0000078003 pfe:EssentialHealthBusinessMember pfe:PeriLOEProductsMember pfe:AllOtherPeriLOEProductsMember pfe:EssentialHealthSegmentMember 2016-07-04 2016-10-02

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
10-Q

X   ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 1, 20172, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______


COMMISSION FILE NUMBER 1-3619

----

PFIZER INC.INC.
(Exact name of registrant as specified in its charter)

DELAWARE
Delaware
13-5315170
(State of Incorporation)
13-5315170
(I.R.S. Employer Identification No.)

235 East 42nd Street, New York, New York  10017
(Address of principal executive offices)  (zip code)
(212)(212) 733-2323
(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $.05 par valuePFENew York Stock Exchange
1.000% Notes due 2027PFE27New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES  Yes X 
NO ___xNo☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES  Yes X 
NO ___xNo☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one):Act:

Large Accelerated filer  X  x              Accelerated filer ___☐                 Non-accelerated filer  ___☐          Smaller reporting company  ___☐    Emerging growth company  ___☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ___☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES ____Yes
NO  ☐
 X Nox

At November 4, 2022,November 6, 2017, 5,960,707,3175,613,314,537 shares of the issuer’s voting common stock were outstanding.


Table of Contents
TABLE OF CONTENTS
Page
Page
Item 1.Financial Statements
Financial Statements
Condensed Consolidated Statements of Income for the three and nine months ended October 1, 2017 and October 2, 2016
5
Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended October 1, 2017 and October 2, 2016
6
Condensed Consolidated Balance Sheets as of October 1, 2017 and December 31, 2016
7
Condensed Consolidated Statements of Equity
8
Condensed Consolidated Statements of Cash Flows for the nine months ended October 1, 2017 and October 2, 2016
89
Notes to Condensed Consolidated Financial Statements
910
Item 2.
Management’Review Report of Independent Registered Public Accounting Firm
45
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
4638
Quantitative and Qualitative Disclosures About Market Risk
10659
Controls and Procedures
10659
Legal Proceedings
10760
Risk Factors
10760
Unregistered Sales of Equity Securities and Use of Proceeds
10960
Item 3.
Defaults Upon Senior Securities
109
N/A
Item 4.
Mine Safety Disclosures
N/A
Item 5.
Other InformationN/A
Exhibits
10960
Other Information
10960
Item 6.N/A = Not Applicable
Exhibits
110
Signature
111
2

GLOSSARY OF
DEFINED TERMS

Unless the context requires otherwise, references to “Pfizer,” “the Company,” “we,” “us” or “our” in this Quarterly Report on Form 10-Q (defined below) refer to Pfizer Inc. and its subsidiaries. Pfizer’s fiscal quarter-end for subsidiaries operating outside the U.S. is as of and for the three and nine months ended August 28, 2022 and August 29, 2021, and for U.S. subsidiaries is as of and for the three and nine months ended October 2, 2022 and October 3, 2021. References to “Notes” in this Form 10-Q are to the Notes to the Condensed or Consolidated Financial Statements in this Form 10-Q or in our 2021 Form 10-K. We also have used several other terms in this Quarterly Report on Form 10-Q, most of which are explained or defined below:
2016 Financial Report2021 Form 10-KFinancial Report for the fiscal year ended December 31, 2016, which was filed as Exhibit 13 to the Annual Report on Form 10-K for the fiscal year ended December 31, 20162021
2016 Form 10-KACIPAnnual Report on Form 10-K for the fiscal year ended December 31, 2016
AAVAdeno-Associated Virus
ACA (Also referred to as U.S. Healthcare Legislation)U.S. Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act
ACIPAdvisory Committee on Immunization Practices
ALKanaplastic lymphoma kinase
AllerganAllergan plc
Alliance revenuesRevenues from alliance agreements under which we co-promote products discovered or developed by other companies or us
AnacorArenaAnacorArena Pharmaceuticals, Inc.
AstellasAstellas Pharma U.S.Inc., Astellas US LLC and Astellas Pharma US, Inc.
ASUArvinasAccounting Standards UpdateArvinas, Inc.
ATM-AVIATTR-CMaztreonam-avibactamtransthyretin amyloid cardiomyopathy
AvillionBiohavenAvillion LLPBiohaven Pharmaceutical Holding Company Ltd.
BambooBioNTechBamboo Therapeutics, Inc.BioNTech SE
BMSBiopharmaGlobal Biopharmaceuticals Business
BLABiologics License Application
BMSBristol-Myers Squibb Company
CDCBODBoard of Directors
CDCU.S. Centers for Disease Control and Prevention
CellectisCGRPCellectis SAcalcitonin gene-related peptide
CitibankCMACitibank N.A.conditional marketing authorisation
cGMPsComirnaty*current Good Manufacturing PracticesUnless otherwise noted, refers to, as applicable, and as authorized or approved, the Pfizer-BioNTech COVID-19 Vaccine, the Pfizer-BioNTech COVID-19 Vaccine, Bivalent (Original and Omicron BA.4/BA.5), the Comirnaty Original/Omicron BA.1 Vaccine, and Comirnaty Original/Omicron BA.4/BA.5 Vaccine
Cond. J-NDAConditional Japan New Drug Application
Consumer Healthcare JVGSK Consumer Healthcare JV
COVID-19novel coronavirus disease of 2019
Developed MarketsEuropeU.S.,Includes the following markets: Western Europe, Scandinavian countries and Finland
Developed MarketsIncludes the following markets: U.S., Developed Europe, Japan, Australia, Canada, Australia, South Korea Scandinavian countries, Finlandand New Zealand
Developed Rest of WorldIncludes the following markets: Japan, Australia, Canada, South Korea and New Zealand
EEAECEuropean Economic AreaCommission
EHEMAEssential Health
EMAEuropean Medicines Agency
Emerging MarketsIncludes, but is not limited to, the following markets: Asia (excluding Japan and South Korea), Latin America, Africa,Central Europe, Eastern Europe, Central Europe, the Middle East, Africa and Turkey
EPSearnings per share
EUEuropean Union
EURIBOREUAEuro Interbank Offered Rateemergency use authorization
Exchange ActSecurities Exchange Act of 1934, as amended
FASBFinancial Accounting Standards Board
FDAU.S. Food and Drug Administration
GAAPFFDCAGenerally Accepted Accounting PrinciplesU.S. Federal Food, Drug and Cosmetic Act
GISTgastrointestinal stromal tumors
GPDGlobal Product Development
HER2-human epidermal growth factor receptor 2-negative
HISHospira Infusion Systems
HisunZhejiang Hisun Pharmaceuticals Co., Ltd.
Hisun PfizerHisun Pfizer Pharmaceuticals Company Limited
HospiraHospira, Inc.
HR+hormone receptor-positive
ICU MedicalICU Medical, Inc.
IHInnovative Health
InnoPharmaInnoPharma, Inc.
IPR&Din-process research and development
IRSU.S. Internal Revenue Service
IVintravenous
JanssenJanssen Biotech Inc.
KingKing Pharmaceuticals, Inc.
LDLlow density lipoprotein

LEPLegacy Established Products
LIBORLondon Interbank Offered Rate
LillyEli Lilly & Company
LOEloss of exclusivity
MCOManaged Care Organization
MD&AManagement’s Discussion and Analysis of Financial Condition and Results of Operations
MedivationMedivation, Inc.
MerckMerck & Co., Inc.
MeridianMeridian Medical Technologies, Inc.
Moody’sMoody’s Investors Service
NDAnew drug application
NovaQuestNovaQuest Co-Investment Fund V, L.P.
NSCLCnon-small cell lung cancer
NYSENew York Stock Exchange
OPKOOPKO Health, Inc.
OTCover-the-counter
PBMPharmacy Benefit Manager
PharmaciaPharmacia Corporation
PP&EProperty, plant & equipment
Quarterly Report on Form 10-QThis Quarterly Report on Form 10-Q for the quarterly period ended October 1, 20172, 2022
RCCGAAPGenerally Accepted Accounting Principles
GISTgastrointestinal stromal tumors
GPDGlobal Product Development organization
GSKGlaxoSmithKline plc
HaleonHaleon plc
HIPAAHealth Insurance Portability and Accountability Act of 1996
HospiraHospira, Inc.
IPR&Din-process research and development
IRAInflation Reduction Act of 2022
IRSU.S. Internal Revenue Service
JAKJanus kinase
JVjoint venture
KingKing Pharmaceuticals LLC (formerly King Pharmaceuticals, Inc.)
LIBORLondon Interbank Offered Rate
LOEloss of exclusivity
3

mCRCmetastatic colorectal cancer
mCRPCmetastatic castration-resistant prostate cancer
mCSPCmetastatic castration-sensitive prostate cancer
MD&AManagement’s Discussion and Analysis of Financial Condition and Results of Operations
MeridianMeridian Medical Technologies, Inc.
mRNAmessenger ribonucleic acid
MSAManufacturing Supply Agreement
MylanMylan N.V.
MyovantMyovant Sciences Ltd.
NDANew Drug Application
nmCRPCnon-metastatic castration-resistant prostate cancer
NSCLCnon-small cell lung cancer
ODToral disintegrating tablet
OPKOOPKO Health, Inc.
OTCover-the-counter
Paxlovid*an oral COVID-19 treatment (nirmatrelvir [PF-07321332] tablets and ritonavir tablets)
PC1Pfizer CentreOne
PGSPfizer Global Supply
PharmaciaPharmacia Corporation
PRACPharmacovigilance Risk Assessment Committee
PsApsoriatic arthritis
QTDQuarter-to-date or three months ended
RArheumatoid arthritis
RCCrenal cell carcinoma
R&Dresearch and development
RPIReViralRPI Finance TrustReViral Ltd.
SandozSECSandoz, Inc., a division of Novartis AG
SangamoSangamo Therapeutics, Inc.
SECU.S. Securities and Exchange Commission
SFJsNDASFJ Pharmaceuticals Groupsupplemental new drug application
SIPTSAsSterile Injectable Pharmaceuticalstransition service arrangements
S&PUCStandard and Poor’sulcerative colitis
TeutoU.K.Laboratório Teuto Brasileiro S.A.United Kingdom
U.K.U.S.United KingdomStates
U.S.Upjohn BusinessUnited StatesPfizer’s former global, primarily off-patent branded and generics business, which included a portfolio of 20 globally recognized solid oral dose brands, including Lipitor, Lyrica, Norvasc, Celebrex and Viagra, as well as a U.S.-based generics platform, Greenstone, that was spun-off on November 16, 2020 and combined with Mylan to create Viatris
ViiVViatrisViatris Inc.
ViiVViiV Healthcare Limited
WRDWRDMWorldwide Research, Development and DevelopmentMedical
ZoetisYTDZoetis Inc.Year-to-date or nine months ended

*Paxlovid and emergency uses of the Pfizer-BioNTech COVID-19 Vaccine or the Pfizer-BioNTech COVID-19 Vaccine, Bivalent (Original and Omicron BA.4/BA.5), have not been approved or licensed by the FDA. Paxlovid has not been approved, but has been authorized for emergency use by the FDA under an EUA, for the treatment of mild-to-moderate COVID-19 in adults and pediatric patients (12 years of age and older weighing at least 40 kg [88 lbs]) with positive results of direct SARS-CoV-2 viral testing, and who are at high-risk for progression to severe COVID-19, including hospitalization or death. Emergency uses of the vaccines have been authorized by the FDA under an EUA to prevent COVID-19 in individuals aged 6 months and older for the Pfizer-BioNTech COVID-19 Vaccine and 5 years and older for the Pfizer-BioNTech COVID-19 Vaccine, Bivalent. The emergency uses are only authorized for the duration of the declaration that circumstances exist justifying the authorization of emergency use of the medical product during the COVID-19 pandemic under Section 564(b)(1) of the FFDCA unless the declaration is terminated or authorization revoked sooner. Please see the EUA Fact Sheets at www.covid19oralrx.com and www.cvdvaccine-us.com.
This Form 10-Q includes discussion of certain clinical studies relating to various in-line products and/or product candidates. These studies typically are part of a larger body of clinical data relating to such products or product candidates, and the discussion herein should be considered in the context of the larger body of data. In addition, clinical trial data are subject to differing interpretations, and, even when we view data as sufficient to support the safety and/or effectiveness of a product candidate or a new indication for an in-line product, regulatory authorities may not share our views and may require additional data or may deny approval altogether.

Some amounts in this Form 10-Q may not add due to rounding. All percentages have been calculated using unrounded amounts. All trademarks mentioned are the property of their owners.
PART I -The information contained on our website, our Facebook, Instagram, YouTube and LinkedIn pages or our Twitter accounts, or any third-party website, is not incorporated by reference into this Form 10-Q.
4

PART I.  FINANCIAL INFORMATION
ITEM 1. FINANCIAL INFORMATIONSTATEMENTS
Item 1. Financial Statements
PFIZER INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
 Three Months EndedNine Months Ended
(MILLIONS, EXCEPT PER COMMON SHARE DATA)October 2,
2022		October 3,
2021		October 2,
2022		October 3,
2021
Revenues$22,638 $24,035 $76,040 $57,450 
Costs and expenses:
Cost of sales(a)
6,063 9,932 24,696 21,085 
Selling, informational and administrative expenses(a)
3,391 2,899 9,032 8,599 
Research and development expenses(a)
2,696 2,681 7,813 6,914 
Acquired in-process research and development expenses(b)
524 762 880 1,000 
Amortization of intangible assets822 968 2,478 2,743 
Restructuring charges and certain acquisition-related costs199 646 580 667 
Other (income)/deductions––net(59)(1,696)1,063 (4,043)
Income from continuing operations before provision/(benefit) for taxes on income9,001 7,843 29,498 20,484 
Provision/(benefit) for taxes on income356 (328)3,098 1,603 
Income from continuing operations8,645 8,171 26,400 18,881 
Discontinued operations––net of tax(21)(13)4 (248)
Net income before allocation to noncontrolling interests8,623 8,159 26,404 18,633 
Less: Net income attributable to noncontrolling interests15 12 27 47 
Net income attributable to Pfizer Inc. common shareholders$8,608 $8,146 $26,378 $18,586 
Earnings per common share––basic:
    
Income from continuing operations attributable to Pfizer Inc. common shareholders$1.54 $1.45 $4.70 $3.37 
Discontinued operations––net of tax— — — (0.04)
Net income attributable to Pfizer Inc. common shareholders$1.54 $1.45 $4.71 $3.32 
Earnings per common share––diluted:
    
Income from continuing operations attributable to Pfizer Inc. common shareholders$1.51 $1.43 $4.60 $3.31 
Discontinued operations––net of tax— — — (0.04)
Net income attributable to Pfizer Inc. common shareholders$1.51 $1.42 $4.60 $3.27 
Weighted-average shares––basic5,607 5,609 5,606 5,597 
Weighted-average shares––diluted5,718 5,725 5,729 5,688 
  Three Months Ended Nine Months Ended
(MILLIONS, EXCEPT PER COMMON SHARE DATA) October 1,
2017
 October 2,
2016
 October 1,
2017
 October 2,
2016
Revenues $13,168
 $13,045
 $38,843
 $39,196
Costs and expenses:        
Cost of sales(a)
 2,847
 3,085
 7,980
 9,111
Selling, informational and administrative expenses(a)
 3,500
 3,559
 10,233
 10,414
Research and development expenses(a)
 1,859
 1,881
 5,346
 5,360
Amortization of intangible assets 1,177
 968
 3,571
 2,934
Restructuring charges and certain acquisition-related costs 149
 531
 377
 988
Other (income)/deductions––net 51
 1,417
 (16) 2,815
Income from continuing operations before provision for taxes on income 3,585
 1,604
 11,351
 7,575
Provision for taxes on income(b)
 727
 249
 2,287
 1,109
Income from continuing operations(b)
 2,858
 1,355
 9,064
 6,465
Discontinued operations––net of tax —
 —
 1
 —
Net income before allocation to noncontrolling interests(b)
 2,858
 1,355
 9,066
 6,465
Less: Net income attributable to noncontrolling interests 18
 —
 32
 25
Net income attributable to Pfizer Inc.(b)
 $2,840
 $1,355
 $9,034
 $6,440
         
Earnings per common share––basic(b):
  
  
  
  
Income from continuing operations attributable to Pfizer Inc. common shareholders $0.48
 $0.22
 $1.51
 $1.06
Discontinued operations––net of tax —
 —
 —
 —
Net income attributable to Pfizer Inc. common shareholders $0.48
 $0.22
 $1.51
 $1.06
         
Earnings per common share––diluted(b):
  
  
  
  
Income from continuing operations attributable to Pfizer Inc. common shareholders $0.47
 $0.22
 $1.49
 $1.04
Discontinued operations––net of tax —
 —
 —
 —
Net income attributable to Pfizer Inc. common shareholders $0.47
 $0.22
 $1.49
 $1.04
         
Weighted-average shares––basic 5,951
 6,066
 5,972
 6,095
Weighted-average shares––diluted(b)
 6,041
 6,150
 6,057
 6,175
Cash dividends paid per common share $0.32
 $0.30
 $0.96
 $0.90
(a)Exclusive of amortization of intangible assets.
(a)
(b)See Note 1D.
Excludes amortization of intangible assets, except as disclosed in Note 9A. Identifiable Intangible Assets and Goodwill: Identifiable Intangible Assets.
(b)
Amounts for the three and nine months ended October 2, 2016 have been revised from previously reported amounts to reflect the adoption of a new accounting standard in the fourth quarter of 2016, as of January 1, 2016. For additional information, see Note 1B. Basis of Presentation and Significant Accounting Policies––Adoption of New Accounting Standards.
Amounts may not add due to rounding.
See Notes to Condensed Consolidated Financial Statements.Accompanying Notes.
5

PFIZER INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
 Three Months EndedNine Months Ended
(MILLIONS)October 2,
2022		October 3,
2021		October 2,
2022		October 3,
2021
Net income before allocation to noncontrolling interests$8,623 $8,159 $26,404 $18,633 
Foreign currency translation adjustments, net(918)(866)(2,549)(366)
Unrealized holding gains/(losses) on derivative financial instruments, net589 213 1,443 179 
Reclassification adjustments for (gains)/losses included in net income(a)
(615)48 (972)286 
 (26)261 471 464 
Unrealized holding gains/(losses) on available-for-sale securities, net(777)(266)(1,397)(128)
Reclassification adjustments for (gains)/losses included in net income(b)
606 9 1,094 (172)
 (171)(257)(303)(300)
Reclassification adjustments related to amortization of prior service costs and other, net(31)(39)(99)(119)
Reclassification adjustments related to curtailments of prior service costs and other, net2 (58)(8)(62)
 (29)(97)(107)(181)
Other comprehensive income/(loss), before tax(1,144)(959)(2,488)(382)
Tax provision/(benefit) on other comprehensive income/(loss)(33)(65)(149)(44)
Other comprehensive income/(loss) before allocation to noncontrolling interests$(1,111)$(894)$(2,339)$(338)
Comprehensive income/(loss) before allocation to noncontrolling interests$7,512 $7,265 $24,065 $18,296 
Less: Comprehensive income/(loss) attributable to noncontrolling interests10 9 16 48 
Comprehensive income/(loss) attributable to Pfizer Inc.$7,503 $7,256 $24,049 $18,248 
  Three Months Ended Nine Months Ended
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
 October 1,
2017
 October 2,
2016
Net income before allocation to noncontrolling interests $2,858
 $1,355
 $9,066
 $6,465
       
  
Foreign currency translation adjustments, net 878
 417
 1,352
 998
Reclassification adjustments(a)
 (3) —
 110
 —
  875
 417
 1,461
 998
Unrealized holding losses on derivative financial instruments, net (50) (126) (149) (970)
Reclassification adjustments for realized (gains)/losses(b)
 56
 150
 (393) 280
  6
 24
 (542) (690)
Unrealized holding gains on available-for-sale securities, net 384
 261
 698
 740
Reclassification adjustments for realized gains(b)
 (278) (112) (181) (129)
  106
 149
 518
 611
Benefit plans: actuarial losses, net (103) (82) (41) (101)
Reclassification adjustments related to amortization(c)
 140
 140
 448
 418
Reclassification adjustments related to settlements, net(c)
 38
 28
 89
 76
Other (76) 69
 (111) 51
  (1) 155
 384
 444
Benefit plans: prior service (costs)/credits and other, net —
 95
 (2) 182
Reclassification adjustments related to amortization(c)
 (46) (45) (138) (127)
Reclassification adjustments related to curtailments, net(c)
 (3) (8) (14) (14)
Other 1
 6
 2
 12
  (48) 48
 (151) 54
Other comprehensive income, before tax 938
 793
 1,669
 1,417
Tax provision/(benefit) on other comprehensive income(d)
 (80) 116
 (218) 111
Other comprehensive income before allocation to noncontrolling interests $1,018
 $677
 $1,888
 $1,306
         
Comprehensive income before allocation to noncontrolling interests $3,876
 $2,031
 $10,953
 $7,771
Less: Comprehensive income attributable to noncontrolling interests 19
 —
 48
 24
Comprehensive income attributable to Pfizer Inc. $3,857
 $2,032
 $10,906
 $7,747
(a)Reclassified into Other (income)/deductions—net and Cost of sales. See Note 7E.
(b)Reclassified into Other (income)/deductions—net.
See Accompanying Notes.
6

(a)
The foreign currency translation adjustments reclassified into Other (income)/deductions—net in the condensed consolidated statements of income primarily result from sale of our 40% ownership investment in Teuto. See Note 2D. Acquisitions, Sale of Hospira Infusion Systems Net Assets, Collaborative Arrangement and Equity-Method Investments: Equity-Method Investments.
(b)
Reclassified into Other (income)/deductions—net and Cost of sales in the condensed consolidated statements of income. For additional information on amounts reclassified into Cost of sales, see Note 7F. Financial Instruments: Derivative Financial Instruments and Hedging Activities.
(c)
Generally reclassified, as part of net periodic pension cost, into Cost of sales, Selling, informational and administrative expenses, and/or Research and development expenses, as appropriate, in the condensed consolidated statements of income. For additional information, see Note 10. Pension and Postretirement Benefit Plans.
(d)
See Note 5C. Tax Matters: Tax Provision/(Benefit) on Other Comprehensive Income.
Amounts may not add due to rounding.

See Notes to Condensed Consolidated Financial Statements.

PFIZER INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(MILLIONS OF DOLLARS) October 1,
2017
 December 31,
2016
  (Unaudited)  
Assets    
Cash and cash equivalents $2,779
 $2,595
Short-term investments 14,146
 15,255
Trade accounts receivable, less allowance for doubtful accounts: 2017—$590; 2016—$609 10,002
 8,225
Inventories 7,925
 6,783
Current tax assets 3,263
 3,041
Other current assets 2,158
 2,249
Assets held for sale 16
 801
Total current assets 40,291
 38,949
Long-term investments 7,311
 7,116
Property, plant and equipment, less accumulated depreciation: 2017—$15,906; 2016—$14,807 13,505
 13,318
Identifiable intangible assets, less accumulated amortization 49,721
 52,648
Goodwill 56,078
 54,449
Noncurrent deferred tax assets and other noncurrent tax assets 1,858
 1,812
Other noncurrent assets 3,388
 3,323
Total assets $172,151
 $171,615
     
Liabilities and Equity  
  
Short-term borrowings, including current portion of long-term debt: 2017—$3,072; 2016—$4,225 $9,448
 $10,688
Trade accounts payable 3,480
 4,536
Dividends payable 1,909
 1,944
Income taxes payable 1,003
 437
Accrued compensation and related items 1,932
 2,487
Other current liabilities 10,446
 11,023
Total current liabilities 28,217
 31,115
     
Long-term debt 34,503
 31,398
Pension benefit obligations, net 5,531
 6,406
Postretirement benefit obligations, net 1,687
 1,766
Noncurrent deferred tax liabilities 30,411
 30,753
Other taxes payable 4,304
 4,000
Other noncurrent liabilities 6,388
 6,337
Total liabilities 111,041
 111,776
     
Commitments and Contingencies 


 


     
Preferred stock 22
 24
Common stock 463
 461
Additional paid-in capital 83,827
 82,685
Treasury stock (89,421) (84,364)
Retained earnings 75,043
 71,774
Accumulated other comprehensive loss (9,164) (11,036)
Total Pfizer Inc. shareholders’ equity 60,770
 59,544
Equity attributable to noncontrolling interests 340
 296
Total equity 61,110
 59,840
Total liabilities and equity $172,151
 $171,615
Amounts may not add due to rounding.
(MILLIONS)October 2,
2022		December 31, 2021
(Unaudited)
Assets
Cash and cash equivalents$1,298 $1,944 
Short-term investments34,825 29,125 
Trade accounts receivable, less allowance for doubtful accounts: 2022—$474; 2021—$49216,076 11,479 
Inventories9,513 9,059 
Current tax assets2,544 4,266 
Other current assets6,149 3,820 
Total current assets70,403 59,693 
Equity-method investments9,826 16,472 
Long-term investments4,062 5,054 
Property, plant and equipment, less accumulated depreciation: 2022—$14,931; 2021—$15,07415,441 14,882 
Identifiable intangible assets28,151 25,146 
Goodwill49,441 49,208 
Noncurrent deferred tax assets and other noncurrent tax assets7,136 3,341 
Other noncurrent assets10,890 7,679 
Total assets$195,350 $181,476 
Liabilities and Equity  
Short-term borrowings, including current portion of long-term debt: 2022—$2,566; 2021—$1,636$4,040 $2,241 
Trade accounts payable6,267 5,578 
Dividends payable2,245 2,249 
Income taxes payable3,071 1,266 
Accrued compensation and related items2,852 3,332 
Deferred revenues6,191 3,067 
Other current liabilities19,647 24,939 
Total current liabilities44,314 42,671 
Long-term debt32,629 36,195 
Pension benefit obligations2,738 3,489 
Postretirement benefit obligations222 235 
Noncurrent deferred tax liabilities616 349 
Other taxes payable9,701 11,331 
Other noncurrent liabilities12,239 9,743 
Total liabilities102,459 104,013 
Commitments and Contingencies
Common stock476 473 
Additional paid-in capital91,359 90,591 
Treasury stock(113,945)(111,361)
Retained earnings122,967 103,394 
Accumulated other comprehensive loss(8,225)(5,897)
Total Pfizer Inc. shareholders’ equity92,631 77,201 
Equity attributable to noncontrolling interests259 262 
Total equity92,891 77,462 
Total liabilities and equity$195,350 $181,476 
See Notes to Condensed Consolidated Financial Statements.Accompanying Notes.
7

PFIZER INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)
PFIZER INC. SHAREHOLDERS
Common StockTreasury Stock
(MILLIONS, EXCEPT PER COMMON SHARE DATA)SharesPar ValueAdd’l
Paid-In Capital		SharesCostRetained EarningsAccum. Other Comp.
Loss		Share-
holders’ Equity		Non-controlling interestsTotal Equity
Balance, July 3, 20229,496 $476 $91,183 (3,903)$(113,939)$116,608 $(7,119)$87,208 $261 $87,469 
Net income8,608 8,608 15 8,623 
Other comprehensive income/(loss), net of tax(1,106)(1,106)(5)(1,111)
Cash dividends declared, per share: $0.40
Common stock(2,245)(2,245)(2,245)
Noncontrolling interests— (7)(7)
Share-based payment transactions20 — 172 — (6)(5)161 161 
Purchases of common stock— — — — 
Other4 — — — 4 (4)— 
Balance, October 2, 20229,515 $476 $91,359 (3,903)$(113,945)$122,967 $(8,225)$92,631 $259 $92,891 
PFIZER INC. SHAREHOLDERS
Common StockTreasury Stock
(MILLIONS, EXCEPT PER COMMON SHARE DATA)SharesPar ValueAdd’l
Paid-In Capital		SharesCostRetained EarningsAccum. Other Comp.
Loss		Share-
holders’ Equity		Non-controlling interestsTotal Equity
Balance, July 4, 20219,450 $472 $89,336 (3,851)$(111,356)$96,346 $(4,758)$70,042 $273 $70,315 
Net income8,146 8,146 12 8,159 
Other comprehensive income/(loss), net of tax(891)(891)(3)(894)
Cash dividends declared, per share: $0.39
Common stock(2,192)(2,192)(2,192)
Noncontrolling interests— (8)(8)
Share-based payment transactions13 1 637 — (3)(1)634 634 
Purchases of common stock— — — — 
Other— — — (47)(47)1 (46)
Balance, October 3, 20219,462 $473 $89,973 (3,851)$(111,359)$102,252 $(5,649)$75,691 $275 $75,967 
PFIZER INC. SHAREHOLDERS
Common StockTreasury Stock
(MILLIONS, EXCEPT PER COMMON SHARE DATA)SharesPar ValueAdd’l
Paid-In Capital		SharesCostRetained EarningsAccum. Other Comp.
Loss		Share-
holders’ Equity		Non-controlling interestsTotal Equity
Balance, January 1, 20229,471 $473 $90,591 (3,851)$(111,361)$103,394 $(5,897)$77,201 $262 $77,462 
Net income26,378 26,378 27 26,404 
Other comprehensive income/(loss), net of tax(2,328)(2,328)(11)(2,339)
Cash dividends declared, per share: $1.20
Common stock(6,734)(6,734)(6,734)
Noncontrolling interests— (7)(7)
Share-based payment transactions45 2 760 (12)(584)(71)108 108 
Purchases of common stock(39)(2,000)(2,000)(2,000)
Other7 — — — 7 (11)(4)
Balance, October 2, 20229,515 $476 $91,359 (3,903)$(113,945)$122,967 $(8,225)$92,631 $259 $92,891 
PFIZER INC. SHAREHOLDERS
Common StockTreasury Stock
(MILLIONS, EXCEPT PER COMMON SHARE DATA)SharesPar ValueAdd’l
Paid-In Capital		SharesCostRetained EarningsAccum. Other Comp.
Loss		Share-
holders’ Equity		Non-controlling interestsTotal Equity
Balance, January 1, 20219,407 $470 $88,674 (3,840)$(110,988)$90,392 $(5,310)$63,238 $235 $63,473 
Net income18,586 18,586 47 18,633 
Other comprehensive income/(loss), net of tax(338)(338)— (338)
Cash dividends declared, per share: $1.17
Common stock(6,569)(6,569)(6,569)
Noncontrolling interests— (8)(8)
Share-based payment transactions56 3 1,300 (11)(371)(77)855 855 
Purchases of common stock— — — — 
Other— — — (81)(81)1 (79)
Balance, October 3, 20219,462 $473 $89,973 (3,851)$(111,359)$102,252 $(5,649)$75,691 $275 $75,967 
See Accompanying Notes.
8

PFIZER INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
  Nine Months Ended
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
Operating Activities    
Net income before allocation to noncontrolling interests(a)
 $9,066
 $6,465
Adjustments to reconcile net income before allocation to noncontrolling interests to net cash provided by operating activities:  
  
Depreciation and amortization 4,695
 4,208
Asset write-offs and impairments 326
 1,146
Loss on sale of HIS net assets 52
 1,422
Deferred taxes from continuing operations 241
 (1,335)
Share-based compensation expense 595
 532
Benefit plan contributions in excess of expense (1,042) (775)
Other adjustments, net (561) 68
Other changes in assets and liabilities, net of acquisitions and divestitures(a)
 (3,644) (1,582)
Net cash provided by operating activities(a)
 9,728
 10,151
     
Investing Activities  
  
Purchases of property, plant and equipment (1,256) (1,134)
Purchases of short-term investments (6,469) (15,170)
Proceeds from redemptions/sales of short-term investments 5,783
 20,685
Net proceeds from redemptions/sales of short-term investments with original maturities of three months or less 2,758
 6,485
Purchases of long-term investments (2,526) (4,771)
Proceeds from redemptions/sales of long-term investments 2,417
 6,915
Acquisitions of businesses, net of cash acquired (1,000) (17,679)
Acquisitions of intangible assets (188) (96)
Other investing activities, net 519
 60
Net cash provided by/(used in) investing activities 38
 (4,704)
     
Financing Activities  
  
Proceeds from short-term borrowings 7,003
 6,397
Principal payments on short-term borrowings (7,691) (3,321)
Net proceeds from/(payments on) short-term borrowings with original maturities of three months or less 555
 (963)
Proceeds from issuance of long-term debt 5,273
 5,031
Principal payments on long-term debt (4,474) (4,317)
Purchases of common stock (5,000) (5,000)
Cash dividends paid (5,750) (5,496)
Proceeds from exercise of stock options 656
 946
Other financing activities, net(a)
 (223) (192)
Net cash used in financing activities(a)
 (9,650) (6,915)
Effect of exchange-rate changes on cash and cash equivalents 67
 (79)
Net increase/(decrease) in cash and cash equivalents 184
 (1,547)
Cash and cash equivalents, beginning 2,595
 3,641
Cash and cash equivalents, end $2,779
 $2,094
   
  
Supplemental Cash Flow Information    
Non-cash transactions:    
Receipt of ICU Medical common stock(b)
 $428
 $—
Promissory note from ICU Medical(b)
 75
 —
Cash paid (received) during the period for:  
  
Income taxes $1,424
 $1,430
Interest 1,101
 1,177
Interest rate hedges (183) (356)

(a)
Amounts for the three and nine months ended October 2, 2016 have been revised from previously reported amounts to reflect the adoption of a new accounting standard in the fourth quarter of 2016, as of January 1, 2016. For additional information, see Note 1B. Basis of Presentation and Significant Accounting Policies: Adoption of New Accounting Standards.
(b)
In connection with the sale of HIS net assets to ICU Medical, on February 3, 2017, Pfizer received 3.2 million newly issued shares of ICU Medical common stock initially valued at $428 million and a promissory note in the amount of $75 million. For additional information, see Note 2B. Acquisitions, Sale of Hospira Infusion Systems Net Assets, Collaborative Arrangement and Equity-Method Investments: Sale of Hospira Infusion Systems Net Assets.

Amounts may not add due to rounding.
 Nine Months Ended
(MILLIONS)October 2,
2022		October 3,
2021
Operating Activities  
Net income before allocation to noncontrolling interests$26,404 $18,633 
Discontinued operations—net of tax4 (248)
Net income from continuing operations before allocation to noncontrolling interests26,400 18,881 
Adjustments to reconcile net income before allocation to noncontrolling interests to net cash provided by operating activities:  
Depreciation and amortization3,545 3,856 
Asset write-offs and impairments287 93 
Deferred taxes from continuing operations(3,399)(3,610)
Share-based compensation expense508 686 
Benefit plan contributions in excess of expense/income(532)(1,933)
Other adjustments, net1,481 (1,848)
Other changes in assets and liabilities, net of acquisitions and divestitures(7,605)10,867 
Net cash provided by operating activities from continuing operations20,685 26,993 
Net cash provided by/(used in) operating activities from discontinued operations— (327)
Net cash provided by operating activities20,685 26,666 
Investing Activities  
Purchases of property, plant and equipment(2,235)(1,709)
Purchases of short-term investments(29,701)(26,280)
Proceeds from redemptions/sales of short-term investments35,087 15,852 
Net (purchases of)/proceeds from redemptions/sales of short-term investments with original maturities of three months or less(10,877)(7,152)
Purchases of long-term investments(1,627)(861)
Proceeds from redemptions/sales of long-term investments446 569 
Acquisition of business, net of cash acquired(6,225)— 
Dividends received from Haleon/GSK Consumer Healthcare JV (Note 2C)
3,960 — 
Other investing activities, net(200)(370)
Net cash provided by/(used in) investing activities from continuing operations(11,373)(19,951)
Net cash provided by/(used in) investing activities from discontinued operations— (8)
Net cash provided by/(used in) investing activities(11,373)(19,960)
Financing Activities  
Proceeds from short-term borrowings3,887 — 
Payments on short-term borrowings(3,887)(1)
Net (payments on)/proceeds from short-term borrowings with original maturities of three months or less870 265 
Proceeds from issuance of long-term debt— 997 
Payments on long-term debt(1,609)(1,001)
Purchases of common stock(2,000)— 
Cash dividends paid(6,738)(6,540)
Other financing activities, net(342)(185)
Net cash provided by/(used in) financing activities(9,819)(6,465)
Effect of exchange-rate changes on cash and cash equivalents and restricted cash and cash equivalents(139)(32)
Net increase/(decrease) in cash and cash equivalents and restricted cash and cash equivalents(646)209 
Cash and cash equivalents and restricted cash and cash equivalents, at beginning of period1,983 1,825 
Cash and cash equivalents and restricted cash and cash equivalents, at end of period$1,338 $2,034 
Supplemental Cash Flow Information
Cash paid/(received) during the period for:  
Income taxes$4,919 $2,943 
Interest paid1,121 1,205 
Interest rate hedges28 (26)
Non-cash transaction:
Right-of-use assets obtained in exchange for lease liabilities$463 $1,552 
See Notes to Condensed Consolidated Financial Statements.
Accompanying Notes.
9

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


Note 1. Basis of Presentation and Significant Accounting Policies

A. Basis of Presentation

See the Glossary of Defined Terms at the beginning of this Quarterly Report on Form 10-Q for terms used throughout theWe prepared these condensed consolidated financial statements and related notes of this Quarterly Report onin conformity with U.S. GAAP, consistent in all material respects with those applied in our 2021 Form 10-Q.

We prepared the condensed consolidated financial statements following the requirements of the SEC for interim reporting.10-K. As permitted under those rules,the SEC requirements for interim reporting, certain footnotes or other financial information that are normally required by U.S. GAAP can behave been condensed or omitted.

These financial statements include all normal and recurring adjustments that are considered necessary for the fair statement of results for the interim periods presented. The financial information included in our condensedthis Form 10-Q should be read in conjunction with the consolidated financial statements for subsidiaries operating outside the U.S. is as of and for the three and nine months ended August 27, 2017 and August 28, 2016. The financial informationaccompanying notes included in our condensed consolidated financial statements for U.S. subsidiaries is as of and for the three and nine months ended October 1, 2017 and October 2, 20162021 Form 10-K.

Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be representative of those for the full year.

We are responsible
Pfizer’s fiscal quarter-end for subsidiaries operating outside the U.S. is as of and for the unaudited financial statements included in this Quarterly Report on Form 10-Q. The interim financial statements include all normalthree and recurring adjustments that are considered necessarynine months ended August 28, 2022 and August 29, 2021, and for U.S. subsidiaries is as of and for the fair statementthree and nine months ended October 2, 2022 and October 3, 2021.
Beginning in the fourth quarter of 2021, we reorganized our condensed consolidated balance sheetscommercial operations and condensed consolidated statements of income. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our 2016 Form 10-K.

Webegan to manage our commercial operations through a global structure consisting of two distinctoperating segments, each led by a single manager: Biopharma, our innovative science-based biopharmaceutical business, segments: Pfizer Innovative Health (IH) and Pfizer Essential Health (EH). ForPC1, our global contract development and manufacturing organization and a leading supplier of specialty active pharmaceutical ingredients. Beginning in the third quarter of 2022, we made several additional information, seeorganizational changes to further transform our operations to better leverage our expertise in certain areas and in anticipation of potential future new product launches. These changes include establishing a new commercial structure within our Biopharma operating segment and realigning certain enabling and platform functions across the organization to ensure alignment with this new operating structure. Biopharma is the only reportable segment. See Note 1317A in our 2021 Form 10-K and Notes 9B and 13A below.
Business development activities completed in 2021 and 2022 impacted financial results in the periods presented. Discontinued operations in the periods presented relate to the previously divested Meridian subsidiary and post-closing adjustments for other previously divested businesses. See Notes 1A and Notes to Consolidated Financial Statements––2B in our 2021 Form 10-K, and Note 18. Segment, Geographic2B below.
We have made certain reclassification adjustments to conform prior-period amounts to the current presentation for discontinued operations, acquired IPR&D expenses and Other Revenue Information segment reporting.
B. New Accounting Standard Adopted in Pfizer’s 2016 Financial Report.2022

Certain amountsOn January 1, 2022, we early adopted a new accounting standard for contract assets and contract liabilities acquired in a business combination. Under the new standard, acquired contract assets and contract liabilities are required to be recognized and measured by the acquirer on the acquisition date in accordance with Accounting Standards Codification 606. This new guidance generally results in the condensedacquirer recognizing contract assets and contract liabilities at the same amounts that were recorded by the acquiree. Previously, these amounts were recognized by the acquirer at fair value as of the acquisition date. We adopted this new standard on a prospective basis and there was no impact to our consolidated financial statementsstatements.
C. Revenues and associated notesTrade Accounts Receivable
Revenue Recognition––We record revenues from product sales when there is a transfer of control of the product from us to the customer. We typically determine transfer of control based on when the product is shipped or delivered and title passes to the customer. For certain contracts, the finished product may not add due to rounding. All percentagestemporarily be stored at our or our third-party subcontractors’ locations under a bill-and-hold arrangement. Revenue is recognized on bill-and-hold arrangements at the point in time when the customer obtains control of the product and all of the following criteria have been calculated using unrounded amounts.met: the arrangement is substantive; the product is identified separately as belonging to the customer; the product is ready for physical transfer to the customer; and we do not have the ability to use the product or direct it to another customer. In determining when the customer obtains control of the product, we consider certain indicators, including whether we have a present right to payment from the customer, whether title and/or significant risks and rewards of ownership have transferred to the customer and whether customer acceptance has been received.

Customers––Our prescription pharmaceutical products, with the exception of Paxlovid, are sold principally to wholesalers, but we also sell directly to retailers, hospitals, clinics, government agencies and pharmacies. We principally sell Paxlovid to
Our recent significant business development activities include:
•
On February 3, 2017, we completed the sale of our global infusion therapy net assets, HIS, to ICU Medical. The operating results of HIS are included in our condensed consolidated statement of income and EH’s operating results through February 2, 2017 and, therefore, our financial results, and EH’s operating results, for the third quarter of 2017 do not reflect any contribution from HIS global operations, while our financial results, and EH’s operating results, for the third quarter of 2016 reflect three months of HIS global operations. Our financial results, and EH’s operating results, for the first nine months of 2017 reflect approximately one month of HIS domestic operations and approximately two months of HIS international operations, while our financial results, and EH’s operating results, for the first nine months of2016 reflect nine months of HIS global operations. Assets and liabilities associated with HIS are presented as held for sale in the condensed consolidated balance sheet as of December 31, 2016. The HIS assets held for sale are reported in Assets held for sale and HIS liabilities held for sale are reported in Other current liabilities.
•
On December 22, 2016, which falls in the first fiscal quarter of 2017 for our international operations, we acquired the development and commercialization rights to AstraZeneca’s small molecule anti-infectives business, primarily outside the U.S. Commencing from the acquisition date, our financial statements reflect the assets, liabilities, operating results and cash flows of this business, and, in accordance with our international reporting period, our financial results, EH’s operating results, and cash flows for the third quarter and first nine months of 2017 reflect approximately three months and eight months, respectively, of the small molecule anti-infectives business acquired from AstraZeneca.
•
On September 28, 2016, we acquired Medivation for $81.50 per share. Commencing from the acquisition date, our financial statements reflect the assets, liabilities, operating results and cash flows of Medivation. Therefore, Medivation operations are reflected in our financial results, IH’s operating results, and cash flows for the third quarter and first nine months of 2017. In accordance with our domestic and international reporting periods, our consolidated financial statements for the third quarter and first nine months of 2016 reflect three business days of Medivation operations, which were immaterial.
10

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

•
On June 24, 2016, we acquired Anacor for $99.25 per share. Commencing from the acquisition date, our financial statements reflect the assets, liabilities, operating results and cash flows of Anacor. Therefore, Anacor operations are reflected in our financial results, IH’s operating results, and cash flows for the third quarter and first nine months of 2017. In accordance with our domestic and international reporting periods, our consolidated financial statements for the third quarter and first nine months of 2016 reflect approximately three months of Anacor operations.
For additional information, see Note 2 and Notes to Consolidated Financial Statements––Note 2. Acquisitions, Sale of Hospira Infusion Systems Net Assets, Collaborative Arrangement and Equity-Method Investments inPfizer’s 2016 Financial Report.
B. Adoption of New Accounting Standards
government agencies. In the fourth quarterU.S., we primarily sell our vaccine products directly to the federal government, CDC, wholesalers, individual provider offices, retail pharmacies and integrated delivery networks. Outside the U.S., we primarily sell our vaccines to government and non-government institutions.
Deductions from Revenues––Our accruals for Medicare, Medicaid and related state program and performance-based contract rebates, chargebacks, sales allowances and sales returns and cash discounts are as follows:
(MILLIONS)October 2,
2022		December 31, 2021
Reserve against Trade accounts receivable, less allowance for doubtful accounts
$1,133 $1,077 
Other current liabilities:
Accrued rebates3,991 3,811 
Other accruals418 528 
Other noncurrent liabilities497 433 
Total accrued rebates and other sales-related accruals$6,038 $5,850 
Trade Accounts Receivable––Trade accounts receivable are stated at their net realizable value. The allowance for credit losses reflects our best estimate of 2016, we adopted a new accounting standard for certain elementsexpected credit losses of the accountingreceivables portfolio determined on the basis of historical experience, current information, and forecasts of future economic conditions. In developing the estimate for share-based payments asexpected credit losses, trade accounts receivables are segmented into pools of January 1, 2016. Specifically,assets depending on market (U.S. versus international), delinquency status, and customer type (high risk versus low risk and government versus non-government), and fixed reserve percentages are established for each pool of trade accounts receivables.
In determining the new standard requires excess tax benefits or deficienciesreserve percentages for each pool of trade accounts receivables, we considered our historical experience with certain customers and customer types, regulatory and legal environments, country and political risk, and other relevant current and future forecasted macroeconomic factors. These credit risk indicators are monitored on a quarterly basis to determine whether there have been any changes in the economic environment that would indicate the established reserve percentages should be adjusted, and are considered on a regional basis to reflect more geographic-specific metrics. Additionally, write-offs and recoveries of customer receivables are tracked against collections on a quarterly basis to determine whether the reserve percentages remain appropriate. When management becomes aware of certain customer-specific factors that impact credit risk, specific allowances for these known troubled accounts are recorded. Trade accounts receivable are written off after all reasonable means to collect the full amount (including tax benefits of dividend equivalents) of share-based compensation to be recognized as a component oflitigation, where appropriate) have been exhausted.
During the Provision for taxes on income, whereas excess tax benefits or deficiencies previously were recognized in Additional paid-in capital. The net tax benefit for the Company was $35 million for the third quarter of 2016three and $85 million for the first nine months ended October 2, 2022 and October 3, 2021, additions to the allowance for credit losses, write-offs and recoveries of 2016. Also, in the diluted net earnings per share calculation, when applying the treasury stock method for shares that could be repurchased, the assumed proceeds no longer include the amount of excess tax benefit.
Another element of the new accounting standard requires that we now present excess tax benefits as operating activities in our consolidated statement of cash flows. We elected to adopt this presentation on a prospective basis as of January 1, 2016. Additionally, cash paid by us when directly withholding shares for tax-withholding purposes is now a cash outflow from financing activities. This reclassification was required to be adopted retrospectively. As a result, $87 million of cash outflows for the first nine months of 2016 was reclassified from operating activities to financing activities in the condensed consolidated statement of cash flows. For additional information, see Notes to Consolidated Financial Statements––Note 1B. Basis of Presentation and Significant Accounting Policies:Adoption of New Accounting Standards included in our 2016 Financial Report.

We adopted a new standard as of January 1, 2017 that amended guidance on the assessment of whether an entity is the primary beneficiary of a variable interest entity. Under this new guidance, when evaluating whether an entity is the primary beneficiary, a single decision maker must consider its indirect interest held through related parties under common control proportionately. There was nocustomer receivables were not material impact to our condensed consolidated financial statements. For additional information on our trade accounts receivable, see Note 1H in our 2021 Form 10-K.

D. Acquired In-Process Research and Development Expenses

In the first quarter of 2022, we began reporting acquired IPR&D expense as a separate line item in our consolidated statements from adopting this standard.of income. Acquired in-process research and development expenses includes costs incurred in connection with (a) all upfront and milestone payments on collaboration and in-license agreements, including premiums on equity securities and (b) asset acquisitions of acquired IPR&D. These costs were previously recorded in Research and development expenses. When we acquire net assets that do not constitute a business, as defined in U.S. GAAP, no goodwill is recognized and acquired IPR&D is expensed. The fair value of IPR&D acquired in connection with a business combination is recorded on the balance sheet as Identifiable intangible assets. See Notes 1E and 10 in our2021 Form 10-K.

We adopted a new standard as of January 1, 2017 related to inventory. The new guidance requires that inventory be measured at the lower of cost or net realizable value, which is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. There was no material impact to our condensed consolidated financial statements from adopting this standard.
Note 2.Acquisitions, Sale of Hospira Infusion Systems Net Assets,Discontinued Operations, Equity-Method Investment and Collaborative Arrangement and Equity-Method Investments

A. Acquisitions
AstraZeneca’s Small Molecule Anti-Infectives Business (EH)
ReViral––On December 22, 2016,June 9, 2022, which fallsfell in the first fiscalour international third quarter of 2017 for our international operations,2022, we acquired the developmentReViral, a privately held, clinical-stage biopharmaceutical company focused on discovering, developing and commercialization rightscommercializing novel antiviral therapeutics that target respiratory syncytial virus, for a total consideration of up to AstraZeneca’s small molecule anti-infectives business, primarily outside the U.S.,$536 million, including the commercialization and development rights to the newly approved EU drug Zavicefta™ (ceftazidime-avibactam), the marketed agents Merrem™/Meronem™ (meropenem) and Zinforo™ (ceftaroline fosamil), and the clinical development assets ATM-AVI and CXL (ceftaroline fosamil-AVI). Under the termsupfront payments of the agreement, we made an upfront$436 million upon closing (including a base payment of approximately $552$425 million to AstraZeneca upon the close of the transactionplus working capital adjustments) and an additional $3$100 million paymentcontingent upon future development milestones.
We accounted for a contractual purchase price adjustment in the second quartertransaction as an asset acquisition since the lead asset, sisunatovir, represented substantially all of 2017. We also made a $50 million milestone payment in the second quarter of 2017, we expect to make an additional milestone payment of $125 million in our first fiscal quarter of 2018 and we will make a deferred payment of $175 million to AstraZeneca in January 2019. In addition, AstraZeneca may be eligible to receive an additional milestone payment of $75 million if the related milestone is achieved prior to December 31, 2021, and up to $600 million if sales of Zavicefta™ exceed certain thresholds prior to January 1, 2026, as well as tiered royalties on sales of Zavicefta™ and ATM-AVI in certain markets for a period ending on the later of ten years from first commercial sale or the loss of patent protection or loss of regulatory exclusivity. The total royalty payments are unlimited during the royalty term and the undiscounted payments are expected to be in the range of approximately $250 million to $425 million. The total fair value of the gross assets acquired. At the acquisition date, we recorded a $426 million charge representing an acquired IPR&D asset with no alternative use in Acquired in-process research and development expenses, which is presented as a cash outflow from operating activities. Other assets acquired and liabilities assumed were not significant.
11

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Arena––On March 11, 2022, we acquired Arena, a clinical stage company, for $100 per share in cash. The total fair value of the consideration transferred for AstraZeneca’s small molecule anti-infectives business was approximately $1,045 million, which includes $555$6.6 billion ($6.2 billion, net of cash acquired). In addition, $138 million in cash, pluspayments to Arena employees for the fair value of contingent considerationpreviously unvested long-term incentive awards was recognized as post-closing compensation expense and recorded in Restructuring charges and certain acquisition-related costs (see Note 3).
Arena’s portfolio includes development-stage therapeutic candidates in gastroenterology, dermatology, and cardiology, including etrasimod, an oral, selective sphingosine 1-phosphate (S1P) receptor modulator currently in development for a range of $490 million (which is composed of the deferred payment, the $50 million milestone payment made in the second quarter of 2017immuno-inflammatory diseases including UC, Crohn’s disease, atopic dermatitis, eosinophilic esophagitis, and the future expected milestone and royalty payments).alopecia areata. In connection with this acquisition, we provisionally recorded $879 million recorded: (i) $5.5 billion in Identifiable intangible assets, primarily consisting of $660 million in Developed technology rights and $219 million in$5.0 billion of IPR&D. We also recorded $92and $460 million inof indefinite-lived Other current assetsLicensing agreements and other related to the economic value, (ii) $1.0 billion of inventory which was retained by AstraZeneca for sale on our behalf, $92 million in Goodwilland $17(iii) $505 million of net deferred tax liabilities. The allocation of the consideration transferred to the assets acquired and the liabilities assumed has not yet been finalized.
Medivation, Inc. (IH)B. Discontinued Operations
Meridian––On September 28, 2016,December 31, 2021, we acquired Medivationcompleted the sale of our Meridian subsidiary. In the three and nine months ended October 2, 2022, the amounts recorded under the interim TSAs and MSA were not material.
Upjohn Separation and Combination with Mylan––On November 16, 2020, we completed the spin-off and the combination of the Upjohn Business with Mylan to form Viatris. In connection with this transaction, Pfizer and Viatris entered into various agreements to effect the separation and combination and to provide a framework for $81.50 per share.our relationship after the combination, including a separation and distribution agreement, interim operating models, including agency arrangements, MSAs, TSAs, a tax matters agreement, and an employee matters agreement, among others. The total fair valueamounts recorded under these agreements were not material to our consolidated results of consideration transferred for Medivation wasoperations in the three and nine months ended October 2, 2022 and October 3, 2021. Net amounts due from Viatris under the agreements were approximately $14.3 billion in cash ($13.9 billion, net$167 million as of cash acquired). Of this consideration, approximately $365October 2, 2022 and $53 million was not paid as of December 31, 2016, and was recorded2021. The cash flows associated with the agreements are included in Other current liabilities.Net cash provided by operating activities from continuing operations, Substantially all of the remaining consideration was paid as of October 1, 2017. Medivation is now a wholly-owned subsidiary of Pfizer. Medivation is a biopharmaceutical company focused on developing and commercializing small moleculesexcept for oncology. Medivation’s portfolio includes Xtandi (enzalutamide), an androgen receptor inhibitor that blocks multiple steps in the androgen receptor signaling pathway within tumor cells. Xtandi is being developed and commercialized through a collaboration with Astellas. Astellas has exclusive commercialization rights for Xtandi outside the U.S. In addition, Medivation has a development-stage oncology asset in its pipeline, talazoparib, which is currently in a Phase 3 study for the treatment of BRCA-mutated breast cancer. In connection with this acquisition, we recorded $12.2 billion in Identifiable intangible assets, primarily consisting of $8.1 billion of Developed technology rights with an average useful life of approximately 12 years and $4.1 billion of IPR&D, and recorded $6.1 billion of Goodwill, $4.0 billion of net income tax liabilities, and $259a $277 million of assumed contingent consideration. In 2017 and 2016, we recorded measurement period adjustmentspayment to the estimated fair values initially recorded in 2016, which resulted in a reduction in Identifiable intangible assets of approximately $1.0 billion with a corresponding change to Goodwill and net income tax liabilities. The measurement period adjustments were recorded to better reflect market participant assumptions about facts and circumstances existing as of the acquisition date. The third quarter and first nine months of 2017 results include a decrease of approximately $38 million to Amortization of intangible assets which reflects the cumulative pre-tax impact of the measurement period adjustments to Identifiable intangible assets that were amortized to the income statement since the acquisition date. The measurement period adjustments did not result from intervening events subsequent to the acquisition date. The final allocation of the consideration transferred to the assets acquired and the liabilities assumed has been completed.
Bamboo Therapeutics, Inc. (IH)
On August 1, 2016, we acquired all the remaining equity in Bamboo, a privately-held biotechnology company focused on developing gene therapies for the potential treatment of patients with certain rare diseases relating to neuromuscular conditions and those affecting the central nervous system, for $150 million, plus potential milestone payments of up to $495 million contingent upon the progression of key assets through development, regulatory approval and commercialization. The total fair value of the consideration transferred for Bamboo was approximately $343 million, including cash of $130 million ($101 million, net of cash acquired), contingent consideration of $167 million, consisting of milestone payments, and the fair value of Pfizer’s previously held equity interest in Bamboo of $45 million. We previously purchased a minority stake in BambooViatris made in the first quarter of 2021 pursuant to terms of the separation agreement, which is reported in 2016Other financing activities, net.
Discontinued operations—net of tax for the three and nine months ended October 3, 2021 reflects pre-tax loss from discontinued operations of $17 million and $353 million, respectively, and primarily includes pre-disposal operations related to our former Meridian subsidiary including a payment of approximately $43 million. Upon acquiring the remaining interest in Bamboo$345 million pre-tax expense in the third quarterfirst nine months of 2016, we recognized2021 to resolve a gainMulti-District Litigation relating to EpiPen against the Company in the U.S. District Court for the District of $2 million on our existing investmentKansas (prior to presenting Meridian as discontinued operations, this EpiPen litigation amount was included in Other (income)/deductions––net over the one- year allocation period). This acquisition provides us with several clinicalFor the three and pre-clinical assetsnine months ended October 2, 2022, Discontinued operations—net of tax reflects pre-tax loss of $15 million and pre-tax income of $9 million from discontinued operations, respectively, and relates to post-closing adjustments for previously divested businesses primarily for tax and legal matters.
C. Equity-Method Investment
Haleon/Consumer Healthcare JV––On July 31, 2019, we completed a transaction in which we and GSK combined our respective consumer healthcare businesses into a new JV that complementoperated globally under the GSK Consumer Healthcare name. In exchange for the contribution of our rare disease portfolio, an advanced recombinant AAV vector designconsumer healthcare business to the JV, we received a 32% equity stake in the new company and production technology, andGSK owned the remaining 68%. On July 18, 2022, GSK completed a fully functional Phase I/II gene therapy manufacturing facility. Bamboo is now a wholly-owned subsidiary of Pfizer. In connection with this acquisition, we recorded $330 million of Identifiable intangible assets, consisting entirely of IPR&D. We also recorded $142 million of Goodwill and $94 million of net deferred tax liabilities. The final allocationdemerger of the consideration transferredConsumer Healthcare JV which became Haleon, an independent, publicly traded company listed on the London Stock Exchange that holds the joint Consumer Healthcare business of GSK and Pfizer following the demerger. We continue to own 32% of the assets acquiredordinary shares of Haleon after the demerger. We continue to account for our interest in Haleon as an equity-method investment. The carrying value of ourinvestment in Haleon as of October 2, 2022 and in the liabilities assumed has been completed.Consumer Healthcare JV as of December 31, 2021 is $9.6 billion and $16.3 billion, respectively, and is reported in

Anacor Pharmaceuticals, Inc. (IH)
On June 24, 2016, we acquired Anacor for $99.25 per share.Equity-method investments. The total fair value of consideration transferred for Anacorour investment in Haleon as of October 2, 2022, based on quoted market prices of Haleon stock, was $9.1 billion. Haleon/the Consumer Healthcare JV is a foreign investee whose reporting currency is the U.K. pound, and therefore we translate its financial statements into U.S. dollars and recognize the impact of foreign currency translation adjustments in the carrying value of our investment and in other comprehensive income. The decrease in the value of our investment from December 31, 2021 is primarily due to dividends totaling approximately $4.9$4.5 billion, of which cash flows of $4.0 billion are included in Net cash used in investing activities from continuing operations and $584 million are included in Net cash provided by operating activities from continuing operations, as well as $2.4 billion in cash ($4.5 billion netpre-tax foreign currency translation adjustments (see Note 6), partially offset by our share of cash acquired), plus $698 million debt assumed. Anacor is nowthe JV’s earnings. We record our share of earnings from Haleon/the Consumer Healthcare JV on a wholly-owned subsidiaryquarterly basis on a one-quarter lag in Other (income)/deductions––net. Our total share of Pfizer. Anacor is a biopharmaceutical company focused on novel small-molecule therapeutics derived from its boron chemistry platform. Anacor’s crisaborole, a non-steroidal topical PDE-4 inhibitor with anti-inflammatory properties, was approved by the FDA on December 14, 2016 underJV’s earnings generated in the trade name, Eucrisa. In connection with this acquisition,second quarter of 2022, which we recorded $698 million asin our operating results in the fair valuethird quarter of notes payable2022, was $67 million. Our total share of the JV’s earnings generated in cash,the fourth quarter of 2021 and first six months of 2022, which we recorded $4.9 billion in Identifiable intangible assets,our operating results in the first nine months of
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PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

primarily consisting of $4.8 billion of IPR&D, and recorded $646 million of Goodwill and $346 million of net income tax liabilities. The final allocation2022, was $402 million. Our total share of the consideration transferred toJV’s earnings generated in the assets acquired and the liabilities assumed has been completed.

B. Salesecond quarter of Hospira Infusion Systems Net Assets to ICU Medical, Inc. (EH)
On October 6, 2016, we announced that we entered into a definitive agreement under which ICU Medical would acquire all of our global infusion therapy net assets, HIS, for approximately $1 billion in cash and ICU Medical common stock. HIS includes IV pumps, solutions, and devices.As a result of the performance of HIS relative to ICU Medical’s expectations, on January 5, 2017, we entered into a revised agreement with ICU Medical under which ICU Medical would acquire HIS for up to approximately $900 million, composed of cash and contingent cash consideration, ICU Medical common stock and seller financing.
The revised transaction closed on February 3, 2017. At closing, under the terms of the revised agreement, we received 3.2 million newly issued shares of ICU Medical common stock (as originally agreed),2021, which we initially valued at approximately $428 million (based upon the closing price of ICU Medical common stock on the closing date less a discount for lack of marketability) and which are reported as available-for-sale equity securities at fair valuerecorded in Long-term investments on the condensed consolidated balance sheet as of October 1, 2017, a promissory note in the amount of $75 million, which is reported in Other noncurrent assets on the condensed consolidated balance sheet as of October 1, 2017, and net cash of approximately $200 million before customary adjustments for net working capital, which is reported in Other investing activities, net on the condensed consolidated statement of cash flows for the nine months ended October 1, 2017. In addition, we are entitled to receive a contingent amount of up to an additional $225 million in cash based on ICU Medical’s achievement of certain cumulative performance targets for the combined company through December 31, 2019. After receipt of the ICU Medical shares, we own approximately 16% of ICU Medical. We have agreed to certain restrictions on transfer of our ICU Medical shares for 18 months after the closing date. The promissory note from ICU Medical has a term of three years and bears interest at LIBOR plus 2.25% for the first year and LIBOR plus 2.50% for the second and third years. We recognized pre-tax income of approximately $12 millionoperating results in the third quarter of 20172021, was $106 million. Our total share of the JV’s earnings generated in the fourth quarter of 2020 and pre-tax lossesfirst six months of approximately $52 million2021, which we recorded in our operating results in the first nine months of 20172021, was $324 million. In the third quarter and first nine months of 2022, our equity-method income included in Other (income)/deductions––net representingalso includes charges of $118 million and $119 million, respectively, primarily for adjustments to amounts previously recordedour equity-method basis differences related to write down the HIS net assets toseparation of Haleon/the GSK Consumer Healthcare JV from GSK. The total amortization and adjustment of basis differences resulting from the excess of the initial fair value less costs to sell. For additional information, see Note 4 and Notes to Consolidated Financial Statements––Note 2. Acquisitions, Sale of Hospira Infusion Systems Net Assets, Collaborative Arrangement and Equity-Method Investments inPfizer’s 2016 Financial Report.
While we have receivedour investment over the full purchase price excludingunderlying equity in the contingent amount ascarrying value of the February 3, 2017 closing, the sale of the HIS net assets was not completed in certain non-U.S. jurisdictions due to temporary regulatory or operational constraints. In these jurisdictions, which represent a relatively small portion of the HIS net assets, we have continued to operate the net assets forof the net economic benefit of ICU Medical, and we are indemnified by ICU Medical against risks associated with such operations during the interim period, subjectJV was not material to our obligations under the definitive transaction agreements. Salesresults of the HIS net assets have occurred in certain of these jurisdictions as of October 1, 2017 and we expect the sale of the HIS net assetsoperations in the remaining jurisdictions to be fully completed by thethird quarter and first quarternine months of 2018. As such, and as we have already received all of the non-contingent proceeds from the sale and ICU Medical is contractually obligated to complete the transaction, we have treated these jurisdictions as sold for accounting purposes.2021. See Note 4.
Summarized financial information for our equity method investee, the Consumer Healthcare JV, for the three and nine months ending June 30, 2022, the most recent period available, and for the three and nine months ending June 30, 2021, is as follows:
Three Months EndedNine Months Ended
(MILLIONS)June 30,
2022		June 30,
2021		June 30,
2022		June 30,
2021
Net sales$3,218 $3,152 $10,164 $9,428 
Cost of sales(1,196)(1,180)(3,830)(3,536)
Gross profit$2,022 $1,972 $6,334 $5,892 
Income from continuing operations226 348 1,303 1,064 
Net income226 348 1,303 1,064 
Income attributable to shareholders210 330 1,256 1,012 
In connection with GSK’s previously announced planned demerger of at least 80% of GSK’s 68% equity interest in the sale transaction, we entered into certain transitional agreements designedConsumer Healthcare JV, in March 2022 the Consumer Healthcare JV completed its offering of a total aggregate principal amount of $8.75 billion in U.S. dollar-denominated senior notes of various maturities, €2.35 billion in euro-denominated senior notes of various maturities and £700 million in U.K. pound-denominated senior notes of various maturities (collectively, the “notes”). The notes were guaranteed by GSK generally up to facilitateand excluding the orderly transitiondate of the HISdemerger (the “Guarantee Assumption Date”). We agreed to indemnify GSK for 32% (representing our pro rata equity interest in the Consumer Healthcare JV) of any amount payable by GSK pursuant to its guarantee of the notes. Our indemnity was provided solely for the benefit of GSK. Neither we nor any of our subsidiaries were an issuer or guarantor of any of the notes.
Following its issuance of the notes in March 2022, which fell in our international second quarter of 2022, the Consumer Healthcare JV loaned to us and GSK the net assetsproceeds received from the notes on a pro rata equity ownership basis, for which we received a loan of £2.9 billion ($3.7 billion as of the end of our second quarter of 2022), at an interest rate of 1.365% per annum payable semi-annually in arrears. In conjunction with the demerger, we received £3.5 billion ($4.2 billion) in dividends from the JV in July 2022, of which $4.0 billion related to ICU Medical. These agreements primarily relate to administrative services,a one-time pre-separation dividend, which are generally to be provided for a perioddecreased the carrying value of up to 24 months afterour investment (as discussed above). Simultaneous with the closing date. We will also manufacturereceipt of the dividends, we repaid the £2.9 billion loan from the JV. GSK similarly received pro rata dividends and supply certain HIS products for ICU Medical and ICU Medical will manufacture and supply certain retained Pfizer products for us after closing, generally for a termsimultaneously repaid its pro rata loan from the JV. In conjunction with these transactions, our indemnification of five years. These agreements are not material to Pfizer and none confers upon us the ability to influence the operating and/or financial policies of ICU Medical subsequent to the sale.GSK’s guarantee discussed above was terminated.
C. CollaborationD. Collaborative Arrangement

Collaboration with Merck & Co., Inc.
Biohaven––In 2013,November 2021, we entered into a worldwide, except for Japan, collaboration and license agreement and related sublicense agreement with Merck for the developmentBiohaven and commercializationcertain of ertugliflozin (PF-04971729), our oral sodium glucose cotransporter (SGLT2) inhibitorits subsidiaries to commercialize rimegepant and zavegepant for the treatment and prevention of type 2 diabetes currently undermigraines outside of the U.S., subject to regulatory review.approval. Under the terms of the agreement, Biohaven would lead R&D globally and we are collaboratingwould have the exclusive right to commercialization globally, outside of the U.S. Upon the closing of the transaction on January 4, 2022, we paid Biohaven $500 million, including an upfront payment of $150 million and an equity investment of $350 million. We recognized $263 million for the upfront payment and premium paid on our equity investment in Acquired in-process research and development expenses. In October 2022, within our fiscal fourth quarter of 2022, we acquired all outstanding common shares of Biohaven not already owned by us for $148.50 per share, in cash, for payments of approximately $11.5 billion.
Note 3. Restructuring Charges and Other Costs Associated with Merck onAcquisitions and Cost-Reduction/Productivity Initiatives
A. Transforming to a More Focused Company Program
With the clinical developmentformation of ertugliflozin,the Consumer Healthcare JV in 2019 and ertugliflozin-containing fixed-dose combinations with metforminthe spin-off of our Upjohn Business in the fourth quarter of 2020, Pfizer has transformed into a focused, global leader in science-based innovative medicines and Januvia (sitagliptin) tablets.vaccines. We continue our
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PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

efforts to ensure our cost base and support model align appropriately with our operating structure. While certain direct costs transferred to the Consumer Healthcare JV, and to the Upjohn Business in connection with the spin-off, there are indirect costs which did not transfer. This program is primarily composed of the following three initiatives:
•We are taking steps to restructure our corporate enabling functions to appropriately support our business, R&D and PGS platform functions. We expect costs, primarily related to restructuring our corporate enabling functions, of $1.8 billion, to be incurred primarily from 2020 through 2022, with substantially all costs to be cash expenditures. Actions include, among others, changes in location of certain activities, expanded use and co-location of centers of excellence and shared services, and increased use of digital technologies. The associated actions and the specific costs primarily include severance and benefit plan impacts, exit costs as well as associated implementation costs.
•In addition, we are transforming our commercial go-to market model in the way we engage patients and physicians. We have also made several organizational changes in the third quarter of 2022 to further transform our operations to better leverage our expertise in certain areas and in anticipation of potential future new product launches (see Note 1A). We expect costs of $1.4 billion to be incurred primarily from 2020 through 2022, with all costs to be cash expenditures. Actions include, among others, centralization of certain activities and enhanced use of digital technologies. The costs for this effort primarily include severance and associated implementation costs.
•We are also optimizing our manufacturing network under this program and incurring one-time costs for cost-reduction initiatives related to our manufacturing operations. We expect to incur costs of $800 million to be incurred primarily from 2020 through 2023, with approximately 25% of the costs to be non-cash. The costs for this effort include, among other things, severance costs, implementation costs, product transfer costs, site exit costs, as well as accelerated depreciation.
The program costs discussed above may be rounded and represent approximations.
From the start of this program in the fourth quarter of 2019 through October 2, 2022, we incurred costs of $2.8 billion, of which $1.1 billion ($862 million of restructuring charges) is associated with Biopharma.
B. Key Activities
The following summarizes acquisitions and cost-reduction/productivity initiatives costs and credits:
Three Months EndedNine Months Ended
(MILLIONS)October 2,
2022		October 3,
2021		October 2,
2022		October 3,
2021
Restructuring charges/(credits):    
Employee terminations$158 $630 $293 $649 
Asset impairments17 10 44 7 
Exit costs/(credits)2 3 31 — 
Restructuring charges/(credits)(a)
177 643 368 656 
Transaction costs(b)
— — 42 — 
Integration costs and other(c)
22 3 170 11 
Restructuring charges and certain acquisition-related costs199 646 580 667 
Net periodic benefit costs/(credits) recorded in Other (income)/deductions––net
— (63)(5)(51)
Additional depreciation––asset restructuring recorded in our condensed consolidated statements of income as follows(d):
    
Cost of sales7 19 22 53 
Selling, informational and administrative expenses1 8 1 23 
Total additional depreciation––asset restructuring7 27 22 76 
Implementation costs recorded in our condensed consolidated statements of income as follows(e):
    
Cost of sales14 8 40 29 
Selling, informational and administrative expenses136 142 344 287 
Research and development expenses— — — 1 
Total implementation costs150 151 384 316 
Total costs associated with acquisitions and cost-reduction/productivity initiatives$357 $760 $982 $1,008 
(a)Primarily represents cost reduction initiatives. Restructuring charges/(credits) associated with Biopharma: charges of $62 million and $108 million for the three and nine months ended October 2, 2022, respectively, and charges of $616 million and $617 million for the three and nine months ended October 3, 2021, respectively.
(b)Represents external costs for banking, legal, accounting and other similar services.
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PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(c)Represents external, incremental costs directly related to integrating acquired businesses, such as expenditures for consulting and the integration of systems and processes, and certain other qualifying costs. In the three and nine months ended October 2, 2022, integration costs and other were mostly related to our acquisition of Arena, including $138 million in payments to Arena employees in the first quarter of 2022 for the fair value of previously unvested long-term incentive awards. See 2017Note 2A.
(d), Represents the impact of changes in the estimated useful lives of assets involved in restructuring actions.
(e)we received a $90 million milestone payment from Merck upon the FDA’s acceptanceRepresents external, incremental costs directly related to implementing our non-acquisition-related cost-reduction/productivity initiatives.
The following summarizes the components and changes in restructuring accruals:
(MILLIONS)Employee
Termination
Costs		Asset
Impairment
Charges		Exit CostsAccrual
Balance, December 31, 2021(a)
$1,014 $— $57 $1,071 
Provision293 44 31 368 
Utilization and other(b)
(447)(44)(80)(572)
Balance, October 2, 2022(c)
$859 $— $8 $867 
(a)Included in Other current liabilities ($816 million) and Other noncurrent liabilities ($255 million).
(b)Includes adjustments for review of the NDAs for ertugliflozinforeign currency translation.
(c)Included in Other current liabilities ($758 million) and two fixed-dose combinations (ertugliflozin plus Januvia (sitagliptin) and ertugliflozin plus metformin), which has been deferred and primarily reported in Other noncurrent liabilities and is being recognized in Other (income)/deductions––net over a multi-year period. We are eligible for additional payments associated with the achievement of future clinical, regulatory and commercial milestones. We share potential revenues and certain costs with Merck on a 60%/40% basis, with Pfizer having the 40% share.($110 million).
D. Equity-Method Investments

Note 4. Other (Income)/Deductions—Net
Investment in Hisun Pfizer Pharmaceuticals Company Limited
Components of Other (income)/deductions––net include:
 Three Months EndedNine Months Ended
(MILLIONS)October 2,
2022		October 3,
2021		October 2,
2022		October 3,
2021
Interest income$(70)$(10)$(114)$(21)
Interest expense311 325 925 975 
Net interest expense240 315 811 954 
Royalty-related income(239)(261)(628)(649)
Net (gains)/losses on asset disposals7 (1)6 (99)
Net (gains)/losses recognized during the period on equity securities(a)
112 (400)1,353 (1,601)
Income from collaborations, out-licensing arrangements and sales of compound/product rights(b)
(4)(65)(17)(317)
Net periodic benefit costs/(credits) other than service costs(306)(1,132)(294)(1,635)
Certain legal matters, net77 38 175 112 
Certain asset impairments(c)
200 — 200 — 
Haleon/Consumer Healthcare JV equity method (income)/loss(d)
51 (105)(283)(307)
Other, net(198)(84)(260)(502)
Other (income)/deductions––net$(59)$(1,696)$1,063 $(4,043)
In (a)2016,we determined that we had other-than-temporary declinesThe losses in the value of Hisun Pfizer, our 49%-owned equity-method investment in China, and, therefore, we recognized a loss of $211 million for the first nine months of 20162022 include, among other things, unrealized losses of $974 million related to investments in BioNTech, Cerevel Therapeutics Holdings, Inc. (Cerevel) and Arvinas. The gains in the third quarter and first nine months of 2021 included, among other things, unrealized gains of $420 million and $1.5 billion, respectively, related to investments in BioNTech and Cerevel.
Other (income)/deductions––net (see Note 4). (b)The declinesfirst nine months of 2021 included, among other things, $188 million of net collaboration income from BioNTech in value resulted from lower expectations asthe first quarter of 2021 related to Comirnaty.
(c)The amount in the future cash flowsthird quarter and first nine months of 2022 represents an intangible asset impairment charge associated with our Biopharma segment, representing an IPR&D asset for the unapproved indication of symptomatic dilated cardiomyopathy (DCM) due to be generated by Hisun Pfizer, primarily asa mutation of the gene encoding the lamin A/C protein (LMNA), acquired in our Array BioPharma Inc. acquisition. The intangible asset impairment charge was a result of an increase the Phase 3 trial reaching futility at a pre-planned interim analysis.
(d)See Note 2C.
Additional information about the intangible asset that was impaired during 2022 (impairment recorded in Other (income)/deductions–net) follows:
Fair Value(a)
Nine Months Ended October 2, 2022
(MILLIONS)AmountLevel 1Level 2Level 3Impairment
Intangible asset––IPR&D(b)
$— $— $— $— $200 
(a)The fair value amount is presented as of the date of impairment, as this asset is not measured at fair value on a recurring basis. See also Note 1F in risk due to the continued slowdown in the Chinese economy and changes in the expected timing and number of new product introductions by Hisun Pfizer. As of October 1, 2017, the carrying value of our investment in Hisun Pfizer is $270 million, which is included in Long-term investments2021 Form 10-K. We are continuing
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(b)Reflects an intangible asset written down to evaluate strategic alternatives with Hisun. These strategic alternatives could impactfair value in 2022. Fair value was determined using the value of our investment in Hisun Pfizer in future periods.

