UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended OctoberApril 2, 20222023
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
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PFIZER INC.
(Exact name of registrant as specified in its charter)
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| Delaware | 13-5315170 |
| (State of Incorporation) | (I.R.S. Employer Identification No.) |
23566 Hudson Boulevard East 42nd Street,, New York, New York 1001710001-2192
(Address of principal executive offices) (zip code)
(212) 733-2323
(Registrant’s telephone number)number including area code)
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| Securities registered pursuant to Section 12(b) of the Act: |
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| Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Common Stock, $.05$0.05 par value | | PFE | | New York Stock Exchange |
| 1.000% Notes due 2027 | | PFE27 | | New 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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
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:
Large Accelerated filer 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).
At November 4, 2022,May 5, 2023, 5,613,314,5375,645,307,020 shares of the issuer’s voting common stock were outstanding.
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| Item 3. | |
| Defaults Upon Senior Securities | N/A |
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| Item 4. | |
| Mine Safety Disclosures | N/A |
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| Item 5. | |
| Other Information | N/A |
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| N/A = Not Applicable | |
Unless the context requires otherwise, references to “Pfizer,” “the Company,” “we,” “us” or “our” in this 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,February 26, 2023 and February 27, 2022, and August 29, 2021, and for U.S. subsidiaries is as of and for the three and nine months ended OctoberApril 2, 20222023 and OctoberApril 3, 2021.2022. 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 20212022 Form 10-K. We also have used several other terms in this Form 10-Q, most of which are explained or defined below:
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20212022 Form 10-K | Annual Report on Form 10-K for the fiscal year ended December 31, 20212022 |
| ACIP | Advisory Committee on Immunization Practices |
| ALK | anaplastic lymphoma kinase |
| Alliance revenues | Revenues from alliance agreements under which we co-promote products discovered or developed by other companies or us |
| Arena | Arena Pharmaceuticals, Inc. |
| Astellas | Astellas Pharma Inc., Astellas US LLC and Astellas Pharma US, Inc. |
Arvinas | Arvinas, Inc. |
| ATTR-CM | transthyretin amyloid cardiomyopathy |
| Biohaven | Biohaven Pharmaceutical Holding Company Ltd. |
| BioNTech | BioNTech SE |
| Biopharma | Global Biopharmaceuticals Business |
BLA | Biologics License Application |
| BMS | Bristol-Myers Squibb Company |
| BOD | Board of Directors |
| CDC | U.S. Centers for Disease Control and Prevention |
CGRP | calcitonin gene-related peptide |
| CMA | conditional marketing authorisation |
| Comirnaty* | Unless 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 VaccineVaccine. In the U.S., monovalent mRNA COVID-19 vaccines are no longer emergency use authorized or CDC-recommended, although Comirnaty remains a licensed vaccine. |
| Cond. J-NDA | Conditional Japan New Drug Application |
| Consumer Healthcare JV | GSK Consumer Healthcare JV |
| COVID-19 | novel coronavirus disease of 2019 |
| Developed Europe | Includes the following markets: Western Europe, Scandinavian countries and Finland |
| Developed Markets | Includes the following markets: U.S., Developed Europe, Japan, Australia,South Korea, Canada, South KoreaAustralia and New Zealand |
| Developed Rest of World | Includes the following markets: Japan, Australia,South Korea, Canada, South KoreaAustralia and New Zealand |
| EC | European Commission |
| EMA | European Medicines Agency |
| Emerging Markets | Includes, but is not limited to, the following markets: Asia (excluding Japan and South Korea), Latin America, CentralEastern Europe, EasternCentral Europe, the Middle East, Africa and Turkey |
| EPS | earnings per share |
| ESG | Environmental, Social and Governance |
| EU | European Union |
| EUA | emergency use authorization |
| Exchange Act | Securities Exchange Act of 1934, as amended |
| FASB | Financial Accounting Standards Board |
| FDA | U.S. Food and Drug Administration |
| FFDCA | U.S. Federal Food, Drug and Cosmetic Act |
| Form 10-Q | This Quarterly Report on Form 10-Q for the quarterly period ended OctoberApril 2, 20222023 |
| GAAP | Generally Accepted Accounting Principles |
GISTGBT | gastrointestinal stromal tumorsGlobal Blood Therapeutics, Inc. |
| GPD | Global Product Development organization |
| GSK | GlaxoSmithKlineGSK plc |
| Haleon | Haleon plc |
| HIPAA | Health Insurance Portability and Accountability Act of 1996 |
| Hospira | Hospira, Inc. |
| IPR&D | in-process research and development |
| IRA | Inflation Reduction Act of 2022 |
| IRS | U.S. Internal Revenue Service |
| JAK | Janus kinase |
| JV | joint venture |
| King | King Pharmaceuticals LLC (formerly King Pharmaceuticals, Inc.) |
| LIBOR | London Interbank Offered Rate |
| LOE | loss of exclusivity |
| mCRC | metastatic colorectal cancer |
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mCRC | metastatic colorectal cancer |
| mCRPC | metastatic castration-resistant prostate cancer |
| mCSPC | metastatic castration-sensitive prostate cancer |
| MD&A | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
| MDL | Multi-District Litigation |
| Meridian | Meridian Medical Technologies, Inc. |
| mRNA | messenger ribonucleic acid |
| MSA | Manufacturing Supply Agreement |
| Mylan | Mylan N.V. |
| Myovant | Myovant Sciences Ltd. |
| NDA | New Drug Application |
| Nimbus | Nimbus Therapeutics, LLC |
| nmCRPC | non-metastatic castration-resistant prostate cancer |
| NSCLC | non-small cell lung cancer |
| ODT | oral disintegrating tablet |
| Ono | Ono Pharmaceutical Co., Ltd. |
| OPKO | OPKO Health, Inc. |
| OTC | over-the-counter |
| Paxlovid* | an oral COVID-19 treatment (nirmatrelvir [PF-07321332] tablets and ritonavir tablets) |
| PC1 | Pfizer CentreOne |
PGS | Pfizer Global Supply |
| Pharmacia | Pharmacia Corporation |
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PRACPrevnar family | Pharmacovigilance Risk Assessment CommitteeIncludes Prevnar 13/Prevenar 13 (pediatric and adult) and Prevnar 20/Apexxnar (adult) |
| PsA | psoriatic arthritis |
QTD | Quarter-to-date or three months ended |
| RA | rheumatoid arthritis |
| RCC | renal cell carcinoma |
| R&D | research and development |
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ReViralSeagen | ReViral Ltd.Seagen Inc. |
| SEC | U.S. Securities and Exchange Commission |
sNDASI&A | supplemental new drug applicationselling, informational and administrative |
| TSAs | transition service arrangements |
| UC | ulcerative colitis |
| U.K. | United Kingdom |
| U.S. | United States |
| Upjohn Business | Pfizer’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 |
| Viatris | Viatris Inc. |
| ViiV | ViiV Healthcare Limited |
| Vyndaqel family | Includes Vyndaqel, Vyndamax and Vynmac |
| WRDM | Worldwide Research, Development and Medical |
YTD | 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])kg) with positive resultsa current diagnosis of direct SARS-CoV-2 viral testing,mild-to-moderate COVID-19 and who are at high-riskhigh risk for progression to severe COVID-19, including hospitalization or death. Emergency uses of the vaccines haveThe Pfizer-BioNTech COVID-19 Vaccine, Bivalent has 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.older. 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.comand 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.
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.
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| PART I. FINANCIAL INFORMATION |
ITEM 1. FINANCIAL STATEMENTS
PFIZER INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
| | | | | Three Months Ended | | Nine Months Ended | | | | Three Months Ended |
| (MILLIONS, EXCEPT PER COMMON SHARE DATA) | | October 2,
2022 | | October 3,
2021 | | October 2,
2022 | | October 3,
2021 | |
| (MILLIONS, EXCEPT PER SHARE DATA) | | (MILLIONS, EXCEPT PER SHARE DATA) | | | April 2,
2023 | | April 3,
2022 |
| Revenues | Revenues | | $ | 22,638 | | | $ | 24,035 | | | $ | 76,040 | | | $ | 57,450 | | Revenues | | | $ | 18,282 | | | $ | 25,661 | |
| Costs and expenses: | Costs and expenses: | | Costs and expenses: | | | |
Cost of sales(a) | Cost of sales(a) | | 6,063 | | | 9,932 | | | 24,696 | | | 21,085 | | Cost of sales(a) | | | 4,886 | | | 9,984 | |
Selling, informational and administrative expenses(a) | Selling, informational and administrative expenses(a) | | 3,391 | | | 2,899 | | | 9,032 | | | 8,599 | | Selling, informational and administrative expenses(a) | | | 3,418 | | | 2,593 | |
Research and development expenses(a) | Research and development expenses(a) | | 2,696 | | | 2,681 | | | 7,813 | | | 6,914 | | Research and development expenses(a) | | | 2,505 | | | 2,301 | |
Acquired in-process research and development expenses(b) | Acquired in-process research and development expenses(b) | | 524 | | | 762 | | | 880 | | | 1,000 | | Acquired in-process research and development expenses(b) | | | 21 | | | 355 | |
| Amortization of intangible assets | Amortization of intangible assets | | 822 | | | 968 | | | 2,478 | | | 2,743 | | Amortization of intangible assets | | | 1,103 | | | 835 | |
| Restructuring charges and certain acquisition-related costs | Restructuring charges and certain acquisition-related costs | | 199 | | | 646 | | | 580 | | | 667 | | Restructuring charges and certain acquisition-related costs | | | 9 | | | 192 | |
| | Other (income)/deductions––net | Other (income)/deductions––net | | (59) | | | (1,696) | | | 1,063 | | | (4,043) | | Other (income)/deductions––net | | | 70 | | | 350 | |
| Income from continuing operations before provision/(benefit) for taxes on income | Income from continuing operations before provision/(benefit) for taxes on income | | 9,001 | | | 7,843 | | | 29,498 | | | 20,484 | | Income from continuing operations before provision/(benefit) for taxes on income | | | 6,270 | | | 9,050 | |
| Provision/(benefit) for taxes on income | Provision/(benefit) for taxes on income | | 356 | | | (328) | | | 3,098 | | | 1,603 | | Provision/(benefit) for taxes on income | | | 715 | | | 1,172 | |
| Income from continuing operations | Income from continuing operations | | 8,645 | | | 8,171 | | | 26,400 | | | 18,881 | | Income from continuing operations | | | 5,555 | | | 7,879 | |
| | Discontinued operations––net of tax | Discontinued operations––net of tax | | (21) | | | (13) | | | 4 | | | (248) | | Discontinued operations––net of tax | | | 1 | | | (9) | |
| | Net income before allocation to noncontrolling interests | Net income before allocation to noncontrolling interests | | 8,623 | | | 8,159 | | | 26,404 | | | 18,633 | | Net income before allocation to noncontrolling interests | | | 5,556 | | | 7,870 | |
| Less: Net income attributable to noncontrolling interests | Less: Net income attributable to noncontrolling interests | | 15 | | | 12 | | | 27 | | | 47 | | Less: Net income attributable to noncontrolling interests | | | 13 | | | 6 | |
| Net income attributable to Pfizer Inc. common shareholders | Net income attributable to Pfizer Inc. common shareholders | | $ | 8,608 | | | $ | 8,146 | | | $ | 26,378 | | | $ | 18,586 | | Net income attributable to Pfizer Inc. common shareholders | | | $ | 5,543 | | | $ | 7,864 | |
| Earnings per common share––basic: | Earnings per common share––basic: | | | | | | | | | Earnings per common share––basic: | | | | | |
| Income from continuing operations attributable to Pfizer Inc. common shareholders | Income from continuing operations attributable to Pfizer Inc. common shareholders | | $ | 1.54 | | | $ | 1.45 | | | $ | 4.70 | | | $ | 3.37 | | Income from continuing operations attributable to Pfizer Inc. common shareholders | | | $ | 0.98 | | | $ | 1.40 | |
| Discontinued operations––net of tax | Discontinued operations––net of tax | | — | | | — | | | — | | | (0.04) | | Discontinued operations––net of tax | | | — | | | — | |
| Net income attributable to Pfizer Inc. common shareholders | Net income attributable to Pfizer Inc. common shareholders | | $ | 1.54 | | | $ | 1.45 | | | $ | 4.71 | | | $ | 3.32 | | Net income attributable to Pfizer Inc. common shareholders | | | $ | 0.98 | | | $ | 1.40 | |
| Earnings per common share––diluted: | Earnings per common share––diluted: | | | | | | | | | Earnings per common share––diluted: | | | | | |
| Income from continuing operations attributable to Pfizer Inc. common shareholders | Income from continuing operations attributable to Pfizer Inc. common shareholders | | $ | 1.51 | | | $ | 1.43 | | | $ | 4.60 | | | $ | 3.31 | | Income from continuing operations attributable to Pfizer Inc. common shareholders | | | $ | 0.97 | | | $ | 1.37 | |
| Discontinued operations––net of tax | Discontinued operations––net of tax | | — | | | — | | | — | | | (0.04) | | Discontinued operations––net of tax | | | — | | | — | |
| Net income attributable to Pfizer Inc. common shareholders | Net income attributable to Pfizer Inc. common shareholders | | $ | 1.51 | | | $ | 1.42 | | | $ | 4.60 | | | $ | 3.27 | | Net income attributable to Pfizer Inc. common shareholders | | | $ | 0.97 | | | $ | 1.37 | |
| | Weighted-average shares––basic | Weighted-average shares––basic | | 5,607 | | | 5,609 | | | 5,606 | | | 5,597 | | Weighted-average shares––basic | | | 5,634 | | | 5,617 | |
| Weighted-average shares––diluted | Weighted-average shares––diluted | | 5,718 | | | 5,725 | | | 5,729 | | | 5,688 | | Weighted-average shares––diluted | | | 5,727 | | | 5,758 | |
(a)Exclusive of amortization of intangible assets.
(b)See Note 1D.
See Accompanying Notes.
PFIZER INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
| | | | | Three Months Ended | | Nine Months Ended | | | | Three Months Ended |
| (MILLIONS) | (MILLIONS) | | October 2,
2022 | | October 3,
2021 | | October 2,
2022 | | October 3,
2021 | (MILLIONS) | | | April 2,
2023 | | April 3,
2022 |
| Net income before allocation to noncontrolling interests | Net income before allocation to noncontrolling interests | | $ | 8,623 | | | $ | 8,159 | | | $ | 26,404 | | | $ | 18,633 | | Net income before allocation to noncontrolling interests | | | $ | 5,556 | | | $ | 7,870 | |
| | Foreign currency translation adjustments, net | Foreign currency translation adjustments, net | | (918) | | | (866) | | | (2,549) | | | (366) | | Foreign currency translation adjustments, net | | | 101 | | | (363) | |
| | Unrealized holding gains/(losses) on derivative financial instruments, net | Unrealized holding gains/(losses) on derivative financial instruments, net | | 589 | | | 213 | | | 1,443 | | | 179 | | Unrealized holding gains/(losses) on derivative financial instruments, net | | | 2 | | | 203 | |
Reclassification adjustments for (gains)/losses included in net income(a) | Reclassification adjustments for (gains)/losses included in net income(a) | | (615) | | | 48 | | | (972) | | | 286 | | Reclassification adjustments for (gains)/losses included in net income(a) | | | 303 | | | (213) | |
| | | | (26) | | | 261 | | | 471 | | | 464 | | | | | 305 | | | (10) | |
| Unrealized holding gains/(losses) on available-for-sale securities, net | Unrealized holding gains/(losses) on available-for-sale securities, net | | (777) | | | (266) | | | (1,397) | | | (128) | | Unrealized holding gains/(losses) on available-for-sale securities, net | | | 87 | | | (133) | |
Reclassification adjustments for (gains)/losses included in net income(b) | Reclassification adjustments for (gains)/losses included in net income(b) | | 606 | | | 9 | | | 1,094 | | | (172) | | Reclassification adjustments for (gains)/losses included in net income(b) | | | (509) | | | 233 | |
| | | | | (171) | | | (257) | | | (303) | | | (300) | | | | | (422) | | | 99 | |
| | Reclassification adjustments related to amortization of prior service costs and other, net | Reclassification adjustments related to amortization of prior service costs and other, net | | (31) | | | (39) | | | (99) | | | (119) | | Reclassification adjustments related to amortization of prior service costs and other, net | | | (30) | | | (36) | |
| Reclassification adjustments related to curtailments of prior service costs and other, net | Reclassification adjustments related to curtailments of prior service costs and other, net | | 2 | | | (58) | | | (8) | | | (62) | | Reclassification adjustments related to curtailments of prior service costs and other, net | | | (5) | | | (11) | |
| | | | | (29) | | | (97) | | | (107) | | | (181) | | | | | (35) | | | (47) | |
| Other comprehensive income/(loss), before tax | Other comprehensive income/(loss), before tax | | (1,144) | | | (959) | | | (2,488) | | | (382) | | Other comprehensive income/(loss), before tax | | | (50) | | | (321) | |
| Tax provision/(benefit) on other comprehensive income/(loss) | Tax provision/(benefit) on other comprehensive income/(loss) | | (33) | | | (65) | | | (149) | | | (44) | | Tax provision/(benefit) on other comprehensive income/(loss) | | | (63) | | | (60) | |
| Other comprehensive income/(loss) before allocation to noncontrolling interests | Other comprehensive income/(loss) before allocation to noncontrolling interests | | $ | (1,111) | | | $ | (894) | | | $ | (2,339) | | | $ | (338) | | Other comprehensive income/(loss) before allocation to noncontrolling interests | | | $ | 12 | | | $ | (260) | |
| | Comprehensive income/(loss) before allocation to noncontrolling interests | Comprehensive income/(loss) before allocation to noncontrolling interests | | $ | 7,512 | | | $ | 7,265 | | | $ | 24,065 | | | $ | 18,296 | | Comprehensive income/(loss) before allocation to noncontrolling interests | | | $ | 5,569 | | | $ | 7,610 | |
| Less: Comprehensive income/(loss) attributable to noncontrolling interests | Less: Comprehensive income/(loss) attributable to noncontrolling interests | | 10 | | | 9 | | | 16 | | | 48 | | Less: Comprehensive income/(loss) attributable to noncontrolling interests | | | 10 | | | 6 | |
| Comprehensive income/(loss) attributable to Pfizer Inc. | Comprehensive income/(loss) attributable to Pfizer Inc. | | $ | 7,503 | | | $ | 7,256 | | | $ | 24,049 | | | $ | 18,248 | | Comprehensive income/(loss) attributable to Pfizer Inc. | | | $ | 5,558 | | | $ | 7,604 | |
(a)Reclassified into Other (income)/deductions—net and Cost of sales. See Note 7E.7E. (b)Reclassified into Other (income)/deductions—net.
See Accompanying Notes.
PFIZER INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| | (MILLIONS) | (MILLIONS) | | October 2,
2022 | | December 31, 2021 | (MILLIONS) | | April 2,
2023 | | December 31, 2022 |
| | | (Unaudited) | | | | | (Unaudited) | | |
| Assets | Assets | | Assets | |
| Cash and cash equivalents | Cash and cash equivalents | | $ | 1,298 | | | $ | 1,944 | | Cash and cash equivalents | | $ | 2,166 | | | $ | 416 | |
| Short-term investments | Short-term investments | | 34,825 | | | 29,125 | | Short-term investments | | 17,806 | | | 22,316 | |
| Trade accounts receivable, less allowance for doubtful accounts: 2022—$474; 2021—$492 | | 16,076 | | | 11,479 | | |
| Trade accounts receivable, less allowance for doubtful accounts: 2023—$465; 2022—$449 | | Trade accounts receivable, less allowance for doubtful accounts: 2023—$465; 2022—$449 | | 12,305 | | | 10,952 | |
| Inventories | Inventories | | 9,513 | | | 9,059 | | Inventories | | 9,541 | | | 8,981 | |
| Current tax assets | Current tax assets | | 2,544 | | | 4,266 | | Current tax assets | | 3,140 | | | 3,577 | |
| Other current assets | Other current assets | | 6,149 | | | 3,820 | | Other current assets | | 5,120 | | | 5,017 | |
| Total current assets | Total current assets | | 70,403 | | | 59,693 | | Total current assets | | 50,078 | | | 51,259 | |
| Equity-method investments | Equity-method investments | | 9,826 | | | 16,472 | | Equity-method investments | | 11,175 | | | 11,033 | |
| Long-term investments | Long-term investments | | 4,062 | | | 5,054 | | Long-term investments | | 3,568 | | | 4,036 | |
| Property, plant and equipment, less accumulated depreciation: 2022—$14,931; 2021—$15,074 | | 15,441 | | | 14,882 | | |
| Property, plant and equipment, less accumulated depreciation: 2023—$15,514; 2022—$15,174 | | Property, plant and equipment, less accumulated depreciation: 2023—$15,514; 2022—$15,174 | | 17,052 | | | 16,274 | |
| Identifiable intangible assets | Identifiable intangible assets | | 28,151 | | | 25,146 | | Identifiable intangible assets | | 42,002 | | | 43,370 | |
| Goodwill | Goodwill | | 49,441 | | | 49,208 | | Goodwill | | 51,476 | | | 51,375 | |
| Noncurrent deferred tax assets and other noncurrent tax assets | Noncurrent deferred tax assets and other noncurrent tax assets | | 7,136 | | | 3,341 | | Noncurrent deferred tax assets and other noncurrent tax assets | | 7,302 | | | 6,693 | |
| Other noncurrent assets | Other noncurrent assets | | 10,890 | | | 7,679 | | Other noncurrent assets | | 12,965 | | | 13,163 | |
| | Total assets | Total assets | | $ | 195,350 | | | $ | 181,476 | | Total assets | | $ | 195,617 | | | $ | 197,205 | |
| | Liabilities and Equity | Liabilities and Equity | | | | | Liabilities and Equity | | | | |
| Short-term borrowings, including current portion of long-term debt: 2022—$2,566; 2021—$1,636 | | $ | 4,040 | | | $ | 2,241 | | |
| Short-term borrowings, including current portion of long-term debt: 2023—$3,567; 2022—$2,560 | | Short-term borrowings, including current portion of long-term debt: 2023—$3,567; 2022—$2,560 | | $ | 4,188 | | | $ | 2,945 | |
| Trade accounts payable | Trade accounts payable | | 6,267 | | | 5,578 | | Trade accounts payable | | 6,123 | | | 6,809 | |
| Dividends payable | Dividends payable | | 2,245 | | | 2,249 | | Dividends payable | | — | | | 2,303 | |
| Income taxes payable | Income taxes payable | | 3,071 | | | 1,266 | | Income taxes payable | | 1,969 | | | 1,587 | |
| Accrued compensation and related items | Accrued compensation and related items | | 2,852 | | | 3,332 | | Accrued compensation and related items | | 2,277 | | | 3,407 | |
| Deferred revenues | Deferred revenues | | 6,191 | | | 3,067 | | Deferred revenues | | 1,750 | | | 2,520 | |
| Other current liabilities | Other current liabilities | | 19,647 | | | 24,939 | | Other current liabilities | | 20,255 | | | 22,568 | |
| | Total current liabilities | Total current liabilities | | 44,314 | | | 42,671 | | Total current liabilities | | 36,562 | | | 42,138 | |
| | Long-term debt | Long-term debt | | 32,629 | | | 36,195 | | Long-term debt | | 31,704 | | | 32,884 | |
| Pension benefit obligations | | 2,738 | | | 3,489 | | |
| Postretirement benefit obligations | | 222 | | | 235 | | |
| Pension and postretirement benefit obligations | | Pension and postretirement benefit obligations | | 2,179 | | | 2,250 | |
| | Noncurrent deferred tax liabilities | Noncurrent deferred tax liabilities | | 616 | | | 349 | | Noncurrent deferred tax liabilities | | 1,067 | | | 1,023 | |
| Other taxes payable | Other taxes payable | | 9,701 | | | 11,331 | | Other taxes payable | | 9,860 | | | 9,812 | |
| Other noncurrent liabilities | Other noncurrent liabilities | | 12,239 | | | 9,743 | | Other noncurrent liabilities | | 13,009 | | | 13,180 | |
| Total liabilities | Total liabilities | | 102,459 | | | 104,013 | | Total liabilities | | 94,381 | | | 101,288 | |
| | Commitments and Contingencies | Commitments and Contingencies | | Commitments and Contingencies | |
| | | Common stock | Common stock | | 476 | | | 473 | | Common stock | | 478 | | | 476 | |
| Additional paid-in capital | Additional paid-in capital | | 91,359 | | | 90,591 | | Additional paid-in capital | | 92,153 | | | 91,802 | |
| | Treasury stock | Treasury stock | | (113,945) | | | (111,361) | | Treasury stock | | (114,473) | | | (113,969) | |
| Retained earnings | Retained earnings | | 122,967 | | | 103,394 | | Retained earnings | | 131,102 | | | 125,656 | |
| Accumulated other comprehensive loss | Accumulated other comprehensive loss | | (8,225) | | | (5,897) | | Accumulated other comprehensive loss | | (8,289) | | | (8,304) | |
| Total Pfizer Inc. shareholders’ equity | Total Pfizer Inc. shareholders’ equity | | 92,631 | | | 77,201 | | Total Pfizer Inc. shareholders’ equity | | 100,970 | | | 95,661 | |
| Equity attributable to noncontrolling interests | Equity attributable to noncontrolling interests | | 259 | | | 262 | | Equity attributable to noncontrolling interests | | 266 | | | 256 | |
| Total equity | Total equity | | 92,891 | | | 77,462 | | Total equity | | 101,236 | | | 95,916 | |
| Total liabilities and equity | Total liabilities and equity | | $ | 195,350 | | | $ | 181,476 | | Total liabilities and equity | | $ | 195,617 | | | $ | 197,205 | |
See Accompanying Notes.
PFIZER INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | PFIZER INC. SHAREHOLDERS | | | | |
| | | | Common Stock | | | | Treasury Stock | | | | | | | | | | |
| (MILLIONS, EXCEPT PER COMMON SHARE DATA) | | | | | | Shares | | Par Value | | Add’l
Paid-In Capital | | Shares | | Cost | | Retained Earnings | | Accum. Other Comp.
Loss | | Share-
holders’ Equity | | Non-controlling interests | | Total Equity |
| Balance, July 3, 2022 | | | | | | 9,496 | | | $ | 476 | | | $ | 91,183 | | | (3,903) | | | $ | (113,939) | | | $ | 116,608 | | | $ | (7,119) | | | $ | 87,208 | | | $ | 261 | | | $ | 87,469 | |
| Net income | | | | | | | | | | | | | | | | 8,608 | | | | | 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 transactions | | | | | | 20 | | | — | | | 172 | | | — | | | (6) | | | (5) | | | | | 161 | | | | | 161 | |
| Purchases of common stock | | | | | | | | | | | | — | | | — | | | | | | | — | | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Other | | | | | | | | | | 4 | | | — | | | — | | | — | | | | | 4 | | | (4) | | | — | |
| Balance, October 2, 2022 | | | | | | 9,515 | | | $ | 476 | | | $ | 91,359 | | | (3,903) | | | $ | (113,945) | | | $ | 122,967 | | | $ | (8,225) | | | $ | 92,631 | | | $ | 259 | | | $ | 92,891 | |
|
| | | | | | PFIZER INC. SHAREHOLDERS | | | | |
| | | | Common Stock | | | | Treasury Stock | | | | | | | | | | |
| (MILLIONS, EXCEPT PER COMMON SHARE DATA) | | | | | | Shares | | Par Value | | Add’l
Paid-In Capital | | Shares | | Cost | | Retained Earnings | | Accum. Other Comp.
Loss | | Share-
holders’ Equity | | Non-controlling interests | | Total Equity |
| Balance, July 4, 2021 | | | | | | 9,450 | | | $ | 472 | | | $ | 89,336 | | | (3,851) | | | $ | (111,356) | | | $ | 96,346 | | | $ | (4,758) | | | $ | 70,042 | | | $ | 273 | | | $ | 70,315 | |
| Net income | | | | | | | | | | | | | | | | 8,146 | | | | | 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 transactions | | | | | | 13 | | | 1 | | | 637 | | | — | | | (3) | | | (1) | | | | | 634 | | | | | 634 | |
| Purchases of common stock | | | | | | | | | | | | — | | | — | | | | | | | — | | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Other | | | | | | | | | | — | | | — | | | — | | | (47) | | | | | (47) | | | 1 | | | (46) | |
| Balance, October 3, 2021 | | | | | | 9,462 | | | $ | 473 | | | $ | 89,973 | | | (3,851) | | | $ | (111,359) | | | $ | 102,252 | | | $ | (5,649) | | | $ | 75,691 | | | $ | 275 | | | $ | 75,967 | |
| | | | PFIZER INC. SHAREHOLDERS | | | | PFIZER INC. SHAREHOLDERS | |
| | | Common Stock | | Treasury Stock | | | | | Common Stock | | Treasury Stock | | |
| (MILLIONS, EXCEPT PER COMMON SHARE DATA) | | | Shares | | Par Value | | Add’l
Paid-In Capital | | Shares | | Cost | | Retained Earnings | | Accum. Other Comp.
Loss | | Share-
holders’ Equity | | Non-controlling interests | | Total Equity | |
| (MILLIONS, EXCEPT PER SHARE DATA) | | (MILLIONS, EXCEPT PER SHARE DATA) | | | Shares | | Par Value | | Add’l
Paid-In Capital | | Shares | | Cost | | Retained Earnings | | Accum. Other Comp.