In valuing our investment in Hisun Pfizer, we usedincome approach, specifically the multi-period excess earnings method, also known as the discounted cash flow techniques, reflecting our best estimatemethod. We started with a forecast of all the various risks inherent in the projectedexpected net cash flows for the asset and then applied an asset-specific discount rate to arrive at a nominal terminal year growth factor.net present value amount. Some of the more significant estimates and assumptions inherent in this approach include: the amount and timing of the projected net cash flows, which includeincludes the expected impact of competitive, legal economic and/or regulatory forces on the products; the long-term growth rate, which seeks to project the sustainable growth rate over the long-term; andproduct; the discount rate, which seeks to reflect the various risks inherent in the projected cash flows, including country risk.

Investment in Laboratório Teuto Brasileiro S.A.
We entered into an agreement on June 30, 2017 to exit our investment in Teuto, a 40%-owned generics company in Brazil, and sell our 40% interest in Teuto to the majority shareholders. As part of the agreement, we have waived our option to acquire the remaining 60% of Teuto, and Teuto’s other shareholders have waived their option to sell their 60% stake in the company to us. As a result, in the second quarter of 2017, we recognized a net loss of approximately $30 million in Other (income)/deductions––net (see Note 4), which included the impairment of our equity-method investment in Teuto, the reversal of a contingent liability associated with the majority shareholders’ option to sell their 60% stake in the company to us,flows; and the recognition in earnings of the currency translation adjustment associated with the Teuto investment. The transaction closed on August 16, 2017.
In 2016, we determined that we had an other-than-temporary decline in the value of Teuto, and, therefore, we recognized a loss of $50 million for the first nine months of 2016 in Other (income)/deductions––net (see Note 4) related to our equity-method investment. The decline in value resulted from lower expectations as to the future cash flows to be generated by Teuto, primarily due to a slowdown in Brazilian economic conditions, which have been impacted by political risk, higher inflation, and the depreciation of the Brazilian real.
In valuing our investment in Teuto, we used discounted cash flow techniques, reflecting our best estimate of the various risks inherent in the projected cash flows, and a nominal terminal year growth factor. Some of the more significant estimates and assumptions inherent in this approach include: the amount and timing of the projected net cash flows, which include the expected impact of competitive, legal, economic and/or regulatory forces on the products; the long-term growthtax rate, which seeks to projectincorporate the sustainable growth rate over the long-term; and the discount rate, which seeks to reflect the various risks inherent ingeographic diversity of the projected cash flows, including country risk.
Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives

We incur significant costs in connection with acquiring, integrating and restructuring businesses and in connection with our global cost-reduction/productivity initiatives. For example:
In connection with acquisition activity, we typically incur costs associated with executing the transactions, integrating the acquired operations (which may include expenditures for consulting and the integration of systems and processes), and restructuring the combined company (which may include charges related to employees, assets and activities that will not continue in the combined company); and

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

In connection with our cost-reduction/productivity initiatives, we typically incur costs and charges associated with site closings and other facility rationalization actions, workforce reductions and the expansion of shared services, including the development of global systems.

All of our businesses and functions may be impacted by these actions, including sales and marketing, manufacturing and R&D, as well as groups such as information technology, shared services and corporate operations.

In connection with our acquisition of Hospira, we are focusing our efforts on achieving an appropriate cost structure for the combined company. For up to a three-year period post-acquisition, we expect to incur costs of approximately $1 billion(not including costs of $215 million for full-year 2015 associated with the return of acquired IPR&D rights as described in the Current-Period Key Activities section of Notes to Consolidated Financial Statements––Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives in our 2016 Financial Report) associated with the integration of Hospira.flows.
In 2016, we substantially completed previously disclosed cost-reduction initiatives begun in 2014 associated with our global commercial structure reorganization, manufacturing plant network rationalization and optimization initiatives, and additional cost-reduction/productivity initiatives across the enterprise.
As a result of the evaluation performed in connection with our decision in September 2016 to not pursue, at that time, splitting IH and EH into two separate publicly-traded companies, we identified new opportunities to potentially achieve greater optimization and efficiency to become more competitive in our business. Therefore, in early 2017, we initiated new enterprise-wide cost reduction/productivity initiatives, which we expect to substantially complete by the end of 2019. These initiatives will encompass all areas of our cost base and will include:
Optimization of our manufacturing plant network to support IH and EH products and pipelines. During 2017-2019, we expect to incur costs of approximately $800 million related to this initiative. Through October 1, 2017, we incurred approximately $122 million associated with this initiative.
Activities in non-manufacturing related areas, which include further centralization of our corporate and platform functions, as well as other activities where opportunities are identified. During 2017-2019, we expect to incur costs of approximately $200 million related to this initiative. Through October 1, 2017, we incurred approximately $131 million associated with this initiative.
The costs expected to be incurred during 2017-2019, of approximately $1.0 billion for the above-mentioned programs (but not including expected costs associated with the Hospira integration), include restructuring charges, implementation costs and additional depreciation––asset restructuring. Of this amount, we expect that about 20% of the total charges will be non-cash.
Current-Period Key Activities

For the first nine months of 2017, we incurred costs of $253 million associated with the 2017-2019 program, $238 million associated with the integration of Hospira and $110 million associated with all other acquisition-related initiatives.

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The following table provides the components of costs associated with acquisitions and cost-reduction/productivity initiatives:
  Three Months Ended Nine Months Ended
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
 October 1,
2017
 October 2,
2016
Restructuring charges(a):
  
  
  
  
Employee terminations $(20) $347
 $9
 $464
Asset impairments(b)
 101
 27
 126
 45
Exit costs 10
 29
 16
 64
Total restructuring charges 91
 404
 150
 574
Transaction costs(c)
 (14) 54
 4
 114
Integration costs(d)
 73
 74
 224
 300
Restructuring charges and certain acquisition-related costs 149
 531
 377
 988
Additional depreciation––asset restructuring recorded in our condensed consolidated statements of income as follows(e):
  
  
  
  
Cost of sales 39
 46
 74
 145
Research and development expenses —
 1
 —
 5
Total additional depreciation––asset restructuring 39
 47
 74
 151
Implementation costs recorded in our condensed consolidated statements of income as follows(f):
  
  
  
  
Cost of sales 26
 46
 77
 127
Selling, informational and administrative expenses 22
 23
 46
 56
Research and development expenses 9
 8
 26
 17
Other (income)/deductions––net —
 1
 —
 2
Total implementation costs 57
 78
 150
 202
Total costs associated with acquisitions and cost-reduction/productivity initiatives $245
 $655
 $601
 $1,341

(a)
In the third quarter and first nine months of 2017, restructuring charges are primarily associated with our acquisitions of Hospira and Medivation, as well as cost-reduction and productivity initiatives not associated with acquisitions. In the third quarter and first nine months of 2016, restructuring charges are largely associated with cost-reduction and productivity initiatives not associated with acquisitions, as well as our acquisitions of Hospira and Medivation. In the third quarter and first nine months ended October 1, 2017, Employee terminations primarily include revisions of our estimates of severance benefits. Employee termination costs are generally recorded when the actions are probable and estimable and include accrued severance benefits, pension and postretirement benefits, many of which may be paid out during periods after termination.
The restructuring activities for 2017 are associated with the following:
•
For the third quarter of 2017, IH ($4 million); EH ($1 million); WRD/GPD ($15 million); manufacturing operations ($47 million); and Corporate ($25 million).
•
For the first nine months of 2017, IH ($10 million); EH ($9 million income); WRD/GPD ($29 million); manufacturing operations ($70 million); and Corporate ($51 million).
The restructuring activities for 2016 are associated with the following:
•
For the third quarter of 2016, IH ($148 million); EH ($28 million); WRD/GPD ($52 million); manufacturing operations ($108 million); and Corporate ($67 million).
•
For the first nine months of 2016, IH ($162 million); EH ($19 million); WRD/GPD ($104 million); manufacturing operations ($181 million); and Corporate ($107 million).
(b)
The asset impairment charges for the third quarter and the first nine months of 2017 are largely associated with our acquisitions of Hospira and Medivation.
(c)
Transaction costs represent external costs for banking, legal, accounting and other similar services, which in the third quarter of 2017 reflect the reversal of an accrual related to the acquisition of Medivation. Transaction costs for the first nine months of 2017 are directly related to our acquisitions of Hospira, Anacor and Medivation. Transaction costs in the third quarter of 2016 were mostly related to the Medivation acquisition, and in the first nine months of 2016, were mostly related to the Medivation and Anacor acquisitions, and our terminated transaction with Allergan.
(d)
Integration costs represent external, incremental costs directly related to integrating acquired businesses, and primarily include expenditures for consulting and the integration of systems and processes. In the third quarter and first nine months of 2017, integration costs primarily relate to our acquisitions of Hospira and Medivation. The first nine months of 2017 also include a net gain of $12 million related to the settlement of the Hospira U.S. qualified defined benefit pension plan (see Note 10). In the third quarter of 2016, integration

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

costs were mostly related to our acquisition of Hospira, and in the first nine months of 2016, integration costs were mostly related to our acquisition of Hospira and our terminated transaction with Allergan.
(e)
Additional depreciation––asset restructuring represents the impact of changes in the estimated useful lives of assets involved in restructuring actions.
(f)
Implementation costs represent external, incremental costs directly related to implementing our non-acquisition-related cost-reduction/productivity initiatives.
The following table provides the components of and changes in our restructuring accruals:
(MILLIONS OF DOLLARS) 
Employee
Termination Costs

 
Asset
Impairment Charges

 Exit Costs
 Accrual
Balance, December 31, 2016(a)
 $1,547
 $—
 $36
 $1,583
Provision 9
 126
 16
 150
Utilization and other(b)
 (401) (126) (24) (551)
Balance, October 1, 2017(c)
 $1,154
 $—
 $28
 $1,182

(a)
Included in Other current liabilities ($863 million) and Other noncurrent liabilities ($720 million).
(b)
Includes adjustments for foreign currency translation.
(c)
Included in Other current liabilities ($533 million) and Other noncurrent liabilities ($650 million).
Note 4. Other (Income)/Deductions—Net
The following table provides components of Other (income)/deductions––net:
  Three Months Ended Nine Months Ended
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
 October 1,
2017
 October 2,
2016
Interest income(a)
 $(99) $(123) $(275) $(357)
Interest expense(a)
 320
 291
 940
 889
Net interest expense 220
 168
 666
 532
Royalty-related income(b)
 (140) (233) (331) (695)
Certain legal matters, net(c)
 183
 (40) 194
 494
Net gains on asset disposals(d)
 (155) (47) (349) (81)
Loss on sale and impairment on remeasurement of HIS net assets(e)
 (12) 1,422
 52
 1,422
Certain asset impairments(f)
 130
 133
 143
 1,080
Business and legal entity alignment costs(g)
 16
 69
 54
 180
Other, net(h)
 (191) (55) (445) (117)
Other (income)/deductions––net $51
 $1,417
 $(16) $2,815
(a)
Interest income decreased in the third quarter and first nine months of 2017, primarily driven by a lower investment balance. Interest expense increased in the third quarter and first nine months of 2017, primarily as a result of higher short-term interest rates, offset, in part, by the retirement of high-coupon debt and the issuance of new low-coupon debt.
(b)
Royalty-related income decreased in the third quarter and first nine months of 2017, primarily due to lower royalty income for Enbrel of $139 million and $414 million, respectively, resulting from the expiration on October 31, 2016 of the 36-month royalty period under the collaboration agreement for Enbrel in the U.S. and Canada (the collaboration period under the agreement expired on October 31, 2013), partially offset by the addition of Xtandi royalty-related income of $73 million and $160 million, respectively.
(c)
In the third quarter and first nine months of 2017, primarily includes a $94 million charge to resolve a class action lawsuit filed by direct purchasers relating to Celebrex, which is subject to the negotiation of a final settlement agreement and court approval, and a $79 million charge to reflect damages awarded by a jury in a patent matter. In the first nine months of 2016, primarily includes amounts to resolve a Multi-District Litigation relating to Celebrex and Bextra that was pending against the Company in New York federal court for $486 million, partially offset by the reversal of a legal accrual where a loss was no longer deemed probable. In addition, the first nine months of 2016 includes a settlement related to a patent matter.
(d)
In the third quarter of 2017, primarily includes gains on sales/out-licensing of product and compound rights (approximately $71 million) and gains on sales and redemptions of investments in equity and debt securities (approximately $66 million). In the first nine months of 2017, primarily includes gains on sales and redemptions of investments in equity and debt securities (approximately $183 million), gains on sales/out-licensing of product and compound rights (approximately $141 million) and a gain on sale of property (approximately $52 million), partially offset by a net loss related to the sale of our 40% ownership investment in Teuto, including the extinguishment of a put option for the remaining 60% ownership interest (approximately $30 million). In the first nine months of 2016, includes gains on sales/out-licensing of product and compound rights (approximately $49 million).

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(e)
In the third quarter and first nine months of 2017, represents adjustments to amounts previously recorded to write down the HIS net assets to fair value less costs to sell related to the sale of HIS net assets to ICU Medical. In the third quarter and first nine months of 2016, represents a charge related to the write-down of the HIS net assets to fair value less estimated costs to sell.
(f)
In the third quarter and first nine months of 2017, primarily includes an intangible asset impairment charge of $127 million related to developed technology rights, acquired in connection with our acquisition of Hospira, for a generic sterile injectable product for the treatment of edema associated with certain conditions. The intangible asset impairment charge for the third quarter and first nine months of 2017 is associated with EH and reflects, among other things, updated commercial forecasts and an increased competitive environment. In the third quarter of 2016, primarily includes intangible asset impairment charges of $126 million, reflecting $97 million of sterile injectable IPR&D compounds acquired in connection with our acquisition of InnoPharma and $29 million of other IPR&D assets acquired in connection with our acquisition of King in 2011. The intangible asset impairment charges for the third quarter of 2016 are associated with the following: EH ($97 million) and IH ($29 million). In the first nine months of 2016, primarily includes intangible asset impairment charges of $767 million, reflecting (i) $331 million related to developed technology rights for a generic injectable antibiotic product for the treatment of bacterial infections; and (ii) $265 million related to an IPR&D compound for the treatment of anemia, both acquired in connection with our acquisition of Hospira; (iii) $97 million of sterile injectable IPR&D compounds acquired in connection with our acquisition of InnoPharma; and (iv) $74 million of other IPR&D assets, $45 million of which were acquired in connection with our acquisition of Hospira and $29 million of which were acquired in connection with our acquisition of King in 2011. The intangible asset impairment charges for the first nine months of 2016 are associated with the following: EH ($738 million) and IH ($29 million). In addition, the first nine months of 2016 includes an impairment loss of $211 million related to Pfizer’s 49%-owned equity-method investment with Hisun in China, Hisun Pfizer, and an impairment loss of $50 million related to Pfizer’s 40%-owned equity-method investment in Teuto. For additional information concerning Hisun Pfizer and Teuto, see Note 2D.
The intangible asset impairment charge for 2016 for the IPR&D compound for the treatment of anemia acquired in connection with our acquisition of Hospira reflects, among other things, the impact of regulatory delays, including delays resulting from a court ruling, which required a 180-day waiting period after approval before a biosimilar product can be launched. The intangible asset impairment charges for 2016 for the sterile injectable IPR&D compounds acquired in connection with our acquisition of InnoPharma reflect, among other things, the impact of portfolio prioritization decisions and decreased commercial profiles of certain compounds. The intangible asset impairment charges for 2016 for developed technology rights and other IPR&D assets acquired in connection with our acquisition of Hospira reflect, among other things, the impact of new scientific findings, updated commercial forecasts, changes in pricing, and an increased competitive environment. The intangible asset impairment charges for 2016 for other IPR&D assets acquired in connection with our acquisition of King reflect changes in the competitive environment.
(g)
In the third quarter and first nine months of 2017 and 2016, represents expenses for changes to our infrastructure to align our commercial operations, including costs to internally separate our businesses into distinct legal entities, as well as to streamline our intercompany supply operations to better support each business.
(h)
In the third quarter and first nine months of 2017, includes, among other things, dividend income of $54 million and $211 million, respectively, from our investment in ViiV, and income of $62 million from resolution of a contract disagreement. In the first nine months of 2016, includes, among other things, $150 million paid to Allergan for reimbursement of Allergan’s expenses associated with the terminated transaction and income of $116 million from resolution of a contract disagreement.
The following table provides additional information about the intangible assets that were impaired during 2017 in Other (income)/deductions––net:
  
Fair Value(a)
 
Nine Months Ended
October 1, 2017
(MILLIONS OF DOLLARS) Amount Level 1 Level 2 Level 3 Impairment
Intangible assets––Developed technology rights(b)
 $50
 $—
 $—
 $50
 $127
(a)
The fair value amount is presented as of the date of impairment, as these assets are not measured at fair value on a recurring basis.
(b)
Reflects intangible assets written down to fair value in the third quarter of 2017. Fair value was determined using the income approach, specifically the multi-period excess earnings method, also known as the discounted cash flow method. We started with a forecast of all the expected net cash flows associated with the asset and then applied an asset-specific discount rate to arrive at a net present value amount. Some of the more significant estimates and assumptions inherent in this approach include: the amount and timing of the projected net cash flows, which includes the expected impact of competitive, legal and/or regulatory forces on the product; the discount rate, which seeks to reflect the various risks inherent in the projected cash flows; and the tax rate, which seeks to incorporate the geographic diversity of the projected cash flows.


PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 5. Tax Matters

A. Taxes on Income from Continuing Operations

Our effective tax rate for continuing operations was 20.3%4.0% for the third quarter of 2017,2022, compared to 15.5%(4.2)% for the third quarter of 20162021, and was 20.1%10.5% for the first nine months of 2017,2022, compared to 14.6%7.8% for the first nine months of 2016.
2021. The higher effective tax raterates for the third quarter and first nine months of 20172022, compared to the third quarter and first nine months of 2021, were mainly due to the non-recurrence of certain initiatives executed in comparisonthe third quarter of 2021 associated with our investment in the Consumer Healthcare JV with GSK, partially offset by tax benefits in the third quarter of 2022 related to global income tax resolutions in multiple tax jurisdictions spanning multiple tax years that included the closing of U.S. IRS audits covering five tax years.
We elected, with the same periodfiling of our 2018 U.S. Federal Consolidated Income Tax Return, to pay our initial estimated $15 billion repatriation tax liability on accumulated post-1986 foreign earnings over eight years through 2026. The fourth annual installment of this liability was paid by its April 18, 2022 due date. The fifth annual installment is due April 18, 2023 and is reported in current 2016Income taxes payable was primarily due to:as of October 2, 2022
an unfavorable change. The remaining liability is reported in the jurisdictional mix of earningsnoncurrent Other taxes payable. Our obligations may vary as a result of operating fluctuationschanges in the normal course of business,
partially offset by:
the non-recurrence of the unfavorable tax effects of an impairment charge related to the write-down of the HIS net assets to fair value less estimated costs to sell, mainly related to goodwill, which is not deductible for tax purposes, and the jurisdictional mix of intangible assets.
The higher effective tax rate for the first nine months of 2017 in comparison with the same period in 2016 was primarily due to:
the non-recurrence of benefits related to the final resolution of an agreement in principle reached in February 2016 and finalized in April 2016 to resolve certain claims related to Protonix, which resulted in the receipt of information that raised our initial assessment in 2015 of the likelihood of prevailing on the technical merits of our tax position;
the non-recurrence of benefits associated with our Venezuela operations; as well as
a decrease in benefits associated with the resolution of certainuncertain tax positions pertaining to prior years primarily with variousand/or availability of attributes such as foreign tax authorities, and the expiration of certain statutes of limitations,
partially offset by:
the change in the jurisdictional mix of earnings as a result of operating fluctuations in the normal course of business; as well as
the non-recurrence of the unfavorable tax effects of an impairment charge related to the write-down of HIS net assets to fair value less estimated costs to sell, mainly related to goodwill, which is not deductible for tax purposes, and the jurisdictional mix of intangible assets.other credit carryforwards.
B. Tax Contingencies

We are subject to income tax in many jurisdictions, and a certain degree of estimation is required in recording the assets and liabilities related to income taxes. All of our tax positions are subject to audit by the local taxing authorities in each tax jurisdiction. These tax audits can involve complex issues, interpretations and judgments and the resolution of matters may span multiple years, particularly if subject to negotiation or litigation. Our assessments are based on estimates and assumptions that have been deemed reasonable by management, but our estimates of unrecognized tax benefits and potential tax benefits may not be representative of actual outcomes, and variation from such estimates could materially affect our financial statements in the period of settlement or when the statutes of limitations expire, as we treat these events as discrete items in the period of resolution.

The U.S. is one of our major tax jurisdictions, and we are regularly audited by the IRS:
IRS. During the third quarter of 2022, Pfizer reached resolution of disputed issues at the IRS Independent Office of Appeals, thereby settling all issues related to U.S. tax returns of Pfizer for the years 2011-2015. With respect to Pfizer, the IRS has issued a Revenue Agent’s Report (RAR) for tax years 2009-2010. We2016-2018 are not in agreement with the RAR and are currently appealing certain disputed issues. Tax years 2011-2013 are currently under audit. Tax years 2014-20172019-2022 are open but not under audit. All other tax years are closed.
With respect to Hospira, the federal income tax audit for tax years 2012-2013 was effectively settled in the third quarter of 2017. The IRS is currently auditing tax year 2014 through short-year 2015. All other tax years are closed. The tax years under audit for Hospira are not considered material to Pfizer.
With respect to Anacor and Medivation, the open tax years are not considered material to Pfizer.
In addition to the open audit years in the U.S., we have open audit years in othercertain major international tax jurisdictions such as Canada (2010-2017), Japan (2015-2017), Europe (2011-2017, primarily reflecting Ireland, the United Kingdom, France, Italy, Spain and Germany), Latin America (1998-2017, primarily reflecting Brazil) and Puerto Rico (2010-2017).dating back to 2011.
For additional information, see Note 5D in our 2021 Form 10-K.
16

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

C. Tax Provision/(Benefit) on Other Comprehensive IncomeIncome/(Loss)
The following table provides the components of Tax provision/(benefit) on other comprehensive income:
  Three Months Ended Nine Months Ended
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
 October 1,
2017
 October 2,
2016
Foreign currency translation adjustments, net(a)
 $(62) $—
 $(192) $(15)
Unrealized holding losses on derivative financial instruments, net 28
 —
 30
 (192)
Reclassification adjustments for realized (gains)/losses (29) 32
 (169) 81
  (1) 32
 (139) (112)
Unrealized holding gains on available-for-sale securities, net 37
 40
 93
 106
Reclassification adjustments for realized gains (49) (14) (45) (16)
  (12) 26
 47
 90
Benefit plans: actuarial losses, net (37) (31) (15) (39)
Reclassification adjustments related to amortization 60
 47
 152
 140
Reclassification adjustments related to settlements, net 22
 10
 30
 27
Other (33) 14
 (46) 5
  11
 40
 121
 133
Benefit plans: prior service (costs)/credits and other, net —
 35
 —
 66
Reclassification adjustments related to amortization (17) (17) (50) (47)
Reclassification adjustments related to curtailments, net (1) (3) (5) (5)
Other 1
 2
 1
 1
  (17) 18
 (55) 15
Tax provision/(benefit) on other comprehensive income $(80) $116
 $(218) $111

(a)
Taxes are not provided for foreign currency translation adjustments relating to investments in international subsidiaries that will be held indefinitely.
Components of Tax provision/(benefit) on other comprehensive income/(loss) include:
Three Months EndedNine Months Ended
(MILLIONS)October 2,
2022		October 3,
2021		October 2,
2022		October 3,
2021
Foreign currency translation adjustments, net(a)
$20 $(32)$(165)$(30)
Unrealized holding gains/(losses) on derivative financial instruments, net47 21 177 28 
Reclassification adjustments for (gains)/losses included in net income(72)13 (97)48 
(25)34 80 76 
Unrealized holding gains/(losses) on available-for-sale securities, net(97)(33)(175)(16)
Reclassification adjustments for (gains)/losses included in net income76 1 137 (22)
(21)(32)(38)(37)
Reclassification adjustments related to amortization of prior service costs and other, net(7)(22)(23)(39)
Reclassification adjustments related to curtailments of prior service costs and other, net— (14)(3)(15)
(8)(36)(26)(54)
Tax provision/(benefit) on other comprehensive income/(loss)$(33)$(65)$(149)$(44)
(a)Taxes are not provided for foreign currency translation adjustments relating to investments in international subsidiaries that we intend to hold indefinitely.
Note 6. Accumulated Other Comprehensive Loss, Excluding Noncontrolling Interests
The following summarizes the changes, net of tax, in Accumulated other comprehensive loss:
 Net Unrealized Gains/(Losses)Benefit Plans 
(MILLIONS)
Foreign Currency Translation Adjustments(a)
Derivative Financial InstrumentsAvailable-For-Sale SecuritiesPrior Service (Costs)/Credits and OtherAccumulated Other Comprehensive Income/(Loss)
Balance, December 31, 2021$(6,172)$119 $(220)$377 $(5,897)
Other comprehensive income/(loss)(2,373)391 (265)(81)(2,328)
Balance, October 2, 2022$(8,545)$509 $(485)$296 $(8,225)
(a)Amounts do not include foreign currency translation adjustments attributable to noncontrolling interests. Foreign currency translation adjustments include net losses related to our equity method investment in Haleon/the Consumer Healthcare JV (see Note 2C)and the impact of our net investment hedging program.

17
The following table provides the changes, net of tax, in Accumulated other comprehensive loss:
  Net Unrealized Gains/(Losses) Benefit Plans  
(MILLIONS OF DOLLARS) Foreign Currency Translation Adjustments
 Derivative Financial Instruments
 Available-For-Sale Securities
 Actuarial Gains/(Losses)
 Prior Service (Costs)/Credits and Other
 Accumulated Other Comprehensive Income/(Loss)
Balance, December 31, 2016 $(6,659) $348
 $(131) $(5,473) $879
 $(11,036)
Other comprehensive income/(loss)(a)
 1,638
 (403) 470
 263
 (96) 1,872
Balance, October 1, 2017 $(5,021) $(55) $339
 $(5,210) $783
 $(9,164)
(a)
Amounts do not include foreign currency translation adjustments attributable to noncontrolling interests of $16 million income for the first nine months of 2017.

As of October 1, 2017, with respect to derivative financial instruments, the amount of unrealized pre-tax net losses on derivative financial instruments estimated to be reclassified into income within the next 12 months is approximately $154 million, which is expected to be offset primarily by gains related to available-for-sale securities and gains resulting from reclassification adjustments related to foreign currency exchange-denominated forecasted intercompany inventory sales.

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 7. Financial Instruments

A. Selected Fair Value Measurements

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis and Fair Value Hierarchy, using a Market Approach:
October 2, 2022December 31, 2021
(MILLIONS)TotalLevel 1Level 2TotalLevel 1Level 2
Financial assets:
Short-term investments
Equity securities with readily determinable fair values:
Money market funds$12,154 $— $12,154 $5,365 $— $5,365 
Available-for-sale debt securities:
Government and agency—non-U.S.15,885 — 15,885 17,318 — 17,318 
Government and agency—U.S.2,931 — 2,931 4,050 — 4,050 
Corporate and other1,361 — 1,361 647 — 647 
20,176 — 20,176 22,014 — 22,014 
Total short-term investments32,330 — 32,330 27,379 — 27,379 
Other current assets
Derivative assets:
Interest rate contracts9 — 9 4 — 4 
Foreign exchange contracts1,950 — 1,950 704 — 704 
Total other current assets1,959 — 1,959 709 — 709 
Long-term investments
Equity securities with readily determinable fair values(a)
2,972 2,960 12 3,876 3,849 27 
Available-for-sale debt securities:
Government and agency—non-U.S.285 — 285 465 — 465 
Government and agency—U.S.— — — 6 — 6 
Corporate and other73 — 73 50 — 50 
358 — 358 521 — 521 
Total long-term investments3,330 2,960 370 4,397 3,849 548 
Other noncurrent assets
Derivative assets:
Interest rate contracts— — — 16 — 16 
Foreign exchange contracts812 — 812 242 — 242 
Total derivative assets812 — 812 259 — 259 
Insurance contracts(b)
631 — 631 808 — 808 
Total other noncurrent assets1,444 — 1,444 1,067 — 1,067 
Total assets$39,063 $2,960 $36,103 $33,552 $3,849 $29,703 
Financial liabilities:
Other current liabilities
Derivative liabilities:
Foreign exchange contracts$295 $— $295 $476 $— $476 
Total other current liabilities295 — 295 476 — 476 
Other noncurrent liabilities
Derivative liabilities:
Interest rate contracts330 — 330 — — — 
Foreign exchange contracts1,153 — 1,153 405 — 405 
Total other noncurrent liabilities1,482 — 1,482 405 — 405 
Total liabilities$1,777 $— $1,777 $881 $— $881 
(a)Long-term equity securities of $139 million as of October 2, 2022 and $194 million as of December 31, 2021 were held in restricted trusts for U.S. non-qualified employee benefit plans.
(b)Includes life insurance policies held in restricted trusts for U.S. non-qualified employee benefit plans. The underlying invested assets in these contracts are marketable securities, which are carried at fair value, with changes in fair value recognized in Other (income)/deductions—net (see Note 4).
Financial Assets and Liabilities Not Measured at Fair Value on a Recurring Basis––The carrying value of Long-term debt, excluding the current portion was $33 billion as of October 2, 2022 and $36 billion as of December 31, 2021. The estimated fair value of such debt, using a market approach and Level 2 inputs, was $29 billion as of October 2, 2022 and $42 billion as of December 31, 2021.
18
The following table provides additional information about certain of our financial assets and liabilities:
(MILLIONS OF DOLLARS) October 1,
2017
 December 31,
2016
Selected financial assets measured at fair value on a recurring basis(a)
    
Trading funds and securities(b)
 $347
 $325
Available-for-sale debt securities(c)
 16,598
 18,632
Money market funds 1,824
 1,445
Available-for-sale equity securities(c)
 1,032
 540
Derivative financial instruments in a receivable position(d):
  
  
Interest rate swaps 630
 625
Foreign currency swaps 92
 79
Foreign currency forward-exchange contracts 110
 551
  20,631
 22,198
Other selected financial assets  
  
Held-to-maturity debt securities, carried at amortized cost(c), (e)
 1,464
 1,242
Restricted stock and private equity securities, carried at cost or at equity-method(e)
 719
 735
  2,183
 1,977
Total selected financial assets $22,815
 $24,175
Selected financial liabilities measured at fair value on a recurring basis(a)
  
  
Derivative financial instruments in a liability position(f):
  
  
Interest rate swaps $154
 $148
Foreign currency swaps 710
 1,374
Foreign currency forward-exchange contracts 309
 143
  1,173
 1,665
Other selected financial liabilities  
  
Short-term borrowings:    
Principal amount 9,460
 10,674
Net fair value adjustments related to hedging and purchase accounting 2
 24
Net unamortized discounts, premiums and debt issuance costs (15) (11)
Total short-term borrowings, carried at historical proceeds, as adjusted(e)
 9,448
 10,688
Long-term debt:    
Principal amount 33,671
 30,529
Net fair value adjustments related to hedging and purchase accounting 981
 998
Net unamortized discounts, premiums and debt issuance costs (149) (130)
Total long-term debt, carried at historical proceeds, as adjusted(g)
 34,503
 31,398
  43,951
 42,085
Total selected financial liabilities $45,124
 $43,750
(a)
We use a market approach in valuing financial instruments on a recurring basis. 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 5% that use Level 1 inputs.
(b)
As of October 1, 2017, trading funds and securities are composed of $274 million of trading equity funds and $74 million of trading debt funds. As of December 31, 2016, trading funds and securities are composed of $236 million of trading equity funds and $89 million of trading debt funds. As of October 1, 2017 and December 31, 2016, trading equity funds of $63 million and $71 million, respectively, are held in trust for benefits attributable to the former Pharmacia Savings Plus Plan.
(c)
Gross unrealized gains and losses are not significant, except as of October 1, 2017, available-for-sale equity securities’ unrealized gains are $406 million and unrealized losses are $119 million.
(d)
Designated as hedging instruments, except for certain contracts used as offsets; namely, foreign currency forward-exchange contracts with fair values of $40 million as of October 1, 2017; and foreign currency forward-exchange contracts with fair values of $162 million as of December 31, 2016.
(e)
The differences between the estimated fair values and carrying values of held-to-maturity debt securities, restricted stock and private equity securities at cost, and short-term borrowings not measured at fair value on a recurring basis were not significant as of October 1, 2017 or December 31, 2016. The fair value measurements of our held-to-maturity debt securities and our short-term borrowings are based on Level 2 inputs, using a market approach. The fair value measurements of our private equity securities carried at cost are based on Level 3 inputs.


PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(f)
Designated as hedging instruments, except for certain contracts used as offsets; namely, foreign currency forward-exchange contracts with fair values of $60 million as of October 1, 2017; and foreign currency swaps with fair values of $269 million and foreign currency forward-exchange contracts with fair values of $113 million as of December 31, 2016.
(g)
The differences between the estimated fair values and carrying values of held-to-maturity debt securities, private equity securities, long-term receivables and short-term borrowings not measured at fair value on a recurring basis were not significant as of October 2, 2022 and December 31, 2021. The fair value measurements of our held-to-maturity debt securities and short-term borrowings are based on Level 2 inputs. The fair value measurements of our long-term receivables and private equity securities are based on Level 3 inputs.
B. Investments
Total Short-Term, Long-Term and Equity-Method Investments
The following summarizes our investments by classification type:
(MILLIONS)October 2, 2022December 31, 2021
Short-term investments
Equity securities with readily determinable fair values(a)
$12,154 $5,365 
Available-for-sale debt securities20,176 22,014 
Held-to-maturity debt securities2,495 1,746 
Total Short-term investments$34,825 $29,125 
Long-term investments
Equity securities with readily determinable fair values(b)
$2,972 $3,876 
Available-for-sale debt securities358 521 
Held-to-maturity debt securities36 34 
Private equity securities at cost(b)
696 623 
Total Long-term investments$4,062 $5,054 
Equity-method investments9,826 16,472 
Total long-term investments and equity-method investments$13,888 $21,526 
Held-to-maturity cash equivalents$969 $268 
(a)Includes money market funds primarily invested in U.S. Treasury and government debt.
(b)Represent investments in the life sciences sector.
Debt Securities
At October 2, 2022, our investment portfolio consisted of debt securities issued across diverse governments, corporate and financial institutions, which are investment-grade. The contractual or estimated maturities, are as follows:
October 2, 2022December 31, 2021
Gross UnrealizedMaturities (in Years)Gross Unrealized
(MILLIONS)Amortized CostGainsLossesFair ValueWithin 1Over 1
to 5		Over 5Amortized CostGainsLossesFair Value
Available-for-sale debt securities
Government and agency––non-U.S.
$16,711 $26 $(567)$16,169 $15,885 $285 $— $18,032 $13 $(263)$17,783 
Government and agency––U.S.2,932 — (1)2,931 2,931 — — 4,056 — (1)4,055 
Corporate and other1,446 — (12)1,434 1,361 73 — 698 — (1)697 
Held-to-maturity debt securities
Time deposits and other1,557 — — 1,557 1,525 20 12 947 — — 947 
Government and agency––non-U.S.
1,943 — — 1,943 1,939 3 1 1,102 — — 1,102 
Total debt securities$24,589 $26 $(580)$24,034 $23,641 $381 $13 $24,835 $14 $(265)$24,584 
Any expected credit losses to these portfolios would be immaterial to our financial statements.
The fair value of our long-term debt (not including the current portion of long-term debt) was $39.0 billion as of October 1, 2017 and $34.9 billion as of December 31, 2016. The fair value measurements for our long-term debt are based on Level 2 inputs, using a market approach. Long-term debt includes foreign currency long-term borrowings with fair values of $4.7 billion as of October 1, 2017, which are used as hedging instruments.
The following table provides the classification of these selected financial assets and liabilities in our condensed consolidated balance sheets:
(MILLIONS OF DOLLARS) October 1,
2017
 December 31,
2016
Assets    
Cash and cash equivalents $526
 $547
Short-term investments 14,146
 15,255
Other current assets(a)
 288
 567
Long-term investments 7,311
 7,116
Other noncurrent assets(b)
 543
 689
  $22,815
 $24,175
Liabilities  
  
Short-term borrowings, including current portion of long-term debt $9,448
 $10,688
Other current liabilities(c)
 277
 443
Long-term debt 34,503
 31,398
Other noncurrent liabilities(d)
 896
 1,222
  $45,124
 $43,750
19

(a)
As of October 1, 2017, derivative instruments at fair value include interest rate swaps ($97 million), foreign currency swaps ($86 million) and foreign currency forward-exchange contracts ($105 million) and, as of December 31, 2016, include interest rate swaps ($26 million), foreign currency swaps ($43 million) and foreign currency forward-exchange contracts ($497 million).
(b)
As of October 1, 2017, derivative instruments at fair value include interest rate swaps ($532 million), foreign currency swaps ($6 million) and foreign currency forward-exchange contracts ($5 million) and, as of December 31, 2016, include interest rate swaps ($599 million), foreign currency swaps ($36 million) and foreign currency forward-exchange contracts ($54 million).
(c)
As of October 1, 2017, derivative instruments at fair value include foreign currency forward-exchange contracts ($276 million) and interest rate swaps ($1 million) and, as of December 31, 2016, include interest rate swaps ($1 million), foreign currency swaps ($300 million) and foreign currency forward-exchange contracts ($143 million).
(d)
As of October 1, 2017, derivative instruments at fair value include interest rate swaps ($153 million), foreign currency swaps ($710 million) and foreign currency forward-exchange contracts ($33 million) and, as of December 31, 2016, include interest rate swaps ($147 million) and foreign currency swaps ($1.1 billion).

There were no significant impairments of financial assets recognized in any period presented.


PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

B. Investments in Debt Securities
The following table provides the contractual maturities, or as necessary, the estimated maturities, of the available-for-sale and held-to-maturity debt securities:
  Years October 1,
2017
(MILLIONS OF DOLLARS) Within 1
 
Over 1
to 5

 
Over 5
to 10

 Over 10
 Total
Available-for-sale debt securities          
Corporate debt(a)
 $2,741
 $2,591
 $1,525
 $17
 $6,874
Western European, Asian, and other government debt(b)
 6,071
 268
 —
 —
 6,339
Western European, Scandinavian and other government agency debt(b)
 1,955
 42
 —
 —
 1,998
Supranational debt(b)
 387
 195
 —
 —
 582
Government National Mortgage Association and other U.S. government guaranteed asset-backed securities 42
 424
 —
 —
 466
Other asset-backed debt(c)
 161
 61
 3
 —
 226
U.S. government debt —
 112
 —
 —
 112
Held-to-maturity debt securities      
    
Time deposits and other 1,133
 —
 3
 —
 1,137
Western European government debt(b)
 326
 —
 —
 —
 326
Total debt securities $12,818
 $3,694
 $1,532
 $18
 $18,061
(a)
Issued by a diverse group of corporations, with a significant concentration in the technology sector, virtually all of which are investment-grade.
Equity Securities
The following presents the calculation of the portion of unrealized (gains)/losses that relates to equity securities, excluding equity-method investments, held at the reporting date:
Three Months EndedNine Months Ended
(MILLIONS)October 2,
2022		October 3,
2021		October 2,
2022		October 3,
2021
Net (gains)/losses recognized during the period on equity securities(a)
$112 $(400)$1,353 $(1,601)
Less: Net (gains)/losses recognized during the period on equity securities sold during the period(5)(78)(84)(83)
Net unrealized (gains)/losses during the reporting period on equity securities still held at the reporting date(b)
$116 $(322)$1,436 $(1,518)
(a)Reported in Other (income)/deductions––net. See Note 4.
(b)Included in net unrealized (gains)/losses are observable price changes on equity securities without readily determinable fair values. As of October 2, 2022, there were cumulative impairments and downward adjustments of $148 million and upward adjustments of $201 million. Impairments, downward and upward adjustments were not significant in the third quarter and first nine months of 2022 and 2021.
(b)
Issued by governments, government agencies or supranational entities, as applicable, all of which are high quality.
(c)
Includes receivable-backed, loan-backed, and mortgage-backed securities, all of which are high quality and in senior positions in the capital structure of the security. Receivable-backed securities are collateralized by credit cards receivables, loan-backed securities are collateralized by senior secured obligations of a diverse pool of companies or student loans, and mortgage-backed securities are collateralized by diversified pools of residential and commercial mortgages.

C. Short-Term Borrowings

Short-term borrowings include:
(MILLIONS)October 2,
2022		December 31, 2021
Current portion of long-term debt, principal amount$2,550 $1,636 
Other short-term borrowings, principal amount(a)
1,474 605 
Total short-term borrowings, principal amount4,024 2,241 
Net fair value adjustments related to hedging and purchase accounting16 — 
Total Short-term borrowings, including current portion of long-term debt, carried at historical proceeds, as adjusted
$4,040 $2,241 
Short-term borrowings include amounts for commercial paper of $6.1 billion as of October 1, 2017 and $5.8 billion as of (a)December 31, 2016Primarily includes cash collateral. See Note 7F.

D. Long-Term Debt
The following summarizes the aggregate principal amount of our senior unsecured long-term debt, and adjustments to report our aggregate long-term debt:
(MILLIONS)October 2,
2022		December 31, 2021
Total long-term debt, principal amount$31,831 $34,948 
Net fair value adjustments related to hedging and purchase accounting976 1,438 
Net unamortized discounts, premiums and debt issuance costs(178)(195)
Other long-term debt— 4 
Total long-term debt, carried at historical proceeds, as adjusted$32,629 $36,195 
E. Derivative Financial Instruments and Hedging Activities
The following table provides the amounts of senior unsecured long-term debt issued in the first quarter of 2017:
    Principal
    As of October 1, 2017
(MILLIONS) Maturity Date Euro
 U.S. Dollar
3-month EURIBOR + 0.20% floating rate notes (0% floor) March 6, 2019 €1,250
 $1,479
0.00% euro notes(a)
 March 6, 2020 1,000
 1,183
0.25% euro notes(a)
 March 6, 2022 1,000
 1,183
1.00% euro notes(a)
 March 6, 2027 750
 887
Total euro long-term debt issued in the first quarter of 2017(b)
   €4,000
 $4,732
4.20% notes(c)
 March 17, 2047   1,065
Total long-term debt issued in the first quarter of 2017(d)
     $5,797
Foreign Exchange Risk––A significant portion of our revenues, earnings and net investments in foreign affiliates is exposed to changes in foreign exchange rates. Where foreign exchange risk is not offset by other exposures, we manage our foreign exchange risk principally through the use of derivative financial instruments and foreign currency debt. These financial instruments serve to mitigate the impact on net income as a result of remeasurement into another currency, or against the impact of translation into U.S. dollars of certain foreign exchange-denominated transactions.
(a)
The derivative financial instruments primarily hedge or offset exposures in the euro, U.K. pound, Japanese yen, and Canadian dollar, and include a portion of our forecasted foreign exchange-denominated intercompany inventory sales hedged up to two years. We may seek to protect against possible declines in the reported net investments of our foreign business entities.
Interest Rate Risk––Our interest-bearing investments and borrowings are subject to interest rate risk. Depending on market conditions, we may change the profile of our outstanding debt or investments by entering into derivative financial instruments like interest rate swaps, either to hedge or offset the exposure to changes in the fair value of hedged items with fixed interest rates, or to convert variable rate debt or investments to fixed rates. The derivative financial instruments primarily hedge U.S. dollar fixed-rate debt.
Redeemable at any time, in whole, or in part, at our option prior to 30 to 90 days of maturity date at the comparable German government bond rate, plus 0.15%; plus, in each case, accrued and unpaid interest. The fixed rate euro notes are also redeemable at our option, in whole, or in part, within 30 to 90 days of maturity date.
(b)
The weighted-average effective interest rate for the euro notes at issuance was 0.23%.
(c)
The notes, issued in U.S. dollars in Taiwan, are redeemable, at our option, in whole but not in part, on each March 17 on or after March 17, 2020.
(d)
The aggregate amount at issuance date was $5,279 million. The increase in the amount since the date of issuance is due to foreign currency exchange.
20

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The following table provides the maturity schedule of our Long-term debt outstanding as of October 1, 2017:
(MILLIONS OF DOLLARS) 2018 2019 2020 2021 After 2021 Total
Maturities $481
 $4,825
 $1,534
 $4,502
 $23,162
 $34,503


E. Other Noncurrent Liabilities

The following summarizes the fair value of the derivative financial instruments and notional amounts (including those reported as part of discontinued operations):
October 2, 2022December 31, 2021
Fair ValueFair Value
(MILLIONS)NotionalAssetLiabilityNotionalAssetLiability
Derivatives designated as hedging instruments:
Foreign exchange contracts(a)
$33,274 $2,479 $1,175 $29,576 $787 $717 
Interest rate contracts2,250 9 330 2,250 21 — 
2,488 1,505 808 717 
Derivatives not designated as hedging instruments:
Foreign exchange contracts$26,426 283 273 $21,419 160 164 
Total$2,771 $1,777 $968 $881 
In August 2017, the U.S. approved Besponsa (inotuzumab ozogamicin) and in June 2017, the EU approved Besponsa as monotherapy for the treatment of adults with relapsed or refractory CD22-positive B-cell precursor acute lymphoblastic leukemia. In connection with the U.S. approval, we incurred an obligation to make guaranteed fixed annual payments over a nine-year period aggregating $296 million related to a research and development arrangement. As a result, we have recorded the estimated net present value of $248 million as an intangible asset in (a)Developed technology rights, and we have recorded $233 million in Other noncurrent liabilities and $15 millionin Other current liabilities as of October 1, 2017. In connection with the EU approval, we incurred an obligation to make guaranteed fixed annual payments over a nine-year period aggregating $148 million related to a research and development arrangement. As a result, we recorded the estimated net present value of $123 million as an intangible asset in Developed technology rights, and we have recorded $117 million in Other noncurrent liabilities and$6 million in Other current liabilities as of October 1, 2017. 

F. Derivative Financial Instruments and Hedging Activities

Foreign Exchange Risk

As of October 1, 2017, the aggregate notional amount of foreign exchange derivative financial instruments hedging or offsetting foreign currency exposures was $31.5 billion. The derivative financial instruments primarily hedge or offset exposures in the euro, Japanese yen and U.K. pound. The maximum length of time over which we are hedging future foreign exchange cash flow relates to our $2.0 billion U.K. pound debt maturing in 2038.
We designate foreign currency forward-exchange contracts as cash flow hedges of a portion of our forecasted euro, Japanese yen, U.K. pound, Canadian dollar, and Australian dollar-denominated intercompany inventory sales expected to occur no more than two years from the date of each hedge. As of October 1, 2017, the notional amount of outstanding foreign currency forward-exchangeexchange contracts hedging our intercompany forecasted inventory sales was $3.9$4.5 billion with as of October 2, 2022 and $4.8 billion as of December 31, 2021.
The following summarizes information about the gains/(losses) incurred to hedge or offset operational foreign exchange or interest rate risk exposures (including those reported as part of discontinued operations):
 
Gains/(Losses)
Recognized in OID(a)
Gains/(Losses)
Recognized in OCI(a)
Gains/(Losses)
Reclassified from
OCI into OID and COS(a)
Three Months Ended
(MILLIONS)October 2,
2022		October 3,
2021		October 2,
2022		October 3,
2021		October 2,
2022		October 3,
2021
Derivative Financial Instruments in Cash Flow Hedge Relationships:
Foreign exchange contracts(b)
$— $— $528 $204 $558 $(59)
Amount excluded from effectiveness testing and amortized into earnings(c)
— — 61 10 57 10 
Derivative Financial Instruments in Fair Value Hedge Relationships:
Interest rate contracts(124)(5)— — — — 
Hedged item124 5 — — — — 
Derivative Financial Instruments in Net Investment Hedge Relationships:      
Foreign exchange contracts— — 680 177 — — 
Amount excluded from effectiveness testing and amortized into earnings(c)
— — 78 19 32 26 
Non-Derivative Financial Instruments in Net Investment Hedge Relationships:(d)
      
Foreign currency short-term borrowings— — — 25 — — 
Foreign currency long-term debt— — 49 19 — — 
Derivative Financial Instruments Not Designated as Hedges:
Foreign exchange contracts(420)(74)— — — — 
All other net(c)
— — — — — — 
 $(420)$(74)$1,396 $453 $647 $(21)
21

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Gains/(Losses)
Recognized in OID(a)
Gains/(Losses)
Recognized in OCI(a)
Gains/(Losses)
Reclassified from
OCI into OID and COS(a)
Nine Months Ended
(MILLIONS)October 2,
2022		October 3,
2021		October 2,
2022		October 3,
2021		October 2,
2022		October 3,
2021
Derivative Financial Instruments in Cash Flow Hedge Relationships:      
Foreign exchange contracts(b)
$— $— $1,339 $147 $872 $(314)
Amount excluded from effectiveness testing and amortized into earnings(c)
— — 105 31 100 28 
Derivative Financial Instruments in Fair Value Hedge Relationships:
Interest rate contracts(346)(6)— — — — 
Hedged item346 6 — — — — 
Derivative Financial Instruments in Net Investment Hedge Relationships:
Foreign exchange contracts— — 1,613 332 — — 
Amount excluded from effectiveness testing and amortized into earnings(c)
— — 63 54 95 82 
Non-Derivative Financial Instruments in Net Investment Hedge Relationships:(d)
Foreign currency short-term borrowings— — 26 52 — — 
Foreign currency long-term debt— — 119 66 — — 
Derivative Financial Instruments Not Designated as Hedges:
Foreign exchange contracts(832)(97)— — — — 
All other net(c)
— — — 1 — 1 
$(832)$(97)$3,264 $683 $1,068 $(204)
(a)OID = Other (income)/deductions—net, included in Other (income)/deductions—net in the condensed consolidated statements of income. COS = Cost of Sales, included in Cost of sales in the condensed consolidated statements of income. OCI = Other comprehensive income/(loss), included in the condensed consolidated statements of comprehensive income.
(b)The amounts reclassified from OCI into COS were:
•a pre-taxnet gain of $125 million in the third quarter of 2022;
•a net gain of $227 million in the first nine months of 2022;
•a net loss of $97$18 million deferred in the third quarter of 2021; and
•Accumulated other comprehensive loss. a net loss of $94 million in the first nine months of 2021.
The remaining amounts were reclassified from OCI into OID. Based on quarter-end foreign exchange rates that are subject to change, we expect to reclassify a pre-tax lossgain of $63 million$1 billion within the next 12 months into Cost of sales. We recognized a $4 million loss in the third quarter of 2017 and a $67 million gain in the first nine months of 2017 as an offset to Cost of salesincome.The maximum length of time over which we are hedging our exposure to the variability in future foreign exchange cash flows is approximately 21 years and relates to foreign currency debt.

(c)The amounts reclassified from OCI were reclassified into OID.
Interest Rate Risk

As(d)Short-term borrowings and long-term debt include foreign currency borrowings, which are used in net investment hedges. The related short-term borrowings’ carrying value as of December 31, 2021 was $1.1 billion. The related long-term debt carrying values as of October 1, 2017,2, 2022 and December 31, 2021 were $726 million and $844 million, respectively.
The following summarizes cumulative basis adjustments to our debt in fair value hedges:
October 2, 2022December 31, 2021
Cumulative Amount of Fair Value Hedging Adjustment Increase/(Decrease) to
Carrying Amount		Cumulative Amount of Fair Value Hedging Adjustment Increase/(Decrease) to
Carrying Amount
(MILLIONS)
Carrying Amount of Hedged Assets/Liabilities(a)
Active Hedging RelationshipsDiscontinued Hedging Relationships
Carrying Amount of Hedged Assets/Liabilities(a)
Active Hedging RelationshipsDiscontinued Hedging Relationships
Short-term borrowings, including current portion of long-term debt$— $— $16 $— $— $— 
Long-term debt$2,235 $(330)$1,061 $2,233 $16 $1,154 
(a)Carrying amounts exclude the aggregate notionalcumulative amount of interest rate derivative financial instruments designated as fair value hedges was $12.4 billion. The derivative financial instruments primarily hedge U.S. dollar fixed-rate debt.hedging adjustments.
22

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The following table provides information about the gains/(losses) incurred to hedge or offset operational foreign exchange or interest rate risk:
  Three Months Ended
  
Amount of
Gains/(Losses)
Recognized in OID(a), (b), (c)
 
Amount of
Gains/(Losses)
Recognized in OCI
(Effective Portion)(a), (d)
 
Amount of
Gains/(Losses)
Reclassified from
OCI into OID and COS
(Effective Portion)(a), (d)
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
 October 1,
2017
 October 2,
2016
 October 1,
2017
 October 2,
2016
Derivative Financial Instruments in Cash Flow Hedge Relationships:            
Foreign currency swaps $—
 $—
 $218
 $87
 $148
 $(39)
Foreign currency forward-exchange contracts 1
 2
 (269) (212) (204) (111)
Derivative Financial Instruments in Net Investment Hedge Relationships:  
  
  
  
  
  
Foreign currency forward-exchange contracts —
 —
 —
 —
 —
 —
             
Derivative Financial Instruments Not Designated as Hedges:  
  
  
  
  
  
Foreign currency forward-exchange contracts 33
 20
 —
 —
 —
 —
Foreign currency swaps —
 (4) —
 —
 —
 —
             
Non-Derivative Financial Instruments in Net Investment Hedge Relationships:  
  
  
  
  
  
Foreign currency long-term debt —
 —
 (166) —
 —
 —
All other net —
 —
 1
 —
 —
 —
  $34
 $18
 $(216) $(126) $(55) $(150)
             
  Nine Months Ended
  
Amount of
Gains/(Losses)
Recognized in OID(a), (b), (c)
 
Amount of
Gains/(Losses)
Recognized in OCI
(Effective Portion)(a), (d)
 
Amount of
Gains/(Losses)
Reclassified from
OCI into OID and COS
(Effective Portion)(a), (d)
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
 October 1,
2017
 October 2,
2016
 October 1,
2017
 October 2,
2016
Derivative Financial Instruments in Cash Flow Hedge Relationships:            
Foreign currency swaps $—
 $—
 $455
 $(204) $419
 $(165)
Foreign currency forward-exchange contracts (5) 1
 (604) (770) (26) (118)
Derivative Financial Instruments in Net Investment Hedge Relationships:  
  
  
  
  
  
Foreign currency forward-exchange contracts —
 1
 —
 (15) —
 —
             
Derivative Financial Instruments Not Designated as Hedges:  
  
  
  
  
  
Foreign currency forward-exchange contracts (111) (49) —
 —
 —
 —
Foreign currency swaps (1) (9) —
 —
 —
 —
             
Non-Derivative Financial Instruments in Net Investment Hedge Relationships:  
  
  
  
  
  
Foreign currency short-term borrowings —
 —
 —
 (26) —
 —
Foreign currency long-term debt —
 —
 (518) —
 —
 —
All other net —
 —
 1
 1
 —
 —
  $(117) $(56) $(666) $(1,014) $394
 $(283)
(a)
OID = Other (income)/deductions—net, included in Other (income)/deductions—net in the condensed consolidated statements of income. COS = Cost of sales, included in Cost of sales in the condensed consolidated statements of income.
F. Credit Risk
OCI = Other comprehensive income/(loss), included in theA significant portion of our trade accounts receivable balances are due from wholesalers and governments. For additional information on our trade accounts receivables with significant customers, see Note 13C below and condensed consolidated statementsNote 17C in our 2021 Form 10-K.
As of comprehensive incomeOctober 2, 2022, the largest investment exposures in our portfolio represent primarily sovereign debt instruments issued by Germany, the U.S., the Netherlands, Japan, the U.K., France, and Canada, as well as money market funds primarily invested in U.S. Treasury and government debt.
With respect to our derivative financial instrument agreements with financial institutions, we do not expect to incur a significant loss from failure of any counterparty. Derivative financial instruments are executed under International Swaps and Derivatives Association master agreements with credit-support annexes that contain zero threshold provisions requiring collateral to be exchanged daily depending on levels of exposure. As a result, there are no significant concentrations of credit risk with any individual financial institution. As of October 2, 2022, the aggregate fair value of these derivative financial instruments that are in a net payable position was $595 million, for which we have posted collateral of $612 million with a corresponding amount reported in Short-term investments. As of October 2, 2022, the aggregate fair value of our derivative financial instruments that are in a net receivable position was $1.5 billion, for which we have received collateral of $1.5 billion with a corresponding amount reported in Short-term borrowings, including current portion of long-term debt.
Note 8. Other Financial Information
A. Inventories
The following summarizes the components of Inventories:
(MILLIONS)October 2,
2022		December 31, 2021
Finished goods$3,159 $3,641 
Work-in-process4,540 4,424 
Raw materials and supplies1,813 994 
Inventories(a)
$9,513 $9,059 
Noncurrent inventories not included above(b)
$3,327 $939 
(a)The increase from December 31, 2021 primarily reflects higher inventory levels for Paxlovid, partially offset by decreases due to net supply recovery and inventory build, and market demand.
(b)Included in Other noncurrent assets. The increase from December 31, 2021 is primarily due to strategic inventory build related to Paxlovid. There are no recoverability issues for these amounts.
B. Other Current Liabilities
Other current liabilities includes, among other things, amounts payable to BioNTech for the gross profit split for Comirnaty, which totaled $4.5 billion as of October 2, 2022 and $9.7 billion as of December 31, 2021.
23

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 9. Identifiable Intangible Assets
A. Identifiable Intangible Assets
The following summarizes the components of Identifiable intangible assets:
October 2, 2022December 31, 2021
(MILLIONS)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$72,818 $(55,309)$17,509 $73,346 $(53,732)$19,614 
Brands922 (832)90 922 (807)115 
Licensing agreements and other2,296 (1,373)923 2,284 (1,299)985 
76,036 (57,514)18,522 76,552 (55,838)20,714 
Indefinite-lived intangible assets
Brands827 827 827 827 
IPR&D(a)
7,829 7,829 3,092 3,092 
Licensing agreements and other(a)
972 972 513 513 
9,629 9,629 4,432 4,432 
Identifiable intangible assets(a), (b)
$85,665 $(57,514)$28,151 $80,984 $(55,838)$25,146 
(a)The increase in the gross carrying amounts mainly reflect the impact of the acquisition of Arena (see Note 2A), and for IPR&D, is partially offset by an impairment (see Note 4).
(b)The increase is primarily due to the acquisition of Arena, partially offset by amortization expense.
B. Goodwill
(b)The following summarizes the changes in the carrying amount of Goodwill:
Includes gains and losses attributable to derivative instruments designated and qualifying as fair value hedges (primarily interest rate swaps), as well as the offsetting gains and losses attributable to the hedged items in such hedging relationships.(MILLIONS)
Total(a)
Balance, January 1, 2022$49,208 
(c)Additions(b)
There was no significant ineffectiveness for any period presented.
1,029 
(d)Other(c)
For derivative financial instruments in cash flow hedge relationships, the effective portion is included in (797)
Balance, October 2, 2022Other comprehensive income––Unrealized holding losses on derivative financial instruments, net$. For derivative financial instruments in net investment hedge relationships and for foreign currency debt designated as hedging instruments, the effective portion is included in49,441 Other comprehensive income––Foreign currency translation adjustments, net.

For information about(a)All goodwill is assigned within the Biopharma reportable segment. As a result of the organizational changes to the commercial structure within the Biopharma operating segment effective in the third quarter of 2022 (see Note 1A), our goodwill is required to be reallocated amongst impacted reporting units. The allocation of goodwill is a complex process that requires, among other things, that we determine the fair value of each reporting unit under our derivative financial instruments,old and new organizational structure and the impact onportions being transferred. Therefore, we have not yet completed the allocation, but it will be completed in the current year.
(b)Additions relate to our condensed consolidated balance sheets, seeacquisition of Arena. See Note 7A above. Certain of our derivative instruments are covered by associated credit-support agreements that have credit-risk-related contingent features designed to reduce our counterparties’ exposure to our risk of defaulting on amounts owed. As of October 1, 2017, the aggregate fair value of these derivative instruments that are in a net liability position was $491 million, for which we have posted collateral of $505 million in the normal course of business. If there had been a ratings downgrade, we would not have been required to post any additional collateral to our counterparties2A.

G. Credit Risk

On an ongoing basis, we review(c)Other represents the creditworthinessimpact of counterparties to our foreign exchange and interest rate agreements and do not expect to incur a significant loss from failure of any counterparties to perform under the agreements. There are no significant concentrations of credit risk related to our financial instruments with any individual counterparty, except for certain significant customers. As of October 1, 2017, we had $946 million due from a well-diversified, high quality group of technology companies around the world. For details about our investments, see Note 7B above.exchange.

In general, there is no requirement for collateral from customers. However, derivative financial instruments are executed under credit-support agreements that provide for the ability to request collateral payments depending on levels of exposure, our credit ratingNote 10. Pension and the credit rating of the counterparty. As of October 1, 2017, we received cash collateral of $232 million from various counterparties. The collateral primarily supports the approximate fair value of our derivative contracts. With respect to the collateral received, the obligations are reported in Short-term borrowings, including current portion of long-term debt.Postretirement Benefit Plans
Note 8. Inventories
The following summarizes the components of net periodic benefit cost/(credit):
 Pension Plans
 U.S.InternationalPostretirement
Plans
Three Months Ended
(MILLIONS)Oct. 2, 2022Oct. 3, 2021Oct. 2, 2022Oct. 3, 2021Oct. 2, 2022Oct. 3, 2021
Service cost$— $— $29 $32 $7 $9 
Interest cost151 114 38 37 7 7 
Expected return on plan assets(195)(261)(72)(83)(12)(10)
Amortization of prior service cost/(credit)— — — — (31)(39)
Actuarial (gains)/losses(a)
(193)(836)— — — — 
Curtailments— — — — (1)(64)
Special termination benefits1 — — — — — 
Net periodic benefit cost/(credit) reported in income$(235)$(983)$(6)$(14)$(30)$(96)
The following table provides the components of Inventories:
(MILLIONS OF DOLLARS) October 1,
2017
 December 31,
2016
Finished goods $2,977
 $2,293
Work-in-process 4,070
 3,696
Raw materials and supplies 879
 793
Inventories(a)
 $7,925
 $6,783
Noncurrent inventories not included above(b)
 $669
 $683
24

(a)
The change from December 31, 2016 reflects the build of inventory primarily for and in advance of new or potential product launches and increases to meet targeted levels for certain products in the normal course of business, including those related to demand.
(b)
Included in Other noncurrent assets. There are no recoverability issues associated with these amounts.

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 9. Identifiable Intangible Assets and Goodwill

A. Identifiable Intangible Assets

Balance Sheet Information
The following table provides the components of Identifiable intangible assets:
  October 1, 2017 December 31, 2016
(MILLIONS OF DOLLARS) 
Gross
Carrying
Amount

 
Accumulated
Amortization

 
Identifiable
Intangible
Assets, less
Accumulated
Amortization

 
Gross
Carrying
Amount

 
Accumulated
Amortization

 
Identifiable
Intangible
Assets, less
Accumulated
Amortization

Finite-lived intangible assets            
Developed technology rights(a)
 $89,585
 $(53,960) $35,625
 $83,390
 $(49,650) $33,740
Brands 2,135
 (1,127) 1,008
 2,092
 (1,032) 1,060
Licensing agreements and other 1,930
 (1,071) 859
 1,869
 (1,005) 864
  93,650
 (56,158) 37,492
 87,351
 (51,687) 35,664
Indefinite-lived intangible assets            
Brands and other 6,937
 

 6,937
 6,883
 

 6,883
IPR&D(a) 
 5,292
 

 5,292
 10,101
 

 10,101
  12,229
 

 12,229
 16,984
 

 16,984
Identifiable intangible assets(b)
 $105,879
 $(56,158) $49,721
 $104,335
 $(51,687) $52,648

(a)
The changes in the gross carrying amount of Developed technology rights and IPR&D primarily reflect (i) the transfer of $4.8 billion from IPR&D to Developed technology rights to reflect the approval of Eucrisa, (ii) the Developed technology rights and IPR&D acquired as part of the acquisition of AstraZeneca’s small molecule anti-infectives business (see Note 2A), (iii) the Developed technology rights of $371 million recorded in connection with the EU and U.S. approvals of Besponsa (see Note 7E), partially offset by (iv) measurement period adjustments related to Medivation (see Note 2A) and (v) impairments of Developed technology rights (see Note 4).
(b)
The decrease in Identifiable intangible assets, less accumulated amortization, is primarily due to amortization, measurement period adjustments related to Medivation (see Note 2A), as well as impairments of Developed technology rights (see Note 4), partially offset by assets acquired as part of the acquisition of AstraZeneca’s small molecule anti-infectives business (see Note 2A) and the assets recorded in connection with the EU and U.S. approvals of Besponsa (see Note 7E).
Our identifiable intangible assets are associated with the following, as a percentage of total identifiable intangible assets, less accumulated amortization:
  October 1, 2017
  IH EH WRD
Developed technology rights 68% 32% —%
Brands, finite-lived 75% 25% —%
Brands, indefinite-lived 71% 29% —%
IPR&D 80% 13% 7%


Amortization

 Pension Plans
 U.S.InternationalPostretirement
Plans
Nine Months Ended
(MILLIONS)Oct. 2, 2022Oct. 3, 2021Oct. 2, 2022Oct. 3, 2021Oct. 2, 2022Oct. 3, 2021
Service cost$— $— $89 $98 $22 $27 
Interest cost387 341 121 110 21 22 
Expected return on plan assets(685)(782)(229)(246)(35)(29)
Amortization of prior service credits1 (1)(1)(1)(99)(116)
Actuarial (gains)/losses(a)
231 (881)— — — — 
Curtailments— — — (1)(14)(64)
Special termination benefits8 12 — — 1 1 
Net periodic benefit cost/(credit) reported in income$(57)$(1,312)$(20)$(40)$(106)$(160)
Total amortization expense for finite-lived intangible assets was $1.2 billion for the(a)The third quarter of 2017 and $988 million for2022 mainly reflects interim actuarial remeasurement gains, primarily driven by an increase in the third quarter of 2016, and $3.6 billion for thediscount rate, partially offset by unfavorable plan asset performance. The first nine months of 20172022 mainly reflects interim actuarial remeasurement losses, primarily driven by unfavorable plan asset performance, partially offset by gains due to an increase in the discount rate. In the third quarter and $3.0 billion for the first nine months of 2021, mainly reflects interim actuarial remeasurement gains, primarily due to favorable plan asset performance and an increase in the discount rate.
The components of net periodic benefit cost/(credit) other than the service cost component are primarily included in 2016Other (income)/deductions––net (see Note 4).
For the nine months ended October 2, 2022, we contributed $207 million, $127 million, and $16 million to our U.S. Pension Plans, International Pension Plans, and Postretirement Plans, respectively, from our general assets, which include direct employer benefit payments.
Note 11. Earnings Per Common Share Attributable to Pfizer Inc. Common Shareholders
The following presents the detailed calculation of EPS:
 Three Months EndedNine Months Ended
(MILLIONS)October 2,
2022		October 3,
2021		October 2,
2022		October 3,
2021
EPS Numerator––Basic
Income from continuing operations attributable to Pfizer Inc. common shareholders$8,630 $8,159 $26,373 $18,834 
Discontinued operations––net of tax(21)(13)4 (248)
Net income attributable to Pfizer Inc. common shareholders$8,608 $8,146 $26,378 $18,586 
EPS Numerator––Diluted    
Income from continuing operations attributable to Pfizer Inc. common shareholders and assumed conversions$8,630 $8,159 $26,373 $18,834 
Discontinued operations––net of tax, attributable to Pfizer Inc. common shareholders and assumed conversions(21)(13)4 (248)
Net income attributable to Pfizer Inc. common shareholders and assumed conversions$8,608 $8,146 $26,378 $18,586 
EPS Denominator    
Weighted-average number of common shares outstanding––Basic5,607 5,609 5,606 5,597 
Common-share equivalents: stock options and stock issuable under employee compensation plans111 116 124 91 
Weighted-average number of common shares outstanding––Diluted5,718 5,725 5,729 5,688 
Anti-dilutive common stock equivalents(a)
3 — 1 3 
(a)These common stock equivalents were outstanding for the periods presented, but were not included in the computation of diluted EPS for those periods because their inclusion would have had an anti-dilutive effect.
25

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

B. Goodwill
The following table provides the components of and changes in the carrying amount of Goodwill:
(MILLIONS OF DOLLARS) IH EH Total
Balance, December 31, 2016 $30,134
 $24,315
 $54,449
Additions(a)
 572
 92
 664
Other(b)
 491
 475
 966
Balance, October 1, 2017 $31,197
 $24,882
 $56,078
(a)
IH additions primarily represent measurement period adjustments related to our Medivation acquisition, and EH additions relate to our acquisition of AstraZeneca’s small molecule anti-infectives business, which are subject to change until we complete the valuation of assets acquired and liabilities assumed (see Note 2A).
(b)
Primarily reflects the impact of foreign exchange and an adjustment of our estimate of goodwill associated with the HIS net assets sold.
Note 10. Pension12. Contingencies and Postretirement Benefit Plans
The following table provides the components of net periodic benefit cost/(income):
  Three Months Ended
  Pension Plans  
  
U.S.
Qualified
 
U.S.
Supplemental
(Non-Qualified)
 International 
Postretirement
Plans
(MILLIONS OF DOLLARS) Oct 1, 2017
 Oct 2, 2016
 Oct 1, 2017
 Oct 2, 2016
 Oct 1, 2017
 Oct 2, 2016
 Oct 1, 2017
 Oct 2, 2016
Net periodic benefit cost/(credit):                
Service cost $67
 $69
 $6
 $5
 $44
 $41
 $10
 $11
Interest cost 157
 218
 13
 18
 52
 58
 23
 33
Expected return on plan assets (248) (239) —
 —
 (87) (95) (9) (8)
Amortization of:  
  
  
  
    
  
  
Actuarial losses 91
 99
 12
 9
 29
 23
 8
 9
Prior service costs (credits) —
 1
 —
 —
 (1) (1) (45) (45)
Curtailments 1
 2
 —
 1
 (2) —
 (3) (8)
Settlements 30
 21
 7
 7
 —
 1
 —
 —
  $99
 $170
 $39
 $39
 $35
 $27
 $(17) $(9)
                 
  Nine Months Ended
  Pension Plans  
  
U.S.
Qualified(a)
 
U.S.
Supplemental
(Non-Qualified)
 International 
Postretirement
Plans
(MILLIONS OF DOLLARS) Oct 1, 2017
 Oct 2, 2016
 Oct 1, 2017
 Oct 2, 2016
 Oct 1, 2017
 Oct 2, 2016
 Oct 1, 2017
 Oct 2, 2016
Net periodic benefit cost/(credit):                
Service cost $202
 $193
 $18
 $14
 $127
 $126
 $32
 $31
Interest cost 478
 486
 41
 40
 152
 178
 68
 77
Expected return on plan assets (759) (721) —
 —
 (256) (291) (27) (25)
Amortization of:                
Actuarial losses 302
 297
 37
 27
 86
 70
 23
 23
Prior service costs (credits) 3
 4
 (1) (1) (3) (2) (137) (127)
Curtailments 10
 5
 —
 1
 (2) (1) (15) (14)
Settlements 54
 52
 32
 23
 3
 2
 —
 —
  $292
 $316
 $127
 $105
 $106
 $81
 $(57) $(36)

(a)
In April 2017, we settled the remaining obligation associated with the Hospira U.S. qualified defined benefit pension plan. We purchased a group annuity contract on behalf of the remaining plan participants with a third-party insurance provider. As a result, we were relieved of the $156 million net pension benefit obligation and recorded a pretax settlement gain of $41 million, partially offset by the recognition of actuarial losses and prior service costs upon plan settlement of approximately $30 million in Restructuring charges and certain acquisition-related costs during the second quarter of 2017 (see Note 3).

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

As of and for the nine months ended October 1, 2017, we contributed and expect to contribute in 2017 from our general assets as follows:
  Pension Plans  
(MILLIONS OF DOLLARS) U.S. Qualified U.S. Supplemental (Non-Qualified) International Postretirement Plans
Contributions from our general assets for the nine months ended October 1, 2017 $1,095
 $121
 $134
 $158
Expected contributions from our general assets during 2017(a)
 $1,095
 $146
 $170
 $204
(a)
Contributions expected to be made for 2017 are inclusive of amounts contributed during the nine months ended October 1, 2017, including the $1.0 billion voluntary contribution that was made in January 2017 for the U.S. qualified plans, which was considered pre-funding for future anticipated mandatory contributions and is also expected to reduce Pension Benefit Guaranty Corporation variable rate premiums. The U.S. supplemental (non-qualified) pension plan, international pension plan and the postretirement plan contributions from our general assets include direct employer benefit payments.
Note 11. Earnings Per Common Share Attributable to Common Shareholders
The following table provides the detailed calculation of Earnings per common share (EPS):
  Three Months Ended Nine Months Ended
(IN MILLIONS) October 1,
2017
 October 2,
2016
 October 1,
2017
 October 2,
2016
EPS Numerator––Basic        
Income from continuing operations(a)
 $2,858
 $1,355
 $9,064
 $6,465
Less: Net income attributable to noncontrolling interests 18
 —
 32
 25
Income from continuing operations attributable to Pfizer Inc.(a)
 2,840
 1,355
 9,032
 6,440
Less: Preferred stock dividends––net of tax —
 —
 1
 1
Income from continuing operations attributable to Pfizer Inc. common shareholders(a)
 2,839
 1,355
 9,032
 6,439
Discontinued operations––net of tax —
 —
 1
 —
Net income attributable to Pfizer Inc. common shareholders(a)
 $2,839
 $1,355
 $9,033
 $6,439
EPS Numerator––Diluted  
  
  
  
Income from continuing operations attributable to Pfizer Inc. common shareholders and assumed conversions(a)
 $2,840
 $1,355
 $9,032
 $6,440
Discontinued operations––net of tax, attributable to Pfizer Inc. common shareholders and assumed conversions —
 —
 1
 —
Net income attributable to Pfizer Inc. common shareholders and assumed conversions(a)
 $2,840
 $1,355
 $9,034
 $6,440
EPS Denominator  
  
  
  
Weighted-average number of common shares outstanding––Basic 5,951
 6,066
 5,972
 6,095
Common-share equivalents: stock options, stock issuable under employee compensation plans, convertible preferred stock and accelerated share repurchase agreements(a)
 89
 84
 85
 80
Weighted-average number of common shares outstanding––Diluted(a)
 6,041
 6,150
 6,057
 6,175
Stock options that had exercise prices greater than the average market price of our common stock issuable under employee compensation plans(a), (b)
 47
 38
 47
 60
(a)
Amounts for the third quarter and first nine months ended October 2, 2016 have been revised from previously reported amounts to reflect the adoption of a new accounting standard in the fourth quarter of 2016, as of January 1, 2016, that requires, when applying the treasury stock method for shares that could be repurchased, that the assumed proceeds no longer include the amount of excess tax benefit (see Note 1B).
(b)
These common stock equivalents were outstanding for the periods presented, but were not included in the computation of diluted EPS for those periods because their inclusion would have had an anti-dilutive effect.

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 12.Certain Commitments and Contingencies

We and certain of our subsidiaries are subject to numerous contingencies arising in the ordinary course of business.business, including tax and legal contingencies. The following outlines our legal contingencies. For a discussion of our tax contingencies, see Note 5B.
Accelerated share repurchase agreement––On February 2, 2017, we entered into an accelerated share repurchase agreement with Citibank to repurchase $5 billion of our common stock. Pursuant to the terms of the agreement, on February 6, 2017, we paid $5 billion to Citibank and received an initial delivery of approximately 126 million shares of our common stock from Citibank at a price of $31.73 per share, which represented, based on the closing price of our common stock on the NYSE on February 2, 2017, approximately 80% of the notional amount of the accelerated share repurchase agreement. On May 16, 2017, the accelerated share repurchase agreement with Citibank was completed, which, per the terms of the agreement, resulted in Citibank owing us a certain number of shares of Pfizer common stock. Pursuant to the agreement’s settlement terms, we received an additional 24 million shares of our common stock from Citibank on May 19, 2017. The average price paid for all of the shares delivered under the accelerated share repurchase agreement was $33.31 per share. The common stock received is included in Treasury Stock. This agreement was entered into pursuant to our previously announced share repurchase authorization. At October 1, 2017, our remaining share-purchase authorization was approximately $6.4 billion.
Pending approval in the EU of Mylotarg––Mylotarg was developed, in part, through a research arrangement with a third party. If Mylotarg is approved in the EU in 2018 for the treatment of acute myeloid leukemia, we will incur an obligation for additional fixed payments over a 10-year period aggregating $310 million.

A. Legal Proceedings

Our non-taxlegal contingencies include, but are not limited to, the following:
•Patent litigation, which typically involves challenges to the coverage and/or validity of patents on various products, processes or dosage forms. We are the plaintiff in the vast majority of these actions. An adverse outcome in actions in which we are the plaintiff could result in loss of patent protection for a drug,product, a significant loss of revenues from that druga product or impairment of the value of associated assets. We are the plaintiff in the majority of these actions.
•Product liability and other product-related litigation related to current or former products, which can include personal injury, consumer, off-label promotion, securities, antitrust and breach of contract claims, among others, and often involves highly complex issues relating to medical causation, label warnings and reliance on those warnings, scientific evidence and findings, actual, provable injury and other matters.
•Commercial and other asserted or unasserted matters, which can include merger-relatedacquisition-, licensing-, intellectual property-, collaboration- or co-promotion-related and product-pricing claims and environmental claims and proceedings, and can involve complexities that will vary from matter to matter.
•Government investigations, which often are related to the extensive regulation of pharmaceutical companies by national, state and local government agencies in the U.S. and in other countries. 

jurisdictions.
Certain of these contingencies could result in increased expenses and/or losses, including damages, royalty payments, fines and/or civil penalties, and/or criminal charges, which could be substantial.

substantial, and/or criminal charges.
We believe that our claims and defenses in these matters in which we are a defendant are substantial, but litigation is inherently unpredictable and excessive verdicts do occur. We do not believe that any of these matters will have a material adverse effect on our financial position. However, we could incur judgments, enter into settlements or revise our expectations regarding the outcome of certain matters, and such developmentswhich could have a material adverse effect on our results of operations in the period in which the amounts are accrued and/or our cash flows in the period in which the amounts are accrued or paid.

We have accrued for losses that are both probable and reasonably estimable. Substantially all of our contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a loss and/or the measurement of any loss can be complex. Consequently, we are unable to estimate the range of reasonably possible loss in excess of amounts accrued. Our assessments, which result from a complex series of judgments about future events and uncertainties, are based on estimates and assumptions that have been deemed reasonable by management, but the assessment process relies heavily on estimates and assumptions that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause us to change those estimates and assumptions.

Amounts recorded for legal and environmental contingencies can result from a complex series of judgments about future events and uncertainties and can rely heavily on estimates and assumptions.

 For proceedings under environmental laws to which a governmental authority is a party, we have adopted a disclosure threshold of $1 million in potential or actual governmental monetary sanctions.
The principal pending matters to which we are a party are discussed below. In determining whether a pending matter is a principal matter, we consider both quantitative and qualitative factors in order to assess materiality, such as, among other things,

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others, the amount of damages and the nature of any other relief sought, in the proceeding, if such damages and other relief are specified; our view of the merits of the claims and of the strength of our defenses; whether the action purports to be, or is, a class action and, if not certified, our view of the likelihood that a class will be certified by the court; the jurisdiction in which the proceeding is pending; whether related actions have been transferred to multidistrict litigation; any experience that we or, to our knowledge, other companies have had in similar proceedings; whether disclosure of the action would be important to a reader of our financial statements, including whether disclosure might change a reader’s judgment about our financial statements in light of all of the information that is available to the reader; the potential impact of the proceeding on our reputation; and the extent of public interest in the matter. In addition, with respect to patent matters in which we are the plaintiff, we consider, among other things, the financial significance of the product protected by the patent. As a resultpatent(s) at issue. Some of considering qualitative factors in our determination of principal matters, there are somethe matters discussed below with respect toinclude those which management believes that the likelihood of possible loss in excess of amounts accrued is remote.

A1. Legal Proceedings––Patent Litigation

Like other pharmaceutical companies, weWe are involved in numerous suits relating to our patents, including but not limited to, those discussed below. Most of the suits involve claims by generic drug manufacturers that patents covering our products (or those of our collaboration/licensing partners to which we
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have licenses or co-promotion rights and to which we may or may not be a party), processes or dosage forms are invalid and/or do not cover the product of the generic drug manufacturer. Also, counterclaims, as well as various independent actions, have been filed alleging that our assertions of, or attempts to enforce, patent rights with respect to certain products constitute unfair competition and/or violations of antitrust laws. In addition to the challenges to the U.S. patents on a number of our products that are discussed below, patent rights to certain of our products or those of our collaboration/licensing partners are being challenged in various other countries. jurisdictions. Some of our collaboration or licensing partners face challenges to the validity of their patent rights in non-U.S. jurisdictions. For example, in April 2022, the U.K. High Court issued a judgment finding invalid a BMS patent related to Eliquis due to expire in 2026. In November 2022, BMS received permission to appeal the High Court’s decision. Additional challenges remain pending in other jurisdictions. Also, for example, in July 2022, CureVac AG (CureVac) brought a patent infringement action against BioNTech and certain of its subsidiaries in the German Regional Court alleging that Comirnaty infringes certain German utility model patents and certain expired and unexpired European patents. Additional challenges involving Comirnaty patents may be filed against us and/or BioNTech in other jurisdictions in the future. In addition, in October 2022, Accord Healthcare Ltd. brought suit in the U.K. against the Regents of the University of California challenging the validity of the U.K. patent covering the active ingredient in Xtandi, which expires in 2028. Adverse decisions in these matters could have a material adverse effect on our results of operations.We are also party to other patent damages suits in various jurisdictions pursuant to which generic drug manufacturers, payers, governments or other parties are seeking damages from us for allegedallegedly causing delay of generic entry. Additionally, our licensing and collaboration partners face challenges by generic drug manufacturers to patents covering several of their products that may impact our licenses or co-promotion rights to such products.
We also are often involved in other proceedings, such as inter partes review, post-grant review, re-examination or opposition proceedings, before the U.S. Patent and Trademark Office, the European Patent Office, or other foreign counterparts relating to our intellectual property or the intellectual property rights of others. Also, if one of our patents is found to be invalid by such proceedings, generic or competitive products could be introduced into the market resulting in the erosion of sales of our existing products. For example, several of the patents in our pneumococcal vaccine portfolio have been challenged in inter partes review and post-grant review proceedings in the United States.U.S. Patent and Trademark Office. In addition, another patent was challenged in federal court in Delaware; and that case was settled in September 2021 on terms not material to the company. Other challenges to pneumococcal vaccine patents remain pending at the Patent Trial and Appeal Board and outside the U.S. The invalidation of theseany of the patents in our pneumococcal portfolio could potentially allow additional competitor vaccines, if approved, to enter the marketplace earlier than anticipated. In the event that any of the patents are found valid and infringed, a competitor’s vaccine, if approved, might be prohibited from entering the market or a competitor pneumococcal vaccine into the marketplace. might be required to pay us a royalty.
We are also subject to patent litigation pursuant to which one or more third parties seeksseek damages and/or injunctive relief to compensate for alleged infringement of its patents by our commercial or other activities. For example, our subsidiary, Hospira issubsidiaries are involved in patent and patent-related disputes over itstheir attempts to bring generic pharmaceutical and biosimilar products to market. If one of our marketed products is found to infringe valid patent rights of a third party, such third party may be awarded significant damages or royalty payments, or we may be prevented from further sales of that product. Such damages may be enhanced as much as three-fold in the event thatif we or one of our subsidiaries like Hospira, is found to have willfully infringed valid patent rights of a third party.

Actions In Which We Are The Plaintiff
Bosulif (bosutinib)Xeljanz (tofacitinib)
In December 2016, Wyeth LLC, Wyeth Pharmaceuticals Inc.,Beginning in 2017, we brought patent-infringement actions against several generic manufacturers that filed separate ANDAs with the FDA seeking approval to market their generic versions of tofacitinib tablets in one or both of 5 mg and PF Prism C.V. (collectively, Wyeth) brought a patent-infringement action against Alembic Pharmaceuticals, Ltd, Alembic Pharmaceuticals, Inc. (collectively, Alembic), Sun Pharmaceutical Industries, Inc.,10 mg dosage strengths, and Sun Pharmaceutical Industries Limited (collectively, Sun),in both immediate and extended release forms. To date, we have settled actions with several manufacturers on terms not material to us. The remaining actions continue in the U.S. District Court for the District of Delaware in connection with abbreviated new drug applications respectively filed with the FDA by Alembic and Sun, each seeking approval to market generic versions of bosutinib. Alembic is challenging patents, which expire in 2026, covering polymorphic forms of bosutinib and methods of treating chronic myelogenous leukemia. Sun is challenging the patent covering polymorphic forms of bosutinib that expires in 2026. as described below.
In March 2017, WyethOctober 2021, we brought a separate patent-infringement action against MSN Laboratories Private LimitedSinotherapeutics Inc. (Sinotherapeutics) asserting the infringement and MSN Pharmaceuticals, Inc. (collectively, MSN),validity of our patent covering extended release formulations of tofacitinib that was challenged by Sinotherapeutics in the U.S. District Court for the District of Delaware in connection with an abbreviated new drug application filed with the FDA by MSN,its ANDA seeking approval to market a generic version of bosutinib, and challengingtofacitinib 11 mg extended release tablets.
In June 2022, we brought a separate patent expiring in 2026 covering polymorphic forms of bosutinib. In September 2017, the caseinfringement action against MSN was dismissed. Also, in September 2017, Wyeth brought an additional patent-infringement action against Sun in the U.S. District Court for the District of DelawareLaboratories Private Ltd. (MSN) asserting the infringement and validity of two other patentsour compound patent covering the active agreement that was challenged by Sun, which expireMSN in 2025 and 2026 respectively, covering compositions of bosutinib and methods of treating chronic myelogenous leukemia.

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EpiPen
In July 2010, King, which we acquired in 2011 and is a wholly-owned subsidiary, brought a patent-infringement action against Sandoz in the U.S. District Court for the District of New Jersey in connection with Sandoz’s abbreviated new drug application filed with the FDAits ANDAs seeking approval to market an epinephrine injectable product. Sandoz is challenging patents, which expire in 2025, covering the next-generation autoinjector for use with epinephrine that is sold under the EpiPen brand name.
Flector Patch (diclofenac)
generic versions of tofacitinib immediate release tablets (5 mg, 10 mg) and oral solution 1 mg/mL. In October 2015, the owners (Teikoku Seiyaku Co., Ltd. and Altergon SA) of a patent covering Pfizer’s Flector Patch product, along with the New Drug Application holder (IBSA Institut Biochemique SA), brought a patent-infringementAugust 2022, we settled our action against Actavis Laboratories UT, Inc. in the U.S. District Court for the District of Delaware in connection with an abbreviated new drug application filed by Actavis Laboratories UT, Inc. with the FDA requesting approval to launch a generic version of Flector Patch prior to the 2019 expiration of the patent. In August 2016, Pfizer subsidiary Alpharma Pharmaceuticals LLC was added as a plaintiff to the lawsuit. In August 2017, this case was settledMSN on terms not material to Pfizer.us.
Precedex PremixInlyta (axitinib)
In June 2014,Ben Venue Laboratories, Inc. (Ben Venue)2019, Glenmark Pharmaceuticals Ltd. (Glenmark) notified our subsidiary, Hospira,us that it had filed an abbreviated new drug applicationANDA with the FDA seeking approval to market a generic version of Hospira’s premix versionInlyta. Glenmark asserts the invalidity and non-infringement of Precedex and containing allegationsthe crystalline form patent for Inlyta that a patent relating to the use of Precedex in an intensive care unit setting, which expires in March2030. In 2019, was invalid or not infringed. In August 2014, Hospira and Orion Corporation (co-owner of the patent that is the subject of the lawsuit)we filed suit against Ben Venue, Hikma Pharmaceuticals PLC (Hikma), and West-Ward Pharmaceutical Corp.Glenmark in the U.S. District Court for the District of Delaware, asserting the validity and infringement of the crystalline form patent that is the subject of the lawsuit. In October 2014, Eurohealth International Sarl was substituted for Ben Venue and Hikma. In June 2016, this case was settled on terms not material to Pfizer.Inlyta.
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In June 2015, Amneal Pharmaceuticals LLC (Amneal)PFIZER INC. AND SUBSIDIARY COMPANIES
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Ibrance (palbociclib)
Beginning in January 2021, several generic companies notified Hospiraus that itthey had filed an abbreviated new drug applicationANDAs with the FDA seeking approval to market generic versions of Ibrance tablets. The generic companies are challenging some or all of the following patents: (i) the composition of matter patent expiring in 2027; (ii) the composition of matter patent expiring in 2023; (iii) the method of use patent expiring in 2023; (iv) the crystalline form patent expiring in 2034; and (v) a tablet formulation patent expiring in 2036. We brought patent infringement actions against each of the generic versionfilers in various U.S. federal courts, asserting the validity and infringement of Hospira’s premix versionthe patents challenged by the generic companies. We have settled with one of Precedexthese generic companies on terms not material to us, and containing allegations that four patentswe dismissed the patent infringement actions relating to the Precedex premix formulationscrystalline form of patent, the composition of matter patent expiring in 2023, the method of use patent, and theirthe tablet formulation patent against the generic companies that had challenged these patents. The composition of matter patent expiring in 2027 remains in suit.
Eucrisa
Beginning in September 2021, several generic companies notified us that they had filed ANDAs with the FDA seeking approval to market generic versions of Eucrisa. The companies assert the invalidity and non-infringement of a composition of matter patent expiring in 2026, two method of use allpatents expiring in 2027, and one other method of which expireuse patent expiring in 2032, were invalid or not infringed.2030. In August 2015, Hospira filed suitSeptember 2021, we brought patent infringement actions against Amnealthe generic filers in the U.S. District Court for the District of Delaware, asserting the validity and infringement of the patents that arechallenged by the subject of the lawsuit.generic companies.

Braftovi (encorafenib)
In December 2015, Fresenius Kabi USA LLC (Fresenius)August 2022, a generic company notified Hospiraus that it had filed an abbreviated new drug applicationANDA with the FDA seeking approval to market a generic version of Hospira’s premix versionBraftovi. The company asserts the invalidity and non-infringement of, Precedex and containing allegations that four patents relating to the Precedex premix formulations and theiramong others, a method of use all of which expirepatent expiring in 2032, were invalid or not infringed. In January 2016, Hospira filed suit against Fresenius in the U.S. District Court for the Northern District of Illinois asserting the validity and infringement of the patents that are the subject of the lawsuit.

In August 2016, Par Sterile Products, LLC (Par) notified Hospira that it had filed an abbreviated new drug application with the FDA seeking approval to market a generic version of Hospira’s premix version of Precedex and containing allegations that four patents relating to the Precedex premix formulations and their use, all of which expire in 2032, were invalid or not infringed.2033. In September 2016, Hospira filed suit2022, we brought a patent infringement action against Parthe generic company in the U.S. District Court for the District of Delaware, asserting the validity and infringement of the patents that are the subjectmethod of the lawsuit. In December 2016, the case was stayed pending the outcome of Hospira’s suit against Amneal (including all appeals).use patent expiring in 2033.
Toviaz (fesoterodine)
We have an exclusive, worldwide license to market Toviaz from UCB Pharma GmbH (UCB), which owns the patents relating to Toviaz.

Mektovi (binimetinib)
Beginning in May 2013,August 2022, several generic drug manufacturerscompanies notified us that they had filed abbreviated new drug applicationsANDAs with the FDA seeking approval to market generic versions of Toviaz and assertingMektovi. The companies assert the invalidity unenforceability and/orand non-infringement of alltwo method of ouruse patents for Toviaz that are listedexpiring in the FDA’s list2030, a method of Approved Drug Products with Therapeutic Equivalence Evaluations, commonly referred to as the “Orange Book”.use patent expiring in 2031, two method of use patents expiring in 2033, and a product by process patent expiring in 2033. Beginning in June 2013,September 2022, we filedbrought patent infringement actions against all of thosethe generic drug manufacturersfilers in the U.S. District Court for the District of Delaware, asserting the validity and infringement of five ofall six patents.
Actions in Which We are the patents for Toviaz: three composition-of-matter patents and a method-of-use patent that expire in 2019 and a patent covering salts of fesoterodine that expires in 2022. Defendant
Comirnaty
In June and July 2015, we settled with four of the generic defendants. The trial relating to the four remaining defendants occurred in July 2015. In April 2016, the District Court held that the patents that were the subject of the lawsuit were valid and infringed. The defendants’ deadline to appeal this decision expired in June 2016.

In December 2014, MylanMarch 2022, Alnylam Pharmaceuticals, Inc. (Mylan Pharmaceuticals) notified us that it had(Alnylam) filed anabbreviated new drug application with the FDA seeking approval to market a generic version of Toviaz and asserting the invalidity, unenforceability and/or non-infringement of all of our patents for Toviaz that are listed in the Orange Book. In January 2015, we filed an action against Mylan Pharmaceuticalscomplaint in the U.S. District Court for the District of Delaware assertingagainst Pfizer and Pharmacia & Upjohn Co. LLC, our wholly owned subsidiary, alleging that Comirnaty infringes U.S. Patent No. 11,246,933, which was issued in February 2022, and seeking unspecified monetary damages. In July 2022, Alnylam filed a second complaint in the U.S. District Court for the District of Delaware against Pfizer, Pharmacia & Upjohn Co. LLC, BioNTech and BioNTech Manufacturing GmbH, alleging that Comirnaty infringes U.S. Patent No. 11,382,979, which was issued in July 2022, and seeking unspecified monetary damages.
In August 2022, ModernaTX, Inc. (ModernaTX) and Moderna US, Inc. (Moderna) sued Pfizer, BioNTech, BioNTech Manufacturing GmbH and BioNTech US Inc. in the U.S. District Court for the District of Massachusetts, alleging that Comirnaty infringes three U.S. patents. In its complaint, Moderna stated that it is seeking damages for alleged infringement occurring only after March 7, 2022.
In August 2022, ModernaTX filed a patent infringement action in Germany against Pfizer and certain subsidiary companies, as well as BioNTech and certain subsidiary companies, alleging that Comirnaty infringes two European patents. In September 2022, ModernaTX filed patent infringement actions in the U.K and in the Netherlands against Pfizer Inc. and certain subsidiary companies, as well as BioNTech and certain subsidiary companies, on the same two patents. In its complaints, Moderna stated that it is seeking damages for alleged infringement occurring only after March 7, 2022. In the U.K., Pfizer and BioNTech have brought an action against ModernaTX seeking to revoke these European patents.
Paxlovid
In June 2022, Enanta Pharmaceuticals, Inc. filed a complaint in the U.S. District Court for the District of five ofMassachusetts against Pfizer alleging that the active ingredient in Paxlovid, nirmatrelvir, infringes U.S. Patent No. 11,358,953, which was issued in June 2022, and seeking unspecified monetary damages.
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patents for Toviaz: three composition-of-matter patents and a method-of-use patent that expire in 2019 and a patent covering salts of fesoterodine that expires in 2022. In January 2017, the District Court issued a verdict finding that the five patents that are the subject of the lawsuit are valid and infringed. In August 2017, the District Court issued a written decision consistent with the verdict, finding the five patents valid and infringed. In September 2017, Mylan Pharmaceuticals appealed the District Court’s decision to the U.S. Court of Appeals for the Federal Circuit.

In December 2016, Torrent Pharmaceuticals, Ltd. (Torrent) notified us that it had filed anabbreviated new drug application with the FDA seeking approval to market a generic version of Toviaz and asserting the invalidity, unenforceability and/or non-infringement of all of our patents for Toviaz that are listed in the Orange Book. In February 2017, we filed an action against Torrent in the U.S. District Court for the District of Delaware, asserting the infringement of the same five patents that are the subject of the action against Mylan Pharmaceuticals. In September 2017, this case was dismissed.
Xeljanz (tofacitinib)
In February 2017, we brought a patent-infringement action against MicroLabs USA Inc. and MicroLabs Ltd. (collectively, MicroLabs) in the U.S. District Court for the District of Delaware asserting the infringement and validity of three patents challenged by MicroLabs in its abbreviated new drug application seeking approval to market a generic version of tofacitinib 5 mg tablets. Of the three patents that are the subject of the lawsuit, one covers the active ingredient and expires in December 2025, the second covers an enantiomer of tofacitinib and expires in 2022, and the third covers a polymorphic form of tofacitinib and expires in 2023. Three other patents for Xeljanz expiring in December 2020 have not been challenged by MicroLabs.

Separately, also in February 2017, we brought a patent-infringement action against Sun Pharmaceutical Industries Ltd. in the U.S. District Court for the District of Delaware asserting the infringement and validity of our patent covering a polymorphic form of tofacitinib, expiring in 2023, that was challenged by Sun Pharmaceutical Industries Ltd. in its abbreviated new drug application seeking approval to market a generic version of tofacitinib 11 mg extended release tablets. In November 2017, we brought an additional patent-infringement action against Sun Pharmaceuticals Industries Ltd. in the U.S. District Court for the District of Delaware asserting the infringement and validity of another patent challenged by Sun Pharmaceuticals Industries Ltd, which covers the active ingredient and expires in December 2025.

In March 2017, we brought a patent-infringement action against Zydus Pharmaceuticals (USA) Inc. and Cadila Healthcare Ltd. (collectively, Zydus) in the U.S. District Court for the District of Delaware asserting the infringement and validity of the same three patents that are the subject of the action against MicroLabs, which Zydus challenged in its abbreviated new drug application seeking approval to market a generic version of tofacitinib 5 mg tablets.

Also in March 2017, we brought separate actions in the U.S. District Court for the District of Delaware against Prinston Pharmaceutical Inc., Zhejiang Huahai Pharmaceutical Co., Ltd., Huahai US Inc. and Solco Healthcare US, LLC (collectively Prinston) and against Breckenridge Pharmaceutical Inc., Pensa Pharma S.A. and Laboratorios Del Dr. Esteve, S.A. (collectively Breckenridge) on the two patents expiring in 2022 and 2023, respectively, that were challenged by Prinston and Breckenridge in their respective abbreviated new drug applications seeking approval to market generic versions of tofacitinib 5 mg tablets. In October 2017, we brought an additional patent-infringement action against Breckenridge in the U.S. District Court for the District of Delaware asserting the infringement and validity of four additional patents challenged by Breckenridge, three of which expire in December 2020 and one of which expires in December 2025.
Xtandi (enzalutamide)
In December 2016, Medivation and Medivation Prostate Therapeutics, Inc. (collectively, the Medivation Group); Astellas Pharma Inc., Astellas US LLC and Astellas Pharma US, Inc. (collectively, Astellas); and The Regents of the University of California filed patent-infringement suits in the U.S. District Court for the District of Delaware against Actavis Laboratories FL, Inc. and Actavis LLC (collectively, Actavis); Zydus; and Apotex Inc. and Apotex Corp. (collectively, Apotex) in connection with those companies’ respective abbreviated new drug applications filed with the FDA for approval to market generic versions of enzalutamide. The generic manufacturers are challenging patents, which expire as early as 2026, covering enzalutamide and treatments for prostate cancer. In May 2017, the Medivation Group filed a patent-infringement suit against Roxane Laboratories Inc. (Roxane) in the same court in connection with Roxane’s abbreviated new drug application with the FDA for approval to market a generic version of enzalutamide.


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Matters Involving OurPfizer and its Collaboration/Licensing Partners
Nexium 24HR (esomeprazole)
We have an exclusive license from AstraZeneca PLC (AstraZeneca) to market in the U.S. the OTC version of Nexium (Nexium 24HR). Between October 2014 and November 2016, Actavis Laboratories FL, Inc. (Actavis), Andrx Labs, LLC (Andrx), Perrigo Company plc (Perrigo), Lupin Limited, Dr. Reddy’s Laboratories, Inc. & Ltd. (Dr. Reddy’s), Hetero USA Inc. (Hetero), Aurobindo Pharma USA Inc. (Aurobindo) and Cipla Limited (Cipla) notified us that they had filed abbreviated new drug applications with the FDA seeking approval to market generic versions of Nexium 24HR prior to the expiration of one or more of AstraZeneca’s patents listed in the Orange Book for Nexium 24HR. AstraZeneca filed actions against each of these companies in the U.S. District Court for the District of New Jersey asserting infringement of the challenged patents. In March 2017, the cases against Actavis and Andrx were settled on terms not material to Pfizer. In June 2017, the cases against Perrigo, Dr. Reddy’s and Lupin Limited were settled on terms not material to Pfizer. In August 2017, the cases against Hetero and Aurobindo were settled on terms not material to Pfizer. In October 2017, AstraZeneca’s action against Cipla was settled on terms not material to Pfizer. We were not a party to AstraZeneca’s patent-infringement actions.

Toviaz (fesoterodine)––Inter-Partes Reviews
In January 2016, Mylan Pharmaceuticals and Mylan Laboratories (collectively, Mylan) filed petitions with the U.S. Patent and Trademark Office requesting inter partes reviews of five of the patents covering fesoterodine, the active ingredient in Toviaz: three composition-of-matter patents and a method-of-use patent that expire in 2019 and a patent covering salts of fesoterodine that expires in 2022. The patents are owned by UCB, and we have an exclusive, worldwide license to market Toviaz from UCB. In July 2016, the Patent Trial and Appeal Board agreed to institute inter partes reviews of all five patents. Amerigen Pharmaceuticals Limited (Amerigen), Alembic Pharmaceuticals Limited and Torrent Pharmaceuticals Limited have joined the inter partes reviews. In July 2017, the U.S. Patent and Trademark Office issued decisions upholding all five patents. In September 2017, Mylan and Amerigen appealed the U.S. Patent and Trademark Office decisions to the U.S. Court of Appeals for the Federal Circuit.

Eliquis
In February, March, and April 2017, twenty-five generic companies sent BMS Paragraph-IV certification letters informing BMS that they had filed abbreviated new drug applicationsANDAs seeking approval of generic versions of Eliquis, challenging the validity and infringement of one or more of the three patents listed in the Orange Book for Eliquis. TheOne of the patents expired in December 2019 and the remaining patents currently are set to expire in 2019, 2026 and 2031. Eliquis has been jointly developed and is being commercialized by BMS and Pfizer. In April 2017, BMS and Pfizer filed patent-infringement actions against all generic filers in the U.S. District Court for the District of Delaware and the U.S. District Court for the District of West Virginia, asserting that each of the generic companies’ proposed products would infringe each of the patent(s) that each generic filer challenged. Some generic filers challenged only the 2031 patent, some challenged both the 2031 and 2026 patent, and one generic company challenged all three patents.

Bavencio (avelumab)
In July 2017, BMS, E.R. Squibb & Sons LLC, Ono Pharmaceutical Co. Ltd., and Tasuku Honjo brought a patent-infringement action inAugust 2020, the U.S. District Court for the District of Delaware against Pfizer, Merck KGaA,ruled that both the 2026 patent and EMD Serono, alleging that Bavencio (avelumab) infringes onethe 2031 patent relatingare valid and infringed by the proposed generic products. In August and September 2020, the generic filers appealed the District Court’s decision to methodsthe U.S. Court of Appeals for treating tumorsthe Federal Circuit. Prior to the August 2020 ruling, we and BMS settled with anti-PD-L1 antibodies, which expirescertain of the companies on terms not material to us, and we and BMS may settle with other generic companies in 2023.the future. In September 2021, the U.S. Court of Appeals for the Federal Circuit affirmed the District Court’s decision.
Actions In Which We Are The Defendant
Inflectra (infliximab-dyyb)Comirnaty
In March 2015, JanssenJuly 2022, Pfizer, BioNTech and New York University, together, broughtBioNTech Manufacturing GmbH filed a patent-infringement actiondeclaratory judgment complaint against CureVac in the U.S. District Court for the District of Massachusetts against Hospira, Celltrion Healthcare Co. Ltd. and Celltrion Inc. alleging that infliximab-dyyb, to be marketed by Hospira inseeking a judgment of non-infringement for the U.S. under the brand name Inflectra, would infringe sixfollowing three patents relating to infliximab, its manufactureComirnaty: U.S. Patent Nos. 11,135,312, 11,149,278, and use. Claims with respect to four11,241,493. Outside of the patents have since been dismissed by the plaintiffs, leaving two patents at issueU.S., in the ongoing action: the infliximab antibody patentU.K., Pfizer and BioNTech have sued CureVac seeking a patent relating to cell culture media. In August 2016, the U.S. District Court for the Districtjudgment of Massachusetts ruled that the antibody patent was invalid,invalidity of several patents and JanssenCureVac has appealed that ruling to the Court of Appeals for the Federal Circuit.

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made certain infringement counterclaims.
A2. Legal Proceedings––Product Litigation

Like other pharmaceutical companies, weWe are defendants in numerous cases, including but not limited to those discussed below, related to our pharmaceutical and other products. Plaintiffs in these cases seek damages and other relief on various grounds for alleged personal injury and economic loss.
Asbestos
Between 1967 and 1982, Warner-Lambert owned American Optical Corporation (American Optical), which manufactured and sold respiratory protective devices and asbestos safety clothing. In connection with the sale of American Optical in 1982, Warner-Lambert agreed to indemnify the purchaser for certain liabilities, including certain asbestos-related and other claims. As of October 1, 2017, approximately 56,500 claims naming American Optical and numerous other defendants were pending in various federal and state courts seeking damages for alleged personal injury from exposure to asbestos and other allegedly hazardous materials. Warner-Lambert was acquired by Pfizer in 2000 and is a wholly-ownedwholly owned subsidiary of Pfizer. Warner-Lambert is actively engaged in the defense of, and will continue to explore various means of resolving, these claims.

Numerous lawsuits against American Optical, Pfizer and certain of its previously owned subsidiaries are pending against Pfizer in various federal and state courts seeking damages for alleged personal injury from exposure to products allegedly containing asbestos and other allegedly hazardous materials sold by Pfizer and certain of its previously owned subsidiaries.
There also are a small number of lawsuits pending in various federal and state courts seeking damages for alleged exposure to asbestos in facilities owned or formerly owned by Pfizer or its subsidiaries.

Effexor
Personal Injury Actions
A number of individual lawsuits and multi-plaintiff lawsuits have been filed against us and/or our subsidiaries in various federal and state courts alleging personal injury as a result of the purported ingestion of Effexor. Among other types of actions, the Effexor personal injury litigation includes actions alleging a variety of birth defects as a result of the purported ingestion of Effexor by women during pregnancy. Plaintiffs in these birth-defect actions seek compensatory and punitive damages. In August 2013, the federal birth-defect cases were transferred for consolidated pre-trial proceedings to a Multi-District Litigation (In re Effexor (Venlafaxine Hydrochloride) Products Liability Litigation MDL-2458) in the U.S. District Court for the Eastern District of Pennsylvania. Almost all plaintiffs have voluntarily dismissed their actions. The Multi-District Litigation, as well as the coordinated state court proceedings in California, has been administratively stayed.

Antitrust Actions
Beginning in May 2011, actions, including purported class actions, were filed in various federal courts against Wyeth and, in certain of the actions, affiliates of Wyeth and certain other defendants relating to Effexor XR, which is the extended-release formulation of Effexor. The plaintiffs in each of the class actions seek to represent a class consisting of all persons in the U.S. and its territories who directly purchased, indirectly purchased or reimbursed patients for the purchase of Effexor XR or generic Effexor XR from any of the defendants from June 14, 2008 until the time the defendants’ allegedly unlawful conduct ceased. The plaintiffs in all of the actions allege delay in the launch of generic Effexor XR in the U.S. and its territories, in violation of federal antitrust laws and, in certain of the actions, the antitrust, consumer protection and various other laws of certain states, as the result of Wyeth fraudulently obtaining and improperly listing certain patents for Effexor XR in the Orange Book, enforcing certain patents for Effexor XR and entering into a litigation settlement agreement with a generic drug manufacturer with respect to Effexor XR. Each of the plaintiffs seeks treble damages (for itself in the individual actions or on behalf of the putative class in the purported class actions) for alleged price overcharges for Effexor XR or generic Effexor XR in the U.S. and its territories since June 14, 2008. All of these actions have been consolidated in the U.S. District Court for the District of New Jersey.
In October 2014, the District Court dismissed the direct purchaser plaintiffs’ claims based on the litigation settlement agreement, but declined to dismiss the other direct purchaser plaintiff claims. In January 2015, the District Court entered partial final judgments as to all settlement agreement claims, including those asserted by direct purchasers and end-payer plaintiffs, which plaintiffs
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appealed to the U.S. Court of Appeals for the Third Circuit. In August 2017, the U.S. Court of Appeals for the Third Circuit reversed the District Court’s decisions and remanded the claims to the District Court.
Zoloft
A number of individual lawsuits and multi-plaintiff lawsuits have been filed against us and/or our subsidiaries in various federal and state courts alleging personal injury as a result of the purported ingestion of Zoloft. Among other types of actions, the Zoloft personal injury litigation includes actions alleging a variety of birth defects as a result of the purported ingestion of Zoloft by women during pregnancy. Plaintiffs in these birth-defect actions seek compensatory and punitive damages and the disgorgement of profits resulting from the sale of Zoloft. In April 2012, the federal birth-defect cases were transferred for consolidated pre-trial proceedings to a Multi-District Litigation (In re Zoloft Products Liability Litigation MDL-2342) in the

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U.S. District Court for the Eastern District of Pennsylvania. A number of plaintiffs have voluntarily dismissed their actions. In April 2016, the District Court granted our motion for summary judgment, dismissing the claims of almost all of the remaining plaintiffs. In May 2016, the plaintiffs appealed the District Court’s decision to the U.S. Court of Appeals for the Third Circuit. In June 2017, the U.S. Court of Appeals for the Third Circuit affirmed the District Court’s decision.
Lipitor
Antitrust Actions
Beginning in November 2011, purported class actions relating to Lipitor were filed in various federal courts against, among others, Pfizer, certain Pfizer affiliates, of Pfizer, and, in most of the actions, Ranbaxy Inc.Laboratories Ltd. (Ranbaxy) and certain affiliates of Ranbaxy.Ranbaxy affiliates. The plaintiffs in these various actions seek to represent nationwide, multi-state or statewide classes consisting of persons or entities who directly purchased, indirectly purchased or reimbursed patients for the purchase of Lipitor (or, in certain of the actions, generic Lipitor) from any of the defendants from March 2010 until the cessation of the defendants’ allegedly unlawful conduct (the Class Period). The plaintiffs allege delay in the launch of generic Lipitor, in violation of federal antitrust laws and/or state antitrust, consumer protection and various other laws, resulting from (i) the 2008 agreement pursuant to which Pfizer and Ranbaxy settled certain patent litigation involving Lipitor and Pfizer granted Ranbaxy a license to sell a generic version of Lipitor in various markets beginning on varying dates, and (ii) in certain of the actions, the procurement and/or enforcement of certain patents for Lipitor. Each of the actions seeks, among other things, treble damages on behalf of the putative class for alleged price overcharges for Lipitor (or, in certain of the actions, generic Lipitor) during the Class Period. In addition, individual actions have been filed against Pfizer, Ranbaxy and certain of their affiliates, among others, that assert claims and seek relief for the plaintiffs that are substantially similar to the claims asserted and the relief sought in the purported class actions described above. These various actions have been consolidated for pre-trial proceedings in a Multi-District Litigation (In re Lipitor Antitrust Litigation MDL-2332) in the U.S. District Court for the District of New Jersey.

In September 2013 and 2014, the District Court dismissed with prejudice the claims byof the direct purchasers. In October and November 2014, the District Court dismissed with prejudice the claims of all other Multi-District Litigation plaintiffs. All plaintiffs have appealed the District Court’s orders dismissing their claims with prejudice to the U.S. Court of Appeals for the Third Circuit. In addition, the direct purchaser class plaintiffs appealed the order denying their motion to amend the judgment and for leave to amend their complaint to the U.S.Court of Appeals. In 2017, the Court of Appeals for the Third Circuit. In August 2017, the U.S. Court of Appeals for the Third Circuit reversed the District Court’s decisions and remanded substantially all of the claims to the District Court.

Also, in January 2013, the State of West Virginia filed an action in West Virginia state court against Pfizer and Ranbaxy, among others, that asserts claims and seeks relief on behalf of the State of West Virginia and residents of that state that are substantially similar to the claims asserted and the relief sought in the purported class actions described above.
Personal Injury ActionsEpiPen (Direct Purchaser)
A number of individual and multi-plaintiff lawsuits have been filed against us in various federal and state courts alleging that the plaintiffs developed type 2 diabetes as a result of the purported ingestion of Lipitor. Plaintiffs seek compensatory and punitive damages.
In February 2014, the federal actions were transferred for consolidated pre-trial proceedings to2020, a Multi-District Litigation (In re Lipitor (Atorvastatin Calcium) Marketing, Sales Practices and Products Liability Litigation (No. II) MDL-2502)lawsuit was filed in the U.S. District Court for the District of South Carolina. Since 2016, certain cases in the Multi-District Litigation were remanded to certain state courts. In January 2017, the District Court granted our motion for summary judgment, dismissing substantially all of the remaining cases pending in the Multi-District Litigation. In January 2017, the plaintiffs appealed the District Court’s decision to the U.S. Court of Appeals for the Fourth Circuit.
Viagra
A number of individual and multi-plaintiff lawsuits have been filed against us in various federal and state courts alleging that the plaintiffs developed melanoma and/or the exacerbation of melanoma as a result of the purported ingestion of Viagra. Plaintiffs seek compensatory and punitive damages.
In April 2016, the federal actions were transferred for coordinated pre-trial proceedings to a Multi-District Litigation (In Re: Viagra (Sildenafil Citrate) Products Liability Litigation, MDL-2691) in the U.S. District Court for the Northern District of California. In December 2016, federal actions filed against Lilly and filed against both us and Lilly, were transferred for coordinated pre-trial proceedings to the Multi-District Litigation (In re: Viagra (Sildenafil Citrate) and Cialis (Tadalafil) Products Liability Litigation, MDL-2691).

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Celebrex
Beginning in July 2014, purported class actions were filed in the U.S. District Court for the Eastern District of VirginiaKansas against Pfizer, its current and certain subsidiaries of Pfizer relating to Celebrex. The plaintiffs seek to represent U.S. nationwide or multi-state classes consisting of persons or entities who directly purchased from the defendants, or indirectly purchased or reimbursed patients for some or all of the purchase price of, Celebrex or generic Celebrex from May 31, 2014 until the cessation of the defendants’ allegedly unlawful conduct. The plaintiffs allege delay in the launch of generic Celebrex in violation of federal antitrust laws or certain state antitrust, consumer protection and various other laws as a result of Pfizer fraudulently obtaining and improperly listing a patent on Celebrex, engaging in sham litigation and prolonging the impact of sham litigation through settlement activity that further delayed generic entry. Each of the actions seeks treble damages on behalf of the putative class for alleged price overcharges for Celebrex since May 31, 2014. In December 2014, the District Court granted the parties’ joint motions to consolidate the direct purchaser and end-payer cases, and all such cases were consolidated as of March 2015. In October 2014 and March 2015, we filed motions to dismiss the direct purchasers’ and end-payers’ amended complaints, respectively. In November 2015, the District Court denied in part and granted in part our motion to dismiss the direct purchasers’ amended complaint. In February 2016, the District Court denied in part and granted in part our motion to dismiss the end-payers’ amended complaint, and in August 2016, the District Court dismissed substantially all of the end-payer’s remaining claims. In February 2017, the District Court dismissed with prejudice all of the end-payers’ claims. In March 2017, the end-payers appealed the District Court’s order dismissing their claims with prejudice to the U.S. Court of Appeals for the Fourth Circuit. In August 2017, the District Court granted the direct purchasers’ motion for class certification. In October 2017, Pfizer and the direct purchasers entered into an agreement-in-principle, which is subject to the negotiation of a final settlement agreement and court approval, to resolve the direct purchasers’ class action for $94 million.
Intravenous Solutions
Beginning in November 2016, purported class actions were filed in the U.S. District Court for the Northern District of Illinois against Hospira, Hospira Worldwide, Inc. and certain other defendants relating to intravenous saline solution. Plaintiffs seek to represent classes consisting of all persons and entities in the U.S. who directly purchased intravenous saline solution sold by any of the defendants from January 1, 2013 until the time the defendants’ allegedly unlawful conduct ceases. Plaintiffs allege that the defendants’ conduct restricts output and artificially fixes, raises, maintains and/or stabilizes the prices of intravenous saline solution sold throughout the U.S. in violation of federal antitrust laws. Plaintiffs seek treble damages (for themselves and on behalf of the putative classes) and an injunction against defendants for alleged price overcharges for intravenous saline solution in the U.S. since January 1, 2013. On February 3, 2017, we completed the sale of our global infusion therapy net assets, HIS, which includes intravenous saline solution, to ICU Medical. The litigation is the subject of cross-claims for indemnification by both Pfizer and ICU Medical under the purchase agreement.
Separately, in April 2017, Pfizer, Hospira and two employees of Pfizer received grand jury subpoenas issued by the United States District Court for the Eastern District of Pennsylvania, in connection with an investigation by the U.S. Department of Justice, Antitrust Division. The subpoenas seek documents related to the sale, manufacture, pricing and shortages of intravenous solutions, including saline, as well as communications among market participants regarding these issues. The Department of Justice investigation is also the subject of cross-claims for indemnification by both Pfizer and ICU Medical under the purchase agreement. In addition, in August 2015, the New York Attorney General issued a subpoena to Hospira for similar information. Hospira has produced records to the New York Attorney General and will coordinate with ICU Medical to produce records to the New York Attorney General as appropriate going forward, and Hospira and Pfizer will coordinate with ICU Medical to produce records to the Department of Justice.
Hormone Therapy Consumer Class Action
A certified consumer class action is pending against Wyeth in the U.S. District Court for the Southern District of California based on the alleged off-label marketing of its hormone therapy products. The case was originally filed in December 2003. The class consists of California consumers who purchased Wyeth’s hormone-replacement products between January 1995 and January 2003 and who do not seek personal injury damages therefrom. The class seeks compensatory and punitive damages, including a full refund of the purchase price.
Eliquis
A number of individual and multi-plaintiff lawsuits have been filed against us and Bristol-Myers Squibb Company in various federal and state courts pursuant to which plaintiffs seek to recover for personal injuries, including wrongful death, due to bleeding as a result of the alleged ingestion of Eliquis. Plaintiffs seek compensatory and punitive damages.
In February 2017, the federal actions were transferred for coordinated pre-trial proceedings to a Multi-District Litigation (In Re: Eliquis (Apixaban) Products Liability Litigation MDL-2754) in the U.S. District Court for the Southern District of New York. In July 2017, the District Court dismissed substantially all of the actions that were pending in the Multi-District Litigation. In

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August 2017, certain plaintiffs appealed the District Court’s dismissal to the U.S. Court of Appeals for the Second Circuit. Additional cases continue to be transferred to the Multi-District Litigation.
EpiPen
Beginning in February 2017, purported class actions were filed in various federal courts by indirect purchasers of EpiPen against Pfizer, and/or itsformer affiliates King and Meridian, and/orand various entities affiliated with Mylan N.V., and Mylan N.V. Chief Executive Officer, Heather Bresch. The plaintiffs in these actions seek to represent U.S. nationwide classes comprising persons or entities, who paid for any portion of the end-user purchase price of an EpiPen between 2009 until the cessation of the defendants’ allegedly unlawful conduct. In August 2017, a similar lawsuit brought on behalf of a purported U.S. nationwide class of direct purchaser plaintiffs against Pfizer, King, Meridian and Mylan was voluntarily dismissed without prejudice. Against Pfizer and/or its affiliates, plaintiffswho purchased EpiPen devices directly from the defendants. Plaintiffs in this action generally allege that Pfizer’s and/or its affiliates’Pfizer and Mylan conspired to delay market entry of generic EpiPen through the settlement of patent litigation regarding EpiPen, and thereby delayed market entry of generic EpiPen in violation of federal antitrust laws and various state antitrust or consumer protection laws. At least one lawsuit also alleges that Pfizer and/or Mylan N.V. violated the federal Racketeer Influenced and Corrupt Organizations Act. Plaintiffs also filed various consumer protection and unjust enrichment claims against, and relating to conduct attributable solely to, Mylan Pharmaceuticals regarding EpiPen.law. Plaintiffs seek treble damages for alleged overcharges for EpiPen since 2009.2011. In July 2021, the District Court granted defendants’ motion to dismiss the direct purchaser complaint, without prejudice. In September 2021, plaintiffs filed an amended complaint. In August 2017,2022, the actions were consolidated for coordinated pre-trial proceedings in a Multi-District Litigation (In re: EpiPen (Epinephrine Injection, USP) Marketing, Sales Practices and Antitrust Litigation, MDL-2785) in the U.S. District Court forgranted Pfizer’s motion to dismiss the District of Kansas with other EpiPen-related actions against Mylan N.V. and/or its affiliates to which Pfizer, King and Meridian are not parties.complaint.
Nexium 24HR and Protonix
A number of individual and multi-plaintiff lawsuits have been filed against Pfizer, certain of its subsidiaries and/or other pharmaceutical manufacturers in various federal and state courts alleging that the plaintiffs developed kidney-related injuries purportedly as a result of the purported ingestion of certain proton pump inhibitors. The cases against usPfizer involve Protonix and/or Nexium 24HR and/or Protonix and seek compensatory and punitive damages and, in some cases, treble damages, restitution or disgorgement. In August 2017, the federal actions were ordered transferred for coordinated pre-trial proceedings to a Multi-District Litigation (In re: Proton-Pump Inhibitor Products Liability Litigation (No. II)) in the U.S. District Court for the District of New Jersey. As part of our Consumer Healthcare JV transaction with GSK, the JV has agreed to assume, and to indemnify Pfizer for, liabilities arising out of such litigation to the extent related to Nexium 24HR.
Docetaxel
•Personal Injury Actions
A number of lawsuits have been filed against Hospira and Pfizer in various federal and state courts alleging that plaintiffs who were treated with Docetaxel developed permanent hair loss. The significant majority of the cases also name other defendants, including the manufacturer of the branded product, Taxotere. Plaintiffs seek compensatory and punitive damages. Additional lawsuits have been filed in which plaintiffs allege they developed blocked tear ducts following their treatment with Docetaxel.
In October 2016, the federal cases were transferred for coordinated pre-trial proceedings to a Multi-District Litigation (In re Taxotere (Docetaxel) Products Liability Litigation, MDL-2740) in the U.S. District Court for the Eastern District of Louisiana. In 2022, the eye injury cases were transferred for coordinated pre-trial proceedings to a Multi-District Litigation in the U.S. District Court for the Eastern District of Louisiana.
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•Mississippi Attorney General Government Action
In 2018, the Attorney General of Mississippi filed a complaint in Mississippi state court against the manufacturer of the branded product and eight other manufacturers including Pfizer and Hospira, alleging, with respect to Pfizer and Hospira, a failure to warn about a risk of permanent hair loss in violation of the Mississippi Consumer Protection Act. The action seeks civil penalties and injunctive relief.
Zantac
A number of lawsuits have been filed against Pfizer in various federal and state courts alleging that plaintiffs developed various types of cancer, or face an increased risk of developing cancer, purportedly as a result of the ingestion of Zantac. The significant majority of these cases also name other defendants that have historically manufactured and/or sold Zantac. Pfizer has not sold Zantac since 2006, and only sold an OTC version of the product. In 2006, Pfizer sold the consumer business that included its Zantac OTC rights to Johnson & Johnson and transferred the assets and liabilities related to Zantac OTC to Johnson & Johnson in connection with the sale. Plaintiffs in these cases seek compensatory and punitive damages.

In February 2020, the federal actions were transferred for coordinated pre-trial proceedings to a Multi-District Litigation in the U.S. District Court for the Southern District of Florida. Plaintiffs in the Multi-District Litigation have filed against Pfizer and many other defendants a master personal injury complaint, asserting a consolidated consumer class action alleging, among other things, claims under consumer protection statutes of all 50 states, and a medical monitoring complaint seeking to certify medical monitoring classes under the laws of 13 states. In addition, (i) Pfizer has received service of Canadian class action complaints naming Pfizer and other defendants, and seeking compensatory and punitive damages for personal injury and economic loss, allegedly arising from the defendants’ sale of Zantac in Canada; and (ii) the State of New Mexico and the Mayor and City Council of Baltimore separately filed civil actions against Pfizer and many other defendants in state courts, alleging various state statutory and common law claims in connection with the defendants’ alleged sale of Zantac in those jurisdictions. In April 2021, a Judicial Council Coordinated Proceeding was created in the Superior Court of California in Alameda County to coordinate personal injury actions against Pfizer and other defendants filed in California state court. Coordinated proceedings have also been created in other state courts.
Chantix
Beginning in August 2021, a number of putative class actions have been filed against Pfizer in various U.S. federal courts following Pfizer’s voluntary recall of Chantix due to the presence of a nitrosamine, N-nitroso-varenicline. Plaintiffs assert that they suffered economic harm purportedly as a result of purchasing Chantix or generic varenicline medicines sold by Pfizer. Plaintiffs seek to represent nationwide and state-specific classes and seek various remedies, including damages and medical monitoring. Similar putative class actions have been filed in Canada and Israel, where the product brand is Champix.
A3. Legal Proceedings––Commercial and Other Matters
Average Wholesale Price Litigation
Pfizer, certain of its subsidiaries and other pharmaceutical manufacturers were sued in various state courts by a number of states alleging that the defendants provided average wholesale price (AWP) information for certain of their products that was higher than the actual average prices at which those products were sold. The AWP is used to determine reimbursement levels under Medicare Part B and Medicaid and in many private-sector insurance policies and medical plans. All but one of those actions have been resolved through settlement, dismissal or final judgment. The plaintiff state, Illinois,in the one remaining action claims that the alleged spread between the AWPs at which purchasers were reimbursed and the actual sale prices was promoted by the defendants as an incentive to purchase certain of their products. The actionalleges, among other things, fraudand violation of the state’s unfair trade practices andconsumer protection statutes and seeks monetary and other relief, including civil penalties and treble damages.

Monsanto-Related Matters
In 1997, Monsanto Company (Former Monsanto) contributed certain chemical manufacturing operations and facilities to a newly formed corporation, Solutia Inc. (Solutia), and spun off the shares of Solutia. In 2000, Former Monsanto merged with Pharmacia & Upjohn Company to form Pharmacia. Pharmacia then transferred its agricultural operations to a newly created subsidiary, named Monsanto Company (New Monsanto), which it spun off in a two-stage process that was completed in 2002. Pharmacia was acquired by Pfizer in 2003 and is a wholly-ownedwholly owned subsidiary of Pfizer.
In connection with its spin-off that was completed in 2002, New Monsanto assumed, and agreed to indemnify Pharmacia for, any liabilities related to Pharmacia’s former agricultural business. New Monsanto has defended and/or is defending Pharmacia in connection with various claims and litigation arising out of, or related to, the agricultural business, and has been indemnifying Pharmacia when liability has been imposed or settlement has been reached regarding such claims and litigation.

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In connection with its spin-off in 1997, Solutia assumed, and agreed to indemnify Pharmacia for, liabilities related to Former Monsanto’s chemical businesses. As the result of its reorganization under Chapter 11 of the U.S. Bankruptcy Code, Solutia’s indemnification obligations relating to Former Monsanto’s chemical businesses are primarily limited to sites that Solutia has owned or operated. In addition, in connection with its spinoffspin-off that was completed in 2002, New Monsanto assumed, and agreed to indemnify Pharmacia for, any liabilities primarily related to Former Monsanto’s chemical businesses, including, but not limited to, any such liabilities that Solutia assumed. Solutia’s and New Monsanto’s assumption of, and agreement to indemnify Pharmacia for, these liabilities apply to pending actions and any future actions related to Former Monsanto’s chemical businesses in which Pharmacia is named as a defendant, including, without limitation, actions asserting environmental claims, including alleged exposure to polychlorinated biphenyls. Solutia and/or New Monsanto are defending Pharmacia in connection with various claims and litigation arising out of, or related to, Former Monsanto’s chemical businesses, and have been indemnifying Pharmacia when liability has been imposed or settlement has been reached regarding such claims and litigation.
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Environmental Matters
In 2009, as part of our acquisition of Wyeth, we submitted toassumed responsibility for environmental remediation at the U.S. Environmental Protection Agency (EPA) a corrective measures study report with regard to Pharmacia’s discontinued industrial chemical facility in North Haven, Connecticut and a revised site-wide feasibility study with regard to Wyeth Holdings Corporation’sLLC (formerly known as, Wyeth Holdings Corporation and American Cyanamid Company) discontinued industrial chemical facility in Bound Brook, New Jersey. In September 2010, our corrective measures study report with regardSince that time, we have executed or have become a party to the North Haven facility was approved by the EPA, and we commenced constructiona number of the site remedy in late 2011 under an Updated Administrative Orderadministrative settlement agreements, orders on Consentconsent, and/or judicial consent decrees, with the EPA. In July 2011, Wyeth Holdings Corporation finalized an Administrative Settlement AgreementU.S. Environmental Protection Agency and/or New Jersey Department of Environmental Protection to perform remedial design, removal and Order on Consent for Removal Action (the 2011 Administrative Settlement Agreement) with the EPA with regard toremedial actions, and related environmental remediation activities at the Bound Brook facility. In May 2012, we completed construction of an interim remedy to address the discharge of impacted groundwater from that facility to the Raritan River. In September 2012, the EPA issued a final remediation plan for the Bound Brook facility’s main plant area, which is generally in accordance with one of the remedies evaluated in our revised site-wide feasibility study. In March 2013, Wyeth Holdings Corporation (now Wyeth Holdings LLC) entered into an Administrative Settlement Agreement and Order on Consent with the EPA to allow us to undertake detailed engineering design of the remedy for the main plant area and to perform a focused feasibility study for two adjacent lagoons. In September 2015, the U.S., on behalf of the EPA, lodged a complaint and consent decree with the federal District Court for the District of New Jersey that will allow Wyeth Holdings LLC to complete the design and to implement the remedy for the main plant area. In December 2015, the consent decree (which supersedes the 2011 Administrative Settlement Agreement) was entered by the District Court. We have accrued for the currently estimated costs of the site remedy for the North Haven facility and the site remediation for the Bound Brook facility.

these activities.
We are a party to a number of other proceedings brought under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, and other state, local or foreign laws in which the primary relief sought is the cost of past and/or future remediation.
Contracts with Iraqi Ministry of Health
In October 2017, a number of United StatesU.S. service members, civilians, and their families brought a complaint in the U.S. District Court for the District of Columbia against a number of pharmaceutical and medical devices companies, including Pfizer and certain of its subsidiaries, alleging that the defendants violated the United StatesU.S. Anti-Terrorism Act. The complaint alleges that the defendants provided funding for terrorist organizations through their sales practices pursuant to pharmaceutical and medical device contracts with the Iraqi Ministry of Health.Health, and seeks monetary relief. In July 2020, the District Court granted defendants’ motions to dismiss and dismissed all of plaintiffs’ claims. In January 2022, the Court of Appeals reversed the District Court’s decision. In February 2022, the defendants filed for en banc review of the Court of Appeals’ decision.
Allergan Complaint for Indemnity
In 2019, Pfizer was named as a defendant in a complaint, along with King, filed by Allergan Finance LLC (Allergan) in the Supreme Court of the State of New York, asserting claims for indemnity related to Kadian, which was owned for a short period by King in 2008, prior to Pfizer's acquisition of King in 2010. This suit was voluntarily discontinued without prejudice in January 2021.
Viatris Securities Litigation
In October 2021, a putative class action was filed in the Court of Common Pleas of Allegheny County, Pennsylvania on behalf of former Mylan N.V. shareholders who received Viatris common stock in exchange for Mylan shares in connection with the spin-off of the Upjohn Business and its combination with Mylan (the Transactions). Viatris, Pfizer, and certain of each company’s current and former officers, directors and employees are named as defendants. The complaint alleges that the defendants violated certain provisions of the Securities Act of 1933 in connection with certain disclosures made in or omitted from the registration statement and related prospectus issued in connection with the Transactions. Plaintiff seeks damages, costs and expenses and other equitable and injunctive relief.
A4. Legal Proceedings––Government Investigations

Like other pharmaceutical companies, weWe are subject to investigations and extensive regulation by government agencies in the U.S., other developed markets and multiple emerging markets in which we operate. As a result, we have interactions with government agencies on an ongoing basis. Criminal charges, and substantial fines and/or civil penalties, as well as limitations on our ability to conduct business in applicable jurisdictions, corporate integrity or deferred prosecution agreements, as well as reputational harm and increased public interest in the matter could result from government investigations.investigations in the U.S. and other jurisdictions in which we do business. These matters often involve government requests for information on a voluntary basis or through subpoenas after which the government may seek additional information through follow-up requests or additional subpoenas. In addition, in a qui tam lawsuit in which the government declines to intervene, the relator may still pursue a suit for the recovery of civil damages and penalties on behalf of the government. Among the investigations by government agencies are the matters discussed below.
Phenytoin Sodium CapsulesGreenstone Investigations
•U.S. Department of Justice Antitrust Division Investigation
Since July 2017, the U.S. Department of Justice's Antitrust Division has been investigating our former Greenstone generics business. We believe this is related to an ongoing broader antitrust investigation of the generic pharmaceutical industry. We have produced records relating to this investigation.
•State Attorneys General and Multi-District Generics Antitrust Litigation
In 2012, Pfizer soldApril 2018, Greenstone received requests for information from the U.K. Marketing Authorisation for phenytoin sodium capsules to a third party, but retainedAntitrust Department of the right to supplyConnecticut Office of the finished product to that third party.Attorney General. In May 2013,2019, Attorneys General of more than 40 states plus the U.K. Competition & Markets Authority (CMA) informed us that it had launched an investigation into the supplyDistrict of phenytoin sodium capsulesColumbia and Puerto Rico filed a complaint against a number of pharmaceutical companies, including Greenstone and Pfizer. The matter has been consolidated with a Multi-District Litigation in the U.K. market. In August 2015, the CMA issued a StatementEastern District of Objections alleging that PfizerPennsylvania. As to Greenstone and Pfizer, Limited, a U.K. subsidiary, engaged in conduct that violates U.K. and EU antitrust laws. In December 2016, the CMA imposed a £84.2 million fine on Pfizer and Pfizer Limited. Pfizer appealed the CMA Decision to The Competition Appeal Tribunal in February 2017.complaint alleges
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anticompetitive conduct in violation of federal and state antitrust laws and state consumer protection laws. In June 2020, the State Attorneys General filed a new complaint against a large number of companies, including Greenstone and Pfizer, making similar allegations, but concerning a new set of drugs. This complaint was transferred to the Multi-District Litigation in July 2020. The Multi-District Litigation also includes civil complaints filed by private plaintiffs and state counties against Pfizer, Greenstone and a significant number of other defendants asserting allegations that generally overlap with those asserted by the State Attorneys General.
Subpoena & Civil Investigative Demand relating to Pharmacy Benefit ManagersTris Pharma/Quillivant XR
In March 2016, PfizerOctober 2018, we received a Civil Investigative Demandsubpoena from the U.S. Attorney’s Office for the Southern District of New York related(SDNY) seeking records relating to Pfizer’s contractual relationshipsour relationship with pharmacy benefit managersanother drug manufacturer and its production and manufacturing of drugs including, but not limited to, Quillivant XR. We responded to that subpoena in full and have had no communication with respectthe SDNY in connection with the subpoena since June 2019. Additionally, in September 2020, we received a Civil Investigative Demand (CID) from the Texas Attorney General’s office seeking records of a similar nature to certain pharmaceutical products overthose requested by the period from January 1, 2006 to the present. SDNY. We have provided information to the governmentare producing records in response to this Civil Investigative Demand.request.
SubpoenasGovernment Inquiries relating to Copayment Assistance OrganizationsMeridian Medical Technologies
In December 2015 and July 2016, PfizerFebruary 2019, we received subpoenasa CID from the U.S. Attorney’s Office for the SDNY. The CID seeks records and information related to alleged quality issues involving the manufacture of auto-injectors at the Meridian site. In August 2019, we received a HIPAA subpoena from the U.S. Attorney’s Office for the Eastern District of Massachusetts requesting documents related to the Patient Access Network FoundationMissouri seeking similar records and other 501(c)(3) organizations that provide financial assistance to Medicare patients.information. We have been providing information to the governmentare producing records in response to these subpoenas.requests.
U.S. Department of Justice InvestigationJustice/SEC Inquiry relating to GreenstoneRussian Operations
As of July 2017,In June 2019, we received an informal request from the U.S. Department of Justice’s Antitrust Division is investigatingForeign Corrupt Practices Act (FCPA) Unit seeking documents relating to our Greenstone generics business.operations in Russia. In September 2019, we received a similar request from the SEC’s FCPA Unit. We believe this is relatedhave produced records pursuant to an ongoing antitrust investigation of the generic pharmaceutical industry. The government has been obtaining information from Greenstone.these requests.
Intravenous SolutionsDocetaxel––Mississippi Attorney General Government Investigation
See Note 12A2. Legal Proceedings––Product Litigation––Intravenous SolutionsDocetaxel––Mississippi Attorney General Government Investigation above for information regarding a government investigationsinvestigation related to salesDocetaxel marketing practices.
U.S. Department of intravenous solution products.Justice Inquiries relating to India Operations
A5. In March 2020, we received an informal request from the U.S. Department of Justice's Consumer Protection Branch seeking documents relating to our manufacturing operations in India, including at our former facility located at Irrungattukottai in India. In April 2020, we received a similar request from the U.S. Attorney’s Office for the SDNY regarding a civil investigation concerning operations at our facilities in India. We are producing records pursuant to these requests.
U.S. Department of Justice/SEC Inquiry relating to China Operations
In June 2020, we received an informal request from the U.S. Department of Justice's FCPA Unit seeking documents relating to our operations in China. In August 2020, we received a similar request from the SEC’s FCPA Unit. We have produced records pursuant to these requests.
Zantac––State of New Mexico and Mayor and City Council of Baltimore Civil Actions
See Legal Proceedings––Matters Resolved DuringProduct Litigation––Zantac above for information regarding civil actions separately filed by the First Nine MonthsState of 2017New Mexico and the Mayor and City Council of Baltimore alleging various state statutory and common law claims in connection with the defendants’ alleged sale of Zantac in those jurisdictions.
During 2017, certain matters, including the matter discussed below, were resolved or were the subject of definitive settlement agreements or settlement agreements-in-principle.
XtandiGovernment Inquiries relating to Biohaven
In April 2014,June 2022, the RegentsU.S. Department of Justice's Commercial Litigation Branch and the UniversityU.S. Attorney’s Office for the Western District of California (the Regents) filedNew York issued a complaint against the Medivation Group in California Superior Court in San Francisco. Medivation was acquired by Pfizer in September 2016CID relating to Biohaven. The CID seeks records and information related to, among other things, engagements with health care professionals and co-pay coupons cards. Biohaven is now a wholly-owned subsidiary of Pfizer. The Regents’ complaint sought a 10% share, under a license agreement between the Medivation Group and the Regents, of certain payments the Medivation Group receives with respectthat we acquired in October 2022. We are producing records in response to Xtandi under the Medivation Group’s sub-licensing and collaboration agreement with Astellas. Trial was scheduled to commence in May 2017. In July 2017, the parties resolved the matter through a settlement on terms not material to Pfizer, which was recorded in the second quarter of 2017 as a measurement period adjustment related to the Medivation acquisition.these requests.
B. Guarantees and Indemnifications

In the ordinary course of business and in connection with the sale of assets and businesses and other transactions, we often indemnify our counterparties against certain liabilities that may arise in connection with the transaction or that are related to events and activities prior to theor following a transaction. These indemnifications typically pertain to environmental, tax, employee and/or product-related matters and patent-infringement claims. If the indemnified party were to make a successful claim pursuant to the terms of the indemnification, we wouldmay be required to reimburse the loss. These indemnifications are generally subject to threshold amounts, specified claim periods and other various
33

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
restrictions and limitations. Historically, we have not paid significant amounts under these provisions and, as of October 1, 2017, recorded amounts for2, 2022, the estimated fair value of these indemnificationsindemnification obligations is not material to Pfizer. See Note 2C for a description of the March 2022 indemnity provided by Pfizer to GSK in connection with the issuance of notes by the Consumer Healthcare JV. In conjunction with the completion of GSK’s demerger transactions in July 2022, GSK’s guarantee and our related indemnification of GSK’s guarantee were not significant.terminated.
In addition, in connection with our entry into certain agreements and other transactions, our counterparties may be obligated to indemnify us. For example, in November 2020, we and Mylan completed the transaction to spin-off our Upjohn Business and combine it with Mylan to form Viatris. As part of the transaction and as previously disclosed, each of Viatris and Pfizer Inc. has agreed to assume, and to indemnify the other for, liabilities arising out of certain matters. Also, our global agreement with BioNTech to co-develop a mRNA-based coronavirus vaccine program aimed at preventing COVID-19 infection, includes certain indemnity provisions pursuant to which each of BioNTech and Pfizer has agreed to indemnify the other for certain liabilities that may arise in connection with certain third-party claims relating to Comirnaty.
We have also guaranteed the long-term debt of certain companies that itwe acquired and that now are subsidiaries of Pfizer. See Note 7D.
C. Contingent Consideration for Acquisitions
We may be required to make payments to sellers for certain prior business combinations that are contingent upon future events or outcomes. For additional information, see Note 1E in our 2021 Form 10-K.
Note 13.Segment, Geographic and Other Revenue Information

A. Segment Information

We manage our commercial operations through two distinct business segments: Pfizer Innovative Health (IH)operating segments, Biopharma and Pfizer Essential Health (EH). The IH and EH segmentsPC1, which are each led by a single manager. Biopharma is the only reportable segment. Each operating segment has responsibility for its commercial activitiesactivities. Regional commercial organizations market, distribute and sell our products and are supported by global platform functions that are responsible for certainthe research, development, manufacturing and supply of our products and global corporate enabling functions. Biopharma receives its R&D services from WRDM and GPD. These services include IPR&D projects for new investigational products and additional indications for in-line products that generally have achieved proof-of-concept.products. Each businessoperating segment has a geographic footprint across developed and emerging markets. Our chief operating decision maker uses the revenues and earnings of the two operating segments, among other factors, for performance evaluation and resource allocation.
We regularly review our segments andAfter the approach used by management for performance evaluation and resource allocation.
As describedorganizational changes in the third quarter of 2022 (see Note 1A), acquisitionsthe new commercial structure within Biopharma is designed to better support and divestitures have impacted our results of operations in 2017 and 2016.optimize performance across three broad therapeutic areas:

•Primary Care consists of the former Internal Medicine and Vaccines product portfolios, as well as COVID-19 products and potential future mRNA products.
PFIZER INC. AND SUBSIDIARY COMPANIES•Specialty Care consists of the former Inflammation & Immunology, Rare Disease and Hospital (excluding Paxlovid) product portfolios.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Operating Segments
Some additional information about our business segments follows:
IH SegmentEH Segment
IH focuses on developing and commercializing novel, value-creating medicines and vaccines that significantly improve patients’ lives, as well as products for consumer healthcare.
Key therapeutic areas include internal medicine, vaccines, oncology, inflammation & immunology, rare diseases and consumer healthcare.		EH includes legacy brands that have lost or will soon lose market exclusivity in both developed and emerging markets, branded generics, generic sterile injectable products, biosimilars, select branded products including anti-infectives and, through February 2, 2017, HIS. EH also includes an R&D organization, as well as our contract manufacturing business.