Loss | | Share-
holders’ Equity | | Non-controlling interests | | Total Equity |
| Balance, January 1, 2023 | | Balance, January 1, 2023 | | | 9,519 | | | $ | 476 | | | $ | 91,802 | | | (3,903) | | | $ | (113,969) | | | $ | 125,656 | | | $ | (8,304) | | | $ | 95,661 | | | $ | 256 | | | $ | 95,916 | |
| Net income | | Net income | | | | 5,543 | | | 5,543 | | | 13 | | | 5,556 | |
| Other comprehensive income/(loss), net of tax | | Other comprehensive income/(loss), net of tax | | | | 15 | | | 15 | | | (3) | | | 12 | |
| Cash dividends declared, per share: $— | | Cash dividends declared, per share: $— | | | |
| Common stock | | Common stock | | | | — | | | — | | | — | |
| | Share-based payment transactions | | Share-based payment transactions | | | 41 | | | 2 | | | 350 | | | (12) | | | (504) | | | (97) | | | (249) | | | (249) | |
| | Other | | Other | | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Balance, April 2, 2023 | | Balance, April 2, 2023 | | | 9,560 | | | $ | 478 | | | $ | 92,153 | | | (3,915) | | | $ | (114,473) | | | $ | 131,102 | | | $ | (8,289) | | | $ | 100,970 | | | $ | 266 | | | $ | 101,236 | |
| | | | | PFIZER INC. SHAREHOLDERS | |
| | | | Common Stock | | Treasury Stock | | |
| (MILLIONS, EXCEPT PER SHARE DATA) | | (MILLIONS, EXCEPT PER SHARE DATA) | | | Shares | | Par Value | | Add’l
Paid-In Capital | | Shares | | Cost | | Retained Earnings | | Accum. Other Comp.
Loss | | Share-
holders’ Equity | | Non-controlling interests | | Total Equity |
| Balance, January 1, 2022 | Balance, January 1, 2022 | | | 9,471 | | | $ | 473 | | | $ | 90,591 | | | (3,851) | | | $ | (111,361) | | | $ | 103,394 | | | $ | (5,897) | | | $ | 77,201 | | | $ | 262 | | | $ | 77,462 | | Balance, January 1, 2022 | | | 9,471 | | | $ | 473 | | | $ | 90,591 | | | (3,851) | | | $ | (111,361) | | | $ | 103,394 | | | $ | (5,897) | | | $ | 77,201 | | | $ | 262 | | | $ | 77,462 | |
| Net income | Net income | | | | 26,378 | | | 26,378 | | | 27 | | | 26,404 | | Net income | | | | 7,864 | | | 7,864 | | | 6 | | | 7,870 | |
| Other comprehensive income/(loss), net of tax | Other comprehensive income/(loss), net of tax | | | | (2,328) | | | (2,328) | | | (11) | | | (2,339) | | Other comprehensive income/(loss), net of tax | | | | (260) | | | (260) | | | — | | | (260) | |
| Cash dividends declared, per share: $1.20 | | | | |
| Cash dividends declared, per share: $— | | Cash dividends declared, per share: $— | | | |
| Common stock | Common stock | | | | (6,734) | | | (6,734) | | | (6,734) | | Common stock | | | | — | | | — | | | — | |
| | Noncontrolling interests | | | | — | | | (7) | | | (7) | | |
| | Share-based payment transactions | Share-based payment transactions | | | 45 | | | 2 | | | 760 | | | (12) | | | (584) | | | (71) | | | 108 | | | 108 | | Share-based payment transactions | | | 23 | | | 2 | | | 249 | | | (12) | | | (570) | | | (65) | | | (383) | | | (383) | |
| Purchases of common stock | Purchases of common stock | | | | (39) | | | (2,000) | | | (2,000) | | | (2,000) | | Purchases of common stock | | | | (39) | | | (2,000) | | | (2,000) | | | (2,000) | |
| | Other | Other | | | | 7 | | | — | | | — | | | — | | | 7 | | | (11) | | | (4) | | Other | | | | 3 | | | — | | | — | | | — | | | 3 | | | (7) | | | (4) | |
| Balance, October 2, 2022 | | | 9,515 | | | $ | 476 | | | $ | 91,359 | | | (3,903) | | | $ | (113,945) | | | $ | 122,967 | | | $ | (8,225) | | | $ | 92,631 | | | $ | 259 | | | $ | 92,891 | | |
| | | PFIZER INC. SHAREHOLDERS | | |
| | Common Stock | | Treasury Stock | | | |
| (MILLIONS, EXCEPT PER COMMON SHARE DATA) | | | Shares | | Par Value | | Add’l
Paid-In Capital | | Shares | | Cost | | Retained Earnings | | Accum. Other Comp.
Loss | | Share-
holders’ Equity | | Non-controlling interests | | Total Equity | |
| Balance, January 1, 2021 | | | 9,407 | | | $ | 470 | | | $ | 88,674 | | | (3,840) | | | $ | (110,988) | | | $ | 90,392 | | | $ | (5,310) | | | $ | 63,238 | | | $ | 235 | | | $ | 63,473 | | |
| Net income | | | | 18,586 | | | 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 transactions | | | 56 | | | 3 | | | 1,300 | | | (11) | | | (371) | | | (77) | | | 855 | | | 855 | | |
| Purchases of common stock | | | | — | | | — | | | — | | | — | | |
| | Other | | | | — | | | — | | | — | | | (81) | | | (81) | | | 1 | | | (79) | | |
| Balance, October 3, 2021 | | | 9,462 | | | $ | 473 | | | $ | 89,973 | | | (3,851) | | | $ | (111,359) | | | $ | 102,252 | | | $ | (5,649) | | | $ | 75,691 | | | $ | 275 | | | $ | 75,967 | | |
| Balance, April 3, 2022 | | Balance, April 3, 2022 | | | 9,494 | | | $ | 476 | | | $ | 90,844 | | | (3,903) | | | $ | (113,931) | | | $ | 111,193 | | | $ | (6,157) | | | $ | 82,424 | | | $ | 261 | | | $ | 82,685 | |
See Accompanying Notes.
PFIZER INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| | | | | Nine Months Ended | | | Three Months Ended |
| (MILLIONS) | (MILLIONS) | | October 2,
2022 | | October 3,
2021 | (MILLIONS) | | April 2,
2023 | | April 3,
2022 |
| Operating Activities | Operating Activities | | | | | Operating Activities | | | | |
| Net income before allocation to noncontrolling interests | Net income before allocation to noncontrolling interests | | $ | 26,404 | | | $ | 18,633 | | Net income before allocation to noncontrolling interests | | $ | 5,556 | | | $ | 7,870 | |
| Discontinued operations—net of tax | Discontinued operations—net of tax | | 4 | | | (248) | | Discontinued operations—net of tax | | 1 | | | (9) | |
| Net income from continuing operations before allocation to noncontrolling interests | Net income from continuing operations before allocation to noncontrolling interests | | 26,400 | | | 18,881 | | Net income from continuing operations before allocation to noncontrolling interests | | 5,555 | | | 7,879 | |
| Adjustments to reconcile net income before allocation to noncontrolling interests to net cash provided by operating activities: | Adjustments to reconcile net income before allocation to noncontrolling interests to net cash provided by operating activities: | | | | | Adjustments to reconcile net income before allocation to noncontrolling interests to net cash provided by operating activities: | | | | |
| Depreciation and amortization | Depreciation and amortization | | 3,545 | | | 3,856 | | Depreciation and amortization | | 1,487 | | | 1,187 | |
| Asset write-offs and impairments | Asset write-offs and impairments | | 287 | | | 93 | | Asset write-offs and impairments | | 270 | | | 31 | |
| | Deferred taxes from continuing operations | | (3,399) | | | (3,610) | | |
| Deferred taxes | | Deferred taxes | | (598) | | | (2,321) | |
| | Share-based compensation expense | Share-based compensation expense | | 508 | | | 686 | | Share-based compensation expense | | 105 | | | 86 | |
| Benefit plan contributions in excess of expense/income | Benefit plan contributions in excess of expense/income | | (532) | | | (1,933) | | Benefit plan contributions in excess of expense/income | | (200) | | | (404) | |
| Other adjustments, net | Other adjustments, net | | 1,481 | | | (1,848) | | Other adjustments, net | | 99 | | | 815 | |
| Other changes in assets and liabilities, net of acquisitions and divestitures | Other changes in assets and liabilities, net of acquisitions and divestitures | | (7,605) | | | 10,867 | | Other changes in assets and liabilities, net of acquisitions and divestitures | | (5,507) | | | (730) | |
| Net cash provided by operating activities from continuing operations | | 20,685 | | | 26,993 | | |
| Net cash provided by/(used in) operating activities from discontinued operations | | — | | | (327) | | |
| | Net cash provided by operating activities | Net cash provided by operating activities | | 20,685 | | | 26,666 | | Net cash provided by operating activities | | 1,212 | | | 6,541 | |
| | Investing Activities | Investing Activities | | | | | Investing Activities | | | | |
| Purchases of property, plant and equipment | Purchases of property, plant and equipment | | (2,235) | | | (1,709) | | Purchases of property, plant and equipment | | (1,139) | | | (643) | |
| Purchases of short-term investments | Purchases of short-term investments | | (29,701) | | | (26,280) | | Purchases of short-term investments | | (6,665) | | | (8,758) | |
| Proceeds from redemptions/sales of short-term investments | Proceeds from redemptions/sales of short-term investments | | 35,087 | | | 15,852 | | Proceeds from redemptions/sales of short-term investments | | 6,400 | | | 13,421 | |
| Net (purchases of)/proceeds from redemptions/sales of short-term investments with original maturities of three months or less | Net (purchases of)/proceeds from redemptions/sales of short-term investments with original maturities of three months or less | | (10,877) | | | (7,152) | | Net (purchases of)/proceeds from redemptions/sales of short-term investments with original maturities of three months or less | | 4,665 | | | 3,409 | |
| Purchases of long-term investments | Purchases of long-term investments | | (1,627) | | | (861) | | Purchases of long-term investments | | (51) | | | (676) | |
| Proceeds from redemptions/sales of long-term investments | Proceeds from redemptions/sales of long-term investments | | 446 | | | 569 | | Proceeds from redemptions/sales of long-term investments | | 124 | | | 52 | |
| Acquisition of business, net of cash acquired | Acquisition of business, net of cash acquired | | (6,225) | | | — | | 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 | Other investing activities, net | | (200) | | | (370) | | Other investing activities, net | | (18) | | | (13) | |
| 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 | Net cash provided by/(used in) investing activities | | (11,373) | | | (19,960) | | Net cash provided by/(used in) investing activities | | 3,315 | | | 567 | |
| | Financing Activities | Financing Activities | | | | | Financing Activities | | | | |
| Proceeds from short-term borrowings | Proceeds from short-term borrowings | | 3,887 | | | — | | Proceeds from short-term borrowings | | 11 | | | — | |
| Payments on short-term borrowings | | (3,887) | | | (1) | | |
| | Net (payments on)/proceeds from short-term borrowings with original maturities of three months or less | Net (payments on)/proceeds from short-term borrowings with original maturities of three months or less | | 870 | | | 265 | | Net (payments on)/proceeds from short-term borrowings with original maturities of three months or less | | 226 | | | (220) | |
| Proceeds from issuance of long-term debt | | — | | | 997 | | |
| | Payments on long-term debt | Payments on long-term debt | | (1,609) | | | (1,001) | | Payments on long-term debt | | (269) | | | (1,609) | |
| Purchases of common stock | Purchases of common stock | | (2,000) | | | — | | Purchases of common stock | | — | | | (2,000) | |
| Cash dividends paid | Cash dividends paid | | (6,738) | | | (6,540) | | Cash dividends paid | | (2,303) | | | (2,249) | |
| Other financing activities, net | Other financing activities, net | | (342) | | | (185) | | Other financing activities, net | | (436) | | | (501) | |
| | Net cash provided by/(used in) financing activities | Net cash provided by/(used in) financing activities | | (9,819) | | | (6,465) | | Net cash provided by/(used in) financing activities | | (2,771) | | | (6,578) | |
| Effect of exchange-rate changes on cash and cash equivalents and restricted cash and cash equivalents | Effect of exchange-rate changes on cash and cash equivalents and restricted cash and cash equivalents | | (139) | | | (32) | | Effect of exchange-rate changes on cash and cash equivalents and restricted cash and cash equivalents | | (2) | | | (1) | |
| Net increase/(decrease) in cash and cash equivalents and restricted cash and cash equivalents | Net increase/(decrease) in cash and cash equivalents and restricted cash and cash equivalents | | (646) | | | 209 | | Net increase/(decrease) in cash and cash equivalents and restricted cash and cash equivalents | | 1,754 | | | 529 | |
| Cash and cash equivalents and restricted cash and cash equivalents, at beginning of period | Cash and cash equivalents and restricted cash and cash equivalents, at beginning of period | | 1,983 | | | 1,825 | | Cash and cash equivalents and restricted cash and cash equivalents, at beginning of period | | 468 | | | 1,983 | |
| Cash and cash equivalents and restricted cash and cash equivalents, at end of period | Cash and cash equivalents and restricted cash and cash equivalents, at end of period | | $ | 1,338 | | | $ | 2,034 | | Cash and cash equivalents and restricted cash and cash equivalents, at end of period | | $ | 2,222 | | | $ | 2,513 | |
| Supplemental Cash Flow Information | Supplemental Cash Flow Information | | | | | Supplemental Cash Flow Information | | | | |
| | Cash paid/(received) during the period for: | | | | | |
| Cash paid during the period for: | | Cash paid during the period for: | | | | |
| Income taxes | Income taxes | | $ | 4,919 | | | $ | 2,943 | | Income taxes | | $ | 329 | | | $ | 354 | |
| Interest paid | Interest paid | | 1,121 | | | 1,205 | | Interest paid | | 419 | | | 453 | |
| Interest rate hedges | Interest rate hedges | | 28 | | | (26) | | Interest rate hedges | | 60 | | | 26 | |
| Non-cash transaction: | | |
| Right-of-use assets obtained in exchange for lease liabilities | | $ | 463 | | | $ | 1,552 | | |
|
See Accompanying Notes.
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
We prepared these condensed consolidated financial statements in conformity with U.S. GAAP, consistent in all material respects with those applied in our 20212022 Form 10-K. As permitted under the SEC requirements for interim reporting, certain footnotes or other financial information have 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 information included in this Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our 20212022 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.
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,February 26, 2023 and February 27, 2022, and August 29, 2021, and for U.S. subsidiaries is as of and for the three and nine months ended OctoberApril 2, 20222023 and OctoberApril 3, 2021.2022.
Beginning in the fourth quarter of 2021, we reorganized our commercial operations and began toWe manage our commercial operations through a global structure consisting of two operating segments, each led by a single manager: Biopharma our innovative science-based biopharmaceutical business, and PC1, 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 additionalorganizational 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.Business Innovation. Biopharma is the only reportable segment. See Note 13Abelow and Note 17A in our 20212022 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 subsidiarySee Notes 2A and post-closing adjustments for other previously divested businesses. See2B below as well as Notes 1A and 2B2 in our 20212022 Form 10-K, and Note 2B below.10-K. We have made certain reclassification adjustments to conform prior-period amounts to the current presentation for discontinued operations, acquired IPR&D expenses and segment reporting.
B. New Accounting Standard Adopted in 20222023
On January 1, 2022,2023, 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 resultssupplier finance programs which requires increased disclosures in the acquirer 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 impactnotes to our consolidated financial statements. See Note 8C. C. Revenues and Trade 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 temporarily 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 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 pharmaceuticalbiopharmaceutical 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
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government agencies.agencies and distributors. In the U.S., we primarily sell our vaccine productsvaccines directly to the federal government, CDC, wholesalers, individual provider offices, retail pharmacies and integrated delivery networks.systems. 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) | (MILLIONS) | | October 2,
2022 | | December 31, 2021 | (MILLIONS) | | April 2,
2023 | | December 31, 2022 |
Reserve against Trade accounts receivable, less allowance for doubtful accounts | Reserve against Trade accounts receivable, less allowance for doubtful accounts | | $ | 1,133 | | | $ | 1,077 | | Reserve against Trade accounts receivable, less allowance for doubtful accounts | | $ | 1,068 | | | $ | 1,200 | |
Other current liabilities: | Other current liabilities: | | Other current liabilities: | |
| Accrued rebates | Accrued rebates | | 3,991 | | | 3,811 | | Accrued rebates | | 4,743 | | | 4,479 | |
| Other accruals | Other accruals | | 418 | | | 528 | | Other accruals | | 521 | | | 430 | |
| Other noncurrent liabilities | Other noncurrent liabilities | | 497 | | | 433 | | Other noncurrent liabilities | | 324 | | | 612 | |
| Total accrued rebates and other sales-related accruals | Total accrued rebates and other sales-related accruals | | $ | 6,038 | | | $ | 5,850 | | Total accrued rebates and other sales-related accruals | | $ | 6,656 | | | $ | 6,722 | |
Trade Accounts Receivable––Trade accounts receivable are stated at their net realizable value. The allowance for credit losses reflects our best estimate of expected credit losses of the receivables portfolio determined on the basis of historical experience, current information, and forecasts of future economic conditions. In developing the estimate for expected credit losses, trade accounts receivables are segmented into pools of 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 reserve 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
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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 litigation, where appropriate) have been exhausted.
During the three and nine months ended OctoberApril 2, 20222023 and OctoberApril 3, 2021,2022, additions to the allowance for credit losses, write-offs and recoveries of customer receivables were not material to our condensed consolidated financial statements. For additional information on our trade accounts receivable, see Note 1H1G in our 20212022 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 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.
Note 2. Acquisitions, Discontinued Operations and Equity-Method Investment and Collaborative Arrangement
A. Acquisitions
ReViralGBT––––On June 9, 2022, which fell in our international third quarter ofOctober 5, 2022, we acquired ReViral,GBT, a privately held, clinical-stage biopharmaceutical company focused on discovering, developingdedicated to the discovery, development and commercializing novel antiviral therapeutics that target respiratory syncytial virus,delivery of life-changing treatments for aunderserved patient communities, starting with sickle cell disease. The total consideration of up to $536 million, including upfront payments of $436 million upon closing (including a base payment of $425 million plus working capital adjustments) and an additional $100 million contingent upon future development milestones.
We accounted for the transaction as an asset acquisition since the lead asset, sisunatovir, represented substantially all of the fair value of the grossconsideration transferred was $5.7 billion ($5.2 billion, net of cash acquired). In connection with this business combination, we provisionally recorded: (i) $4.4 billion in Identifiable intangible assets acquired. At the acquisition date, we recorded a $426 million charge representing an acquired, consisting of $3.0 billion of IPR&D assetand $1.4 billion of developed technology rights with no alternative usea useful life of six years, (ii) $1.1 billion of Goodwill, (iii) $672 million of inventories to be sold over approximately three years, (iv) $568 million of net deferred tax liabilities and (v) $331 million of assumed long-term debt that was paid in Acquired in-process research and development expenses, which is presented as a cash outflow from operating activities. Otherfull in the fourth quarter of 2022. The allocation of the consideration transferred to the assets acquired and liabilities assumed werehas not significant.yet been finalized.
Biohaven––On October 3, 2022, we acquired Biohaven, the maker of Nurtec ODT/Vydura (rimegepant), an innovative therapy approved for both acute treatment of migraine and prevention of episodic migraine in adults. The total fair value of the consideration transferred was $11.8 billion, which includes the fair value of Pfizer’s previous investment in Biohaven on the acquisition date of approximately $300 million. In connection with this business combination, we provisionally recorded: (i) $12.1 billion in Identifiable intangible assets, consisting of $11.6 billion of developed technology rights with a useful life of 11
years and $450 million of IPR&D, (ii) $817 million of inventories to be sold over approximately two years, (iii) $797 million of
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,(iv) $398 million of trade accounts receivable, (v) $1.4 billion of assumed long-term debt that was paid in full in the fourth quarter of 2022, (vi) $566 million of net deferred tax liabilities and (vii) $476 million of Other current liabilities. The allocation of the consideration transferred to the assets acquired and liabilities assumed has not yet been finalized.Arena––On March 11, 2022, we acquired Arena, a clinical stage company for $100 per sharewith development-stage therapeutic candidates in cash.gastroenterology, dermatology and cardiology. The total fair value of the consideration transferred was $6.6 billion ($6.2 billion, net of cash acquired). In addition, $138 millionThe final allocation of the consideration transferred to the assets acquired and the liabilities assumed was completed in payments to Arena employees for the fair valuefirst quarter of previously 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 immuno-inflammatory diseases including UC, Crohn’s disease, atopic dermatitis, eosinophilic esophagitis, and alopecia areata.2023. In connection with this acquisition,business combination, we provisionally recorded: (i) $5.5 billion in Identifiable intangible assets, consisting of $5.0 billion of IPR&DIPR&D and $460 million of indefinite-lived Licensinglicensing agreements and other,, (ii) $1.0 billion of Goodwill and (iii) $505$490 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.
B. Discontinued Operations
Meridian–Discontinued operations––net of taxOn December 31, 2021, we completed in the sale of ourperiods presented are post-close adjustments related to the previously disposed discontinued Meridian subsidiary.subsidiary and the Upjohn Business. In the three and nine months ended OctoberApril 2, 2023 and April 3, 2022, the amounts recorded under the interim agreements, including TSAs and MSAMSAs, associated with these disposals were not material.
Upjohn Separation and Combination with Mylan––On November 16, Under agreements related to the 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 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 amounts recorded under these agreements were not material to our consolidated results of operations in the three and nine months ended October 2, 2022 and October 3, 2021. Netnet amounts due from Viatris under the agreements were approximately $167$57 million as of OctoberApril 2, 20222023 and $53net amounts due to Viatris were $94 million as of December 31, 2021.2022. The cash flows associated with the agreements are included in Net cash provided by operating activities from continuing operations, except for. For information about the nature of these agreements, see Note 2B a $277 million payment to Viatris made in the first quarter of 2021 pursuant to terms of the separation agreement, which is reported in Other 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 $345 million pre-tax expense in the first nine months of 2021 to resolve a Multi-District Litigation relating to EpiPen against the Company in the U.S. District Court for the District of Kansas (prior to presenting Meridian as discontinued operations, this EpiPen litigation amount was included in Other (income)/deductions––net).For the three and nine 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.Form 10-K.
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 operated globally under the GSK Consumer Healthcare name. In exchange for the contribution of our consumer healthcare business to the JV, we received a 32% equity stake in the new company and GSK owned the remaining 68%. On July 18, 2022, GSK completed a demerger of the Consumer Healthcare JV which became Haleon, an independent, publicly traded company listed on the London Stock Exchange that holds the joint Consumer Healthcarehistorical consumer healthcare business of GSK and Pfizer following the demerger. We continue to own 32% of the ordinary shares of Haleon after the demerger. We continue to account for our interest in Haleon as an equity-method investment.
The carrying value of our investment in Haleon as of OctoberApril 2, 20222023 and in the Consumer Healthcare JV as of December 31, 20212022 is $9.6$11.0 billion and $16.3$10.8 billion, respectively, and is reported in Equity-method investments. The fair value of our investment in Haleon as of OctoberApril 2, 2022,2023, based on quoted market prices of Haleon stock, was $9.1$11.8 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 decreaseincrease in the value of our investment from December 31, 20212022 is primarily due to dividends totaling approximately $4.5 billion, of which cash flows of $4.0 billion are included$90 million in
Net cash used in investing activities from continuing operations
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and $584 million are included in Net cash provided by operating activities from continuing operations, as well as $2.4 billion in pre-tax foreign currency translation adjustments (see Note 6), partially offset by and our share of the JV’sHaleon’s earnings. We record our share of earnings from Haleon/the Consumer Healthcare JV on a quarterly basis on a one-quarter lag in Other (income)/deductions––net. Our total share of the JV’sHaleon’s earnings generated in the secondfourth quarter of 2022, which we recorded in our operating results in the thirdfirst quarter of 2022,2023, was $67$68 million. Our total share of the JV’s earnings generated in the fourth quarter of 2021, and first six months of 2022, which we recorded in our operating results in the first nine monthsquarter of 2022, was $185 million. The total amortization and adjustment of basis differences resulting from the excess of the initial fair value of our investment over the underlying equity in the carrying value of the net assets of Haleon/the Consumer Healthcare JV was not material to our results of operations in the periods presented. See Note 4. | | | | | | | | | | | | | | | | | | | | |
| | | | |
| Summarized financial information for our equity-method investee, Haleon/the Consumer Healthcare JV, for the three months ending December 31, 2022, the most recent period available, and for the three months ending December 31, 2021, is as follows: |
| | | | Three Months Ended | | |
| (MILLIONS) | | | | | | December 31, 2022 | | December 31, 2021 | | |
| Net sales | | | | | | $ | 3,261 | | | $ | 3,420 | | | |
| Cost of sales | | | | | | (1,496) | | | (1,312) | | | |
| Gross profit | | | | | | $ | 1,766 | | | $ | 2,108 | | | |
| Income from continuing operations | | | | | | 225 | | | 590 | | | |
| Net income | | | | | | 225 | | | 590 | | | |
| Income attributable to shareholders | | | | | | 211 | | | 578 | | | |
Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives
A. Transforming to a More Focused Company Program
In 2019, we announced that we would be incurring costs associated with our Transforming to a More Focused Company Program, a multi-year effort to ensure our cost base aligns appropriately with our operating structure following Pfizer’s transformation into a more focused, innovative science-based global biopharmaceutical business. This program includes activities to (i) restructure our corporate enabling functions to appropriately support our operating structure; (ii) transform our commercial go-to-market model; and (iii) optimize our manufacturing network and R&D operations.
The activities associated with transforming our commercial go-to-market model are substantially complete. Activities associated with restructuring our corporate enabling functions and optimizing our manufacturing network and R&D operations are ongoing and are expected to be substantially completed by the end of 2023. The costs to restructure our corporate enabling functions, and to optimize our R&D operations and reduce cycle times, as well as to further prioritize our internal R&D portfolio, primarily include severance and implementation costs. The costs to optimize our manufacturing network largely include severance, implementation costs, product transfer costs, site exit costs, and accelerated depreciation.
From the start of this program in the fourth quarter of 2019 through April 2, 2023, we incurred costs of $3.5 billion, of which $1.4 billion ($1.1 billion of restructuring charges) is associated with Biopharma. We have incurred approximately 85% of total expected costs to date, and we expect the remaining costs to be substantially incurred through 2023.
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2022, was $402 million. Our total share of the JV’s earnings generated in the second quarter of 2021, which we recorded in our operating results in the third quarter of 2021, was $106 million. Our total share of the JV’s earnings generated in the fourth quarter of 2020 and first six months of 2021, which we recorded in our operating results in the first nine months of 2021, was $324 million. In the third quarter and first nine months of 2022, our equity-method income included in Other (income)/deductions––net also includes charges of $118 million and $119 million, respectively, primarily for adjustments to our equity-method basis differences related to the separation 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 of our investment over the underlying equity in the carrying value of the net assets of the JV was not material to our results of operations in the third quarter and first nine months of 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 Ended | | Nine 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 operations | | 226 | | | 348 | | | 1,303 | | | 1,064 | | | |
| Net income | | 226 | | | 348 | | | 1,303 | | | 1,064 | | | |
| Income attributable to shareholders | | 210 | | | 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 Consumer 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 and excluding the date of the demerger (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 proceeds 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 a one-time pre-separation dividend, which decreased the carrying value of our investment (as discussed above). Simultaneous with the receipt of the dividends, we repaid the £2.9 billion loan from the JV. GSK similarly received pro rata dividends and simultaneously repaid its pro rata loan from the JV. In conjunction with these transactions, our indemnification of GSK’s guarantee discussed above was terminated.