Leading brands include:
- Prevnar 13/Prevenar 13
- Xeljanz
- Eliquis
- Lyrica (U.S., Japan and certain other markets)
- Enbrel (outside the U.S. and Canada)
- Viagra (U.S. and Canada)
- Ibrance
- Xtandi
- Several OTC consumer healthcare products (e.g., Advil and
  Centrum)

Leading brands include:
- Lipitor•Oncology consists of the former Oncology product portfolio.
- Premarin family
- Norvasc
- Lyrica (Europe, Russia, Turkey, Israel and Central Asia countries)
- Celebrex
- Inflectra/Remsima
- Several sterile injectable products

Other Costs and Business Activities

Activities––Certain pre-tax costs are not allocated to our operating segment results, such as costs included in Other business activities that are associated with the following:
WRD, which is generally responsible for research projects for our IH business until proof-of-concept is achieved and then for transitioning those projects to the IH segment via the GPD organization for possible clinical and commercial development.with: (i) R&D spending may include upfront and milestone payments for intellectual property rights. The WRD organization also has responsibility for certain science-basedmedical expenses managed by our WRDM and GPD organizations; (ii) corporate enabling functions and other platform-services organizations, which provide technical expertise and other services to the various R&D projects, including EH R&D projects. WRD is also responsible for facilitating all regulatory submissions and interactions with regulatory agencies, including all safety-event activities.
GPD, which is generally responsible for the clinical development of assets that are in clinical trials for our WRD and Innovative portfolios. GPD also provides technical support and other services to Pfizer R&D projects.
•
Corporate, representing platform functions (such as worldwide technology, global real estate operations, legal, finance, human resources, worldwide public affairs, compliance and worldwide procurement) and certain compensation and other corporate costs, such as interest income and expense, and gains and losses on investments. Effective in the first quarter of 2017, Corporate also includes the costs associated with our Pfizer Medical organization (Medical), previously reported as part of Other Business Activities. Medical is responsible for the provision of medical information to healthcare providers, patients and other parties, transparency and disclosure activities, clinical trial results publication, grants for healthcare quality improvement and medical education, and partnerships with global public health and medical associations.
Other unallocatedcorporate costs; (iii) overhead costs representing overhead expensesprimarily associated with our manufacturing operations; and commercial operations(iv) our share of earnings from Haleon/the Consumer Healthcare JV. Additionally, all amortization of intangible assets, acquisition-related items, and certain significant items, representing substantive and/or unusual, and in some cases recurring, items that are evaluated on an individual basis by management and that, either as a result of their nature or size, would not directly assessedbe expected to anoccur as part of our normal business on a regular basis, are not allocated to our operating segment results. Beginning in the first quarter of 2022, acquisition-related items may now include purchase accounting impacts that previously were included as part of a reconciling item entitled “Purchase accounting adjustments” that we no longer separately present, such as the incremental charge to cost of sales from the sale of acquired inventory that was written up to fair value, depreciation related to the increase/decrease in fair value of acquired fixed assets, amortization related to the increase in fair value of acquired debt, and the fair value changes for contingent consideration. The operating results of PC1 are included in Other business unit (segment) management does not manage these costs (which include manufacturing variances associated with production).activities.
•
Certain transactions and events such as (i) purchase accounting adjustments, where we incur expenses associated with the amortization of fair value adjustments to inventory, intangible assets and PP&E; (ii) acquisition-related costs, where we incur costs for executing the transaction, integrating the acquired operations and restructuring the combined company; and (iii) certain significant items, representing substantive and/or unusual, and in some cases recurring, items (such as restructuring or legal charges) that are evaluated on an individual basis by management and that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis. Such items can include, but are not limited to, non-acquisition-related restructuring costs, as well as costs incurred for legal settlements, asset impairments and disposals of assets or businesses, including, as applicable, any associated transition activities.
Segment Assets

Assets––We manage our assets on a total company basis, not by operating segment, as many of our operating assets are shared (such as our plant network assets) or commingled (such as accounts receivable, as many of our customers are served by both operating segments).commingled. Therefore, our chief operating decision maker does not regularly review any asset information by operating
34

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
segment and, accordingly, we do not report asset information by operating segment. Total assets were approximately $172$195 billion as of October 1, 20172, 2022 and $181 billion as of December 31, 2021.
Selected Income Statement Information
The following provides selected income statement information by reportable segment:
Three Months EndedNine Months Ended
 Revenues
Earnings(a)
Revenues
Earnings(a)
(MILLIONS)October 2,
2022		October 3,
2021		October 2,
2022		October 3,
2021		October 2,
2022		October 3,
2021		October 2,
2022		October 3,
2021
Reportable Segment:
Biopharma$22,319 $23,513 $14,665 $11,848 $75,066 $56,101 $45,222 $29,952 
Other business activities(b)
319 521 (4,007)(3,303)974 1,348 (9,820)(7,778)
Reconciling Items:
Amortization of intangible assets— — (822)(980)— — (2,478)(2,778)
Acquisition-related items— — (62)(41)— — (331)(14)
Certain significant items(c)
— — (773)318 — — (3,095)1,102 
$22,638 $24,035 $9,001 $7,843 $76,040 $57,450 $29,498 $20,484 
(a)Income from continuing operations before provision/(benefit) for taxes on income. Biopharma’s earnings include dividend income from our investment in ViiV of $112 million in the third quarter of 2022 and $38 million in the third quarter of 2021, and $237 million in the first nine months of 2022 and $127 million in the first nine months of 2021. In connection with the organizational changes effective in the third quarter of 2022, certain functions transferred between Biopharma and corporate enabling functions and certain activities were realigned within the GPD organization. We have reclassified $105 million of costs for the first six months of 2022, $57 million of costs in the third quarter of 2021 and $153 million of costs in the first nine months of 2021 from corporate enabling functions, which are included in Other business activities, to Biopharma to conform to the current period presentation.
(b)Other business activities include revenues and costs associated with PC1 and costs that we do not allocate to our operating segments, per above, including acquired IPR&Dexpenses in the periods presented. In the third quarter and first nine months of 2022, earnings include $426 million of acquired IPR&D expenses for an upfront payment related to the closing of the acquisition of ReViral, as well as a charge to Cost of sales of approximately $400 million related to excess raw materials for Paxlovid. Earnings in the first nine months of 2022 also include write-offs to Cost of sales of inventory, related to COVID-19 products that have exceeded or are expected to exceed their approved shelf-lives prior to being used, of $516 million. In the third quarter and first nine months of 2021, earnings include $706 million of acquired IPR&D expenses associated with our collaboration with Arvinas.
(c)Certain significant items are substantive and/or unusual, and in some cases recurring, items (as noted above). Earnings in the first nine months of 2022 includes, among other items: (i) net losses on equity securities of $1.3 billion recorded in Other (income)/deductions––net and (ii) restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring of $701 million ($344 million recorded in Selling, informational and administrative expenses and the remaining amounts primarily recorded in Restructuring charges and certain acquisition-related costs). Earnings in the first nine months of 2021 includes, among other items: (i) net gains on equity securities of $1.6 billion recorded in Other (income)/deductions––net and (ii) actuarial valuation and other pension and postretirement plan gains of $932 million recorded in Other (income)/deductions––net, partially offset by (iii) restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring of $1.1 billion ($310 million recorded in Selling, informational and administrative expenses and the remaining amount primarily recorded in Restructuring charges and certain acquisition-related costs). Earnings in the third quarter of 2021 includes, among other items: (i) actuarial valuation and other pension and postretirement plan gains of $899 million recorded in Other (income)/deductions––net, partially offset by (ii) restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring of $823 million ($150 million recorded in Selling, informational and administrative expenses and the remaining amount primarily recorded in Restructuring charges and certain acquisition-related costs). For additional information, see Notes3 and December 31, 20164.
B. Geographic Information
The following summarizes revenues by geographic area:
 Three Months EndedNine Months Ended
(MILLIONS)October 2,
2022		October 3,
2021		%
Change		October 2,
2022		October 3,
2021		%
Change
United States$13,851 $7,020 97 $33,991 $22,066 54 
Developed Europe3,136 6,221 (50)14,705 13,836 6 
Developed Rest of World2,351 4,498 (48)10,671 8,617 24 
Emerging Markets3,300 6,296 (48)16,673 12,930 29 
Revenues$22,638 $24,035 (6)$76,040 $57,450 32 
C. Other Revenue Information
Significant Customers––For information on our significant wholesale customers, see Note 17C in our 2021 Form 10-K. Additionally, revenues from the U.S. government represented 38% and 27% of total revenues for the three and nine months ended October 2, 2022, respectively, and primarily represent sales of Paxlovid and Comirnaty. Accounts receivable from the
35

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Selected Income Statement Information
The following table provides selected income statement information by reportable segment:
  Three Months Ended
  Revenues 
Earnings(a)
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
 October 1,
2017
 October 2,
2016
Reportable Segments:        
IH $8,118
 $7,332
 $4,875
 $4,187
EH 5,050
 5,712
 2,765
 3,128
Total reportable segments 13,168
 13,045
 7,640
 7,315
Other business activities(b), (c)
 —
 —
 (759) (753)
Reconciling Items:      
  
Corporate(c)
 —
 —
 (1,382) (1,537)
Purchase accounting adjustments(c)
 —
 —
 (1,154) (966)
Acquisition-related costs(c)
 —
 —
 (155) (280)
Certain significant items(d)
 —
 —
 (449) (1,969)
Other unallocated —
 —
 (156) (206)
  $13,168
 $13,045

$3,585
 $1,604
 
  Nine Months Ended
  Revenues 
Earnings(a)
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
 October 1,
2017
 October 2,
2016
Reportable Segments:        
IH $23,204
 $21,471
 $14,190
 $12,470
EH 15,639
 17,725
 8,558
 9,985
Total reportable segments 38,843
 39,196
 22,748
 22,454
Other business activities(b), (c)
 —
 —
 (2,205) (2,096)
Reconciling Items:        
Corporate(c)
 —
 —
 (3,948) (4,217)
Purchase accounting adjustments(c)
 —
 —
 (3,527) (3,103)
Acquisition-related costs(c)
 —
 —
 (347) (598)
Certain significant items(d)
 —
 —
 (797) (4,112)
Other unallocated —
 —
 (573) (753)
  $38,843
 $39,196
 $11,351
 $7,575
(a)
Income from continuing operations before provision for taxes on income. IH’s earnings in the third quarter and first nine months of 2017 include dividend income of $54 million and $211 million, respectively, from our investment in ViiV. For additional information, see Note 4.
(b)
Other business activities includes the costs managed by our WRD and GPD organizations. Effective in the first quarter of 2017, Medical, previously reported as part of Other Business Activities, was reclassified to Corporate. We have reclassified approximately $33 million and $94 million of costs from Other Business Activities to Corporate in the third quarter and first nine months of 2016, respectively, to conform to the current period presentation.
(c)
For a description, see the “Other Costs and Business Activities” section above.
(d)
Certain significant items are substantive and/or unusual, and in some cases recurring, items (such as restructuring or legal charges) that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis.
For Earnings in the third quarterU.S. government represented 44% of 2017, certain significant items includes: (i) restructuring chargestotal trade accounts receivable as of October 2, 2022, and implementation costs associated withprimarily relate to sales of Paxlovid and Comirnaty.
Significant Product Revenues
The following provides detailed revenue information for several of our cost-reduction initiatives that are not associated with an acquisition of $90 million, (ii) charges for certain legal matters of $183 million, (iii) income of $12 million, representing an adjustment to amounts previously recorded to write down the HIS net assets to fair value less costs to sell, (iv) certain asset impairment charges of $127 million, (v) charges for business and legal entity alignment of $16 million and (vi) other charges of $45 million. For additional information, see Note 2B, Note 3 and Note 4.major products:
For Earnings in the third quarter of 2016, certain significant items includes: (i) restructuring charges and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $375 million, (ii) income for certain legal matters of $40 million, (iii) an impairment charge related to the write-down of the HIS net assets to fair value less estimated costs to sell of $1.4 billion, (iv) certain asset impairment charges of $126 million, (v) charges for business and legal entity alignment of $69 million and (vi) other charges of $17 million. For additional information, see Note 3 and Note 4.
For Earnings in the first nine months of 2017, certain significant items includes: (i) restructuring charges and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $253 million, (ii) charges for certain legal matters of $191 million, (iii) incremental charges to amounts previously recorded to write down the HIS net assets to fair value less costs to sell of $52 million, (iv) certain asset impairment charges of $127 million, (v) charges for business and legal entity alignment of $54 million and (vi) other charges of $119 million. For additional information, see Note 2B, Note 3 and Note 4.
For Earnings in the first nine months of 2016, certain significant items includes: (i) restructuring charges and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $743 million, (ii) charges for certain legal matters of $506 million, (iii) an impairment charge related to the write-down of the HIS net assets to fair value less estimated costs to sell of $1.4 billion, (iv) certain asset impairment charges of $1.1 billion, (v) charges for business and legal entity alignment of $180 million and (vi) other charges of $189 million. For additional information, see Note 3 and Note 4.
(MILLIONS)Three Months EndedNine Months Ended
PRODUCTPRIMARY INDICATION OR CLASSOct. 2, 2022Oct. 3, 2021Oct. 2, 2022Oct. 3, 2021
TOTAL REVENUES(a)
$22,638 $24,035 $76,040 $57,450 
GLOBAL BIOPHARMACEUTICALS BUSINESS (BIOPHARMA)(a), (b)
$22,319 $23,513 $75,066 $56,101 
Primary Care$15,846 $16,680 $55,676 $35,804 
Comirnaty direct sales and alliance revenues(c)
Active immunization to prevent COVID-194,402 12,977 26,477 24,277 
PaxlovidCOVID-19 infection (high risk population)7,514 — 17,099 — 
Eliquis alliance revenues and direct salesNonvalvular atrial fibrillation, deep vein thrombosis, pulmonary embolism1,464 1,346 5,001 4,470 
Prevnar family(d)
Pneumococcal disease1,607 1,447 4,601 3,971 
Premarin familySymptoms of menopause110 148 327 420 
NimenrixMeningococcal ACWY disease79 51 221 145 
BMP2Development of bone and cartilage58 71 201 186 
FSME-IMMUN/TicoVacTick-borne encephalitis disease67 47 177 161 
ToviazOveractive bladder30 56 130 174 
TrumenbaMeningococcal B disease60 52 108 102 
Chantix/ChampixAn aid to smoking cessation treatment in adults 18 years of age or older4 7 8 409 
All other Primary CareVarious451 479 1,326 1,490 
Specialty Care$3,404 $3,749 $10,267 $11,205 
Vyndaqel/VyndamaxATTR-CM and polyneuropathy602 501 1,766 1,454 
XeljanzRA, PsA, UC, active polyarticular course juvenile idiopathic arthritis, ankylosing spondylitis502 610 1,304 1,734 
Enbrel (Outside the U.S. and Canada)RA, juvenile idiopathic arthritis, PsA, plaque psoriasis, pediatric plaque psoriasis, ankylosing spondylitis and nonradiographic axial spondyloarthritis230 283 767 888 
SulperazonBacterial infections178 181 598 515 
InflectraCrohn’s disease, pediatric Crohn’s disease, UC, pediatric UC, RA in combination with methotrexate, ankylosing spondylitis, PsA and plaque psoriasis131 172 403 485 
Ig Portfolio(e)
Various124 99 356 311 
BeneFIXHemophilia B99 104 325 328 
ZaviceftaBacterial infections98 107 302 306 
GenotropinReplacement of human growth hormone90 95 261 284 
ZithromaxBacterial infections71 66 250 198 
MedrolAnti-inflammatory glucocorticoid79 109 235 320 
FragminTreatment/prevention of venous thromboembolism60 74 202 223 
SomavertAcromegaly70 70 202 203 
Refacto AF/XynthaHemophilia A58 69 188 235 
VfendFungal infections51 51 171 204 
All other Anti-infectivesVarious374 455 1,123 1,384 
All other Specialty CareVarious586 702 1,816 2,134 
Oncology$3,070 $3,085 $9,124 $9,091 
IbranceHR-positive/HER2-negative metastatic breast cancer1,283 1,381 3,841 4,039 
Xtandi alliance revenuesmCRPC, nmCRPC, mCSPC320 309 878 879 
InlytaAdvanced RCC252 256 760 742 
ZirabevTreatment of mCRC; unresectable, locally advanced, recurrent or metastatic NSCLC; recurrent glioblastoma; metastatic RCC; and persistent, recurrent or metastatic cervical cancer146 96 432 311 
BosulifPhiladelphia chromosome–positive chronic myelogenous leukemia141 136 425 395 
XalkoriALK-positive and ROS1-positive advanced NSCLC118 116 362 371 
RuxienceNon-hodgkin’s lymphoma, chronic lymphocytic leukemia, granulomatosis with polyangiitis (Wegener’s Granulomatosis) and microscopic polyangiitis120 124 357 343 
36

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Equity in the net income of investees accounted for by the equity method is not significant for any of our operating segments.
The operating segment information does not purport to represent the revenues, costs and income from continuing operations before provision for taxes on income that each of our operating segments would have recorded had each segment operated as a standalone company during the periods presented.
B. Geographic Information
As described in Note 1A, acquisitions and divestitures have impacted our results of operations in 2017 and 2016.
The following table provides revenues by geographic area:
  Three Months Ended Nine Months Ended
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
 
%
Change

 October 1,
2017
 October 2,
2016
 
%
Change

U.S. $6,534
 $6,530
 —
 $19,516
 $19,561
 —
Developed Europe(a)
 2,163
 2,218
 (2) 6,309
 6,982
 (10)
Developed Rest of World(b)
 1,632
 1,711
 (5) 4,797
 4,940
 (3)
Emerging Markets(c)
 2,839
 2,586
 10
 8,222
 7,714
 7
Revenues $13,168
 $13,045
 1
 $38,843
 $39,196
 (1)
(a)
Developed Europe region includes the following markets: Western Europe, Scandinavian countries and Finland. Revenues denominated in euros were $1.7 billion in both the third quarter of 2017 and 2016, and $5.0 billion and $5.3 billion in the first nine months of 2017 and 2016, respectively.
(b)
Developed Rest of World region includes the following markets: Japan, Canada, Australia, South Korea and New Zealand.
(c)
Emerging Markets region includes, but is not limited to, the following markets: Asia (excluding Japan and South Korea), Latin America, Africa, Eastern Europe, Central Europe, the Middle East and Turkey.

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

C. Other Revenue Information
Significant Product Revenues
As described in Note 1A, acquisitions and divestitures have impacted our results of operations in 2017 and 2016.


PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The following table provides detailed revenue information:
  Three Months Ended Nine Months Ended
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
 October 1,
2017
 October 2,
2016
PFIZER INNOVATIVE HEALTH (IH)(a)
 $8,118
 $7,332
 $23,204
 $21,471
Internal Medicine $2,455
 $2,243
 $7,245
 $6,557
Lyrica IH(b)
 1,150
 1,049
 3,382
 3,107
Eliquis alliance revenues and direct sales 644
 449
 1,813
 1,225
Chantix/Champix 240
 198
 727
 631
Viagra IH(c)
 206
 297
 711
 897
BMP2 79
 63
 198
 175
Toviaz 62
 60
 187
 191
All other Internal Medicine 75
 128
 228
 330
Vaccines $1,649
 $1,641
 $4,385
 $4,576
Prevnar 13/Prevenar 13 1,522
 1,536
 4,069
 4,302
FSME/IMMUN-TicoVac 43
 33
 119
 102
All other Vaccines 85
 72
 197
 172
Oncology $1,616
 $1,104
 $4,551
 $3,206
Ibrance 878
 550
 2,410
 1,492
Sutent 276
 260
 805
 823
Xalkori 146
 140
 442
 415
Xtandi alliance revenues 150
 2
 422
 2
Inlyta 84
 95
 256
 304
Bosulif 57
 43
 163
 121
All other Oncology 26
 15
 54
 49
Inflammation & Immunology (I&I) $1,000
 $960
 $2,863
 $2,907
Enbrel (Outside the U.S. and Canada) 613
 701
 1,818
 2,201
Xeljanz 348
 235
 935
 649
Eucrisa
15

—

33

—
All other I&I 23
 24
 78
 57
Rare Disease $569
 $585
 $1,637
 $1,768
BeneFIX 151
 176
 453
 543
Refacto AF/Xyntha 140
 140
 409
 408
Genotropin 136
 147
 375
 425
Somavert 65
 59
 182
 173
All other Rare Disease 77
 64
 218
 219
Consumer Healthcare $829
 $798
 $2,522
 $2,457
PFIZER ESSENTIAL HEALTH (EH)(d)
 $5,050
 $5,712
 $15,639
 $17,725
Legacy Established Products (LEP)(e)
 $2,681
 $2,708
 $7,995
 $8,373
Lipitor 491
 422
 1,341
 1,294
Premarin family 238
 244
 711
 751
Norvasc 226
 238
 684
 714
EpiPen 82
 110
 253
 300
Xalatan/Xalacom 83
 91
 241
 273
Effexor 76
 70
 215
 207
Zoloft 78
 72
 215
 228
Zithromax 61
 56
 202
 203
Relpax 50
 83
 193
 248
Xanax 58
 55
 164
 163
All other LEP 1,237
 1,268
 3,776
 3,992
Sterile Injectable Pharmaceuticals (SIP)(f)
 $1,273
 $1,461
 $4,270
 $4,481
Medrol 109
 102
 352
 330
Sulperazon 114
 102
 345
 304
Fragmin 79
 80
 221
 240
Tygacil 60
 69
 192
 203
Precedex 51
 64
 182
 199
All other SIP 860
 1,044
 2,977
 3,206
  Three Months Ended Nine Months Ended
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
 October 1,
2017
 October 2,
2016
Peri-LOE Products(g)
 $794
 $1,023
 $2,398
 $3,224
Celebrex 212
 194
 564
 550
Lyrica EH(b)
 134
 191
 428
 623
Vfend 97
 140
 305
 459
Viagra EH(c)
 102
 89
 285
 286
Pristiq 69
 174
 230
 546
Zyvox 68
 94
 220
 334
Revatio 58
 73
 189
 213
All other Peri-LOE Products 55
 68
 176
 214
Biosimilars(h)
 $141
 $83
 $367
 $228
Inflectra/Remsima 112
 49
 284
 130
All other Biosimilars 28
 34
 82
 97
Pfizer CentreOne(i)
 $161
 $156
 $514
 $540
Hospira Infusion Systems (HIS)(j)
 $—
 $281
 $97
 $879
Revenues $13,168
 $13,045
 $38,843
 $39,196
         
Total Lyrica(b)
 $1,285
 $1,240
 $3,810
 $3,730
Total Viagra(c)
 $308
 $387
 $996
 $1,183
Total Alliance revenues $741
 $419
 $2,112
 $1,155

(a)
The IH business encompasses Internal Medicine, Vaccines, Oncology, Inflammation & Immunology, Rare Disease and Consumer Healthcare. Through December 31, 2016, includes Duavive/Duavee and Viviant (recorded in All other Internal Medicine in 2016), which were transferred from Innovative Health to Essential Health effective January 1, 2017 (recorded in All other LEP (EH) beginning January 1, 2017), in order to align these products with our management of the women’s health portfolio within EH.
(b)
Lyrica revenues from all of Europe, Russia, Turkey, Israel and Central Asia countries are included in Lyrica EH. All other Lyrica revenues are included in Lyrica IH. Total Lyrica revenues represent the aggregate of worldwide revenues from Lyrica IH and Lyrica EH.
(c)
Viagra revenues from the U.S. and Canada are included in Viagra IH. All other Viagra revenues are included in Viagra EH. Total Viagra revenues represent the aggregate of worldwide revenues from Viagra IH and Viagra EH.
(d)
The EH business encompasses Legacy Established Products, Sterile Injectable Pharmaceuticals, Peri-LOE Products, Biosimilars, Pfizer CentreOne and HIS (through February 2, 2017) and includes all legacy Hospira commercial operations.
(e)
Legacy Established Products primarily include products that have lost patent protection (excluding Sterile Injectable Pharmaceuticals and Peri-LOE Products). Effective January 1, 2017, All other LEP includes Duavive/Duavee and Viviant, which were transferred from Innovative Health (recorded in All other Internal Medicine (IH) in 2016), in order to align these products with our management of the women’s health portfolio within EH.See note (a) above.
(f)
Sterile Injectable Pharmaceuticals include generic injectables and proprietary specialty injectables (excluding Peri-LOE Products).
(g)
Peri-LOE Products include products that have recently lost or are anticipated to soon lose patent protection. These products include: Lyrica in Europe, Russia, Turkey, Israel and Central Asia; Viagra in all countries (excluding the U.S. and Canada); and worldwide revenues for Celebrex, Pristiq, Zyvox, Vfend, Revatio and Inspra.
(h)
Biosimilars include Inflectra/Remsima (biosimilar infliximab) in the U.S. and certain international markets, Nivestim (biosimilar filgrastim) in certain European, Asian and Africa/Middle Eastern markets and Retacrit (biosimilar epoetin zeta) in certain European and Africa/Middle Eastern markets.
(i)
Pfizer CentreOne includes revenues from our contract manufacturing and active pharmaceutical ingredient sales operation, including sterile injectables contract manufacturing, and revenues related to our manufacturing and supply agreements, including with Zoetis.
(j)
HIS (through February 2, 2017) includes Medication Management Systems products composed of infusion pumps and related software and services, as well as IV Infusion Products, including large volume IV solutions and their associated administration sets.


REVIEW REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Pfizer Inc.:

We have reviewed the condensed consolidated balance sheet of Pfizer Inc. and Subsidiary Companies as of October 1, 2017, the related condensed consolidated statements of income and comprehensive income for the three-month and nine-month periods ended October 1, 2017 and October 2, 2016, and the related condensed consolidated statements of cash flows for the nine-month periods ended October 1, 2017 and October 2, 2016. These condensed consolidated financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Pfizer Inc. and Subsidiary Companies as of December 31, 2016, and the related consolidated statements of income, comprehensive income, equity, and cash flows for the year then ended (not presented herein); and in our report dated February 23, 2017, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2016, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.




/s/ KPMG LLP
New York, New York
November 9, 2017

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

See the Glossary of Defined Terms at the beginning of this Quarterly Report on Form 10-Q for terms used throughout this MD&A. Our MD&A is provided in addition to the accompanying condensed consolidated financial statements and footnotes to assist readers in understanding Pfizer’s results of operations, financial condition and cash flows. The MD&A is organized as follows:
●
Overview of Our Performance, Operating Environment, Strategy and Outlook
Beginning on page 48
This section provides information about the following: Our Business; our performance during the third quarter and first nine months of 2017 and 2016; Our Operating Environment; the Global Economic Environment; Our Strategy; Our Business Development Initiatives, such as acquisitions, dispositions, licensing and collaborations; and Our Financial Guidance for 2017.
●
Analysis of the Condensed Consolidated Statements of Income
Beginning on page 61
This section includes a Revenues Overview section as well as the following sub-sections:
○ Revenues - Major Products
Beginning on page 65
This sub-section provides revenue information for several of our major biopharmaceutical products.
○ Revenues - Selected Product Discussion
Beginning on page 66
This sub-section provides an overview of several of our biopharmaceutical products.
○ Product Developments - Biopharmaceutical
Beginning on page 70
This sub-section provides an overview of important biopharmaceutical product developments.
○ Costs and Expenses
Beginning on page 74
This sub-section provides a discussion about our costs and expenses.
○ Provision for Taxes on Income
Beginning on page 77
This sub-section provides a discussion of items impacting our tax provisions.
○ Non-GAAP Financial Measure (Adjusted Income)
Beginning on page 77
This sub-section provides a discussion of an alternative view of performance used by management.
●
Analysis of Operating Segment Information
Beginning on page 83
This section provides a discussion of the performance of each of our operating segments.
●
Analysis of the Condensed Consolidated Statements of Comprehensive Income
Beginning on page 91
This section provides a discussion of changes in certain components of other comprehensive income.
●
Analysis of the Condensed Consolidated Balance Sheets
Beginning on page 91
This section provides a discussion of changes in certain balance sheet accounts.
●
Analysis of the Condensed Consolidated Statements of Cash Flows
Beginning on page 93
This section provides an analysis of our cash flows for the first nine months of 2017 and 2016.
●
Analysis of Financial Condition, Liquidity and Capital Resources
Beginning on page 94
This section provides an analysis of selected measures of our liquidity and of our capital resources as of October 1, 2017 and December 31, 2016, as well as a discussion of our outstanding debt and other commitments that existed as of October 1, 2017 and December 31, 2016. Included in the discussion of outstanding debt is a discussion of the amount of financial capacity available to help fund Pfizer’s future activities.
●
New Accounting Standards
Beginning on page 98
This section discusses accounting standards that we have recently adopted, as well as those that recently have been issued, but not yet adopted.
●
Forward-Looking Information and Factors That May Affect Future Results
Beginning on page 102
This section provides a description of the risks and uncertainties that could cause actual results to differ materially from those discussed in forward-looking statements presented in this MD&A, relating to, among other things, our anticipated operating and financial performance, business plans and prospects, in-line products and product candidates, including anticipated regulatory submissions, data read-outs, approvals, performance, timing of exclusivity and potential benefits of Pfizer’s products and product candidates, strategic reviews, capital allocation, business-development plans, manufacturing and products supply and plans relating to share repurchases and dividends. Also included in this section is a discussion of legal proceedings and contingencies.
Certain
(MILLIONS)Three Months EndedNine Months Ended
PRODUCTPRIMARY INDICATION OR CLASSOct. 2, 2022Oct. 3, 2021Oct. 2, 2022Oct. 3, 2021
RetacritAnemia87 110 308 322 
SutentAdvanced and/or metastatic RCC, adjuvant RCC, refractory GIST (after disease progression on, or intolerance to, imatinib mesylate) and advanced pancreatic neuroendocrine tumor75 142 287 537 
LorbrenaALK-positive metastatic NSCLC99 67 247 193 
Bavencio alliance revenuesLocally advanced or metastatic urothelial carcinoma; metastatic Merkel cell carcinoma; immunotherapy and tyrosine kinase inhibitor combination for patients with advanced RCC73 54 198 122 
AromasinPost-menopausal early and advanced breast cancer66 56 187 159 
BesponsaRelapsed or refractory B-cell acute lymphoblastic leukemia55 50 164 145 
Braftovi
In combination with Mektovi for metastatic melanoma in patients with a BRAFV600E/K mutation and, in combination with Erbitux® (cetuximab)(f), for the treatment of BRAFV600E -mutant mCRC after prior therapy
58 47 156 136 
TrazimeraHER-positive breast cancer and metastatic stomach cancers51 45 149 131 
Mektovi
In combination with Braftovi for metastatic melanoma in patients with a BRAFV600E/K mutation
45 41 129 112 
All other OncologyVarious80 53 243 155 
PFIZER CENTREONE(b)
$319 $521 $974 $1,348 
Total Alliance revenues included above$1,689 $2,068 $6,320 $5,718 
(a)On December 31, 2021, we completed the sale of our Meridian subsidiary. Prior to its sale, Meridian was managed as part of the former Hospital therapeutic area (see footnote (b) below). Beginning in the fourth quarter of 2021, the financial results of Meridian are reflected as discontinued operations. See Note 1A.
(b)See Note 1A for information about our recent organizational changes. PC1 includes revenues from our contract manufacturing, including certain Comirnaty-related manufacturing activities performed on behalf of BioNTech ($7 million and $108 million for the third quarter and the first nine months of 2022, respectively, and $187 million and $274 million for the third quarter and the first nine months of 2021, respectively), and revenues from our active pharmaceutical ingredient sales operation, as well as revenues related to our manufacturing and supply agreements with former legacy Pfizer businesses/partnerships, including but not limited to, transitional manufacturing and supply agreements with Viatris following the spin-off of the Upjohn Business. Prior to the fourth quarter of 2021, PC1 was managed within our former Hospital product portfolio.
(c)Excludes revenues for certain Comirnaty-related manufacturing activities performed on behalf of BioNTech, which are included in the PC1 contract development and manufacturing organization.
(d)Prevnar family include revenues from Prevnar 13/Prevenar 13 (pediatric and adult) and Prevnar 20/Apexxnar (adult).
(e)Immunoglobulin (Ig) portfolio includes the revenues from Panzyga, Octagam and Cutaquig.
(f)Erbitux® is a registered trademark of ImClone LLC.
Remaining Performance Obligations––Contracted revenue expected to be recognized from remaining performance obligations for firm orders in long-term contracts to supply Comirnaty to our customers totaled approximately $22 billion as of October 2, 2022, which includes amounts received in advance and deferred, as well as amounts that will be invoiced as we deliver these products to our MD&A maycustomers in future periods. Of this amount, we expect to recognize revenue of approximately $9 billion in 2022, $13 billion in 2023 and $200 million in 2024. Remaining performance obligations are based on foreign exchange rates as of the end of the third quarter of 2022 and exclude arrangements with an original expected contract duration of less than one year.
Deferred Revenues––Our deferred revenues primarily relate to advance payments received or receivable from various government or government sponsored customers in international markets for supply of Comirnaty and Paxlovid. The deferred revenues related to Comirnaty and Paxlovid total $6.2 billion as of October 2, 2022, with $6.1 billion and $126 million recorded in current and noncurrent liabilities, respectively. The deferred revenues related to Comirnaty total $3.3 billion as of December 31, 2021, with $3.0 billion and $249 million recorded in current liabilities and noncurrent liabilities, respectively. There were no deferred revenues associated with Paxlovid as of December 31, 2021. The increase in Comirnaty and Paxlovid deferred revenues during the first nine months of 2022 was primarily the result of additional advance payments received as we entered into new or amended contracts, including new advance payments received for Paxlovid contracts, less amounts recognized in Revenues as we delivered the products to our customers and the impact of foreign exchange. During the third quarter and first nine months of 2022, we recognized revenue of $68 million and $2.5 billion, respectively, that was included in the balance of Comirnaty deferred revenues as of December 31, 2021. The Comirnaty and Paxlovid deferred revenues as of October 2, 2022 will be recognized in Revenues proportionately as we transfer control of the products to our customers and satisfy our performance obligation under the contracts, with the amounts included in current liabilities expected to be recognized in Revenues within the next 12 months, and the amounts included in noncurrent liabilities expected to be recognized in Revenues in the last three months of 2023 and in the first quarter of 2024. Deferred revenues associated with contracts for other products were not add due to rounding. All percentages have been calculated using unrounded amounts.

significant as of October 2, 2022 or December 31, 2021.
37
The following table provides the components of the condensed consolidated statements of income:
  Three Months Ended Nine Months Ended
(MILLIONS OF DOLLARS, EXCEPT PER COMMON SHARE DATA) October 1,
2017
 October 2,
2016
 
%
Change

 October 1,
2017
 October 2,
2016
 
%
Change

Revenues $13,168
 $13,045
 1
 $38,843
 $39,196
 (1)
             
Cost of sales(a)
 2,847
 3,085
 (8) 7,980
 9,111
 (12)
% of revenues 21.6% 23.6%  
 20.5% 23.2%  
             
Selling, informational and administrative expenses(a)
 3,500
 3,559
 (2) 10,233
 10,414
 (2)
% of revenues 26.6% 27.3%  
 26.3% 26.6%  
             
Research and development expenses(a)
 1,859
 1,881
 (1) 5,346
 5,360
 —
% of revenues 14.1% 14.4%  
 13.8% 13.7%  
             
Amortization of intangible assets 1,177
 968
 22
 3,571
 2,934
 22
% of revenues 8.9% 7.4%  
 9.2% 7.5%  
             
Restructuring charges and certain acquisition-related costs 149
 531
 (72) 377
 988
 (62)
% of revenues 1.1% 4.1%  
 1.0% 2.5%  
             
Other (income)/deductions––net 51
 1,417
 (96) (16) 2,815
 *
Income from continuing operations before provision for taxes on income 3,585
 1,604
 *
 11,351
 7,575
 50
% of revenues 27.2% 12.3%  
 29.2% 19.3%  
             
Provision for taxes on income(b)
 727
 249
 *
 2,287
 1,109
 *
Effective tax rate 20.3% 15.5%  
 20.1% 14.6%  
             
Income from continuing operations(b)
 2,858
 1,355
 *
 9,064
 6,465
 40
% of revenues 21.7% 10.4%  
 23.3% 16.5%  
             
Discontinued operations––net of tax —
 —
 —
 1
 —
 *
             
Net income before allocation to noncontrolling interests 2,858
 1,355
 *
 9,066
 6,465
 40
% of revenues 21.7% 10.4%  
 23.3% 16.5%  
             
Less: Net income attributable to noncontrolling interests 18
 —
 *
 32
 25
 27
Net income attributable to Pfizer Inc.(b)
 $2,840
 $1,355
 *
 $9,034
 $6,440
 40
% of revenues 21.6% 10.4%  
 23.3% 16.4%  
             
Earnings per common share––basic(b):
:
  
  
  
  
  
  
Income from continuing operations attributable to Pfizer Inc. common shareholders $0.48
 $0.22
 *
 $1.51
 $1.06
 43
Net income attributable to Pfizer Inc. common shareholders $0.48
 $0.22
 *
 $1.51
 $1.06
 43
             
Earnings per common share––diluted(b):
      
  
  
  
Income from continuing operations attributable to Pfizer Inc. common shareholders $0.47
 $0.22
 *
 $1.49
 $1.04
 43
Net income attributable to Pfizer Inc. common shareholders $0.47
 $0.22
 *
 $1.49
 $1.04
 43
             
Cash dividends paid per common share $0.32
 $0.30
 7
 $0.96
 $0.90
 7

* Calculation not meaningful.
(a)
Excludes amortization of intangible assets, except as disclosed in Notes to Condensed Consolidated Financial Statements––Note 9A. Identifiable Intangible Assets and Goodwill:Identifiable Intangible Assets.
(b)
Amounts for the three and nine months ended October 2, 2016 have been revised from previously reported amounts to reflect the adoption of a new accounting standard in the fourth quarter of 2016, as of January 1, 2016. For additional information, see Notes to Condensed Consolidated Financial Statements––Note 1B. Basis of Presentation and Significant Accounting Policies––Adoption of New Accounting Standards.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

OVERVIEW OF OUR PERFORMANCE, OPERATING ENVIRONMENT, STRATEGY AND OUTLOOK

References to operational variances pertain to period-over-period changes that exclude the impact of foreign exchange rates. Although foreign exchange rate changes are part of our business, they are not within our control and since they can mask positive or negative trends in the business, we believe presenting operational variances excluding these foreign exchange changes provides useful information to evaluate our results.
Our Business

and Strategy––We apply science and our global resources to bring therapies to people that extend and significantly improve their lives through the discovery, development, manufacture, marketing, sale and manufacturedistribution of healthcare products. Our global portfolio includes medicinesbiopharmaceutical products worldwide. Beginning in the fourth quarter of 2021, we reorganized our commercial operations and vaccines, as well as many of the world’s best-known consumer healthcare products. We work across developed and emerging marketsbegan to advance wellness, prevention, treatments and cures that challenge the most feared diseases of our time. We collaborate with healthcare providers, governments and local communities to support and expand access to reliable, affordable healthcare around the world. Our revenues are derived from the sale of our products and, to a much lesser extent, from alliance agreements, under which we co-promote products discovered or developed by other companies or us (Alliance revenues).

We manage our commercial operations through a global structure consisting of two distinct businessoperating segments: Pfizer Innovative Health (IH)Biopharma and Pfizer Essential Health (EH). ForPC1. Beginning in the third quarter of 2022, we made several additional information, see Notesorganizational changes to Condensed Consolidated Financial Statements––further transform our operations to better leverage our expertise in certain areas and in anticipation of potential future new product launches. Biopharma is the only reportable segment. See Note 13A. Segment, Geographic1A. We expect to incur costs of approximately $700 million in connection with separating Upjohn, of which approximately 85% has been incurred since inception and Other Revenue Information: Segment Informationthrough the third quarter of 2022. These charges include costs and the “Our Strategy––Commercial Operations” sectionexpenses related to separation of this MD&A below.legal entities and transaction costs.

The majority of our revenues come from the manufacture and sale of biopharmaceutical products. As explained more fully in our 2016 Form 10-K, the biopharmaceutical industry is highly competitive and highly regulated. As a result, we face a number of industry-specific factors and challenges, which can significantly impact our results. These factors include, among others: the loss or expiration of intellectual property rights and the expiration of co-promotion and licensing rights, the ability to replenish innovative biopharmaceutical products, healthcare legislation, pipeline productivity, the regulatory environment, pricing and access pressures and competition. We also face challenges as a result of the global economic environment. For additional information about these factorsour business, strategy and challenges,operating environment, see the “OurItem 1. Business section and Overview of Our Performance, Operating Environment”Environment, Strategy and “The Global Economic Environment” sections of thisOutlook section within MD&A and of our 2021 Form 10-K.
Our Business Development Initiatives2016 Financial Report––We are committed to strategically capitalizing on growth opportunities, primarily by advancing our own product pipeline and Part I, Item 1A, “Risk Factors”maximizing the value of our 2016 Form 10-K and Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q.

The financial information included in our condensed consolidated financial statements for our subsidiaries operating outside the U.S. is as of and for the three and nine months ended August 27, 2017 and August 28, 2016. The financial information included in our condensed consolidated financial statements for U.S. subsidiaries is as of and for the three and nine months ended October 1, 2017 and October 2, 2016.
References to developed and emerging markets in this MD&A include:
Developed marketsU.S., Western Europe, Japan, Canada, Australia, South Korea, Scandinavian countries, Finland and New Zealand
Emerging markets (includes, but is not limited to)Asia (excluding Japan and South Korea), Latin America, Africa, Eastern Europe, Central Europe, the Middle East and Turkey
References to operational variances in this MD&A pertain to period-over-period growth rates that exclude the impact of foreign exchange. The operational variances are determined by multiplying or dividing, as appropriate, our current period U.S. dollar results by the current period average foreign exchange rates and then multiplying or dividing, as appropriate, those amounts by the prior-year period average foreign exchange rates. Although exchange rate changes are part of ourexisting products, but also through various business they are not within our control. Exchange rate changes, however, can mask positive or negative trends in the business; therefore, we believe presenting operational variances provides useful information in evaluating the results of our business.

In October 2017, we announced that we are reviewing strategic alternatives for our Consumer Healthcare business. A range of options will be considered, including a full or partial separation of the Consumer Healthcare business from Pfizer through a spin-off, sale or other transaction, and we may ultimately determine to retain the business.development activities. Our other significant recent business development activities include:

•
On February 3, 2017, we completed the sale of Pfizer’s global infusion therapy net assets, HIS, to ICU Medical for up to approximately $900 million, composed of cash and contingent cash consideration, ICU Medical common stock and seller financing.include the transactions discussed in Note 2 and the following:At closing, we received 3.2 million newly issued shares of ICU Medical common stock, which we initially valued at approximately $428 million, a promissory note in the amount of $75 million and net cash of approximately $200 million before customary adjustments for net working capital. In addition, we are entitled to receive a contingent amount of up to an additional $225 million in cash based on ICU Medical’s achievement of certain cumulative performance targets for the combined company through December 31, 2019. The operating results of HIS are included in our condensed consolidated statement of income and EH’s operating results through February 2, 2017 and, therefore, our financial results, and EH’s

operating results,Acquisition of Global Blood Therapeutics, Inc. (GBT)––On October 5, 2022, we acquired GBT, a biopharmaceutical company dedicated to the discovery, development and delivery of life-changing treatments that provide hope to underserved patient communities, starting with sickle cell disease, for $68.50 per share, in cash, for payments of approximately $5.3 billion, net of cash acquired, plus repayment of third-party debt of $331 million.
Acquisition of Biohaven––On October 3, 2022, we acquired Biohaven, the maker of Nurtec ODT (rimegepant), an innovative dual-acting migraine therapy approved for both acute treatment and episodic prevention of migraine in adults. The transaction includes the acquisition of Biohaven’s CGRP programs, including rimegepant, zavegepant and a portfolio of five pre-clinical CGRP assets. Under the terms of the agreement, we acquired all outstanding common shares of Biohaven not already owned by us for $148.50 per share, in cash, for payments of approximately $11.5 billion, plus repayment of third-party debt of $863 million and redemption of Biohaven’s redeemable preferred stock for $495 million. Effective immediately prior to the closing of the acquisition, Biohaven completed the spin-off of Biohaven Ltd. (NYSE: BHVN), distributing Biohaven Ltd.’s shares to Biohaven shareholders. Biohaven Ltd. is a new publicly traded company that retained Biohaven’s non-CGRP development stage pipeline compounds. Pfizer, a Biohaven shareholder, received a pro rata portion of Biohaven Ltd.’s shares in the distribution and currently owns approximately 1.5% of Biohaven Ltd.
This acquisition follows on the November 2021 collaboration for the commercialization of rimegepant and zavegepant outside the U.S., in connection with which Pfizer acquired 2.6% of Biohaven’s common stock (see Note 2D). Biohaven Ltd. will also have the right to receive tiered royalties from Pfizer on any annual net sales of rimegepant and zavegepant in the U.S. in excess of $5.25 billion.
For a description of the more significant recent transactions through February 24, 2022, the filing date of our 2021 Form 10-K, see Note 2 in our 2021 Form 10-K.
Our Third Quarter 2022 and First Nine Months of 2022 Performance
Revenues––Revenues decreased $1.4 billion, or 6%, in the third quarter of 2017 do not reflect any contribution2022 to $22.6 billion from HIS global operations, while our financial results, and EH’s operating results, for$24.0 billion in the third quarter of 2016 reflect three months2021, reflecting an operational decrease of HIS global operations. Our financial results, and EH’s operating results, for $441 million, or 2%, as well as an unfavorable impact of foreign exchange of $957 million, or 4%. The operational decrease was primarily driven by a decline in Comirnaty, partially offset by growth from Paxlovid. Revenues increased $18.6 billion, or 32%, in the first nine months of2017 reflect approximately one month of HIS domestic operations and approximately two months of HIS international operations, while our financial results, and EH’s operating results, for 2022 to $76.0 billion from $57.4 billion in the first nine months of2016 reflect nine months2021, reflecting an operational increase of HIS global operations. Assets$21.6 billion, or 38%, as well as an unfavorable impact of foreign exchange of $3.0 billion, or 5%. The operational increase was primarily driven by growth from Paxlovid and liabilities associated with HIS are presented as held for saleComirnaty.
Excluding the impact of Paxlovid and Comirnaty, revenues increased 2% operationally in the condensed consolidated balance sheet as of December 31, 2016. The HIS assets held for sale are reported in Assets held for sale and HIS liabilities held for sale are reported in Other current liabilities.
On December 22, 2016, which falls in the first fiscal quarter of 2017 for our international operations, we acquired the development and commercialization rights to AstraZeneca’s small molecule anti-infectives business, primarily outside the U.S. The total fair value of the consideration transferred for this business was approximately $555 million in cash plus contingent consideration of $490 million. Commencing from the acquisition date, our financial statements reflect the assets, liabilities, operating results and cash flows of this business, and, in accordance with our international reporting period, our financial results, EH’s operating results, and cash flows forboth the third quarter and first nine months of 2017 reflect approximately three months2022, reflecting strong growth in Eliquis, the Prevnar family and eight months, respectively,Vyndaqel/Vyndamax, partially offset by declines in
38

Xeljanz, Sutent and certain Comirnaty-related manufacturing activities performed on behalf of the small molecule anti-infectives business acquired from AstraZeneca.
•
On September 28, 2016, we acquired Medivation for $81.50 per share. The total fair value of consideration transferred for Medivation was approximately $14.3 billion in cash ($13.9 billion, net of cash acquired). Of this consideration, approximately $365 million was not paid as of December 31, 2016, and was recorded in Other current liabilities. Substantially all of the remaining consideration was paid as of October 1, 2017. Commencing from the acquisition date, our financial statements reflect the assets, liabilities, operating results and cash flows of Medivation. Therefore, Medivation operations are reflected in our financial results, IH’s operating results, and cash flows for the third quarter and first nine months of 2017. In accordance with our domestic and international reporting periods, our consolidated financial statements for the third quarter and first nine months of 2016 reflect three business days of Medivation operations, which were immaterial.
•
On June 24, 2016, we acquired Anacor for $99.25 per share. The total fair value of consideration transferred for Anacor was approximately $4.9 billion in cash ($4.5 billion, net of cash acquired), plus $698 million debt assumed. Commencing from the acquisition date, our financial statements reflect the assets, liabilities, operating results and cash flows of Anacor. Therefore, Anacor operations are reflected in our financial results, IH’s operating results, and cash flows for the third quarter and first nine months of 2017. In accordance with our domestic and international reporting periods, our consolidated financial statements for the third quarter and first nine months of 2016 reflect approximately three months of Anacor operations.

For additional information, see Notes to Condensed Consolidated Financial Statements––Note 2. Acquisitions, Sale of Hospira Infusion Systems Net Assets, Collaborative Arrangement and Equity-Method Investments and the “Our Strategy” and “Our Business Development Initiatives” sections of this MD&A below.

Impact of Recent Hurricanes in Puerto Rico

We have manufacturing and commercial operations in Puerto Rico,BioNTech, which were impacted by the recent hurricanes toward the end of the third quarter in 2017. While our three manufacturing sites sustained some damage and became inoperable due to issues impacting Puerto Rico overall, we have made significant progress in repairing our facilities in anticipation of ramping up to full operations over the coming months. As of the date of this Form 10-Q filing, some packaging production has begun at our facilities. We expect our facilities to reach full capacity in early 2018, but there could be certain product shortagesare included in the coming months. Our commercial sales offices in Puerto Rico have been operational since October 9, 2017.
In the third quarter of 2017, we recorded $55 million in Cost of sales for inventory losses, overhead costs related to the period in which the plants could not operate,PC1 contract development and incremental costs to date resulting from the hurricanes in Puerto Rico. We may record additional losses in future periods but we are unable to predict them with certainty at this time. As a result of dual source supply options and sufficient pre-hurricane inventory levels, we currently expect the impact on future revenues to be insignificant. We will continue to monitor the situation closely and make any updates to our outlook if warranted.

Product Manufacturing

We periodically encounter difficulties or delays in manufacturing including due to legal or regulatory actions, such as warning letters, suspension of manufacturing or voluntary recall of a product. Within our Essential Health portfolio, we have been experiencing product shortages with some products. The product shortages are primarily for products from the legacy Hospira portfolio and are largely driven by capacity constraints and technical issues. In February 2017, for example, we received a

warning letter from the FDA communicating the FDA’s view that certain violations of cGMP regulations exist at Hospira’s manufacturing facility in McPherson, Kansas. We are undertaking corrective actions to address the concerns raised by the FDA. Communication with the FDA is ongoing. Until the violations are corrected, the FDA may refuse to grant premarket approval applications and/or the FDA may refuse to grant export certificates related to products manufactured at McPherson, Kansas. Any continued product shortage interruption at this manufacturing facility could negatively impact our financial results, specifically in our Sterile Injectable Pharmaceuticals portfolio. In addition to the McPherson facility, we continue to remediate issues at other legacy Hospira facilities manufacturing sterile injectables within our Essential Health portfolio. We expect to make substantial progress on our remediation efforts during 2018.

Our 2017 Performance

organization. Revenues

Revenues in the third quarter of 2017 increased 1% compared to the same period in 2016, which reflects an operational increase of $178 million, or 1%, slightly offset by the unfavorable impact of foreign exchange.
Revenues in the first nine months of 2017 decreased 1% compared to the same period2022 were also negatively impacted by declines in 2016, which reflects an operational increase of $19 million and an unfavorable impact of foreign exchange of 1%.Chantix/Champix.
The following provides an analysis of the changes in revenues for the third quarter and first nine months of 2017:
(MILLIONS OF DOLLARS) Three Months
 Nine Months
     
Revenues, for the three months and nine months ended October 2, 2016
 $13,045
 $39,196
  

  
Disposition-related operational impact––February 2017 sale of HIS(a)
 (280) (783)
  

  
Other operational growth/(decline)    
Continued growth from key brands(b) and growth from Biosimilars
 806
 2,245
Growth in Xtandi alliance revenues in the U.S. (September 2016 acquisition of Medivation) 148
 420
Declines from Peri-LOE Products, Enbrel (driven by declines in most developed Europe markets), Prevnar 13/Prevenar 13 (driven by declines in the U.S.), and Viagra (IH) (primarily in the U.S.), as well as a decline in our SIP portfolio, and for the first nine months of 2017, also includes a decline in the LEP portfolio (598) (1,951)
Other operational factors, net 102
 87
Operational growth, net 178
 19
     
Operational revenues 13,222
 39,215
Unfavorable impact of foreign exchange (54) (372)
Revenues, for the three months and nine months ended October 1, 2017
 $13,168
 $38,843
(a)
In the third quarter of 2017, financial results do not reflect any contribution from HIS global operations, compared to the inclusion of three months of HIS global operations in the same period in 2016. In the first nine months of 2017, financial results include approximately one month of HIS domestic operations and approximately two months of HIS international operations, compared to nine months of HIS global operations in the same period in 2016.
(b)
Key brands include Ibrance and Eliquis (globally) as well as Lyrica (IH) and Xeljanz (both primarily in the U.S.).
See the “AnalysisAnalysis of the Condensed Consolidated Statements of Income–Income––Revenues byGeographyand Revenues––Selected Product Developments––Revenues––Overview” section belowDiscussion sections for more information, including a discussion of key drivers of our revenue performance. For information regarding the primary indications or class of certain products, see Note 13C.

Income from Continuing Operations Before ProvisionProvision/(Benefit) for Taxes on Income
––The following provides an analysis of the increasesincrease in Income from continuing operations before provisionprovision/(benefit) for taxes on income forof $1.2 billion in the third quarter of 2022, compared to the same period in 2021, was primarily attributable to decreases in Cost of salesandRestructuring charges and certain acquisition-related costs, partially offset by: (i) lower revenues; (ii) lower net periodic benefit credits associated with pension and other postretirement plans; (iii)net losses on equity securities in the third quarter of 2022 versus net gains on equity securities in the third quarter of 2021 and (iv) an increase in Selling, informational and administrative expenses.
The increase in Income from continuing operations before provision/(benefit) for taxes on income of $9.0 billion in the first nine months of 2022, compared to the same period in 2021, was primarily attributable to higher revenues, partially offset by: (i) an increase in 2017Cost of sales; :(ii)
net losses on equity securities in the first nine months of 2022 versus net gains on equity securities in the first nine months of 2021; (iii) lower net periodic benefit credits associated with pension and other postretirement plans and (iv) increases in Research and development expenses and Selling, informational and administrative expenses.
(MILLIONS OF DOLLARS) Three Months
 Nine Months
     
Income from continuing operations before provision for taxes on income, for the three months and nine months ended October 2, 2016
 $1,604
 $7,575
     
Favorable/(Unfavorable) change in revenues 123
 (353)
     
Favorable/(Unfavorable) changes:  
 
Nonrecurrence of 2016 impairment on remeasurement of HIS net assets and lower loss on sale of HIS(a)
 1,434
 1,369
Lower Cost of sales(b)
 238
 1,130
Lower certain asset impairments(a)
 3

937
Lower Restructuring charges and certain acquisition-related costs(c)
 381
 611
(Higher)/lower certain legal matters, net(a)
 (223) 300
Higher net gains on asset disposals(a)
 108

268
Higher dividend income(a)
 54
 204
Lower Selling, information and administrative expenses(d)
 59
 181
Lower business and legal entity alignment costs(a) 
 53
 126
Higher Amortization of intangible assets(e)
 (209)
(637)
Lower royalty-related income(a)
 (93)
(363)
     
All other items, net 52

4
Income from continuing operations before provision for taxes on income, for the three months and nine months ended October 1, 2017
 $3,585

$11,351
(a)Seethe Analysis of the Condensed Consolidated Statements of Income within MD&A and Note 4 for additional information.
See the Notes to Condensed Consolidated Financial Statements––Note 4. Other (Income)/Deductions—Net.
(b)
See the “Costs and Expenses––Cost of Sales” section of this MD&A.
(c)
See the “Costs and Expenses––Restructuring Charges and Certain Acquisition-Related Costs and Cost-Reduction/Productivity Initiatives” section of this MD&A.
(d)
See the “Costs and Expenses––Selling, Informational and Administrative Expenses” section of this MD&A.
(e)
See the “Costs and Expenses––Amortization of Intangible Assets” section of this MD&A.
For information on our tax provision and effective tax rate, see the “ProvisionProvision/(Benefit) for Taxes on Income”Income section of thiswithin MD&A and Notes to Condensed Consolidated Financial Statements––Note 5. Tax Matters.

Our Operating Environment––We, like other businesses in our industry, are subject to certain industry-specific challenges. These include, among others, the topics listed below, as well as in the Item 1. Business––Government Regulation and Price Constraints and Item 1A. Risk Factors sections,and the Overview of Our Performance, Operating Environment, Strategy and Outlook––Our Operating Environment section of the MD&Aof our 2021 Form 10-K.
Industry-Specific Challenges

Intellectual Property Rights and Collaboration/Licensing Rights

––The loss, expiration or invalidation of intellectual property rights, patent litigation settlements with generic manufacturers and the expiration of co-promotion and licensing rights can have a significantmaterial adverse effect on our revenues. We have lost exclusivity for a numberCertain of our products have experienced patent-based expirations or loss of regulatory exclusivity in certain markets and we have lost collaboration rights with respect to a number of our alliance products in certain markets,the last few years, and we expect certain products to face significantly increased generic competition over the next few years. Also, if one of our patents is found to be invalid by judicial, court or administrative proceedings, such as inter partesreview, post-grant review, re-examination or opposition proceedings, before the U.S. Patent and Trademark Office, the European Patent Office, or other foreign counterparts, generic or competitive products could be introduced into the market resulting in the erosion of sales of our existing products. For example, several of the patents in our pneumococcal vaccine portfolio have been challenged in inter partes review and post-grant review proceedings in the U.S. The invalidation of these patents could potentially allow a competitor pneumococcal vaccine into the marketplace.
As a result of aWhile additional patent litigation settlement with several generic manufacturers, generic versions of Pristiq launched in the U.S. in March 2017. See the “Intellectual Property Rights and Collaboration/Licensing Rights” section of our 2016 Financial Report for additional information about (i) recent losses and expected losses of product exclusivity in the U.S., Europe and/or Japan impacting product revenues and (ii) recent losses of collaboration rights impacting alliance revenues.

We expect to lose exclusivity for various other products in various markets over the next few years, including, among others, Viagra in the U.S. in December 2017 and the expiration of the basic product patent for Lyrica in the U.S. in December 2018.

For additional information, see the “Patents and Other Intellectual Property Rights” section in Part I, Item 1, “Business” of our 2016 Form 10-K.
Weexpiries will continue, to aggressively defend our patent rights whenever we deem appropriate. For more detailed information about our significant products, see the discussion in the “Revenues––Major Products” and “Revenues––Selected Product Discussion” sectionsexpect a moderate impact of this MD&A. For a discussion of certain recent developments with respectreduced revenues due to patent litigation, see Notes to Condensed Consolidated Financial Statements––Note 12A1. Commitments and Contingencies: Legal Proceedings––Patent Litigation.
Regulatory Environment/Pricing and Access––U.S. Healthcare Legislation

In March 2010, the ACA was enacted in the U.S. For additional information, see the “Government Regulation and Price Constraints” section in Part I, Item 1, “Business” of our 2016 Form 10-K.

We recorded the following amounts as a result of the U.S. Healthcare Legislation:
•
$157 million in the third quarter of 2017 and $143 million in the third quarter of 2016, and $296 million in the first nine months of 2017 and $302 million in the first nine months of 2016, recorded as a reduction to Revenues related to the Medicare “coverage gap” discount provision; and
•
$87 million in the third quarter of 2017 and $95 million in the third quarter of 2016, and $218 million in the first nine months of 2017 and $219 million in the first nine months of 2016, recorded in Selling, informational and administrative expenses, related to the fee payable to the federal government (which is not deductible for U.S. income tax purposes) based on our prior-calendar-year share relative to other companies of branded prescription drug sales to specified government programs.

Regulatory Environment/Pricing and Access––Government and Other Payer Group Pressures

Governments, MCOs and other payer groups continue to seek increasing discounts on our productsexpiries from 2022 through a variety of means, such as leveraging their purchasing power, implementing price controls, and demanding price cuts (directly or by rebate actions). In Europe, Japan, China, Canada, South Korea and some other international markets, governments provide healthcare at low direct cost to patients and regulate pharmaceutical prices or patient reimbursement levels to control costs for the government-sponsored healthcare system, particularly under recent global economic pressures. In the U.S., a primary government activity with implications for pharmaceutical pricing is deficit reduction. Any significant spending reductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs that may be implemented, and/or any significant additional taxes or fees that may be imposed on us, as part of any broad deficit-reduction effort could have an adverse impact on our results of operations. Significant Medicare reductions could also result if Congress proceeds with certain proposals to convert the Medicare fee-for-service program into a premium support program, or if it chooses to implement the recommendations made annually by the Medicare Payment Advisory Commission, which are primarily intended to extend the fiscal solvency of the Medicare program. Similar reductions to Medicare spending could result if the threshold for action by the Independent Payment Advisory Board (IPAB) is reached, and the Secretary of the Department of Health and Human Services (to whom responsibility for developing savings proposals specified in the ACA is likely to default in the absence of a seated IPAB) is required to identify savings. Current projections by the Centers for Medicare and Medicaid Services Office of the Actuary indicate that the IPAB threshold will not be reached before 2021.
Consolidation among MCOs has increased the negotiating power of MCOs and other private insurers. Private third-party insurers, as well as governments, increasingly employ formularies to control costs by negotiating discounted prices in exchange for formulary inclusion. Failure to obtain or maintain timely or adequate pricing or formulary placement for our products or obtaining such pricing or placement at unfavorable pricing could adversely impact revenue.
Additionally, efforts by government officials or legislators to implement measures to regulate prices or payment for pharmaceutical products, including legislation on drug importation, could adversely affect our business if implemented. There has recently been considerable public and government scrutiny of pharmaceutical pricing and proposals to address the perceived high cost of pharmaceuticals, and there are indications that there could be a Presidential Executive Order that would focus on pharmaceuticals. We believe medicines are the most efficient and effective use of healthcare dollars based on the value they deliver to the overall healthcare system.2025. We continue to work with stakeholders to ensure access to medicines within an efficient and affordable healthcare system.

Adoption of other new legislation at the federal or state level could further affect demand for, or pricing of, our products. We face uncertainties due to federal legislative and administrative efforts to repeal, substantially modify or invalidate some or all of the provisions of the ACA, though the likelihood of repeal of the ACA is now low given the recent failure of the Senate’s multiple attempts to repeal various combinations of ACA provisions. In October 2017, the President signed an Executive Order directing federal agencies to modify how the ACA is implemented and announced that his administration will withhold the cost-

sharing subsidies paid to health insurance exchange plans serving low-income enrollees. The revenues generated for Pfizer by the health insurance exchanges under the ACA are minor, so the impact of the recent administration actions is expected to be limited. There is no assurance that any replacement, modification or repeal of the ACA will not adversely affect our business and financial results, particularly if the legislation reduces incentives for employer-sponsored insurance coverage. We also may face uncertainties if our industry is looked to for savings to fund certain legislation, such as reauthorization of the Children’s Health Insurance Program, or lifting the debt ceiling. There have also been recent state legislative efforts to address drug costs, which have generally focused on increasing transparency around drug costs or limiting drug prices. Recent legislation enacted includes, for example, a 2017 Maryland law that prohibits a generic drug manufacturer or wholesale distributor from engaging in price gouging in the sale of certain off-patent or generic drugs, and a 2017 California law that requires manufacturers to provide advanced notification of price increases to certain purchasers and report specified drug pricing information to the state. We cannot predict the success of current or future federal or state legislative efforts. We will continue to work with law makers and advocate for solutions that effectively improve patient health outcomes and lower costs to the healthcare system.

The potential for additional pricing and access pressures in the commercial sector continues to be significant. Some employers, seeking to avoid the tax on high-cost health insurance in the ACA to be imposed in 2020, are already scaling back healthcare benefits and an increasing number are implementing high deductible benefit designs. This is a trend that is likely to continue, especially if proposals to limit the tax exclusion for employer sponsored health insurance ultimately become law. Private third-party payers, such as health plans, increasingly challenge pharmaceutical product pricing, which could result in lower prices, lower reimbursement rates and a reduction in demand for our products. Pricing pressures for our products may occur as a result of highly competitive insurance markets. Healthcare provider purchasers, directly or through group purchasing organizations, are seeking enhanced discounts or implementing more rigorous bidding or purchasing review processes.
Overall, there is increasing pressure on U.S. providers to deliver healthcare at a lower cost and to ensure that those expenditures deliver demonstrated value in terms of health outcomes. Longer term, we are seeing a shift in focus away from fee-for-service payments towards outcomes-based payments and risk-sharing arrangements that reward providers for cost reductions. These new payment models can, at times, lead to lower prices for, and restricted access to, new medicines. At the same time, these models can also expand utilization by encouraging physicians to screen, diagnose and focus on outcomes.

Outside the U.S., governments, including the different EU Member States, may use a variety of cost-containment measures for our pharmaceutical products, including price cuts, mandatory rebates, value-based pricing, and international reference pricing (i.e., the practice of a country linking its regulated medicine prices to those of other countries). This international patchwork of price regulation and differing economic conditions and assessments of value across countries has led to different prices in different countries and some third-party trade in our products between countries.
In particular, international reference pricing adds to the regional impact of price cuts in individual countries and hinders patient access and innovation. Price variations, exacerbated by international reference pricing systems, also have resulted from exchange rate fluctuations. The downward pricing pressure resulting from this dynamic can be expected to continue as a result of reforms to international reference pricing policies and measures targeting pharmaceuticals in some European countries.

In addition, several important multilateral organizations, such as the United Nations (UN) and the Organization for Economic Cooperation and Development (OECD), are increasing policy pressures and scrutiny of international pharmaceutical pricing through issuing reports and policy recommendations (e.g., 2016 UN High Level Panel Report on Access to Medicines and 2017 OECD Report on New Health Technologies––Managing Access, Value and Sustainability). Government adoption of these recommendations may lead to additional pricing pressures.

In response to the evolving U.S. and global healthcare spending landscape, we are continuing to work with health authorities, health technology assessment and quality measurement bodies and major U.S. payers throughout the product-development process to better understand how these entities value our compounds and products. Further, we are seeking to develop stronger internal capabilities focused on demonstrating the value of the medicines that we discover or develop, register and manufacture, by recognizing patterns of usage of our medicines and competitor medicines along with patterns of healthcare costs.
For additional information, see the “Regulatory Environment––Pipeline Productivity” and “Competition” sections of our 2016 Financial Report.
The Global Economic Environment

In addition to the industry-specific factors discussed above, we, like other businesses, are exposed to the economic cycle, which impacts our biopharmaceutical operations globally.
Governments, corporations, and insurance companies, which provide insurance benefits to patients, have implemented increases in cost-sharing and restrictions on access to medicines, potentially causing patients to switch to generic products, delay treatments, skip doses or use less effective treatments. Government financing pressures can lead to negative pricing

pressure in various markets where governments take an active role in setting prices, access criteria (e.g., through public or private health technology assessments), or other means of cost control. Examples include Europe, Japan, China, Canada, South Korea and a number of other international markets. The U.S. continues to maintain competitive insurance markets, but has also seen significant increases in patient cost-sharing and growing government influence as government programs continue to grow as a source of coverage.
•
We continue to monitor developments regarding government and government agency receivables in several European markets, including Greece, where economic conditions remain challenging and uncertain. For further information about our Accounts Receivable, see the “Analysis of Financial Condition, Liquidity and Capital Resources” section of this MD&A.
Significant portions of our revenues and earnings, as well as our substantial international net assets, are exposed to changes in foreign exchange rates. We seek to manage our foreign exchange risk in part through operational means, including managing same-currency revenues in relation to same-currency costs and same-currency assets in relation to same-currency liabilities. Depending on market conditions, foreign exchange risk also is managed through the use of derivative financial instruments and foreign currency debt. As we operate in multiple foreign currencies, including the euro, the Japanese yen, the Chinese renminbi, the U.K. pound, the Canadian dollar and approximately 100 other currencies, changes in those currencies relative to the U.S. dollar will impact our revenues and expenses. If the U.S. dollar were to weaken against another currency, assuming all other variables remained constant, our revenues would increase, having a positive impact on earnings, and our overall expenses would increase, having a negative impact on earnings. Conversely, if the U.S. dollar were to strengthen against another currency, assuming all other variables remained constant, our revenues would decrease, having a negative impact on earnings, and our overall expenses would decrease, having a positive impact on earnings. Therefore, significant changes in foreign exchange rates, including those changes resulting from the volatility following the U.K. referendum in which voters approved the exit from the EU, can impact our results and our financial guidance.
The impact of possible currency devaluations in countries experiencing high inflation rates or significant exchange fluctuations, including Venezuela, can impact our results and financial guidance. For further information about our exposure to foreign currency risk, see the “Analysis of Financial Condition, Liquidity and Capital Resources” and the “Our Financial Guidance for 2017” sections of this MD&A.
In June 2016, the U.K. electorate voted in a referendum to leave the EU, which is commonly referred to as “Brexit”. In January 2017, the U.K. Prime Minister announced a 12-point plan of negotiating objectives and confirmed that the U.K. government will not seek continued membership in the EU single market. In March 2017, the U.K. government formally notified the European Council of its intention to leave the EU after it triggered Article 50 of the Lisbon Treaty to begin the two-year negotiation process establishing the terms of the exit and outlining the future relationship between the U.K. and the EU. This process continues to be highly complex and the end result of these negotiations may pose certain implications to our research, commercial and general business operations in the U.K. and the EU, including the approval of our products.
We generated approximately 2% of our worldwide revenues from the U.K. in the first nine months of 2017. However, except for the foreign currency exchange impact from the weakening U.K. pound relative to the U.S. dollar to date, there are no other immediate-term impacts to our business as there has not yet been a formal change in the relationship between the U.K. and the EU. In addition, because of the significant uncertainties associated with the negotiation process, any potential long-term impacts are not currently determinable.
Pfizer maintains a strong financial position while operating in a complex global environment. Due to our significant operating cash flows, financial assets, access to capital markets and available lines of credit and revolving credit agreements, we continue to believe that we have, and will maintain, the ability to meet our liquidity needs for the foreseeable future. Our long-term debt is rated high quality by both S&P and Moody’s. As market conditions change, we continue to monitor our liquidity position. We have taken and will continue to take a conservative approach to our financial investments. Both short-term and long-term investments consist primarily of high-quality, highly liquid, well-diversified, available-for-sale debt securities. For further discussion of our financial condition and credit ratings, see the “Analysis of Financial Condition, Liquidity and Capital Resources” section of this MD&A.
These and other industry-wide factors that may affect our businesses should be considered along with information presented in the “Forward-Looking Information and Factors That May Affect Future Results” section of this MD&A and in Part I, Item 1A, “Risk Factors” of our 2016 Form 10-K and Part II, Item 1A, "Risk Factors," of this Quarterly Report on Form 10-Q.

Our Strategy

We believe that our medicines provide significant value for both healthcare providers and patients, not only from the improved treatment of diseases but also from a reduction in other healthcare costs, such as emergency room or hospitalization costs, as well as improvements in health, wellness and productivity. We continue to actively engage in dialogues about the value of our medicines and how we can best work with patients, physicians and payers to prevent and treat disease and improve outcomes.

We continue to work within the current legal and pricing structures, as well as continue to review our pricing arrangements and contracting methods with payers, to maximize patient access and minimize any adverse impact on our revenues. We remain firmly committed to fulfilling our company’s purpose of innovating to bring therapies to patients that extend and significantly improve their lives. By doing so, we expect to create value for the patients we serve and for our shareholders.

Commercial Operations

We manage our commercial operations through two distinct business segments: Pfizer Innovative Health (IH) and Pfizer Essential Health (EH). The IH and EH operating segments are each led by a single manager. Each operating segment has responsibility for its commercial activities and for certain IPR&D projects for new investigational products and additional indications for in-line products that generally have achieved proof-of-concept. Each business has a geographic footprint across developed and emerging markets.
Some additional information about our business segments follows:
IH SegmentEH Segment
●
IH focuses on developing and commercializing novel, value-creating medicines and vaccines that significantly improve patients’ lives, as well as products for consumer healthcare.
Key therapeutic areas include internal medicine, vaccines, oncology, inflammation & immunology, rare diseases and consumer healthcare.
●EH includes legacy brands that have lost or will soon lose market exclusivity in both developed and emerging markets, branded generics, generic sterile injectable products, biosimilars, select branded products including anti-infectives and, through February 2, 2017, HIS. EH also includes an R&D organization, as well as our contract manufacturing business.
●We expect that the IH biopharmaceutical portfolio of innovative, largely patent-protected, in-line and newly launched products will be sustained by ongoing investments to develop promising assets and targeted business development in areas of focus to help ensure a pipeline of highly-differentiated product candidates in areas of unmet medical need. The assets managed by IH are science-driven, highly differentiated and generally require a high-level of engagement with healthcare providers and consumers.●EH is expected to generate strong consistent cash flow by providing patients around the world with access to effective, lower-cost, high-value treatments. EH leverages our biologic development, regulatory and manufacturing expertise to seek to advance its biosimilar development portfolio. Additionally, EH leverages capabilities in formulation development and manufacturing expertise to help advance its generic sterile injectables portfolio. EH may also engage in targeted business development to further enable its commercial strategies.
●IH will have continued focus on R&D productivity and pipeline strength while maximizing the value of our recently launched brands and in-line portfolio. Our acquisitions of Anacor and Medivation expanded our pipeline in the high priority therapeutic areas of inflammation and immunology and oncology.●For EH, we continue to invest in growth drivers and manage the portfolio to extract additional value while seeking opportunities for operating efficiencies. This strategy includes active management of our portfolio; maximizing growth of core product segments; acquisitions to strengthen core areas of our portfolio further, such as our recent acquisition of AstraZeneca’s small molecule anti-infectives business; and divestitures to increase focus on our core strengths. In line with this strategy, on February 3, 2017, we completed the sale of Pfizer’s global infusion therapy net assets, representing the infusion systems net assets that we acquired as part of the Hospira transaction, HIS, to ICU Medical.

Leading brands include:
- Prevnar 13/Prevenar 13
- Xeljanz
- Eliquis
- Lyrica (U.S., Japan and certain other markets)
- Enbrel (outside the U.S. and Canada)
- Viagra (U.S. and Canada)
- Ibrance
- Xtandi
- Several OTC consumer healthcare products (e.g., Advil and
Centrum)

Leading brands include:
- Lipitor
- Premarin family
- Norvasc
- Lyrica (Europe, Russia, Turkey, Israel and Central Asia
countries)
- Celebrex
- Inflectra/Remsima
- Several sterile injectable products
For additional information about the 2017 performance for each of our operating segments, see the “Analysis of Operating Segment Information” section of this MD&A.

Description of Research and Development Operations

Innovation is critical to the success of our company, and drug discovery and development is time-consuming, expensive and unpredictable. Our R&D priorities include delivering a pipeline of differentiated therapies and vaccines with the greatest medical and commercial promise, innovating new capabilities that can position Pfizer for long-term leadership and creating new models for biomedical collaboration that will expedite the pace of innovation and productivity. To that end, our research primarily focuses on:
Biosimilars;
Inflammation and Immunology;
Metabolic Disease and Cardiovascular Risks;
Neuroscience;
Oncology;
Rare Diseases; and
Vaccines.
We continue to strengthen our global R&D organization and pursue strategies intended to improve innovation and overall productivity in R&D to achieve a sustainable pipeline that will deliver value in the near term and over time. Our R&D spending is conducted through a number of matrix organizations:
Research Units within our WRD organization are generally responsible for research assets for our IH business (assets that have not yet achieved proof-of-concept). Our Research Units are organized in a variety of ways (by therapeutic area or combinations of therapeutic areas, by discipline, by location, etc.) to enhance flexibility, cohesiveness and focus. Because of our structure, we can rapidly redeploy resources within a Research Unit between various projects as necessary because the workforce shares similar skills, expertise and/or focus.
Our R&D organization within the EH business supports the large base of EH products and is expected to develop potential new sterile injectable drugs and therapeutic solutions, as well as biosimilars.
Our GPD organization is a unified center for late-stage development for our innovative products and is generally responsible for the clinical development of assets that are in clinical trials for our WRD and Innovative portfolios. GPD is expected to enable more efficient and effective development and enhance our ability to accelerate and progress assets through our pipeline. GPD combines certain previously separate development-related functions from the IH business and the WRD organization to achieve a development capability that is expected to deliver high-quality, efficient, and well-executed clinical programs by enabling greater speed, greater cost efficiencies, and reduced complexity across our development portfolio. GPD also provides technical support and other services to Pfizer R&D projects.
Our science-based and other platform-services organizations, where a significant portion of our R&D spending occurs, provide technical expertise and other services to the various R&D projects, and are organized into science-based functions (which are part of our WRD organization), such as Pharmaceutical Sciences, Medicinal Chemistry, Regulatory and Drug Safety, and non-science-based functions, such as Facilities, Business Technology and Finance. As a result, within each of these functions, we are able to migrate resources among projects, candidates and/or targets in any therapeutic area and in most phases of development, allowing us to react quickly in response to evolving needs.

We manage R&D operations on a total-company basis through our matrix organizations described above. Specifically, a single committee with representation from the R&D groups and the IH commercial organization is accountable for aligning resources among all of our WRD, GPD and IH R&D projects and for seeking to ensure optimal capital allocation across the Innovative R&D portfolio. We believe that this approach also serves to maximize accountability and flexibility. Our EH R&D organization manages its resources separately from the WRD and GPD organizations.
Generally, we do not disaggregate total R&D expense by development phase or by therapeutic area since, as described above, we do not manage a significant portion of our R&D operations by development phase or by therapeutic area. Further, as we are able to adjust a significant portion of our spending quickly, as conditions change, we believe that any prior-period information about R&D expense by development phase or by therapeutic area would not necessarily be representative of future spending.
While a significant portion of R&D is done internally, we continue to seek out promising chemical and biological lead molecules and innovative technologies developed by third parties to incorporate into our discovery and development processes or projects, as well as our product lines, by entering into collaborations, alliances and license agreements with other companies, as well as leveraging acquisitions and equity- or debt-based investments. These agreements enable us to co-develop, license or acquire promising compounds, technologies or capabilities. We also enter into agreements pursuant to which a third party agrees to fund a portion of the development costs of one of our pipeline products in exchange for rights to receive potential milestone payments, revenue sharing payments, profit sharing payments and/or royalties. Collaboration, alliance, license and

funding agreements and equity- or debt-based investments allow us to share risk and cost and to access external scientific and technological expertise, and enable us to advance our own products as well as in-licensed or acquired products.
For additional information about R&D by operating segment, see the “Analysis of Operating Segment Information” section of this MD&A. For additional information about our pending new drug applications and supplemental filings, see the “Analysis of the Condensed Consolidated Statements of Income––Product Developments––Biopharmaceutical” section of this MD&A. For additional information about recent transactions and strategic investments that we believe have the potential to advance our pipeline, see the “Our Strategy––Our Business Development Initiatives” section of this MD&A.

Intellectual Property Rights
We continue to aggressivelyvigorously defend our patent rights against increasingly aggressive infringement, whenever appropriate, and we will continue to support efforts that strengthen worldwide recognition of patent rights while taking necessary steps to help ensure appropriate patient access. In addition,
For additional information on patent rights we consider most significant in relation to our business as a whole, see the Item 1. Business––Patents and Other Intellectual Property Rights section of our 2021 Form 10-K. For a discussion of recent developments with respect to patent litigation, see Note 12A1.
Regulatory Environment/Pricing and Access––Government and Other Payer Group Pressures––Governments globally, as well as private third-party payers in the U.S., may use a variety of measures to control costs, including, among others, proposing pricing reform or legislation, employing formularies to control costs, cross country collaboration and procurement, price cuts, mandatory rebates, health technology assessments, forced localization as a condition of market access, “international reference pricing” (i.e., the practice of a country linking its regulated medicine prices to those of other countries), quality consistency evaluation processes and volume-based procurement. We anticipate that these and similar initiatives will continue to employ innovative approaches designedincrease pricing and access pressures globally. In the U.S., in August 2022, President Biden signed into law the IRA, which includes significant drug pricing provisions, including (i) inflation rebates, where drug manufacturers must pay a rebate to prevent counterfeit pharmaceuticals from entering the supply chaingovernment if the prices of their covered single-source drugs and to achieve greater control overbiologics rise faster than the distributionrate of our products,inflation; (ii) Medicare Part D redesign whereby beneficiaries’ out-of-pocket costs are capped, payment obligation for initial coverage is redistributed with drug manufacturers paying 10% on all drugs and we will continue to participate in the generics market for our products, whenever appropriate, once they lose exclusivity. Also, the pursuit of valid business opportunities may require us to challenge intellectual property rights held by other companies that we believe were improperly granted. Such challenges may include negotiation and litigation, which may not be successful. For additional information about our current efforts to enforce our intellectual property rights and certain other patent proceedings, see Notes to Condensed Consolidated Financial Statements––Note 12A1. Commitments and Contingencies: Legal Proceedings––Patent Litigation. For information on risks related to patent protection and intellectual property claims by third parties, see “Risks Related to Intellectual Property” in Part I, Item 1A, “Risk Factors” of our 2016 Form 10-K.
Capital Allocation and Expense Management
We seek to maintain a strong balance sheet and robust liquidity so that we continue to have the financial resources necessary to take advantage of prudent commercial, research and business development opportunities and to directly enhance shareholder value through share repurchases and dividends. For additional information about our financial condition, liquidity, capital resources, share repurchases (including accelerated share repurchases) and dividends, see the “Analysis of Financial Condition, Liquidity and Capital Resources” section of this MD&A. For additional information about our recent business development activities, see the “Our Strategy––Our Business Development Initiatives” section of this MD&A.
We remain focused on achieving an appropriate cost structure for the Company. For additional information about our cost-reduction and productivity initiatives, see the “Costs and Expenses––Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives” section of this MD&A and Notes to Condensed Consolidated Financial Statements––Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives.
Our Business Development Initiatives

We are committed to capitalizing on growth opportunities by advancing our own pipeline and maximizing the value of our in-line products,coverage gap is eliminated, as well as requiring Part D plans to pay a larger portion of the catastrophic phase with drug manufacturers covering 20% of the costs; and (iii) Medicare negotiation, which requires the Secretary of the U.S. Department of Health and Human Services (HHS) to negotiate prices for certain drugs covered by Medicare Part B and Part D through various forms of business development, which can include alliances, licenses, joint ventures, collaborations, equity- or debt-based investments, dispositions, mergers and acquisitions. We view our business development activity as an enabler of our strategies, and we seek to generate earnings growth and enhance shareholder value by pursuing a disciplined, strategic and financial approach to evaluating business development opportunities.Drug Price Negotiation Program. We continue to evaluate the impact of the IRA on our business, development transactionsoperations and financial condition and results as the full effect of the IRA on our business and the pharmaceutical industry remains uncertain. In addition, in October 2022, President Biden signed an executive order that instructs the Secretary of HHS to consider whether to select for testing new health care payment and delivery models that would lower drug costs and promote access to innovative drug therapies for beneficiaries enrolled in the Medicare and Medicaid
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programs. Also in the U.S., we implemented a policy in 2022 that will help improve contract pharmacy integrity. HHS has sent letters to numerous manufacturers that have also implemented contract pharmacy integrity initiatives expressing the view that their programs are in violation of the 340B statute, and referring those programs for potential enforcement action. We believe that our program is consistent with the statute. Additional legal or legislative developments with respect to the 340B program may have an adverse impact on our integrity initiative, and we may face enforcement action or penalties, depending upon such developments. For additional information, see the Item 1. Business––Pricing Pressures and Managed Care Organizations and ––Government Regulation and Price Constraints and the Item 1A. Risk Factors––Pricing and Reimbursement sections in our 2021 Form 10-K and the Overview of Our Performance, Operating Environment, Strategy and Outlook––Our Operating Environment section of the MD&A in our 2021 Form 10-K.
Product Supply––We periodically encounter supply delays, disruptions and shortages, including due to voluntary product recalls. In response to requests from various regulatory authorities, manufacturers across the pharmaceutical industry, including Pfizer, are evaluating their product portfolios for the potential presence or formation of nitrosamines. This has led to strengthen onerecalls, including our voluntary recall of Chantix in 2021 and additional voluntary recalls initiated for other products in 2022 due to the presence of nitrosamines above the applicable acceptable intake limit, and may lead to additional recalls or bothother market actions for Pfizer products. For information on our Chantix recall in 2021 and risks related to product manufacturing, see the Item 1A. Risk Factors––Product Manufacturing, Sales and Marketing Risks section of our 2021 Form 10-K.
The Global Economic Environment––In addition to the industry-specific factors discussed above, we, like other businesses of our size and their capabilities,global extent of activities, are exposed to economic cycles. For additional information, see the Overview of Our Performance, Operating Environment, Strategy and Outlook––The Global Economic Environment section of the MD&A of our 2021 Form 10-K.
Russia/Ukraine Conflict––Our global operations may be impacted by certain factors in the global economic environment including impacts of political or civil unrest or military action, including the armed conflict between Russia and Ukraine. Consistent with our commitment to putting patients first, we are maintaining the supply of medicines to Russia, including the provision of needed medicines to patients already enrolled in clinical trials. Effective March 14, 2022, Pfizer is donating the equivalent of profits of our Russian subsidiary to causes that provide direct humanitarian support to the people of Ukraine, in addition to our ongoing efforts to support the humanitarian response in the region. To date, we have donated $20 million to 10 global and local non-governmental organizations to support humanitarian relief and response efforts. We will continue to support Ukrainian relief efforts through this method until peace is achieved. Additionally, we are not initiating new clinical trials in Russia, have stopped recruiting new patients in our ongoing clinical trials in the country, and halted all new investments with local suppliers intended to build manufacturing capacity in Russia. For both the nine months ended October 2, 2022 and the fiscal year ended December 31, 2021, the business of our Russia and Ukraine subsidiaries represented less than 1% of our consolidated revenues and assets, and while we are monitoring the effects of the armed conflict between Russia and Ukraine, the situation continues to evolve and the long-term implications, including the broader economic consequences of the conflict, are difficult to predict at this time. While as of now, we do not anticipate any significant negative impacts on our business from this conflict, continued regional instability, geopolitical shifts, potential additional sanctions and other restrictive measures against Russia, neighboring countries or allies of Russia, any retaliatory measures taken by Russia, neighboring countries or allies of Russia, and actions by our customers or suppliers in response to such asmeasures could adversely affect the global macroeconomic environment, our acquisitionsoperations, currency exchange rates and financial markets, which could in turn adversely impact our business and results of Hospira, Medivation, Anacor,operations.
COVID-19 Pandemic––The COVID-19 pandemic has impacted our business, operations and AstraZeneca’s small molecule anti-infectives business,financial condition and results.
Our Response to COVID-19
Pfizer is continuing to help lead the global effort to confront the COVID-19 pandemic by advancing a vision for industry-wide collaboration while continuing to make significant investments in breakthrough science and global manufacturing.
•Comirnaty
◦We have collaborated with BioNTech to jointly develop Comirnaty, a mRNA-based coronavirus vaccine to help prevent COVID-19. For additional information, including information regarding EUAs for a booster dose of an Omicron-adapted bivalent vaccine for individuals ages 5 years and older, see the Product Developments section within MD&A. We continue to evaluate our vaccine and the short- and long-term safety and efficacy of Comirnaty. We are also studying monovalent, bivalent and variant-adapted vaccine candidates to potentially help prevent COVID-19 caused by variants of concern, as well as collaborations,a next-generation mRNA vaccine candidate.
◦The companies have entered into agreements to supply pre-specified doses of Comirnaty in 2022 with multiple developed and allianceemerging countries around the world and licenseare continuing to deliver doses of Comirnaty to governments under such agreements. We also signed agreements with multiple countries to supply Comirnaty doses in 2023 and are currently negotiating similar potential agreements with multiple countries as well. Additionally, we will continue our efforts to help
40

ensure equitable access to Comirnaty and anticipate delivering at least two billion doses to low- and middle-income countries—one billion of which were delivered in 2021 and approximately 600 million of which were delivered in the first nine months of 2022. Certain of the aforementioned doses to low- and middle-income countries are being supplied to the U.S. government at a not-for-profit price to be donated to the world’s poorest nations.
◦While to date sales of Comirnaty in the U.S. have been to the government, we expect in 2023, sales of Comirnaty in the U.S. will transition to commercial market sales only as we anticipate the expiration of current contracts and depletion of the vaccines purchased through them. Internationally, we expect sales of Comirnaty in international developed markets to generally be under government contracts in 2023, and in emerging markets, under a combination of private channels and government contracts; in both cases, we expect to generally transition to commercial markets in 2024.
◦As of November 1, 2022, we forecasted approximately $34 billion of revenues for Comirnaty in 2022, with gross profit to be split evenly with BioNTech, which includes doses expected to be delivered in fiscal 2022, primarily under contracts signed as of mid-October 2022.
•Paxlovid
◦In December 2021, the FDA authorized the emergency use of Paxlovid, a novel oral COVID-19 treatment, for the treatment of mild-to-moderate COVID-19 in adults and pediatric patients (12 years of age and older weighing at least 40 kg [88 lbs]) with positive results of direct SARS-CoV-2 viral testing, and who are at high risk for progression to severe COVID-19, including hospitalization or death. Paxlovid has been granted an authorization or approval in many other companies,countries. In June 2022, we submitted an NDA to the FDA for approval of Paxlovid for the treatment of COVID-19 in both vaccinated and unvaccinated individuals who are at high risk for progression to severe illness from COVID-19 consistent with the current EUA. For additional information, see the Product Developments section within MD&A.
◦We continue to evaluate Paxlovid in other populations, including our collaborationsin non-hospitalized, symptomatic, pediatric patients with Cellectis, OPKOa confirmed diagnosis of COVID-19 who are at risk of progression to severe disease (Phase 2/3 study, EPIC-PEDS (Evaluation of Protease Inhibition for COVID-19 in Pediatric Patients)) and Merck KGaA.those who are immunocompromised, hospitalized with severe COVID-19 and at increased risk for poor outcomes due to the disease (Phase 2, EPIC-Hos (Evaluation of Protease Inhibition for COVID-19 in Hospitalized Patients)). We assess our businesses, assetsare also studying Paxlovid in those who are pregnant.
◦We have entered into agreements to supply pre-specified courses of Paxlovid to multiple countries, such as the U.S. and scientific capabilities/portfolioU.K., as well as agreements with UNICEF and the Global Fund to supply low- and middle-income countries. Through the nine months of 2022, we have shipped 31 million treatment courses globally, and we have capacity to meet the demand for Paxlovid in a flexible manner going forward.
◦As of November 1, 2022, we forecasted approximately $22 billion of revenues for Paxlovid in 2022, which includes treatment courses expected to be delivered in fiscal 2022, primarily relating to supply contracts signed or committed as of mid-October 2022.
Impact of COVID-19 on Our Business and Operations
As part of our regular, ongoing portfolio review processon-going monitoring and alsoassessment, we have made certain assumptions regarding the pandemic for purposes of our operational planning and financial projections, including assumptions regarding the duration, severity and the global macroeconomic impact of the pandemic, as well as COVID-19 vaccine and oral COVID-19 treatment revenues, supply and contracts, which remain dynamic. Despite careful tracking and planning, we are unable to accurately predict the extent of the impact of the pandemic on our business, operations and financial condition and results due to the uncertainty of future developments. We are focused on all aspects of our business and are implementing measures aimed at mitigating issues where possible, including by using digital technology to assist in operations for our commercial, manufacturing, R&D and corporate enabling functions globally.
As discussed in our 2021 Form 10-K, in addition to our introduction of Comirnaty and Paxlovid, our business and operations were impacted by the pandemic in various ways; certain of those impacts have continued in 2022. For additional detail and discussion on the impact of the COVID-19 pandemic on certain of our products, sales and marketing, supply chain and clinical trials, see the Analysis of the Condensed Consolidated Statements of Income—Revenues by Geography and Revenues—Selected Product Discussion sections within MD&A and the Overview of Our Performance, Operating Environment, Strategy and Outlook—The Global Economic Environment and —COVID-19 Pandemic sections of the MD&A of our 2021 Form 10-K.
We will continue to considerpursue efforts to maintain the continuity of our operations while monitoring for new developments related to the pandemic. Future developments could result in additional favorable or unfavorable impacts on our business, development activities that will advanceoperations or financial condition and results. If we experience significant disruption in our businesses. In October 2017, we announced that we are reviewing strategic alternativesmanufacturing or supply chains or significant disruptions in clinical trials or other operations, if demand for our Consumer Healthcare business. A range of options will be considered, includingproducts is significantly reduced as a full or partial separationresult of the Consumer HealthcareCOVID-19 pandemic, or if demand for our COVID-19 vaccine or oral COVID-19 treatment is reduced or no longer exists, we could experience a material adverse impact on our business, from Pfizer through a spin-off, sale or other transaction,operations and we may ultimately determine to retain the business. We expect that any decision regarding strategic alternatives for Consumer Healthcare would be made during 2018. financial condition and results.
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For additional information, on our business development activities, see Notes to Condensed Consolidated Financial Statements––theNote 2. Acquisitions, Sale Item 1A. Risk Factors—COVID-19 Pandemic section and the Overview of Hospira Infusion Systems Net Assets, Collaborative ArrangementOur Performance, Operating Environment, Strategy and Equity-Method Investments.
The more significant recent transactions and events are described below:
•
Sale of Hospira Infusion Systems Net Assets to ICU Medical, Inc. (EH)––On February 3, 2017, we completed the sale of our global infusion therapy net assets, HIS, to ICU Medical. In connection with this transaction, we recognized pre-tax income of approximately $12 million in the third quarter of 2017 and pre-tax losses of approximately $52 million in the first

nine months of 2017 inOutlook Other (income)/deductions––net, representing adjustments to amounts previously recorded to write down the HIS net assets to fair value less costs to sell. We may record additional adjustments to the loss on the sale of HIS net assets in future periods, pending final working capital adjustments and local market closes, among other agreement provisions, which we do not expect to have a material impact on our consolidated financial statements.
•
Acquisition of AstraZeneca’s Small Molecule Anti-Infectives Business (EH)––On December 22, 2016, which falls in the first fiscal quarter of 2017 for our international operations, we acquired the development and commercialization rights to AstraZeneca’s small molecule anti-infectives business, primarily outside the U.S. The total fair value of the consideration transferred for this business was approximately $555 million in cash plus the fair value of contingent consideration of $490 million.
•
Acquisition of Medivation, Inc. (IH)––On September 28, 2016, we acquired Medivation for $81.50 per share. The total fair value of consideration transferred for Medivation was approximately $14.3 billion in cash ($13.9 billion, net of cash acquired). Medivation’s portfolio includes Xtandi (enzalutamide), an androgen receptor inhibitor that blocks multiple steps in the androgen receptor signaling pathway within tumor cells. Xtandi is being developed and commercialized through a collaboration with Astellas. Astellas has exclusive commercialization rights for Xtandi outside the U.S. In addition, Medivation has a development-stage oncology asset in its pipeline, talazoparib, which is currently in a Phase 3 study for the treatment of BRCA-mutated breast cancer.
•
Acquisition of Bamboo Therapeutics, Inc. (R&D)––On August 1, 2016, we acquired all the remaining equity in Bamboo, a privately-held biotechnology company, focused on developing gene therapies for the potential treatment of patients with certain rare diseases relating to neuromuscular conditions and those affecting the central nervous system, for $150 million, plus potential milestone payments of up to $495 million contingent upon the progression of key assets through development, regulatory approval and commercialization. We previously purchased a minority stake in Bamboo in the first quarter of 2016 for a payment of approximately $43 million. This acquisition provides us with several clinical and pre-clinical assets that complement our rare disease portfolio, an advanced recombinant AAV vector design and production technology, and a fully functional Phase I/II gene therapy manufacturing facility.
•
Acquisition of Anacor Pharmaceuticals, Inc. (IH)––On June 24, 2016, we acquired Anacor for $99.25 per share. The total fair value of consideration transferred for Anacor was approximately $4.9 billion in cash ($4.5 billion net of cash acquired) plus $698 million debt assumed. Anacor’s crisaborole, a non-steroidal topical PDE-4 inhibitor with anti-inflammatory properties, was approved by the FDA on December 14, 2016 under the trade name Eucrisa, for the treatment of mild-to-moderate atopic dermatitis in patients two years of age and older, commonly referred to as a type of eczema. Anacor also holds the rights to Kerydin, a topical treatment for onychomycosis (toenail fungus) that is distributed and commercialized by Sandoz in the U.S.
•
Research and Development Arrangement with NovaQuest Co-Investment Fund V, L.P.––In April 2016, Pfizer entered into an agreement with NovaQuest under which NovaQuest will fund up to $200 million in development costs related to certain Phase III clinical trials of Pfizer’s rivipansel compound and Pfizer will use commercially reasonable efforts to develop and obtain regulatory approvals for such compound. NovaQuest’s development funding is expected to cover up to 100% of the development costs and will be received over approximately twelve quarters from 2016 to 2019. As there is a substantive and genuine transfer of risk to NovaQuest, the development funding is recognized by us as an obligation to perform contractual services and therefore is a reduction of Research and development expenses as incurred. The reduction to Research and development expenses for the third quarter of 2017totaled $16.8 million and for the first nine months of 2017 totaled $48.8 million. The reduction to Research and development expenses for the third quarter of 2016 totaled $14.5 million and for the first nine months of 2016 totaled $29.5 million. Following potential regulatory approval, NovaQuest will be eligible to receive a combination of fixed milestone payments of up to approximately $267 million in total, based on achievement of first commercial sale and certain levels of cumulative net sales as well as royalties on rivipansel net sales over approximately eight years. Fixed sales-based milestone payments will be recorded as intangible assets and amortized to Amortization of intangible assets over the estimated commercial life of the rivipansel product and royalties on net sales will be recorded as Cost of sales when incurred.
•
Research and Development Arrangement with RPI Finance Trust––In January 2016, Pfizer entered into an agreement with RPI, a subsidiary of Royalty Pharma, under which RPI will fund up to $300 million in development costs related to certain Phase III clinical trials of Pfizer’s Ibrance (palbociclib) product primarily for adjuvant treatment of hormone receptor positive early breast cancer (the Indication). RPI’s development funding is expected to cover up to 100% of the costs primarily for the applicable clinical trials through 2021. As there is a substantive and genuine transfer of risk to RPI, the development funding is recognized by us as an obligation to perform contractual services and therefore is a reduction of Research and development expenses as incurred. The reduction to Research and development expenses for the third quarter of 2017 totaled $27.6 million and for the first nine months of 2017 totaled $54.4 million. The reduction to Research and development expenses for the third quarter of 2016 totaled $11.0 million and for the first nine months of 2016 totaled $32.7 million. If successful and upon approval of Ibrance in the U.S. or certain major markets in the EU for the Indication based

on the applicable clinical trials, RPI will be eligible to receive a combination of approval-based fixed milestone payments of up to $250 million dependent upon resultssection of the clinical trials and royalties on certain Ibrance sales over approximately seven years. Fixed milestone payments due upon approval will be recorded as intangible assets and amortized to Amortization of intangible assets over the estimated commercial life of the Ibrance product and sales-based royalties will be recorded as Cost of sales when incurred.
•
Approval of Besponsa––In August 2017, the U.S. approved Besponsa (inotuzumab ozogamicin) and in June 2017, the EU approved Besponsa as monotherapy for the treatment of adults with relapsed or refractory CD22-positive B-cell precursor acute lymphoblastic leukemia. In connection with the U.S. approval, we incurred an obligation to make guaranteed fixed annual payments over a nine-year period aggregating $296 million related to a research and development arrangement. As a result, we have recorded the estimated net present value of $248 million as an intangible asset in Developed technology rights, and we have recorded $233 million in Other noncurrent liabilities and $15 millionin Other current liabilities as of October 1, 2017. In connection with the EU approval, we incurred an obligation to make guaranteed fixed annual payments over a nine-year period aggregating $148 million related to a research and development arrangement. As a result, we have recorded the estimated net present value of $123 million as an intangible asset in Developed technology rights, and we have recorded $117 million in Other noncurrent liabilities and$6 million in Other current liabilities as of October 1, 2017.
For a description of the more significant recent transactions through February 23, 2017, the filing dateMD&A of our 2016 Form 10-K, see the “Our Business Development Initiatives” section of our 2016 Financial Report.

Our Financial Guidance for 2017
On October 31, 2017, we updated our 2017 financial guidance. Specifically, we narrowed the ranges for certain 2017 financial guidance components, including a $0.03 increase to the midpoint of our range for adjusted diluted EPS guidance to a range of $2.58 to $2.62. The midpoint of our new guidance range for adjusted diluted EPS implies 8% growth compared with last year.
Pfizer’s updated 2017 financial guidance is presented below(a),(b):
Revenues$52.4 to $53.1 billion
(previously $52.0 to $54.0 billion)
Adjusted cost of sales as a percentage of revenues20.0% to 20.5%
(previously 20.0% to 21.0%)
Adjusted selling, informational and administrative expenses$14.0 to $14.5 billion
(previously $13.7 to $14.7 billion)
Adjusted research and development expenses$7.5 to $7.8 billion
(previously $7.5 to $8.0 billion)
Adjusted other (income)/deductionsApproximately $500 million of income
(previously approximately $200 million of income)
Effective tax rate on adjusted incomeApproximately 23.0%
Adjusted diluted EPS$2.58 to $2.62
(previously $2.54 to $2.60)
(a)
The 2017 financial guidance reflects the following:
•
Does not assume the completion of any business development transactions not completed as of October 1, 2017, including any one-time upfront payments associated with such transactions.
Exchange rates assumed are a blend of the actual exchange rates in effect through September 2017 and mid-October 2017 exchange rates for the remainder of the year.
•
Reflects an anticipated negative revenue impact of $2.3 billion due to recent and expected generic and biosimilar competition for certain products that have recently lost or are anticipated to soon lose patent protection.
•
Reflects the anticipated negative impact of $0.1 billion on revenues and $0.01 on adjusted diluted EPS as a result of unfavorable changes in foreign exchange rates relative to the U.S. dollar compared to foreign exchange rates from 2016.
Guidance for adjusted diluted EPS assumes diluted weighted-average shares outstanding of between 6.0 and 6.1 billion shares, which reflects the impact of our $5.0 billion accelerated share repurchase agreement executed in February 2017 and completed in May 2017.
(b)
For an understanding of Adjusted income and its components and Adjusted diluted EPS (all of which are non-GAAP financial measures), see the “Non-GAAP Financial Measure (Adjusted Income)” section of this MD&A.
Pfizer does not provide guidance for GAAP Reported financial measures (other than Revenues) or a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP Reported financial measures on a forward-looking basis because it is unable to predict with reasonable certainty the ultimate outcome of pending litigation, unusual gains and losses, acquisition-related expenses and potential future asset impairments without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on GAAP Reported results for the guidance period.

For information about our actual costs and anticipated costs and cost savings associated with our three-year cost-reduction initiative entered into in the fourth quarter of 2016, the Hospira acquisition, our recent business development activities, and global commercial structure, see the “Costs and Expenses––Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives” section of this MD&A and Notes to Condensed Consolidated Financial Statements––Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives.

Our 2017 financial guidance is subject to a number of factors and uncertainties as described in the “Our Operating Environment”, “The Global Economic Environment”, “Our Strategy” and “Forward-Looking Information and Factors That May Affect Future Results” sections of this MD&A; in Part II, Item 1A, “Risk Factors”, of this Quarterly Report on Form 10-Q; and Part I, Item 1A, “Risk Factors” of our 20162021 Form 10-K.

SIGNIFICANT ACCOUNTING POLICIES AND APPLICATION OF CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS

For a description of our significant accounting policies, see Notes to Consolidated Financial Statements––Note 1. Basis of Presentation and Significant Accounting Policies1 in our 2021 Form 10-K2016. Form 10-K. Of these policies, the following are considered critical to an understanding of our consolidated financial statements as they require the application of the most subjective and the most complex judgments: (i) Acquisitions (Note 1D)(Note 1E); (ii) Fair Value (Note 1E)(Note 1F); (iii) Revenues (Note 1G)(Note 1H); (iv) Asset Impairments (Note 1K)(Note 1M); (v)Tax Assets and Liabilities and Income Tax Contingencies (Note 1O)(Note 1Q); (vi) Pension and Postretirement Benefit Plans (Note 1P)(Note 1R); and Legal and Environmental Contingencies (Note 1Q)(Note 1S).

For a discussion about the critical accounting estimates and assumptions impacting our consolidated financial statements, see the “SignificantSignificant Accounting Policies and Application of Critical Accounting Estimates and Assumptions”Assumptions section ofwithin MD&A in our 2016 Financial Report.2021 Form 10-K. See also Notes to Consolidated Financial Statements––Note 1C. Basis of Presentation and Significant Accounting Policies: Estimates and Assumptions1D in our 2021 Form 10-K for a discussion about the risks associated with estimates and assumptions in our 2016 Form 10-K.assumptions.
For a discussion of a recently adopted accounting standards,standard, see Notes to Condensed Consolidated Financial Statements––Note 1B. Basis1B. For a discussion of Presentationpresentation changes for Acquired in-process research and Significant Accounting Policies: Adoption of New Accounting Standards.development expenses, see Note 1D.

ANALYSIS OF THE CONDENSED CONSOLIDATED STATEMENTS OF INCOME

REVENUES AND PRODUCT DEVELOPMENTSRevenues by Geography

The following presents worldwide revenues by geography:
Three Months Ended
 WorldwideU.S.InternationalWorld-wideU.S.Inter-national
(MILLIONS)Oct. 2, 2022Oct. 3, 2021Oct. 2, 2022Oct. 3, 2021Oct. 2, 2022Oct. 3, 2021% Change in Revenues
Operating segments:
Biopharma$22,319 $23,513 $13,748 $6,899 $8,571 $16,614 (5)99 (48)
Pfizer CentreOne319 521 103 121 216 400 (39)(15)(46)
Total revenues$22,638 $24,035 $13,851 $7,020 $8,786 $17,014 (6)97 (48)
Nine Months Ended
WorldwideU.S.InternationalWorld-wideU.S.Inter-national
(MILLIONS)Oct. 2, 2022Oct. 3, 2021Oct. 2, 2022Oct. 3, 2021Oct. 2, 2022Oct. 3, 2021% Change in Revenues
Operating segments:
Biopharma$75,066 $56,101 $33,700 $21,657 $41,366 $34,444 34 56 20 
Pfizer CentreOne974 1,348 291 409 683 939 (28)(29)(27)
Total revenues$76,040 $57,450 $33,991 $22,066 $42,049 $35,384 32 54 19 
Revenues––Overview
The following graphs show revenues by geography (dollars in billions):
pfe-3q17qtdrevbygeo.jpgpfe-3q17ytdrevbygeo.jpg
The following tables provide worldwide revenues by operating segment and by geography:
  Three Months Ended
  Worldwide U.S. International World-wide U.S. Inter-national
(MILLIONS OF DOLLARS) Oct 1,
2017
 Oct 2, 2016
 Oct 1, 2017
 Oct 2, 2016
 Oct 1, 2017
 Oct 2, 2016
 % Change in Revenues
Operating Segments(a):
                  
IH $8,118
 $7,332
 $4,777
 $4,244
 $3,341
 $3,088
 11
 13
 8
EH 5,050
 5,712
 1,756
 2,286
 3,294
 3,426
 (12) (23) (4)
Total revenues $13,168
 $13,045
 $6,534
 $6,530
 $6,634
 $6,515
 1
 —
 2
 
  Nine Months Ended
  Worldwide U.S. International World-wide U.S. Inter-national
(MILLIONS OF DOLLARS) Oct 1, 2017
 Oct 2, 2016
 Oct 1, 2017
 Oct 2, 2016
 Oct 1, 2017
 Oct 2, 2016
 % Change in Revenues
Operating Segments(a):
    
    
    
  
  
  
IH $23,204
 $21,471
 $13,708
 $12,308
 $9,496
 $9,163
 8
 11
 4
EH 15,639
 17,725
 5,808
 7,253
 9,831
 10,472
 (12) (20) (6)
Total revenues $38,843
 $39,196
 $19,516
 $19,561
 $19,327
 $19,636
 (1) —
 (2)
(a)
IH = the Innovative Health segment; and EH = the Essential Health segment. For additional information about each operating segment, see the “Our Strategy––Commercial Operations” and “Analysis of Operating Segment Information” sections of this MD&A and Notes to Condensed Consolidated Financial Statements––Note 13A. Segment, Geographic and Other Revenue Information: Segment Information.

Revenues––Third Quarter of 20172022 vs. Third Quarter of 2021
The following provides an analysis of the change in worldwide revenues by geographic areas in the third quarter of 2022:
Three Months Ended October 2, 2022
(MILLIONS)WorldwideU.S.International
Operational growth/(decline):
Worldwide declines from Comirnaty, Xeljanz and Ibrance, partially offset by worldwide growth from Paxlovid, Eliquis, Prevnar family, Vyndaqel/Vyndamax, Xtandi and Inlyta(a)
$(226)$6,849 $(7,075)
Decline from PC1(a)
(180)(18)(162)
Lower revenues for Sutent, primarily reflecting lower volume demand in Europe following its loss of exclusivity in January 2022(61)(4)(57)
Other operational factors, net26 4 22 
Operational growth/(decline), net(441)6,831 (7,272)
Unfavorable impact of foreign exchange(957)— (957)
Revenues increase/(decrease)
$(1,397)$6,831 $(8,228)
(a)2016See the Analysis of the Condensed Consolidated Statements of Income––Revenues––Selected Product Discussion within MD&A for additional analysis.
42

The following provides an analysis of the change in revenues by geographic areas in the third quarter of 2017:
(MILLIONS OF DOLLARS) Three Months Ended October 1, 2017
  Worldwide U.S. International
  
    
Disposition-related operational impact: 
    
Financial results in the third quarter of 2017 do not reflect any contribution from HIS global operations, compared to the inclusion of three months of HIS global operations in the same period in 2016 (February 2017 sale) $(280) $(220) $(60)
  
    
Other operational growth/(decline):      
Continued growth from key brands including Ibrance and Eliquis globally, as well as Lyrica (IH) and Xeljanz, both primarily in the U.S. 751
 460
 291
Growth in Xtandi alliance revenues in the U.S. (September 2016 acquisition of Medivation) 148
 148
 —
Growth from Biosimilars 55
 34
 21
Decline from Peri-LOE Products, including declines in Pristiq in the U.S., which lost marketing exclusivity in the U.S. in March 2017, as well as Lyrica (EH) and Vfend, both primarily in developed Europe markets (220) (103) (117)
Decline from the Sterile Injectable Pharmaceuticals portfolio, primarily due to legacy Hospira product shortages in the U.S. (182) (196) 14
Lower revenues for Viagra (IH) in the U.S. primarily due to wholesaler destocking in advance of anticipated generic competition beginning in December 2017 (91) (91) —
Lower revenues for Enbrel, primarily in most developed Europe markets due to continued biosimilar competition (89) —
 (89)
Decline in Prevnar 13/Prevenar 13 revenues. U.S. revenues decreased primarily due to the continued decline in revenues for the Adult indication due to a smaller remaining “catch up” opportunity compared to the prior-year quarter, partially offset by growth from the pediatric indication. International revenues increased primarily due to the favorable overall impact of timing of government purchases in certain emerging markets and the launch of Prevenar 13 in China for the pediatric indication. (16) (40) 24
Other operational factors, net 102
 12
 89
Operational growth, net 178
 4
 174
  

    
Unfavorable impact of foreign exchange (54) —
 (54)
Revenues increase
 $123
 $4
 $120
Emerging markets revenues increased $254 million,decreased $3.0 billion, or 10%48%, in the third quarter of 2022 to $3.3 billion from $6.3 billion in the third quarter of 2021, reflecting an operational decrease of $2.8 billion, or 45%, and an unfavorable impact from foreign exchange of approximately 3%. The operational decrease in emerging markets was primarily driven by declines from Comirnaty and certain Comirnaty-related manufacturing activities performed on behalf of BioNTech, partially offset by growth from Paxlovid.
First Nine Months of 2022 vs. First Nine Months of 2021
The following provides an analysis of the worldwide change in revenues by geographic areas in the first nine months of 2022:
Nine Months Ended October 2, 2022
(MILLIONS)WorldwideU.S.International
Operational growth/(decline):
Worldwide growth from Paxlovid, Comirnaty, Eliquis, Prevnar family, Vyndaqel/Vyndamax and Inlyta, partially offset by worldwide declines from Xeljanz and Ibrance(a)
$22,507 $12,440 $10,066 
Decline from PC1(a)
(332)(118)(214)
Lower revenues for Chantix/Champix and Sutent:
•The decrease in Chantix/Champix was driven by the ongoing global pause in shipments of Chantix due to the presence of N-nitroso-varenicline above an acceptable level of intake set by various global regulators, the ultimate timing for resolution of which may vary by country
•The decrease for Sutent primarily reflects lower volume demand in Europe and the U.S. following its loss of exclusivity in January 2022 and August 2021, respectively
(632)(386)(246)
Other operational factors, net42 (11)53 
Operational growth/(decline), net21,585 11,925 9,659 
Unfavorable impact of foreign exchange(2,995)— (2,995)
Revenues increase/(decrease)
$18,590 $11,925 $6,665 
(a)2017See the Analysis of the Condensed Consolidated Statements of Income––Revenues––Selected Product Discussion within MD&A for additional analysis.
Emerging markets revenues increased $3.7 billion, or 29%, in the first nine months of 2022 to $2.8$16.7 billion from $12.9 billion in the first nine months of 2021, reflecting an operational increase of $280 million,$4.4 billion, or 11%. Foreign exchange had34%, and an unfavorable impact from foreign exchange of approximately 1% on emerging markets revenues.5%. The operational increase in emerging markets was primarily driven by our IH segmentgrowth from Comirnaty, Paxlovid and Nimenrix, partially offset by declines in certain Comirnaty-related manufacturing activities performed on behalf of BioNTech, as well as our Legacy Established Products and Sterile Injectable Pharmaceuticals portfolios.

the Prevnar family.
Revenues––First Nine Months of 2017 vs. First Nine Months of 2016
The following provides an analysis of the change in revenues by geographic areas in the first nine months of 2017:
(MILLIONS OF DOLLARS) Nine Months Ended October 1, 2017
  Worldwide U.S. International
       
Disposition-related operational impact:      
Approximately one month of HIS domestic operations and approximately two months of HIS international operations in the first nine months of 2017, compared to nine months of HIS global operations in the same period in 2016 (February 2017 sale) $(783) $(626) $(158)
       
Other operational growth/(decline):      
Continued growth from key brands including Ibrance and Eliquis globally, as well as Lyrica (IH) and Xeljanz, both primarily in the U.S. 2,102
 1,404
 698
Growth in Xtandi alliance revenues in the U.S. (September 2016 acquisition of Medivation) 420
 420
 —
Growth from Biosimilars 143
 74
 69
Decline from Peri-LOE Products, including declines in Pristiq in the U.S., which lost marketing exclusivity in the U.S. in March 2017, as well as Lyrica (EH) and Vfend, both primarily in developed Europe markets (779) (342) (437)
Lower revenues for Enbrel, primarily in most developed Europe markets due to continued biosimilar competition (353) —
 (353)
Decline in the Legacy Established Products portfolio (250) (314) 64
Decline in Prevnar 13/Prevenar 13 revenues. U.S. revenues decreased primarily due to the continued decline in revenues for the Adult indication due to a smaller remaining “catch up” opportunity compared to the first nine months of 2016, partially offset by growth from the pediatric indication. International revenues increased primarily due to the favorable overall impact of timing of government purchases in certain emerging markets and the launch of Prevenar 13 in China for the pediatric indication. (213) (256) 44
Decline in Viagra (IH) revenues mainly in the U.S. primarily due to lower market growth (186) (186) (1)
Decline from the Sterile Injectable Pharmaceuticals portfolio, primarily due to legacy Hospira product shortages in the U.S. (169) (253) 84
Other operational factors, net 87
 33
 54
Operational growth (decline), net 19
 (45) 64
       
Unfavorable impact of foreign exchange (372) —
 (372)
Revenues decrease $(353) $(45) $(308)
Emerging markets revenues increased $508 million, or 7%, in the first nine months of 2017 to $8.2 billion, reflecting an operational increase of $684 million, or 9%. Foreign exchange had an unfavorable impact of approximately 2% on emerging markets revenues. The operational increase in emerging markets was primarily driven by our IH segment as well as our Legacy Established Products and Sterile Injectable Pharmaceuticals portfolios.
Revenue Deductions
––Our gross product revenues are subject to a variety of deductions, thatwhich generally are generally estimated and recorded in the same period that the revenues are recognized, and primarily represent chargebacks, rebates and sales allowances to wholesalers, and, to a lesser extent, distributors like MCOs, retailers and government agencies with respect to our pharmaceutical products. Thoserecognized. These deductions represent estimates of rebates and discounts related to gross sales for the reporting periodobligations and, as such, knowledge and judgment of market conditions and practice are required when estimating the impact of these revenue deductions on gross sales for a reporting period.

Historically, our adjustments ofto these estimates to reflect actual results or updated expectations, have not been material to our overall business. On a quarterly basis, our adjustments of estimates to reflect actual resultsbusiness and generally have been less than 1% of revenues, and have resulted in either a net increase or a net decrease in revenues. Product-specific rebates, however, can have a significant impact on year-over-year individual product revenue growth trends.

The following presents information about revenue deductions:
 Three Months EndedNine Months Ended
(MILLIONS)October 2,
2022		October 3,
2021		October 2,
2022		October 3,
2021
Medicare rebates$195 $175 $582 $546 
Medicaid and related state program rebates223 252 689 904 
Performance-based contract rebates851 883 2,518 2,424 
Chargebacks1,946 1,618 5,480 4,567 
Sales allowances1,334 1,216 3,905 3,569 
Sales returns and cash discounts247 267 845 726 
Total$4,796 $4,411 $14,019 $12,737 
Revenue deductions are primarily a function of product sales volume, mix of products sold, contractual or legislative discounts and rebates.
The following table provides information about revenue deductions:
  Three Months Ended Nine Months Ended
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
 October 1,
2017
 October 2,
2016
Medicare rebates(a)
 $355
 $285
 $931
 $777
Medicaid and related state program rebates(a)
 439
 338

1,335
 1,073
Performance-based contract rebates(a), (b)
 773
 629

2,321
 1,854
Chargebacks(c)
 1,608
 1,465

4,585
 4,318
Sales allowances(d)
 1,419
 1,177

3,718
 3,268
Sales returns and cash discounts 329
 356
 1,025
 1,044
Total(e)
 $4,923
 $4,251
 $13,916
 $12,334
(a)
Rebates are product-specific and, therefore,For information on our accruals for any given year are impacted by the mix of products sold.
(b)
Performance-based contract rebates include contract rebates with MCOs within the U.S., including health maintenance organizations and PBMs, who receive rebates based on the achievement of contracted performance terms and claims under these contracts. Outside the U.S., performance-based contract rebates include rebates to wholesalers/distributors based on achievement of contracted performance for specific products or sales milestones.
(c)
Chargebacks primarily represent reimbursements to U.S. wholesalers for honoring contracted prices to third parties.
(d)
Sales allowances primarily represent price reductions that are contractual or legislatively mandated outside the U.S., discounts and distribution fees.
(e)
For the three months ended October 1, 2017, associated with the following segments: IH ($2.4 billion) and EH ($2.5 billion). For the three months ended October 2, 2016, associated with the following segments: IH ($1.8 billion); and EH ($2.4 billion). For the nine months ended October 1, 2017, associated with the following segments: IH ($6.4 billion) and EH ($7.5 billion). For the nine months ended October 2, 2016, associated with the following segments: IH ($5.1 billion) and EH ($7.2 billion).
Total revenue deductions, forincluding the third quarterbalance sheet classification of these accruals, see 2017 increased 16% compared to the third quarter of 2016, and total revenue deductions for the first nine months of 2017 increased 13% compared to the first nine months of 2016, primarily as a result of:Note 1C.
an increase in performance-based contract rebates primarily due to sales to managed care customers in the U.S., as well as higher rebates in certain markets outside the U.S.;
an increase in sales allowances primarily in markets outside the U.S.;
an increase in chargebacks from certain IH products, partially offset by decreases across several EH products; and
an increase in Medicaid and related state program rebates, primarily as a result of updated estimates of sales related to these programs.
Our accruals for Medicare rebates, Medicaid and related state program rebates, performance-based contract rebates, chargebacks, sales allowances and sales returns and cash discounts totaled $4.6 billion as of October 1, 2017, of which (i) approximately $2.5 billion represents accrued rebates included in Other current liabilities, and (ii) approximately $2.1 billion represents other accruals included in Other current liabilities ($472 million), Other noncurrent liabilities ($344 million)and against Trade accounts receivable, less allowance for doubtful accounts ($1.3 billion), in our condensed consolidated balance sheet.Our accruals for Medicare rebates, Medicaid and related state program rebates, performance-based contract rebates, chargebacks, sales allowances and sales returns and cash discounts totaled$4.3 billion as of December 31, 2016, of which (i) approximately $2.3 billion represents accrued rebates included in Other current liabilities, and (ii) approximately $2.0 billion represents other accruals included in Other current liabilities ($509 million), Other noncurrent liabilities ($357 million) and against Trade accounts receivable, less allowance for doubtful accounts ($1.2 billion), in our condensed consolidated balance sheet.

Revenues—Major Products
43
The following table provides revenue information for several of our major products. As described in Note 1A, acquisitions and divestitures have impacted our results of operations in 2017 and 2016.
  Three Months Ended Nine Months Ended
(MILLIONS OF DOLLARS)   
% Change(a)
   
% Change(a)
PRODUCT PRIMARY INDICATIONS OR CLASS Oct 1,
2017
Total
 Oper.
Oct 1,
2017
Total
 Oper.
TOTAL REVENUES   $13,168
 1
 1
 $38,843
 (1) —
PFIZER INNOVATIVE HEALTH (IH)(b)
 $8,118
 11
 11
 $23,204
 8
 9
Internal Medicine $2,455
 9
 10
 $7,245
 10
 11
Lyrica IH(c)
 Epilepsy, post-herpetic neuralgia and diabetic peripheral neuropathy, fibromyalgia, neuropathic pain due to spinal cord injury 1,150
 10
 11
 3,382
 9
 9
Eliquis alliance revenues and direct sales Atrial fibrillation, deep vein thrombosis, pulmonary embolism 644
 43
 43
 1,813
 48
 49
Chantix/Champix An aid to smoking cessation treatment in adults 18 years of age or older 240
 21
 22
 727
 15
 15
Viagra IH(d)
 Erectile dysfunction 206
 (31) (31) 711
 (21) (21)
BMP2 Development of bone and cartilage 79
 24
 24
 198
 13
 13
Toviaz Overactive bladder 62
 4
 5
 187
 (2) —
All other Internal Medicine Various 75
 (41) (41) 228
 (31) (31)
Vaccines $1,649
 1
 —
 $4,385
 (4) (4)
Prevnar 13/Prevenar 13 Vaccines for prevention of pneumococcal disease 1,522
 (1) (1) 4,069
 (5) (5)
FSME/IMMUN-TicoVac Tick-borne encephalitis vaccine 43
 31
 29
 119
 17
 19
All other Vaccines Various 85
 17
 16
 197
 14
 17
Oncology $1,616
 46
 46
 $4,551
 42
 43
Ibrance Advanced breast cancer 878
 60
 59
 2,410
 61
 62
Sutent Advanced and/or metastatic RCC, refractory GIST (after disease progression on, or intolerance to, imatinib mesylate) and advanced pancreatic neuroendocrine tumor 276
 6
 6
 805
 (2) (1)
Xalkori ALK-positive and ROS1-positive advanced NSCLC 146
 4
 4
 442
 6
 8
Xtandi alliance revenues Advanced prostate cancer 150
 *
 *
 422
 *
 *
Inlyta Advanced RCC 84
 (12) (10) 256
 (16) (14)
Bosulif Philadelphia chromosome–positive chronic myelogenous leukemia 57

34

35
 163
 35
 36
All other Oncology Various 26
 74
 76
 54
 10
 11
Inflammation & Immunology (I&I) $1,000
 4
 4
 $2,863
 (1) —
Enbrel (Outside the U.S. and Canada) Rheumatoid arthritis, juvenile idiopathic arthritis, psoriatic arthritis, plaque psoriasis, pediatric plaque psoriasis, ankylosing spondylitis and nonradiographic axial spondyloarthritis 613
 (13) (13) 1,818
 (17) (16)
Xeljanz Rheumatoid arthritis 348
 48
 49
 935
 44
 44
Eucrisa Mild to moderate atopic dermatitis (eczema) 15
 *
 *
 33
 *
 *
All other I&I Various 23
 (3) 1
 78
 35
 36
Rare Disease $569
 (3) (3) $1,637
 (7) (6)
BeneFIX Hemophilia 151
 (14) (14) 453
 (17) (16)
Refacto AF/Xyntha Hemophilia 140
 —
 (1) 409
 —
 3
Genotropin Replacement of human growth hormone 136
 (7) (6) 375
 (12) (10)
Somavert Acromegaly 65
 11
 10
 182
 6
 7
All other Rare Disease Various 77
 21
 21
 218
 (1) 1
Consumer Healthcare $829
 4
 4
 $2,522
 3
 3
PFIZER ESSENTIAL HEALTH (EH)(e)
 $5,050
 (12) (11) $15,639
 (12) (11)
Legacy Established Products (LEP)(f)
 $2,681
 (1) —
 $7,995
 (5) (3)
Lipitor Reduction of LDL cholesterol 491
 16
 18
 1,341
 4
 6
Premarin family Symptoms of menopause 238
 (2) (2) 711
 (5) (5)
Norvasc Hypertension 226
 (5) (3) 684
 (4) (1)
EpiPen Epinephrine injection used in treatment of life-threatening allergic reactions 82
 (25) (25) 253
 (16) (15)
Xalatan/Xalacom Glaucoma and ocular hypertension 83
 (9) (8) 241
 (12) (12)
Effexor Depression and certain anxiety disorders 76
 8
 9
 215
 4
 5
Zoloft Depression and certain anxiety disorders 78
 9
 11
 215
 (6) (4)
Zithromax Bacterial infections 61
 10
 11
 202
 (1) 3
Relpax Symptoms of migraine headache 50
 (39) (39) 193
 (22) (22)
Xanax Anxiety disorders 58
 5
 4
 164
 1
 2
All other LEP Various 1,237
 (2) (1) 3,776
 (5) (4)
Sterile Injectable Pharmaceuticals (SIP)(g)
 $1,273
 (13) (12) $4,270
 (5) (4)
Medrol Steroid anti-inflammatory 109
 7
 7
 352
 7
 7
Sulperazon Treatment of infections 114
 11
 13
 345
 14
 18
Fragmin Slows blood clotting 79
 (1) (1) 221
 (8) (6)
Tygacil Tetracycline class antibiotic 60
 (12) (12) 192
 (5) (5)
Precedex Sedation agent in surgery or intensive care 51
 (21) (20) 182
 (8) (9)
All other SIP Various 860
 (18) (17) 2,977
 (7) (6)

  Three Months Ended Nine Months Ended
(MILLIONS OF DOLLARS)   
% Change(a)
   
% Change(a)
PRODUCT PRIMARY INDICATIONS OR CLASS Oct 1,
2017
Total
 Oper.
Oct 1,
2017
Total
 Oper.
Peri-LOE Products(h)
 $794
 (22) (22) $2,398
 (26) (24)
Celebrex Arthritis pain and inflammation, acute pain 212
 9
 11
 564
 3
 4
Lyrica EH(c)
 Epilepsy, neuropathic pain and generalized anxiety disorder 134
 (30) (31) 428
 (31) (29)
Vfend Fungal infections 97
 (31) (29) 305
 (33) (32)
Viagra EH(d)
 Erectile dysfunction 102
 14
 16
 285
 —
 3
Pristiq Depression 69
 (61) (61) 230
 (58) (58)
Zyvox Bacterial infections 68
 (28) (27) 220
 (34) (33)
Revatio Pulmonary arterial hypertension 58
 (20) (20) 189
 (11) (11)
All other Peri-LOE Products Various 55
 (19) (17) 176
 (17) (15)
Biosimilars(i)
 Various $141
 70
 67
 $367
 61
 63
Inflectra/Remsima Inflammatory diseases 112
 *
 *
 284
 *
 *
All other Biosimilars Various 28
 (16) (18) 82
 (15) (14)
Pfizer CentreOne(j)
   $161
 3
 3
 $514
 (5) (5)
Hospira Infusion Systems (HIS)(k)
 Various $—
 *
 *
 $97
 (89) (89)
Total Lyrica(c)
 Epilepsy, post-herpetic neuralgia and diabetic peripheral neuropathy, fibromyalgia, neuropathic pain due to spinal cord injury $1,285
 4
 5
 $3,810
 2
 3
Total Viagra(d)
 Erectile dysfunction $308
 (20) (20) $996
 (16) (15)
Total Alliance revenues Various $741
 77
 78
 $2,112
 83
 84
(a)
As compared to the three and nine months ended October 2, 2016.
(b)
The IH business encompasses Internal Medicine, Vaccines, Oncology, Inflammation & Immunology, Rare Disease and Consumer Healthcare. Through December 31, 2016, includes Duavive/Duavee and Viviant (recorded in All other Internal Medicine in 2016), which were transferred from Innovative Health to Essential Health effective January 1, 2017 (recorded in All other LEP (EH) beginning January 1, 2017), in order to align these products with our management of the women’s health portfolio within EH.
(c)
Lyrica revenues from all of Europe, Russia, Turkey, Israel and Central Asia countries are included in Lyrica EH. All other Lyrica revenues are included in Lyrica IH. Total Lyrica revenues represent the aggregate of worldwide revenues from Lyrica IH and Lyrica EH.
(d)
Viagra revenues from the U.S. and Canada are included in Viagra IH. All other Viagra revenues are included in Viagra EH. Total Viagra revenues represent the aggregate of worldwide revenues from Viagra IH and Viagra EH.
(e)
The EH business encompasses Legacy Established Products, Sterile Injectable Pharmaceuticals, Peri-LOE Products, Biosimilars, Pfizer CentreOne and HIS (through February 2, 2017) and includes all legacy Hospira commercial operations.
(f)
Legacy Established Products primarily include products that have lost patent protection (excluding Sterile Injectable Pharmaceuticals and Peri-LOE Products). Effective January 1, 2017, All other LEP includes Duavive/Duavee and Viviant, which were transferred from Innovative Health (recorded in All other Internal Medicine (IH) in 2016), in order to align these products with our management of the women’s health portfolio within EH. See note (b) above.
(g)
Sterile Injectable Pharmaceuticals include generic injectables and proprietary specialty injectables (excluding Peri-LOE Products).
(h)
Peri-LOE Products include products that have recently lost or are anticipated to soon lose patent protection. These products include: Lyrica in Europe, Russia, Turkey, Israel and Central Asia; Viagra in all countries (excluding the U.S. and Canada); and worldwide revenues for Celebrex, Pristiq, Zyvox, Vfend, Revatio and Inspra.
(i)
Biosimilars include Inflectra/Remsima (biosimilar infliximab) in the U.S. and certain international markets, Nivestim (biosimilar filgrastim) in certain European, Asian and Africa/Middle Eastern markets and Retacrit (biosimilar epoetin zeta) in certain European and Africa/Middle Eastern markets.
(j)
Pfizer CentreOne includes revenues from our contract manufacturing and active pharmaceutical ingredient sales operation, including sterile injectables contract manufacturing, and revenues related to our manufacturing and supply agreements, including with Zoetis.
(k)
HIS (through February 2, 2017) includes Medication Management Systems products composed of infusion pumps and related software and services, as well as IV Infusion Products, including large volume IV solutions and their associated administration sets.
*Indicates calculation not meaningful.

Amounts may not add due to rounding. All percentages have been calculated using unrounded amounts.
Revenues––Selected Product Discussion

Biopharma
The information
(MILLIONS)Revenue% Change
ProductPeriodGlobal
Revenues		RegionOct. 2, 2022Oct. 3, 2021TotalOper.Operational Results Commentary
Comirnaty(a)
QTD
$4,402

Down 65%

(operationally)
U.S.$2,908 $1,586 83 
QTD declines largely driven by a previously announced amendment to the supply agreement with the EC whereby all doses scheduled for delivery in June through August 2022 would instead be delivered in the fourth quarter of 2022 and similar shifts in scheduled deliveries to other developed countries, as well as slower demand in emerging markets. Declines were partially offset by growth in the U.S., driven primarily by deliveries of the Omicron BA.4/BA.5-adapted bivalent booster, following its EUA in late-August 2022, as well as the granting of an EUA in June 2022 for a primary vaccination series for children 6 months to less than 5 years of age.
YTD performance was largely driven by operational growth in international markets, led by increased sales of doses to serve emerging markets and increased deliveries to certain international developed markets in the first six months of 2022, as well as the granting of an EUA in the U.S. in October 2021 for a primary vaccination series for children 5 to 11 years of age and QTD U.S. growth drivers noted above, partially offset by QTD declines noted above.
Int’l.1,494 11,391 (87)(86)
Worldwide$4,402 $12,977 (66)(65)
YTD
$26,477

Up 14%

(operationally)
U.S.$6,303 $5,657 11 
Int’l.20,174 18,619 8 14 
Worldwide$26,477 $24,277 9 14 
PaxlovidQTD
$7,514

 *

U.S.$5,044 $— *Driven by the U.S. launch under EUA in December 2021 and international launches in late 2021 and early 2022 following regulatory approvals or EUAs.
Int’l.2,470 — **
Worldwide$7,514 $— **
YTD
$17,099

*

U.S.$10,514 $— *
Int’l.6,584 — **
Worldwide$17,099 $— **
EliquisQTD
$1,464

Up 15%

(operationally)
U.S.$835 $629 33 
Growth driven primarily by continued oral anti-coagulant adoption and market share gains in non-valvular atrial fibrillation in the U.S., as well as favorable changes in channel mix in the U.S., partially offset by declines in certain emerging markets.
In addition, YTD performance was impacted by growth in oral anti-coagulant adoption and market share gains in certain markets in Europe, partially offset by the non-recurrence of an $80 million favorable adjustment related to the Medicare “coverage gap” provision recorded in the first quarter of 2021 in the U.S.
Int’l.628 717 (12)(1)
Worldwide$1,464 $1,346 9 15 
YTD
$5,001

Up 16%

(operationally)
U.S.$2,979 $2,440 22 
Int’l.2,022 2,030 —10 
Worldwide$5,001 $4,470 12 16 
Prevnar familyQTD
$1,607

Up 14%
(operationally)
U.S.$1,089 $850 28 
Growth primarily driven by the adult indications in the U.S. due to strong patient demand following the launch of Prevnar 20 for the eligible adult population, partially offset by unfavorable timing of government and private purchasing of Prevnar 13 for the pediatric indication globally and adult indication internationally.
YTD growth was partially offset by competitive pressures in China for the pediatric indication.
Int’l.517 596 (13)(7)
Worldwide$1,607 $1,447 11 14 
YTD
$4,601

Up 18%
(operationally)
U.S.$3,010 $2,130 41 
Int’l.1,591 1,841 (14)(9)
Worldwide$4,601 $3,971 16 18 
IbranceQTD
$1,283

Down 3%
 
(operationally)
U.S.$872 $883 (1)
Global declines primarily driven by prior-year clinical trial purchases internationally, planned price decreases that recently went into effect in international developed markets, and continued increase in the proportion of patients accessing Ibrance through the U.S. Patient Assistance Program.
YTD declines were partially offset by higher volumes in emerging markets.
Int’l.411 498 (17)(6)
Worldwide$1,283 $1,381 (7)(3)
YTD
$3,841

Down 2%

(operationally)
U.S.$2,493 $2,539 (2)
Int’l.1,347 1,500 (10)(1)
Worldwide$3,841 $4,039 (5)(2)
Vyndaqel/
Vyndamax		QTD
$602

Up 29%

(operationally)
U.S.$329 $228 44 Growth largely driven by continued strong uptake of the ATTR-CM indication, primarily in developed Europe and the U.S., partially offset by a planned price decrease that went into effect in Japan in the second quarter of 2022.
Int’l.273 273 —15 
Worldwide$602 $501 20 29 
YTD
$1,766
Up 28%

(operationally)
U.S.$890 $658 35 
Int’l.876 796 10 22 
Worldwide$1,766 $1,454 21 28 
XeljanzQTD
$502

Down 14%

(operationally)
U.S.$345 $410 (16)
Declines driven primarily by decreased prescription volumes globally resulting from ongoing shifts in prescribing patterns related to JAK class label changes.
In addition, YTD was impacted by declines in net price due to unfavorable changes in channel mix and unfavorable wholesaler inventory buying patterns in the U.S.
Int’l.157 201 (22)(11)
Worldwide$502 $610 (18)(14)
YTD
$1,304

Down 22%

(operationally)
U.S.$802 $1,132 (29)
Int’l.502 602 (17)(9)
Worldwide$1,304 $1,734 (25)(22)
44

(MILLIONS)Revenue% Change
ProductPeriodGlobal
Revenues		RegionOct. 2, 2022Oct. 3, 2021TotalOper.Operational Results Commentary
XtandiQTD
$320

Up 3%

(operationally)
U.S.$320 $309 3 
Performance largely due to steady demand growth across the mCRPC, nmCRPC, and mCSPC indications.
YTD demand growth was offset largely by unfavorable changes in channel mix and fluctuating enrollment rates in the Xtandi Patient Assistance Program.
Int’l.— — ——
Worldwide$320 $309 3 3 
YTD
$878

Flat

(operationally)
U.S.$878 $879 —
Int’l.— — ——
Worldwide$878 $879 ——
InlytaQTD
$252

Up 3%

(operationally)
U.S.$152 $151 —
Growth primarily reflects continued adoption in emerging markets of combinations of certain immune checkpoint inhibitors and Inlyta for the first-line treatment of patients with advanced RCC.
YTD growth also driven by continued adoption in developed Europe.
Int’l.100 104 (4)6 
Worldwide$252 $256 (1)3 
YTD
$760

Up 6%

(operationally)
U.S.$454 $448 1 
Int’l.306 294 4 13 
Worldwide$760 $742 2 6 
Pfizer CentreOne
(MILLIONS)Revenue% Change
Operating SegmentPeriodGlobal
Revenues		RegionOct. 2, 2022Oct. 3, 2021TotalOper.Operational Results Commentary
PC1QTD
$319

Down 35%

(operationally)
U.S.$103 $121 (15)Declines primarily driven by lower COVID-19 manufacturing activities performed on behalf of customers, including Comirnaty supply to BioNTech, and lower manufacturing of divested products under manufacturing and supply agreements.
Int’l.216 400 (46)(40)
Worldwide$319 $521 (39)(35)
YTD
$974

Down 25%

(operationally)
U.S.$291 $409 (29)
Int’l.683 939 (27)(23)
Worldwide$974 $1,348 (28)(25)
(a)Comirnaty includes direct sales and alliance revenues related to sales of the Pfizer-BioNTech COVID-19 vaccine, which are recorded within our Primary Care therapeutic area. It does not include revenues for certain Comirnaty-related manufacturing activities performed on behalf of BioNTech, which are included in “Revenues—Selected Product Discussion” below should be read in conjunction with the revenue information included in the “Revenues—Major Products” section.
•
Prevnar 13/Prevenar 13 (IH) worldwide revenues decreased operationally in the third quarter and first nine months of 2017, compared to the same periods in 2016. Foreign exchange had a de minimis impact on worldwide revenues in the third quarter and first nine months of 2017, compared to the same periods in 2016.
In the U.S., revenues for Prevnar 13 decreased 4% in the third quarter ofPC1. See 2017 and 9% in the first nine months of 2017, compared to the same periods in 2016, primarily due to the continued decline in revenues for the Adult indication in the U.S. due to a high initial capture rate of the eligible population following its successful fourth-quarter 2014 launch, which resulted in a smaller remaining “catch up” opportunity (i.e., the opportunity to reach adults age 65 and older who have not been previously vaccinated with Prevnar 13) compared to the prior-year period, partially offset by growth from the pediatric indication. Given the success since the launch of the Adult indication, approximately 53% of the eligible patient pool 65 years and above in the U.S. has already been vaccinated. While the remaining eligible population is large, this cohort is much more difficult to capture.
Internationally, revenues for Prevenar 13 increased 5% operationally in the third quarter of 2017 and 3% operationally in the first nine months of 2017, compared to the same periods in 2016, primarily due to the favorable overall impact of timing of government purchases in certain emerging markets and the launch of Prevenar 13 in China for the pediatric indication. Foreign exchange had a de minimis impact on international revenues in the third quarter of 2017 and an unfavorable impact in the first nine months of 2017, compared to the same periods in 2016Note 13C.