D. Collaborative Arrangement
Collaboration with Biohaven––In November 2021, we entered into a collaboration and license agreement and related sublicense agreement with Biohaven and certain of its subsidiaries to commercialize rimegepant and zavegepant for the treatment and prevention of migraines outside of the U.S., subject to regulatory approval. Under the terms of the agreement, Biohaven would lead R&D globally and we would 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 Acquisitions and Cost-Reduction/Productivity Initiatives
A. Transforming to a More Focused Company Program
With the formation of the Consumer Healthcare JV in 2019 and the 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 vaccines. We continue our
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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: | |
| The following summarizes costs and credits for acquisitions and cost-reduction/productivity initiatives: | | The following summarizes costs and credits for acquisitions and cost-reduction/productivity initiatives: |
| | Three Months Ended | | Nine Months Ended | | | Three Months Ended |
| (MILLIONS) | (MILLIONS) | | October 2,
2022 | | October 3,
2021 | | October 2,
2022 | | October 3,
2021 | (MILLIONS) | | | April 2,
2023 | | April 3,
2022 |
| Restructuring charges/(credits): | Restructuring charges/(credits): | | | | | | | | | Restructuring charges/(credits): | | | | | |
| Employee terminations | Employee terminations | | $ | 158 | | | $ | 630 | | | $ | 293 | | | $ | 649 | | Employee terminations | | | $ | (36) | | | $ | 25 | |
| Asset impairments | Asset impairments | | 17 | | | 10 | | | 44 | | | 7 | | Asset impairments | | | (10) | | | 8 | |
| Exit costs/(credits) | Exit costs/(credits) | | 2 | | | 3 | | | 31 | | | — | | Exit costs/(credits) | | | 2 | | | 11 | |
Restructuring charges/(credits)(a) | Restructuring charges/(credits)(a) | | 177 | | | 643 | | | 368 | | | 656 | | Restructuring charges/(credits)(a) | | | (44) | | | 43 | |
Transaction costs(b) | Transaction costs(b) | | — | | | — | | | 42 | | | — | | Transaction costs(b) | | | — | | | 6 | |
Integration costs and other(c) | Integration costs and other(c) | | 22 | | | 3 | | | 170 | | | 11 | | Integration costs and other(c) | | | 52 | | | 142 | |
| Restructuring charges and certain acquisition-related costs | Restructuring charges and certain acquisition-related costs | | 199 | | | 646 | | | 580 | | | 667 | | Restructuring charges and certain acquisition-related costs | | | 9 | | | 192 | |
Net periodic benefit costs/(credits) recorded in Other (income)/deductions––net | Net periodic benefit costs/(credits) recorded in Other (income)/deductions––net | | — | | | (63) | | | (5) | | | (51) | | Net periodic benefit costs/(credits) recorded in Other (income)/deductions––net | | | (5) | | | (6) | |
Additional depreciation––asset restructuring recorded in our condensed consolidated statements of income as follows(d): | | | | | | | | | |
| Cost of sales | | 7 | | | 19 | | | 22 | | | 53 | | |
| Selling, informational and administrative expenses | | 1 | | | 8 | | | 1 | | | 23 | | |
| | Total additional depreciation––asset restructuring | | 7 | | | 27 | | | 22 | | | 76 | | |
| Additional depreciation––asset restructuring recorded in our condensed consolidated statements of income, mainly in Cost of sales(d) | | Additional depreciation––asset restructuring recorded in our condensed consolidated statements of income, mainly in Cost of sales(d) | | | 18 | | | 9 | |
Implementation costs recorded in our condensed consolidated statements of income as follows(e): | Implementation costs recorded in our condensed consolidated statements of income as follows(e): | | | | | | | | | Implementation costs recorded in our condensed consolidated statements of income as follows(e): | | | | | |
| Cost of sales | Cost of sales | | 14 | | | 8 | | | 40 | | | 29 | | Cost of sales | | | 15 | | | 12 | |
| Selling, informational and administrative expenses | Selling, informational and administrative expenses | | 136 | | | 142 | | | 344 | | | 287 | | Selling, informational and administrative expenses | | | 59 | | | 74 | |
| Research and development expenses | Research and development expenses | | — | | | — | | | — | | | 1 | | Research and development expenses | | | 11 | | | — | |
| | Total implementation costs | Total implementation costs | | 150 | | | 151 | | | 384 | | | 316 | | Total implementation costs | | | 85 | | | 85 | |
| Total costs associated with acquisitions and cost-reduction/productivity initiatives | Total costs associated with acquisitions and cost-reduction/productivity initiatives | | $ | 357 | | | $ | 760 | | | $ | 982 | | | $ | 1,008 | | Total costs associated with acquisitions and cost-reduction/productivity initiatives | | | $ | 107 | | | $ | 280 | |
(a)Primarily represents cost reduction initiatives. Restructuring charges/(credits) associated with Biopharma: chargescredits of $62 million and $108$28 million for the three and nine months ended OctoberApril 2, 2022, respectively,2023 and chargescredits of $616 million and $617$4 million for the three and nine months ended OctoberApril 3, 2021, respectively.2022.
(b)Represents external costs for banking, legal, accounting and other similar services.
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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,first quarter of 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 Note 2A.awards that was recognized as post-closing compensation expense.
(d)Represents the impact of changes in the estimated useful lives of assets involved in restructuring actions.
(e)Represents 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: | The following summarizes the components and changes in restructuring accruals: | The following summarizes the components and changes in restructuring accruals: |
| (MILLIONS) | (MILLIONS) | | Employee
Termination
Costs | | Asset
Impairment
Charges | | Exit Costs | | Accrual | (MILLIONS) | | Employee
Termination
Costs | | Asset
Impairment
Charges | | Exit Costs | | Accrual |
Balance, December 31, 2021(a) | | $ | 1,014 | | | $ | — | | | $ | 57 | | | $ | 1,071 | | |
| Provision | | 293 | | | 44 | | | 31 | | | 368 | | |
Balance, December 31, 2022(a) | | Balance, December 31, 2022(a) | | $ | 1,196 | | | $ | — | | | $ | 8 | | | $ | 1,204 | |
| Provision/(credit) | | Provision/(credit) | | (36) | | | (10) | | | 2 | | | (44) | |
Utilization and other(b) | Utilization and other(b) | | (447) | | | (44) | | | (80) | | | (572) | | Utilization and other(b) | | (420) | | | 10 | | | (1) | | | (411) | |
Balance, October 2, 2022(c) | | $ | 859 | | | $ | — | | | $ | 8 | | | $ | 867 | | |
Balance, April 2, 2023(c) | | Balance, April 2, 2023(c) | | $ | 740 | | | $ | — | | | $ | 9 | | | $ | 750 | |
(a)Included in Other current liabilities ($816991 million) and Other noncurrent liabilities ($255213 million).
(b)Includes adjustments for foreign currency translation.
(c)Included in Other current liabilities ($758548 million) and Other noncurrent liabilities ($110202 million).
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 4. Other (Income)/Deductions—Net
| Components of Other (income)/deductions––net include: | Components of Other (income)/deductions––net include: | Components of Other (income)/deductions––net include: |
| | | | Three Months Ended | | Nine Months Ended | | | | Three Months Ended |
| (MILLIONS) | (MILLIONS) | | October 2,
2022 | | October 3,
2021 | | October 2,
2022 | | October 3,
2021 | (MILLIONS) | | | April 2,
2023 | | April 3,
2022 |
| Interest income | Interest income | | $ | (70) | | | $ | (10) | | | $ | (114) | | | $ | (21) | | Interest income | | | $ | (177) | | | $ | (14) | |
| Interest expense | Interest expense | | 311 | | | 325 | | | 925 | | | 975 | | Interest expense | | | 318 | | | 322 | |
| Net interest expense | Net interest expense | | 240 | | | 315 | | | 811 | | | 954 | | Net interest expense | | | 141 | | | 308 | |
| Royalty-related income | Royalty-related income | | (239) | | | (261) | | | (628) | | | (649) | | Royalty-related income | | | (204) | | | (173) | |
| Net (gains)/losses on asset disposals | Net (gains)/losses on asset disposals | | 7 | | | (1) | | | 6 | | | (99) | | Net (gains)/losses on asset disposals | | | (7) | | | (1) | |
Net (gains)/losses recognized during the period on equity securities(a) | Net (gains)/losses recognized during the period on equity securities(a) | | 112 | | | (400) | | | 1,353 | | | (1,601) | | Net (gains)/losses recognized during the period on equity securities(a) | | | 451 | | | 699 | |
Income from collaborations, out-licensing arrangements and sales of compound/product rights(b) | Income from collaborations, out-licensing arrangements and sales of compound/product rights(b) | | (4) | | | (65) | | | (17) | | | (317) | | Income from collaborations, out-licensing arrangements and sales of compound/product rights(b) | | | (68) | | | (9) | |
| Net periodic benefit costs/(credits) other than service costs | Net periodic benefit costs/(credits) other than service costs | | (306) | | | (1,132) | | | (294) | | | (1,635) | | Net periodic benefit costs/(credits) other than service costs | | | (80) | | | (283) | |
Certain legal matters, net | Certain legal matters, net | | 77 | | | 38 | | | 175 | | | 112 | | Certain legal matters, net | | | 36 | | | 79 | |
Certain asset impairments(c) | Certain asset impairments(c) | | 200 | | | — | | | 200 | | | — | | Certain asset impairments(c) | | | 264 | | | — | |
Haleon/Consumer Healthcare JV equity method (income)/loss(d) | Haleon/Consumer Healthcare JV equity method (income)/loss(d) | | 51 | | | (105) | | | (283) | | | (307) | | Haleon/Consumer Healthcare JV equity method (income)/loss(d) | | | (68) | | | (184) | |
Other, net | Other, net | | (198) | | | (84) | | | (260) | | | (502) | | Other, net | | | (396) | | | (88) | |
| Other (income)/deductions––net | Other (income)/deductions––net | | $ | (59) | | | $ | (1,696) | | | $ | 1,063 | | | $ | (4,043) | | Other (income)/deductions––net | | | $ | 70 | | | $ | 350 | |
(a)The losses in the first nine monthsquarter of 20222023 include, among other things, unrealized losses of $974$363 million related to our investments in BioNTech, Cerevel Therapeutics Holdings, Inc. (Cerevel) and Arvinas.BioNTech. The gainslosses in the thirdfirst quarter and first nine months of 20212022 included, among other things, unrealized gainslosses of $420$473 million and $1.5 billion, respectively, related to investmentsour investment in BioNTech and Cerevel.BioNTech.
(b)The first nine monthsquarter of 2021 included, among other things, $188 million of net collaboration income from BioNTech in the2023 primarily includes certain product liability expenses related to products discontinued and/or divested by Pfizer. The first quarter of 20212022 includes certain product liability expenses related to Comirnaty.products discontinued and/or divested by Pfizer, and to a lesser extent, legal obligations related to pre-acquisition commitments.
(c)The amount in the thirdfirst quarter and first nine months of 20222023 primarily represents an intangible asset impairment chargecharges, including $128 million associated with Other business activities, related to IPR&D and developed technology rights for acquired software assets and reflects unfavorable pivotal trial results and updated commercial forecasts, and $120 million associated with our Biopharma segment representingdue to the discontinuation of a study related to an out-licensed IPR&D asset for the unapproved indicationtreatment of symptomatic dilated cardiomyopathy (DCM) due to a mutation of the gene encoding the lamin A/C protein (LMNA),prostate cancer, acquired in our Array BioPharma Inc. acquisition. The intangible asset impairment charge was a result of the Phase 3 trial reaching futility at a pre-planned interim analysis.
(e)The first quarter of 2023 primarily includes, among other things, dividend income of $211 million from our investment in Nimbus resulting from Takeda Pharmaceutical Company Limited’s acquisition of Nimbus’s oral, selective allosteric tyrosine kinase 2 (TYK2) inhibitor program subsidiary, and $92 million from our investment in ViiV.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Additional information about the intangible assetassets that waswere impaired during 2022 (impairment recorded in 2023 follows: |
| Three Months EndedOther (income)/deductions–net) follows: |
| | Fair Value(a) | | Nine Months Ended OctoberApril 2, 20222023 |
| (MILLIONS) | | Amount | | Level 1 | | Level 2 | | Level 3 | | Impairment |
Intangible asset–assets––IPR&DLicensing agreements and other(b) | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 200120 | |
Intangible assets––IPR&D(b) | | — | | | — | | | — | | | — | | | 94 | |
Intangible assets––Developed technology rights(b) | | — | | | — | | | — | | | — | | | 34 | |
| Total | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 248 | |
(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 1F1E in our 20212022 Form 10-K.
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(b)Reflects an intangible assetassets written down to fair value in 2022.2023. 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 for 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.
Note 5. Tax Matters
A. Taxes on Income from Continuing Operations
Our effective tax rate for continuing operations was 4.0% for the third quarter of 2022, compared to (4.2)% for the third quarter of 2021, and was 10.5%11.4% for the first nine monthsquarter of 2022,2023, compared to 7.8%12.9% for the first nine monthsquarter of 2021.2022. The higherlower effective tax ratesrate for the thirdfirst quarter and first nine months of 2022, compared to the third quarter and first nine months of 2021, were mainly2023, was due to the non-recurrence of certain initiatives executeda favorable change in the third quarterjurisdictional mix 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.earnings.
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
We elected, with the filing 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 fourthfifth annual installment of this liability was paid by its April 18, 20222023 due date. The fifth annual installment is due April 18, 2023date and is reported in current Income taxes payable as of October 2, 2022. Theand the remaining liability is reported in noncurrent Other taxes payable.payable as of April 2, 2023. Our obligations may vary as a result of changes in our uncertain tax positions and/or availability of attributes such as foreign tax and other credit carryforwards.
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.
The U.S. is one of our major tax jurisdictions, and we are regularly audited by the 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, tax years 2016-2018 are under audit. Tax years 2019-20222019-2023 are open but not under audit. All other tax years are closed. In addition to the open audit years in the U.S., we have open audit years and certain related audits, appeals and investigations in certain major international tax jurisdictions dating back to 2011.2012.
For additional information, seeSee Note 5D in our 20212022 Form 10-K.
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
C. Tax Provision/(Benefit) on Other Comprehensive Income/(Loss)
| Components of Tax provision/(benefit) on other comprehensive income/(loss) include: | Components of Tax provision/(benefit) on other comprehensive income/(loss) include: | Components of Tax provision/(benefit) on other comprehensive income/(loss) include: |
| | Three Months Ended | | Nine Months Ended | | | Three Months Ended |
| (MILLIONS) | (MILLIONS) | | October 2,
2022 | | October 3,
2021 | | October 2,
2022 | | October 3,
2021 | (MILLIONS) | | | April 2,
2023 | | April 3,
2022 |
Foreign currency translation adjustments, net(a) | Foreign currency translation adjustments, net(a) | | $ | 20 | | | $ | (32) | | | $ | (165) | | | $ | (30) | | Foreign currency translation adjustments, net(a) | | | $ | (25) | | | $ | (72) | |
| Unrealized holding gains/(losses) on derivative financial instruments, net | Unrealized holding gains/(losses) on derivative financial instruments, net | | 47 | | | 21 | | | 177 | | | 28 | | Unrealized holding gains/(losses) on derivative financial instruments, net | | | 3 | | | 32 | |
| Reclassification adjustments for (gains)/losses included in net income | Reclassification adjustments for (gains)/losses included in net income | | (72) | | | 13 | | | (97) | | | 48 | | Reclassification adjustments for (gains)/losses included in net income | | | 21 | | | (22) | |
| | (25) | | | 34 | | | 80 | | | 76 | | | | 24 | | | 10 | |
| Unrealized holding gains/(losses) on available-for-sale securities, net | Unrealized holding gains/(losses) on available-for-sale securities, net | | (97) | | | (33) | | | (175) | | | (16) | | Unrealized holding gains/(losses) on available-for-sale securities, net | | | 11 | | | (17) | |
| Reclassification adjustments for (gains)/losses included in net income | Reclassification adjustments for (gains)/losses included in net income | | 76 | | | 1 | | | 137 | | | (22) | | Reclassification adjustments for (gains)/losses included in net income | | | (64) | | | 29 | |
| | (21) | | | (32) | | | (38) | | | (37) | | | | (53) | | | 12 | |
| | Reclassification adjustments related to amortization of prior service costs and other, net | Reclassification adjustments related to amortization of prior service costs and other, net | | (7) | | | (22) | | | (23) | | | (39) | | Reclassification adjustments related to amortization of prior service costs and other, net | | | (7) | | | (9) | |
| Reclassification adjustments related to curtailments of prior service costs and other, net | Reclassification adjustments related to curtailments of prior service costs and other, net | | — | | | (14) | | | (3) | | | (15) | | Reclassification adjustments related to curtailments of prior service costs and other, net | | | (1) | | | (2) | |
| | | (8) | | | (36) | | | (26) | | | (54) | | | | (9) | | | (11) | |
| Tax provision/(benefit) on other comprehensive income/(loss) | Tax provision/(benefit) on other comprehensive income/(loss) | | $ | (33) | | | $ | (65) | | | $ | (149) | | | $ | (44) | | Tax provision/(benefit) on other comprehensive income/(loss) | | | $ | (63) | | | $ | (60) | |
(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: | The following summarizes the changes, net of tax, in Accumulated other comprehensive loss: | The following summarizes the changes, net of tax, in Accumulated other comprehensive loss: |
| | | | Net Unrealized Gains/(Losses) | | | Benefit Plans | | | | | Net Unrealized Gains/(Losses) | | | Benefit Plans | | |
| (MILLIONS) | (MILLIONS) | | Foreign Currency Translation Adjustments(a) | | Derivative Financial Instruments | | Available-For-Sale Securities | | | Prior Service (Costs)/Credits and Other | | Accumulated Other Comprehensive Income/(Loss) | (MILLIONS) | | Foreign Currency Translation Adjustments(a) | | Derivative Financial Instruments | | Available-For-Sale Securities | | | Prior Service (Costs)/Credits and Other | | Accumulated Other Comprehensive Income/(Loss) |
| Balance, December 31, 2021 | | $ | (6,172) | | | $ | 119 | | | $ | (220) | | | | $ | 377 | | | $ | (5,897) | | |
| Balance, December 31, 2022 | | Balance, December 31, 2022 | | $ | (8,360) | | | $ | (412) | | | $ | 220 | | | | $ | 248 | | | $ | (8,304) | |
Other comprehensive income/(loss) | Other comprehensive income/(loss) | | (2,373) | | | 391 | | | (265) | | | | (81) | | | (2,328) | | Other comprehensive income/(loss) | | 129 | | | 281 | | | (369) | | | | (27) | | | 15 | |
| Balance, October 2, 2022 | | $ | (8,545) | | | $ | 509 | | | $ | (485) | | | | $ | 296 | | | $ | (8,225) | | |
| Balance, April 2, 2023 | | Balance, April 2, 2023 | | $ | (8,231) | | | $ | (131) | | | $ | (149) | | | | $ | 222 | | | $ | (8,289) | |
(a)Amounts do not include foreign currency translation adjustments attributable to noncontrolling interests.
(b)Foreign currency translation adjustments include net lossesgains related to our equity methodequity-method investment in Haleon/the Consumer Healthcare JVHaleon (see Note 2C2C) and the impact of our net investment hedging program.
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 7. Financial Instruments
A. 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, 2022 | | | December 31, 2021 | | April 2, 2023 | | | December 31, 2022 |
| (MILLIONS) | (MILLIONS) | | Total | | Level 1 | | Level 2 | | | Total | | Level 1 | | Level 2 | (MILLIONS) | | Total | | Level 1 | | Level 2 | | | Total | | Level 1 | | Level 2 |
| Financial assets: | Financial assets: | | | | | | | | | | | | | | Financial assets: | | | | | | | | | | | | | |
| Short-term investments | Short-term investments | | | | Short-term investments | | | |
| Equity securities with readily determinable fair values: | Equity securities with readily determinable fair values: | | | | Equity securities with readily determinable fair values: | | | |
| Money market funds | Money market funds | | $ | 12,154 | | | $ | — | | | $ | 12,154 | | | | $ | 5,365 | | | $ | — | | | $ | 5,365 | | Money market funds | | $ | 1,165 | | | $ | — | | | $ | 1,165 | | | | $ | 1,588 | | | $ | — | | | $ | 1,588 | |
| | Available-for-sale debt securities: | Available-for-sale debt securities: | | | | Available-for-sale debt securities: | | | |
| Government and agency—non-U.S. | Government and agency—non-U.S. | | 15,885 | | | — | | | 15,885 | | | | 17,318 | | | — | | | 17,318 | | Government and agency—non-U.S. | | 13,278 | | | — | | | 13,278 | | | | 15,915 | | | — | | | 15,915 | |
| Government and agency—U.S. | Government and agency—U.S. | | 2,931 | | | — | | | 2,931 | | | | 4,050 | | | — | | | 4,050 | | Government and agency—U.S. | | 927 | | | — | | | 927 | | | | 1,313 | | | — | | | 1,313 | |
| Corporate and other | Corporate and other | | 1,361 | | | — | | | 1,361 | | | | 647 | | | — | | | 647 | | Corporate and other | | 1,914 | | | — | | | 1,914 | | | | 1,514 | | | — | | | 1,514 | |
| | 20,176 | | | — | | | 20,176 | | | | 22,014 | | | — | | | 22,014 | | | 16,118 | | | — | | | 16,118 | | | | 18,743 | | | — | | | 18,743 | |
| Total short-term investments | Total short-term investments | | 32,330 | | | — | | | 32,330 | | | | 27,379 | | | — | | | 27,379 | | Total short-term investments | | 17,283 | | | — | | | 17,283 | | | | 20,331 | | | — | | | 20,331 | |
| Other current assets | Other current assets | | | | | | | | | | | | | | Other current assets | | | | | | | | | | | | | |
| Derivative assets: | Derivative assets: | | | | Derivative assets: | | | |
| Interest rate contracts | | 9 | | | — | | | 9 | | | | 4 | | | — | | | 4 | | |
| | Foreign exchange contracts | Foreign exchange contracts | | 1,950 | | | — | | | 1,950 | | | | 704 | | | — | | | 704 | | Foreign exchange contracts | | 734 | | | — | | | 734 | | | | 714 | | | — | | | 714 | |
| Total other current assets | Total other current assets | | 1,959 | | | — | | | 1,959 | | | | 709 | | | — | | | 709 | | Total other current assets | | 734 | | | — | | | 734 | | | | 714 | | | — | | | 714 | |
| Long-term investments | Long-term investments | | | | | | | | | | | | | | Long-term investments | | | | | | | | | | | | | |
Equity securities with readily determinable fair values(a) | Equity securities with readily determinable fair values(a) | | 2,972 | | | 2,960 | | | 12 | | | | 3,876 | | | 3,849 | | | 27 | | Equity securities with readily determinable fair values(a) | | 2,355 | | | 2,348 | | | 7 | | | | 2,836 | | | 2,823 | | | 13 | |
| | Available-for-sale debt securities: | Available-for-sale debt securities: | | | | Available-for-sale debt securities: | | | |
| Government and agency—non-U.S. | Government and agency—non-U.S. | | 285 | | | — | | | 285 | | | | 465 | | | — | | | 465 | | Government and agency—non-U.S. | | 261 | | | — | | | 261 | | | | 280 | | | — | | | 280 | |
| Government and agency—U.S. | | — | | | — | | | — | | | | 6 | | | — | | | 6 | | |
| | Corporate and other | Corporate and other | | 73 | | | — | | | 73 | | | | 50 | | | — | | | 50 | | Corporate and other | | 72 | | | — | | | 72 | | | | 72 | | | — | | | 72 | |
| | 358 | | | — | | | 358 | | | | 521 | | | — | | | 521 | | | 333 | | | — | | | 333 | | | | 352 | | | — | | | 352 | |
| Total long-term investments | Total long-term investments | | 3,330 | | | 2,960 | | | 370 | | | | 4,397 | | | 3,849 | | | 548 | | Total long-term investments | | 2,688 | | | 2,348 | | | 340 | | | | 3,188 | | | 2,823 | | | 365 | |
| Other noncurrent assets | Other noncurrent assets | | | | | | | | | | | | | | Other noncurrent assets | | | | | | | | | | | | | |
| Derivative assets: | Derivative assets: | | | | Derivative assets: | | | |
| Interest rate contracts | | — | | | — | | | — | | | | 16 | | | — | | | 16 | | |
| | Foreign exchange contracts | Foreign exchange contracts | | 812 | | | — | | | 812 | | | | 242 | | | — | | | 242 | | Foreign exchange contracts | | 295 | | | — | | | 295 | | | | 364 | | | — | | | 364 | |
| Total derivative assets | Total derivative assets | | 812 | | | — | | | 812 | | | | 259 | | | — | | | 259 | | Total derivative assets | | 295 | | | — | | | 295 | | | | 364 | | | — | | | 364 | |
Insurance contracts(b) | Insurance contracts(b) | | 631 | | | — | | | 631 | | | | 808 | | | — | | | 808 | | Insurance contracts(b) | | 700 | | | — | | | 700 | | | | 665 | | | — | | | 665 | |
| Total other noncurrent assets | Total other noncurrent assets | | 1,444 | | | — | | | 1,444 | | | | 1,067 | | | — | | | 1,067 | | Total other noncurrent assets | | 995 | | | — | | | 995 | | | | 1,028 | | | — | | | 1,028 | |
| Total assets | Total assets | | $ | 39,063 | | | $ | 2,960 | | | $ | 36,103 | | | | $ | 33,552 | | | $ | 3,849 | | | $ | 29,703 | | Total assets | | $ | 21,699 | | | $ | 2,348 | | | $ | 19,352 | | | | $ | 25,261 | | | $ | 2,823 | | | $ | 22,439 | |
| | Financial liabilities: | Financial liabilities: | | | | Financial liabilities: | | | |
| Other current liabilities | Other current liabilities | | | | Other current liabilities | | | |
| Derivative liabilities: | Derivative liabilities: | | | | Derivative liabilities: | | | |
| | Interest rate contracts | | Interest rate contracts | | $ | — | | | $ | — | | | $ | — | | | | $ | 10 | | | $ | — | | | $ | 10 | |
| Foreign exchange contracts | Foreign exchange contracts | | $ | 295 | | | $ | — | | | $ | 295 | | | | $ | 476 | | | $ | — | | | $ | 476 | | Foreign exchange contracts | | 382 | | | — | | | 382 | | | | 694 | | | — | | | 694 | |
| Total other current liabilities | Total other current liabilities | | 295 | | | — | | | 295 | | | | 476 | | | — | | | 476 | | Total other current liabilities | | 383 | | | — | | | 383 | | | | 704 | | | — | | | 704 | |
| Other noncurrent liabilities | Other noncurrent liabilities | | | | | | | | | | | | | | Other noncurrent liabilities | | | | | | | | | | | | | |
| Derivative liabilities: | Derivative liabilities: | | | | Derivative liabilities: | | | |
| Interest rate contracts | Interest rate contracts | | 330 | | | — | | | 330 | | | | — | | | — | | | — | | Interest rate contracts | | 274 | | | — | | | 274 | | | | 321 | | | — | | | 321 | |
| Foreign exchange contracts | Foreign exchange contracts | | 1,153 | | | — | | | 1,153 | | | | 405 | | | — | | | 405 | | Foreign exchange contracts | | 832 | | | — | | | 832 | | | | 864 | | | — | | | 864 | |
| Total other noncurrent liabilities | Total other noncurrent liabilities | | 1,482 | | | — | | | 1,482 | | | | 405 | | | — | | | 405 | | Total other noncurrent liabilities | | 1,105 | | | — | | | 1,105 | | | | 1,185 | | | — | | | 1,185 | |
| Total liabilities | Total liabilities | | $ | 1,777 | | | $ | — | | | $ | 1,777 | | | | $ | 881 | | | $ | — | | | $ | 881 | | Total liabilities | | $ | 1,488 | | | $ | — | | | $ | 1,488 | | | | $ | 1,889 | | | $ | — | | | $ | 1,889 | |
(a)Long-term equity securities of $139$115 million as of OctoberApril 2, 20222023 and $194$143 million as of December 31, 20212022 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$32 billion as of OctoberApril 2, 20222023 and $36$33 billion as of December 31, 2021.2022. The estimated fair value of such debt, using a market approach and Level 2 inputs, was $29$30 billion as of OctoberApril 2, 20222023 and $42$30 billion as of December 31, 2021.2022.