In 2014, the ACIP voted to recommend Prevnar 13 for routine use to help protect adults aged 65 years and older against pneumococcal disease, which for adults includes pneumonia caused by the 13 pneumococcal serotypes included in the vaccine. These ACIP recommendations were subsequently approved by the directors at the CDC and U.S. Department of Health and Human Services, and were published in the Morbidity and Mortality Weekly Report in September 2014 by the CDC. As with other vaccines, the CDC regularly monitors the impact of vaccination and reviews the recommendations; in this case, however, the CDC announced formally that it will conduct this review in 2018. A potential adverse change in the ACIP recommendation could negatively impact future Prevnar 13 revenues. Currently, we are working with a number of U.S. investigators to monitor the proportion of community-acquired pneumonia caused by the serotypes included in Prevnar 13 and continue to observe trends.
•
Lyrica (EH (revenues from all of Europe, Russia, Turkey, Israel and Central Asia)/IH (revenues from all other geographies)) worldwide revenues increased operationally in the third quarter and the first nine months of 2017, compared to the same periods in 2016. Foreign exchange had an unfavorable impact on worldwide revenues in the third quarter and first nine months of 2017, compared to the same periods in 2016.
In the U.S., Lyrica revenues increased 12% in the third quarter of 2017 and 10% in the first nine months of 2017, compared to the same periods in 2016, driven by sustained demand and positive price impact.
Internationally, Lyrica revenues decreased 8% operationally in the third quarter of 2017 and 10% operationally in the first nine months of 2017, compared to the same periods in 2016, primarily due to losses of exclusivity in developed Europe markets. Foreign exchange had an unfavorable impact on international revenues in the third quarter and first nine months of 2017, compared to the same periods in 2016.
Lyrica revenues in our IH segment increased operationally in the third quarter and first nine months of 2017, compared to the same periods in 2016, primarily driven by sustained demand and positive price impact in the U.S. Foreign exchange had an unfavorable impact on Lyrica IH revenues in the third quarter and a de minimis impact in the first nine months of 2017, compared to the same periods in 2016.
In our EH segment, worldwide revenues from Lyrica decreased operationally in the third quarter and first nine months of 2017, compared to the same periods in 2016, due to losses of exclusivity in developed Europe markets. Foreign exchange had a favorable impact on Lyrica EH worldwide revenues in the third quarter of 2017 and an unfavorable impact in the first nine months of 2017, compared to the same periods in 2016.
•
Ibrance (IH) worldwide revenues, most of which were recorded in the U.S., increased operationally in the third quarter and first nine months of 2017, compared to the same periods in 2016. The significant revenue growth reflects our scientific/clinical data, continued positive patient experience as well as Ibrance being the class leader among cyclin-dependent kinase inhibitors in major markets. Foreign exchange had a favorable impact on worldwide revenues in the third quarter of 2017 and had an unfavorable impact in the first nine months of 2017, compared to the same periods in 2016.
•
Enbrel (IH, outside the U.S. and Canada) worldwide revenues, excluding the U.S. and Canada, decreased operationally in the third quarter and first nine months of 2017, compared to the same periods in 2016, primarily due to on-going biosimilar competition in most developed Europe markets, which is expected to continue. Foreign exchange had a de minimis impact on worldwide revenues in the third quarter and an unfavorable impact in the first nine months of 2017, compared to the same periods in 2016.
•
Lipitor (EH) worldwide revenues increased operationally in the third quarter and the first nine months of 2017, compared to the same periods in 2016. Foreign exchange had an unfavorable impact on worldwide revenues in the third quarter of 2017 and first nine months of 2017, compared to the same periods in 2016. In the U.S., revenues increased more than 100% in the third quarter of 2017 and 11% in the first nine months of 2017, compared to the same periods in 2016, primarily due to favorable rebates.
In our international markets, revenues increased 11% operationally in the third quarter of 2017, compared to the same period in 2016, driven by increased demand in China and certain Middle Eastern markets, partially offset by lower volumes in Japan and pricing pressures in China. International revenues increased 6% operationally in the first nine months of 2017, compared to the same period in 2016, driven by increased demand in China, partially offset by lower volumes in Japan and certain Middle Eastern markets, as well as pricing pressures in China. Foreign exchange had an unfavorable impact on international revenues in the third quarter of 2017 and first nine months of 2017, compared to the same periods in 2016.
•
Viagra (IH (U.S. and Canada revenues)/EH (all other revenues excluding U.S. and Canada)) worldwide revenues decreased operationally in the third quarter and first nine months of 2017, compared to the same periods in 2016. The decrease in the third quarter of 2017, compared to the same period in 2016, was primarily due to wholesaler destocking in advance of anticipated generic competition in the U.S. beginning in December 2017. The decrease in the first nine months of 2017, compared to the same period in 2016, was primarily due to lower market growth. Foreign exchange had a de minimis impact on worldwide revenues in the third quarter of 2017 and an unfavorable impact in the first nine months of 2017, compared to the same periods in 2016.

Revenues in the U.S. decreased 32% in the third quarter of 2017, compared to the same period in 2016, primarily due to wholesaler destocking in advance of anticipated generic competition beginning in December 2017. Revenues in the U.S. decreased 21% in the first nine months of 2017, compared to the same period in 2016, primarily due to lower market growth. International revenues increased 15% operationally in the third quarter of 2017, compared to the same period in 2016, primarily from demand in emerging markets, primarily in China. International revenues increased 3% operationally in the first nine months of 2017, compared to the same period in 2016, primarily from increased demand in emerging markets, mainly China and certain Middle Eastern markets, partially offset by price reductions in China. Foreign exchange had an unfavorable impact on international revenues in the third quarter and first nine months of 2017, compared to the same periods in 2016.
•
Xeljanz (IH) worldwide revenues increased operationally in the third quarter and first nine months of 2017, compared to the same periods in 2016. In the U.S., Xeljanz revenues increased 44% in the third quarter of 2017 and 40% in the first nine months of 2017, compared to the same periods in 2016, primarily driven by increased adoption among rheumatologists, growing awareness among patients and improvements in payer access. Foreign exchange had an unfavorable impact on worldwide revenues in the third quarter of 2017 and had a de minimis impact in the first nine months of 2017, compared to the same periods in 2016.
•
BeneFIX and ReFacto AF/Xyntha (IH)––BeneFIX worldwide revenues decreased operationally in the third quarter and first nine months of 2017, compared to the same periods in 2016, primarily as a result of erosion of market share in the U.S. and European countries due to increasing adoption of extended half-life treatment options as well as a price decrease in the U.K. Foreign exchange had a de minimis impact on worldwide revenues in the third quarter and an unfavorable impact in the first nine months of 2017, compared to the same periods in 2016.
ReFacto AF/Xyntha worldwide revenues decreased operationally in the third quarter of 2017 and increased operationally in the first nine months of 2017, compared to the same periods in 2016. The increase in the first nine months of 2017 was largely due to increased product demand in certain emerging markets, partially offset by declines in developed markets in Europe and the U.S., primarily driven by increasing adoption of extended half-life treatment options. Foreign exchange had a favorable impact on worldwide revenues in the third quarter of 2017 and an unfavorable impact in the first nine months of 2017, compared to the same periods in 2016.
•
Sutent (IH) worldwide revenues increased operationally in the third quarter of 2017 and decreased operationally in the first nine months of 2017, compared to the same periods in 2016. The increase in the third quarter of 2017 was primarily driven by increased performance in certain emerging markets. The decrease in the first nine months of 2017 was primarily due to competitive pressure in the U.S. and Europe and cost containment measures in certain developed international markets, partially offset by increased performance in certain emerging markets. Foreign exchange had a de minimis impact on worldwide revenues in the third quarter of 2017 and an unfavorable impact in the first nine months of 2017, compared to the same periods in 2016.
•
Chantix/Champix (IH) worldwide revenues increased operationally in the third quarter and first nine months of 2017, compared to the same periods in 2016. Foreign exchange had an unfavorable impact on worldwide revenues in the third quarter of 2017 and a de minimis impact in the first nine months of 2017, compared to the same periods in 2016.
In the U.S., Chantix revenues increased 27% in the third quarter of 2017 and 21% in the first nine months of 2017, compared to the same periods in 2016, primarily due to increased promotional activities, educating healthcare providers on updates to the Chantix label, including removal of the boxed warning, the addition of EAGLES safety and efficacy data, improved patient access and positive price impact.
•
The Premarin family of products (EH) worldwide revenues decreased operationally in the third quarter of 2017 and first nine months of 2017, compared to the same periods in 2016. Revenues in the U.S. decreased 2% in the third quarter and 5% in the first nine months of 2017, compared to the same periods in 2016, primarily driven by lower volume, partially offset by a positive price impact.
Internationally, Premarin revenues decreased 8% operationally in the third quarter and first nine months of 2017, compared to the same periods in 2016, primarily due to lower volumes in certain emerging markets and, with respect to the first nine months of 2017, the U.K., partially offset by price increases. Foreign exchange had a favorable impact on international revenues in the third quarter and first nine months of 2017, compared to the same periods in 2016.
•
Norvasc (EH) worldwide revenues decreased operationally in the third quarter and first nine months of 2017, compared to the same periods in 2016. Results for the third quarter of 2017 and first nine months of 2017 were impacted by generic competition in Japan, lower volumes in certain Middle Eastern markets and pricing pressures in China, partially offset by demand in China. Foreign exchange had an unfavorable impact on worldwide revenues in the third quarter and first nine months of 2017, compared to the same periods in 2016.
•
Celebrex (EH) worldwide revenues increased operationally in the third quarter and first nine months of 2017, compared to the same periods in 2016. The increase in the third quarter of 2017, compared to the same period in 2016, was primarily

driven by favorable rebates in the U.S. and increased demand in China, partially offset by generic competition in the U.S., lower volumes in certain Middle Eastern markets and pricing pressures in China and Mexico. The increase in the first nine months of 2017, compared to the same period in 2016, was primarily driven by favorable rebates in the U.S. and volume growth in emerging markets, primarily China, partially offset by generic competition in the U.S. and most developed international markets and pricing pressures in China and Mexico. Foreign exchange had an unfavorable impact on worldwide revenues in the third quarter and first nine months of 2017, compared to the same periods in 2016.
•
Xalkori (IH) worldwide revenues increased operationally in the third quarter and first nine months of 2017, compared to the same periods in 2016, as a result of a steady increase in diagnostic rates for the ALK gene mutation across key markets outside the U.S., which has led to more patients being treated. This increase was partially offset by volume declines in the U.S. and Japan due to competitive pressure, partially mitigated by the March 2016 FDA approval of the supplemental NDA to treat patients with metastatic NSCLC whose tumors are ROS1-positive as detected by an FDA-approved test. Foreign exchange had a de minimis impact on worldwide revenues in the third quarter of 2017 and an unfavorable impact in the first nine months of 2017, compared to the same periods in 2016.
•
Inflectra/Remsima (EH) worldwide revenues increased operationally in the third quarter and first nine months of 2017, compared to the same periods in 2016, due to continued uptake in developed markets in Europe, and the U.S. launch in the fourth quarter of 2016, partially offset by pricing pressures in Europe. Foreign exchange had a favorable impact on worldwide revenues in the third quarter of 2017 and an unfavorable impact in the first nine months of 2017, compared to the same periods in 2016.
Inflectra uptake in the U.S. is being driven by a number of factors including Inflectra’s clinical data package, patient support programs, price and the access/reimbursement environment. To date, reimbursement coverage has been mixed. While we achieved 100% Medicare coverage, we have experienced access challenges among commercial payers where our lower priced product has*    Indicates calculation not received access at parity to the innovator product and remains in a disadvantaged position despite recent price increases taken by the innovator product. We will look at all relevant factors impacting reimbursement given our extensive experience working with commercial payers to enable greater access for Inflectra. Additionally, in September 2017, Pfizer filed suit in the U.S. District Court for the Eastern District of Pennsylvania against Johnson & Johnson (J&J) alleging that J&J’s exclusionary contracts and other anticompetitive practices concerning Remicade® (infliximab) violate federal antitrust laws.meaningful.
•
Inlyta (IH) worldwide revenues decreased operationally in the third quarter and first nine months of 2017, compared to the same periods in 2016, primarily due to increased competition in the U.S. and Europe, partially offset by performance in key emerging markets. Foreign exchange had an unfavorable impact on worldwide revenues in the third quarter and first nine months of 2017, compared to the same periods in 2016.
•
Pristiq (EH) worldwide revenues decreased operationally in the third quarter and first nine months of 2017, compared to the same periods in 2016, primarily due to loss of exclusivity in the U.S. in March 2017. Foreign exchange had a de minimis impact on worldwide revenues in the third quarter and first nine months of 2017, compared to the same periods in 2016.
Zyvox (EH) worldwide revenues decreased operationally in the third quarter and first nine months of 2017, compared to the same periods in 2016, due to generic competition in developed international markets and the U.S. and corresponding pricing pressures, partially offset by volume growth in China. Foreign exchange had an unfavorable impact on worldwide revenues in the third quarter and first nine months of 2017, compared to the same periods in 2016.
•
Eucrisa (IH) is approved in the U.S. for the treatment of mild to moderate atopic dermatitis for patients two years of age and older. The FDA approved Eucrisa on December 14, 2016, and Eucrisa was launched in the U.S. late in the first quarter of 2017. Eucrisa is a novel non-steroidal topical ointment and is the first topical prescription treatment for atopic dermatitis approved in over 10 years. Prescription volume continued to strengthen through the third quarter of 2017 supported by the launch of our direct-to-consumer campaign.
•
Alliance revenues (IH/EH) increased operationally in the third quarter and first nine months of 2017, compared to the same periods in 2016, mainly due to:
◦an increase in Eliquis alliance revenues due to higher demand resulting from increased market penetration of novel oral anticoagulants and market share gains; and
◦
the inclusion of Xtandi alliance revenues of $150 million in the third quarter of 2017 and $422 million in the first nine months of 2017 in the U.S. resulting from the September 2016 acquisition of Medivation. We expect patient assistance program (which provides free medicines to patients) utilization as a percentage of total demand to normalize as we move into next year.
Foreign exchange had an unfavorable impact on alliance revenues in the third quarter and first nine months of 2017, compared to the same periods in 2016.

◦
Eliquis (IH) has been jointly developed and is commercialized by Pfizer and BMS. Pfizer funds between 50% and 60% of all development costs depending on the study. Profits and losses are shared equally on a global basis, except in certain countries where Pfizer commercializes Eliquis and pays BMS compensation based on a percentage of net sales. We have full commercialization rights in certain smaller markets. BMS supplies the product to us at cost plus a percentage of the net sales to end-customers in these markets. Eliquis is part of the Novel Oral Anticoagulant (NOAC) market; the agents in this class were developed as alternative treatment options to warfarin in appropriate patients.
◦
Xtandi (IH) is being developed and commercialized through a collaboration with Astellas. The two companies share equally in the gross profits (losses) related to U.S. net sales of Xtandi. Subject to certain exceptions, Pfizer and Astellas also share equally all Xtandi commercialization costs attributable to the U.S. market. Pfizer and Astellas also share certain development and other collaboration expenses and Pfizer receives tiered royalties as a percentage of international Xtandi net sales (recorded in Other (income)/deductions—net).
See the “Analysis of the Consolidated Statements of Income—Revenues—Selected Product Descriptions”Item 1. Business—Patents and Other Intellectual Property Rights section of our 2016 Financial Report2021 Form 10-K for additional information regarding the primary indications or classexpiration of the selected products discussed above.
See Notes to Condensed Consolidated Financial Statements—various patent rights, Note 12.Commitments and Contingencies12 for a discussion of recent developments concerning patent and product litigation relating to certain of the products discussed above.above, and
Product Developments—Biopharmaceutical

We continue to invest in R&D to provide potential future sources of revenues throughNote 13C for information regarding the development of new products, as well as through additional uses for in-line and alliance products. Notwithstanding our efforts, there are no assurances as to when,primary indications or if, we will receive regulatory approval for additional indications for existing products or any of our other products in development.

We continue to strengthen our global R&D organization and pursue strategies intended to improve innovation and overall productivity in R&D to achieve a sustainable pipeline that will deliver value in the near term and over time. Our R&D priorities include:
delivering a pipeline of differentiated therapies with the greatest scientific and commercial promise;
innovating new capabilities that can position Pfizer for long-term leadership; and
creating new models for biomedical collaboration that will expedite the pace of innovation and productivity.
Our R&D primarily focuses on:
Biosimilars;
Inflammation and Immunology;
Metabolic Disease and Cardiovascular Risks;
Neuroscience;
Oncology
Rare Diseases; and
Vaccines.
For additional information about our R&D organization, including the EH R&D organization, see the “Overview of Our Performance, Operating Environment, Strategy and Outlook—Our Strategy—Description of Research and Development Operations” section of this MD&A.
A comprehensive update of Pfizer’s development pipeline was published on October 31, 2017 and is available at www.pfizer.com/science/drug-product-pipeline. It includes an overview of our research and a list of compounds in development with targeted indication and phase of development, as well as mechanism of action for some candidates in Phase 1 and all candidates from Phase 2 through registration.
The following series of tables provides information about significant regulatory actions by, and filings pending with, the FDA and regulatory authorities in the EU and Japan, as well as additional indications and new drug candidates in late-stage development.

RECENT FDA APPROVALS
PRODUCTINDICATIONDATE APPROVED
Lyrica (pregabalin)Extended-release tablets CV as once-daily therapy for the management of neuropathic pain associated with diabetic peripheral neuropathy and the management of post-herpetic neuralgia
October 2017

Mylotarg (gemtuzumab ozogamicin)Treatment of adults with newly diagnosed CD33-positive acute myeloid leukemia (AML), and adults and children 2 years and older with relapsed or refractory CD33-positive AMLSeptember 2017
Besponsa (inotuzumab ozogamicin)Treatment of adults with relapsed or refractory B-cell precursor acute lymphoblastic leukemiaAugust 2017
Bavencio (avelumab)Treatment for patients with locally advanced or metastatic urothelial carcinoma with disease progression on or after platinum-based therapy, which is being developed in collaboration with Merck KGaA, GermanyMay 2017
Bavencio (avelumab)Treatment of adults and pediatric patients 12 years and older with metastatic Merkel cell carcinoma, which is being developed in collaboration with Merck KGaA, GermanyMarch 2017
Eucrisa (crisaborole)A non-steroidal topical anti-inflammatory PDE-4 inhibitor for the treatment of mild-to-moderate atopic dermatitisDecember 2016
PENDING U.S. NDAs AND SUPPLEMENTAL FILINGS
PRODUCTPROPOSED INDICATION
DATE FILED*
PF-05280014(a)
A potential biosimilar to Herceptin®(trastuzumab)
August 2017
Bosulif (bosutinib)Treatment of patients with newly diagnosed chronic phase Philadelphia chromosome-positive chronic myeloid leukemia, which is being developed in collaboration with AvillionAugust 2017
Xeljanz (tofacitinib)Treatment of adult patients with moderately to severely active ulcerative colitisJuly 2017
Sutent (sunitinib)(b)
Adjuvant treatment in adult patients at high risk of recurrent renal cell carcinoma following nephrectomyMay 2017
Xeljanz (tofacitinib)(c)
Treatment of adult patients with active psoriatic arthritisMay 2017
PF-06438179(d)
A potential biosimilar to Remicade® (infliximab)
April 2017
ertugliflozinTreatment of type 2 diabetes, which is being developed in collaboration with MerckMarch 2017
Retacrit(e)
A potential biosimilar to Epogen® and Procrit® (epotein alfa)
February 2015
tafamidis meglumine(f)
Treatment of transthyretin familial amyloid polyneuropathyFebruary 2012
*The dates set forth in this column are the dates on which the FDA accepted our submissions.
(a)
Herceptin® is a registered trademark of Genentech, Inc.
(b)
In September 2017, the FDA’s Oncologic Drug Advisory Committee (ODAC) voted six in favor and six against the benefit-risk profile for Sutent as adjuvant treatment of adult patients at high risk of recurrent renal cell carcinoma after nephrectomy (surgical removal of the cancer-containing kidney).
(c)
In August 2017, the FDA’s Arthritis Advisory Committee voted ten to one to recommend approval of the proposed dose of tofacitinib for the treatment of adult patients with active psoriatic arthritis.
(d)
Remicade® is a registered trademark of Janssen. In February 2016, we divested the rights for development and commercialization of PF-06438179, a potential biosimilar to Remicade® (infliximab) in the 28 countries that form the EEA to Sandoz, which was a condition to the European Commission’s approval of the Hospira transaction. We retain commercialization rights to PF-06438179 in all countries outside of the EEA.
(e)
Epogen® is a registered U.S. trademark of Amgen Inc.; Procrit® is a registered U.S. trademark of Johnson & Johnson. In October 2015, we received a “complete response” letter from the FDA with respect to our biologics license application (BLA) for Retacrit, our proposed biosimilar to epoetin alfa, which was submitted for all indications of the reference product. In December 2016, we completed the resubmission of the BLA to the FDA for Retacrit in response to the “complete response” letter. In May 2017, the FDA’s ODAC voted to recommend Retacrit for approval. In June 2017, we received a “complete response” letter from the FDA, relating to matters noted in a Warning Letter issued in February 2017 following a routine inspection of the company’s facility in McPherson, Kansas in 2016. This facility was listed as the potential manufacturing site in the BLA for the proposed epoetin alfa biosimilar. The issues noted in the Warning Letter do not relate specifically to the manufacture of epoetin alfa. No additional clinical data was requested at this time and we continue to work closely with the FDA on next steps.
(f)
In May 2012, the FDA’s Peripheral and Central Nervous System Drugs Advisory Committee voted that the tafamidis meglumine data provide substantial evidence of efficacy for a surrogate endpoint that is reasonably likely to predict a clinical benefit. In June 2012, the FDA issued a “complete response” letter with respect to the tafamidis NDA. The FDA has requested the completion of a second efficacy study, and also has asked for additional information on the data within the current tafamidis NDA. Pfizer initiated study B3461028 in December 2013, a global Phase 3 study to support a potential new indication in transthyretin cardiomyopathy, which includes transthyretin familial amyloid cardiomyopathy (TTR-FAC) and wild-type cardiomyopathy (WT-CM). We anticipate results from this study in 2018, and continue to work with the FDA to identify next steps.

REGULATORY APPROVALS AND FILINGS IN THE EU AND JAPAN
PRODUCTDESCRIPTION OF EVENTDATE APPROVED
DATE FILED*
Xeljanz (tofacitinib)Application filed in the EU for treatment of psoriatic arthritis—September 2017
Ibrance (palbociclib)Approval in Japan for Ibrance in combination with endocrine therapy for the treatment of HR+, HER2- inoperable or recurrent breast cancerSeptember 2017—
Bavencio (avelumab)Approval in Japan for the treatment of curatively unresectable Merkel cell carcinoma, which is being developed in collaboration with Merck KGaA, GermanySeptember 2017—
Bavencio (avelumab)Approval in the EU for the treatment of adult patients with metastatic Merkel cell carcinoma, which is being developed in collaboration with Merck KGaA, GermanySeptember 2017—
Xeljanz (tofacitinib)Application filed in the EU for the treatment of ulcerative colitis—August 2017
Bosulif (bosutinib)Application filed in the EU for the treatment of patients with newly diagnosed chronic phase Philadelphia chromosome-positive chronic myeloid leukemia, which is being developed in collaboration with Avillion—August 2017
PF-06438179(a)
Application filed in Japan for a potential biosimilar to Remicade® (infliximab)
—August 2017
PF-05280014(b)

Application filed in the EU for a potential biosimilar to Herceptin® (trastuzumab)
—July 2017
Besponsa (inotuzumab ozogamicin)
Approval in the EU for the treatment of adult patients with relapsed or refractory B-cell precursor acute lymphoblastic leukemia
June 2017—
Trumenba

Approval in the EU for a prophylactic vaccine for active immunization to prevent invasive disease caused by Neisseria meningtidis serogroup B in individuals 10 years of age and older
May 2017—
Xalkori (crizotinib)Approval in Japan for the treatment of ROS1-positive non-small cell lung cancerMay 2017—
Xeljanz (tofacitinib)Application filed in Japan for the treatment of ulcerative colitis—May 2017
Sutent (sunitinib)Application filed in the EU for the adjuvant treatment in adult patients at high risk of recurrent renal cell carcinoma following nephrectomy—April 2017
inotuzumab ozogamicinApplication filed in Japan for the treatment of acute lymphoblastic leukemia—April 2017
Xeljanz (tofacitinib)Approval in the EU for Xeljanz in combination with methotrexate for the treatment of moderate to severe active rheumatoid arthritis in adult patients who have responded inadequately to, or who are intolerant to one or more disease-modifying antirheumatic drugs. Xeljanz can be given as monotherapy in case of intolerance to methotrexate or when treatment with methotrexate is inappropriateMarch 2017—
ertugliflozinApplication filed in the EU for the treatment of type 2 diabetes, which is being developed in collaboration with Merck—February 2017
Mylotarg (gemtuzumab ozogamicin)Application filed in the EU for the treatment of acute myeloid leukemia—December 2016
Ibrance (palbociclib)
Approval in the EU for palbociclib in combination with
endocrine therapy for the treatment of HR+, HER2- advanced or
metastatic breast cancer, as well as for the treatment of recurrent
advanced breast cancer
November 2016—
*For applications in the EU, the dates set forth in this column are the dates on which the EMA validated our submissions.
(a)
Remicade® is a registered trademark of Janssen. In February 2016, we divested the rights for development and commercialization of PF-06438179, a potential biosimilar to Remicade® (infliximab) in the 28 countries that form the EEA to Sandoz, which was a condition to the European Commission’s approval of the Hospira transaction. We retain commercialization rights to PF-06438179 in all countries outside of the EEA.
(b)
Herceptin® is a registered trademark of Genentech, Inc.


LATE-STAGE CLINICAL PROGRAMS FOR ADDITIONAL USES AND DOSAGE FORMS
FOR IN-LINE AND IN-REGISTRATION PRODUCTS
PRODUCTPROPOSED INDICATION
Bavencio (avelumab)
A monoclonal antibody that inhibits PD-L1, in combination with Inlyta (axitinib), a tyrosine kinase inhibitor,
for the first-line treatment of advanced renal cell carcinoma, which is being developed in collaboration with
Merck KGaA, Germany
Bavencio (avelumab)
A monoclonal antibody that inhibits PD-L1 for the first-line treatment of stage IIIb/IV non-small cell lung
cancer, which is being developed in collaboration with Merck KGaA, Germany
Bavencio (avelumab)A monoclonal antibody that inhibits PD-L1 for treatment of stage IIIb/IV non-small cell lung cancer that has progressed after a platinum-containing doublet, which is being developed in collaboration with Merck KGaA, Germany
Bavencio (avelumab)
A monoclonal antibody that inhibits PD-L1 for treatment of platinum-resistant/refractory ovarian cancer,
which is being developed in collaboration with Merck KGaA, Germany
Bavencio (avelumab)
A monoclonal antibody that inhibits PD-L1 for the first-line treatment of ovarian cancer, which is being
developed in collaboration with Merck KGaA, Germany
Bavencio (avelumab)
A monoclonal antibody that inhibits PD-L1 for maintenance treatment, in the first-line setting, for patients
with urothelial cancer, which is being developed in collaboration with Merck KGaA, Germany
Bavencio (avelumab)
A monoclonal antibody that inhibits PD-L1 for maintenance treatment of advanced or metastatic gastric/
gastro-esophageal junction cancers, which is being developed in collaboration with Merck KGaA, Germany
Bavencio (avelumab)
A monoclonal antibody that inhibits PD-L1 for the third-line treatment of advanced or metastatic gastric/
gastro-esophageal junction cancers, which is being developed in collaboration with Merck KGaA, Germany
Bavencio (avelumab)
A monoclonal antibody that inhibits PD-L1 for treatment of locally advanced squamous cell carcinoma of the
head and neck, which is being developed in collaboration with Merck KGaA, Germany
Inlyta (axitinib)Adjuvant treatment of renal cell carcinoma, which is being developed in collaboration with SFJ
Ibrance (palbociclib)Treatment of HER2+ advanced breast cancer, in collaboration with the Alliance Foundation Trials, LLC
Ibrance (palbociclib)Treatment of high-risk early breast cancer, in collaboration with the German Breast Group
Ibrance (palbociclib)Treatment of HR+ early breast cancer, in collaboration with the Alliance Foundation Trials, LLC, and the Austrian Breast Colorectal Cancer Study Group
Xtandi (enzalutamide)Treatment of non-metastatic castration resistant prostate cancer
Xtandi (enzalutamide)Treatment of non-metastatic high risk hormone-sensitive prostate cancer
Xtandi (enzalutamide)Treatment of metastatic hormone-sensitive prostate cancer
Vyndaqel (tafamidis meglumine)Adult symptomatic transthyretin cardiomyopathy
NEW DRUG CANDIDATES IN LATE-STAGE DEVELOPMENT
CANDIDATEPROPOSED INDICATION
dacomitinibA pan-human epidermal growth factor receptor (HER) tyrosine kinase inhibitor for the first-line treatment of patients with advanced non-small cell lung cancer with estimated glomerular filtration rate (eGFR) activating mutations, which is being developed in collaboration with SFJ
lorlatinib (PF-06463922)A next generation ALK/ROS1 tyrosine kinase inhibitor for the treatment of patients with ALK-positive metastatic non-small cell lung cancer, previously treated with one or more ALK inhibitors
PF-06425090A prophylactic vaccine for active immunization to prevent clostridium difficile colitis
PF-05280586(a)
A potential biosimilar to Rituxan® (rituximab)
PF-06439535(b)
A potential biosimilar to Avastin® (bevacizumab)
PF-06410293(c)
A potential biosimilar to Humira® (adalimumab)
rivipansel (GMI-1070)A pan-selectin inhibitor for the treatment of vaso-occlusive crisis in hospitalized individuals with sickle cell disease, which was licensed from GlycoMimetics Inc.
somatrogon (PF-06836922)A long-acting hGH-CTP for the treatment of growth hormone deficiency in children, which is being developed in collaboration with OPKO
somatrogon (PF-06836922)
A long-acting hGH-CTP for the treatment of growth hormone deficiency in adults, which is being developed
in collaboration with OPKO
talazoparib (MDV3800)An oral PARP inhibitor for the treatment of patients with germline breast cancer susceptibility gene BRCA mutated advanced breast cancer
tanezumabAn anti-nerve growth factor monoclonal antibody for the treatment of pain, which is being developed in collaboration with Lilly
(a)
Rituxan® is a registered trademark of Biogen MA Inc.
(b)
Avastin® is a registered trademark of Genentech, Inc.
(c)
Humira® is a registered trademark of AbbVie Biotechnology Ltd.
Additional product-related programs are in various stages of discovery and development. Also, see the discussion in the “Our Strategy––Our Business Development Initiatives” section of this MD&A.

COSTS AND EXPENSES

The changes in expenses below reflect, among other things, the favorable impactclass of the February 2017 sale of HIS. The operating results of HIS are included in our operating results through February 2, 2017selected products discussed.
Costs and therefore, operating results for the third quarter of 2017 do not reflect HIS global operations, while operating results for the third quarter of Expenses
Costs and expenses follow:
Three Months EndedNine Months Ended
(MILLIONS)October 2,
2022		October 3,
2021		%
 Change		October 2,
2022		October 3,
2021		%
 Change
Cost of sales$6,063 $9,932 (39)$24,696 $21,085 17 
Percentage of Revenues
26.8 %41.3 %32.5 %36.7 %
Selling, informational and administrative expenses3,391 2,899 17 9,032 8,599 5 
Research and development expenses2,696 2,681 1 7,813 6,914 13 
Acquired in-process research and development expenses524 762 (31)880 1,000 (12)
Amortization of intangible assets822 968 (15)2,478 2,743 (10)
Restructuring charges and certain acquisition-related costs199 646 (69)580 667 (13)
Other (income)/deductions—net(59)(1,696)(97)1,063 (4,043)*
* Indicates calculation not meaningful.
45
2016 reflect three months of HIS global operations. Operating results for the first nine months of 2017 include approximately one month of HIS domestic operations and approximately two months of HIS international operations, while operating results for the first nine months of 2016 reflect nine months of HIS global operations.
Cost of Sales
  Three Months Ended Nine Months Ended
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
 
%
 Change

 October 1,
2017
 October 2,
2016
 
%
 Change

Cost of sales $2,847
 $3,085
 (8) $7,980
 $9,111
 (12)
As a percentage of Revenues
 21.6% 23.6%   20.5% 23.2%  
Cost of sales decreased 8%$3.9 billion in the third quarter of 2022, primarily due to:
•2017a reduction of $4.1 billion due to lower sales of Comirnaty (see the ,Analysis of the Condensed Consolidated Statements of Income––Revenues––Selected Product Discussion within MD&A); and 12%
•a $600 million favorable impact of foreign exchange and hedging activity,
partially offset by:
•an increase of $800 million for Paxlovid, including a charge of $400 million related to excess raw materials.
Cost of sales increased $3.6 billion in the first nine months of 2017, compared to the same periods in 2016, primarily2022, mainly due to:
•
the favorable
•an unfavorable impact of $3.4 billion due to increased sales of Comirnaty, which includes a charge for the 50% gross profit split with BioNTech and applicable royalty expenses;
•an increase of $1.8 billion for Paxlovid, which includes the charge of $400 million discussed above; and
•a $450 million write off of the sale of HIS global operations (which carried a higher cost of sales than other products) of $152 million in the third quarter of 2017, and $433 million in the first nine months of 2017;
•
the favorable impact of foreign exchange of $223 million and the favorable offset of hedging gains of $66 million, both in the first nine months of 2017;
•
the nonrecurring unfavorable impact of $4 million in the third quarter of 2016 and $216 million in the first nine months of 2016 of acquired Hospira inventory which is measured at fair value on the acquisition date and was amortized over the turn of the related inventory;
recognition of synergies related to our cost-reduction/productivity initiatives; and
a favorable change in product mix, including an operational decline in the SIP portfolio and the favorability attributed toCOVID-19 products that have lost exclusivity,exceeded or are expected to exceed their approved shelf-lives prior to being used, which was recorded in the second quarter of 2022,
partially offset by:
$55 million in inventory losses, overhead costs related to the period in which our Puerto Rico plants were not operational,•a $2.0 billion favorable impact of foreign exchange and incremental costs to date, all of which resulted from the recent hurricanes in Puerto Rico.hedging activity.
The decrease in Cost of sales as a percentage of revenues in the third quarter of 2022 was primarily driven by favorable changes in sales mix, including significant sales of Paxlovid, and lower sales of Comirnaty, as well as the favorable impacts of foreign exchange and hedging activity, partially offset by the charge of $400 million related to Paxlovid discussed above.
The decrease in 2017Cost of sales andas a percentage of revenues in the first nine months of 2017, compared to the same periods in 2016,2022 was primarily due to allthe favorable impacts of Paxlovid, foreign exchange and hedging activity, partially offset by the factors discussed above,unfavorable impact of Comirnaty, as well as an increase in alliance revenues, which have no associated costthe $450 million inventory write-off related to COVID-19 products and the charge of sales.$400 million related to Paxlovid discussed above.
Selling, Informational and Administrative (SI&A) Expenses
  Three Months Ended Nine Months Ended
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
 %
 Change
 October 1,
2017
 October 2,
2016
 %
 Change
Selling, informational and administrative expenses $3,500
 $3,559
 (2) $10,233
 $10,414
 (2)
As a percentage of Revenues
 26.6% 27.3%   26.3% 26.6%  
SI&A expenses decreased 2%increased $492 million in the third quarter of 2017, compared to the same period in 2016,2022, primarily due to:
•an increase of $290 million for Paxlovid and Comirnaty marketing and promotional expenses and a higher provision for U.S. healthcare reform fees based on sales of Paxlovid and Comirnaty; and
•
lower advertising, promotional and field force expenses, reflecting the benefits of cost-reduction and productivity initiatives, and lower expenses associated with products that recently lost marketing exclusivity;
the favorable impact•an increase of the sale of HIS global operations of $39 million;$125 million for marketing and promotional expenses for recently launched products,
lower spending for certain products, primarily Prevnar 13/Prevenar 13; andpartially offset by:
the•a $112 million favorable impact of foreign exchange of $11 million,exchange.
partially offset by:
additional investment across several of our key products, primarily Eucrisa, Ibrance and Xtandi; and
increased spending for biosimilars, primarily related to the U.S. launch of Inflectra.
SI&A expenses decreased 2%increased $433 million in the first nine months of 2017, compared to the same period in 2016, primarily2022, mainly due to:
•an increase of $720 million for Paxlovid and Comirnaty marketing and promotional expenses and a higher provision for U.S. healthcare reform fees based on sales of Paxlovid and Comirnaty; and
•
the non-recurrence of an allowance for doubtful trade accounts receivable of approximately $265
•an increase of $300 million for marketing and promotional expenses for recently launched products,
partially offset by:
•a decrease of $270 million in our liability to be paid to participants of our supplemental savings plan; and
•a $244 million resulting from unfavorable developments with a distributor that was recorded in the first quarter of 2016;

•
lower advertising, promotional and field force expenses associated with products that recently lost marketing exclusivity and certain other expenses related to disputes in the ordinary course of business;
lower spending for certain products, primarily Prevnar 13/Prevenar 13;
the favorable impact of the sale of HIS global operations of $95 million; and
the favorable impact of foreign exchange of $78 million,
partially offset by:
additional investment across several of our key products, primarily Eucrisa, Ibrance, Xtandi and Xeljanz;
increased spending for biosimilars, primarily related to the U.S. launch of Inflectra; and
an increase in charitable contributions.exchange.
Research and Development (R&D) Expenses
R&D expenses increased $15 million in the third quarter, primarily due to:
  Three Months Ended Nine Months Ended
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
 %
Change
 October 1,
2017
 October 2,
2016
 %
Change
Research and development expenses $1,859
 $1,881
 (1) $5,346
 $5,360
 —
As a percentage of Revenues
 14.1% 14.4%   13.8% 13.7% 

•increased costs of $290 million to develop recently acquired assets, as well as investments for certain oncology and non-COVID-19 vaccines programs,
partially offset by:
•lower spending of $270 million on programs to prevent and treat COVID-19 and various late-stage clinical programs.
R&D expenses decreased 1% in the third quarter of 2017 and were relatively flatincreased $898 million in the first nine months of 2022,2017, comparedprimarily driven by increased costs of $800 million to develop recently acquired assets, as well as investments across multiple late-stage clinical programs, including development costs and at-risk manufacturing related to programs to prevent and treat COVID-19.
Acquired In-Process Research and Development (IPR&D) Expenses
Acquired IPR&D expenses decreased $237 million in the third quarter of 2022, primarily reflecting an upfront payment to Arvinas and a premium paid on our equity investment in Arvinas totaling $706 million in the third quarter of 2021, partially offset by an upfront payment of $426 million related to the same periods in 2016, primarily due to:
lower expenses due to the discontinuationclosing of the global clinical development program for bococizumabacquisition of ReViral in the fourththird quarter of 2016;2022.
46

Acquired IPR&D expenses decreased $120 million in the close-outfirst nine months of certain post-marketing clinical trials;2022, largely due to:
•the payments to Arvinas in the third quarter of 2021; and
•the favorable impactacquisition of Amplyx Pharmaceuticals, Inc. in the salesecond quarter of HIS global operations,2021,
partially offset by:
•
increased costs associated with our oncology programs, primarily clinical trial spend on Medivation assets, as well as, in the third quarter of 2017, increased costs associated with our immuno-oncology development programs;
lower development funding credits primarily•the upfront payment related to the discontinuationclosing of the global clinical development program for bococizumabacquisition of ReViral in the fourththird quarter of 2016;2022;
•an expenseupfront payment to Biohaven and a premium paid on our equity investment in Biohaven totaling $263 million in the first quarter of $752022; and
•a $76 million resulting frompremium paid on our May 2017 agreement with Sangamoequity investment in BioNTech to develop a potential mRNA vaccine against shingles in the first quarter of 2022.
See Note 2A and commercialize gene therapy programs 2D for Hemophilia A;
•
increased costs associated with our C. difficile vaccine program, which initiated a Phase 3 clinical study in March 2017; andadditional information.
increased costs associated with our tanezumab development program.
For additional information on Cost of sales, SI&A and R&D expenses by operating segment, see the “Analysis of Operating Segment Information” section of this MD&A.
Amortization of Intangible Assets
  Three Months Ended Nine Months Ended
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
 %
Change		 October 1,
2017
 October 2,
2016
 %
Change
Amortization of intangible assets $1,177
 $968
 22 $3,571
 $2,934
 22
As a percentage of Revenues
 8.9% 7.4%   9.2% 7.5%  
Amortization of intangible assets increased 22%decreased $146 million in the third quarter of 2017and 22%$265 million in the first nine months of 2017, compared to the same periods in 2016,2022, primarily due to the inclusion of amortization expense of approximately $221 million (pre-tax) in the third quarter of 2017 and approximately $751 million (pre-tax) in the first nine months of 2017 related to the identifiable intangible assets acquired from Medivation and Anacor, partially offset by assets that became fully amortized at the end of their estimated useful lives.

See also Notes to Condensed Consolidated Financial Statements—Note 9A. Identifiable Intangible Assets and Goodwill: Identifiable Intangible Assets.


Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives
  Three Months Ended Nine Months Ended
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
 %
Change
 October 1,
2017
 October 2,
2016
 %
Change
Restructuring charges $91
 $404
 (77) $150
 $574
 (74)
Transaction costs (14) 54
 *
 4
 114
 (97)
Integration costs 73
 74
 (1) 224
 300
 (26)
Restructuring charges and certain acquisition-related costs 149
 531
 (72) 377
 988
 (62)
Total additional depreciation—asset restructuring 39
 47
 (17) 74
 151
 (51)
Total implementation costs 57
 78
 (27) 150
 202
 (26)
Costs associated with acquisitions and cost-reduction/productivity initiatives(a)
 $245
 $655
 (63) $601
 $1,341
 (55)
(a)
Comprises Restructuring charges and certain acquisition-related costsas well as costs associated with our cost-reduction/productivity initiatives included in Cost of sales, Research and development expenses and/or Selling, informational and administrative expenses, as appropriate. For additional information, see Notes to Condensed Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives.
In connection with our acquisition of Hospira, we are focusing our efforts on achieving an appropriate cost structure for the combined company. We expect to achieve $1 billion of annual cost savings by 2018 in connection with the Hospira acquisition, 25% more than our initial cost savings target of $800 million, and have achieved approximately $700 million of cost savings through October 1, 2017. The one-time costs to generate the savings are expected to be approximately $1 billion (not including costs of $215 million for full-year 2015 associated with the return of acquired IPR&D rights), incurred for up to a three-year period post-acquisition.
In 2016, we substantially completed previously disclosed cost-reduction initiatives begun in 2014 associated with our global commercial structure reorganization, manufacturing plant network rationalization and optimization initiatives, and additional cost-reduction/productivity initiatives across the enterprise. Through December 31, 2016, we incurred $3.1 billion (pre-tax) in total costs for the 2014-2016 program. The cumulative ongoing annual cost savings associated with the 2014-2016 program (but not including expected cost savings associated with the Hospira acquisition), are approximately $3.1 billion. These savings were recognized, for the most part, through the end of 2016. However, savings from costs incurred in the last half of 2016 are expected to largely occur in 2017 and are reflected in our 2017 financial guidance.
New Cost-Reduction/Productivity Initiatives—2017 through 2019 Activities
As a result of the evaluation performed in connection with our decision in September 2016lower amortization of Comirnaty sales milestones to not pursue, at that time, splitting IH and EH into two separate publicly-traded companies, we have identified new opportunities to potentially achieve greater optimization and efficiency to become more competitive in our business. Therefore, we have initiated new enterprise-wide cost-reduction/productivity initiatives, which we expect to complete by the end of 2019. These initiatives will encompass all areas of our cost base and will include further centralization of our corporate and platform functions and optimization of our manufacturing plant network to support IH and EH products and pipelines, as well as activities in other areas where opportunities are identified. The action plans related to these new initiatives are underway and, in order to achieve targeted savings of approximately $1.3 billion by 2020, we expect to incur total costs of approximately $1.0 billion over the next three years. Of this amount, we expect about 80% to be manufacturing operations related and we expect about 20% of the total charges will be non-cash. For additional information about these programs and expected and actual total costs, see Notes to Condensed Consolidated Financial Statements—BioNTech.
Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives.

Transforming to a More Focused Company Program––For a description of our program, as well as the anticipated and actual costs, see Note 3. The expectedprogram savings discussed below may be rounded and represent approximations. In connection with restructuring our corporate enabling functions, we expect gross cost savings of $1.0 billion, or net cost savings, excluding merit and inflation growth and certain real estate cost increases, of $700 million, to be achieved primarily from 2021 through 2022. In connection with transforming our marketing strategy, we expect net cost savings of $1.4 billion, to be achieved primarily from 2022 through 2024. In connection with manufacturing network optimization, we expect net cost savings of $550 million to be achieved primarily from 2020 through 2023.
Certain qualifying costs for this program were recorded in 2017 associated with these activitiesthe first three quarters of 2022 and 2021 and are reflected inas Certain Significant Items and excluded from our non-GAAP measure of Adjusted Income. See the 2017Non-GAAP Financial Measure: Adjusted Income financial guidance.section within MD&A.

In addition to these major initiatives,this program, we continuously monitor our operations for cost reduction and/or productivity opportunities, especially in light of the losses of exclusivity and the expiration of collaborative arrangements for various products.

Other (Income)/Deductions—Net
  Three Months Ended Nine Months Ended
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
 %
Change
 October 1,
2017
 October 2,
2016
 %
Change
Other (income)/deductions––net $51
 $1,417
 (96)% $(16) $2,815
 *
*Calculation not meaningful.

The period-over-period changes were primarily driven by:
For information about•net losses on equity securities in 2022 versus net gains recognized in 2021;
•lower net periodic benefit credits associated with pension and postretirement plans incurred in 2022 compared to 2021; and
•an intangible asset impairment charge recorded in the componentsthird quarter of 2022.
Other (income)/deductions—net, see Notes to Condensed Consolidated Financial Statements—See Note 4. Other (Income)/Deductions—Net4 for additional information.

See also the “Analysis of Operating Segment Information” section of this MD&A.Provision/(Benefit) for Taxes on Income
 Three Months EndedNine Months Ended
(MILLIONS)October 2,
2022		October 3,
2021		%
Change		October 2,
2022		October 3,
2021		%
Change
Provision/(benefit) for taxes on income$356 $(328)*$3,098 $1,603 93 
Effective tax rate on continuing operations4.0 %(4.2)%10.5 %7.8 % 
* Indicates calculation not meaningful.
PROVISION FOR TAXES ON INCOME
  Three Months Ended Nine Months Ended  
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
 %
Change		 October 1,
2017
 October 2,
2016
 %
Change
Provision for taxes on income $727
 $249
 * $2,287
 $1,109
 *
Effective tax rate on continuing operations 20.3% 15.5%   20.1% 14.6%  
*Calculation not meaningful.
For information about our effective tax rate and the events and circumstances contributing to the changes between periods, as well as details about discrete elements that impacted our tax provisions, see Notes to Condensed Consolidated Financial Statements—Note 5. Tax Matters.
NON-GAAP FINANCIAL MEASURE (ADJUSTED INCOME)
General Description of Non-GAAP Financial Measure (Adjusted Income)

Adjusted income is an alternative view of performance used by management. We measure the performance of the overall Company on this basis in conjunction with other performance metrics. Because Adjusted income is an important internal measurement for Pfizer, we believe that investors’ understanding of our performance is enhanced by disclosing this performance measure. We report Adjusted income, certain components of Adjusted income, and Adjusted diluted earnings per share in order to portray the results of our major operations––the discovery, development, manufacture, marketing and sale of prescription medicines, vaccines and consumer healthcare (OTC) products––prior to considering certain income statement elements. We have defined Adjusted income as Net income attributable to Pfizer Inc. before the impact of purchase accounting for acquisitions, acquisition-related costs, discontinued operations and certain significant items, which are described below. Also, see the “Non-GAAP Financial Measure (Adjusted Income)––General Description of Non-GAAP Financial Measure (Adjusted Income)” section of our 2016 Financial Report for additional information. Similarly, we have defined the Adjusted income components as Cost of sales, Selling, informational and administrative expenses, Research and development expenses, Amortization of intangible assets and Other (income)/deductions––net, each before the impact of purchase accounting for acquisitions, acquisition-related costs and certain significant items. We have defined Adjusted diluted earnings per share as Earnings per common share attributable to Pfizer Inc.––dilutedbefore the impact of purchase accounting for acquisitions, acquisition-related costs, discontinued operations and certain significant items. The Adjusted income measure, the Adjusted income component measures and the Adjusted diluted earnings per share measure are not, and should not be viewed as, substitutes for U.S. GAAP net income, U.S. GAAP net income components or U.S. GAAP diluted earnings per share.

The following are examples of how the Adjusted income and Adjusted diluted earnings per share measures are utilized:
senior management receives a monthly analysis of our operating results that is prepared on an Adjusted income and Adjusted diluted earnings per share basis;
our annual budgets are prepared on an Adjusted income and Adjusted diluted earnings per share basis; and
•
senior management’s annual compensation is derived, in part, using Adjusted income and Adjusted diluted earnings per share measures. See the “Non-GAAP Financial Measure (Adjusted Income)––General Description of Non-GAAP Financial Measure (Adjusted Income)” section of our 2016 Financial Report for additional information.
Adjusted income and its components and Adjusted diluted earnings per share are non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, are limited in their usefulness to investors. Because of their non-standardized definitions, Adjusted income and its components (unlike U.S. GAAP net income and its components) and Adjusted diluted earnings per share (unlike U.S. GAAP diluted earnings per share) may not be comparable to the calculation of similar measures of other companies. Adjusted income and its components and Adjusted diluted earnings per share are presented solely to permit investors to more fully understand how management assesses performance.

We also recognize that, as internal measures of performance, the Adjusted income and its components and Adjusted diluted earnings per share measures have limitations, and we do not restrict our performance-management process solely to these metrics. A limitation of these measures is that they provide a view of our operations without including all events during a period, such as the effects of an acquisition or amortization of purchased intangibles, and do not provide a comparable view of our performance to other companies in the biopharmaceutical industry. We also use other specifically tailored tools designed to achieve the highest levels of performance. For example, our R&D organization has productivity targets, upon which its

effectiveness is measured. In addition, total shareholder return, both on an absolute basis and relative to a publicly-traded pharmaceutical index, plays a significant role in determining payouts under certain of Pfizer’s long-term incentive compensation plans.

See the accompanying reconciliations of certain GAAP reported to non-GAAP adjusted information for the third quarter and first nine months of 2017 and 2016 below.

Purchase Accounting Adjustments

Adjusted income is calculated prior to considering certain significant purchase accounting impacts resulting from business combinations and net asset acquisitions. These impacts, primarily associated with Wyeth (acquired in 2009), Hospira (acquired in 2015), Anacor (acquired in June 2016) and Medivation (acquired in September 2016), can include the incremental charge to cost of sales from the sale of acquired inventory that was written up to fair value, amortization related to the increase in fair value of the acquired finite-lived intangible assets, and to a much lesser extent, depreciation related to the increase/decrease in fair value of the acquired fixed assets (primarily manufacturing facilities), amortization related to the increase in fair value of acquired debt, and the fair value changes associated with contingent consideration. Therefore, the Adjusted income measure includes the revenues earned upon the sale of the acquired products without considering the acquisition cost of those products.
Acquisition-Related Costs

Adjusted income is calculated prior to considering transaction, integration, restructuring and additional depreciation costs associated with business combinations because these costs are unique to each transaction and represent costs that were incurred to restructure and integrate two businesses as a result of the acquisition decision. For additional clarity, only transaction costs, additional depreciation and restructuring and integration activities that are associated with a business combination or a net-asset acquisition are included in acquisition-related costs. We have made no adjustments for the resulting synergies.

Discontinued OperationsCosts and Expenses

Costs and expenses follow:
Three Months EndedNine Months Ended
(MILLIONS)October 2,
2022		October 3,
2021		%
 Change		October 2,
2022		October 3,
2021		%
 Change
Cost of sales$6,063 $9,932 (39)$24,696 $21,085 17 
Percentage of Revenues
26.8 %41.3 %32.5 %36.7 %
Selling, informational and administrative expenses3,391 2,899 17 9,032 8,599 5 
Research and development expenses2,696 2,681 1 7,813 6,914 13 
Acquired in-process research and development expenses524 762 (31)880 1,000 (12)
Amortization of intangible assets822 968 (15)2,478 2,743 (10)
Restructuring charges and certain acquisition-related costs199 646 (69)580 667 (13)
Other (income)/deductions—net(59)(1,696)(97)1,063 (4,043)*
* Indicates calculation not meaningful.
Adjusted income is calculated
45

Cost of Sales
Cost of sales decreased $3.9 billion in the third quarter of 2022, primarily due to:
•a reduction of $4.1 billion due to lower sales of Comirnaty (see the Analysis of the Condensed Consolidated Statements of Income––Revenues––Selected Product Discussion within MD&A); and
•a $600 million favorable impact of foreign exchange and hedging activity,
partially offset by:
•an increase of $800 million for Paxlovid, including a charge of $400 million related to excess raw materials.
Cost of sales increased $3.6 billion in the first nine months of 2022, mainly due to:
•an unfavorable impact of $3.4 billion due to increased sales of Comirnaty, which includes a charge for the 50% gross profit split with BioNTech and applicable royalty expenses;
•an increase of $1.8 billion for Paxlovid, which includes the charge of $400 million discussed above; and
•a $450 million write off of inventory related to COVID-19 products that have exceeded or are expected to exceed their approved shelf-lives prior to consideringbeing used, which was recorded in the resultssecond quarter of operations included in discontinued operations, as well as any related gains or losses on the disposal of such operations.2022,

Certain Significant Items

partially offset by:
Adjusted income is calculated prior to considering certain significant items. Certain significant items represent substantive and/or unusual items that are evaluated on an individual basis. Such evaluation considers both the quantitative and the qualitative aspects of their nature. Certain significant items may be highly variable and difficult to predict. Furthermore, in some cases it is reasonably possible that they could reoccur in future periods. For example, major non-acquisition-related cost-reduction programs stand on their own as they are specific to an event or goal with •a defined term, but we may have subsequent programs based on reorganizations of the business, cost productivity or in response to loss of exclusivity or economic conditions. Legal charges to resolve litigation are also related to specific cases, which are facts and circumstances specific and, in some cases, may also be the result of litigation matters at acquired companies that were inestimable, not probable or unresolved at the date of acquisition. Unusual items may represent items that are not part of our ongoing business; items that, either as a result of their nature or size, we would not expect to occur as part of our normal business on a regular basis; items that would be non-recurring; or items that relate to products we no longer sell. While not all-inclusive, examples of items that could be included as certain significant items would be a major non-acquisition-related restructuring charge and associated implementation costs; amounts related to certain disposals of businesses, products or facilities that do not qualify as discontinued operations under U.S. GAAP; certain intangible asset impairments; adjustments related to the resolution of certain tax positions; the$2.0 billion favorable impact of adopting certain significant, event-driven tax legislation; or charges related to certain legal matters, such as certain of those discussed in Notes to Condensed Consolidated Financial Statements—Note 12A. Commitmentsforeign exchange and Contingencies: Legal Proceedings, included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Normal, ongoing defense costs of the Company or settlements of and accruals for legal matters made in the normal course of our business would not be considered certain significant items.hedging activity.


Reconciliations of GAAP Reported to Non-GAAP Adjusted Information––Certain Line Items
  Three Months Ended October 1, 2017
IN MILLIONS, EXCEPT PER COMMON SHARE DATA GAAP Reported
 
Purchase Accounting Adjustments(a)

 
Acquisition-Related Costs(a)

 
Discontinued Operations(a)

 
Certain Significant Items(a)

 Non-GAAP Adjusted
Revenues $13,168
 $—
 $—
 $—
 $—
 $13,168
Cost of sales 2,847
 (28) (26) —
 (92) 2,699
Selling, informational and administrative expenses 3,500
 —
 —
 —
 (22) 3,478
Research and development expenses 1,859
 1
 —
 —
 (9) 1,851
Amortization of intangible assets 1,177
 (1,120) —
 —
 —
 57
Restructuring charges and certain acquisition-related costs 149
 —
 (129) —
 (21) —
Other (income)/deductions––net 51
 (7) —
 —
 (305) (261)
Income from continuing operations before provision for taxes on income 3,585
 1,154
 155
 —
 449
 5,343
Provision for taxes on income(b)
 727
 306
 72
 —
 161
 1,267
Income from continuing operations 2,858
 848
 83
 —
 288
 4,077
Discontinued operations––net of tax —
 —
 —
 —
 —
 —
Net income attributable to noncontrolling interests 18
 —
 —
 —
 —
 18
Net income attributable to Pfizer Inc. 2,840
 848
 83
 —
 288
 4,059
Earnings per common share attributable to Pfizer Inc.––diluted 0.47
 0.14
 0.01
 —
 0.05
 0.67
  Nine Months Ended October 1, 2017
IN MILLIONS, EXCEPT PER COMMON SHARE DATA GAAP Reported
 
Purchase Accounting Adjustments(a)

 
Acquisition-Related Costs(a)

 
Discontinued Operations(a)

 
Certain Significant Items(a)

 Non-GAAP Adjusted
Revenues $38,843
 $—
 $—
 $—
 $—
 $38,843
Cost of sales 7,980
 (45) (38) —
 (168) 7,729
Selling, informational and administrative expenses 10,233
 (15) —
 —
 (67) 10,151
Research and development expenses 5,346
 7
 —
 —
 (26) 5,326
Amortization of intangible assets 3,571
 (3,438) —
 —
 —
 133
Restructuring charges and certain acquisition-related costs 377
 —
 (309) —
 (68) —
Other (income)/deductions––net (16) (35) —
 —
 (468) (519)
Income from continuing operations before provision for taxes on income 11,351
 3,527
 347
 —
 797
 16,023
Provision for taxes on income(b)
 2,287
 990
 137
 —
 263
 3,677
Income from continuing operations 9,064
 2,537
 211
 —
 534
 12,345
Discontinued operations––net of tax 1
 —
 —
 (1) —
 —
Net income attributable to noncontrolling interests 32
 —
 —
 —
 —
 32
Net income attributable to Pfizer Inc. 9,034
 2,537
 211
 (1) 534
 12,313
Earnings per common share attributable to Pfizer Inc.––diluted 1.49
 0.42
 0.03
 —
 0.09
 2.03
See end of tables for notes (a) and (b).

  Three Months Ended October 2, 2016
IN MILLIONS, EXCEPT PER COMMON SHARE DATA GAAP Reported
 
Purchase Accounting Adjustments(a)

 
Acquisition-Related Costs(a)

 
Discontinued Operations(a)

 
Certain Significant Items(a)

 Non-GAAP Adjusted
Revenues $13,045
 $—
 $—
 $—
 $—
 $13,045
Cost of sales 3,085
 (32) (3) —
 (93) 2,957
Selling, informational and administrative expenses 3,559
 (5) —
 —
 (23) 3,531
Research and development expenses 1,881
 —
 —
 —
 (8) 1,873
Amortization of intangible assets 968
 (936) —
 —
 —
 32
Restructuring charges and certain acquisition-related costs 531
 —
 (277) —
 (254) —
Other (income)/deductions––net 1,417
 6
 —
 —
 (1,590) (168)
Income from continuing operations before provision for taxes on income 1,604
 966
 280
 —
 1,969
 4,819
Provision for taxes on income(b), (c)
 249
 366
 73
 —
 370
 1,058
Income from continuing operations(c)
 1,355
 600
 207
 —
 1,599
 3,761
Discontinued operations––net of tax —
 —
 —
 —
 —
 —
Net income attributable to noncontrolling interests —
 —
 —
 —
 —
 —
Net income attributable to Pfizer Inc.(c)
 1,355
 600
 207
 —
 1,599
 3,761
Earnings per common share attributable to Pfizer Inc.––diluted(c)
 0.22
 0.10
 0.03
 —
 0.26
 0.61
  Nine Months Ended October 2, 2016
IN MILLIONS, EXCEPT PER COMMON SHARE DATA GAAP Reported
 
Purchase Accounting Adjustments(a)

 
Acquisition-Related Costs(a)
 
Discontinued Operations(a)

 
Certain Significant Items(a)

 Non-GAAP Adjusted
Revenues $39,196
 $—
 $—
 $—
 $—
 $39,196
Cost of sales 9,111
 (284) (3) —
 (240) 8,584
Selling, informational and administrative expenses 10,414
 (13) —
 —
 (59) 10,342
Research and development expenses 5,360
 1
 —
 —
 (24) 5,336
Amortization of intangible assets 2,934
 (2,841) —
 —
 —
 94
Restructuring charges and certain acquisition-related costs 988
 —
 (595) —
 (393) —
Other (income)/deductions––net 2,815
 33
 —
 —
 (3,395) (547)
Income from continuing operations before provision for taxes on income 7,575
 3,103
 598
 —
 4,112
 15,388
Provision for taxes on income(b), (c)
 1,109
 962
 47
 —
 1,377
 3,496
Income from continuing operations(c)
 6,465
 2,141
 550
 —
 2,735
 11,892
Discontinued operations––net of tax —
 —
 —
 —
 —
 —
Net income attributable to noncontrolling interests 25
 —
 —
 —
 —
 25
Net income attributable to Pfizer Inc.(c)
 6,440
 2,141
 550
 —
 2,735
 11,867
Earnings per common share attributable to Pfizer Inc.––diluted(c)
 1.04
 0.35
 0.09
 —
 0.44
 1.92
(a)
For details of adjustments, see “Details of Income Statement Items Included in GAAP Reported but Excluded from Non-GAAP Adjusted Income” below.
(b)
The effective tax rate on Non-GAAP Adjusted income was 23.7% in the third quarter of 2017, compared with 22.0% in the third quarter of 2016. The increase was primarily due to an unfavorable change in the jurisdictional mix of earnings as a result of operating fluctuations in the normal course of business. The effective tax rate on Non-GAAP Adjusted income was 22.9% in the first nine months of 2017, compared with 22.7% in the first nine months of 2016. The increase was primarily due to a decrease in benefits associated with the resolution of certain tax positions pertaining to prior years primarily with various foreign tax authorities, and the expiration of certain statutes of limitations, partially offset by a favorable change in the jurisdictional mix of earnings as a result of operating fluctuations in the normal course of business.
(c)
GAAP Reported and Non-GAAP Adjusted amounts for the three and nine months ended October 2, 2016 have been revised from previously reported amounts to reflect the adoption of a new accounting standard in the fourth quarter of 2016, as of January 1, 2016, requiring: (i) excess tax benefits or deficiencies (including tax benefits of dividend equivalents) of share-based compensation to be recognized as a component of the Provision for taxes on income (the net tax benefit was $35 million in the third quarter of 2016 and $85 million in the first nine months of 2016) and (ii) in the diluted net earnings per share calculation, when applying the treasury stock method for shares that could be repurchased, the assumed proceeds no longer include the amount of excess tax benefit. For additional information, see Notes to Consolidated Financial Statements––Note 1B. Adoption of New Accounting Standards in Pfizer’s 2016 Financial Report.

Details of Income Statement Items Included in GAAP Reported but Excluded from Non-GAAP Adjusted Income
  Three Months Ended Nine Months Ended
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
 October 1,
2017
 October 2,
2016
Purchase accounting adjustments        
Amortization, depreciation and other(a)
 $1,126
 $934
 $3,482
 $2,819
Cost of sales 28
 32
 45
 284
Total purchase accounting adjustments––pre-tax 1,154
 966
 3,527
 3,103
Income taxes(b)
 (306) (366) (990) (962)
Total purchase accounting adjustments––net of tax 848
 600
 2,537
 2,141
Acquisition-related costs    
  
  
Restructuring charges(c)
 70
 150
 82
 181
Transaction costs(c)
 (14) 54
 4
 114
Integration costs(c)
 73
 73
 224
 300
Additional depreciation––asset restructuring(d)
 26
 3
 38
 3
Total acquisition-related costs––pre-tax 155
 280
 347
 598
Income taxes(e)
 (72) (73) (137) (47)
Total acquisition-related costs––net of tax 83
 207
 211
 550
Discontinued operations    
  
  
Total discontinued operations––net of tax, attributable to Pfizer Inc.(f)
 —
 —
 (1) —
Certain significant items    
  
  
Restructuring charges(g)
 21
 254
 68
 393
Implementation costs and additional depreciation––asset restructuring(h)
 69
 122
 185
 350
Certain legal matters, net(i)
 183
 (40) 191
 506
Loss on sale and impairment on remeasurement of HIS net assets(i)
 (12) 1,422
 52
 1,422
Certain asset impairments(i)
 127
 126
 127
 1,073
Business and legal entity alignment costs(i)
 16
 69
 54
 180
Other(j)
 45
 17
 119
 189
Total certain significant items––pre-tax 449
 1,969
 797
 4,112
Income taxes(k)
 (161) (370) (263) (1,377)
Total certain significant items––net of tax 288
 1,599
 534
 2,735
Total purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items––net of tax, attributable to Pfizer Inc. $1,219
 $2,406
 $3,280
 $5,426
(a)
Included primarily in Amortization of intangible assets.
(b)
Included in Provision for taxes on income. Income taxes includes the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction’s applicable tax rate.
(c)
Included in Restructuring charges and certain acquisition-related costs. Restructuring charges include employee termination costs, asset impairments and other exit costs associated with business combinations. Transaction costs represent external costs for banking, legal, accounting and other similar services. Integration costs represent external, incremental costs directly related to integrating acquired businesses, and primarily include expenditures for consulting and the integration of systems and processes. For additional information, see Notes to Condensed Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives.
(d)
Included in Cost of sales. Represents the impact of changes in estimated useful lives of assets involved in restructuring actions related to acquisitions.
(e)
Included in Provision for taxes on income. Income taxes includes the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction’s applicable tax rate. The nine months ended October 2, 2016were unfavorably impacted by the remeasurement of certain deferred tax liabilities resulting from plant network restructuring activities.
(f)
Included in Discontinued operations––net of tax.
(g)
Amounts relate to our cost-reduction/productivity initiatives not related to acquisitions. Included in Restructuring charges and certain acquisition-related costs (see Notes to Condensed Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives).
(h)
Amounts relate to our cost-reduction/productivity initiatives not related to acquisitions (see Notes to Condensed Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives). For the three months ended October 1, 2017, included in Cost of sales ($38 million), Selling, informational and administrative expenses ($22 million) and Research and development expenses ($9 million). For the three months ended October 2, 2016, virtually all included in Cost of sales ($89 million), Selling, informational and administrative expenses ($23 million) and Research and development expenses ($8 million). For the nine months ended October 1, 2017, included in Cost of sales ($113 million), Selling, informational and administrative

expenses ($46 million) and Research and developmentexpenses ($26 million). For the nine months ended October 2, 2016, virtually all included in Cost of sales ($269 million), Selling, informational and administrativeexpenses ($56 million) and Research and developmentexpenses ($22 million).
(i)
Included in Other (income)/deductions—net (see Notes to Condensed Consolidated Financial Statements—Note 4. Other (Income)/Deductions—Net).
(j)
For the three months ended October 1, 2017, included in Cost of sales ($54 million) and Other (income)/deductions––net ($9 million income. For the three months ended October 2, 2016, included in Cost of sales ($4 million) and Other (income)/deductions––net ($13 million). For the nine months ended October 1, 2017, included in Cost of sales ($55 million), Selling, informational and administrative expenses ($21 million) and Other (income)/deductions––net ($43 million). For the nine months ended October 2, 2016, included in Cost of sales ($29 million income), Selling, informational and administrative expenses ($3 million), Research and developmentexpenses ($2 million) and Other (income)/deductions––net ($213 million). In the three months and nine months ended October 1, 2017, includes $55 million in inventory losses, overhead costs related to the period in which our Puerto Rico plants were not operational, and incremental costs to date, all of which resulted from the recent hurricanes in Puerto Rico and are included in Cost of sales. For the nine months ended October 1, 2017, includes a net loss of $30 million related to the sale of our 40% ownership investment in Teuto, including the extinguishment of a put option for the remaining 60% ownership interest. For the nine months ended October 2, 2016, primarily includes $150 million paid to Allergan for reimbursement of Allergan’s expenses associated with the terminated transaction.
(k)
Included in Provision for taxes on income. Income taxes includes the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction’s applicable tax rate. The third quarter of 2016 was unfavorably impacted by the tax effects of an impairment charge related to the write-down of the HIS net assets to fair value less estimated costs to sell, mainly related to goodwill, which is not deductible for tax purposes, and the jurisdictional mix of intangible assets. The first nine months of 2016 were favorably impacted by benefits related to the final resolution of an agreement in principle reached in February 2016 and finalized in April 2016 to resolve certain claims related to Protonix, which resulted in the receipt of information that raised our initial assessment in 2015 of the likelihood of prevailing on the technical merits of our tax position, as well as benefits associated with our Venezuela operations, partially offset by the unfavorable tax effects of the impairment charge related to the write-down of the HIS net assets to fair value less estimated costs to sell, mainly related to goodwill, which is not deductible for tax purposes, and the jurisdictional mix of intangible assets.


ANALYSIS OF OPERATING SEGMENT INFORMATION

The following tables and associated notes provide additional information about the performanceas a percentage of our two operating segments—the IH segment and the EH segment. For additional information about each operating segment, see the “Our Strategy––Commercial Operations” section of this MD&A and Notes to Condensed Consolidated Financial Statements—Note 13. Segment, Geographic and Other Revenue Information, as well as the “Selected Balance Sheet Information by Operating Segment” section of the MD&A in our Form 10-Q for the quarter ended April 2, 2017.
As described in Note 1A, acquisitions and divestitures have impacted our results of operations in 2017 and 2016.
The following tables provide revenue and cost information by reportable operating segment and a reconciliation of that information to our condensed consolidated statements of income:
  Third Quarter of 2017
(MILLIONS OF DOLLARS) 
Innovative Health (IH)(a)

 
Essential Health (EH)(a)

 
Other(b)

 
Non-GAAP
Adjusted(c)

 
Reconciling Items(d)

 GAAP Reported
Revenues $8,118
 $5,050
 $—
 $13,168
 $—
 $13,168
Cost of sales 1,082
 1,448
 170
 2,699
 147
 2,847
% of revenue 13.3%
28.7%
*

20.5%
*

21.6%
Selling, informational and administrative expenses 1,736
 727
 1,016
 3,478
 22
 3,500
Research and development expenses 639
 249
 964
 1,851
 8
 1,859
Amortization of intangible assets 40
 17
 —
 57
 1,120
 1,177
Restructuring charges and certain acquisition-related costs —
 —
 —
 —
 149
 149
Other (income)/deductions––net (253) (155) 147
 (261) 312
 51
Income/(loss) from continuing operations before provision for taxes on income $4,875
 $2,765
 $(2,297) $5,343
 $(1,759) $3,585
  Nine Months Ended October 1, 2017
(MILLIONS OF DOLLARS) 
Innovative Health (IH)(a)

 
Essential Health (EH)(a)

 
Other(b)

 
Non-GAAP
Adjusted(c)

 
Reconciling Items(d)

 GAAP Reported
Revenues $23,204
 $15,639
 $—
 $38,843
 $—
 $38,843
Cost of sales 2,912
 4,319
 497
 7,729
 252
 7,980
% of revenue 12.6% 27.6% *
 19.9% *
 20.5%
Selling, informational and administrative expenses 4,914
 2,212
 3,026
 10,151
 82
 10,233
Research and development expenses 1,709
 755
 2,862
 5,326
 20
 5,346
Amortization of intangible assets 90
 43
 —
 133
 3,438
 3,571
Restructuring charges and certain acquisition-related costs —
 —
 —
 —
 377
 377
Other (income)/deductions––net (611) (248) 341
 (519) 503
 (16)
Income/(loss) from continuing operations before provision for taxes on income $14,190
 $8,558
 $(6,725) $16,023
 $(4,671) $11,351
  Third Quarter of 2016
(MILLIONS OF DOLLARS) 
Innovative Health (IH)(a)

 
Essential Health (EH)(a)

 
Other(b)

 
Non-GAAP
Adjusted(c)

 
Reconciling Items(d)

 GAAP Reported
Revenues $7,332
 $5,712
 $—
 $13,045
 $—
 $13,045
Cost of sales 1,039
 1,546
 372
 2,957
 128
 3,085
% of revenue 14.2%
27.1%
*

22.7%
*

23.6%
Selling, informational and administrative expenses 1,647
 813
 1,071
 3,531
 28
 3,559
Research and development expenses 671
 292
 911
 1,873
 8
 1,881
Amortization of intangible assets 25
 7
 —
 32
 936
 968
Restructuring charges and certain acquisition-related costs —
 —
 —
 —
 531
 531
Other (income)/deductions––net (237) (73) 142
 (168) 1,584
 1,417
Income/(loss) from continuing operations before provision for taxes on income $4,187
 $3,128
 $(2,496) $4,819
 $(3,215) $1,604
See end of tables for notes (a) through (d).

  Nine Months Ended October 2, 2016
(MILLIONS OF DOLLARS) 
Innovative Health (IH)(a)

 
Essential Health (EH)(a)

 
Other(b)

 
Non-GAAP
Adjusted(c)

 
Reconciling Items(d)

 GAAP Reported
Revenues $21,471
 $17,725
 $—
 $39,196
 $—
 $39,196
Cost of sales 2,930
 4,677
 977
 8,584
 527
 9,111
% of revenue 13.6% 26.4% *
 21.9% *
 23.2%
Selling, informational and administrative expenses 4,947
 2,435
 2,960
 10,342
 72
 10,414
Research and development expenses 1,815
 876
 2,645
 5,336
 23
 5,360
Amortization of intangible assets 74
 20
 —
 94
 2,841
 2,934
Restructuring charges and certain acquisition-related costs —
 —
 —
 —
 988
 988
Other (income)/deductions––net (764) (267) 484
 (547) 3,362
 2,815
Income/(loss) from continuing operations before provision for taxes on income $12,470
 $9,985
 $(7,066) $15,388
 $(7,813) $7,575
(a)
Amounts represent the revenues and costs managed by each of our operating segments. The expenses generally include only those costs directly attributable to the operating segment.
(b)
Other comprises the costs included in our Adjusted income components (see footnote (c) below) that are managed outside of our two operating segmentsand includes the following:
  Third Quarter of 2017
  Other Business Activities   
(MILLIONS OF DOLLARS) 
WRD(i)

 
GPD(ii)

 
Corporate(iii)

 
Other Unallocated(iv)

 Total
Revenues $—
 $—
 $—
 $—
 $—
Cost of sales —
 —
 28
 142
 170
Selling, informational and administrative expenses —
 —
 993
 23
 1,016
Research and development expenses 568
 193
 194
 8
 964
Amortization of intangible assets —
 —
 —
 —
 —
Restructuring charges and certain acquisition-related costs —
 —
 —
 —
 —
Other (income)/deductions––net (2) —
 167
 (18) 147
Loss from continuing operations before provision for taxes on income $(566) $(193) $(1,382) $(156) $(2,297)
  Nine Months Ended October 1, 2017
  Other Business Activities    
(MILLIONS OF DOLLARS) 
WRD(i)

 
GPD(ii)

 
Corporate(iii)

 
Other Unallocated(iv)

 Total
Revenues $—
 $—
 $—
 $—
 $—
Cost of sales —
 —
 (3) 500
 497
Selling, informational and administrative expenses —
 (1) 2,995
 31
 3,026
Research and development expenses 1,674
 560
 616
 12
 2,862
Amortization of intangible assets —
 —
 —
 —
 —
Restructuring charges and certain acquisition-related costs —
 —
 —
 —
 —
Other (income)/deductions––net (29) —
 339
 31
 341
Loss from continuing operations before provision for taxes on income $(1,645) $(559) $(3,948) $(573) $(6,725)

  Third Quarter of 2016
  Other Business Activities    
(MILLIONS OF DOLLARS) 
WRD(i)

 
GPD(ii)

 
Corporate(iii)

 
Other Unallocated(iv)

 Total
Revenues $—
 $—
 $—
 $—
 $—
Cost of sales —
 —
 104
 268
 372
Selling, informational and administrative expenses —
 1
 1,073
 (3) 1,071
Research and development expenses 575
 172
 169
 (5) 911
Amortization of intangible assets —
 —
 —
 —
 —
Restructuring charges and certain acquisition-related costs —
 —
 —
 —
 —
Other (income)/deductions––net 5
 —
 191
 (54) 142
Loss from continuing operations before provision for taxes on income $(580) $(173) $(1,537) $(206) $(2,496)
  Nine Months Ended October 2, 2016
  Other Business Activities    
(MILLIONS OF DOLLARS) 
WRD(i)

 
GPD(ii)

 
Corporate(iii)

 
Other Unallocated(iv)

 Total
Revenues $—
 $—
 $—
 $—
 $—
Cost of sales —
 —
 194
 783
 977
Selling, informational and administrative expenses —
 1
 2,910
 48
 2,960
Research and development expenses 1,629
 487
 523
 6
 2,645
Amortization of intangible assets —
 —
 —
 —
 —
Restructuring charges and certain acquisition-related costs —
 —
 —
 —
 —
Other (income)/deductions––net (22) —
 590
 (83) 484
Loss from continuing operations before provision for taxes on income $(1,608) $(488) $(4,217) $(753) $(7,066)
(i)
WRD—the R&D expenses managed by our WRD organization, which is generally responsible for research projects for our IH business until proof-of-concept is achieved and then for transitioning those projects to the IH segment via the GPD organization for possible clinical and commercial development. R&D spending may include upfront and milestone payments for intellectual property rights. The WRD organization also has responsibility for certain science-based and other platform-services organizations, which provide technical expertise and other services to the various R&D projects, including EH R&D projects. WRD is also responsible for facilitating all regulatory submissions and interactions with regulatory agencies, including all safety-event activities.
(ii)
GPD––the costs associated with our GPD organization, which is generally responsible for the clinical development of assets that are in clinical trials for our WRD and Innovative portfolios. GPD also provides technical support and other services to Pfizer R&D projects.
(iii)
Corporate—the costs associated with Corporate, representing platform functions (such as worldwide technology, global real estate operations, legal, finance, human resources, worldwide public affairs, compliance and worldwide procurement) and certain compensation and other corporate costs, such as interest income and expense, and gains and losses on investments. Effective in the first quarter of 2017, Corporate also includes the costs associated with our Pfizer Medical organization (Medical), previously reported as part of Other Business Activities. Medical is responsible for the provision of medical information to healthcare providers, patients and other parties, transparency and disclosure activities, clinical trial results publication, grants for healthcare quality improvement and medical education, and partnerships with global public health and medical associations. We have reclassified approximately $33 million and $94 million of Medical costs from Other Business Activities to Corporate in the third quarter and first nine months of 2016, respectively, to conform to the current period presentation.
We recognized a $4 million loss in the third quarter of 2022 was primarily driven by favorable changes in sales mix, including significant sales of Paxlovid, and lower sales of Comirnaty, as well as the favorable impacts of foreign exchange and hedging activity, partially offset by the charge of $400 million related to Paxlovid discussed above.
The decrease in 2017Cost of sales andas a $67 million gainpercentage of revenues in the first nine months of 20172022 was primarily due to the favorable impacts of Paxlovid, foreign exchange and hedging activity, partially offset by the unfavorable impact of Comirnaty, as an offset to Cost of saleswell as the $450 million inventory write-off related to foreign currency forward-exchange contracts designated as cash flow hedgesCOVID-19 products and the charge of a portion$400 million related to Paxlovid discussed above.
Selling, Informational and Administrative (SI&A) Expenses
SI&A expenses increased $492 million in the third quarter of our foreign exchange-denominated forecasted intercompany inventory sales. For additional information, see Notes to Condensed Consolidated Financial Statements––Note 7F. Derivative Financial Instruments and Hedging Activities.
(iv)
Other Unallocated—other unallocated costs, representing overhead expenses associated with our manufacturing and commercial operations that are not directly assessed to an operating segment, as business unit (segment) management does not manage these costs (which include manufacturing variances associated with production).
For information purposes only, the following tables present reconciliations of our segment operating results to segment operating results including estimated Other costs generally associated with each segment. While we do not manage our segments or have performance goals under such an allocated manner, we believe that some investors may find this information useful in their analyses.
The estimated Other costs generally associated with our operating segments do not purport to reflect the additional amounts that each of our operating segments would have incurred had each segment operated as a standalone company during the period presented.

2022, primarily due to:
For information purposes only,•an increase of $290 million for Paxlovid and Comirnaty marketing and promotional expenses and a higher provision for U.S. healthcare reform fees based on sales of Paxlovid and Comirnaty; and
•an increase of $125 million for marketing and promotional expenses for recently launched products,
partially offset by:
•a $112 million favorable impact of foreign exchange.
SI&A expenses increased $433 million in the first nine months of 2022, mainly due to:
•2017an increase of $720 million for Paxlovid and Comirnaty marketing and promotional expenses and a higher provision for U.S. healthcare reform fees based on sales of Paxlovid and Comirnaty; and
•, we estimate that Other costs, as described above,an increase of $300 million for combined WRDmarketing and GPDpromotional expenses for recently launched products,
partially offset by:
•a decrease of $270 million in our liability to be paid to participants of our supplemental savings plan; and
•a $244 million favorable impact of foreign exchange.
Research and Development (R&D) Expenses
R&D expenses increased $15 million in the third quarter, primarily due to:
•increased costs of $2.2 billion,$290 million to develop recently acquired assets, as well as investments for certain oncology and combined Corporatenon-COVID-19 vaccines programs,
partially offset by:
•lower spending of $270 million on programs to prevent and Other Unallocated costs of $4.0 billion after excluding (i) net interest-related expense not attributable to an operating segment includedtreat COVID-19 and various late-stage clinical programs.
R&D expenses increased $898 million in Corporate (approximately $704 million for the first nine months of 20172022, primarily driven by increased costs of $800 million to develop recently acquired assets, as well as investments across multiple late-stage clinical programs, including development costs and at-risk manufacturing related to programs to prevent and treat COVID-19.
Acquired In-Process Research and Development (IPR&D) Expenses
Acquired IPR&D expenses decreased $237 million in Other (income)/deductions––net);the third quarter of 2022, primarily reflecting an upfront payment to Arvinas and (ii) net income from investments and other assets not attributablea premium paid on our equity investment in Arvinas totaling $706 million in the third quarter of 2021, partially offset by an upfront payment of $426 million related to an operating segment includedthe closing of the acquisition of ReViral in Corporate (approximately $146the third quarter of 2022.
46

Acquired IPR&D expenses decreased $120 million forin the first nine months of 2017 in Other(income)/deductions––net), are generally associated with our operating segments, as follows:
  Nine Months Ended October 1, 2017
    
Estimated Other Costs Associated with IH(ii)
  
(MILLIONS OF DOLLARS) 
Innovative Health Non-GAAP Adjusted(i), (iii)

 
Estimated WRD/GPD(ii)

 
Estimated Corporate/Other Unallocated(ii)

 
Innovative Health with Estimated Other Costs Associated with
Innovative Health
Non-GAAP Adjusted(ii), (iii)

Revenues $23,204
 $—
 $—
 $23,204
Cost of sales 2,912
 —
 68
 2,980
Selling, informational and administrative expenses 4,914
 (1) 1,688
 6,601
Research and development expenses 1,709
 2,220
 575
 4,504
Amortization of intangible assets 90
 —
 —
 90
Restructuring charges and certain acquisition-related costs —
 —
 —
 —
Other (income)/deductions––net (611) (29) (84) (725)
Income from continuing operations before provision for taxes on income 14,190
 (2,190) (2,246) 9,754
  Nine Months Ended October 1, 2017
    
Estimated Other Costs Associated with EH(ii)
  
(MILLIONS OF DOLLARS) 
Essential Health
Non-GAAP Adjusted(i), (iii)

 
Estimated WRD/GPD(ii)

 
Estimated Corporate/Other Unallocated(ii)

 
Essential Health with Estimated Other Costs Associated with
Essential Health
Non-GAAP Adjusted(ii), (iii)

Revenues $15,639
 $—
 $—
 $15,639
Cost of sales 4,319
 —
 429
 4,749
Selling, informational and administrative expenses 2,212
 —
 1,338
 3,550
Research and development expenses 755
 15
 53
 823
Amortization of intangible assets 43
 —
 —
 43
Restructuring charges and certain acquisition-related costs —
 —
 —
 —
Other (income)/deductions––net (248) —
 (104) (353)
Income from continuing operations before provision for taxes on income 8,558
 (15) (1,716) 6,827
(i)
Amount represents the revenues and costs managed by each of our operating segments. The expenses generally include only those costs directly attributable to the operating segment. See note (a) above for more information.
(ii)
Represents costs not assessed to an operating segment, as business unit (segment) management does not manage these costs. For a description of these other costs and business activities, see note (b) above.
•
WRD/GPD––The information provided for WRD and GPD was substantially all derived from our estimates of the costs incurred in connection with the R&D projects associated with each operating segment.
•
Corporate/Other Unallocated––The information provided for Corporate and Other Unallocated was derived mainly using proportional allocation methods based on global, regional or country revenues or global, regional or country headcount, as well as certain cost metrics, as appropriate, such as those derived from research and development and manufacturing costs, and, to a lesser extent, specific identification and estimates. Management believes that the allocations of Corporate and Other Unallocated costs are reasonable.
The estimated Other costs generally associated with our operating segments do not purport to reflect the additional amounts that each of our operating segments would have incurred had each segment operated as a standalone company during the period presented.
(iii)
See note (c) below for an explanation of our Non-GAAP Adjusted financial measure.
(c)
See the “Non-GAAP Financial Measure (Adjusted Income)” section of this MD&A for a definition of these “Adjusted Income” components.
(d)
Includes costs associated with (i) purchase accounting adjustments; (ii) acquisition-related costs; and (iii) certain significant items, which are substantive and/or unusual, and in some cases recurring, items (such as restructuring or legal charges), that are evaluated on an individual basis by management. For additional information about these reconciling items and/or our Non-GAAP adjusted measure of performance, see the “Non-GAAP Financial Measure (Adjusted Income)” section of this MD&A.

2022, largely due to:
Third Quarter•the payments to Arvinas in the third quarter of 2017 vs. Third Quarter of 2016
Innovative Health Operating Segment
Revenues
IH Revenues increased $786 million, or 11%, to $8.1 billion, reflecting an 11% operational increase. Foreign exchange had a de minimis impact on IH Revenues.2021; and
The following provides an analysis•the acquisition of Amplyx Pharmaceuticals, Inc. in the increase in IH Revenues:
(MILLIONS OF DOLLARS)  
IH Revenues, for the three months ended October 2, 2016
 $7,332
   
Operational growth/(decline):  
Continued growth from key brands including Ibrance and Eliquis globally, as well as Lyrica and Xeljanz, both primarily in the U.S. 751
Growth in Xtandi alliance revenues in the U.S. (September 2016 acquisition of Medivation) 148
Lower revenues for Viagra in the U.S. primarily due to wholesaler destocking in advance of anticipated generic competition beginning in December 2017 (91)
Lower revenues for Enbrel, primarily in most developed Europe markets due to continued biosimilar competition (89)
Decline in Prevnar 13/Prevenar 13 revenues. U.S. revenues decreased primarily due to the continued decline in revenues for the Adult indication due to a smaller remaining “catch up” opportunity compared to the prior-year quarter, partially offset by growth from the pediatric indication. International revenues increased primarily due to the favorable overall impact of timing of government purchases in certain emerging markets and the launch of Prevenar 13 in China for the pediatric indication. (16)
Other operational factors, net 95
Operational growth, net 799
   
Unfavorable impact of foreign exchange (13)
IH Revenues increase
 786
IH Revenues, for the three months ended October 1, 2017
 $8,118
Total IH revenues from emerging markets increased $167 million, or 18%, to $1.1 billion on both a reported and operational basis. Foreign exchange had a de minimis impact on total IH revenues from emerging markets.
Costs and Expenses
•second quarter of 2021,
Cost of sales as a percentage of Revenues decreased 0.8 percentage points, primarily driven by a favorable change in product mix, including an increase in alliance revenue, which have no associated cost of sales, partially offset by an increase in royalty expense, mostly related to Ibrance, and the unfavorable impact of foreign exchange.
•
The increase in Cost of sales of 4% was primarily driven by an increase in royalty expense, mostly related to Ibrance, and the unfavorable impact of foreign exchange, partially offset by a favorable change in product mix.
•
The increase in Selling, informational and administrativeexpenses of 5% was primarily driven by additional investment across several of our key products, primarily Eucrisa, Ibrance and Xtandi. The increase was partially offset by lower spending for certain other products, primarily Prevnar 13/Prevenar 13, and the favorable impact of foreign exchange.
•
The decrease in Research and developmentexpenses of 5% primarily reflects:
◦the discontinuation of the global clinical development program for bococizumab in the fourth quarter of 2016,
partially offset by increased costs associated with:
◦our oncology programs, primarily clinical trial spend on legacy Medivation assets and our immuno-oncology development programs;
◦
our C. difficile vaccine program, which initiated a Phase 3 clinical study in March 2017; and
◦our tanezumab development program.
•
The favorable change in Other (income)/deductions––net primarily reflects:
◦the addition of $73 million in Xtandi royalty income;
◦a $54 million increase in dividend income from our investment in ViiV; and
◦a $50 million milestone payment received for an out-licensed product,
partially offset by:
◦lower royalty income for Enbrel of $139 million, resulting from the expiration on October 31, 2016 of the 36-month royalty period under the collaboration agreement for Enbrel in the U.S. and Canada (the collaboration period under the agreement expired on October 31, 2013).

Essential Health Operating Segment
Revenues
EH •Revenues decreased $662 million, or 12%, to $5.0 billion, reflecting an 11% operational decrease, of which 5% operationally was duethe upfront payment related to the saleclosing of HIS. Foreign exchange had the acquisition of ReViral in the third quarter of 2022;
•an unfavorable impactupfront payment to Biohaven and a premium paid on our equity investment in Biohaven totaling $263 million in the first quarter of 1%2022; and
•a $76 million premium paid on EHour equity investment in BioNTech to develop a potential mRNA vaccine against shingles in the first quarter of 2022.
See RevenuesNote 2A and 2D for additional information.
Amortization of Intangible Assets
Amortization of intangible assets decreased $146 million in the third quarter and $265 million in the first nine months of 2022, primarily as a result of lower amortization of Comirnaty sales milestones to BioNTech.
Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives
Transforming to a More Focused Company Program––For a description of our program, as well as the anticipated and actual costs, see Note 3. The program savings discussed below may be rounded and represent approximations. In connection with restructuring our corporate enabling functions, we expect gross cost savings of $1.0 billion, or net cost savings, excluding merit and inflation growth and certain real estate cost increases, of $700 million, to be achieved primarily from 2021 through 2022. In connection with transforming our marketing strategy, we expect net cost savings of $1.4 billion, to be achieved primarily from 2022 through 2024. In connection with manufacturing network optimization, we expect net cost savings of $550 million to be achieved primarily from 2020 through 2023.
Certain qualifying costs for this program were recorded in the first three quarters of 2022 and 2021 and are reflected as Certain Significant Items and excluded from our non-GAAP measure of Adjusted Income. See the Non-GAAP Financial Measure: Adjusted Income section within MD&A.
In addition to this program, we continuously monitor our operations for cost reduction and/or productivity opportunities, especially in light of the losses of exclusivity and the expiration of collaborative arrangements for various products.
Other (Income)/Deductions—Net
The period-over-period changes were primarily driven by:
•net losses on equity securities in 2022 versus net gains recognized in 2021;
•lower net periodic benefit credits associated with pension and postretirement plans incurred in 2022 compared to 2021; and
•an intangible asset impairment charge recorded in the third quarter of 2022.
See Note 4 for additional information.
Provision/(Benefit) for Taxes on Income
 Three Months EndedNine Months Ended
(MILLIONS)October 2,
2022		October 3,
2021		%
Change		October 2,
2022		October 3,
2021		%
Change
Provision/(benefit) for taxes on income$356 $(328)*$3,098 $1,603 93 
Effective tax rate on continuing operations4.0 %(4.2)%10.5 %7.8 % 
* Indicates calculation not meaningful.
The following provides an analysis ofFor information about our effective tax rate and the decrease in EH Revenues:
(MILLIONS OF DOLLARS)  
EH Revenues, for the three months ended October 2, 2016
 $5,712
   
Disposition-related operational impact:  
Financial results in the third quarter of 2017 do not reflect any contribution from HIS global operations, compared to the inclusion of three months of HIS global operations in the same period in 2016 (February 2017 sale) (280)
   
Other operational growth/(decline):  
Decline from Peri-LOE Products, including declines in Pristiq in the U.S., which lost marketing exclusivity in the U.S. in March 2017, as well as Lyrica and Vfend, both primarily in developed Europe (220)
Decline from the Sterile Injectable Pharmaceuticals portfolio, primarily due to legacy Hospira product shortages in the U.S. (182)
Growth from Biosimilars 55
Other operational factors, net 6
Operational decline, net (621)
   
Unfavorable impact of foreign exchange (41)
EH Revenues decrease
 (662)
EH Revenues, for the three months ended October 1, 2017
 $5,050
Total EH revenues in developed markets decreased $749 million, or 18%, to $3.3 billion, reflecting an 18% operational decline, of which 6% operationally was dueevents and circumstances contributing to the unfavorable impact of the sale of HIS. Total EH revenues in developed markets were also negativelychanges between periods, as well as details about discrete elements that impacted by a 33% operational decline from Peri-LOE Products and a 20% operational decline from the Sterile Injectable Pharmaceuticals portfolio primarily due to legacy Hospira product supply shortages in the U.S., partially offset by 65% operational growth from Biosimilars. Foreign exchange had a de minimis impact on total EH revenues in developed markets.our tax provisions, see Note 5.
Total EH revenues from emerging markets increased $87 million, or 5%, to $1.7 billion, reflecting 7% operational growth, primarily driven by 6% operational growth from the Legacy Established Products portfolio and 14% operational growth from the Sterile Injectable Pharmaceuticals portfolio. Foreign exchange had an unfavorable impact of 1%. Excluding HIS from both periods, EH revenues in emerging markets grew 8% operationally.
Costs and Expenses
Costs and expenses follow:
Three Months EndedNine Months Ended
(MILLIONS)October 2,
2022		October 3,
2021		%
 Change		October 2,
2022		October 3,
2021		%
 Change
Cost of sales$6,063 $9,932 (39)$24,696 $21,085 17 
Percentage of Revenues
26.8 %41.3 %32.5 %36.7 %
Selling, informational and administrative expenses3,391 2,899 17 9,032 8,599 5 
Research and development expenses2,696 2,681 1 7,813 6,914 13 
Acquired in-process research and development expenses524 762 (31)880 1,000 (12)
Amortization of intangible assets822 968 (15)2,478 2,743 (10)
Restructuring charges and certain acquisition-related costs199 646 (69)580 667 (13)
Other (income)/deductions—net(59)(1,696)(97)1,063 (4,043)*
* Indicates calculation not meaningful.
45
The changes in EH expenses below reflect, among other things, the favorable impact
Cost of the February 2017 saleSales
Cost of HIS. The operating results of HIS are includedsales decreased $3.9 billion in EH’s operating results through February 2, 2017 and, therefore, operating results for EH for the third quarter of 2017 do not reflect HIS global operations, while operating results2022, primarily due to:
•a reduction of $4.1 billion due to lower sales of Comirnaty (see the Analysis of the Condensed Consolidated Statements of Income––Revenues––Selected Product Discussion within MD&A); and
•a $600 million favorable impact of foreign exchange and hedging activity,
partially offset by:
•an increase of $800 million for EHPaxlovid, including a charge of $400 million related to excess raw materials.
Cost of sales increased $3.6 billion in the first nine months of 2022, mainly due to:
•an unfavorable impact of $3.4 billion due to increased sales of Comirnaty, which includes a charge for the 50% gross profit split with BioNTech and applicable royalty expenses;
•an increase of $1.8 billion for Paxlovid, which includes the charge of $400 million discussed above; and
•a $450 million write off of inventory related to COVID-19 products that have exceeded or are expected to exceed their approved shelf-lives prior to being used, which was recorded in the second quarter of 2022,
partially offset by:
•a $2.0 billion favorable impact of foreign exchange and hedging activity.
The decrease in Cost of sales as a percentage of revenues in the third quarter of 2022 was primarily driven by favorable changes in sales mix, including significant sales of Paxlovid, and lower sales of Comirnaty, as well as the favorable impacts of foreign exchange and hedging activity, partially offset by the charge of $400 million related to Paxlovid discussed above.
The decrease in 2016Cost of sales reflect threeas a percentage of revenues in the first nine months of HIS global operations.2022 was primarily due to the favorable impacts of Paxlovid, foreign exchange and hedging activity, partially offset by the unfavorable impact of Comirnaty, as well as the $450 million inventory write-off related to COVID-19 products and the charge of $400 million related to Paxlovid discussed above.
Selling, Informational and Administrative (SI&A) Expenses
SI&A expenses increased $492 million in the third quarter of 2022, primarily due to:
•an increase of $290 million for Paxlovid and Comirnaty marketing and promotional expenses and a higher provision for U.S. healthcare reform fees based on sales of Paxlovid and Comirnaty; and
•an increase of $125 million for marketing and promotional expenses for recently launched products,
partially offset by:
•a $112 million favorable impact of foreign exchange.
SI&A expenses increased $433 million in the first nine months of 2022, mainly due to:
•an increase of $720 million for Paxlovid and Comirnaty marketing and promotional expenses and a higher provision for U.S. healthcare reform fees based on sales of Paxlovid and Comirnaty; and
•an increase of $300 million for marketing and promotional expenses for recently launched products,
partially offset by:
•a decrease of $270 million in our liability to be paid to participants of our supplemental savings plan; and
•a $244 million favorable impact of foreign exchange.
Research and Development (R&D) Expenses
R&D expenses increased $15 million in the third quarter, primarily due to:
•increased costs of $290 million to develop recently acquired assets, as well as investments for certain oncology and non-COVID-19 vaccines programs,
partially offset by:
•lower spending of $270 million on programs to prevent and treat COVID-19 and various late-stage clinical programs.
R&D expenses increased $898 million in the first nine months of 2022,primarily driven by increased costs of $800 million to develop recently acquired assets, as well as investments across multiple late-stage clinical programs, including development costs and at-risk manufacturing related to programs to prevent and treat COVID-19.
Acquired In-Process Research and Development (IPR&D) Expenses
Acquired IPR&D expenses decreased $237 million in the third quarter of 2022, primarily reflecting an upfront payment to Arvinas and a premium paid on our equity investment in Arvinas totaling $706 million in the third quarter of 2021, partially offset by an upfront payment of $426 million related to the closing of the acquisition of ReViral in the third quarter of 2022.
46

Acquired IPR&D expenses decreased $120 million in the first nine months of 2022, largely due to:
•the payments to Arvinas in the third quarter of 2021; and
•the acquisition of Amplyx Pharmaceuticals, Inc. in the second quarter of 2021,
partially offset by:
•the upfront payment related to the closing of the acquisition of ReViral in the third quarter of 2022;
•an upfront payment to Biohaven and a premium paid on our equity investment in Biohaven totaling $263 million in the first quarter of 2022; and
•a $76 million premium paid on our equity investment in BioNTech to develop a potential mRNA vaccine against shingles in the first quarter of 2022.
See Note 2A and 2D for additional information.
Amortization of Intangible Assets
Amortization of intangible assets decreased $146 million in the third quarter and $265 million in the first nine months of 2022, primarily as a result of lower amortization of Comirnaty sales milestones to BioNTech.
Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives
Transforming to a More Focused Company Program––For a description of our program, as well as the anticipated and actual costs, see Note 3. The program savings discussed below may be rounded and represent approximations. In connection with restructuring our corporate enabling functions, we expect gross cost savings of $1.0 billion, or net cost savings, excluding merit and inflation growth and certain real estate cost increases, of $700 million, to be achieved primarily from 2021 through 2022. In connection with transforming our marketing strategy, we expect net cost savings of $1.4 billion, to be achieved primarily from 2022 through 2024. In connection with manufacturing network optimization, we expect net cost savings of $550 million to be achieved primarily from 2020 through 2023.
Certain qualifying costs for this program were recorded in the first three quarters of 2022 and 2021 and are reflected as Certain Significant Items and excluded from our non-GAAP measure of Adjusted Income. See the Non-GAAP Financial Measure: Adjusted Income section within MD&A.
In addition to this program, we continuously monitor our operations for cost reduction and/or productivity opportunities, especially in light of the losses of exclusivity and the expiration of collaborative arrangements for various products.
Other (Income)/Deductions—Net
The period-over-period changes were primarily driven by:
•net losses on equity securities in 2022 versus net gains recognized in 2021;
•lower net periodic benefit credits associated with pension and postretirement plans incurred in 2022 compared to 2021; and
•an intangible asset impairment charge recorded in the third quarter of 2022.
See Note 4 for additional information.
Provision/(Benefit) for Taxes on Income
 Three Months EndedNine Months Ended
(MILLIONS)October 2,
2022		October 3,
2021		%
Change		October 2,
2022		October 3,
2021		%
Change
Provision/(benefit) for taxes on income$356 $(328)*$3,098 $1,603 93 
Effective tax rate on continuing operations4.0 %(4.2)%10.5 %7.8 % 
* Indicates calculation not meaningful.
For information about our effective tax rate and the events and circumstances contributing to the changes between periods, as well as details about discrete elements that impacted our tax provisions, see Note 5.
Discontinued Operations
For information about our discontinued operations, see Note 2B.
PRODUCT DEVELOPMENTS
A comprehensive update of Pfizer’s development pipeline was published as of November 1, 2022 and is available at www.pfizer.com/science/drug-product-pipeline. It includes an overview of our research and a list of compounds in
47

development with targeted indication and phase of development, as well as mechanism of action for some candidates in Phase 1 and all candidates from Phase 2 through registration.
The following provides information as of the date of this filing about significant marketing application-related regulatory actions by, and filings pending with, the FDA and regulatory authorities in the EU and Japan.
The tables below include filing and approval milestones for products that have occurred in the last twelve months and generally do not include approvals that may have occurred prior to that time. The tables include filings with regulatory decisions pending (even if the filing occurred outside of the last twelve-month period).
COVID-19 Vaccine Products
PATIENT POPULATION AND DATE OF APPROVAL/FILING
COVID-19 VACCINE PRODUCT(a)
PRIMARY SERIES
OR BOOSTER		16 Years of age and older12-15 Years of age5-11 Years of age6 Months through 4 Years of age
U.S.EUJAPANU.S.EUJAPANU.S.EUJAPANU.S.EUJAPAN
Comirnaty

30-µg 2-dose primary(b)
10-µg 2-dose primary(c)
3-µg 3-dose primary
Primary
Approved
Aug.
2021
CMA
Dec.
2020
Cond.
J-NDA Feb.
2021
EUA
May 2021
CMA
May 2021
Cond.
J-NDA
May
2021
EUA
Oct. 2021
CMA
Nov. 2021
Cond.
J-NDA
Jan.
2022
EUA
June 2022
CMA
Oct.
2022
Cond.
J-NDA
Oct.
2022
30-µg booster dose(d)
10-µg booster dose
Booster
EUA(e)
Dec.
2021
CMA
Oct. 2021
Cond.
J-NDA
Nov.
2021
EUA(e) Jan. 2022
CMA Feb. 2022
Cond.
J-NDA Jan.
2022
EUA(e)
May 2022
CMA Sep. 2022
Cond.
J-NDA June
2022
Comirnaty Original/Omicron BA.4/BA.5 Vaccine(f)
Booster30-µg booster dose10-µg booster dose
EUA
Aug.
2022
CMA
Sep. 2022
Cond.
J-NDA Oct.
2022
EUA
Aug. 2022
CMA
Sep. 2022
Cond.
J-NDA Oct.
2022
EUA
Oct. 2022
Filed
Sep. 2022
Comirnaty Original/Omicron BA.1 VaccineBooster30-µg booster dose
CMA
Sep.
2022
Cond.
J-NDA Sep.
2022
CMA
Sep.
2022
Cond.
J-NDA Sep.
2022
(a)All COVID-19 vaccine products listed in this table are being developed in collaboration with BioNTech.
(b)FDA has authorized a third 30-µg primary series dose to individuals 12 years of age and older with certain kinds of immunocompromise.
(c)FDA has authorized a third 10-µg primary series dose to individuals 5-11 years of age with certain kinds of immunocompromise.
(d)FDA has authorized a second booster dose in adults ages 50 years and older who have previously received a first booster of any authorized COVID-19 vaccine. The FDA also has authorized a second booster dose for individuals 12 years of age and older who have been determined to have certain kinds of immunocompromise and who have received a first booster dose of any authorized COVID-19 vaccine.
(e)Comirnaty wild-type booster in these populations has been replaced by the booster of the Pfizer-BioNTech COVID-19 Vaccine, Bivalent (Original and Omicron BA.4/BA.5).
(f)Refers to the Pfizer-BioNTech COVID-19 Vaccine, Bivalent (Original and Omicron BA.4/BA.5) and Comirnaty Original/Omicron BA.4/BA.5 Vaccine.
48

Other Products
PRODUCTDISEASE AREAAPPROVED/FILED*
U.S.EUJAPAN
Cibinqo
(abrocitinib)		Atopic dermatitis
Approved
Jan.
2022
Approved
Dec.
2021
Approved
Sep.
2021
Xeljanz
(tofacitinib)		Ankylosing spondylitis
Approved
Dec.
2021
Approved
Nov.
2021
Myfembree
(relugolix fixed dose combination)(a)
Uterine fibroids (combination with estradiol and norethindrone acetate)
Approved
May
2021
Endometriosis (combination with estradiol and norethindrone acetate)
Approved
Aug.
2022
Lorbrena/Lorviqua
(lorlatinib)
First-line ALK-positive NSCLC
Approved
Mar.
2021
Approved
Jan.
2022
Approved
Nov.
2021
Ngenla
(somatrogon)(b)
Pediatric growth hormone deficiency
Filed
Jan.
2021
Approved
Feb.
2022
Approved
Jan.
2022
Prevnar 20/Apexxnar
(Vaccine)(c)
Immunization to prevent invasive and non-invasive pneumococcal infections (adults)
Approved
June
2021
Approved
Feb.
2022
TicoVac
(Vaccine)		Immunization to prevent tick-borne encephalitis
Approved
Aug.
2021
Paxlovid(d)(nirmatrelvir [PF-07321332]; ritonavir)
COVID-19 infection (high risk population)
EUA
Dec.
2021
CMA
Jan.
2022
Approved
Feb.
2022
Nurtec ODT/Vydura
(rimegepant)
Acute migraine
Approved Feb.
2020
Approved
Apr.
2022
Migraine prevention
Approved May
2021
Approved
Apr.
2022
ritlecitinib (PF-06651600)Alopecia areata
Filed
Sep.
2022
Filed
Sep.
2022
Filed
Sep.
2022
zavegepant
(intranasal)		Acute migraine
Filed
May
2022
*For the U.S., the filing date is the date on which the FDA accepted our submission. For the EU, the filing date is the date on which the EMA validated our submission.
(a)Being developed in collaboration with Myovant. In June 2022, the FDA accepted for review a sNDA for Myfembree (relugolix 40 mg, estradiol 1 mg, and norethindrone acetate 0.5 mg) proposing updates to Myfembree’s U.S. Prescribing Information based on safety and efficacy data from the Phase 3 LIBERTY randomized withdrawal study in premenopausal women with heavy menstrual bleeding associated with uterine fibroids for up to two years. The Prescription Drug User Fee Act goal date for this sNDA is January 29, 2023.
(b)Being developed in collaboration with OPKO. In January 2022, Pfizer and OPKO received a Complete Response Letter (CRL) from the FDA for the BLA for somatrogon. Discussions are ongoing with the FDA regarding the CRL and how to best address their concerns.
(c)In October 2021, the CDC’s ACIP voted to recommend Prevnar 20 for routine use in adults. Specifically, the ACIP voted to recommend the following: (i) adults 65 years of age or older who have not previously received a pneumococcal conjugate vaccine or whose previous vaccination history is unknown should receive a pneumococcal conjugate vaccine (either pneumococcal 20-valent conjugate vaccine (PCV20) or pneumococcal 15-valent conjugate vaccine (PCV15)). If PCV15 is used, this should be followed by a dose of pneumococcal polysaccharide vaccine (PPSV23); and (ii) adults aged 19 years of age or older with certain underlying medical conditions or other risk factors who have not previously received a pneumococcal conjugate vaccine or whose previous vaccination history is unknown should receive a pneumococcal conjugate vaccine (either PCV20 or PCV15). If PCV15 is used, this should be followed by a dose of PPSV23. The recommendations were published in the Morbidity and Mortality Weekly Report on January 28, 2022. The publication also notes “for adults who have received pneumococcal conjugate vaccine (PCV13) but have not completed their recommended pneumococcal vaccine series with PPSV23, one dose of Prevnar 20 may be used if PPSV23 is not available.” In October 2022, the CDC’s ACIP voted to recommend a single dose of Prevnar 20 to help protect adults previously vaccinated with Prevnar 13 or both Prevnar 13 and PPSV23 against invasive disease and pneumonia caused by the 20 Streptococcus pneumoniae serotypes in Prevnar 20.
(d)In January 2022, the EMA approved the CMA of Paxlovid for treating COVID-19 in adults who do not require supplemental oxygen and who are at increased risk of the disease becoming severe. In June 2022, we announced the submission of an NDA to the FDA for approval of Paxlovid for the treatment of COVID-19 in both vaccinated and unvaccinated individuals who are at high risk for progression to severe illness from COVID-19.
In December 2021, in light of the results from the completed required postmarketing safety study of Xeljanz, ORAL Surveillance (A3921133), the U.S. label for Xeljanz was revised. In addition, in October 2022, the PRAC of the EMA concluded their assessment of JAK inhibitors authorized for inflammatory diseases in the EU, including Xeljanz and Cibinqo, and recommended that risk minimization measures, including special warnings and precautions for use, should be revised for such JAK inhibitors. The resulting label changes are expected to be finalized in January 2023. For additional information, see Item 1A. Risk Factors—Post-Authorization/Approval Data andthe Product Development sections of our 2021 Form 10-K.
In China, the following products received regulatory approvals in the last twelve months: Cresemba for fungal infection and Besponsa for second line acute lymphoblastic leukemia, both in December 2021; Paxlovid for COVID-19 infection in February 2022; Cibinqo for atopic dermatitis in April 2022; Lorbrena for non-small cell lung cancer (first line and second line therapy) in April 2022.
49

The following provides information about additional indications and new drug candidates in late-stage development:
LATE-STAGE CLINICAL PROGRAMS FOR ADDITIONAL USES AND DOSAGE FORMS
FOR IN-LINE AND IN-REGISTRATION PRODUCTS
PRODUCT/CANDIDATEPROPOSED DISEASE AREA
Ibrance (palbociclib)(a)
ER+/HER2+ metastatic breast cancer
Xtandi (enzalutamide)(b)
Non-metastatic high-risk castration sensitive prostate cancer
Talzenna (talazoparib)Combination with Xtandi (enzalutamide) for first-line mCRPC
Combination with Xtandi (enzalutamide) for DNA Damage Repair (DDR)-deficient mCSPC
PF-06482077 (Vaccine)Immunization to prevent invasive and non-invasive pneumococcal infections (pediatric)
somatrogon (PF-06836922)(c)
Adult growth hormone deficiency
Braftovi (encorafenib) and Erbitux® (cetuximab)(d)
First-line BRAFv600E-mutant mCRC
Braftovi (encorafenib) and Mektovi (binimetinib) and Keytruda® (pembrolizumab)(e)
BRAFv600E-mutant metastatic or unresectable locally advanced melanoma
Paxlovid (nirmatrelvir [PF-07321332]; ritonavir)
COVID-19 infection (pediatric)
zavegepant (oral)Migraine prevention
NEW DRUG CANDIDATES IN LATE-STAGE DEVELOPMENTaztreonam-avibactam
(PF-06947387)		Treatment of infections caused by Gram-negative bacteria with limited or no treatment options
fidanacogene elaparvovec (PF-06838435)(f)
Hemophilia B
giroctocogene fitelparvovec
(PF-07055480)(g)
Hemophilia A
PF-06425090 (Vaccine)Immunization to prevent primary clostridioides difficile infection
PF-06886992 (Vaccine)Immunization to prevent serogroups meningococcal infection (adolescent and young adults)
PF-06928316 (Vaccine)Immunization to prevent respiratory syncytial virus infection (maternal)
Immunization to prevent respiratory syncytial virus infection (older adults)
sasanlimab (PF-06801591)Combination with Bacillus Calmette-Guerin for non-muscle-invasive bladder cancer
fordadistrogene movaparvovec (PF-06939926)Duchenne muscular dystrophy (ambulatory)
marstacimab (PF-06741086)Hemophilia
elranatamab (PF-06863135)(h)
Multiple myeloma triple-class refractory
Multiple myeloma double-class exposed
Newly diagnosed multiple myeloma
Omicron-based mRNA vaccine(i)
Immunization to prevent COVID-19 (adults)
etrasimod (PF-07915503)Ulcerative colitis (moderately to severely active)
VLA15 (PF-07307405) vaccine(j)
Immunization to prevent Lyme Disease
PF-07252220 (quadrivalent mRNA-based vaccine)Immunization to prevent influenza
inclacumab (PF-07940370)Sickle Cell Disease
(a)Being developed in collaboration with The Alliance Foundation Trials, LLC.
(b)Being developed in collaboration with Astellas.
(c)Being developed in collaboration with OPKO.
(d)Erbitux® is a registered trademark of ImClone LLC. In the EU, we are developing in collaboration with the Pierre Fabre Group. In Japan, we are developing in collaboration with Ono Pharmaceutical Co., Ltd.
(e)Keytruda® is a registered trademark of Merck Sharp & Dohme Corp. In the EU, we are developing in collaboration with the Pierre Fabre Group. In Japan, we are developing in collaboration with Ono Pharmaceutical Co., Ltd.
(f)Being developed in collaboration with Spark Therapeutics, Inc.
(g)Being developed in collaboration with Sangamo Therapeutics, Inc.
(h)Multiple myeloma triple-class refractory is currently in a Phase 2 registration-enabling study.
(i)Being developed in collaboration with BioNTech.
(j)Being developed in collaboration with Valneva SE.
Myfembree combination with estradiol and norethindrone acetate for contraceptive efficacy is currently enrolling in a Phase 3 study as of November 2022 as a potential label update rather than a distinct registration, and has been removed from the table above.
For additional information about our R&D organization, see the Item 1. Business—Research and Development section of our 2021 Form 10-K.
NON-GAAP FINANCIAL MEASURE: ADJUSTED INCOME
Adjusted income is an alternative measure of performance used by management to evaluate our overall performance as a supplement to our GAAP reported performance measures. As such, we believe that investors’ understanding of our performance is enhanced by disclosing this measure. We use Adjusted income, certain components of Adjusted income and
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Adjusted diluted EPS to present the results of our major operations––the discovery, development, manufacture, marketing, sale and distribution of biopharmaceutical products worldwide––prior to considering certain income statement elements as follows:
MeasureDefinitionRelevance of Metrics to Our Business Performance
Adjusted income
Net income attributable to Pfizer Inc. common shareholders(a) before the impact of amortization of intangible assets, certain acquisition-related items, discontinued operations and certain significant items
•Provides investors useful information to:
◦evaluate the normal recurring operational activities, and their components, on a comparable year-over-year basis
◦assist in modeling expected future performance on a normalized basis
•Provides investors insight into the way we manage our budgeting and forecasting, how we evaluate and manage our recurring operations and how we reward and compensate our senior management(b)
Adjusted cost of sales, Adjusted selling, informational and administrative expenses, Adjusted research and development expenses and Adjusted other (income)/deductions––net
Cost of sales, as a percentage of Revenues increased 1.6 percentage points primarily due to cost increases reflecting the shift to EH of certain legacy Hospira costs that were previously unallocated to EH as a result of harmonizing the Hospira cost policy, and the impact of product losses of exclusivity, partially offset by the favorable impact of the sale of HIS, which had a higher cost of sales than the other EH products.
•
The decrease in Cost of sales of 6% was primarily due to:
◦the favorable impact of the sale of HIS, which had a higher cost of sales than the other EH products;
◦a net decrease in royalty expense and, to a lesser extent,
◦lower volumes driven by, among other things, the Sterile Injectable Pharmaceuticals (SIP) portfolio, primarily due to legacy Hospira product shortages in the U.S.,
partially offset by:
◦cost increases reflecting the shift to EH of certain legacy Hospira costs that were previously unallocated to EH as a result of harmonizing the Hospira cost policy.
•
Selling, informational and administrativeexpenses decreased 11%, mainly due to lower advertising, promotional and field force expenses, reflecting the benefits of cost-reduction and productivity initiatives, and lower expenses associated with products that recently lost marketing exclusivity, as well as the favorable impact of the sale of HIS, partially offset by increased spending for biosimilars, primarily related to the U.S. launch of Inflectra.

•
Research and developmentexpenses decreased 15%, andprimarily due to the close-out of certain post-marketing clinical trials and the favorable impact of the sale of HIS.
•
The favorable change in Other (income)/deductions––net (a)primarily reflects income from resolution of a contract disagreement and, each before the favorable impact of foreign exchange.amortization of intangible assets, certain acquisition-related items, discontinued operations and certain significant items, which are components of the Adjusted income measure
First Nine Months of 2017 vs. First Nine Months of 2016
Innovative Health Operating Segment
Revenues
IH Revenues increased $1,733 million, or 8%, to $23.2 billion, reflecting a 9% operational increase. Foreign exchange had an unfavorable impact of 1% on IH Revenues.
The following provides an analysis of the increase in IH Revenues:
(MILLIONS OF DOLLARS)  
IH Revenues, for the nine months ended October 2, 2016
 $21,471
   
Operational growth/(decline):  
Continued growth from key brands including Ibrance and Eliquis globally, as well as Lyrica and Xeljanz, both primarily in the U.S. 2,102
Growth in Xtandi alliance revenues in the U.S. (September 2016 acquisition of Medivation) 420
Lower revenues for Enbrel, primarily in most developed Europe markets due to continued biosimilar competition (353)
Decline in Prevnar 13/Prevenar 13 revenues. U.S. revenues decreased primarily due to the continued decline in revenues for the Adult indication due to a smaller remaining “catch up” opportunity compared to the first nine months of 2016, partially offset by growth from the pediatric indication. International revenues increased primarily due to the favorable overall impact of timing of government purchases in certain emerging markets and the launch of Prevenar 13 in China for the pediatric indication. (213)
Lower revenues for Viagra in the U.S. primarily due to lower market growth (186)
Other operational factors, net 113
Operational growth, net 1,883
   
Unfavorable impact of foreign exchange (150)
IH Revenues increase
 1,733
IH Revenues, for the nine months ended October 1, 2017
 $23,204
Total IH revenues from emerging markets increased $377 million, or 14%, to $3.1 billion, reflecting a 15% operational increase. Foreign exchange had an unfavorable impact of 1% on Total IH revenues from emerging markets.
Costs and Expenses
•Adjusted diluted EPS
CostEPS attributable to Pfizer Inc. common shareholders––diluted(a) before the impact of sales as a percentageamortization of Revenues decreased 1.1 percentage points primarily driven by a favorable change in product mix, including an increase in alliance revenue, which have no associated cost of sales, partially offset by an increase in royalty expense, mostly related to Ibrance.intangible assets, certain acquisition-related items, discontinued operations and certain significant items
•
The decrease in Cost of sales of 1% was primarily driven by favorable product mix and the favorable impact of foreign exchange, partially offset by an increase in royalty expense, mostly related to Ibrance.
•
The decrease in Selling, informational and administrativeexpenses of 1% was primarily driven by the non-recurrence of an allowance for doubtful trade accounts receivable, resulting from unfavorable developments with a distributor that was recorded in the first quarter of 2016, lower spending for certain products, primarily Prevnar 13/Prevenar 13, and the favorable impact of foreign exchange, partially offset by additional investment across several of our key products, primarily Eucrisa, Ibrance, Xtandi and Xeljanz.
•
The decrease in Research and developmentexpenses of 6% primarily reflects:
◦the discontinuation of the global clinical development program for bococizumab in the fourth quarter of 2016,
partially offset by:
◦increased costs associated with:
▪our oncology programs, including clinical trial spend on legacy Medivation assets;
▪our C. difficile vaccine program, which initiated a Phase 3 clinical study in March 2017; and
▪our tanezumab development program; and
◦an expense of $28 million, representing IH’s portion of the $75 million expense resulting from our May 2017 agreement with Sangamo to develop and commercialize gene therapy programs for Hemophilia A.

•
The unfavorable change in Other (income)/deductions––net primarily reflects:
◦lower royalty income for Enbrel of $414 million, resulting from the expiration on October 31, 2016 of the 36-month royalty period under the collaboration agreement for Enbrel in the U.S. and Canada (the collaboration period under the agreement expired on October 31, 2013),
partially offset by:
◦an increase of $204 million in dividend income from our investment in ViiV;
◦the addition of $160 million of Xtandi royalty income; and
◦a $50 million milestone payment received for an out-licensed product.

Essential Health Operating Segment
Revenues
EH (a)RevenuesMost directly comparable GAAP measure.
(b) decreased $2.1 billion, or 12%, to $15.6 billion, reflectingThe short-term incentive plans for substantially all non-sales-force employees worldwide are funded from a 11% operational decrease,pool based on our performance, measured in significant part versus three budgeted metrics, one of which 4% operationally was dueis Adjusted diluted EPS (as defined for annual incentive compensation purposes), which is derived from Adjusted income and accounts for 40% of the bonus pool funding tied to financial performance. Additionally, the payout for performance share awards is determined in part by Adjusted net income, which is derived from Adjusted income. Beginning in the first quarter of 2022, we no longer exclude any expenses for acquired IPR&D from our non-GAAP Adjusted results but we continue to exclude certain of these expenses for our financial results for annual incentive compensation purposes. The bonus pool funding, which is largely based on financial performance, is adjusted by our R&D pipeline performance, as measured by four metrics, and performance against certain of our environmental, social and governance (ESG) metrics, and may be further modified by our Compensation Committee’s assessment of other factors.
Adjusted income and its components and Adjusted diluted EPS are non-GAAP financial measures that have no standardized meaning prescribed by GAAP and, therefore, are limited in their usefulness to investors. Because of their non-standardized definitions, they may not be comparable to the salecalculation of HIS. Foreign exchange hadsimilar measures of other companies and are presented to permit investors to more fully understand how management assesses performance. A limitation of these measures is that they provide a view of our operations without including all events during a period, and do not provide a comparable view of our performance to peers. These measures are not, and should not be viewed as, substitutes for their most directly comparable GAAP measures of Net income attributable to Pfizer Inc. common shareholders, components of Net income attributable to Pfizer Inc. common shareholders and EPS attributable to Pfizer Inc. common shareholders—diluted, respectively.
We also recognize that, as internal measures of performance, these measures have limitations, and we do not restrict our performance-management process solely to these measures. We also use other tools designed to achieve the highest levels of performance. For example, our R&D organization has productivity targets, upon which its effectiveness is measured. In addition, total shareholder return, both on an unfavorable impactabsolute basis and relative to a publicly traded pharmaceutical index, plays a significant role in determining payouts under certain of 1% on EH Revenues.our incentive compensation plans.
TheBeginning in the first quarter of 2022, our reconciliation of certain GAAP reported to non-GAAP adjusted information is updated to reflect the following, provides an analysis of the decrease in EH Revenues:
(MILLIONS OF DOLLARS)  
EH Revenues, for the nine months ended October 2, 2016
 $17,725
   
Disposition-related operational impact:  
Approximately one month of HIS domestic operations and approximately two months of HIS international operations in the first nine months of 2017, compared to nine months of HIS global operations in the same period in 2016 (February 2017 sale) (783)
   
Other operational growth/(decline):  
Decline from Peri-LOE Products, including declines in Pristiq in the U.S., which lost marketing exclusivity in the U.S. in March 2017, as well as Lyrica and Vfend, both primarily in developed Europe (779)
Decline in the Legacy Established Products portfolio (250)
Decline from the Sterile Injectable Pharmaceuticals portfolio, primarily due to legacy Hospira product shortages in the U.S. (169)
Growth from Biosimilars 143
Other operational factors, net (26)
Operational decline, net (1,864)
   
Unfavorable impact of foreign exchange (222)
EH Revenues decrease
 (2,086)
EH Revenues, for the nine months ended October 1, 2017
 $15,639
Total EH revenues in developed markets decreased $2.2 billion, or 17%,and prior-period information has been revised to $10.5 billion, reflecting a 17% operational decline, of which 5% operationally was dueconform to the unfavorable impactcurrent period presentation:
Adjusted Income and Adjusted Diluted EPS
Acquired IPR&D—Non-GAAP Adjusted financial measures include expenses for all acquired IPR&D costs incurred in connection with upfront and milestone payments on collaboration and in-license agreements, including premiums on equity securities, as well as asset acquisitions of the saleacquired IPR&D. Previously, certain of HIS. Total EH revenuesthese items were excluded from our non-GAAP adjusted results. Acquired IPR&D expenses that previously would have been excluded from non-GAAP Adjusted income but are now included in developed marketsboth GAAP Reported income and non-GAAP Adjusted income were also negatively impacted by a 36% operational decline from Peri-LOE Products, a 7% operational declineapproximately: (i) $426 million pre-tax ($389 million, net of tax), or $0.07 per share, in the Legacy Established Products portfolio and a 9% operational decline from the Sterile Injectable Pharmaceuticals portfolio, partially offset by 64% operational growth from Biosimilars. Foreign exchange had an unfavorable impactthird quarter of 1%.
Total EH revenues from emerging markets increased $1312022; (ii) $765 million pre-tax ($665 million, net of tax), or 3%, to $5.1 billion, reflecting 6% operational growth, primarily driven by 5% operational growth from the Legacy Established Products portfolio and 15% operational growth from the Sterile Injectable Pharmaceuticals portfolio. Foreign exchange had an unfavorable impact of 3%. Excluding HIS$0.12 per share, in both periods, EH revenues in emerging markets grew 7% operationally.
Costs and Expenses
The changes in EH expenses below reflect, among other things, the favorable impact of the February 2017 sale of HIS. The operating results of HIS are included in EH’s operating results through February 2, 2017 and, therefore, operating results for EH for the first nine months of 2017 include approximately one month2022; (iii) $706 million pre-tax ($540 million, net of HIS domestic operationstax), or $0.09 per share, in the third quarter of 2021 and approximately two months(iv) $892 million pre-tax ($726 million, net of HIS international operations, while operating results for EH fortax), or $0.13 per share, in the first nine months of 2016 reflect nine months of HIS global operations.2021.

51
•
Cost of sales as a percentage of Revenues increased 1.2 percentage points, primarily due to cost increases reflecting the shift to EH of certain legacy Hospira costs that were previously unallocated to EH as a result of harmonizing the Hospira cost policy, and the impact of product losses of exclusivity, partially offset by the favorable impact of the sale of HIS, which had a higher cost of sales than the other EH products, and the favorable impact of foreign exchange.

•
The decrease in Cost of sales of 8% primarily reflects;
◦the favorable impact of the sale of HIS, which had a higher cost of sales than the other EH products;
◦the favorable impact of foreign exchange;
◦a net decrease in royalty expense and, to a lesser extent,
◦lower volumes driven by, among other things, the SIP portfolio, primarily due to legacy Hospira product shortages in the U.S.,
partially offset by:
◦cost increases reflecting the shift to EH of certain legacy Hospira costs that were previously unallocated to EH as a result of harmonizing the Hospira cost policy.
•
Selling, informational and administrativeexpenses decreased 9% primarily due to lower advertising, promotional, and field force expenses associated with products that recently lost marketing exclusivity and certain other expenses related to disputes in the ordinary course of business, as well as the favorable impact of the sale of HIS and the favorable impact of foreign exchange, partially offset by increased spending for biosimilars, primarily related to the U.S. launch of Inflectra.
•
Research and developmentexpenses decreased 14%, primarily due to the close-out of certain post-marketing clinical trials and the favorable impact of the sale of HIS.
•
The unfavorable change in Other (income)/deductions––net primarily reflects the non-recurrence of a resolution of a contract disagreement in the first quarter of 2016, partially offset by a gain on the redemption of an acquired bond.
ANALYSIS OF THE CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

ChangesAmortization of Intangible Assets—We began excluding all amortization of intangibles from non-GAAP Adjusted income, compared to excluding only amortization of intangibles related to large mergers or acquisitions under the prior methodology, and presenting it as a separate reconciling line. Previously, the adjustment under the prior methodology was included as part of a reconciling line entitled “Purchase accounting adjustments” that we no longer separately present. The impact of this policy change resulted in the componentsbenefits of Accumulated other comprehensive loss for$0.01 and $0.04 on Adjusted diluted EPS in the third quarter and first nine months of2017 reflect 2022, respectively, and $0.02 and $0.07 in the following:third quarter and first nine months of 2021, respectively.
•
For Foreign currency translation adjustments, net, for the third quarter of 2017, primarily reflects the weakening of the U.S. dollar against the euro, Canadian dollar and Australian dollar; for the first nine months of 2017, primarily reflects the weakening of the U.S. dollar against the euro, Canadian dollar, Swedish krona and the Australian dollar. For the first nine months of 2017, also includes the reclassification of amounts related to the agreement to sell our 40% ownership investment in Teuto. For additional information, see Notes to Condensed Consolidated Financial Statements—Note 2D. Acquisitions, Sale of Hospira Infusion Systems Net Assets, Collaborative Arrangement and Equity-Method Investments: Equity-Method Investments.
•
For Unrealized holding losses on derivative financial instruments, net and Unrealized holding gains on available-for-sale securities, net, reflect the impact of fair value remeasurements and the reclassification of realized amounts into income. For additional information, see Notes to Condensed Consolidated Financial Statements—Note 7. Financial Instruments.
•
For Benefit plans: actuarial losses, net, for the third quarter and first nine months of 2017, primarily reflects (i) the amortization of changes in the pension benefit obligation previously recognized in Other comprehensive income; (ii) the unfavorable impact of foreign exchange; and (iii) an increase in actuarial losses due to an interim remeasurement. The first nine months of 2017 also reflects the remeasurement gain due to the settlement of the Hospira U.S. qualified defined benefit plan. For additional information, see Notes to Condensed Consolidated Financial Statements—Note 10. Pension and Postretirement Benefit Plans.
ANALYSIS OF THE CONDENSED CONSOLIDATED BALANCE SHEETS
For information aboutAcquisition-Related Items—Adjusted income continues to exclude certain acquisition-related items, which are comprised of transaction, integration, restructuring charges and additional depreciation costs for business combinations because these costs are unique to each transaction and represent costs that were incurred to restructure and integrate businesses as a result of an acquisition. We have made no adjustments for resulting synergies. Beginning in the first quarter of 2022, acquisition-related items may now include purchase accounting impacts that previously would have been included as part of a reconciling line entitled “Purchase accounting adjustments” that we no longer separately present, such as: (i) the incremental charge to cost of sales from the sale of acquired inventory that was written up to fair value; (ii) depreciation related to the increase/decrease in fair value of acquired fixed assets; (iii) amortization related to the increase in fair value of acquired debt and (iv) the fair value changes for contingent consideration.
Discontinued Operations—Adjusted income continues to exclude the results of discontinued operations, as well as any related gains or losses on the disposal of such operations. We believe that this presentation is meaningful to investors because, while we review our therapeutic areas and product lines for strategic fit with our operations, we do not build or run our business with the intent to discontinue parts of our financial assets and liabilities, including Cash and cash equivalents, Short-term investments, Long-term investments, Short-term borrowings, including current portion of long-term debt, and Long-term debt, seebusiness. Restatements due to discontinued operations do not impact compensation or change the “AnalysisAdjusted income measure for the compensation in respect of the Condensed Consolidated Statementsrestated periods, but are presented for consistency across all periods.
Certain Significant Items—Adjusted income continues to exclude certain significant items representing substantive and/or unusual items that are evaluated individually on a quantitative and qualitative basis. Certain significant items may be highly variable and difficult to predict. Furthermore, in some cases it is reasonably possible that they could reoccur in future periods. For example, although major non-acquisition-related cost-reduction programs are specific to an event or goal with a defined term, we may have subsequent programs based on reorganizations of Cash Flows”the business, cost productivity or in response to LOE or economic conditions. Legal charges to resolve litigation are also related to specific cases, which are facts and circumstances specific and, in some cases, may also be the result of litigation matters at acquired companies that were inestimable, not probable or unresolved at the date of acquisition. Gains and losses on equity securities, and pension and postretirement actuarial remeasurement gains and losses have a very high degree of inherent market volatility, which we do not control and cannot predict with any level of certainty and because we do not believe including these gains and losses assists investors in understanding our business or is reflective of our core operations and business. Unusual items represent items that are not part of our ongoing business; items that, either as a result of their nature or size, we would not expect to occur as part of our normal business on a regular basis; items that would be non-recurring; or items that relate to products we no longer sell.
See the Reconciliations of GAAP Reported to Non-GAAP Adjusted information—Certain Line Items below for a non-inclusive list of certain significant items and the Non-GAAP Financial Measure: Adjusted Income section of thiswithin MD&A of our 2021 Form 10-K for additional information.
52

Reconciliations of GAAP Reported to Non-GAAP Adjusted Information––Certain Line Items
Three Months Ended October 2, 2022
Data presented will not (in all cases) aggregate to totals.
(MILLIONS, EXCEPT PER COMMON SHARE DATA)
Cost of sales(a)
Selling, informational and administrative expenses(a)
Other (income)/deductions––net(a)
Net income attributable to Pfizer Inc. common shareholders(a)
Earnings per common share attributable to Pfizer Inc. common shareholders––diluted
GAAP reported$6,063 $3,391 $(59)$8,608 $1.51 
Amortization of intangible assets— — — 822 
Acquisition-related items(b)
3 (2)(12)62 
Discontinued operations(c)
— — — 15 
Certain significant items:
Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(d)
(20)(137)— 306 
Certain asset impairments(e)
— — (200)200 
(Gains)/losses on equity securities— — (111)111 
Actuarial valuation and other pension and postretirement plan (gains)/losses— — 193 (193)
Other(f)
(8)(12)(325)349 
Income tax provision—non-GAAP items(109)
Non-GAAP adjusted$6,038 $3,239 $(515)$10,172 $1.78 
Nine Months Ended October 2, 2022
Data presented will not (in all cases) aggregate to totals.
(MILLIONS, EXCEPT PER COMMON SHARE DATA)
Cost of sales(a)
Selling, informational and administrative expenses(a)
Other (income)/deductions––net(a)
Net income attributable to Pfizer Inc.
common shareholders(a)
Earnings per common share attributable to Pfizer Inc. common shareholders––diluted
GAAP reported$24,696 $9,032 $1,063 $26,378 $4.60 
Amortization of intangible assets— — — 2,478 
Acquisition-related items(b)
12 (5)(51)331 
Discontinued operations(c)
— — — (9)
Certain significant items:
Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(d)
(62)(344)— 701 
Certain asset impairments(e)
— — (200)200 
(Gains)/losses on equity securities— — (1,348)1,348 
Actuarial valuation and other pension and postretirement plan (gains)/losses— — (225)225 
Other(f)
(24)(47)(536)621 
Income tax provision—Non-GAAP items(1,107)
Non-GAAP adjusted$24,621 $8,635 $(1,298)$31,165 $5.44 

53

Three Months Ended October 3, 2021
Data presented will not (in all cases) aggregate to totals.
(MILLIONS, EXCEPT PER COMMON SHARE DATA)
Cost of sales(a)
Selling, informational and administrative expenses(a)
Other (income)/deductions––net(a)
Net income attributable to Pfizer Inc. common shareholders(a)
Earnings per common share attributable to Pfizer Inc. common shareholders––diluted
GAAP reported$9,932 $2,899 $(1,696)$8,146 $1.42 
Amortization of intangible assets— (9)(1)980 
Acquisition-related items6 (1)(47)41 
Discontinued operations(c)
— — — 17 
Certain significant items:
Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(d)
(28)(150)— 823 
(Gains)/losses on equity securities— — 400 (400)
Actuarial valuation and other pension and postretirement plan (gains)/losses— — 899 (899)
Other(f)
(11)(20)(126)159 
Income tax provision—non-GAAP items(1,587)
Non-GAAP adjusted$9,899 $2,719 $(570)$7,279 $1.27 
Nine Months Ended October 3, 2021
Data presented will not (in all cases) aggregate to totals.
(MILLIONS, EXCEPT PER COMMON SHARE DATA)
Cost of sales(a)
Selling, informational and administrative expenses(a)
Other (income)/deductions––net(a)
Net income attributable to Pfizer Inc. common shareholders(a)
Earnings per common share attributable to Pfizer Inc. common shareholders––diluted
GAAP reported$21,085 $8,599 $(4,043)$18,586 $3.27 
Amortization of intangible assets— (29)(2)2,778 
Acquisition-related items17 (2)(31)14 
Discontinued operations(c)
— — — 353 
Certain significant items:
Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(d)
(82)(310)— 1,057 
(Gains)/losses on equity securities— — 1,597 (1,597)
Actuarial valuation and other pension and postretirement plan (gains)/losses— — 932 (932)
Other(f)
(45)(119)(200)370 
Income tax provision—Non-GAAP items(1,976)
Non-GAAP adjusted$20,975 $8,140 $(1,747)$18,653 $3.28 
(a)Items that reconcile GAAP Reported to non-GAAP Adjusted balances are shown pre-tax. Our effective tax rates for GAAP reported income from continuing operations were: 4.0% and 10.5% in the “Analysis of Financial Condition, Liquiditythree and Capital Resources: Selected Measures of Liquiditynine months ended October 2, 2022, respectively, and Capital Resources” section of this MD&A(4.2)% and Notes to Condensed Consolidated Financial Statements—7.8% in the three and nine months ended October 3, 2021, respectively. See Note 7. Financial Instruments5. Our effective tax rates on non-GAAP adjusted income were: 4.4% and 11.9% in the three and nine months ended October 2, 2022, respectively, and 14.7% and 15.7% in the three and nine months ended October 3, 2021, respectively.
(b)Acquisition-related items in the three and nine months ended October 2, 2022 primarily represent integration and other costs for the acquisition of Arena in March 2022. See Note 2A.

(c)Relates to the previously divested Meridian subsidiary and post-closing adjustments for other previously divested businesses. See Note 2B.
For information about certain balances in (d)Trade accounts receivable, less allowance for doubtful accounts, see also the “Analysis of Financial Condition, LiquidityIncludes employee termination costs, asset impairments and Capital Resources: Selected Measures of Liquidityother exit costs related to our cost-reduction and Capital Resources: Accounts Receivable” section of this MD&A.

For information about events and circumstances impacting our tax-related accounts, see Notes to Condensed Consolidated Financial Statements—productivity initiatives not associated with acquisitions. See Note 5. Tax Matters3.
(e)See Note 4.

(f)For informationthe third quarter of 2022, the total Other (income)/deductions––net adjustment of $325 million primarily includes charges of $212 million mostly representing our equity-method accounting pro rata share of costs of preparing for separation from GSK recorded by Haleon/the GSK Consumer Healthcare JV, and adjustments to our equity-method basis differences which are also related to changesthe separation of Haleon/the GSK Consumer Healthcare JV from GSK, and charges of $77 million for certain legal matters. For the first nine months of 2022, the total Other (income)/deductions––net adjustment of $536 million primarily includes charges of $273 million mostly representing our equity-method accounting pro rata share of restructuring charges and costs of preparing for separation from GSK recorded by Haleon/the GSK Consumer Healthcare JV, and adjustments to our equity-method basis differences which are also related to the separation of Haleon/the GSK Consumer Healthcare JV from GSK, and charges of $175 million for certain legal matters. For the third quarter of 2021, the total Other (income)/deductions––net adjustment of $126 million primarily includes charges of $64 million for certain legal matters and charges of $55 million mostly representing our equity-method accounting pro rata share of restructuring charges and costs of preparing for separation from GSK recorded by the GSK Consumer Healthcare JV. For the first nine months of 2021, amounts in Accumulated other comprehensive lossSelling, informational and administrative expenses, see of $119 million primarily include costs for consulting, legal, tax and advisory services associated with a non-recurring internal reorganization of legal entities. For the “Analysisfirst nine months of 2021, the Condensed Consolidated Statementstotal Other (income)/deductions––net adjustment of Comprehensive Income” section$200 million primarily includes charges of this MD&A$136 million mostly representing our equity-method accounting pro rata share of restructuring charges and Notes to Condensed Consolidated Financial Statements—costs of preparing for separation from GSK recorded by the GSK Consumer Healthcare JV, and charges of $92 million for certain legal matters. The third quarter and first nine months of 2022 and 2021 include insignificant reconciling amounts for Note 6. Accumulated Other Comprehensive Loss, Excluding Noncontrolling InterestsResearch and development expenses.