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
as of OctoberApril 2, 20222023 and December 31, 2021.2022. 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: | The following summarizes our investments by classification type: | The following summarizes our investments by classification type: |
| (MILLIONS) | (MILLIONS) | | October 2, 2022 | | December 31, 2021 | (MILLIONS) | | April 2,
2023 | | December 31, 2022 |
| Short-term investments | Short-term investments | | | | | Short-term investments | | | | |
Equity securities with readily determinable fair values(a) | Equity securities with readily determinable fair values(a) | | $ | 12,154 | | | $ | 5,365 | | Equity securities with readily determinable fair values(a) | | $ | 1,165 | | | $ | 1,588 | |
| Available-for-sale debt securities | Available-for-sale debt securities | | 20,176 | | | 22,014 | | Available-for-sale debt securities | | 16,118 | | | 18,743 | |
| Held-to-maturity debt securities | Held-to-maturity debt securities | | 2,495 | | | 1,746 | | Held-to-maturity debt securities | | 523 | | | 1,985 | |
| Total Short-term investments | Total Short-term investments | | $ | 34,825 | | | $ | 29,125 | | Total Short-term investments | | $ | 17,806 | | | $ | 22,316 | |
| | Long-term investments | Long-term investments | | Long-term investments | |
Equity securities with readily determinable fair values(b) | Equity securities with readily determinable fair values(b) | | $ | 2,972 | | | $ | 3,876 | | Equity securities with readily determinable fair values(b) | | $ | 2,355 | | | $ | 2,836 | |
| | Available-for-sale debt securities | Available-for-sale debt securities | | 358 | | | 521 | | Available-for-sale debt securities | | 333 | | | 352 | |
| Held-to-maturity debt securities | Held-to-maturity debt securities | | 36 | | | 34 | | Held-to-maturity debt securities | | 52 | | | 48 | |
Private equity securities at cost(b) | Private equity securities at cost(b) | | 696 | | | 623 | | Private equity securities at cost(b) | | 828 | | | 800 | |
| Total Long-term investments | Total Long-term investments | | $ | 4,062 | | | $ | 5,054 | | Total Long-term investments | | $ | 3,568 | | | $ | 4,036 | |
| Equity-method investments | Equity-method investments | | 9,826 | | | 16,472 | | Equity-method investments | | 11,175 | | | 11,033 | |
| Total long-term investments and equity-method investments | Total long-term investments and equity-method investments | | $ | 13,888 | | | $ | 21,526 | | Total long-term investments and equity-method investments | | $ | 14,743 | | | $ | 15,069 | |
| Held-to-maturity cash equivalents | Held-to-maturity cash equivalents | | $ | 969 | | | $ | 268 | | Held-to-maturity cash equivalents | | $ | 436 | | | $ | 679 | |
(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: | |
| Our investment portfolio consists of investment-grade debt securities issued across diverse governments, corporate and financial institutions: | | Our investment portfolio consists of investment-grade debt securities issued across diverse governments, corporate and financial institutions: |
| | October 2, 2022 | | December 31, 2021 | | April 2, 2023 | | December 31, 2022 |
| | | Gross Unrealized | | Maturities (in Years) | | | Gross Unrealized | | | | Gross Unrealized | | Contractual or Estimated Maturities (in Years) | | | Gross Unrealized | |
| (MILLIONS) | (MILLIONS) | | Amortized Cost | | Gains | | Losses | | Fair Value | | Within 1 | | Over 1
to 5 | | Over 5 | | | Amortized Cost | | Gains | | Losses | | Fair Value | (MILLIONS) | | Amortized Cost | | Gains | | Losses | | Fair Value | | Within 1 | | Over 1
to 5 | | Over 5 | | | Amortized Cost | | Gains | | Losses | | Fair Value |
| Available-for-sale debt securities | Available-for-sale debt securities | | | | | | | | | | | | | | | | | | | | | | | Available-for-sale debt securities | | | | | | | | | | | | | | | | | | | | | | |
Government and agency––non-U.S. | Government and agency––non-U.S. | | $ | 16,711 | | | $ | 26 | | | $ | (567) | | | $ | 16,169 | | | $ | 15,885 | | | $ | 285 | | | $ | — | | | $ | 18,032 | | | $ | 13 | | | $ | (263) | | | $ | 17,783 | | Government and agency––non-U.S. | | $ | 13,702 | | | $ | 51 | | | $ | (214) | | | $ | 13,539 | | | $ | 13,278 | | | $ | 261 | | | $ | — | | | $ | 15,946 | | | $ | 297 | | | $ | (48) | | | $ | 16,195 | |
| Government and agency––U.S. | Government and agency––U.S. | | 2,932 | | | — | | | (1) | | | 2,931 | | | 2,931 | | | — | | | — | | | 4,056 | | | — | | | (1) | | | 4,055 | | Government and agency––U.S. | | 927 | | | — | | | — | | | 927 | | | 927 | | | — | | | — | | | 1,313 | | | — | | | — | | | 1,313 | |
| Corporate and other | Corporate and other | | 1,446 | | | — | | | (12) | | | 1,434 | | | 1,361 | | | 73 | | | — | | | 698 | | | — | | | (1) | | | 697 | | Corporate and other | | 1,992 | | | — | | | (7) | | | 1,985 | | | 1,914 | | | 72 | | | — | | | 1,584 | | | 7 | | | (4) | | | 1,586 | |
| Held-to-maturity debt securities | Held-to-maturity debt securities | | Held-to-maturity debt securities | |
| Time deposits and other | Time deposits and other | | 1,557 | | | — | | | — | | | 1,557 | | | 1,525 | | | 20 | | | 12 | | | 947 | | | — | | | — | | | 947 | | Time deposits and other | | 936 | | | — | | | — | | | 936 | | | 888 | | | 34 | | | 14 | | | 1,171 | | | — | | | — | | | 1,171 | |
Government and agency––non-U.S. | Government and agency––non-U.S. | | 1,943 | | | — | | | — | | | 1,943 | | | 1,939 | | | 3 | | | 1 | | | 1,102 | | | — | | | — | | | 1,102 | | Government and agency––non-U.S. | | 75 | | | — | | | — | | | 75 | | | 71 | | | 3 | | | 1 | | | 1,542 | | | — | | | — | | | 1,542 | |
| Total debt securities | Total debt securities | | $ | 24,589 | | | $ | 26 | | | $ | (580) | | | $ | 24,034 | | | $ | 23,641 | | | $ | 381 | | | $ | 13 | | | $ | 24,835 | | | $ | 14 | | | $ | (265) | | | $ | 24,584 | | Total debt securities | | $ | 17,632 | | | $ | 51 | | | $ | (221) | | | $ | 17,462 | | | $ | 17,077 | | | $ | 371 | | | $ | 15 | | | $ | 21,556 | | | $ | 304 | | | $ | (53) | | | $ | 21,807 | |
Any expected credit losses to these portfolios would be immaterial to our financial statements.
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 Ended |
| (MILLIONS) | | | | | | April 2,
2023 | | April 3,
2022 |
Net (gains)/losses recognized during the period on equity securities(a) | | | | | | $ | 451 | | | $ | 699 | |
| Less: Net (gains)/losses recognized during the period on equity securities sold during the period | | | | | | (33) | | | (11) | |
Net unrealized (gains)/losses during the reporting period on equity securities still held at the reporting date(b) | | | | | | $ | 485 | | | $ | 710 | |
(a)Reported in Other (income)/deductions––net. See Note 4.
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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 Ended | | Nine 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 OctoberApril 2, 2022,2023, there were cumulative impairments and downward adjustments of $148$171 million and upward adjustments of $201$203 million. Impairments, downward and upward adjustments were not significant in the third quarterfirst quarters of 2023 and first nine months of 2022 and 2021.2022.
C. Short-Term Borrowings
| | Short-term borrowings include: | Short-term borrowings include: | Short-term borrowings include: |
| (MILLIONS) | (MILLIONS) | | October 2,
2022 | | December 31, 2021 | (MILLIONS) | | April 2,
2023 | | December 31, 2022 |
| | Current portion of long-term debt, principal amount | Current portion of long-term debt, principal amount | | $ | 2,550 | | | $ | 1,636 | | Current portion of long-term debt, principal amount | | $ | 3,550 | | | $ | 2,550 | |
Other short-term borrowings, principal amount(a) | Other short-term borrowings, principal amount(a) | | 1,474 | | | 605 | | Other short-term borrowings, principal amount(a) | | 622 | | | 385 | |
| Total short-term borrowings, principal amount | Total short-term borrowings, principal amount | | 4,024 | | | 2,241 | | Total short-term borrowings, principal amount | | 4,172 | | | 2,935 | |
| Net fair value adjustments related to hedging and purchase accounting | | 16 | | | — | | |
| Net fair value adjustments | | Net fair value adjustments | | 17 | | | 10 | |
| Total Short-term borrowings, including current portion of long-term debt, carried at historical proceeds, as adjusted | Total Short-term borrowings, including current portion of long-term debt, carried at historical proceeds, as adjusted | | $ | 4,040 | | | $ | 2,241 | | Total Short-term borrowings, including current portion of long-term debt, carried at historical proceeds, as adjusted | | $ | 4,188 | | | $ | 2,945 | |
(a)Primarily 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: | The following summarizes the aggregate principal amount of our senior unsecured long-term debt, and adjustments to report our aggregate 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) | (MILLIONS) | | October 2,
2022 | | December 31, 2021 | (MILLIONS) | | April 2,
2023 | | December 31, 2022 |
| Total long-term debt, principal amount | Total long-term debt, principal amount | | $ | 31,831 | | | $ | 34,948 | | Total long-term debt, principal amount | | $ | 30,909 | | | $ | 32,080 | |
| Net fair value adjustments related to hedging and purchase accounting | Net fair value adjustments related to hedging and purchase accounting | | 976 | | | 1,438 | | Net fair value adjustments related to hedging and purchase accounting | | 966 | | | 959 | |
| Net unamortized discounts, premiums and debt issuance costs | Net unamortized discounts, premiums and debt issuance costs | | (178) | | | (195) | | Net unamortized discounts, premiums and debt issuance costs | | (171) | | | (175) | |
| Other long-term debt | Other long-term debt | | — | | | 4 | | Other long-term debt | | — | | | 20 | |
| Total long-term debt, carried at historical proceeds, as adjusted | Total long-term debt, carried at historical proceeds, as adjusted | | $ | 32,629 | | | $ | 36,195 | | Total long-term debt, carried at historical proceeds, as adjusted | | $ | 31,704 | | | $ | 32,884 | |
|
E. Derivative Financial Instruments and Hedging Activities
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.
The derivative financial instruments primarily hedge or offset exposures in the euro, U.K. pound, Japanese yen, Chinese renminbi, Canadian dollar and CanadianSingapore 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.
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| | The following summarizes the fair value of the derivative financial instruments and notional amounts (including those reported as part of discontinued operations): | |
| The following summarizes the fair value of the derivative financial instruments and notional amounts: | | The following summarizes the fair value of the derivative financial instruments and notional amounts: |
| | October 2, 2022 | | December 31, 2021 | | April 2, 2023 | | December 31, 2022 |
| | | Fair Value | | | Fair Value | | | Fair Value | | | Fair Value |
| (MILLIONS) | (MILLIONS) | | Notional | | Asset | | Liability | | Notional | | Asset | | Liability | (MILLIONS) | | Notional | | Asset | | Liability | | Notional | | Asset | | Liability |
Derivatives designated as hedging instruments: | Derivatives designated as hedging instruments: | | | | | | | | | | | | | Derivatives designated as hedging instruments: | | | | | | | | | | | | |
Foreign exchange contracts(a) | Foreign exchange contracts(a) | | $ | 33,274 | | | $ | 2,479 | | | $ | 1,175 | | | $ | 29,576 | | | $ | 787 | | | $ | 717 | | Foreign exchange contracts(a) | | $ | 26,179 | | | $ | 809 | | | $ | 1,038 | | | $ | 26,603 | | | $ | 838 | | | $ | 1,196 | |
| Interest rate contracts | Interest rate contracts | | 2,250 | | | 9 | | | 330 | | | 2,250 | | | 21 | | | — | | Interest rate contracts | | 2,250 | | | — | | | 274 | | | 2,250 | | | — | | | 331 | |
| | 2,488 | | | 1,505 | | | 808 | | | 717 | | | 809 | | | 1,311 | | | 838 | | | 1,527 | |
Derivatives not designated as hedging instruments: | Derivatives not designated as hedging instruments: | | Derivatives not designated as hedging instruments: | |
| Foreign exchange contracts | Foreign exchange contracts | | $ | 26,426 | | | 283 | | | 273 | | | $ | 21,419 | | | 160 | | | 164 | | Foreign exchange contracts | | $ | 21,870 | | | 220 | | | 177 | | | $ | 29,814 | | | 240 | | | 362 | |
| | Total | Total | | $ | 2,771 | | | $ | 1,777 | | | $ | 968 | | | $ | 881 | | Total | | $ | 1,029 | | | $ | 1,488 | | | $ | 1,078 | | | $ | 1,889 | |
(a)The notional amount of outstanding foreign exchange contracts hedging our intercompany forecasted inventory sales was $4.5 billion as of OctoberApril 2, 20222023 and $4.8$4.4 billion as of December 31, 2021.2022.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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 item | | 124 | | | 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) | |
|
|
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| | | The following summarizes information about the gains/(losses) incurred to hedge or offset operational foreign exchange or interest rate risk exposures: | | The following summarizes information about the gains/(losses) incurred to hedge or offset operational foreign exchange or interest rate risk exposures: |
| | Gains/(Losses)
Recognized in OID(a) | | Gains/(Losses)
Recognized in OCI(a) | | Gains/(Losses) Reclassified from OCI into OID and COS(a) | | | 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 | | Three Months Ended |
| (MILLIONS) | (MILLIONS) | | October 2,
2022 | | October 3,
2021 | | October 2,
2022 | | October 3,
2021 | | October 2,
2022 | | October 3,
2021 | (MILLIONS) | | April 2,
2023 | | April 3,
2022 | | April 2,
2023 | | April 3,
2022 | | April 2,
2023 | | April 3,
2022 |
| Derivative Financial Instruments in Cash Flow Hedge Relationships: | Derivative Financial Instruments in Cash Flow Hedge Relationships: | | | | | | | | | | | | | Derivative Financial Instruments in Cash Flow Hedge Relationships: | | | | | | | | | | | | |
Foreign exchange contracts(b) | Foreign exchange contracts(b) | | $ | — | | | $ | — | | | $ | 1,339 | | | $ | 147 | | | $ | 872 | | | $ | (314) | | Foreign exchange contracts(b) | | $ | — | | | $ | — | | | $ | (53) | | | $ | 187 | | | $ | (356) | | | $ | 195 | |
Amount excluded from effectiveness testing and amortized into earnings(c) | Amount excluded from effectiveness testing and amortized into earnings(c) | | — | | | — | | | 105 | | | 31 | | | 100 | | | 28 | | Amount excluded from effectiveness testing and amortized into earnings(c) | | — | | | — | | | 55 | | | 16 | | | 53 | | | 18 | |
| Derivative Financial Instruments in Fair Value Hedge Relationships: | Derivative Financial Instruments in Fair Value Hedge Relationships: | | Derivative Financial Instruments in Fair Value Hedge Relationships: | |
| Interest rate contracts | Interest rate contracts | | (346) | | | (6) | | | — | | | — | | | — | | | — | | Interest rate contracts | | 48 | | | (156) | | | — | | | — | | | — | | | — | |
| Hedged item | Hedged item | | 346 | | | 6 | | | — | | | — | | | — | | | — | | Hedged item | | (48) | | | 156 | | | — | | | — | | | — | | | — | |
| | Derivative Financial Instruments in Net Investment Hedge Relationships: | Derivative Financial Instruments in Net Investment Hedge Relationships: | | Derivative Financial Instruments in Net Investment Hedge Relationships: | | | | | | | | | | | | |
| Foreign exchange contracts | Foreign exchange contracts | | — | | | — | | | 1,613 | | | 332 | | | — | | | — | | Foreign exchange contracts | | — | | | — | | | (213) | | | 259 | | | — | | | — | |
Amount excluded from effectiveness testing and amortized into earnings(c) | Amount excluded from effectiveness testing and amortized into earnings(c) | | — | | | — | | | 63 | | | 54 | | | 95 | | | 82 | | Amount excluded from effectiveness testing and amortized into earnings(c) | | — | | | — | | | 67 | | | (74) | | | 34 | | | 30 | |
Non-Derivative Financial Instruments in Net Investment Hedge Relationships:(d) | Non-Derivative Financial Instruments in Net Investment Hedge Relationships:(d) | | Non-Derivative Financial Instruments in Net Investment Hedge Relationships:(d) | | | | | | | | | | | | |
| Foreign currency short-term borrowings | Foreign currency short-term borrowings | | — | | | — | | | 26 | | | 52 | | | — | | | — | | Foreign currency short-term borrowings | | — | | | — | | | — | | | 26 | | | — | | | — | |
| Foreign currency long-term debt | Foreign currency long-term debt | | — | | | — | | | 119 | | | 66 | | | — | | | — | | Foreign currency long-term debt | | — | | | — | | | (16) | | | 23 | | | — | | | — | |
| Derivative Financial Instruments Not Designated as Hedges: | Derivative Financial Instruments Not Designated as Hedges: | | Derivative Financial Instruments Not Designated as Hedges: | |
| Foreign exchange contracts | Foreign exchange contracts | | (832) | | | (97) | | | — | | | — | | | — | | | — | | Foreign exchange contracts | | 17 | | | (19) | | | — | | | — | | | — | | | — | |
All other net(c) | | — | | | — | | | — | | | 1 | | | — | | | 1 | | |
| | $ | (832) | | | $ | (97) | | | $ | 3,264 | | | $ | 683 | | | $ | 1,068 | | | $ | (204) | | |
| | | | | $ | 17 | | | $ | (19) | | | $ | (160) | | | $ | 436 | | | $ | (269) | | | $ | 243 | |
| | | |
(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:
•were a net gain of $125$91 million in the thirdfirst quarter of 2022;
•2023 and a net gain of $227$34 million in the first nine months of 2022;
•a net loss of $18 million in the third quarter of 2021; and
•a net loss of $94 million in the first nine months of 2021.
2022. 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 gain of $1 billion$235 million within the next 12 months into income. The maximum length of time over which we are hedging our exposure to the variability in future foreign exchange cash flows is approximately 2120 years and relates to foreign currency debt.
(c)The amounts reclassified from OCI were reclassified into OID.
(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 OctoberApril 2, 20222023 and December 31, 20212022 were $726$811 million and $844$795 million, respectively.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| The following summarizes cumulative basis adjustments to our debt in fair value hedges: |
| | October 2, 2022 | | December 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 Relationships | | Discontinued Hedging Relationships | | Carrying Amount of Hedged Assets/Liabilities(a) | | Active Hedging Relationships | | Discontinued 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 cumulative amount of fair value hedging adjustments.
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| The following summarizes cumulative basis adjustments to our debt in fair value hedges: |
| | April 2, 2023 | | December 31, 2022 |
| | | | 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 Relationships | | Discontinued Hedging Relationships | | Carrying Amount of Hedged Assets/Liabilities(a) | | Active Hedging Relationships | | Discontinued Hedging Relationships |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Short-term borrowings, including current portion of long-term debt | | $ | — | | | $ | — | | | $ | 12 | | | $ | — | | | $ | — | | | $ | 10 | |
| Long-term debt | | $ | 2,236 | | | $ | (274) | | | $ | 1,014 | | | $ | 2,235 | | | $ | (321) | | | $ | 1,042 | |
(a)Carrying amounts exclude the cumulative amount of fair value hedging adjustments.
F. Credit Risk
A 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 Note 17C in our 20212022 Form 10-K. As of OctoberApril 2, 2022,2023, the largest investment exposures in our portfolio represent primarily sovereign debt instruments issued by Canada, Japan, Germany, France, the U.S., the Netherlands, Japan,and 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 OctoberApril 2, 2022,2023, the aggregate fair value of these derivative financial instruments that are in a net payable position was $595$763 million, for which we have posted collateral of $612$831 million with a corresponding amount reported in Short-term investments. As of OctoberApril 2, 2022,2023, the aggregate fair value of our derivative financial instruments that are in a net receivable position was $1.5 billion,$715 million, for which we have received collateral of $1.5 billion$530 million 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: | The following summarizes the components of Inventories: | The following summarizes the components of Inventories: |
| (MILLIONS) | (MILLIONS) | | October 2,
2022 | | December 31, 2021 | (MILLIONS) | | April 2,
2023 | | December 31, 2022 |
| Finished goods | Finished goods | | $ | 3,159 | | | $ | 3,641 | | Finished goods | | $ | 2,657 | | | $ | 2,603 | |
| Work-in-process | Work-in-process | | 4,540 | | | 4,424 | | Work-in-process | | 6,129 | | | 5,519 | |
| Raw materials and supplies | Raw materials and supplies | | 1,813 | | | 994 | | Raw materials and supplies | | 755 | | | 859 | |
Inventories(a) | Inventories(a) | | $ | 9,513 | | | $ | 9,059 | | Inventories(a) | | $ | 9,541 | | | $ | 8,981 | |
Noncurrent inventories not included above(b) | Noncurrent inventories not included above(b) | | $ | 3,327 | | | $ | 939 | | Noncurrent inventories not included above(b) | | $ | 5,616 | | | $ | 5,827 | |
(a)The increase from December 31, 2021 primarily2022 reflects higher inventory levels for Paxlovid and increases for certain products due to supply recovery and inventory build, 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. ThereBased on our current estimates and assumptions, there are no recoverability issues for these amounts.amounts, which are primarily related to Paxlovid.
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$4.7 billion as of OctoberApril 2, 20222023 and $9.7$5.2 billion as of December 31, 2021.2022.
C. Supplier Finance Program Obligation
We maintain voluntary supply chain finance agreements with several participating financial institutions. Under these agreements, participating suppliers may voluntarily elect to sell their accounts receivable with Pfizer to these financial institutions. Our suppliers negotiate their financing agreements directly with the respective financial institutions and we are not a party to these agreements. We have no economic interest in our suppliers’ decision to participate and we pay the financial institutions the stated amount of confirmed invoices on the original maturity dates, which is generally within 90 to 120 days of
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
the invoice date. The agreements with the financial institutions do not require Pfizer to provide assets pledged as security or other forms of guarantees for the supplier finance program. All outstanding amounts related to suppliers participating in such financing arrangements are recorded within trade payables in our consolidated balance sheet. As of April 2, 2023 and December 31, 2022, respectively, $755 million and $849 million of our trade payables to suppliers who participate in these financing arrangements are outstanding.
Note 9. Identifiable Intangible Assets
A. Identifiable Intangible Assets
| The following summarizes the components of Identifiable intangible assets: | The following summarizes the components of Identifiable intangible assets: | The following summarizes the components of Identifiable intangible assets: |
| | October 2, 2022 | | December 31, 2021 | | April 2, 2023 | | December 31, 2022 |
| (MILLIONS) | (MILLIONS) | | Gross
Carrying
Amount | | Accumulated
Amortization | | Identifiable
Intangible
Assets, less
Accumulated
Amortization | | Gross
Carrying
Amount | | Accumulated
Amortization | | Identifiable
Intangible
Assets, less
Accumulated
Amortization | (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 | Finite-lived intangible assets | | | | | | | | | | | | | Finite-lived intangible assets | | | | | | | | | | | | |
| Developed technology rights | Developed technology rights | | $ | 72,818 | | | $ | (55,309) | | | $ | 17,509 | | | $ | 73,346 | | | $ | (53,732) | | | $ | 19,614 | | Developed technology rights | | $ | 84,973 | | | $ | (56,887) | | | $ | 28,086 | | | $ | 85,604 | | | $ | (56,307) | | | $ | 29,297 | |
| Brands | Brands | | 922 | | | (832) | | | 90 | | | 922 | | | (807) | | | 115 | | Brands | | 922 | | | (854) | | | 68 | | | 922 | | | (844) | | | 78 | |
| Licensing agreements and other | Licensing agreements and other | | 2,296 | | | (1,373) | | | 923 | | | 2,284 | | | (1,299) | | | 985 | | Licensing agreements and other | | 2,420 | | | (1,433) | | | 987 | | | 2,237 | | | (1,397) | | | 841 | |
| | | 76,036 | | | (57,514) | | | 18,522 | | | 76,552 | | | (55,838) | | | 20,714 | | | 88,315 | | | (59,174) | | | 29,141 | | | 88,763 | | | (58,548) | | | 30,215 | |
| Indefinite-lived intangible assets | Indefinite-lived intangible assets | | | | | | | | | | | | | Indefinite-lived intangible assets | | | | | | | | | | | | |
| Brands | Brands | | 827 | | | 827 | | | 827 | | | 827 | | Brands | | 827 | | | 827 | | | 827 | | | 827 | |
IPR&D(a) | IPR&D(a) | | 7,829 | | | 7,829 | | | 3,092 | | | 3,092 | | IPR&D(a) | | 11,269 | | | 11,269 | | | 11,357 | | | 11,357 | |
Licensing agreements and other(a) | Licensing agreements and other(a) | | 972 | | | 972 | | | 513 | | | 513 | | Licensing agreements and other(a) | | 764 | | | 764 | | | 971 | | | 971 | |
| | 9,629 | | | | | 9,629 | | | 4,432 | | | | | 4,432 | | | 12,860 | | | | | 12,860 | | | 13,155 | | | | | 13,155 | |
Identifiable intangible assets(a), (b) | | $ | 85,665 | | | $ | (57,514) | | | $ | 28,151 | | | $ | 80,984 | | | $ | (55,838) | | | $ | 25,146 | | |
Identifiable intangible assets(a) | | Identifiable intangible assets(a) | | $ | 101,176 | | | $ | (59,174) | | | $ | 42,002 | | | $ | 101,919 | | | $ | (58,548) | | | $ | 43,370 | |
(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 increasedecrease is primarily due to the acquisition of Arena, partially offset by amortization expense.
B. Goodwill
| | | | | | | | | | | | | | | | |
The following summarizes the changes in the carrying amount of Goodwill:
|
(MILLIONS) | | | | | | | | | | Total(a)
|
Balance, January 1, 2022 | | | | | | | | | | $ | 49,208 | |
Additions(b)
| | | | | | | | | | 1,029 | |
Other(c)
| | | | | | | | | | (797) | |
Balance, October 2, 2022 | | | | | | | | | | $ | 49,441 | |
(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 2022expense and impairments (see Note 1A4), 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 old and new organizational structure and the portions being transferred. Therefore, we have not yet completed the allocation, but it will be completed in the current year.(b)Additions relate to our acquisition of Arena. See Note 2A.
(c)Other represents the impact of foreign exchange.
Note 10. Pension and Postretirement Benefit Plans
| | The following summarizes the components of net periodic benefit cost/(credit): | The following summarizes the components of net periodic benefit cost/(credit): | | The following summarizes the components of net periodic benefit cost/(credit): | |
| | | | | | | | Pension Plans | | | | | | Pension Plans | | | |
| | | | U.S. | | International | | Postretirement
Plans | | | | U.S. | | International | | Postretirement
Plans | |
| | Three Months Ended | | | Three Months Ended | |
| (MILLIONS) | (MILLIONS) | | Oct. 2, 2022 | | Oct. 3, 2021 | | Oct. 2, 2022 | | Oct. 3, 2021 | | Oct. 2, 2022 | | Oct. 3, 2021 | | (MILLIONS) | | April 2,
2023 | | April 3,
2022 | | April 2,
2023 | | April 3,
2022 | | April 2,
2023 | | April 3,
2022 | |
| Service cost | Service cost | | $ | — | | | $ | — | | | $ | 29 | | | $ | 32 | | | $ | 7 | | | $ | 9 | | | Service cost | | $ | — | | | $ | — | | | $ | 22 | | | $ | 30 | | | $ | 3 | | | $ | 7 | | |
| Interest cost | Interest cost | | 151 | | | 114 | | | 38 | | | 37 | | | 7 | | | 7 | | | Interest cost | | 148 | | | 118 | | | 71 | | | 42 | | | 5 | | | 7 | | |
| Expected return on plan assets | Expected return on plan assets | | (195) | | | (261) | | | (72) | | | (83) | | | (12) | | | (10) | | | Expected return on plan assets | | (194) | | | (245) | | | (76) | | | (79) | | | (11) | | | (12) | | |
| Amortization of prior service cost/(credit) | Amortization of prior service cost/(credit) | | — | | | — | | | — | | | — | | | (31) | | | (39) | | | Amortization of prior service cost/(credit) | | — | | | — | | | — | | | — | | | (30) | | | (36) | | |
Actuarial (gains)/losses(a) | | (193) | | | (836) | | | — | | | — | | | — | | | — | | | |
| Actuarial (gains)/losses | | Actuarial (gains)/losses | | 9 | | | (65) | | | 3 | | | — | | | — | | | — | | |
| Curtailments | Curtailments | | — | | | — | | | — | | | — | | | (1) | | | (64) | | | Curtailments | | — | | | — | | | (1) | | | — | | | (5) | | | (13) | | |
| Special termination benefits | Special termination benefits | | 1 | | | — | | | — | | | — | | | — | | | — | | | Special termination benefits | | 2 | | | 6 | | | — | | | — | | | — | | | — | | |
| Net periodic benefit cost/(credit) reported in income | Net periodic benefit cost/(credit) reported in income | | $ | (235) | | | $ | (983) | | | $ | (6) | | | $ | (14) | | | $ | (30) | | | $ | (96) | | | Net periodic benefit cost/(credit) reported in income | | $ | (36) | | | $ | (186) | | | $ | 18 | | | $ | (8) | | | $ | (37) | | | $ | (46) | | |
|
The components of net periodic benefit cost/(credit) other than the service cost component are primarily included in Other (income)/deductions––net (see Note 4). For the three months ended April 2, 2023, we contributed $85 million, $39 million, and $20 million to our U.S. Pension Plans, International Pension Plans, and Postretirement Plans, respectively, from our general assets, which include direct employer benefit payments.
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | Pension Plans | | | | | | | | |
| | | U.S. | | International | | Postretirement
Plans | | | | | | |
| | Nine Months Ended | | | | | | |
| (MILLIONS) | | Oct. 2, 2022 | | Oct. 3, 2021 | | Oct. 2, 2022 | | Oct. 3, 2021 | | Oct. 2, 2022 | | Oct. 3, 2021 | | | | | | |
| Service cost | | $ | — | | | $ | — | | | $ | 89 | | | $ | 98 | | | $ | 22 | | | $ | 27 | | | | | | | |
| Interest cost | | 387 | | | 341 | | | 121 | | | 110 | | | 21 | | | 22 | | | | | | | |
| Expected return on plan assets | | (685) | | | (782) | | | (229) | | | (246) | | | (35) | | | (29) | | | | | | | |
| Amortization of prior service credits | | 1 | | | (1) | | | (1) | | | (1) | | | (99) | | | (116) | | | | | | | |
Actuarial (gains)/losses(a) | | 231 | | | (881) | | | — | | | — | | | — | | | — | | | | | | | |
| Curtailments | | — | | | — | | | — | | | (1) | | | (14) | | | (64) | | | | | | | |
| Special termination benefits | | 8 | | | 12 | | | — | | | — | | | 1 | | | 1 | | | | | | | |
| Net periodic benefit cost/(credit) reported in income | | $ | (57) | | | $ | (1,312) | | | $ | (20) | | | $ | (40) | | | $ | (106) | | | $ | (160) | | | | | | | |
(a)The third quarter of 2022 mainly reflects interim actuarial remeasurement gains, primarily driven by an increase in the discount rate, partially offset by unfavorable plan asset performance. The first nine months of 2022 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 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 Other (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: | The following presents the detailed calculation of EPS: | The following presents the detailed calculation of EPS: |
| | | | Three Months Ended | | Nine Months Ended | | | | Three Months Ended |
| (MILLIONS) | (MILLIONS) | | October 2,
2022 | | October 3,
2021 | | October 2,
2022 | | October 3,
2021 | (MILLIONS) | | | April 2,
2023 | | April 3,
2022 |
| EPS Numerator––Basic | EPS Numerator––Basic | | | | | | | | | EPS Numerator––Basic | | | | | |
| | Income from continuing operations attributable to Pfizer Inc. common shareholders | Income from continuing operations attributable to Pfizer Inc. common shareholders | | $ | 8,630 | | | $ | 8,159 | | | $ | 26,373 | | | $ | 18,834 | | Income from continuing operations attributable to Pfizer Inc. common shareholders | | | $ | 5,542 | | | $ | 7,872 | |
| Discontinued operations––net of tax | Discontinued operations––net of tax | | (21) | | | (13) | | | 4 | | | (248) | | Discontinued operations––net of tax | | | 1 | | | (9) | |
| | Net income attributable to Pfizer Inc. common shareholders | Net income attributable to Pfizer Inc. common shareholders | | $ | 8,608 | | | $ | 8,146 | | | $ | 26,378 | | | $ | 18,586 | | Net income attributable to Pfizer Inc. common shareholders | | | $ | 5,543 | | | $ | 7,864 | |
| EPS Numerator––Diluted | EPS Numerator––Diluted | | | | | | | | | EPS Numerator––Diluted | | | | | |
| Income from continuing operations attributable to Pfizer Inc. common shareholders and assumed conversions | Income from continuing operations attributable to Pfizer Inc. common shareholders and assumed conversions | | $ | 8,630 | | | $ | 8,159 | | | $ | 26,373 | | | $ | 18,834 | | Income from continuing operations attributable to Pfizer Inc. common shareholders and assumed conversions | | | $ | 5,542 | | | $ | 7,872 | |
| Discontinued operations––net of tax, attributable to Pfizer Inc. common shareholders and assumed conversions | Discontinued operations––net of tax, attributable to Pfizer Inc. common shareholders and assumed conversions | | (21) | | | (13) | | | 4 | | | (248) | | Discontinued operations––net of tax, attributable to Pfizer Inc. common shareholders and assumed conversions | | | 1 | | | (9) | |
| Net income attributable to Pfizer Inc. common shareholders and assumed conversions | Net income attributable to Pfizer Inc. common shareholders and assumed conversions | | $ | 8,608 | | | $ | 8,146 | | | $ | 26,378 | | | $ | 18,586 | | Net income attributable to Pfizer Inc. common shareholders and assumed conversions | | | $ | 5,543 | | | $ | 7,864 | |
| EPS Denominator | EPS Denominator | | | | | | | | | EPS Denominator | | | | | |
| Weighted-average number of common shares outstanding––Basic | Weighted-average number of common shares outstanding––Basic | | 5,607 | | | 5,609 | | | 5,606 | | | 5,597 | | Weighted-average number of common shares outstanding––Basic | | | 5,634 | | | 5,617 | |
| Common-share equivalents: stock options and stock issuable under employee compensation plans | | 111 | | | 116 | | | 124 | | | 91 | | |
| Common-share equivalents | | Common-share equivalents | | | 93 | | | 141 | |
| Weighted-average number of common shares outstanding––Diluted | Weighted-average number of common shares outstanding––Diluted | | 5,718 | | | 5,725 | | | 5,729 | | | 5,688 | | Weighted-average number of common shares outstanding––Diluted | | | 5,727 | | | 5,758 | |
Anti-dilutive common stock equivalents(a) | Anti-dilutive common stock equivalents(a) | | 3 | | | — | | | 1 | | | 3 | | Anti-dilutive common stock equivalents(a) | | | 2 | | | — | |
(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.