54
The changes in our asset and liability accounts as of October 1, 2017, compared to December 31, 2016, generally reflect, among other things, the impact of assets acquired and liabilities assumed as part of the acquisition of AstraZeneca’s small molecule anti-infectives business, measurement period adjustments related to the acquisition of Medivation, and fluctuations in foreign currency exchange rates. The following explanations exclude the impact of the acquisition of AstraZeneca’s small molecule anti-infectives business, measurement period adjustments related to the acquisition of Medivation, as well as the sale of HIS to ICU Medical and foreign exchange (see Notes to Condensed Consolidated Financial Statements––Note 2. Acquisitions, Sale of Hospira Infusion Systems Net Assets, Collaborative Arrangement and Equity-Method Investments and Note 9. Identifiable Intangible Assets and Goodwill for additional information).
•
For Trade accounts receivable, less allowance for doubtful accounts, the change reflects the timing of sales and collections in the normal course of business.
•
For Inventories, the change reflects the build of inventory primarily for and in advance of new or potential product launches and increases to meet targeted levels for certain products in the normal course of business, including those related to demand.
•
For Other current assets, the change reflects a decrease in receivables associated with our derivative financial instruments, as well as the timing of receipt and payments in the normal course of business, partially offset by an increase in VAT receivable balances due to a change in our supply chain.
•
For PP&E,the change primarily reflects depreciation during the period and reductions due to restructuring efforts, partially offset by capital additions in the normal course of business.
•
For Identifiable intangible assets, less accumulated amortization, the change primarily reflects amortization for the period, partially offset by intangible assets recorded in connection with the EU and U.S. approvals of Besponsa.For additional information, see Notes to Condensed Consolidated Financial Statements—Note 7E. Financial Instruments: Other Noncurrent Liabilities.
•
For Other noncurrent assets, the change reflects a decrease in receivables associated with our derivative financial instruments, partially offset by net increases in the normal course of business.
•
For Trade accounts payable, the change reflects the timing of purchases and payments in the normal course of business, including the impact of efforts to improve working capital efficiencies.
•
For Accrued compensation and related items, the decrease reflects normal bonus payments made to employees and a reduction related to the termination of a Hospira U.S. qualified defined benefit pension plan, partially offset by current year’s accruals. For additional information, see Notes to Condensed Consolidated Financial Statements—Note 10. Pension and Postretirement Benefit Plans.
•
For Other current liabilities, the change reflects a decrease in liabilities associated with:
◦payment for consideration transferred for Medivation;
◦payments for restructuring activities and payments for liabilities related to the closeout of bococizumab clinical studies; and
◦our derivative financial instruments,
partially offset by:
◦an increase related to accrued healthcare fees;
◦
an accrual for net funds due to ICU Medical for net economic benefit payments (see Notes to Condensed Consolidated Financial Statements––Note 2B. Acquisitions, Sale of Hospira Infusion Systems Net Assets, Collaborative Arrangement and Equity-Method Investments: Sale of Hospira Infusion Systems Net Assets to ICU Medical, Inc. (EH)); and
◦the impact of timing of payments in the normal course of business.
•
For Pension benefit obligations, net, the decrease primarily reflects the $1.0 billion voluntary pension contribution in January 2017 and payments to plan participants.
•
For Other noncurrent liabilities, the change reflects a decrease in liabilities associated with:
◦an increase in reclassification of short-term liabilities;
◦our derivative financial instruments; and
◦
the reversal of a contingent liability as a result of exiting our investment in Teuto (see Notes to Condensed Consolidated Financial Statements––Note 2D. Acquisitions, Sale of Hospira Infusion Systems Net Assets, Collaborative Arrangement and Equity-Method Investments: Equity Method Investments),

partially offset by:
◦
an increase of $351 million to record obligations in connection with the EU and U.S. approvals of Besponsa(see Notes to Condensed Consolidated Financial Statements—Note 7E. Financial Instruments: Other Noncurrent Liabilities);
◦
an increase in deferred revenue from a milestone payment received from Merck for the ertugliflozin collaboration agreement (see Notes to Condensed Consolidated Financial Statements––Note 2C. Acquisitions, Sale of Hospira Infusion Systems Net Assets, Collaborative Arrangement and Equity-Method Investments: Collaboration Arrangement); and
◦accruals in the normal course of business.
•
For Treasury stock, the change reflects $5 billion paid to Citibank in February 2017 pursuant to the terms of an accelerated share repurchase agreement. See Notes to Condensed Consolidated Financial Statements—Note 12. Commitments and Contingencies for additional information.
ANALYSIS OF THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash Flows from Continuing Operations
 Nine Months Ended
(MILLIONS)October 2,
2022		October 3,
2021		Drivers of change
Cash provided by/(used in):
Operating activities from continuing operations$20,685 $26,993 
The change was driven primarily by (i) a decrease in the change in amounts due to BioNTech for the gross profit split for Comirnaty (see Note 8), as well as (ii) the impact of timing of receipts and payments in the ordinary course of business, partially offset by (iii) higher net income adjusted for non-cash items, including an increase from non-cash unrealized losses on equity securities recognized in 2022, compared to unrealized gains recognized in 2021.
Investing activities from continuing operations$(11,373)$(19,951)The change was driven mainly by a $19.2 billion increase in redemptions of short-term investments with original maturities of greater than three months and $4.0 billion of dividends received from our Haleon/GSK Consumer Healthcare JV investment that were allocated to investing activities, partially offset by $6.2 billion cash paid for the acquisition of Arena, net of cash acquired, a $3.7 billion increase in net purchases of short-term investments with original maturities of three months or less, and a $3.4 billion increase in purchases of short-term investments with original maturities of greater than three months.
Financing activities from continuing operations$(9,819)$(6,465)The change was driven mostly by $2.0 billion purchases of the Company’s common stock in 2022 and a $997 million decrease in proceeds from the issuance of long-term debt.
Cash Flows from Discontinued Operations––Cash flows from discontinued operations relate to previously divested businesses (see
  Nine Months Ended  
(MILLIONS OF DOLLARS) October 1,
2017
 October 2,
2016
 %
Change
Cash provided by/(used in):      
Operating activities(a)
 $9,728
 $10,151
 (4)
Investing activities 38
 (4,704) *
Financing activities(a)
 (9,650) (6,915) 40
Effect of exchange-rate changes on cash and cash equivalents 67
 (79) *
Net increase/(decrease) in Cash and cash equivalents
 $184
 $(1,547) *
*Calculation not meaningful.
(a)
Amounts for the nine months ended October 2, 2016 have been revised from previously reported amounts to reflect the adoption of a new accounting standard in the fourth quarter of 2016, as of January 1, 2016, that requires that cash flows present (i) excess tax benefits as Other tax accounts, net as part of operating activities, rather than financing activities on a prospective basis beginning in the year of adoption, and (ii) cash paid by us when directly withholding shares for tax-withholding purposes as a cash outflow from financing activities, rather than operating activities and is reflected in the year of adoption. The year-to-date excess tax benefit was $87 million in the first nine months of 2016. For cash paid by us for withholding purposes, $134 million for the first nine months of 2016 is presented as financing activitiesin the condensed consolidated statement of cash flows (see Notes to Consolidated Financial Statements—Note 1B. Basis of Presentation and Significant Accounting Policies: Adoption of New Accounting StandardsNote 2B).
In the condensed consolidated statements of cash flows, the line item Other changes in assets and liabilities, net of acquisitions and divestitures is presented excluding the effects of changes in foreign currency exchange rates, as these changes do not reflect actual cash inflows or outflows, and excluding any other significant non-cash movements. Accordingly, the amounts shown will not necessarily agree with the changes in the assets and liabilities that are presented in our condensed consolidated balance sheets.
Operating Activities

Our net cash provided by operating activities was $9.7 billion in the first nine months of 2017, compared to $10.2 billion in the same period in 2016. The decrease in net cash provided by operating activities reflects the timing of receipts from customers and payments to vendors in the ordinary course of business, as well as an increase in benefit plan contributions.
In the first nine months of 2017, the line item Other adjustments, net primarily reflects, among other items, the decrease in the provision for bad debt expense, an increase in dividends from an equity-method investment reclassified to investing activities in 2017 and an increase in net gains on sales of PP&E.
In the first nine months of 2017 and 2016, the line item Other changes in assets and liabilities, net of acquisitions and divestitures, primarily reflects changes, in the normal course of business, in trade accounts receivable, inventories, other current assets, other noncurrent assets, trade accounts payable, accrued compensation and other current and noncurrent liabilities. For the first nine months of 2016, this line item also includes the adjustments necessary to reflect the payments of certain legal claims accrued in prior periods, including for Protonix-related matters. For additional information about accounts receivable, see also the “Selected Measures of Liquidity and Capital Resources: Accounts Receivable” section of this MD&A.
For additional information about changes in other assets and liabilities account balances, see also “Analysis of the Condensed Consolidated Balance Sheets” in this MD&A.

Investing Activities
Our net cash provided by investing activities was $38 million in the first nine months of 2017, compared to net cash used in investing activities of $4.7 billion in the same period in 2016. The change in net cash provided by investing activities was primarily attributable to:
•
a decrease in cash used for acquisitions—cash paid of $1.0 billion, net of cash acquired, primarily for the acquisition of AstraZeneca’s small molecule anti-infectives business in 2017 and substantially all of the remaining consideration for the Medivation acquisition, compared to cash paid of $17.7 billion, net of cash acquired, primarily for the acquisitions of Medivation, Bamboo and Anacor in 2016 (see Notes to Condensed Consolidated Financial Statements—Note 2A. Acquisitions, Sale of Hospira Infusion Systems Net Assets, Collaborative Arrangement and Equity-Method Investments: Acquisitions); and
•
an increase in Other investing activities, net, including dividends received from an equity-method investment,
partially offset by:
•
less net proceeds generated from the sale of investments of $12.2 billion in 2017 for cash needs.
Financing Activities
Our net cash used in financing activities was $9.6 billion in first nine months of 2017, compared to $6.9 billion in the same period in 2016. The change in net cash used in financing activities was primarily attributable to:
•
$2.2 billion less proceeds raised from net short-term borrowings in the first nine months of 2017, compared to the first nine months of 2016; and
•
$5.8 billion cash dividends paid in the first nine months of 2017, compared to $5.5 billion in the same period in 2016,
partially offset by:
•
the issuance of long-term debt of $5.3 billion in the first nine months of 2017, compared to $5.0 billion in the same period in 2016 (see Notes to Condensed Consolidated Financial Statements––Note 7D. Financial Instruments: Long-Term Debt).
ANALYSIS OF FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES AND MARKET RISK

We rely largely on operating cash flows, short-term investments, short-term commercial paper borrowings and long-term debt to provide for our liquidity requirements. We continue our efforts to improve cash inflows through working capital efficiencies. We target specific areas of focus including accounts receivable, inventories, accounts payable, and other working capital, which allows us to optimize our operating cash flows. Due to our significant operating cash flows, which is a key strength of our liquidity and capital resources and our primary funding source, as well as our financial assets, access to capital markets, revolving credit agreements, and available lines of credit, and revolving credit agreements, we believe that we have, and will maintain, the ability to meet our liquidity needs to support ongoing operations, our capital allocation objectives, and our contractual and other obligations for the foreseeable future, which include:
future. For additional information, including information about off-balance sheet arrangements, see the working capital requirementsAnalysis of our operations, including our R&D activities;
investmentsFinancial Condition, Liquidity, Capital Resources and Market Risk section within MD&A in our business;
dividend payments and potential increases in the dividend rate;
share repurchases;
the cash requirements associated with our cost-reduction/productivity initiatives;
paying down outstanding debt;
contributions to our pension and postretirement plans; and
business-development activities.

Our long-term debt is rated high-quality by both S&P and Moody’s. See the “Credit Ratings” section below. As market conditions change, we continue to monitor our liquidity position. We have taken and will continue to take a conservative approach to our financial investments. Both short-term and long-term investments consist primarily of high-quality, highly liquid, well-diversified available-for-sale debt securities.


Selected Measures of Liquidity and Capital Resources
The following table provides certain relevant measures of our liquidity and capital resources:
(MILLIONS OF DOLLARS, EXCEPT RATIOS AND PER COMMON SHARE DATA) October 1,
2017
 December 31,
2016
Selected financial assets:    
Cash and cash equivalents(a)
 $2,779
 $2,595
Short-term investments(a)
 14,146
 15,255
Long-term investments(a)
 7,311
 7,116
  24,236
 24,967
Debt:  
  
Short-term borrowings, including current portion of long-term debt 9,448
 10,688
Long-term debt 34,503
 31,398
  43,951
 42,085
Selected net financial liabilities(b)
 $(19,714) $(17,118)
     
Working capital(c)
 $12,074
 $7,834
Ratio of current assets to current liabilities 1.43:1
 1.25:1
Total Pfizer Inc. shareholders’ equity per common share(d)
 $10.20
 $9.81
(a)
See Notes to Condensed Consolidated Financial Statements––Note 7. Financial Instruments for a description of certain assets held and for a description of credit risk related to our financial instruments held.
(b)
The increase in selected net financial liabilities is primarily driven by (i) our decrease in short-term investments, the proceeds of which were used for various cash needs and (ii) the net increase in long-term debt. We retain a strong financial liquidity position as a result of our net cash provided by operating activities, our high-quality financial asset portfolio and access to capital markets. Both Moody’s and S&P rating agencies maintained our strong investment-grade corporate debt rating subsequent to the acquisitions of Medivation and Anacor.2021 Form 10-K. For additional information, see the “Credit Ratings” section of this MD&A.
(c)
The increase in working capital is primarily due to the timing of accruals, cash receipts and payments in the ordinary course of business, a decline in short-term borrowings and an increase in inventory related to new or potential products, partially offset by a decline in short-term investments used for various cash needs and the sale of HIS assets to ICU Medical.
(d)
Represents total Pfizer Inc. shareholders’ equity divided by the actual number of common shares outstanding (which excludes treasury stock).

For additional information about the sources and uses of our funds, as well as our operating cash flows, see the “Analysisour condensed consolidated statements of the Condensed Consolidated Balance Sheets”cash flows, condensed consolidated balance sheets, condensed consolidated statements of equity, and the “AnalysisAnalysis of the Condensed Consolidated Statements of Cash Flows” sections of thisFlows within MD&A.

On March 17, 2017, we completed a public offering of $1.065 billion principal amount of senior unsecured notes due 2047 with an interest rate of 4.20%, For information on our money market funds, available-for sale-debt securities and on March 6, 2017, we completed a public offering of €4.0 billion principal amount of senior unsecured notes with a weighted-average effective interest rate of 0.23% (see Notes to Condensed Consolidated Financial Statements––long-term debt, see Note 7D. Financial Instruments: Long-Term Debt7).

Domestic and International Short-Term Funds

ManyDebt Capacity––Lines of our operations are conducted outside the U.S., and significant portions of our cash, cash equivalents and short-term investments are held internationally. We generally hold up to $10 billion of these short-term funds in U.S. tax jurisdictions. The amount of funds held in U.S. tax jurisdictions can fluctuate due to the timing of receipts and payments in the ordinary course of business and due to other reasons, such as business-development activities. As part of our ongoing liquidity assessments, we regularly monitor the mix of domestic and international cash flows (both inflows and outflows). Repatriation of overseas funds can result in additional U.S. federal, state and local income tax payments. We record U.S. deferred tax liabilities for certain unremitted earnings, but when amounts earned overseas are expected to be indefinitely reinvested outside the U.S., no accrual for U.S. taxes is provided.

Accounts Receivable

We continue to monitor developments regarding government and government agency receivables in several European markets where economic conditions remain challenging and uncertain. Historically, payments from a number of these European governments and government agencies extend beyond the contractual terms of sale. Specifically, we received delayed payments for 2016 revenues from the Greek government; virtually all Greece government receivables pertain to 2017 revenues. Also, the Greek government restructured its debt to other third parties in the third quarter of 2016. We determined our allowance for doubtful accounts to reflect these events, and have $35 million in net receivables from the Greek government as of CreditOctober 1, 2017. Reported revenues from all customers in Greece for the nine months ended October 1, 2017 were $180 million.


We believe that our allowance for doubtful accounts is appropriate. Our assessment is based on an analysis of the following: (i) payments received to date; (ii) the consistency of payments from customers; (iii) direct and observed interactions with the governments (including court petitions) and with market participants (for example, the factoring industry); and (iv) various third-party assessments of repayment risk (for example, rating agency publications and the movement of rates for credit default swap instruments).

––As of October 1, 2017, we had about $533 million in aggregate gross accounts receivable from governments and/or government agencies in Italy, Spain, Greece and Portugal where economic conditions remain challenging and uncertain. Such receivables in excess of one year from the invoice date, totaling $65 million, were as follows: $40 million in Italy; $18 million in Portugal; $4 million in Greece; and $3 million in Spain.

Although certain European governments and government agencies sometimes delay payments beyond the contractual terms of sale, we seek to appropriately balance repayment risk with the desire to maintain good relationships with our customers and to ensure a humanitarian approach to local patient needs.

We will continue to closely monitor repayment risk and, when necessary, we will continue to adjust our allowance for doubtful accounts.

Our assessments about the recoverability of accounts receivables can result from a complex series of judgments about future events and uncertainties and can rely heavily on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Notes to Consolidated Financial Statements––Note 1C. Basis of Presentation and Significant Accounting Policies:Estimates and Assumptions included in our 2016 Financial Report.
Credit Ratings

Two major corporate debt-rating organizations, Moody’s and S&P, assign ratings to our short-term and long-term debt. A security rating is not a recommendation to buy, sell or hold securities and the rating is subject to revision or withdrawal at any time by the rating organization. Each rating should be evaluated independently of any other rating.
The following table provides the current ratings assigned by these rating agencies to our commercial paper and senior unsecured long-term debt:
NAME OF RATING AGENCY
Pfizer
Commercial Paper
Pfizer
Long-Term Debt
Date of Last Rating Change
RatingRating
Moody’s(a)
P-1A1October 2009
S&P(b)
A-1+AAOctober 2009
(a)
In September 2016, Moody’s updated their credit outlook from negative outlook to stable.
(b)
In April 2016, S&P updated their credit outlook from negative watch to stable.
Debt Capacity

We have available lines of credit and revolving credit agreements with a group of banks and other financial intermediaries. We maintain cash and cash equivalent balances and short-term investments in excess of our commercial paper and other short-term borrowings. As of October 1, 2017,2, 2022, we had access to $7.8a $7 billion ofcommitted U.S. revolving credit facility expiring in 2026, which may be used for general corporate purposes including to support our commercial paper borrowings. In addition to the U.S. revolving credit facility, our lenders have provided us an additional $332 million in lines of credit, of which $689$302 million expire within one year. Of theseEssentially all lines of credit $7.7 billion were unused of which our lenders have committed to loan us $7.0 billion at our request. Also, $7.0 billion of our unused lines of credit, all of which expire in 2021, may be used to support our commercial paper borrowings.

Global Economic Conditions––General

The global economic environment has not had, nor do we anticipate it will have, a material impact on our liquidity or capital resources. Due to our significant operating cash flows, financial assets, access to capital markets and available lines of credit and revolving credit agreements, we continue to believe that we have, and will maintain, the ability to meet our liquidity needs for the foreseeable future. We monitor our liquidity position continuously in the face of evolving economic conditions.

Global Economic Conditions––U.K.
In June 2016, the U.K. electorate voted in a referendum to leave the EU, which is commonly referred to as “Brexit”. In January 2017, the U.K. Prime Minister announced a 12-point plan of negotiating objectives and confirmed that the U.K. government will not seek continued membership in the EU single market. In March 2017, the U.K. government formally notified the

European Council of its intention to leave the EU after it triggered Article 50 of the Lisbon Treaty to begin the two-year negotiation process establishing the terms of the exit and outlining the future relationship between the U.K. and the EU. This process continues to be highly complex and the end result of these negotiations may pose certain implications to our research, commercial and general business operations in the U.K. and the EU, including the approval of our products.

We generated approximately 2% of our worldwide revenues from the U.K. in the first nine months of 2017. However, except for the foreign currency exchange impact from the weakening U.K. pound relative to the U.S. dollar to date, there are no other immediate-term impacts to our business as there has not yet been a formal change in the relationship between the U.K. and the EU. In addition, because of the significant uncertainties associated with the negotiation process, any potential long-term impacts are not currently determinable.
Global Economic Conditions––Venezuela Operations

Our Venezuela operations continue to operate with the U.S. dollar as the functional currency due to the hyperinflationary status of the Venezuelan economy.

In the second quarter of 2015, the Venezuelan government identified three official rates of exchange. These were the CENCOEX rate of 6.3; the SICAD rate of 13.5 (as of November 2017); and the SIMADI rate of 3,345 (as of November 2017). Effective in March 2016, the CENCOEX rate was replaced by the DIPRO rate of 10 (as of February 2017); the SICAD rate ceased to be offered; and the SIMADI rate was planned to be replaced by the DICOM rate. The Venezuelan government continued to publish the SIMADI rate, which was commonly referred to as the DICOM rate, and then began to publish the DICOM rate beginning in August 2017. That SIMADI, now DICOM, rate has grown from 206 in March 2016 to about 3,345 (as of November 2017). Based on conditions in Venezuela, we resolved that our Venezuelan bolivar-denominated net monetary assets that are subject to revaluation are no longer expected to be substantially settled at the Venezuelan government CENCOEX official rate of 6.3 or the DIPRO official rate of 10, but at a rate of 500 at the end of the second quarter and third quarter of 2016, and 670 at the end of the fourth quarter of 2016, and at the end of the first and second quarters of 2017, and 2,640 at the end of the third quarter of 2017.
We cannot predict whether there will be further devaluations of the Venezuelan currency or whether our use of the DICOM rate will continue to be supported by evolving facts and circumstances. Further, other potential actions by the Venezuelan government in response to economic uncertainties could impact the recoverability of our investment in Venezuela, which could result in an impairment charge and, under extreme circumstances, could impact our ability to continue to operate in the country in the same manner as we have historically.
On July 11, 2016, the Venezuelan government administration announced a new program under a State of Emergency decree that is intended to control the use of raw materials, production and distribution of products, specifically for medicines and foods. It is uncertain how this program will be applied to Pfizer in Venezuela. We continue to operate under adverse conditions in Venezuela and have $6 million of net monetary assets and $40 million of non-monetary assets, excluding inventory carried at lower of cost or market, in Venezuela at August 27, 2017, our international quarter-end.

Off-Balance Sheet Arrangements

In the ordinary course of business and in connection with the sale of assets and businesses, we often indemnify our counterparties against certain liabilities that may arise in connection with a transaction or that are related to activities prior to a transaction. These indemnifications typically pertain to environmental, tax, employee and/or product-related matters, and patent-infringement claims. If the indemnified party were to make a successful claim pursuant to the terms of the indemnification, we would be required to reimburse the loss. These indemnifications generally are subject to threshold amounts, specified claim periods and other restrictions and limitations. Historically, we have not paid significant amounts under these provisions and, as of October 1, 2017, recorded amounts for2, 2022.
Capital Allocation Framework––Our capital allocation framework is primarily devised to facilitate (i) the estimated fair valueachievement of these indemnifications were not significant.

Certainmedical breakthroughs through R&D investments and business development activities and (ii) returning capital to shareholders through dividends and share repurchases. See the Overview of Our Performance, Operating Environment, Strategy and Outlook section within this MD&A and within the MD&A of our co-promotion or license agreements give our licensors or partners the rights to negotiate for, or in some cases to obtain under certain financial conditions, co-promotion or other rights in specified countries with respect to certain of our products.

Share-Purchase Plans and Accelerated Share Repurchase Agreements

Our October 2014 $11 billion share-purchase plan was exhausted in the first quarter of 2017. In December 2015, the Board of Directors authorized an $11 billion share repurchase program, and share repurchases commenced thereunder in the first quarter of 2017.


On February 2, 2017, we entered into an accelerated share repurchase agreement with Citibank to repurchase $5 billion of our common stock. For additional information, see Notes to Condensed Consolidated Financial Statements––Note 12. Commitments and Contingencies and “Unregistered Sales of Equity Securities and Use of Proceeds––Issuer Purchases of Equity Securities” in Part II, Item 2 of this Quarterly Report on2021 Form 10-Q.10-K.
The following table provides the number of shares of our common stock purchased and the cost of purchases under our publicly announced accelerated share repurchase agreements:
  Three Months Ended Nine Months Ended
(SHARES IN MILLIONS, DOLLARS IN BILLIONS) 
October 1,
2017

 
October 2,
2016

 
October 1,
2017(a)

 
October 2,
2016(b)

Shares of common stock purchased —
 —
 150
 154
Cost of purchase $—
 $—
 $5.0
 $5.0
(a)
Represents shares purchased pursuant to an accelerated share repurchase agreement with Citibank. For additional information, see Notes to Condensed Consolidated Financial Statements––Note 12. Commitments and Contingencies and “Unregistered Sales of Equity Securities and Use of Proceeds––Issuer Purchases of Equity Securities” in Part II, Item 2 of this Quarterly Report on Form 10-Q.
(b)
Represents shares purchased pursuant to an accelerated share repurchase agreement entered into on March 8, 2016. For additional information, see Notes to Consolidated Financial Statements––Note 12. Equity in our 2016 Financial Report.

At October 1, 2017, our remaining share-purchase authorization was approximately $6.4 billion.

Dividends on Common Stock

In September 2017,2022, our Board of DirectorsBOD declared a dividend of $0.32$0.40 per share, payable on December 1, 2017,5, 2022, to shareholders of record at the close of business on November 10,4, 2022.
55

In the first quarter of 2022, we purchased 39 million shares of our common stock at a cost of $2.0 billion under our publicly announced share purchase plan. See 2017Note 12 in our 2021 Form 10-K and Unregistered Sales of Equity Securities and Use of Proceeds in Part II, Item 2 for more information. At October 2, 2022, our remaining share-purchase authorization was approximately $3.3 billion.
In keeping with Pfizer’s transformation into a more focused, global leader in science-based innovative medicines and vaccines, we intend to exit our 32% ownership interest in Haleon in a disciplined manner, with the objective of maximizing value for our shareholders. See Note 2C.
Off-Balance Sheet Arrangements––For information about off-balance sheet arrangements, see the Analysis of Financial Condition, Liquidity, Capital Resources and Market Risk section within MD&A in our 2021 Form 10-K. For more information on guarantees and indemnifications, see Note 12B.
In March 2022, in connection with GSK’s previously announced planned demerger, the Consumer Healthcare JV issued notes of $8.75 billion, €2.35 billion and £700 million with various maturities. GSK guaranteed the notes and we agreed to indemnify GSK for 32% of any amount payable by GSK. In conjunction with the completion of GSK’s demerger transactions in July 2022, GSK’s guarantee and our related indemnification of GSK’s guarantee were terminated. See Note 2C.
Global Economic Conditions––Beginning in our second quarter of 2022, our operations in Turkey function in a hyperinflationary economy. The impact to Pfizer is not considered material. For more information about global economic conditions, see the Overview of Our Performance, Operating Environment, Strategy and Outlook—The Global Economic Environment section within MD&A.
For additional information about our diverse sources of funds, global economic conditions, and information about credit ratings, market risk and LIBOR, see the Analysis of Financial Condition, Liquidity, Capital Resources and Market Risk sectionwithin MD&A in our 2021 Form 10-K.
NEW ACCOUNTING STANDARDS

Recently Adopted Accounting Standards

Standard
See Notes to Condensed Consolidated Financial Statements––Note 1B. Basis of Presentation and Significant AccountingPolicies: Adoption of New Accounting Standards.
Recently Issued Accounting Standards, Not Adopted as of October 1, 2017
The following table provides a brief descriptionRecently Issued Accounting Standards, Not Adopted as of recently issued accounting standards, not yet adopted:
October 2, 2022
Standard/DescriptionEffective DateEffect on the
Financial Statements or Other Significant Matters
In May 2014, the FASB issued amended guidance relatedReference rate reform provides temporary optional expedients and exceptions torevenue from contracts with customers. The new guidance introduces a new principles-based framework for revenue recognition and disclosure. Since its issuance the FASB has issued six ASUs, amending the guidance for contracts, hedging relationships, and effective date, and the SEC has rescinded certain related SEC guidance; the most recent of these changes was issued in December 2016.
January 1, 2018.
We have made substantial progress in completing our review of the impact of this guidance across our various business arrangements and revenue-related activities, and do not expect the adoption of this standard to have a material impact on our reported Revenues in our consolidated financial statements, revenue recognition processes,other transactions that reference LIBOR or our internal controls. We are reviewing our disclosures for revenue recognition and do not anticipate significant changes will be needed to conform with the disclosure requirements of the new guidance.
The interpretation and applicability of the new revenue recognition standard to collaboration arrangements in certain industries is still being assessed. We expect that milestone payments received in our collaboration agreements, which are recorded in Other (income)/deductions––net, and currently amortized over the life of the agreement, will, for many arrangements, be amortized over the remaining development period or sooner, if there is a distinct and separable licensing component. We are required to apply the new rules to existing contracts as if the new principles had always existed, and therefore, upon adoption, we expect to record a cumulative effect adjustment to Retained earnings as of the adoption date in the range of $350 million to $550 million to accelerate what would have been future income under the current rules into prior periods. The financial statement impact on pre-tax income isanother reference rate expected to be less than $100 million in any future annual period.discontinued after 2021 because of reference rate reform.
We continue to monitor additional changes, modifications, clarifications or interpretations undertaken by the FASB, which may impact our current conclusions. In addition, we continue to monitor other changes, such as changes in our business, new collaboration arrangements, business combinations, etc., which may impact our current conclusions prior to the adoption date.


Standard/DescriptionEffective DateEffect on the Financial Statements or Other Significant Matters
In January 2016, the FASB issued an update to its guidance on recognition and measurement of financial assets and liabilities.
Among other things, the new guidance makes the following targeted changes to existing guidance:
1. Requires certain equity investments to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer.
2. Requires a qualitative assessment of equity investments without readily determinable fair values to identify impairment.
3. Requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or in the accompanying notes to the financial statements.
In September 2017, the FASB issued a proposed amendment to this new standard which is intended to clarify certain aspects of the guidance.
January 1, 2018.
We have substantially completed our review of the impact of this new guidance on our consolidated financial statements, and will continue to assess events which may occur prior to adoption. As of October 1, 2017, we have $1.0 billion in available-for-sale equity securities and approximately $273 million of restricted stock and private equity securities which will be subject to the new rules. Further, for the nine months ended October 1, 2017, we recognized $406 million of previously unrealized holding gains and $119 million of previously unrealized losses on available-for-sale equity securities in Other comprehensive income, which would have been recorded to Other (income)/ deductions––net under the new rules. The impact of adoption will be recorded as a cumulative effect adjustment to Retained earnings. We expect the adoption of this new accounting standard may increase the volatility of our income in future periods due to changes in the fair value of equity investments. We do not expect that the proposed amendment, as currently drafted, will have any substantive impact to our assessment discussed above. We continue to monitor changes, modifications, clarifications or interpretations undertaken by the FASB, which may impact our current conclusions.
In August 2016, the FASB issued new guidance on the classification of certain transactions in the Statement of Cash Flows.
January 1, 2018. Earlier application is permitted.We have substantially completed our review and will continue to assess events which may occur prior to adoption. Retrospective application is required. Upon adoption, we expect to reclassify approximately $362 million of cash outflows related to debt redemption in 2016 from operating activities to financing activities. We also expect to reclassify approximately $32 million of cash inflows from trust-owned life insurance contracts in 2016 from operating activities to investing activities. Cash outflows from trust-owned life insurance contracts represent benefit payments and are classified as operating activities. In addition, although there is no impact on the presented historical comparative financial statements, the new guidance may impact the classification of certain cash flows related to contingent consideration in a business acquisition, depending on the ultimate settlement amount of the reported contingency liability.
In October 2016, the FASB issued new guidance on the presentation of restricted cash in the Statement of Cash Flows.
January 1, 2018. Earlier application is permitted.We have substantially completed our review and will continue to assess events which may occur prior to adoption. Retrospective application is required. Our restricted cash balances as of the end of 2016 were approximately $18.1 million of short-term restricted cash and $45.3 million of long-term restricted cash. Our restricted cash balances as of October 1, 2017 were approximately $6.4 million of short-term restricted cash and $68.7 million of long-term restricted cash.
In October 2016, the FASB issued an update to its guidance on income tax accounting. The new guidance replaces the prohibition against recognizing current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party with a requirement to do so, unless the asset transferred is inventory.
January 1, 2018.
We have substantially completed our review and will continue to assess events which may occur prior to adoption. Our analysis of the standard indicates that our estimate of the impact to our consolidated financial statements, using current assumptions, is not material. However, while we currently do not have any specific plans, we cannot predict intercompany asset transfers other than inventory that may occur in the future, as they are dependent on economic and operational factors that may change over time.
For example, an acquisition might cause us to realign legal entities and to transfer assets between entities as we integrate an acquired company into Pfizer. We anticipate that after adoption, our effective tax rate could be impacted by the immediate recognition of the tax consequences of intercompany asset transfers other than inventory. The impact of adoption will be recorded as a cumulative effect adjustment to Retained Earnings.
In January 2017, the FASB issued new guidance to clarify the definition of a business. The new guidance provides the following optional expedients:
1.Simplify accounting analyses under current U.S. GAAP for contract modifications.
2.Simplify the assessment of hedge effectiveness and allow hedging relationships affected by reference rate reform to continue.
3.Allow a new framework for determining whether business development transactions should be accounted forone-time election to sell or transfer debt securities classified as acquisitions (or disposals) of assets or businesses. If the fair value of the gross assets acquired is concentrated inheld to maturity that reference a single identifiable asset, the transaction will not qualify for treatment as a business. The new guidance also requires that to be considered a business, a set of integrated activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs, without regard as to whether a market participant could replace missing elements. In addition, the new guidance narrows the definition of the term “output” to make it consistent with how outputs are described in the updated revenue recognition guidance.rate affected by reference rate reform.
January 1, 2018. Earlier application is permitted.We have substantially completed our review and will continue to assess events which may occur prior to adoption. The new accounting standard is applicable on a prospective basis upon adoption and therefore has no impact on completed transactions. We expect that subsequent to our anticipated adoption date of January 1, 2018, fewer transactions willElections can be accounted for as business acquisitions (decreasing the amount of goodwill incurred and potentially increasing IPR&D expense) or disposals of a business. We will continue to monitor for changes in our business, and business combination or other transactions which might close after adoption and be impacted by these new standards.


adopted prospectively at any time through December 31, 2022.
Standard/DescriptionEffective DateEffect on the Financial Statements or Other Significant Matters
In February 2017, the FASB issued amended guidance related to the derecognition of nonfinancial assets.
January 1, 2018. Earlier application is permitted.
We have substantially completed our review and will continue to assess events which may occur prior to adoption. The new guidance applies to the full or partial sale or transfer of nonfinancial assets, including intangible assets, real estate and inventory, under which the gain or loss is the difference between the consideration received and the carrying value of the asset. The new guidance does not impact out-licensing arrangements. We are not expecting a material impact on existing transactions. We will continue to monitor for changes in our business and transactions which might be impacted by these new standards. The impact of adoption, if any, will be recorded as a cumulative effect adjustment to Retained Earnings.
In March 2017, the FASB issued guidance on the presentation of net periodic pension and postretirement benefit cost. Under the new rules, entities that sponsor defined benefit plans will present net benefit cost as follows:
1. Service cost will be included in the same income statement line items where other employee compensation costs are reported.
2. The other components of net benefit cost will be presented outside of income from operations, if such a subtotal is presented.
3. Only the service cost component will be capitalized, when applicable (for example, as a cost of inventory, internal-use software, or a self-constructed fixed asset).
If a separate line item is used to present the other components of net benefit cost, it should have an appropriate description. If a separate line item or items is not used, the line item or items in the income statement where the other components of net benefit cost are included must be disclosed.
January 1, 2018.
We have made substantial progress in completing our review of the impact of this new guidance. We anticipate that upon adoption, the net benefit costs other than service costs will be reclassified to Other (income)/deductions-net from their current classification within Cost of sales, Selling, informational and administrative expenses, and Research and development expenses. We expect to adopt the practical expedient which allows us to ignore capitalized pension expense in the retrospective adjustments in our Statements of Income. Net benefit cost/(income) other than service costs was $154 million for the year ended December 31, 2016 and $89 million for the nine months ended October 1, 2017 (see Notes to Condensed Consolidated Financial Statements––Note 10.Pension and Postretirement Benefits for further details). We are still assessing the impact on our results of operations for business segment reporting, changes in accounting processes, such as inventory standard costing methodologies, and policies.
Effective January 1, 2018, future accruals under the Pfizer Consolidated Pension Plan (our largest U.S. defined benefit plan), will freeze, and the Pfizer defined contribution savings plan will provide additional annual contributions to those previously accruing benefits under the Pfizer Consolidated Pension Plan. This change will result in elimination of future service costs for the plan.
In May 2017, the FASB issued new guidance on the accounting for modifications of share-based payment awards. The new guidance clarifies that changes in the terms or conditions of a share-based payment award be accounted for as a modification unless all the following conditions are met:
1.
The fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified.
2.
The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified.
3.
The modification does not change the classification of the award as an equity instrument or a liability instrument.
January 1, 2018. Early application is permitted, including in interim periods.We have substantially completed our review and will continue to assess events that may occur prior to adoption. The new accounting standard is applicable on a prospective basis upon adoption and therefore has no impact on completed transactions. The impact of adopting this guidance will be dependent upon whether we make any future modifications of share-based payment awards, and we have no plans to modify share-based payment awards at this time.
In February 2016, the FASB issued an update to its guidance on leases. The new ASU provides guidance for both lessee and lessor accounting models. Among other things, the new guidance requires that a right of use asset and a lease liability be recognized for leases with a duration of greater than one year.
January 1, 2019. Earlier application is permitted.We have made substantial progress in completing our review of the impact of this new guidance. We anticipate recognition of at least $2 billion of additional assets and corresponding liabilities on our balance sheet. We are currently assessing the potential impact of embedded leases on our consolidated financial statements, given our manufacturing outsourcing, service arrangements and other agreements. In connection with this guidance we will need to design new global processes and technological solutions to provide the appropriate financial accounting and disclosure data. We continue to monitor changes, modifications, clarifications or interpretations undertaken by the FASB, which may impact our conclusions.
In March 2017, the FASB issued new guidance that shortens the amortization period for certain callable debt securities held at a premium. The new guidance requires the premium to be amortized to the earliest call date.
January 1, 2019. Early application is permitted, including in interim periods, so long as any adjustments are reflected as of the beginning of the fiscal year that includes the interim period in which the guidance is applied.We are assessing the impact, of the provisions of this new guidance on our consolidated financial statements.


Standard/DescriptionEffective DateEffect on the Financial Statements or Other Significant Matters
In July 2017, the FASB issued new guidance on accounting for certain financial instruments with characteristics of liabilities and equity, and accounting for certain financial instruments with down round features (a feature in a financial instrument that reduces the strike price of an issued financial instrument if the issuer sells shares of its stock for an amount less than thebut currently stated strike price of the issued financial instrument or issues an equity-linked financial instrument with a strike price below the currently stated strike price of the issued financial instrument).
January 1, 2019. Earlier application is permitted.We are assessing the impact of the provisions of this new guidance on our consolidated financial statements.
In August 2017, the FASB issued new guidance making targeted improvements to accounting for hedging activities. The objective of this amendment is to improve financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements, and also to simplify the application of hedge accounting guidance.
January 1, 2019. Early adoption is permitted, including in interim periods.

We are assessing the impact of the provisions of this new guidance on our consolidated financial statements and, pending our final review, we may consider early adoption.
In June 2016, the FASB issued new guidance on accounting for credit losses of financial instruments. The new guidance replaces the probable initial recognition threshold for incurred loss estimates in current GAAP with a methodology that reflects expected credit loss estimates.
January 1, 2020. Earlier application is permitted as of fiscal years beginning after December 15, 2018, including interim periods within that fiscal year.We are assessing the impact of the provisions of this new guidance on our consolidated financial statements. Previously, when credit losses were measured under GAAP, an entity generally only considered past events and current conditions in measuring the incurred loss. The new guidance requires us to identify, analyze, document and support new methodologies for quantifying expected credit loss estimates for our financial instruments, using information such as historical estimates and current economic environmental conditions, plus the use of reasonable supportable forecast information.
In January 2017, the FASB issued new guidance for goodwill impairment testing. The new guidance eliminates the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment. Under the new guidance the goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount, and recognizing an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value, although it cannot exceed the total amount of goodwill allocated to that reporting unit.
January 1, 2020. Earlier application is permitted.We have not yet completed our review of the impact of this new guidance on our consolidated financial statements. However, we do not expect this new guidance to have a material impact on our consolidated financial statements.
In June 2022, the FASB issued final guidance to clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered when measuring fair value. Recognizing a contractual sale restriction as a separate unit of account is not permitted.
January 1, 2024, with early adoption permitted.
We are assessing the impact, but currently do not expect this new guidance to have a material impact on our consolidated financial statements.
In September 2022, the FASB issued final guidance to enhance transparency about an entity’s use of supplier finance programs. Under the final guidance, the buyer in a supplier finance program is required to disclose information about the key terms of the program, outstanding confirmed amounts as of the end of the period, a rollforward of such amounts during each annual period, and a description of where in the financial statements outstanding amounts are presented.
January 1, 2023, except for the amendment on rollforward information, which is effective January 1, 2024. Early adoption is permitted.We are assessing the impact, but currently we expect this new guidance to result in increased disclosure in the notes to financial statements.

FORWARD-LOOKING INFORMATION AND FACTORS THAT MAY AFFECT FUTURE RESULTS

This report and other written or oral statements that we make from time to time containForm 10-Q contains forward-looking statements. SuchWe also provide forward-looking statements in other materials we release to the public, as well as public oral statements. Given their forward-looking nature, these statements involve substantial risks, uncertainties and uncertainties. potentially inaccurate assumptions.
We have tried, wherever possible, to identify such statements by using words such as “will,” “may,” “could,” “likely,” “ongoing,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “assume,” “target,” “forecast,”
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“guidance,” “goal,” “objective,” “aim”“aim,” “seek,” “potential,” “hope” and other words and terms of similar meaning or by using future datesdates.
We include forward-looking information in connection with anyour discussion of the following, among other things, topics:
•our anticipated operating and financial performance, reorganizations, business plans, strategy and prospects,prospects;
•expectations for our product pipeline, in-line products and product candidates, including anticipated regulatory submissions, data read-outs, study starts, approvals, launches, clinical trial results and other developing data, revenue contribution, growth, performance, timing of exclusivity and potential benefits of Pfizer’s products and product candidates, benefits;
•strategic reviews, capital allocation business-development objectives, dividends and share repurchases;
•plans manufacturing and product supply and plans relating to share repurchases and dividends. In particular, these include statements relating to future actions, business plansfor and prospects of our acquisitions, dispositions and other business development activities, the disposition of the HIS net assets, prospective products or product approvals, future performance or results of current and anticipated products, our ability to successfully capitalize on these opportunities;
•sales, efforts, expenses, interest rates, foreign exchange rates and the outcome of contingencies, such as legal proceedings, plansproceedings;
•expectations for impact of or changes to existing or new government regulations or laws;
•our ability to anticipate and respond to macroeconomic, geopolitical, health and industry trends, pandemics, acts of war and other large-scale crises; and
•manufacturing and product supply.
In particular, forward-looking information in this Form 10-Q includes statements relating to share repurchasesspecific future actions and dividends, government regulationeffects, including, among others, the expected benefits of the organizational changes to further transform our operations, our efforts to respond to COVID-19, including our plans and financial results,expectations regarding Comirnaty and Paxlovid, and any potential future vaccines or treatments; the forecasted revenue, demand, manufacturing and supply of Comirnaty and Paxlovid, including in particular,expectations of the commercial market for Comirnaty; our expectations regarding the impact of COVID-19 on our business; the expected impact of patent expiries and competition from generic manufacturers; the recent hurricanes in Puerto Rico set forth in the “Overview of Our Performance, Operating Environment, Strategyexpected pricing pressures on our products and Outlook––Our Business––Impact of Recent Hurricanes in Puerto Rico” section of this MD&A, the anticipated progressimpact to our business; the availability of raw materials for 2022; the expected charges and/or costs in remediation efforts at certainconnection with the spin-off of our Hospira manufacturing facilities set forth in the “Overview of Our Performance, Operating Environment, StrategyUpjohn Business and Outlook––Our Business––Product Manufacturing” section of this MD&A, the anticipated timeframe for any decision regarding strategic alternatives for Pfizer Consumer Healthcare set forth in the “Overview of Our Performance, Operating Environment, Strategy and Outlook––Our Strategy––Our Business Development Initiatives” section of this MD&A, our anticipated liquidity position set forth in the “Overview of Our Performance, Operating Environment, Strategy and Outlook––The Global Economic Environment” and the “Analysis of Financial Condition, Liquidity and Capital Resources” sections of this MD&A, the financial guidance set forth in the “Our Financial Guidance for 2017” section of this MD&A, the anticipated costs and cost savings, including from our acquisition of Hospira and our cost-reduction/productivity initiatives set forth in the “Costs and Expenses––Restructuring Charges and Other Costs Associatedits combination with Acquisitions and Cost-Reduction/Productivity Initiatives” section of this MD&A and in Notes to Condensed Consolidated Financial Statements––Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives, Mylan; the benefits expected from our business development transactions,transactions; our anticipated liquidity position; the anticipated product performance set forthcosts and savings from certain of our initiatives, including our Transforming to a More Focused Company program; and our planned capital spending.
Given their nature, we cannot assure that any outcome expressed in “Revenuesthese forward-looking statements will be realized in whole or in part. Actual outcomes may vary materially from past results and Product Developmentsthose anticipated, estimated, implied or projected. These forward-looking statements may be affected by underlying assumptions that may prove inaccurate or incomplete, or by known or unknown risks and uncertainties, including those described in this section and in the —Item 1A. Risk FactorsRevenues section in our 2021 Form 10-K.—Selected Product Discussion”
Therefore, you are cautioned not to unduly rely on forward-looking statements, which speak only as of the date of this MD&A and the contributions thatForm 10-Q. We undertake no obligation to update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities law. You are advised, however, to consult any further disclosures we expect to make from our general assets to our pension and postretirement plans during on related subjects.
2017 set forth in Notes to Condensed Consolidated Financial Statements––Note 10. Pension and Postretirement Benefit Plans. AmongSome of the factors that could cause actual results to differ materially from pastare identified below, as well as those discussed in the Item 1A. Risk Factors section in our 2021 Form 10-K and within MD&A. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. The occurrence of any of the risks identified below, in the Item 1A. Risk Factors section in our 2021 Form 10-K or within MD&A, or other risks currently unknown, could have a material adverse effect on our business, financial condition or results, and future plans and projected future results areor we may be required to increase our accruals for contingencies. It is not possible to predict or identify all such factors. Consequently, you should not consider the following:following to be a complete discussion of all potential risks or uncertainties:
Risks Related to Our Business, Industry and Operations, and Business Development
•the outcome of research and developmentR&D activities, including, without limitation, the ability to meet anticipated pre-clinical andor clinical trialendpoints, commencement andand/or completion dates for our pre-clinical or clinical trials, regulatory submission anddates, and/or regulatory approval dates, andand/or launch dates for product candidates, as well asdates; the possibility of unfavorable pre-clinical and clinical trial results, including the possibility of unfavorable new pre-clinical or clinical data and additionaland/or further analyses of existing pre-clinical or clinical data;
decisions risks associated with preliminary, early stage or interim data; the risk that pre-clinical and clinical trial data are subject to differing interpretations and assessments, including during the peer review/publication process, in the scientific community generally, and by regulatory authorities regardingauthorities; and whether and when to approveadditional data from our drug applications, whichpipeline programs will depend on the assessment by such regulatory authorities of the benefit-risk profile suggested by the totality of the efficacybe published in scientific journal publications, and safety information submitted; decisions by regulatory authorities regarding labeling, ingredientsif so, when and other matters that could affect the availability or commercial potential of our products;with what modifications and uncertainties regarding interpretations;
•our ability to successfully address comments received from regulatory authorities such as the comments in complete response letters receivedFDA or the EMA, or obtain approval for new products and indications from regulators on a timely basis or at all; regulatory decisions impacting labeling, including the scope of indicated patient populations, product dosage, manufacturing processes, safety and/or other matters, including decisions relating to emerging developments regarding potential product impurities; the impact of, or uncertainties
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regarding the ability to obtain, recommendations by us with respect to certaintechnical or advisory committees; and the timing of our drug applications to the satisfaction of the FDA;
the speed with which regulatory authorizations, pricing approvals and product launcheslaunches;
•claims and concerns that may be achieved;
arise regarding the safety or efficacy of in-line products and product candidates, including claims and concerns that may arise from the outcome of post-approval clinical trials, which could result in the loss ofimpact marketing approval, for a product or changes in the labeling, for, and/or increased or new concerns about the safety or efficacy of, a product that could affect its availability or commercial potential;
risks associated with preliminary, early stagepotential, including uncertainties regarding the commercial or interimother impact of the results of the Xeljanz ORAL Surveillance (A3921133) study or actions by regulatory authorities based on analysis of ORAL Surveillance or other data, including the risk that final results of studies for which preliminary, early stage or interim data have been provided and/or additional clinical trials may be different from (including less favorable than) the preliminary, early stage or interim data results and may not support further clinical development of the applicable product candidate or indication;on other JAK inhibitors in our portfolio;
•the success and impact of external business-developmentbusiness development activities, including the ability to identify and execute on potential business development opportunities; the ability to satisfy the conditions to closing of announced transactions in the anticipated time frame or at all orall; the ability to realize the anticipated benefits of any such transactions;transactions in the anticipated time frame or at all; the potential need for and impact of additional equity or debt financing to pursue these opportunities, which could result in increased leverage and/or a downgrade of our credit ratings; challenges integrating the businesses and operations; disruption to business and operations relationships; risks related to growing revenues for certain acquired products; significant transaction costs; and unknown liabilities;
competitive developments,•competition, including the impact on our competitive position offrom new product entrants, in-line branded products, generic products, private label products, biosimilars and product candidates that treat or prevent diseases and conditions similar to those treated or intended to be prevented by our in-line drugsproducts and drugproduct candidates;

the implementation by the FDA and regulatory authorities in certain other countries of an abbreviated legal pathway to approve biosimilar products, which could subject our biologic products to competition from biosimilar products, with attendant competitive pressures, after the expiration of any applicable exclusivity period and patent rights;
risks related to our ability to develop and launch biosimilars, including risks associated with “at risk” launches, defined as the marketing of a product by Pfizer before the final resolution of litigation (including any appeals) brought by a third party alleging that such marketing would infringe one or more patents owned or controlled by the third party;
the ability to meet competition from generic, branded and biosimilar products after the loss or expiration of patent protection for our products or competitor products;
•the ability to successfully market both new and existing products, domestically and internationally;including biosimilars;
•difficulties or delays in manufacturing, including delays caused by natural events, such as hurricanes;sales or marketing; supply disruptions, shortages or stock-outs at our facilities;facilities or third-party facilities that we rely on; and legal or regulatory actions, such as warning letters, suspension of manufacturing, seizure of product, injunctions or voluntary recall of a product;actions;
trade buying patterns;
•the impact of existingpublic health outbreaks, epidemics or pandemics (such as the COVID-19 pandemic), including the impact of vaccine mandates where applicable, on our business, operations and financial condition and results, including impacts on our employees, manufacturing, supply chain, sales and marketing, R&D and clinical trials;
•risks and uncertainties related to our efforts to develop and commercialize a vaccine to help prevent COVID-19 and an oral COVID-19 treatment, as well as challenges related to their manufacturing, supply and distribution;
•risks related to our ability to achieve our revenue forecasts for Comirnaty and Paxlovid or any potential future legislationCOVID-19 vaccines or treatments, including, among other things, whether and regulatory provisions on product exclusivity;when additional supply or purchase agreements will be reached, the risk that demand for any products may be reduced or no longer exist and the possibility that COVID-19 will diminish in severity or prevalence or disappear entirely, which may lead to reduced revenues or excess inventory;
•trends toward managed care and healthcare cost containment, and our ability to obtain or maintain timely or adequate pricing or favorable formulary placement for our products;
the impact of any significant spending reductions or cost controls affecting Medicare, Medicaid or other publicly funded or subsidized health programs or changes in the tax treatment of employer-sponsored health insurance that may be implemented, and/or any significant additional taxes or fees that may be imposed on the pharmaceutical industry as part of any broad deficit-reduction effort;
the impact of any U.S. healthcare reform or legislation, including any repeal, substantial modification or invalidation of any or all of the provisions of the U.S. Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act;
U.S. federal or state legislation or regulatory action and/or policy efforts affecting, among other things, pharmaceutical product pricing, reimbursement or access, including under Medicaid, Medicare and other publicly funded or subsidized health programs; patient out-of-pocket costs for medicines, manufacturer prices and/or price increases that could result in new mandatory rebates and discounts or other pricing restrictions; the importation of prescription drugs from outside the U.S. at prices that are regulated by governments of various foreign countries; restrictions on direct-to-consumer advertising; limitations on interactions with healthcare professionals; or the use of comparative effectiveness methodologies that could be implemented in a manner that focuses primarily on the cost differences and minimizes the therapeutic differences among pharmaceutical products and restricts access to innovative medicines; as well as pricing pressures for our products as a result of highly competitive insurance markets;
legislation or regulatory action in markets outside the U.S. affecting pharmaceutical product pricing, reimbursement or access, including, in particular, continued government-mandated reductions in prices and access restrictions for certain biopharmaceutical products to control costs in those markets;
the exposure of our operations outside the U.S. to possible capital and exchange controls, expropriation and other restrictive government actions, changes in intellectual property legal protections and remedies, as well as political unrest, unstable governments and legal systems and inter-governmental disputes;
contingencies related to actual or alleged environmental contamination;
claims and concerns that may arise regarding the safety or efficacy of in-line products and product candidates;
any significant breakdown, infiltration or interruption of our information technology systems and infrastructure;
legal defense costs, insurance expenses and settlement costs;
the risk of an adverse decision or settlement and the adequacy of reserves related to legal proceedings, including patent litigation, product liability and other product-related litigation, including personal injury, consumer, off-label promotion, securities, antitrust and breach of contract claims, commercial, environmental, government investigations, employment and other legal proceedings, including various means for resolving asbestos litigation, as well as tax issues;
our ability to protect our patents and other intellectual property, both domestically and internationally;

•interest rate and foreign currency exchange rate fluctuations, including the impact of possible currency devaluations in countries experiencing high inflation rates and the volatility following the U.K. referendum in which voters approved the exit from the EU;rates;
governmental laws and regulations affecting domestic and foreign operations, including, without limitation, tax obligations and changes affecting the tax treatment by the U.S. of income earned outside the U.S. that may result from pending and possible future proposals;
•any significant issues involving our largest wholesale distributors or government customers, which account for a substantial portion of our revenues;
•the possible impact of the increased presence of counterfeit medicines or vaccines in the pharmaceutical supply chain on our revenues and on patient confidence in the integrity of our medicines;chain;
the end result of any negotiations between the U.K. government and the EU regarding the terms of the U.K.’s exit from the EU, which could have implications on our research, commercial and general business operations in the U.K. and the EU;
•any significant issues that may arise related to the outsourcing of certain operational and staff functions to third parties, including with regard to quality, timelinessparties; and compliance with applicable legal requirements and industry standards;
any significant issues that may arise related to our joint venturesJVs and other third-party business arrangements;
changes in U.S. generally accepted accounting principles;
changes in interpretations of existing laws and regulations, or changes in laws and regulations, in the U.S. and other countries;
•uncertainties related to general economic, political, business, industry, regulatory and market conditions including, without limitation, uncertainties related to the impact on us, our customers, suppliers and lenders and counterparties to our foreign-exchange and interest-rate agreements of challenging global economic conditions, such as inflation, and recent and possible future changes in global financial markets; and the related risk that our allowance for doubtful accounts may not be adequate;
•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.geopolitical instability, civil unrest or military action overseas;action;
growth in costs and expenses;
changes in our product, segment and geographic mix;
•the impact of purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items;
the impact of acquisitions, divestitures, restructurings, internal reorganizations, product recalls, withdrawals and other unusual items, including uncertainties related to regulator-directed risk evaluations and assessments, including our ability to realize the projected benefitsongoing evaluation of our cost-reduction and productivity initiatives andproduct portfolio for the potential presence or formation of the internal separation of our commercial operations into our current operating structure;nitrosamines;
•trade buying patterns;
•the risk of an impairment charge related to our intangible assets, goodwill or equity-method investments;
risks related to internal control over financial reporting;
•the impact of, and risks and uncertainties related to, our acquisitionsrestructurings and internal reorganizations, as well as any other corporate strategic initiatives, and cost-reduction and productivity initiatives, each of Hospira, Anacor, Medivationwhich requires upfront costs but may fail to yield anticipated benefits and AstraZeneca’s small molecule anti-infectives business,may result in unexpected costs or organizational disruption;
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Risks Related to Government Regulation and Legal Proceedings
•the impact of any U.S. healthcare reform or legislation or any significant spending reductions or cost controls affecting Medicare, Medicaid or other publicly funded or subsidized health programs, including the IRA, or changes in the tax treatment of employer-sponsored health insurance that may be implemented;
•U.S. federal or state legislation or regulatory action and/or policy efforts affecting, among other things, the ability to realize the anticipated benefits of those acquisitions, including the possibility that expected cost savings related to the acquisition of Hospirapharmaceutical product pricing, intellectual property, reimbursement or access or restrictions on U.S. direct-to-consumer advertising; limitations on interactions with healthcare professionals and accretion related to the acquisitions of Hospira, Anacor and Medivation will not be realized or will not be realized within the expected time frame; the risk that the businesses will not be integrated successfully; disruption from the transactions making it more difficult to maintain business and operational relationships; risks related to our ability to grow revenues for Xtandi and expand Xtandi into the non-metastatic castration-resistant prostate cancer setting; significant transaction costs; and unknown liabilities; and
risks and uncertainties related to our evaluation of strategic alternativesother industry stakeholders; as well as pricing pressures for our Consumer Healthcare business, including, among other things, the ability to realize the anticipated benefits of any strategic alternatives we may pursue for our Consumer Healthcare business, including the potential for disruption to our business resulting from the evaluation of strategic alternatives for Pfizer Consumer Healthcare; the possibility that we may not be able to realize a higher value for Pfizer Consumer Healthcare through strategic alternatives; and unknown liabilities.
We cannot guarantee that any forward-looking statement will be realized. Achievement of anticipated results is subject to substantial risks, uncertainties and inaccurate assumptions. Should known or unknown risks or uncertainties materialize or should underlying assumptions prove inaccurate, actual results could vary materially from past results

and those anticipated, estimated or projected. Investors should bear this in mind as they consider forward-looking statements, and are cautioned not to put undue reliance on forward-looking statements.

We undertake no obligation to publicly update forward-looking statements, whetherproducts as a result of new information, future eventshighly competitive insurance markets;
•legislation or otherwise, exceptregulatory action in markets outside of the U.S., including China, affecting pharmaceutical product pricing, intellectual property, reimbursement or access, including, in particular, continued government-mandated reductions in prices and access restrictions for certain biopharmaceutical products to control costs in those markets;
•the exposure of our operations globally to possible capital and exchange controls, economic conditions, expropriation and other restrictive government actions, changes in intellectual property legal protections and remedies, as required bywell as the impact of political unrest or civil unrest or military action, including the ongoing conflict between Russia and Ukraine and the continued economic consequences, unstable governments and legal systems and inter-governmental disputes;
•legal defense costs, insurance expenses, settlement costs and contingencies, including those related to actual or alleged environmental contamination;
•the risk and impact of an adverse decision or settlement and the adequacy of reserves related to legal proceedings;
•the risk and impact of tax related litigation;
•governmental laws and regulations affecting our operations, including, without limitation, the recently enacted IRA, changes in laws and regulations or their interpretation, including, among others, changes in tax laws and regulations internationally and in the U.S., the potential adoption of global minimum taxation requirements and potential changes to existing tax law or by the rulescurrent U.S. Presidential administration and regulationsCongress;
Risks Related to Intellectual Property, Technology and Security
•any significant breakdown or interruption of the SEC. You are advised, however, to consult any further disclosures we make on related subjects.

our information technology systems and infrastructure (including cloud services);
Our •2016any business disruption, theft of confidential or proprietary information, extortion or integrity compromise resulting from a cyber-attack or other malfeasance by third parties, including, but not limited to, nation states, employees, business partners or others;
• Form 10-K listed various important factorsthe risk that our currently pending or future patent applications may not be granted on a timely basis or at all, or any patent-term extensions that we seek may not be granted on a timely basis, if at all; and
•our ability to protect our patents and other intellectual property, such as against claims of invalidity that could cause actual resultsresult in LOE; claims of patent infringement, including asserted and/or unasserted intellectual property claims; challenges faced by our collaboration or licensing partners to differ materiallythe validity of their patent rights; and in response to any pressure, or legal or regulatory action by, various stakeholders or governments that could potentially result in us not seeking intellectual property protection for or agreeing not to enforce or being restricted from pastenforcing intellectual property related to our products, including Comirnaty and projected future results. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. Readers can find them in Part I, Item 1A, of that filing under the heading “Risk Factors.” We incorporate that section of that Form 10-K in this filing and investors should refer to it. Reference is also made to Part II, Item 1A, “Risk Factors,” of this Quarterly Report on Form 10-Q. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.Paxlovid.

The operating segment information provided in this report does not purport to represent the revenues, costs and income from continuing operations before provision for taxes on income that each of our operating segments would have recorded had each segment operated as a standalone company during the periods presented.

This report includes discussion of certain clinical studies relating to various in-line products and/or product candidates. These studies typically are part of a larger body of clinical data relating to such products or product candidates, and the discussion herein should be considered in the context of the larger body of data. In addition, clinical trial data are subject to differing interpretations, and, even when we view data as sufficient to support the safety and/or effectiveness of a product candidate or a new indication for an in-line product, regulatory authorities may not share our views and may require additional data or may deny approval altogether.
Legal Proceedings and Contingencies

Information with respect to legal proceedings and contingencies required by this Item is incorporated herein by reference to Notes to Condensed Consolidated Financial Statements––Note 12A. Commitments and Contingencies: Legal Proceedings in Part I, Item 1, of this Quarterly Report on Form 10-Q.


ItemITEM 3. Quantitative and Qualitative Disclosures About Market Risk

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information required by this item is incorporated by reference from the discussion underin the heading Analysis of Financial Condition, Liquidity, Capital Resources and Market Risk Management insection within MD&A of our 2016 Financial Report.2021 Form 10-K.

ItemITEM 4. Controls and Procedures

CONTROLS AND PROCEDURES
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective in alerting them in a timely manner to material information required to be disclosed in our periodic reports filed with the SEC.

During our most recent fiscal quarter, there has not been any change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


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PART II - OTHER INFORMATION


Item 1. Legal Proceedings

PART II.  OTHER INFORMATION
The information required by this Item is incorporated herein by reference to Notes to Condensed Consolidated Financial Statements––
ITEM 1. LEGAL PROCEEDINGS

Certain legal proceedings in which we are involved are discussed in Note 12A. Commitments and Contingencies: Legal Proceedings12A in Part I, Item 1, of this Quarterly Report on Form 10-Q..

Tax Matters

ITEM 1A. RISK FACTORS
Additional information with respect to tax matters required by this Item is incorporated herein by reference to Notes to Condensed Consolidated Financial Statements––Note 5B. Tax Matters: Tax Contingencies in Part I, Item 1, of this Quarterly Report on Form 10-Q.

We account for income tax contingencies using a benefit recognition model. If our initial assessment fails to result in the recognition of a tax benefit, we regularly monitor our position and subsequently recognize the tax benefit: (i) if there are changes in tax law, analogous case law or there is new information that sufficiently raise the likelihood of prevailing on the technical merits of the position to “more likely than not”; (ii) if the statute of limitations expires; or (iii) if there is a completion of an audit resulting in a favorable settlement of that tax year with the appropriate agency. We regularly re-evaluate our tax positions based on the results of audits of federal, state and foreign income tax filings, statute of limitations expirations, changes in tax law or receipt of new information that would either increase or decrease the technical merits of a position relativerefer to the “more-likely-than-not” standard.

Overview of Our assessments are based on estimatesPerformance, Operating Environment, Strategy and assumptions that have been deemed reasonable by management, but our estimates of unrecognized tax benefits Outlook—Our Operating Environment and potential tax benefits may not be representative of actual outcomes,—The Global Economic Environment sections and variation from such estimates could materially affect our financial statements in the period of settlement or when the statutes of limitations expire, as we treat these events as discrete items in the period of resolution. Finalizing audits with the relevant taxing authorities can include formal administrative and legal proceedings, and, as a result, it is difficult to estimate the timing and range of possible changes related to our uncertain tax positions, and such changes could be significant.

Item 1A. Risk Factors
The “Our Operating Environment” and “Forward-LookingForward-Looking Information and Factors That May Affect Future Results” sectionsResults section of the MD&A of this Quarterly Report on Form 10-Q and Part I, Item 1A, “Risk Factors” of our 2016 Form 10-K are incorporated by reference herein. We are including the following revised risk factor, which updates and supersedes the corresponding risk factor disclosed in our 20162021 Form 10-K and should be read in conjunction with our description of risk factors in Part I, to the Item 1A, “Risk Factors”1A. Risk Factors section of our 20162021 Form 10-K:10-K.
PRODUCT MANUFACTURING
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND MARKETING RISKS

Difficulties or delays in product manufacturing or marketing could affect future results through regulatory actions, shut-downs, approval delays, withdrawals, recalls, penalties, supply disruptions or shortages, reputational harm, product liability, unanticipated costs or otherwise. Examples of such difficulties or delays include, but are not limited to, the inability to increase production capacity commensurate with demand; the failure to predict market demand for, or to gain market acceptance of, approved products; the possibility that the supply of incoming materials may be delayed or become unavailable and that the quality of incoming materials may be substandard and not detected; the possibility that we may fail to maintain appropriate quality standards throughout the internal and external supply network and/or comply with cGMPs and other applicable regulations such as serialization (which allows for track and trace of products in the supply chain to enhance patient safety); risks to supply chain continuity as a result of natural or man-made disasters at our facilities or at a supplier or vendor, including those that may be related to climate change; or failure to maintain the integrity of our supply chains against intentional and criminal acts such as economic adulteration, product diversion, product theft, and counterfeit goods.

Regulatory agencies periodically inspect our drug manufacturing facilities to ensure compliance with applicable cGMP requirements. Failure to comply with these requirements may subject us to possible legal or regulatory actions, such as warning letters, suspension of manufacturing, seizure of product, injunctions or voluntary recall of a product, any of which could have a material adverse effect on our business, financial condition and results of operations. In February 2017, we received a warning letter from the FDA communicating the FDA’s view that certain violations of cGMP regulations exist at Hospira’s manufacturing facility in McPherson, Kansas. We are undertaking corrective actions to address the concerns raised by the FDA. Communication with the FDA is ongoing. Until the violations are corrected and confirmed by the FDA, the FDA may refuse to


grant premarket approval applications and/or the FDA may refuse to grant export certificates related to products manufactured at McPherson, Kansas. In addition, in September 2017, Meridian, a subsidiary of Pfizer Inc., received a warning letter from the FDA asserting the FDA’s view that certain violations of cGMP and Quality System Regulations exist at Meridian’s manufacturing sites in St. Louis, Missouri. We are undertaking corrective actions to address the concerns raised by the FDA, and communication with the FDA is ongoing. Until the violations are corrected and confirmed by the FDA, the FDA may refuse to grant premarket approval of applications and/or the FDA may refuse to grant export certificates related to products manufactured at St. Louis, Missouri.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

USE OF PROCEEDS

The following table provides certain information with respect to oursummarizes purchases of shares of the Company’sour common stock during the third fiscal quarter of 2022:
Period
Total Number of
Shares Purchased(a)
Average Price
Paid per Share(a)
Total Number of Shares Purchased as Part of Publicly Announced Plan
Approximate Value of Shares That May Yet Be Purchased Under the Plan(b)
July 4 through July 31, 202229,527 $52.06 — $3,292,882,444 
August 1 through August 28, 202218,768 $50.29 — $3,292,882,444 
August 29 through October 2, 202285,565 $45.46 — $3,292,882,444 
Total133,860 $47.59 — 
(a)2017:Represents (i) 131,564 shares of common stock surrendered to the Company to satisfy tax withholding obligations in connection with the vesting of awards under our long-term incentive programs and (ii) the open market purchase by the trustee of 2,296 shares of common stock in connection with the reinvestment of dividends paid on common stock held in trust for employees who deferred receipt of performance share awards.

Issuer Purchases(b)See the Analysis of Equity SecuritiesFinancial Condition, Liquidity, Capital Resources and Market Risk—Capital Allocation Framework (a)section within the MD&A of this Form 10-Q and Note 12 in our 2021 Form 10-K.
Period 
Total Number of
Shares Purchased(b)

 
Average Price
Paid per Share(b)

 Total Number of Shares Purchased as Part of Publicly Announced Plan
 
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plan(a)

July 3, 2017 through July 30, 2017 12,102
 $33.46
 —
 $6,355,862,076
July 31, 2017 through August 27, 2017 51,568
 $33.03
 —
 $6,355,862,076
August 28, 2017 through October 1, 2017 33,579
 $34.06
 —
 $6,355,862,076
Total 97,249
 $33.44
 —
  
ITEM 6. EXHIBITS
(a)
Our October 2014 $11 billion share-purchase plan was exhausted in the first quarter of 2017. In December 2015, the Board of Directors authorized an $11 billion share repurchase program, and share repurchases commenced thereunder in the first quarter of 2017. On February 2, 2017, we entered into an accelerated share repurchase agreement with Citibank to repurchase $5 billion of our common stock. Pursuant to the terms of the agreement, on February 6, 2017, we paid $5 billion to Citibank and received an initial delivery of approximately 126 million shares of our common stock from Citibank at a price of $31.73 per share, which represented, based on the closing price of our common stock on the NYSE on February 2, 2017, approximately 80% of the notional amount of the accelerated share repurchase agreement. On May 16, 2017, the accelerated share repurchase agreement with Citibank was completed, which, per the terms of the agreement, resulted in Citibank owing us a certain number of shares of Pfizer common stock. Pursuant to the agreement’s settlement terms, we received an additional 24 million shares of our common stock from Citibank on May 19, 2017. The average price paid for all of the shares delivered under the accelerated share repurchase agreement was $33.31 per share. The common stock received is included in Treasury Stock. This agreement was entered into pursuant to our previously announced share repurchase authorization. At October 1, 2017, our remaining share-purchase authorization was approximately $6.4 billion.
(b)
These columns reflect the following transactions during the third fiscal quarter of 2017: (i) the surrender to Pfizer of 91,487 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock units issued to employees; (ii) the surrender to Pfizer of 100 shares of common stock to satisfy tax withholding obligations in connection with the vesting of performance share awards issued to employees; (iii) the surrender of 16 shares of common stock to satisfy withholding obligations in connection with the settlement of total shareholder return units; and (iv) the open market purchase by the trustee of 5,646 shares of common stock in connection with the reinvestment of dividends paid on common stock held in trust for employees who were granted performance share awards and who deferred receipt of such awards.
Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.


Item 6. Exhibits
-Amendment No. 1 to the Pfizer Supplemental Savings Plan
Exhibit 10.2
-Pfizer Inc. Global Performance Plan
Exhibit 12
-Computation of Ratio of Earnings to Fixed Charges.
Exhibit 15
-Accountants’ Acknowledgment.
Exhibit 31.1
-Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
-Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
-
Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
-
Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 101:
EX-101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
EX-101.SCH

EX-101.CAL

EX-101.LAB

EX-101.PRE

EX-101.DEF
Inline XBRL Taxonomy Extension Schema

Inline XBRL Taxonomy Extension Calculation Linkbase

Inline XBRL Taxonomy Extension Label Linkbase

Inline XBRL Taxonomy Extension Presentation Linkbase

Inline XBRL Taxonomy Extension Definition Document
Exhibit 104Cover Page Interactive Data File––the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Pfizer Inc.
(Registrant)
Dated:November 9, 20172022/s/ Loretta V. CangialosiJennifer B. Damico
Loretta V. Cangialosi, Jennifer B. Damico
Senior Vice President and
Controller

(Principal Accounting Officer and

Duly Authorized Officer)

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