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 12. Contingencies and Certain Commitments
We and certain of our subsidiaries are subject to numerous contingencies arising in the ordinary course of business, including tax and legal contingencies.contingencies, guarantees and indemnifications. The following outlines our legal contingencies.contingencies, guarantees and indemnifications. For a discussion of our tax contingencies, see Note 5B.5B. A. Legal Proceedings
Our legal 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. An adverse outcome could result in loss of patent protection for a product, a significant loss of revenues from a 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 acquisition-, 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 jurisdictions.
Certain of these contingencies could result in increased expenses and/or losses, including damages, royalty payments, fines and/or civil penalties, which could be substantial, and/or criminal charges.
We believe that our claims and defenses in 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 matters, which could have a material adverse effect on our results of operations 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.
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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 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 to assess materiality, such as, among others, the amount of damages and the nature of other relief sought, if 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(s) at issue. Some of the matters discussed below include those which management believes that the likelihood of possible loss in excess of amounts accrued is remote.
A1. Legal Proceedings––Patent Litigation
We are involved in suits relating to our patents (or those of our collaboration/licensing partners to which we have licenses or co-promotion rights), including but not limited to, those discussed below. Most involveWe face claims by generic drug manufacturers that patents covering our products (or those of our collaboration/licensing partners to which we
PFIZER INC. AND SUBSIDIARY COMPANIES
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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 that are discussed below, patent rights to certain of our products or those of our collaboration/licensing partners are being challenged in various other 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.decision and the appeal hearing was held in April 2023. In May 2023, the Court of Appeal dismissed the appeal. Additional challenges remainare 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 patent damages suits in various jurisdictions pursuant to which generic drug manufacturers, payers, governments or other parties are seeking damages from us for allegedly causing delay of generic entry.
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, as well as court proceedings relating to our intellectual property or the intellectual property rights of others.others, including challenges to such rights initiated by us. Also, if one of our patents (or one of our collaboration/licensing partner’s 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 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 andOffice, as well as outside the U.S.The invalidation of any 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 might be required to pay us a royalty.
We are also subject to patent litigation pursuant to which one or more third parties seek damages and/or injunctive relief to compensate for alleged infringement of its patents by our commercial or other activities. For example, our Hospira subsidiaries are involved in patent and patent-related disputes over their attempts to bring generic pharmaceutical products to market. If one of our marketed products (or a product of our collaboration/licensing partners to which we have licenses or co-promotion rights) 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
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prevented from further sales of that product. Such damages may be enhanced as much as three-fold if we or one of our subsidiaries is found to have willfully infringed valid patent rights of a third party.
Actions In Which We Are The Plaintiff
Xeljanz (tofacitinib)
Beginning in 2017, we brought patent-infringement actions against several generic manufacturers that filed separate ANDAsabbreviated new drug applications (ANDAs) with the FDA seeking approval to market their generic versions of tofacitinib tablets in one or both of 5 mg and 10 mg dosage strengths, and 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 continueaction continues in the U.S. District Court for the District of Delaware as described below.
In October 2021, we brought a separate patent-infringement action against Sinotherapeutics Inc. (Sinotherapeutics) asserting the infringement and validity of our patent covering extended release formulations of tofacitinib that was challenged by Sinotherapeutics in its ANDA seeking approval to market a generic version of tofacitinib 11 mg extended release tablets.
In JuneNovember 2022, we brought a separate patent infringementfiled an additional patent-infringement action against MSN Laboratories Private Ltd. (MSN) asserting the infringement and validitySinotherapeutics relating to its challenge of our compound patent covering the active agreement that was challenged by MSNextended release formulation and method of treatment patents in its ANDAs seeking approval to market generic versions of tofacitinib immediate release tablets (5 mg, 10 mg) and oral solution 1 mg/mL. In August 2022, we settled our action against MSN on terms not material to us.
Inlyta (axitinib)
In 2019, Glenmark Pharmaceuticals Ltd. (Glenmark) notified us that it had filed an ANDA with the FDA seeking approval to market a generic version of Inlyta. Glenmark asserts the invalidity and non-infringement of the crystalline form patent for Inlyta that expires in 2030. In 2019, we filed suit against Glenmark in the U.S. District Court for the District of Delaware, asserting the validity and infringement of the crystalline form patent for Inlyta.
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tofacitinib 22 mg extended release tablets.Ibrance (palbociclib)
Beginning in January 2021, several generic companies notified us that they had filed ANDAs with the FDA seeking approval to market generic versions of Ibrance tablets. The generic companies are challengingchallenged 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 filers in various U.S. federal courts, asserting the validity and infringement of the patents challenged by the generic companies. We have settled with one of these generic companies on terms not material to us, and we dismissed the patent infringement actions relating to the crystalline form of patent, the composition of matter patent expiring in 2023, the method of use patent, and the 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 patents expiring in 2027, and one other method of use patent expiring in 2030. In September 2021, we brought patent infringement actions against the generic filers in the U.S. District Court for the District of Delaware, asserting the validity and infringement of the patents challenged by the generic companies.
Braftovi (encorafenib)
In August 2022, a generic company notified us that it had filed an ANDA with the FDA seeking approval to market a generic version of Braftovi. The company asserts the invalidity and non-infringement of, among others, a method of use patent expiring in 2033. In September 2022, we brought a patent infringement action against the generic company in the U.S. District Court for the District of Delaware, asserting the validity and infringement of the method of use patent expiring in 2033.
Mektovi (binimetinib)
Beginning in August 2022, several generic companies notified us that they had filed ANDAs with the FDA seeking approval to market generic versions of Mektovi. The companies assert the invalidity and non-infringement of two method of use patents expiring in 2030, a method of use patent expiring in 2031, two method of use patents expiring in 2033, and a product by process patent expiring in 2033. Beginning in September 2022, we brought patent infringement actions against the generic filers in the U.S. District Court for the District of Delaware, asserting the validity and infringement of all six patents.
Actions in Which We are the Defendant
Comirnaty
In March 2022, Alnylam Pharmaceuticals, Inc. (Alnylam) filed a complaint in the U.S. District Court for the District of Delaware against 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.KU.K. and in the Netherlands against Pfizer Inc. and certain subsidiary
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companies, as well as BioNTech and certain subsidiary companies, on the same two patents. In its complaints, ModernaModernaTX 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.patents, which was consolidated with the September 2022 action filed by ModernaTX.
In April 2023, Arbutus Biopharma Corp. (Arbutus) and Genevant Sciences GmbH (Genevant) filed a complaint in the U.S. District Court for the District of New Jersey against Pfizer and BioNTech alleging that Comirnaty and its manufacture infringe five U.S. patents, and seeking unspecified monetary damages.
Paxlovid
In June 2022, Enanta Pharmaceuticals, Inc. filed a complaint in the U.S. District Court for the District of Massachusetts 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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Matters Involving Pfizer and its Collaboration/Licensing Partners
Eliquis
In 2017, twenty-five generic companies sent BMS Paragraph-IV certification letters informing BMS that they had filed ANDAs 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. One of the patents expired in December 2019 and the remaining patents currently are set to expire in 2026 and 2031. Eliquis has been jointly developed and is being commercialized by BMS and Pfizer. 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. In August 2020, the U.S. District Court for the District of Delaware ruled that both the 2026 patent and the 2031 patent are valid and infringed by the proposed generic products. In August and September 2020, the generic filers appealed the District Court’s decision to the U.S. Court of Appeals for the Federal Circuit. Prior to the August 2020 ruling, we and BMS settled with certain of the companies on terms not material to us, and we and BMS may settle with other generic companies in the future. In September 2021, the U.S. Court of Appeals for the Federal Circuit affirmed the District Court’s decision.
Comirnaty
In July 2022, Pfizer, BioNTech and BioNTech Manufacturing GmbH filed a declaratory judgment complaint against CureVac in the U.S. District Court for the District of Massachusetts seeking a judgment of non-infringement for the following three patents relating to Comirnaty: U.S. Patent Nos. 11,135,312, 11,149,278, and 11,241,493. Outside of the U.S., in the U.K., Pfizer and BioNTech have sued CureVac seeking a judgment of invalidity of several patents and CureVac has made certain infringement counterclaims.
Xtandi (enzalutamide)
In July 2022, Medivation LLC and Medivation Prostate Therapeutics LLC (wholly owned subsidiaries of Pfizer); Astellas Pharma Inc., Astellas US LLC and Astellas Pharma US, Inc.; and The Regents of the University of California filed a patent-infringement suit in the U.S. District Court for the District of New Jersey against Zydus Pharmaceuticals (USA) Inc. and Zydus Lifesciences Ltd.; and in December 2022, the same entities filed a patent-infringement suit in the U.S. District Court for the District of New Jersey against Sun in connection with those companies’ respective ANDAs seeking approval to market generic versions of enzalutamide. The generic manufacturers are challenging the composition of matter patent, which expires in 2027, covering enzalutamide and pharmaceutical compositions thereof, for treating prostate cancer.
Eliquis
In April 2023, we and BMS brought separate patent-infringement actions in Federal Court in Delaware against each of Biocon Pharma Limited (Biocon) and ScieGen Pharmaceuticals Inc. (ScieGen) asserting the infringement and validity of the formulation patent for Eliquis, expiring in 2031, challenged by Biocon and ScieGen in their respective ANDAs seeking approval to market generic versions of Eliquis. In April 2023, we settled our action against ScieGen on terms not material to us.
A2. Legal Proceedings––Product Litigation
We 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. Warner-Lambert was acquired by Pfizer in 2000 and is a wholly 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 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
Beginning in 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
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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 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 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 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.
Lipitor
Beginning in 2011, purported class actions relating to Lipitor were filed in various federal courts against, among others, Pfizer, certain Pfizer affiliates, and, in most of the actions, Ranbaxy Laboratories Ltd. (Ranbaxy) and certain 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 LitigationMDL 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 of the direct purchasers. In October and November 2014, the District Court dismissed with prejudice the claims of all other Multi-District LitigationMDL plaintiffs. All plaintiffs 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 Court of Appeals. In 2017, the Court of Appeals reversed the District Court’s decisions and remanded the claims to the District Court.
Also, in 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.
EpiPen (Direct Purchaser)
In February 2020, a lawsuit was filed in the U.S. District Court for the District of Kansas against Pfizer, its current and former affiliates King and Meridian, and various Mylan entities, on behalf of a purported U.S. nationwide class of direct purchaser plaintiffs who purchased EpiPen devices directly from the defendants. Plaintiffs in this action generally allege that 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 law. Plaintiffs seek treble damages for alleged overcharges for EpiPen since 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 2022, the District Court granted Pfizer’s motion to dismiss the complaint.complaint, and plaintiffs have appealed to the U.S. Court of Appeals for the Tenth Circuit.
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 ingestion of certain proton pump inhibitors. The cases against Pfizer involve Protonix and/or Nexium 24HR and seek compensatory and punitive damages and, in some cases, treble damages, restitution or disgorgement. In 2017, the federal actions were ordered transferred for coordinated pre-trial proceedings to a Multi-District LitigationMDL in the U.S. District Court for
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the District of New Jersey. As part of the combination of our Consumer Healthcare JV transaction with GSK, the JV hasand GSK’s consumer healthcare businesses to form Haleon, Haleon assumed, and 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 2016, the federal cases were transferred for coordinated pre-trial proceedings to a Multi-District LitigationMDL 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 LitigationMDL 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 LitigationMDL in the U.S. District Court for the Southern District of Florida.Florida (the Federal MDL Court). Plaintiffs in the Multi-District LitigationMDL 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 December 2022, the Federal MDL Court granted defendants’ Daubert motions to exclude plaintiffs’ expert testimony and motion for summary judgment on general causation, and dismissed the litigation.
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. In December 2022, the federal actions were transferred for coordinated pre-trial proceedings to a MDL in the U.S. District Court for the Southern District of New York. Similar putative class actions have been filed in Canada and Israel, where the product brand is Champix.
A3. Legal Proceedings––Commercial and Other Matters
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
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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 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.
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 spin-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 assumed responsibility for environmental remediation at the Wyeth Holdings LLC (formerly known as, Wyeth Holdings Corporation and American Cyanamid Company) discontinued industrial chemical facility in Bound Brook, New Jersey. Since that time, we have executed or have become a party to a number of administrative settlement agreements, orders on consent, and/or judicial consent decrees, with the U.S. Environmental Protection Agency and/or New Jersey Department of Environmental Protection to perform remedial design, removal and remedial actions, and related environmental remediation activities at the Bound Brook facility. We have accrued for the currently estimated costs of 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 2017, a number of U.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 U.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, 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. In February 2023, the Court of Appeals denied defendants’ en banc petitions.
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. TheAn amended complaint was filed in January 2023, and 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.Transactions, as well as related communications. Plaintiff seeks damages, costs and expenses and other equitable and injunctive relief.
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A4. Legal Proceedings––Government Investigations
We are subject to extensive regulation by government agencies in the U.S., other developed markets and multiple emerging markets in which we operate. Criminal charges, substantial fines and/or civil penalties, 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 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.
Greenstone 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 April 2018, Greenstone received requests for information from the Antitrust Department of the Connecticut Office of the Attorney General. In May 2019, Attorneys General of more than 40 states plus the District of Columbia 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 LitigationMDL in the Eastern District of Pennsylvania. As to Greenstone and Pfizer, the 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 LitigationMDL in July 2020. The Multi-District LitigationMDL 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 Tris Pharma/Quillivant XR
In October 2018, we received a subpoena from the U.S. Attorney’s Office for the Southern District of New York (SDNY) seeking records relating to our relationship with another 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 the 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 those requested by the SDNY. We are producing records in response to this request.
Government Inquiries relating to Meridian Medical Technologies
In February 2019, we received a 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 fromissued by the U.S. Attorney’s Office for the Eastern District of Missouri, in coordination with the Department of Justice’s Consumer Protection Branch, seeking similar records and information. We are producing records in response to these and subsequent requests.
U.S. Department of Justice/SEC Inquiry relating to Russian Operations
In June 2019, we received an informal request from the U.S. Department of Justice’s Foreign Corrupt Practices Act (FCPA) Unit seeking documents relating to our operations in Russia. In September 2019, we received a similar request from the SEC’s FCPA Unit. We have produced records pursuant to these requests.
Docetaxel––Mississippi Attorney General Government Investigation
See Legal Proceedings––Product Litigation––Docetaxel––Mississippi Attorney General Government Investigation above for information regarding a government investigation related to Docetaxel marketing practices.
U.S. Department of Justice Inquiries relating to India Operations
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.
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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––Product Litigation––Zantac above for information regarding civil actions separately filed by the State of New 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.
Government Inquiries relating to Biohaven
In June 2022, the U.S. Department of Justice's Commercial Litigation Branch and the U.S. Attorney’s Office for the Western District of New York issued a CID relating to Biohaven. The CID seeks records and information related to, among other things, engagements with health care professionals and co-pay coupons cards. In March 2023, the California Department of Insurance issued a subpoena seeking records similar to those requested by the CID. Biohaven is a wholly-owned subsidiary that we acquired in October 2022. We are producing records in response to these requests.
U.S. Department of Justice Inquiry relating to Mexico Operations
In March 2023, we received an informal request from the U.S. Department of Justice’s FCPA Unit seeking documents relating to our operations in Mexico.We are producing records pursuant to this request.
Government Inquiries relating to Xeljanz
In April 2023, we received a HIPAA subpoena issued by the U.S. Attorney’s Office for the Western District of Virginia, in coordination with the Department of Justice’s Commercial Litigation Branch, seeking records and information related to programs Pfizer sponsored in retail pharmacies relating to Xeljanz. We are producing records pursuant to this request.
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 or following a transaction. If the indemnified party were to make a successful claim pursuant to the terms of the indemnification, we may be required to reimburse the loss. These indemnifications are generally subject to various
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 OctoberApril 2, 2022,2023, the estimated fair value of these indemnification 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 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 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 we 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, seeSee Note 1E1D in our 20212022 Form 10-K.
Note 13. Segment, Geographic and Other Revenue Information
A. Segment Information
We manage our commercial operations through two operating segments, Biopharma and PC1, which are each led by a single manager.manager: Biopharma and Business Innovation, an operating segment established in the first quarter of 2023 that includes PC1, our contract development and manufacturing organization and a leading supplier of specialty active pharmaceutical ingredients, and Pfizer Ignite, a recently launched offering that provides strategic guidance and end-to-end R&D services to select innovative biotech companies that align with Pfizer’s R&D focus areas. Biopharma is the only reportable segment. Each operating segment has responsibility for its commercial activities. Regional commercial organizations market, distribute and sell our products and are
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
supported by global platform functions that are responsible for the 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. Each operating segment has a geographic footprint across developed and emerging markets. Our chief operating decision maker uses the revenues and earnings of the operating segments, among other factors, for performance evaluation and resource allocation.
AfterOther Business Activities and Reconciling Items––Other business activities include the organizational changes in the third quarteroperating results of 2022 (see Note 1A), the new commercial structure within Biopharma is designed to better support and optimize performance across three broad therapeutic areas:
•Primary Care consists of the former Internal Medicine and Vaccines product portfolios,Business Innovation as well as COVID-19 products and potential future mRNA products.
•Specialty Care consists of the former Inflammation & Immunology, Rare Disease and Hospital (excluding Paxlovid) product portfolios.
•Oncology consists of the former Oncology product portfolio.
Other Costs and Business Activities––Certaincertain pre-tax costs are not allocated to our operating segment results, such as costs included in Other business activities that are associated with: (i) R&D and medical expenses managed by our WRDM organization and costs associated with our GPD organizations;organization; (ii) corporate enabling functions and other corporate costs; (iii) overhead costs primarily associated with our manufacturing operations; and (iv) our share of earnings from Haleon/the Consumer Healthcare JV. Additionally,Reconciling items include the following items, transactions and events that are not allocated to our operating segments: (i) all amortization of intangible assets,assets; (ii) acquisition-related items; and (iii) 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 be expected to occur 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 activities.basis.
Segment Assets––We manage our assets on a total company basis, not by operating segment, as our operating assets are shared or commingled. Therefore, our chief operating decision maker does not regularly review any asset information by operating
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 $195$196 billion as of OctoberApril 2, 20222023 and $181$197 billion as of December 31, 2021.2022.
Selected Income Statement Information
| | The following provides selected income statement information by reportable segment: | The following provides selected income statement information by reportable segment: | The following provides selected income statement information by reportable segment: |
| | Three Months Ended | | Nine Months Ended | | Three Months Ended | |
| | | | Revenues | | Earnings(a) | | Revenues | | Earnings(a) | | | Revenues | | Earnings(a) | |
| (MILLIONS) | (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 | (MILLIONS) | | April 2,
2023 | | April 3,
2022 | | April 2,
2023 | | April 3,
2022 | |
| Reportable Segment: | Reportable Segment: | | | | | | | | | | | | | | | | | Reportable Segment: | | | | | | | | | |
| Biopharma | Biopharma | | $ | 22,319 | | | $ | 23,513 | | | $ | 14,665 | | | $ | 11,848 | | | $ | 75,066 | | | $ | 56,101 | | | $ | 45,222 | | | $ | 29,952 | | Biopharma | | $ | 17,971 | | | $ | 25,323 | | | $ | 10,936 | | | $ | 13,391 | | |
Other business activities(b) | Other business activities(b) | | 319 | | | 521 | | | (4,007) | | | (3,303) | | | 974 | | | 1,348 | | | (9,820) | | | (7,778) | | Other business activities(b) | | 310 | | | 338 | | | (2,734) | | | (2,429) | | |
| Reconciling Items: | Reconciling Items: | | Reconciling Items: | | |
| Amortization of intangible assets | Amortization of intangible assets | | — | | | — | | | (822) | | | (980) | | | — | | | — | | | (2,478) | | | (2,778) | | Amortization of intangible assets | | (1,103) | | | (835) | | |
| Acquisition-related items | Acquisition-related items | | — | | | — | | | (62) | | | (41) | | | — | | | — | | | (331) | | | (14) | | Acquisition-related items | | (163) | | | (187) | | |
Certain significant items(c) | Certain significant items(c) | | — | | | — | | | (773) | | | 318 | | | — | | | — | | | (3,095) | | | 1,102 | | Certain significant items(c) | | (665) | | | (891) | | |
| | $ | 22,638 | | | $ | 24,035 | | | $ | 9,001 | | | $ | 7,843 | | | $ | 76,040 | | | $ | 57,450 | | | $ | 29,498 | | | $ | 20,484 | | | $ | 18,282 | | | $ | 25,661 | | | $ | 6,270 | | | $ | 9,050 | | |
| | | |
(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$92 million in the first nine monthsquarter of 20222023 and $127$56 million in the first nine monthsquarter of 2021.2022. 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$47 million of costs in the first nine monthsquarter of 20212022 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 PC1Business Innovation and costs that we do not allocate to our operating segments, per above, including acquired IPR&D expenses 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 monthsquarter of 2023 and 2022 includes,include, among other items: (i)items, net losses on equity securities of $1.3 billion$452 million and $698 million, respectively, 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. See Selling, informational and administrative expensesNote 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 4. B. Geographic Information
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| The following summarizes revenues by geographic area: |
| | | Three Months Ended | | Nine 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 Europe | | 3,136 | | | 6,221 | | | (50) | | | 14,705 | | | 13,836 | | | 6 | |
| Developed Rest of World | | 2,351 | | | 4,498 | | | (48) | | | 10,671 | | | 8,617 | | | 24 | |
| Emerging Markets | | 3,300 | | | 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 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| The following summarizes revenues by geographic area: |
| | | Three Months Ended | | |
| (MILLIONS) | | April 2,
2023 | | April 3,
2022 | | %
Change | | | | | | |
| United States | | $ | 8,507 | | | $ | 8,918 | | | (5) | | | | | | | |
| Developed Europe | | 2,822 | | | 6,090 | | | (54) | | | | | | | |
| Developed Rest of World | | 2,473 | | | 3,286 | | | (25) | | | | | | | |
| Emerging Markets | | 4,480 | | | 7,367 | | | (39) | | | | | | | |
| Revenues | | $ | 18,282 | | | $ | 25,661 | | | (29) | | | | | | | |
|
|
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
C. Other Revenue Information
Significant Customers––For information on our significant wholesale customers, see Note 17C in our 2022 Form 10-K. Additionally, revenues from the U.S. government represented 44%15% and 19% of total revenues for the three months ended April 2, 2023 and April 3, 2022, respectively. Accounts receivable from the U.S. government represented 17% and 4% of total trade accounts receivable as of OctoberApril 2, 2023 and December 31, 2022, respectively. Revenues and accounts receivable from the U.S. government primarily relate torepresent sales of Paxlovid and Comirnaty.
Significant Product Revenues
The following provides detailed revenue information for several of our major products:
| | (MILLIONS) | (MILLIONS) | | Three Months Ended | | Nine Months Ended | (MILLIONS) | | Three Months Ended | |
| PRODUCT | PRODUCT | | PRIMARY INDICATION OR CLASS | | Oct. 2, 2022 | | Oct. 3, 2021 | | Oct. 2, 2022 | | Oct. 3, 2021 | PRODUCT | | PRIMARY INDICATION OR CLASS | | April 2,
2023 | | April 3,
2022 | |
TOTAL REVENUES(a) | TOTAL REVENUES(a) | | | | $ | 22,638 | | | $ | 24,035 | | | $ | 76,040 | | | $ | 57,450 | | TOTAL REVENUES(a) | | | | $ | 18,282 | | | $ | 25,661 | | |
GLOBAL BIOPHARMACEUTICALS BUSINESS (BIOPHARMA)(a), (b) | | $ | 22,319 | | | $ | 23,513 | | | $ | 75,066 | | | $ | 56,101 | | |
GLOBAL BIOPHARMACEUTICALS BUSINESS (BIOPHARMA)(a) | | GLOBAL BIOPHARMACEUTICALS BUSINESS (BIOPHARMA)(a) | | $ | 17,971 | | | $ | 25,323 | | |
| Primary Care | Primary Care | | | $ | 15,846 | | | $ | 16,680 | | | $ | 55,676 | | | $ | 35,804 | | Primary Care | | | $ | 11,505 | | | $ | 18,851 | | |
Comirnaty direct sales and alliance revenues(c) | | Active immunization to prevent COVID-19 | | 4,402 | | | 12,977 | | | 26,477 | | | 24,277 | | |
| Paxlovid | Paxlovid | | COVID-19 infection (high risk population) | | 7,514 | | | — | | | 17,099 | | | — | | Paxlovid | | COVID-19 in certain high-risk patients | | 4,069 | | | 1,470 | | |
Comirnaty direct sales and alliance revenues(b) | | Comirnaty direct sales and alliance revenues(b) | | Active immunization to prevent COVID-19 | | 3,064 | | | 13,227 | | |
| Eliquis alliance revenues and direct sales | Eliquis alliance revenues and direct sales | | Nonvalvular atrial fibrillation, deep vein thrombosis, pulmonary embolism | | 1,464 | | | 1,346 | | | 5,001 | | | 4,470 | | Eliquis alliance revenues and direct sales | | Nonvalvular atrial fibrillation, deep vein thrombosis, pulmonary embolism | | 1,874 | | | 1,793 | | |
Prevnar family(d) | Prevnar family(d) | | Pneumococcal disease | | 1,607 | | | 1,447 | | | 4,601 | | | 3,971 | | Prevnar family(d) | | Active immunization to prevent pneumonia, invasive disease and otitis media caused by Streptococcus pneumoniae | | 1,593 | | | 1,565 | | |
| Nurtec ODT/Vydura | | Nurtec ODT/Vydura | | Acute treatment of migraine and prevention of episodic migraine | | 167 | | | 1 | | |
| Premarin family | Premarin family | | Symptoms of menopause | | 110 | | | 148 | | | 327 | | | 420 | | Premarin family | | Symptoms of menopause | | 112 | | | 102 | | |
| Nimenrix | | Meningococcal ACWY disease | | 79 | | | 51 | | | 221 | | | 145 | | |
| BMP2 | BMP2 | | Development of bone and cartilage | | 58 | | | 71 | | | 201 | | | 186 | | BMP2 | | Development of bone and cartilage | | 86 | | | 67 | | |
| FSME-IMMUN/TicoVac | FSME-IMMUN/TicoVac | | Tick-borne encephalitis disease | | 67 | | | 47 | | | 177 | | | 161 | | FSME-IMMUN/TicoVac | | Active immunization to prevent tick-borne encephalitis disease | | 45 | | | 42 | | |
| Toviaz | | Overactive bladder | | 30 | | | 56 | | | 130 | | | 174 | | |
| Trumenba | | Meningococcal B disease | | 60 | | | 52 | | | 108 | | | 102 | | |
| Chantix/Champix | | An aid to smoking cessation treatment in adults 18 years of age or older | | 4 | | | 7 | | | 8 | | | 409 | | |
| Nimenrix | | Nimenrix | | Active immunization against invasive meningococcal ACWY disease | | 40 | | | 77 | | |
| All other Primary Care | All other Primary Care | | Various | | 451 | | | 479 | | | 1,326 | | | 1,490 | | All other Primary Care | | Various | | 456 | | | 507 | | |
| Specialty Care | Specialty Care | | | $ | 3,404 | | | $ | 3,749 | | | $ | 10,267 | | | $ | 11,205 | | Specialty Care | | | $ | 3,612 | | | $ | 3,505 | | |
| Vyndaqel/Vyndamax | | ATTR-CM and polyneuropathy | | 602 | | | 501 | | | 1,766 | | | 1,454 | | |
| Vyndaqel family | | Vyndaqel family | | ATTR-CM and polyneuropathy | | 686 | | | 612 | | |
| Sulperazon | | Sulperazon | | Bacterial infections | | 320 | | | 210 | | |
| Xeljanz | Xeljanz | | RA, PsA, UC, active polyarticular course juvenile idiopathic arthritis, ankylosing spondylitis | | 502 | | | 610 | | | 1,304 | | | 1,734 | | Xeljanz | | RA, PsA, UC, active polyarticular course juvenile idiopathic arthritis, ankylosing spondylitis | | 237 | | | 372 | | |
| Enbrel (Outside the U.S. and Canada) | Enbrel (Outside the U.S. and Canada) | | RA, juvenile idiopathic arthritis, PsA, plaque psoriasis, pediatric plaque psoriasis, ankylosing spondylitis and nonradiographic axial spondyloarthritis | | 230 | | | 283 | | | 767 | | | 888 | | Enbrel (Outside the U.S. and Canada) | | RA, juvenile idiopathic arthritis, PsA, plaque psoriasis, pediatric plaque psoriasis, ankylosing spondylitis and nonradiographic axial spondyloarthritis | | 199 | | | 280 | | |
| Sulperazon | | Bacterial infections | | 178 | | | 181 | | | 598 | | | 515 | | |
| Inflectra | Inflectra | | Crohn’s disease, pediatric Crohn’s disease, UC, pediatric UC, RA in combination with methotrexate, ankylosing spondylitis, PsA and plaque psoriasis | | 131 | | | 172 | | | 403 | | | 485 | | Inflectra | | Crohn’s disease, pediatric Crohn’s disease, UC, pediatric UC, RA in combination with methotrexate, ankylosing spondylitis, PsA and plaque psoriasis | | 178 | | | 135 | | |
| Zithromax | | Zithromax | | Bacterial infections | | 150 | | | 125 | | |
| Genotropin | | Genotropin | | Replacement of human growth hormone | | 147 | | | 80 | | |
Ig Portfolio(e)(c) | Ig Portfolio(e)(c) | | Various | | 124 | | | 99 | | | 356 | | | 311 | | Ig Portfolio(e)(c) | | Various | | 126 | | | 107 | | |
| Zavicefta | | Zavicefta | | Bacterial infections | | 116 | | | 104 | | |
| BeneFIX | BeneFIX | | Hemophilia B | | 99 | | | 104 | | | 325 | | | 328 | | BeneFIX | | Hemophilia B | | 109 | | | 112 | | |
| Zavicefta | | Bacterial infections | | 98 | | | 107 | | | 302 | | | 306 | | |
| Genotropin | | Replacement of human growth hormone | | 90 | | | 95 | | | 261 | | | 284 | | |
| Zithromax | | Bacterial infections | | 71 | | | 66 | | | 250 | | | 198 | | |
| Medrol | Medrol | | Anti-inflammatory glucocorticoid | | 79 | | | 109 | | | 235 | | | 320 | | Medrol | | Anti-inflammatory glucocorticoid | | 93 | | | 76 | | |
| Fragmin | | Treatment/prevention of venous thromboembolism | | 60 | | | 74 | | | 202 | | | 223 | | |
| Oxbryta | | Oxbryta | | Sickle cell disease | | 71 | | | — | | |
| Somavert | Somavert | | Acromegaly | | 70 | | | 70 | | | 202 | | | 203 | | Somavert | | Acromegaly | | 66 | | | 68 | | |
| Refacto AF/Xyntha | Refacto AF/Xyntha | | Hemophilia A | | 58 | | | 69 | | | 188 | | | 235 | | Refacto AF/Xyntha | | Hemophilia A | | 60 | | | 66 | | |
| Fragmin | | Fragmin | | Treatment/prevention of venous thromboembolism | | 58 | | | 70 | | |
| Vfend | Vfend | | Fungal infections | | 51 | | | 51 | | | 171 | | | 204 | | Vfend | | Fungal infections | | 51 | | | 65 | | |
| All other Anti-infectives | All other Anti-infectives | | Various | | 374 | | | 455 | | | 1,123 | | | 1,384 | | All other Anti-infectives | | Various | | 374 | | | 381 | | |
| All other Specialty Care | All other Specialty Care | | Various | | 586 | | | 702 | | | 1,816 | | | 2,134 | | All other Specialty Care | | Various | | 569 | | | 643 | | |
| Oncology | Oncology | | | $ | 3,070 | | | $ | 3,085 | | | $ | 9,124 | | | $ | 9,091 | | Oncology | | | $ | 2,855 | | | $ | 2,967 | | |
| Ibrance | Ibrance | | HR-positive/HER2-negative metastatic breast cancer | | 1,283 | | | 1,381 | | | 3,841 | | | 4,039 | | Ibrance | | HR-positive/HER2-negative metastatic breast cancer | | 1,144 | | | 1,237 | | |
| Inlyta | | Inlyta | | Advanced RCC | | 259 | | | 234 | | |
| Xtandi alliance revenues | Xtandi alliance revenues | | mCRPC, nmCRPC, mCSPC | | 320 | | | 309 | | | 878 | | | 879 | | Xtandi alliance revenues | | mCRPC, nmCRPC, mCSPC | | 258 | | | 268 | | |
| Inlyta | | Advanced RCC | | 252 | | | 256 | | | 760 | | | 742 | | |
| Bosulif | | Bosulif | | Philadelphia chromosome–positive chronic myelogenous leukemia | | 150 | | | 128 | | |
| Zirabev | Zirabev | | Treatment of mCRC; unresectable, locally advanced, recurrent or metastatic NSCLC; recurrent glioblastoma; metastatic RCC; and persistent, recurrent or metastatic cervical cancer | | 146 | | | 96 | | | 432 | | | 311 | | Zirabev | | Treatment of mCRC; unresectable, locally advanced, recurrent or metastatic NSCLC; recurrent glioblastoma; metastatic RCC; and persistent, recurrent or metastatic cervical cancer | | 129 | | | 147 | | |
| Bosulif | | Philadelphia chromosome–positive chronic myelogenous leukemia | | 141 | | | 136 | | | 425 | | | 395 | | |
| Ruxience | | Ruxience | | Non-hodgkin’s lymphoma, chronic lymphocytic leukemia, granulomatosis with polyangiitis (Wegener’s Granulomatosis) and microscopic polyangiitis | | 114 | | | 124 | | |
| Lorbrena | | Lorbrena | | ALK-positive metastatic NSCLC | | 112 | | | 72 | | |
| Xalkori | Xalkori | | ALK-positive and ROS1-positive advanced NSCLC | | 118 | | | 116 | | | 362 | | | 371 | | Xalkori | | ALK-positive and Proto-Oncogene 1, Receptor Tyrosine Kinase-positive advanced NSCLC | | 111 | | | 127 | | |
| Ruxience | | Non-hodgkin’s lymphoma, chronic lymphocytic leukemia, granulomatosis with polyangiitis (Wegener’s Granulomatosis) and microscopic polyangiitis | | 120 | | | 124 | | | 357 | | | 343 | | |
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| | (MILLIONS) | (MILLIONS) | | Three Months Ended | | Nine Months Ended | (MILLIONS) | | Three Months Ended | |
| PRODUCT | PRODUCT | | PRIMARY INDICATION OR CLASS | | Oct. 2, 2022 | | Oct. 3, 2021 | | Oct. 2, 2022 | | Oct. 3, 2021 | PRODUCT | | PRIMARY INDICATION OR CLASS | | April 2,
2023 | | April 3,
2022 | |
| Retacrit | Retacrit | | Anemia | | 87 | | | 110 | | | 308 | | | 322 | | Retacrit | | Anemia | | 93 | | | 115 | | |
| Sutent | | Advanced and/or metastatic RCC, adjuvant RCC, refractory GIST (after disease progression on, or intolerance to, imatinib mesylate) and advanced pancreatic neuroendocrine tumor | | 75 | | | 142 | | | 287 | | | 537 | | |
| Lorbrena | | ALK-positive metastatic NSCLC | | 99 | | | 67 | | | 247 | | | 193 | | |
| Bavencio alliance revenues | Bavencio alliance revenues | | Locally advanced or metastatic urothelial carcinoma; metastatic Merkel cell carcinoma; immunotherapy and tyrosine kinase inhibitor combination for patients with advanced RCC | | 73 | | | 54 | | | 198 | | | 122 | | Bavencio alliance revenues | | Locally advanced or metastatic urothelial carcinoma; metastatic Merkel cell carcinoma; immunotherapy and tyrosine kinase inhibitor combination for patients with advanced RCC | | 85 | | | 67 | | |
| Aromasin | Aromasin | | Post-menopausal early and advanced breast cancer | | 66 | | | 56 | | | 187 | | | 159 | | Aromasin | | Post-menopausal early and advanced breast cancer | | 77 | | | 62 | | |
| Besponsa | Besponsa | | Relapsed or refractory B-cell acute lymphoblastic leukemia | | 55 | | | 50 | | | 164 | | | 145 | | Besponsa | | Relapsed or refractory B-cell acute lymphoblastic leukemia | | 58 | | | 51 | | |
| Sutent | | Sutent | | Advanced and/or metastatic RCC, adjuvant RCC, refractory gastrointestinal stromal tumors (after disease progression on, or intolerance to, imatinib mesylate) and advanced pancreatic neuroendocrine tumor | | 50 | | | 114 | | |
| Braftovi | 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 | | Braftovi | | In combination with Mektovi for metastatic melanoma in patients with a BRAFV600E/K mutation and, in combination with Erbitux® (cetuximab)(d), for the treatment of BRAFV600E -mutant mCRC after prior therapy | | 49 | | | 48 | | |
| Mektovi | | Mektovi | | In combination with Braftovi for metastatic melanoma in patients with a BRAFV600E/K mutation | | 40 | | | 40 | | |
| Trazimera | Trazimera | | HER-positive breast cancer and metastatic stomach cancers | | 51 | | | 45 | | | 149 | | | 131 | | Trazimera | | HER2-positive breast cancer and metastatic stomach cancers | | 34 | | | 52 | | |
| Mektovi | | In combination with Braftovi for metastatic melanoma in patients with a BRAFV600E/K mutation | | 45 | | | 41 | | | 129 | | | 112 | | |
| All other Oncology | All other Oncology | | Various | | 80 | | | 53 | | | 243 | | | 155 | | All other Oncology | | Various | | 92 | | | 81 | | |
PFIZER CENTREONE(b) | | $ | 319 | | | $ | 521 | | | $ | 974 | | | $ | 1,348 | | |
BUSINESS INNOVATION(a) | | BUSINESS INNOVATION(a) | | $ | 310 | | | $ | 338 | | |
Pfizer CentreOne(e) | | Pfizer CentreOne(e) | | Various | | 306 | | | 338 | | |
| Pfizer Ignite | | Pfizer Ignite | | Various | | 4 | | | — | | |
| | Total Alliance revenues included above | Total Alliance revenues included above | | $ | 1,689 | | | $ | 2,068 | | | $ | 6,320 | | | $ | 5,718 | | Total Alliance revenues included above | | $ | 2,060 | | | $ | 2,314 | | |
(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 in our 2022 Form 10-K for information about our recent organizational changes. changes within Biopharma. See Note 13A above for information about Business Innovation. Prior-period financial information has been revised to reflect the current period presentation.
(b)Excludes revenues for certain Comirnaty-related manufacturing activities performed on behalf of BioNTech, which are included in the PC1 contract development and manufacturing organization. See footnote (e) below.
(c)Immunoglobulin (Ig) portfolio includes the revenues from Panzyga, Octagam and Cutaquig.
(d)Erbitux® is a registered trademark of ImClone LLC.
(e)PC1 includes revenues from our contract manufacturing, including certain Comirnaty-related manufacturing activities performed on behalf of BioNTech ($75 million and $108$47 million for the third quarterfirst quarters of 2023 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.partnerships.
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$13 billion as of OctoberApril 2, 2022,2023, which includes amounts received in advance and deferred, as well as amounts that will be invoiced as we deliver these products to our customers in future periods. Of this amount, we expect to recognizecurrent contract terms provide for expected delivery of product with contracted revenue of approximately $9 billion in 2022, $13 billion in 2023 and $200 million in 2024.2024, the timing and terms of which may be renegotiated. Remaining performance obligations are based on foreign exchange rates as of the end of the thirdour fiscal first quarter of 20222023 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.Comirnaty. The deferred revenues related to Comirnaty and Paxlovid total $6.2$1.7 billion as of OctoberApril 2, 2022,2023, with $6.1$1.6 billion and $126$34 million recorded in current and noncurrent liabilities, respectively. The deferred revenues related to Comirnaty total $3.3totaled $2.5 billion as of December 31, 2021,2022, with $3.0$2.4 billion and $249$77 million recorded in current liabilities and noncurrent liabilities, respectively. There were no deferred revenues associated with Paxlovid as of December 31, 2021. The increasedecrease in Comirnaty and Paxlovid deferred revenues during the first ninethree months of 20222023 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, partially offset by additional advance payments received as we entered into amended contracts and the impact of foreign exchange. During the thirdfirst quarter and first nine months of 2022,2023, we recognized revenue of $68 million and $2.5approximately $1.7 billion respectively, that was included in the balance of Comirnaty deferred revenues as of December 31, 2021.2022. The Comirnaty and Paxlovid deferred revenues as of OctoberApril 2, 20222023 will be recognized in Revenues proportionately as we transfer control of the productsproduct 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 significant as of OctoberApril 2, 20222023 or December 31, 2021.2022.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW OF OUR PERFORMANCE, OPERATING ENVIRONMENT, STRATEGY AND OUTLOOKGENERAL
The following MD&A is intended to assist the reader in understanding our financial condition and results of operations, including an evaluation of the amounts and certainty of cash flows from operations and from outside sources, and is provided as a supplement to and should be read in conjunction with the condensed consolidated financial statements and related notes in Item 1. Financial Statementsin this Form 10-Q. 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 sincebecause 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.
OVERVIEW OF OUR PERFORMANCE, OPERATING ENVIRONMENT, STRATEGY AND OUTLOOK
Our Business and Strategy––Pfizer Inc. is a research-based, global biopharmaceutical company. 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, salelives. In 2023, we are making additional investments in both R&D and distributionSI&A to support Pfizer’s near- and longer-term growth plans, including to support anticipated new launches, commercial launch of biopharmaceuticalCOVID-19 products, worldwide. Beginning in the fourth quarter of 2021, we reorganized our commercial operationspotential pipeline programs and began torecently acquired assets. We manage our commercial operations through a global structure consisting of two operating segments: Biopharma and PC1. Beginning in the third quarter of 2022, we made several additionalorganizational changes to further transform our operations to better leverage our expertise in certain areas and in anticipation of potential future new product launches.Business Innovation. Biopharma is the only reportable segment. See Note 1A13A. We expect to incur costs of approximately $700 million in connection with separating Upjohn, of which approximately 85% has been incurred since inception and through the thirdfirst quarter of 2022.2023. These charges include costs and expenses related to separation of legal entities and transaction costs.
For additional information about our business, strategy and operating environment, see the Item 1. Business section and Overview of Our Performance, Operating Environment, Strategy and Outlook section within MD&A of our 20212022 Form 10-K.
Our Business Development Initiatives––We are committed to strategically capitalizing on growth opportunities, primarily by advancing our own product pipeline and maximizing the value of our existing products, but also through various business development activities. Our significant recent business development activities include the transactions discussed in Note 2 and the following: Research and Development Funding Arrangement––In April 2023, we entered into an arrangement with Blackstone Life Sciences (Blackstone) under which we will receive up to a total of $550 million in 2023 through 2026 to co-fund our quarterly development costs for specified treatments. If successful, upon regulatory approval in the U.S. or certain major markets in the EU for the indications based on the applicable clinical trials, Blackstone will be eligible to receive a combination of approval-based fixed milestone payments of up to $468 million contingent upon the successful results of the clinical trials. Following potential regulatory approval, Blackstone will be eligible to receive a combination of fixed milestone payments of up to $550 million in total based on achievement of certain levels of cumulative applicable net sales, as well as royalties based on a mid-to-high single digit percentage of the applicable net sales.
Proposed Acquisition of Global Blood Therapeutics, Inc. (GBT)Seagen––On October 5, 2022,In March 2023, we acquired GBT,and Seagen announced that the companies entered into an agreement under which we will acquire Seagen, a biopharmaceuticalglobal biotechnology company dedicated to the discovery, developmentthat discovers, develops and delivery of life-changing treatments that provide hope to underserved patient communities, starting with sickle cell disease,commercializes transformative cancer medicines, for $68.50 per share,$229 in cash per Seagen share for paymentsa total enterprise value of approximately $5.3$43 billion. We expect to finance the transaction substantially through $31 billion net of cash acquired, plus repaymentnew, long-term debt, and the balance from a combination of third-party debtshort-term financing and existing cash. The transaction is expected to close in late 2023 or early 2024, subject to customary closing conditions, including approval of $331 million.Seagen’s stockholders and receipt of required regulatory approvals.
AcquisitionTermination of BiohavenCollaboration Arrangement with Merck KGaA, Darmstadt, Germany (Merck KGaA)––On October 3, 2022, we acquired Biohaven, the maker of Nurtec ODT (rimegepant), an innovative dual-acting migraine therapy approved for both acute treatmentIn March 2023, it was announced that our alliance with Merck KGaA to co-develop 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 termsco-commercialize Bavencio (avelumab) will terminate. Effective June 30, 2023, Merck KGaA will take full control 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 theglobal commercialization of rimegepant and zavegepant outside the U.S., in connection with whichBavencio. The current profit share will be replaced by a 15% royalty to 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 rimegepantBavencio. We and zavegepant in the U.S. in excess of $5.25 billion.Merck KGaA will continue to operationalize our respective ongoing clinical trials for Bavencio; and Merck KGaA will control all future R&D activities.
For a description of the more significant recent transactions through February 24, 2022,23, 2023, the filing date of our 20212022 Form 10-K, see Note 2 in our 20212022 Form 10-K.
Our ThirdFirst Quarter 2022 and First Nine Months of 20222023 Performance
Revenues––Revenues decreased $1.4$7.4 billion, or 6%29%, in the thirdfirst quarter of 20222023 to $22.6$18.3 billion from $24.0$25.7 billion in the thirdfirst quarter of 2021,2022, reflecting an operational decrease of $441 million,$6.6 billion, or 2%26%, as well as an unfavorable impact of foreign exchange of $957$730 million, or 4%3%. The operational decrease was primarily driven by a decline in Comirnaty, partially offset by growth from Paxlovid. Revenues
Excluding contributions from Comirnaty and Paxlovid, revenues increased $18.6 billion, or 32%,5% operationally, reflecting revenues from recently acquired products, Nurtec ODT/Vydura and Oxbryta, as well as increased Sulperazon revenues in China, and strong growth from Eliquis and the Vyndaqel family, partially offset by a decline in Xeljanz.
Revenue growth in the first nine monthsquarter of 2022 to $76.0 billion from $57.4 billion in 2023 was unfavorably impacted by approximately 1% as a result of the first nine monthsquarter of 2023 having one fewer selling day in international markets compared to the first quarter of 2022. This unfavorable impact is expected to reverse in the fourth quarter of 2023.
2021,As of May 2, 2023, on a total company basis, we forecasted revenues in 2023 of $67 billion to $71 billion, reflecting an operational increasedecline of $21.6 billion, or 38%, as well as31% at the midpoint from 2022 results, which we expect will also have an unfavorable impact of foreign exchange of $3.0 billion, or 5%on Income from continuing operations before provision/(benefit) for taxes on income. The operational increase was primarilytotal company expected revenue declines in 2023 are driven by growth from Paxlovid and Comirnaty.
Excluding the impactan expected reduction in sales of Paxlovid and Comirnaty, revenues increased 2% operationally in both the third quarter and first nine months of 2022, reflecting strong growth in Eliquis, the Prevnar family and Vyndaqel/Vyndamax,our COVID-19 products, partially offset by declines in
Xeljanz, Sutentexpected operational growth from our non-COVID-19 in-line portfolio, anticipated new product and certain Comirnaty-related manufacturing activities performed on behalf of BioNTech, which are included in the PC1 contract developmentindication launches, and manufacturing organization. Revenues in the first nine months of 2022 were also negatively impacted by declines in Chantix/Champix.recently acquired products.
See the Analysis of the Condensed Consolidated Statements of Income––Revenues byGeography and Revenues––Selected Product Discussion sections for more information, including a discussion of key drivers of our revenue performance. See also The Global Economic Environment––COVID-19 section below for information about our COVID-19 products, including expectations for 2023. For information regarding the primary indications or class of certain products, see Note 13C.13C. Income from Continuing Operations Before Provision/(Benefit) for Taxes on Income––The increasedecrease in Income from continuing operations before provision/(benefit) for taxes on income of $1.2$2.8 billion, to $6.3 billion in the thirdfirst quarter of 2023 from $9.1 billion in the first quarter of 2022, compared to the same period in 2021, was primarily attributabledue to decreases in Cost of saleslower revenues andRestructuring 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 inexpenses, 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 inby lower Cost of sales;sales (ii)and lower 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 ResearchAcquired in-process research and development expenses and Selling, informational and administrative expenses.
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&A of our 20212022 Form 10-K.10-K and the Item 1A.Risk Factors section of this Form 10-Q. Intellectual Property Rights and Collaboration/Licensing Rights––The loss, expiration or invalidation of intellectual property rights, patent litigation settlements with manufacturers and the expiration of co-promotion and licensing rights can have a material adverse effect on our revenues. Certain of our products have experienced patent-based expirations or loss of regulatory exclusivity in certain markets in the last few years, and we expect certain products to face increased generic competition over the next few years. While additional patent expiries will continue, we expect a moderate impact of reduced revenues due to patent expiries from 20222023 through 2025. We anticipate a more significant impact of reduced revenues from patent expiries in 2026 through 2030 as several of our in-line products experience patent-based expirations. We continue to vigorously defend our patent rights against infringement, and we will continue to support efforts that strengthen worldwide recognition of patent rights while taking necessary steps to help ensure appropriate patient access.
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 20212022 Form 10-K. For a discussion of recent developments with respect to patent litigation, see Note 12A1.12A1. 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 increase pricing and access pressures globally. In the U.S., we expect to see continued focus by Congress and the Biden Administration on regulating pricing, which could result in August 2022, President Bidenlegislative and regulatory changes designed to control costs, such as the IRA that was signed into law the IRA, which includes significant drug pricing provisions, including (i) inflation rebates, where drug manufacturers must pay a rebate to the government if the prices of their covered single-source drugs and biologics rise faster than the rate of 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 the 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 a Drug Price Negotiation Program.in August 2022. We continue to evaluate the impact of the IRA on our business, operations 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 instructschanges to the Secretary of HHS to consider whether to select for testing new health care payment and delivery models that would lowerMedicaid program or the federal 340B drug costs and promote access to innovative drug therapies for beneficiaries enrolled in the Medicare and Medicaid
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 ourpricing program, is consistent with the statute. Additionalincluding legal or legislative developments at the federal or state level with respect to the 340B program, maycould have an adversea material impact on our integrity initiative, and we may face enforcement action or penalties, depending upon such developments. For additional information, seebusiness. 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 inof our 20212022 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 recalls, 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 applicableFDA interim acceptable intake limit, and may lead to additional recalls or other market actions for Pfizer products.
Regarding our supply chain generally, in the first quarter of 2023 and to date, we have not seen a significant disruption, and all of our manufacturing sites globally have continued to operate at or near normal levels; however, we continue to see heightened demand in the industry for certain components and raw materials, which could potentially result in constraining available supply leading to a possible future impact on our business. We are continuing to monitor and implement mitigation strategies in an effort to reduce any potential risk or impact including active supplier management, qualification of additional suppliers and advanced purchasing to the extent possible. 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 20212022 Form 10-K.
The Global Economic Environment––In addition to the industry-specific factors discussed above, we, like other businesses of our size and global extent of activities, are exposed to economic cycles. For additional information, seeSee the Overview of Our Performance, Operating Environment, Strategy and Outlook––The Global Economic Environment section of the MD&A of our 20212022 Form 10-K.
COVID-19––In response to COVID-19, we have developed Paxlovid and collaborated with BioNTech to jointly develop Comirnaty, including booster doses of an Omicron-adapted bivalent vaccine. As part of our strategy for COVID-19, we are continuing to make significant additional investments in breakthrough science and global manufacturing. This includes continuing to evaluate Comirnaty and Paxlovid, including against new variants of concern, developing variant adapted vaccine candidates and developing potential combination respiratory vaccines and potential next generation vaccines and therapies. We are also evaluating Paxlovid for additional populations. For additional information, including our continuing late-stage development efforts for Paxlovid, see the Product Developments section within MD&A. In the first quarter of 2023 and to date, we principally sold Comirnaty globally under government contracts and Paxlovid globally to government agencies and distributors. We expect Comirnaty in the U.S. will transition to traditional commercial market sales in the second half of 2023, triggered by the expiration of current contracts and the vaccines purchased through them becoming either depleted or not usable against new variants. 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 starting in 2024. For Paxlovid, we expect to transition to traditional commercial markets in the second half of 2023 rather than significant government purchases. We also remain committed to helping ensure broad and equitable access to our COVID-19 products to eligible patients around the world. Revenues from our COVID-19 products are expected to go from their peak in 2022 to their low point in 2023 before potentially returning to growth in 2024. While patient demand for our COVID-19 products is expected to remain strong throughout 2023, much of that demand is expected to be fulfilled by existing supply of products that were delivered to governments and recorded as revenues in 2022. As of May 2, 2023, we forecasted Comirnaty revenues of approximately $13.5 billion in 2023, down 64% from actual 2022 results, with gross profit to be split evenly with BioNTech, and Paxlovid revenues of approximately $8 billion in 2023, down 58% from actual 2022 results. These forecasts are based on estimates and assumptions that are subject to significant uncertainties, including, among others, patient demand, which could be significantly impacted by the infectiousness and severity of the predominant strains of the SARS-CoV-2 virus during 2023, proportion of the population that receives a vaccine or is treated with an oral antiviral treatment, the number of doses per vaccinated person per year, number of symptomatic infections, market share of Comirnaty and Paxlovid, timing and terms for delivery of the contracted doses of Comirnaty to the EC, Paxlovid sales in China and the timing for transitioning Comirnaty and Paxlovid to commercial markets in the U.S.
For information on the impact of COVID-19 on our business, operations and financial conditions and results and risks associated with COVID-19 and our COVID-19 products, as well as COVID-19 intellectual property disputes, see the Item 1A. Risk Factors—COVID-19, —Intellectual Property Protection and —Third-Party Intellectual Property Claims sections and the Overview of Our Performance, Operating Environment, Strategy and Outlook section of the MD&A of our 2022 Form 10-K, as well as Note 12A1. 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 ninethree months ended OctoberApril 2, 20222023 and the fiscal year ended December 31, 2021,2022, 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 measures could adversely affect the global macroeconomic environment, our operations, currency exchange rates and financial markets, which could in turn adversely impact our business and results of operations.
COVID-19 Pandemic––The COVID-19 pandemic has impacted our business, operations and 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 yearson our response to the armed conflict between Russia and older,Ukraine as well as risks associated with the conflict, 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 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 emerging countries around the world and are 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
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 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 in non-hospitalized, symptomatic, pediatric patients with a 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 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 are 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 U.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 on-going monitoring and assessment, 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 pursue 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, operations or financial condition and results. If we experience significant disruption in our manufacturing or supply chains or significant disruptions in clinical trials or other operations, if demand for our products is significantly reduced as a result of the COVID-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, operations and financial condition and results.
For additional information, see theItem 1A. Risk Factors—COVID-19 PandemicGlobal Operations section and the Overview of Our Performance, Operating Environment, Strategy and Outlook section of the MD&A of our 20212022 Form 10-K.
SIGNIFICANT ACCOUNTING POLICIES AND APPLICATION OF CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
For a description of our significant accounting policies, see Note 1 in our 20212022 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: Acquisitions (Note 1E1D); Fair Value (Note 1F1E); Revenues (Note 1H1G); Asset Impairments (Note 1M); Tax Assets and Liabilities and Income Tax Contingencies (Note 1Q); Pension and Postretirement Benefit Plans (Note 1R); and Legal and Environmental Contingencies (Note 1S).
For a discussion about the critical accounting estimates and assumptions impacting our consolidated financial statements, see the Significant Accounting Policies and Application of Critical Accounting Estimates and Assumptions section within MD&A in our 20212022 Form 10-K. See also Note 1D1C in our 20212022 Form 10-K for a discussion about the risks associated with estimates and assumptions.
For a discussion of a recently adopted accounting standard, see Note 1B. For a discussion of presentation changes for Acquired in-process research and development expenses, see Note 1D. ANALYSIS OF THE CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Revenues by Geography
| | The following presents worldwide revenues by geography: | The following presents worldwide revenues by geography: | The following presents worldwide revenues by geography: |
| | Three Months Ended | | Three Months Ended |
| | | | Worldwide | | U.S. | | International | | World-wide | | U.S. | | Inter-national | | | Worldwide | | U.S. | | International | | World-wide | | U.S. | | Inter-national |
| (MILLIONS) | (MILLIONS) | | Oct. 2, 2022 | | Oct. 3, 2021 | | Oct. 2, 2022 | | Oct. 3, 2021 | | Oct. 2, 2022 | | Oct. 3, 2021 | | % Change in Revenues | (MILLIONS) | | April 2,
2023 | | April 3,
2022 | | April 2,
2023 | | April 3,
2022 | | April 2,
2023 | | April 3,
2022 | | % Change |
| Operating segments: | Operating segments: | | | | | | | | | | | | | | | Operating segments: | | | | | | | | | | | | | | |
| Biopharma | Biopharma | | $ | 22,319 | | | $ | 23,513 | | | $ | 13,748 | | | $ | 6,899 | | | $ | 8,571 | | | $ | 16,614 | | | (5) | | | 99 | | | (48) | | Biopharma | | $ | 17,971 | | | $ | 25,323 | | | $ | 8,396 | | | $ | 8,816 | | | $ | 9,575 | | | $ | 16,507 | | | (29) | | | (5) | | | (42) | |
| Pfizer CentreOne | | 319 | | | 521 | | | 103 | | | 121 | | | 216 | | | 400 | | | (39) | | | (15) | | | (46) | | |
| Business Innovation | | Business Innovation | | 310 | | | 338 | | | 110 | | | 102 | | | 200 | | | 236 | | | (8) | | | 8 | | | (15) | |
| Total revenues | Total revenues | | $ | 22,638 | | | $ | 24,035 | | | $ | 13,851 | | | $ | 7,020 | | | $ | 8,786 | | | $ | 17,014 | | | (6) | | | 97 | | | (48) | | Total revenues | | $ | 18,282 | | | $ | 25,661 | | | $ | 8,507 | | | $ | 8,918 | | | $ | 9,775 | | | $ | 16,743 | | | (29) | | | (5) | | | (42) | |
| | | Nine Months Ended | |
| | Worldwide | | U.S. | | International | | World-wide | | U.S. | | Inter-national | |
| (MILLIONS) | | Oct. 2, 2022 | | Oct. 3, 2021 | | Oct. 2, 2022 | | Oct. 3, 2021 | | Oct. 2, 2022 | | Oct. 3, 2021 | | % Change in Revenues | |
| Operating segments: | | | | | | | | | | | | | |
| Biopharma | | $ | 75,066 | | | $ | 56,101 | | | $ | 33,700 | | | $ | 21,657 | | | $ | 41,366 | | | $ | 34,444 | | | 34 | | | 56 | | | 20 | | |
| Pfizer CentreOne | | 974 | | | 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 | | |
| |
First Quarter of 20222023 vs. ThirdFirst Quarter of 20212022
| | The following provides an analysis of the change in worldwide revenues by geographic areas in the third quarter of 2022: | |
| The following provides an analysis of the change in worldwide revenues by geographic areas in the first quarter of 2023: | | The following provides an analysis of the change in worldwide revenues by geographic areas in the first quarter of 2023: |
| | Three Months Ended October 2, 2022 | | Three Months Ended April 2, 2023 |
| (MILLIONS) | (MILLIONS) | | Worldwide | | U.S. | | International | (MILLIONS) | | Worldwide | | U.S. | | International |
| Operational growth/(decline): | Operational growth/(decline): | | | | | | | 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) | | |
Worldwide declines from Comirnaty(a) | | Worldwide declines from Comirnaty(a) | | $ | (9,967) | | | $ | (1,986) | | | $ | (7,981) | |
Worldwide growth from Paxlovid(a) | | Worldwide growth from Paxlovid(a) | | 2,754 | | | 945 | | | 1,809 | |
Revenues from recently acquired products: Nurtec ODT/Vydura(a) and Oxbryta | | Revenues from recently acquired products: Nurtec ODT/Vydura(a) and Oxbryta | | 237 | | | 234 | | | 3 | |
| Increased revenues from Sulperazon largely driven by demand in China | | Increased revenues from Sulperazon largely driven by demand in China | | 134 | | | — | | | 134 | |
Worldwide growth from Eliquis, the Vyndaqel family, the Prevnar family and Inlyta, partially offset by declines from Xeljanz, Ibrance and Xtandi(a) | | Worldwide growth from Eliquis, the Vyndaqel family, the Prevnar family and Inlyta, partially offset by declines from Xeljanz, Ibrance and Xtandi(a) | | 119 | | | 251 | | | (132) | |
| Other operational factors, net | Other operational factors, net | | 26 | | | 4 | | | 22 | | Other operational factors, net | | 73 | | | 144 | | | (71) | |
| Operational growth/(decline), net | Operational growth/(decline), net | | (441) | | | 6,831 | | | (7,272) | | Operational growth/(decline), net | | (6,650) | | | (411) | | | (6,238) | |
| | Unfavorable impact of foreign exchange | Unfavorable impact of foreign exchange | | (957) | | | — | | | (957) | | Unfavorable impact of foreign exchange | | (730) | | | — | | | (730) | |
Revenues increase/(decrease) | Revenues increase/(decrease) | | $ | (1,397) | | | $ | 6,831 | | | $ | (8,228) | | Revenues increase/(decrease) | | $ | (7,379) | | | $ | (411) | | | $ | (6,968) | |
Emerging markets revenues decreased $3.0$2.9 billion, or 48%39%, in the thirdfirst quarter of 20222023 to $3.3$4.5 billion from $6.3$7.4 billion in the thirdfirst quarter of 2021,2022, reflecting an operational decrease of $2.8$2.6 billion, or 45%36%, and an unfavorable impact from foreign exchange of approximately 3%4%. 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) | | Worldwide | | U.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, net | | 42 | | | (11) | | | 53 | |
| Operational growth/(decline), net | | 21,585 | | | 11,925 | | | 9,659 | |
| | | | | | |
| Unfavorable impact of foreign exchange | | (2,995) | | | — | | | (2,995) | |
Revenues increase/(decrease) | | $ | 18,590 | | | $ | 11,925 | | | $ | 6,665 | |
(a)See 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 $16.7 billion from $12.9 billion in the first nine months of 2021, reflecting an operational increase of $4.4 billion, or 34%, and an unfavorable impact from foreign exchange of approximately 5%. The operational increase in emerging markets was primarily driven by growth from Comirnaty, Paxlovid, and Nimenrix, partially offset by declines in certain Comirnaty-related manufacturing activities performed on behalf of BioNTech, as well as the Prevnar family.increased Sulperazon revenues largely driven by demand in China, which is not expected to be sustained.
Revenue Deductions––Our gross product revenues are subject to a variety of deductions, which generally are estimated and recorded in the same period that the revenues are recognized. These deductions represent estimates of the related obligations and, as such, knowledge and judgment are required when estimating the impact of these revenue deductions on gross sales for a reporting period. Historically, adjustments to these estimates to reflect actual results or updated expectations, have not been material to our overall business and generally have been less than 1% of 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: | The following presents information about revenue deductions: | The following presents information about revenue deductions: |
| | | | Three Months Ended | | Nine Months Ended | | | | Three Months Ended |
| (MILLIONS) | (MILLIONS) | | October 2,
2022 | | October 3,
2021 | | October 2,
2022 | | October 3,
2021 | (MILLIONS) | | | April 2,
2023 | | April 3,
2022 |
| Medicare rebates | Medicare rebates | | $ | 195 | | | $ | 175 | | | $ | 582 | | | $ | 546 | | Medicare rebates | | | $ | 225 | | | $ | 201 | |
| Medicaid and related state program rebates | Medicaid and related state program rebates | | 223 | | | 252 | | | 689 | | | 904 | | Medicaid and related state program rebates | | | 411 | | | 241 | |
| Performance-based contract rebates | Performance-based contract rebates | | 851 | | | 883 | | | 2,518 | | | 2,424 | | Performance-based contract rebates | | | 1,192 | | | 806 | |
| Chargebacks | Chargebacks | | 1,946 | | | 1,618 | | | 5,480 | | | 4,567 | | Chargebacks | | | 2,285 | | | 1,737 | |
| Sales allowances | Sales allowances | | 1,334 | | | 1,216 | | | 3,905 | | | 3,569 | | Sales allowances | | | 1,516 | | | 1,204 | |
| Sales returns and cash discounts | Sales returns and cash discounts | | 247 | | | 267 | | | 845 | | | 726 | | Sales returns and cash discounts | | | 513 | | | 270 | |
| Total | Total | | $ | 4,796 | | | $ | 4,411 | | | $ | 14,019 | | | $ | 12,737 | | Total | | | $ | 6,141 | | | $ | 4,458 | |
Revenue deductions are primarily a function of product sales volume, mix of products sold, contractual or legislative discounts and rebates.
For information on our accruals for revenue deductions, including the balance sheet classification of these accruals, see Note 1C.1C.
Revenues––Selected Product Discussion
Biopharma
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Revenue | | | |
| (MILLIONS) | (MILLIONS) | | Revenue | | % Change | | (MILLIONS) | | | | | | | Three Months Ended | | % Change | |
| Product | Product | | Period | | Global
Revenues | | Region | | Oct. 2, 2022 | | Oct. 3, 2021 | | Total | | Oper. | | Operational Results Commentary | Product | | | Global
Revenues | | Region | | April 2, 2023 | | April 3, 2022 | | Total | | Oper. | | Operational Results Commentary |
| Paxlovid | | Paxlovid | | | $4,069
* | | U.S. | | $ | 1,960 | | | $ | 1,015 | | | 93 | | | | | Growth primarily driven by: •favorable timing of final delivery associated with the U.S. government contract before anticipated transition to traditional commercial markets in the second half of 2023; •strong demand in China under the temporary National Reimbursement Drug List (which ended on April 1, 2023) due to surge in COVID-19 infections; and •launch in certain international markets. |
| Int’l. | | 2,109 | | 455 | | | * | | * | | Growth primarily driven by: •favorable timing of final delivery associated with the U.S. government contract before anticipated transition to traditional commercial markets in the second half of 2023; •strong demand in China under the temporary National Reimbursement Drug List (which ended on April 1, 2023) due to surge in COVID-19 infections; and •launch in certain international markets. |
| Worldwide | | $ | 4,069 | | $ | 1,470 | | | * | | * | |
| | Growth primarily driven by: •favorable timing of final delivery associated with the U.S. government contract before anticipated transition to traditional commercial markets in the second half of 2023; •strong demand in China under the temporary National Reimbursement Drug List (which ended on April 1, 2023) due to surge in COVID-19 infections; and •launch in certain international markets. |
| | Growth primarily driven by: •favorable timing of final delivery associated with the U.S. government contract before anticipated transition to traditional commercial markets in the second half of 2023; •strong demand in China under the temporary National Reimbursement Drug List (which ended on April 1, 2023) due to surge in COVID-19 infections; and •launch in certain international markets. |
| Comirnaty(a) | 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. | Comirnaty(a) | | $3,064
Down 75%
(operationally) | U.S. | | $ | 328 | | | $ | 2,314 | | | (86) | | |
| Int’l. | | 1,494 | | | 11,391 | | | (87) | | | (86) | | | Int’l. | 2,735 | | | | 10,913 | | | (75) | | |
| Worldwide | | $ | 4,402 | | | $ | 12,977 | | | (66) | | | (65) | | Worldwide | $ | 3,064 | | | $ | 13,227 | | | (77) | | |
| YTD | td6,477
Up 14%
(operationally) | U.S. | | $ | 6,303 | | | $ | 5,657 | | | 11 | | | | | | | | Global declines largely driven by lower contracted deliveries and demand in international markets, as well as lower U.S. government contracted deliveries with anticipated transition to traditional commercial market sales in the second half of 2023. |
| | 20,174 | | | 18,619 | | | 8 | | | 14 | | | | Global declines largely driven by lower contracted deliveries and demand in international markets, as well as lower U.S. government contracted deliveries with anticipated transition to traditional commercial market sales in the second half of 2023. |
| $ | 26,477 | | | $ | 24,277 | | | 9 | | | 14 | | | |
| Paxlovid | QTD | $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. | |
| | — | | | * | | * | | |
| $ | — | | | * | | * | | |
| | | $ | — | | | * | | | | |
| — | | | * | | * | | |
| $ | — | | | * | | * | | |
| Eliquis | Eliquis | | $ | 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. | Eliquis | td,874
Up 7%
(operationally) | U.S. | | $ | 1,080 | | | 17 | | | | | Growth driven primarily by continued oral anti-coagulant adoption and market share gains in the non-valvular atrial fibrillation indication in the U.S. and certain markets in Europe, partially offset by declines due to LOE and generic competition in certain international markets. |
| 717 | | | (12) | | | (1) | | | 713 | | | (14) | | | (8) | | |
| $ | 1,346 | | | 9 | | | 15 | | | $ | 1,793 | | | 5 | | | 7 | |
| $ | 2,440 | | | 22 | | | | | |
| 2,030 | | | — | | 10 | | | | Growth driven primarily by continued oral anti-coagulant adoption and market share gains in the non-valvular atrial fibrillation indication in the U.S. and certain markets in Europe, partially offset by declines due to LOE and generic competition in certain international markets. |
| $ | 4,470 | | | 12 | | | 16 | | | |
| Prevnar family | Prevnar family | | $ | 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. | Prevnar family | td,593
Up 4% (operationally) | U.S. | | $ | 1,014 | | | 6 | | | Growth primarily driven by the adult indications in the U.S. and certain markets in Europe due to strong patient demand following the launch of Prevnar 20/Apexxnar for the eligible adult population, partially offset by lower stocking and demand for Prevnar 13 pediatric indication in the U.S. due to competitor entry, as well as declines in certain emerging markets. |
| (13) | | (7) | | 518 | | | — |
| 11 | | 14 | | $ | 1,593 | | 4 | |
| 41 | | | | | |
| (14) | | | (9) | | | | Growth primarily driven by the adult indications in the U.S. and certain markets in Europe due to strong patient demand following the launch of Prevnar 20/Apexxnar for the eligible adult population, partially offset by lower stocking and demand for Prevnar 13 pediatric indication in the U.S. due to competitor entry, as well as declines in certain emerging markets. |
| 16 | | | 18 | | | |
| Ibrance | Ibrance | | | (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. | Ibrance | td,144
Down 5% (operationally) | U.S. | | | — | | | Declines primarily driven by lower clinical trial purchases internationally, and planned price decreases in certain international developed markets. |
| (17) | | | (6) | | | (19) | | | (12) | |
| (7) | | | (3) | | | (8) | | | (5) | |
| (2) | | | | | |
| (10) | | | (1) | | | | Declines primarily driven by lower clinical trial purchases internationally, and planned price decreases in certain international developed markets. |
| (5) | | | (2) | | | |
Vyndaqel/
Vyndamax | | | 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. | |
| — | | 15 | | | |
| 20 | | | 29 | | | |
| | 35 | | | | | |
| | 10 | | | 22 | | | |
| 21 | | | 28 | | | |
| Vyndaqel family | | Vyndaqel family | $686
Up 16%
(operationally) | U.S. | | | $ | 384 | | | | 45 | | | | | Growth largely driven by continued strong uptake of the ATTR-CM indication, primarily in the U.S. and developed Europe, partially offset by a planned price decrease that went into effect in Japan in the second quarter of 2022. |
| | 347 | | | (13) | | | (7) | | | Growth largely driven by continued strong uptake of the ATTR-CM indication, primarily in the U.S. and developed Europe, partially offset by a planned price decrease that went into effect in Japan in the second quarter of 2022. |
| | $ | 612 | | 12 | | | 16 | | |
| | | Growth largely driven by continued strong uptake of the ATTR-CM indication, primarily in the U.S. and developed Europe, partially offset by a planned price decrease that went into effect in Japan in the second quarter of 2022. |
| | Inlyta | | Inlyta | | td59
Up 14%
(operationally) | U.S. | $ | 155 | | $ | 140 | | | 11 | | | Growth primarily reflects continued strong performance in the U.S. and emerging markets driven by the adoption of combinations of certain immune checkpoint inhibitors and Inlyta for the first-line treatment of patients with advanced RCC. |
| | Int’l. | 104 | | 94 | | | 11 | | 18 | | |
| | Worldwide | $ | 259 | | $ | 234 | | | 11 | | 14 | | |
| | | Growth primarily reflects continued strong performance in the U.S. and emerging markets driven by the adoption of combinations of certain immune checkpoint inhibitors and Inlyta for the first-line treatment of patients with advanced RCC. |
| | Xtandi | | Xtandi | | | td58
Down 4%
(operationally) | U.S. | $ | 258 | | $ | 268 | | | (4) | | | | Decline driven by lower net price mainly due to unfavorable changes in channel mix, partially offset by demand growth. |
| | Int’l. | — | | — | | | — | | — |
| | Worldwide | $ | 258 | | $ | 268 | | | (4) | | | (4) | |
| | | Decline driven by lower net price mainly due to unfavorable changes in channel mix, partially offset by demand growth. |
| | Xeljanz | Xeljanz | | QTD | | $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. | Xeljanz | | td37
Down 33%
(operationally) | U.S. | $ | 90 | | | $ | 203 | | | (55) | | | | Declines driven primarily by lower net price in the U.S. due to unfavorable changes in channel mix, as well as decreased prescription volumes globally resulting from ongoing shifts in prescribing patterns related to label changes. |
| Int’l. | 157 | | 201 | | | (22) | | | (11) | | | Int’l. | 169 | | | (13) | | | (6) | | | Declines driven primarily by lower net price in the U.S. due to unfavorable changes in channel mix, as well as decreased prescription volumes globally resulting from ongoing shifts in prescribing patterns related to label changes. |
| Worldwide | $ | 502 | | $ | 610 | | | (18) | | | (14) | | Worldwide | $ | 372 | | | (36) | | | (33) | |
| td,304
Down 22%
(operationally) | U.S. | | $ | 802 | | | $ | 1,132 | | | (29) | | | | | |
| Int’l. | | 502 | | | 602 | | | (17) | | | (9) | | | | Declines driven primarily by lower net price in the U.S. due to unfavorable changes in channel mix, as well as decreased prescription volumes globally resulting from ongoing shifts in prescribing patterns related to label changes. |
| Worldwide | | $ | 1,304 | | | $ | 1,734 | | | (25) | | | (22) | | | |
| Nurtec ODT/Vydura | | Nurtec ODT/Vydura | | td67
* | U.S. | $ | 163 | | | $ | — | | | * | | Driven by the acquisition of Biohaven in the fourth quarter of 2022, after which Nurtec ODT/Vydura is now a Pfizer-owned product, compared to the first quarter of 2022 during which Pfizer only had commercialization rights outside of the U.S. under a collaboration and license agreement with Biohaven. See Notes 2A and 2E of our 2022 Form 10-K. |
| | Int’l. | 4 | | 1 | | | * |
| | Worldwide | $ | 167 | | | $ | 1 | | | * |
| | | Driven by the acquisition of Biohaven in the fourth quarter of 2022, after which Nurtec ODT/Vydura is now a Pfizer-owned product, compared to the first quarter of 2022 during which Pfizer only had commercialization rights outside of the U.S. under a collaboration and license agreement with Biohaven. See Notes 2A and 2E of our 2022 Form 10-K. |
| | Driven by the acquisition of Biohaven in the fourth quarter of 2022, after which Nurtec ODT/Vydura is now a Pfizer-owned product, compared to the first quarter of 2022 during which Pfizer only had commercialization rights outside of the U.S. under a collaboration and license agreement with Biohaven. See Notes 2A and 2E of our 2022 Form 10-K. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (MILLIONS) | | | | | | | | Revenue | | % Change | | |
| Product | | Period | | Global
Revenues | | Region | | Oct. 2, 2022 | | Oct. 3, 2021 | | Total | | Oper. | | Operational Results Commentary |
| Xtandi | | QTD | | $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 | | | — | | — | |
| Inlyta | | QTD | $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
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Revenue | | | |
| (MILLIONS) | (MILLIONS) | | Revenue | | % Change | | (MILLIONS) | | | | Three Months Ended | | % Change | |
| Operating Segment | Operating Segment | | Period | | Global
Revenues | | Region | | Oct. 2, 2022 | | Oct. 3, 2021 | | Total | | Oper. | | Operational Results Commentary | Operating Segment | | | Global
Revenues | | Region | | April 2, 2023 | | April 3, 2022 | | Total | | Oper. | | Operational Results Commentary |
| PC1 | | QTD | | $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) | | | |
| Business Innovation | | Business Innovation | | | $310
Down 5%
(operationally) | | U.S. | | $ | 110 | | | $ | 102 | | | 8 | | | | | Declines primarily driven by, among other things, the timing of Comirnaty supply to BioNTech, partially offset by higher manufacturing of divested products under manufacturing and supply agreements and higher COVID-19 manufacturing activities performed on behalf of customers. |
| Int’l. | 200 | | | 236 | | | (15) | | | (11) | | | Declines primarily driven by, among other things, the timing of Comirnaty supply to BioNTech, partially offset by higher manufacturing of divested products under manufacturing and supply agreements and higher COVID-19 manufacturing activities performed on behalf of customers. |
| Worldwide | $ | 310 | | | $ | 338 | | | (8) | | | (5) | | |
| | | Declines primarily driven by, among other things, the timing of Comirnaty supply to BioNTech, partially offset by higher manufacturing of divested products under manufacturing and supply agreements and higher COVID-19 manufacturing activities performed on behalf of customers. |
| | Declines primarily driven by, among other things, the timing of Comirnaty supply to BioNTech, partially offset by higher manufacturing of divested products under manufacturing and supply agreements and higher COVID-19 manufacturing activities performed on behalf of customers. |
(a)Comirnaty includes direct sales and allianceAlliance revenues related to sales of the Pfizer-BioNTech COVID-19 vaccine, which are recorded within our Primary Care therapeutic area.customer group. It does not include revenues for certain Comirnaty-related manufacturing activities performed on behalf of BioNTech, which are included in PC1.PC1, which is part of the Business Innovation operating segment. See Note 13C. * Indicates calculation not meaningful.
See the Item 1. Business—Patents and Other Intellectual Property Rights section of our 20212022 Form 10-K for information regarding the expiration of various patent rights, Note 12 for a discussion of recent developments concerning patent and product litigation relating to certain of the products discussed above and Note 13C for additional information regarding the primary indications or class of the selected products discussed.discussed above. Costs and Expenses
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Costs and expenses follow: |
| | Three Months Ended | Nine 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 expenses | | 3,391 | | | 2,899 | | | 17 | | | 9,032 | | | 8,599 | | | 5 | |
| Research and development expenses | | 2,696 | | | 2,681 | | | 1 | | | 7,813 | | | 6,914 | | | 13 | |
| Acquired in-process research and development expenses | | 524 | | | 762 | | | (31) | | | 880 | | | 1,000 | | | (12) | |
| Amortization of intangible assets | | 822 | | | 968 | | | (15) | | | 2,478 | | | 2,743 | | | (10) | |
| Restructuring charges and certain acquisition-related costs | | 199 | | | 646 | | | (69) | | | 580 | | | 667 | | | (13) | |
| Other (income)/deductions—net | | (59) | | | (1,696) | | | (97) | | | 1,063 | | | (4,043) | | | * |
| * Indicates calculation not meaningful. |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Costs and expenses follow: |
| | | Three Months Ended |
| (MILLIONS) | | | | | | | | April 2,
2023 | | April 3,
2022 | | %
Change |
| Cost of sales | | | | | | | | $ | 4,886 | | | $ | 9,984 | | | (51) | |
Percentage of Revenues | | | | | | | | 26.7 | % | | 38.9 | % | | |
| Selling, informational and administrative expenses | | | | | | | | 3,418 | | | 2,593 | | | 32 | |
| Research and development expenses | | | | | | | | 2,505 | | | 2,301 | | | 9 | |
| Acquired in-process research and development expenses | | | | | | | | 21 | | | 355 | | | (94) | |
| Amortization of intangible assets | | | | | | | | 1,103 | | | 835 | | | 32 | |
| Restructuring charges and certain acquisition-related costs | | | | | | | | 9 | | | 192 | | | (96) | |
| Other (income)/deductions—net | | | | | | | | 70 | | | 350 | | | (80) | |
|
Cost of Sales
Cost of sales decreased $3.9$5.1 billion, in the third quarter of 2022, primarily due to:
•a reduction of $4.1$5.4 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 increasedhigher 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.Paxlovid.
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 impactsand higher sales of foreign exchange and hedging activity, partially offset by the charge of $400 million related to Paxlovid discussed above.
The decrease in Cost of sales as a percentage of revenues in the first nine months of 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.Paxlovid.
Selling, Informational and Administrative (SI&A) Expenses
SI&ASelling, informational and administrative expenses increased $492$824 million, in the third quarter of 2022, primarily due to:
•ana $500 million increase of $290in marketing and promotional expenses ($280 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$220 million for marketingrecently acquired 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;products); and
•a $244$180 million favorable impact of foreign exchange.increase in spending on products across multiple customer groups.
Research and Development (R&D) Expenses
R&DResearch and development expenses increased $15$203 million, in the third quarter, primarily due to:
•increased costsinvestments of $290$420 million to develop recently acquired assets and certain vaccine programs, as well as investments for certain oncology and non-COVID-19 vaccines programs,activities to support upcoming product launches,
partially offset by:
•lower spending of $270$250 million on programs to prevent and treat COVID-19 and variouscertain other 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 in-process research and development expenses decreased $237$334 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 quarternon-recurrence 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.
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;
•(i) 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
• (ii) a $76 million premium paid on our equity investment in BioNTech to develop a potential mRNA vaccine against shingles, both recorded in the first quarter of 2022.
See Note 2A and 2D for additional information.
Amortization of Intangible Assets
Amortization of intangible assets decreased $146increased $268 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.intangible assets from our acquisitions of Biohaven and GBT, partially offset by fully amortized assets.
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 3.3A. The program savings discussed below may be rounded and represent approximations. In connection with restructuring our corporate enabling functions, we expectachieved 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 primarilyin the two year period from 2021 through 2022. In connection with transforming our marketingcommercial go-to market 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. In connection with optimizing our end-to-end R&D operations, we expect net cost savings of $2.3 billion to be achieved primarily from 2023 through 2025.
Certain qualifying costs for this program in all periods since inception 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 werefavorable change of $279 million was primarily driven by:
•by (i) lower net losses on equity securities, (ii) higher dividend income and (iii) lower net interest expense, partially offset by (iv) intangible asset impairment charges recorded in 2022 versus net gains recognized in 2021;
•the first quarter of 2023 and (v) 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.
plans. See Note 4for additional information. Provision/(Benefit) for Taxes on Income
| | | | | Three Months Ended | | Nine Months Ended | | | | Three Months Ended |
| (MILLIONS) | (MILLIONS) | | October 2,
2022 | | October 3,
2021 | | %
Change | | October 2,
2022 | | October 3,
2021 | | %
Change | (MILLIONS) | | | April 2,
2023 | | April 3,
2022 | | %
Change |
| Provision/(benefit) for taxes on income | Provision/(benefit) for taxes on income | | $ | 356 | | | $ | (328) | | | * | | $ | 3,098 | | | $ | 1,603 | | | 93 | | Provision/(benefit) for taxes on income | | | $ | 715 | | | $ | 1,172 | | | (39) | |
| Effective tax rate on continuing operations | Effective tax rate on continuing operations | | 4.0 | % | | (4.2) | % | | 10.5 | % | | 7.8 | % | | | Effective tax rate on continuing operations | | | 11.4 | % | | 12.9 | % | | |
| * 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 5.5. 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, 2022May 2, 2023 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 followingThis section 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
U.S.––In April 2023, in order to simplify the vaccination schedule for most individuals, the FDA amended an EUA for the emergency use of the Pfizer‑BioNTech COVID-19 Vaccine, Bivalent (Original and Omicron BA.4/BA.5), which has been developed in collaboration with BioNTech, for active immunization to prevent COVID-19 caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) in individuals 6 months of age and older. In the U.S., the monovalent Pfizer-BioNTech COVID-19 Vaccine is no longer authorized for emergency use or CDC-recommended, although Comirnaty remains a licensed vaccine. This decision relates entirely to the FDA’s strategy to harmonize COVID-19 vaccines and is not indicative of any safety-related signals or concerns.
In February 2023, Pfizer and BioNTech announced the submission of a supplemental Biologics License Application (sBLA) to the FDA for approval of the companies’ Omicron BA.4/BA.5-adapted bivalent COVID-19 vaccine (Pfizer-BioNTech COVID-19 Vaccine, Bivalent (Original and Omicron BA.4/BA.5)) as a primary series and booster dose(s) for individuals 12 years of age and older.
The following table contains the authorized uses of the Pfizer‑BioNTech COVID-19 Vaccine, Bivalent (Original and Omicron BA.4/BA.5) for the various patient populations in the U.S.:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| PATIENT POPULATION AND AUTHORIZATIONS (U.S. ONLY) |
| AGE | | Individuals 6 months of age and older not previously vaccinated with a COVID-19 vaccine | | Individuals 5 years of age and older previously vaccinated with 1 or more doses of a monovalent COVID-19 Vaccine(a) | | Individuals 6 months through 4 years of age previously vaccinated with the monovalent Pfizer-BioNTech COVID-19 Vaccine |
| One previous dose of the Pfizer-BioNTech COVID-19 Vaccine | | Two previous doses of the Pfizer-BioNTech COVID-19 Vaccine | | Three previous doses of the Pfizer-BioNTech COVID-19 Vaccine |
| | | | | | |
6 months – 4 years(b) | | 3 doses, 0.2 mL each Dose 1: Week 0 Dose 2: Week 3 Dose 3: ≥ 8 weeks after Dose 2 | | 2 doses(c), 0.2 mL each Dose 1: 3 weeks after receipt of the Pfizer-BioNTech COVID-19 Vaccine Dose 2: ≥8 weeks after Dose 1 | Single dose, 0.2 mL
≥8 weeks after receipt of second dose of the Pfizer-BioNTech COVID-19 Vaccine | Single dose, 0.2 mL ≥2 monthsafter receipt of third dose of the Pfizer-BioNTech COVID-19 Vaccine |
| | | | | | |
| 5-11 years | | Single dose, 0.2 mL | Single dose, 0.2 mL
≥2 months after monovalent COVID-19 Vaccine | | | |
| | | | | | |
| 12-64 years | | Single dose, 0.3 mL | Single dose, 0.3 mL
≥2 months after monovalent COVID-19 Vaccine | | | |
| | | | | | |
| ≥65 years | | Single dose, 0.3 mL. One additional dose, 0.3 mL, may be administered ≥4 months after first dose of an authorized bivalent COVID-19 vaccine | Single dose, 0.3 mL ≥2 months after monovalent COVID-19 vaccine One additional dose, 0.3 mL, may be administered ≥4 months after first dose of an authorized bivalent COVID-19 vaccine | | | |
(a)Monovalent refers to a COVID-19 vaccine that contains or encodes the spike protein of only the Original SARS-CoV-2.
(b)Notwithstanding the age limitations for use of the vaccine, individuals turning from 4 to 5 years of age during the vaccination series should receive all doses with the Pfizer-BioNTech COVID-19 Vaccine, Bivalent.
(c)Notwithstanding the age limitations for use of the vaccine, individuals turning from 4 to 5 years of age during the vaccination series should receive 2 doses with the Pfizer-BioNTech COVID-19 Vaccine, Bivalent.
For individuals with certain kinds of immunocompromise 6 months through 4 years of age who have received three 0.2 mL doses (the Pfizer‑BioNTech COVID-19 Vaccine or the Pfizer-BioNTech COVID-19 Vaccine, Bivalent), a fourth dose (0.2 mL) with the Pfizer-BioNTech COVID-19 Vaccine, Bivalent may be administered at least one month following the most recent dose; additional doses of the Pfizer-BioNTech COVID-19 Vaccine, Bivalent may be administered at the discretion of the healthcare provider, taking into consideration the individual’s clinical circumstances. For individuals with certain kinds of immunocompromise 5 years of age and older, a single additional age-appropriate dose of the Pfizer‑BioNTech COVID-19 Vaccine, Bivalent maybe administered at least 2 months following the initial dose of a bivalent COVID-19 vaccine; additional age‑appropriate doses of the Pfizer‑BioNTech COVID‑19 Vaccine, Bivalent may be administered at the discretion of the healthcare provider, taking into consideration the individual’s clinical circumstances.
EU and Japan––In March 2023, Pfizer and BioNTech announced the submission of an application to the EMA to extend the Omicron BA.4/BA.5-adapted bivalent vaccine’s marketing authorization (MA) to include use in children six months through four years of age as both primary series (all three doses) and booster vaccination (fourth dose).
In February 2023, Pfizer and BioNTech announced the submission of an application to the EMA for a variation of the
MA to include the bivalent vaccine as a primary course of vaccination in individuals five years of age and older.
The following table includes filings and approvals for our COVID-19 vaccine products in the EU and Japan. All COVID-19 vaccine products listed in this table have been developed in collaboration with BioNTech.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PATIENT POPULATION AND DATE OF APPROVAL/FILING(a) |
COVID-19 VACCINE PRODUCT(a)(b) | | PRIMARY SERIES
OR BOOSTER | | 16 Years of age and older | | 12-15 Years of age | | 5-11 Years of age | | 6 Months through 4 Years of age |
| | | U.S. | EU | JAPAN | | U.S. | EU | JAPAN | | U.S. | EU | JAPAN | U.S. | EU | JAPAN |
Comirnaty
| | | 30-µg 2-dose primary(b) | | 10-µg 2-dose primary(c) | 3-µg 3-dose primary |
| Primary | | Approved Aug.
2021
| CMA
Dec.December
2020 | Cond. J-NDA Feb.February 2021 | | EUA
May 2021
| CMAApproved
May 2021 | Cond. J-NDA May 2021 | | EUAApproved
Oct. 2021
| CMANovember
Nov. 2021
| Cond. J-NDA Jan.January
2022
| EUA
June 2022
| CMA Oct.October
2022 | Cond. J-NDA Oct.October
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)
| Booster | | 30-µg booster dose | | 10-µg booster dose | | | |
| Booster | | EUAApproved
Aug.October
2021 | Cond. J-NDA November 2021 | | Approved February 2022 | CMACond.
Sep. J-NDA
March 2022 | | Approved September 2022 | Cond. J-NDA August 2022 | | |
Comirnaty Original/Omicron BA.4/BA.5 Vaccine(b) | | | 30-µg 2-dose primary | | 10-µg 2-dose primary | 3-µg 3-dose primary |
| Primary | | | Filed April 2023 | | | Filed April 2023 | | | Filed April 2023 | | Filed April 2023 |
| | 30-µg booster dose | | 10-µg booster dose | 3-µg booster dose |
| Booster | | Approved September 2022 | Cond. J-NDA Oct.October 2022 | | EUAApproved
Aug. 2022
| CMASeptember
Sep. 2022
| Cond. J-NDA Oct.October 2022 | | EUAApproved
Oct. September
2022 | Cond. J-NDA February 2023 | | Filed Sep. 2022April
| | | | 2023 |
| Comirnaty Original/Omicron BA.1 Vaccine | Booster | | 30-µg booster dose | | | | | | | |
| | CMAApproved
Sep.September
2022 | Cond. J-NDA Sep.October 2022 | | | CMAApproved
Sep.September
2022 | Cond. J-NDA Sep.October 2022 | |
(a)All COVID-19 vaccine products listedEU approvals prior to October 10, 2022 were under the CMA, and later converted to full Marketing Authorization as of October 10, 2022. Dates shown in this table are being developed in collaboration with BioNTech.reflect original CMA date.
(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.
Other Products
| | | | | | | | | | | | | | |
| PRODUCT | DISEASE AREAINDICATION OR PROPOSED INDICATION | APPROVED/FILED* |
| U.S. | EU | JAPAN |
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)estradiol, and norethindrone acetate)(a) | Uterine fibroids (combinationModerate to severe pain associated with estradiol and norethindrone acetate)endometriosis | Approved May
2021
| | |
Endometriosis (combination with estradiol and norethindrone acetate) | Approved
Aug.August
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.January
2021 | Approved Feb.February
2022 | Approved Jan.January
2022 |
Prevnar 20/Apexxnar (Vaccine)(c) | ImmunizationActive immunization to prevent pneumonia, invasive disease and non-invasive pneumococcal infectionsotitis media caused by Streptococcus pneumoniae (adults) | Approved June 2021 | Approved Feb.February
2022 | |
| Active immunization to prevent pneumonia, invasive disease and otitis media caused by Streptococcus pneumoniae (pediatric) | Approved April 2023 | | Filed March 2023 |
TicoVac
(Vaccine) | ImmunizationActive immunization to prevent tick-borne encephalitis disease | Approved Aug.August
2021 | | Filed March 2023 |
Paxlovid(d) (nirmatrelvir [PF-07321332]; ritonavir) | COVID-19 infection (high risk population)in high-risk adults and children (12-18 years of age; >88lbs) | EUA Dec.December
2021 | CMAApproved
Jan.February
20222023
| Approved Feb.February
2022 |
Nurtec ODT/Vydura (rimegepant) | Acute treatment of migraine with or without aura (adults) | Approved Feb.February 2020 | Approved Apr.April
2022 | |
Migraine preventionPrevention of episodic migraine (adults) | Approved May 2021 | Approved Apr.April
2022 | |
| ritlecitinib (PF-06651600) | Alopecia areata | Filed Sep.September
2022 | Filed Sep.September
2022 | Filed Sep.September
2022 |
zavegepantZavzpret (zavegepant)
(intranasal) | Acute treatment of migraine with or without aura (adults) | Approved March 2023 | | |
PF-06886992
(Vaccine) | Active immunization to prevent serogroups ABCWY meningococcal infections (adolescent and young adults) | Filed MayDecember
2022 | | |
PF-06928316
(Vaccine) | Active immunization to prevent respiratory syncytial virus infection (maternal) | Filed February 2023 | Filed January 2023 | Filed February 2023 |
| Active immunization to prevent respiratory syncytial virus infection (older adults) | Filed December 2022 | Filed January 2023 | |
| etrasimod | Ulcerative colitis (moderately to severely active) | Filed December 2022 | Filed November 2022 | |
| Braftovi (encorafenib) and Mektovi (binimetinib) | BRAFV600E-mutant metastatic non-small cell lung cancer | Filed April 2023 | | |
| elranatamab (PF-06863135) | Multiple myeloma triple-class refractory | Filed February 2023 | Filed February 2023 | |
| Talzenna (talazoparib) | Combination with Xtandi (enzalutamide) for first-line mCRPC | Filed February 2023 | Filed February 2023 | |
*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 2022, Pfizer announced the FDA has extended the review period for the NDA for Paxlovid. At the request of the FDA, Pfizer submitted additional analyses of efficacy and safety data from the pivotal Evaluation of Protease Inhibition for COVID-19 in High-Risk Patients and supportive Evaluation of Protease Inhibition for COVID-19 in Standard-Risk Patients trials to be considered as part of its NDA for Paxlovid. Results from these analyses are consistent with previously disclosed efficacy and safety data for the trials. In order to allow time for a full review of the application, including the additional data analyses submitted, the FDA has extended the Prescription Drug User Fee Act goal date by three months to May 2023.
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 OctoberNovember 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 and harmonized for all such JAK inhibitors. The resulting EU label changes are expected to bewere finalized in JanuaryApril 2023. For additional information, seeWe continue to work with regulatory agencies worldwide to review the full results and analyses of ORAL Surveillance and their impact on product labeling. See the Item 1A. Risk Factors—Post-Authorization/Approval Data and the Product Development sections of our 20212022 Form 10-K.
In China, the following products received regulatory approvals in the last twelve months: Cresemba (IV formulation) for fungal infectionthe treatment of adult patients with invasive aspergillosis and Besponsainvasive mucormycosis in June 2022; Xeljanz for second line acute lymphoblastic leukemia, boththe treatment of adult patients with active psoriatic arthritis in December 2021; Paxlovid for COVID-19 infectionOctober 2022; and Prevenar 13 in February 2022; Cibinqo for atopic dermatitisinfants and children aged 6 weeks to 15 months, in April 2022; Lorbrena for non-small cell lung cancer (first line and second line therapy) in April 2022.
The following provides information about additional indications and new drug candidates in late-stage development:
| | | | | | | | | | | |
| | PRODUCT/CANDIDATE | PROPOSED DISEASE AREA |
| LATE-STAGE CLINICAL PROGRAMS FOR ADDITIONAL USES AND DOSAGE FORMS FOR IN-LINE AND IN-REGISTRATION PRODUCTS | | PRODUCT/CANDIDATE | PROPOSED 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®Erbitux® (cetuximab)(d) | First-line BRAFv600EV600E-mutant mCRC |
| Braftovi (encorafenib) and Mektovi (binimetinib) and Keytruda®Keytruda® (pembrolizumab)(e) | BRAFv600EV600E/K-mutant metastatic or unresectable locally advanced melanoma |
| Paxlovid (nirmatrelvir [PF-07321332]; ritonavir) | COVID-19 infection (in high-risk children (6-11 years of age; >88lbs)pediatric) |
| zavegepant (oral) | Migraine preventionPrevention of chronic migraine (adults) |
| ritlecitinib (PF-06651600) | Vitiligo |
| elranatamab (PF-06863135) | Multiple myeloma double-class exposed |
| Newly diagnosed multiple myeloma post-transplant maintenance |
| Newly diagnosed multiple myeloma transplant-ineligible |
| Voxelotor | Sickle Cell Disease (pediatric) |
| Eliquis (apixaban) | Venous thromboembolism (pediatric) |
| NEW DRUG CANDIDATES IN LATE-STAGE DEVELOPMENT | | aztreonam-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)(h) | Immunization to prevent COVID-19 (adults) |
| etrasimod (PF-07915503) | Ulcerative colitis (moderately to severely active) |
| VLA15 (PF-07307405) vaccine(j)(i) | Immunization to prevent Lyme Disease |
| PF-07252220 (quadrivalent mRNA-based vaccine) | Immunization to prevent influenza |
Vepdegestrant (PF-07850327)(j) | Breast Cancer Metastatic - 2nd line + ER+/HER2- |
| 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.Ono.
(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.Ono.
(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)(i)Being developed in collaboration with Valneva SE.
Myfembree combination(j)Being developed in collaboration 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.Arvinas, Inc.
For additional information about our R&D organization, see the Item 1. Business—Research and Development section of our 20212022 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 reportedReported 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
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:
| | | | | | | | | | | | | | |
| Measure | | Definition | | Relevance 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, Selling, informational and administrative expenses, Research and development expenses and Other (income)/deductions––net(a), each before the impact of amortization of intangible assets, certain acquisition-related items, discontinued operations and certain significant items, which are components of the Adjusted income measure | |
| Adjusted diluted EPS | | EPS attributable to Pfizer Inc. common shareholders––diluted(a) before the impact of amortization of intangible assets, certain acquisition-related items, discontinued operations and certain significant items | |
(a)Most directly comparable GAAP measure.
(b)The short-term incentive plans for substantially all non-sales-force employees worldwide are funded from a pool based on our performance, measured in significant part versus three budgeted metrics, one of which is 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)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 calculation of similar 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 absolute basis and relative to a publicly traded pharmaceutical index, plays a significant role in determining payouts under certain of our incentive compensation plans.
Beginning in the first quarter of 2022, our reconciliation of certain GAAP reported to non-GAAP adjusted information is updated to reflect the following, and prior-period information has been revised to conform to the current 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 acquired IPR&D. Previously, certain of these 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 both GAAP Reported income and non-GAAP Adjusted income were approximately: (i) $426 million pre-tax ($389 million, net of tax), or $0.07 per share, in the third quarter of 2022; (ii) $765 million pre-tax ($665 million, net of tax), or $0.12 per share, in the first nine months of 2022; (iii) $706 million pre-tax ($540 million, net of tax), or $0.09 per share, in the third quarter of 2021 and (iv) $892 million pre-tax ($726 million, net of tax), or $0.13 per share, in the first nine months of 2021.
Amortization of Intangible Assets—We began excludingAdjusted income excludes 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 benefits of $0.01 and $0.04 on Adjusted diluted EPS in the third quarter and first nine months of 2022, respectively, and $0.02 and $0.07 in the third quarter and first nine months of 2021, respectively.intangible assets.
Acquisition-Related Items—Adjusted income continues to excludeexcludes 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-relatedAcquisition-related items may now include purchase accounting impacts that previously would have been includedsuch 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)value, depreciation related to the increase/decrease in fair value of acquired fixed assets; (iii)assets, 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 excludeexcludes 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 linesportfolio for strategic fit with our operations, we do not build or run our business with the intent to discontinue parts of our business. Restatements due to discontinued operations do not impact compensation or change the Adjusted income measure for the compensation in respect of the restated periods, but are presented for consistency across all periods.
Certain Significant Items—Adjusted income continues to excludeexcludes 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 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.acquisition, or legal matters related to divested products or businesses. 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 within MD&A of our 20212022 Form 10-K for additional information.10-K.
Reconciliations of GAAP Reported to Non-GAAP Adjusted Information––Certain Line Items
| | | Three Months Ended October 2, 2022 | | Three Months Ended April 2, 2023 |
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 | | |
Data presented will not (in all cases) aggregate to totals. (MILLIONS, EXCEPT PER SHARE DATA) | | Data presented will not (in all cases) aggregate to totals. (MILLIONS, EXCEPT PER 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), (b) | | Earnings per common share attributable to Pfizer Inc. common shareholders––diluted |
| GAAP Reported | | GAAP Reported | | $ | 4,886 | | | $ | 3,418 | | | $ | 70 | | | $ | 5,543 | | | $ | 0.97 | |
| Amortization of intangible assets | Amortization of intangible assets | | — | | — | | — | | 822 | | | Amortization of intangible assets | | — | | — | | — | | 1,103 | | |
Acquisition-related items(b) | Acquisition-related items(b) | | 3 | | (2) | | (12) | | 62 | | | Acquisition-related items(b) | | (97) | | (2) | | 18 | | 163 | | |
Discontinued operations(c) | Discontinued operations(c) | | — | | — | | — | | 15 | | | Discontinued operations(c) | | — | | — | | — | | (1) | | |
| Certain significant items: | Certain significant items: | | | | Certain significant items: | | | |
Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(d) | Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(d) | | (20) | | (137) | | — | | 306 | | | Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(d) | | (32) | | (59) | | — | | 30 | | |
Certain asset impairments(e) | Certain asset impairments(e) | | — | | — | | (200) | | 200 | | | Certain asset impairments(e) | | — | | — | | (264) | | 264 | | |
(Gains)/losses on equity securities | (Gains)/losses on equity securities | | — | | — | | (111) | | 111 | | | (Gains)/losses on equity securities | | — | | — | | (452) | | 452 | | |
| Actuarial valuation and other pension and postretirement plan (gains)/losses | Actuarial valuation and other pension and postretirement plan (gains)/losses | | — | | — | | 193 | | (193) | | | Actuarial valuation and other pension and postretirement plan (gains)/losses | | — | | — | | (8) | | 8 | | |
Other(f) | Other(f) | | (8) | | (12) | | (325) | | 349 | | | Other(f) | | (10) | | (6) | | 107 | | (88) | | |
| Income tax provision—non-GAAP items | Income tax provision—non-GAAP items | | | | | | | | (109) | | | | Income tax provision—non-GAAP items | | | (437) | | |
| Non-GAAP adjusted | | $ | 6,038 | | $ | 3,239 | | $ | (515) | | $ | 10,172 | | $ | 1.78 | | |
| Non-GAAP Adjusted | | Non-GAAP Adjusted | | $ | 4,746 | | | $ | 3,350 | | | $ | (528) | | | $ | 7,036 | | | $ | 1.23 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 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 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 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 items | | 6 | | | (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 | | Three Months Ended April 3, 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 | | $ | 21,085 | | | $ | 8,599 | | | $ | (4,043) | | | $ | 18,586 | | | $ | 3.27 | | |
Data presented will not (in all cases) aggregate to totals. (MILLIONS, EXCEPT PER SHARE DATA) | | Data presented will not (in all cases) aggregate to totals. (MILLIONS, EXCEPT PER 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), (b) | | Earnings per common share attributable to Pfizer Inc. common shareholders––diluted |
| GAAP Reported | | GAAP Reported | | $ | 9,984 | | | $ | 2,593 | | | $ | 350 | | | $ | 7,864 | | | $ | 1.37 | |
| Amortization of intangible assets | Amortization of intangible assets | | — | | (29) | | (2) | | 2,778 | | | Amortization of intangible assets | | — | | | — | | | — | | | 835 | | | |
| Acquisition-related items | Acquisition-related items | | 17 | | (2) | | (31) | | 14 | | | Acquisition-related items | | 4 | | | (1) | | | (26) | | | 187 | | | |
Discontinued operations(c) | Discontinued operations(c) | | — | | — | | — | | 353 | | | Discontinued operations(c) | | — | | | — | | | — | | | 10 | | | |
| Certain significant items: | Certain significant items: | | | | Certain significant items: | | | | | | | | | | |
Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(d) | Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(d) | | (82) | | (310) | | — | | 1,057 | | | Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(d) | | (20) | | | (74) | | | — | | | 122 | | | |
| (Gains)/losses on equity securities | (Gains)/losses on equity securities | | — | | — | | 1,597 | | (1,597) | | | (Gains)/losses on equity securities | | — | | | — | | | (698) | | | 698 | | | |
| Actuarial valuation and other pension and postretirement plan (gains)/losses | Actuarial valuation and other pension and postretirement plan (gains)/losses | | — | | — | | 932 | | (932) | | | Actuarial valuation and other pension and postretirement plan (gains)/losses | | — | | | — | | | 72 | | | (72) | | | |
Other(f) | Other(f) | | (45) | | (119) | | (200) | | 370 | | | Other(f) | | (10) | | | (23) | | | (104) | | | 143 | | | |
| Income tax provision—Non-GAAP items | | | | | | | | (1,976) | | | | |
| Non-GAAP adjusted | | $ | 20,975 | | $ | 8,140 | | $ | (1,747) | | $ | 18,653 | | $ | 3.28 | | |
| Income tax provision—non-GAAP items | | Income tax provision—non-GAAP items | | | | | | | | (448) | | | |
| Non-GAAP Adjusted | | Non-GAAP Adjusted | | $ | 9,958 | | | $ | 2,496 | | | $ | (406) | | | $ | 9,338 | | | $ | 1.62 | |
(a)Items that reconcile GAAP Reported to non-GAAP Adjusted balances are shown pre-tax. Our effective tax rates for GAAP reportedReported income from continuing operations were: 4.0% and 10.5%11.4% in the three and nine months ended OctoberApril 2, 2022, respectively,2023 and (4.2)% and 7.8%12.9% in the three and nine months ended OctoberApril 3, 2021, respectively.2022. See Note 5. Our effective tax rates onfor non-GAAP adjustedAdjusted income were: 4.4% and 11.9%were 14.0% in the three and nine months ended OctoberApril 2, 2022, respectively,2023 and 14.7% and 15.7%14.8% in the three and nine months ended OctoberApril 3, 2021, respectively.2022.
(b)Acquisition-related items inThe amounts for the three and nine months ended OctoberApril 2, 2023 and April 3, 2022 primarily represent integrationinclude reconciling amounts for Research and other costs for the acquisition of Arena in March 2022. See development expensesNote 2A. that are not material.
(c)Relates to the previously divested Meridian subsidiary and post-closing adjustments for other previously divested businesses. SeeNote 2B.2B. (d)Includes employee termination costs, asset impairments and other exit costs related to our cost-reduction and productivity initiatives not associated with acquisitions. See Note 3.3. (f)For the third quarterthree months ended April 2, 2023, the total Other (income)/deductions––net adjustment of $107 million primarily includes dividend income of $211 million related to our investment in Nimbus resulting from Takeda Pharmaceutical Company Limited’s acquisition of Nimbus’s oral, selective allosteric tyrosine kinase 2 (TYK2) inhibitor program subsidiary, partially offset by charges of (i) $50 million mostly related to our equity-method accounting pro-rata share of intangible asset amortization and impairments, costs of separating from GSK and restructuring costs recorded by Haleon, and (ii) $36 million for certain legal matters, primarily for certain product liability expenses related to products discontinued and/or divested by Pfizer. For the three months ended April 3, 2022, the total Other (income)/deductions––net adjustment of $325$104 million primarily includesincluded 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 the 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$79 million for certain legal matters representing certain product liability expenses related to products discontinued and/or divested by Pfizer, 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 Selling, informational and administrative expenses of $119 million primarily include costs for consulting,to a lesser extent, legal tax and advisory services associated with a non-recurring internal reorganization of legal entities. For the first nine months of 2021, the total obligations related to pre-acquisition commitments.Other (income)/deductions––net adjustment of $200 million primarily includes charges of $136 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, 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 Research and development expenses.
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 Note 2B). | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | |
| (MILLIONS) | | April 2,
2023 | | April 3,
2022 | | | | Drivers of change |
| Cash provided by/(used in): | | | | | | | | |
| Operating activities | | $ | 1,212 | | | $ | 6,541 | | | | | The change was primarily driven by a decrease in net income adjusted for non-cash items, the timing of receipts and payments in the ordinary course of business, including timing of payments to BioNTech for the gross profit split for Comirnaty (see Note 8B), a decrease in advance payments for Comirnaty and Paxlovid, and a decrease in cash dividends received from equity method investments. |
| Investing activities | | $ | 3,315 | | | $ | 567 | | | | | The change was driven mainly by $6.2 billion cash used to acquire Arena, net of cash acquired, in the first quarter of 2022, partially offset by $3.7 billion fewer net redemptions of short-term investments with original maturities less than and greater than three months in the first quarter of 2023. |
| Financing activities | | $ | (2,771) | | | $ | (6,578) | | | | | The change was driven mainly by $2.0 billion of purchases of common stock in the first quarter of 2022, and a $1.3 billion decrease in payments of long-term debt. |
| | | | | | | | |
| | | | | | | | |
ANALYSIS OF FINANCIAL CONDITION, LIQUIDITY, CAPITAL RESOURCES AND MARKET RISK
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, 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. For additional information, including 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 information about the sources and uses of our funds and capital resources, as well as our operating cash flows, see our condensed consolidated statementsCondensed Consolidated Statements of cash flows, condensed consolidated balance sheets, condensed consolidated statementsCash Flows, Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of equity,Equity, and the Analysis of the Condensed Consolidated Statements of Cash Flows within MD&A. For information on our money market funds, available-for sale-debt securities and long-term debt, see Note 7. Debt Capacity––Lines of Credit––As of October 2, 2022, we had access to a $7 billion committed 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 $302 million expire within one year. Essentially all lines of credit were unused as of October 2, 2022.
Capital Allocation Framework––Our capital allocation framework is primarily devised to facilitate (i) the achievement of medical 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 2021 Form 10-K.
In September 2022, our BOD declared a dividend of $0.40 per share, payable on December 5, 2022, to shareholders of record at the close of business on November 4, 2022.
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 Note 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, off-balance sheet arrangements, contractual and other obligations, global economic conditions, and information about credit ratings, market risk and LIBOR, see the Analysis of Financial Condition, Liquidity, Capital Resources and Market Risk section within MD&A in our 20212022 Form 10-K. For more information on guarantees and indemnifications, see Note 12B.Credit Ratings––The cost and availability of financing are influenced by credit ratings, and an increase or decrease in our credit rating could have a beneficial or adverse effect on financing. Our long-term debt is rated high-quality by both S&P and Moody’s. In March 2023, following the announcement of the proposed acquisition of Seagen, Moody’s changed the outlook on our long-term debt to Negative; S&P downgraded our short-term rating from A-1+ to A-1.
| | | | | | | | | | | | | | | | | | | | |
| The current ratings assigned to our commercial paper and senior unsecured long-term debt: |
| NAME OF RATING AGENCY | | Pfizer Short-Term Rating | | Pfizer Long-Term Rating | | Outlook/Watch |
| Moody’s | | P-1 | | A1 | | Negative |
| S&P | | A-1 | | A+ | | Stable |
These ratings are not recommendations to buy, sell or hold securities and the ratings are subject to revision or withdrawal at any time by the rating organizations. Each rating should be evaluated independently of any other rating.
Debt Capacity––Lines of Credit––As of April 2, 2023, we had access to a $7 billion committed U.S. revolving credit facility, which may be used for general corporate purposes including to support our commercial paper borrowings. Lenders under this facility have approximately $700 million of commitments maturing in November 2026 and $6.3 billion of commitments maturing in November 2027. In addition to the U.S. revolving credit facility, our lenders have provided us an additional $316 million in lines of credit, of which $287 million expire within one year. Essentially all lines of credit were unused as of April 2, 2023.
Capital Allocation Framework––Our capital allocation framework is primarily devised to facilitate the achievement of medical breakthroughs through R&D investments and business development activities and returning capital to shareholders through dividends and share repurchases. We expect to finance the proposed acquisition of Seagen substantially through $31 billion of new, long-term debt, and the balance from a combination of short-term financing and existing cash. See the Overview of Our Performance, Operating Environment, Strategy and Outlooksection within MD&A and the Item 1A. Risk Factors section for additional information about our proposed acquisition of Seagen. In April 2023, our BOD declared a dividend of $0.41 per share, payable on June 9, 2023, to shareholders of record at the close of business on May 12, 2023. At April 2, 2023, our remaining share-purchase authorization was approximately $3.3 billion, with no repurchases in the first three months of 2023. See Note 12 in our 2022 Form 10-K for more information on our publicly announced share-purchase plans. Our financing plan for Seagen does not involve monetizing any portion of our Haleon stake. Our intentions with respect to our Haleon stake are set out in our Schedule 13D (as amended) initially filed with the SEC on July 27, 2022.
NEW ACCOUNTING STANDARDS
Recently Adopted Accounting Standard
| | | | | | | | | | | | | | |
Recently Issued Accounting Standards, Not Adopted as of OctoberApril 2, 20222023 |
| Standard/Description | | Effective Date | | Effect on the
Financial Statements |
Reference rate reform provides temporary optional expedients and exceptions to the guidance for contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued after 2021 because of reference rate reform. 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 one-time election to sell or transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform. | | Elections can be adopted prospectively at any time through December 31, 2022.2024. | | We are assessingwill apply certain of the impact, but currentlyoptional expedients on hedge accounting relationships and related contracts, if necessary. 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 Form 10-Q contains forward-looking statements. We 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 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,”
“guidance, “guidance,” “goal,” “objective,” “aim,” “seek,” “potential,” “hope” and other words and terms of similar meaning or by using future dates.
We include forward-looking information in our discussion of the following, among other topics:
•our anticipated operating and financial performance, reorganizations, business plans, strategy and 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,data; revenue contribution and projections; potential pricing and reimbursement; potential market dynamics and size; growth, performance, timing of exclusivity and potential benefits;
•strategic reviews, capital allocation objectives, dividends and share repurchases;
•plans for and prospects of our acquisitions, dispositions and other business development activities, and our ability to successfully capitalize on these opportunities;growth opportunities and prospects;
•sales, expenses, interest rates, foreign exchange rates and the outcome of contingencies, such as legal proceedings;
•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 specific future actions, performance and effects, including, among others, the expected benefits of the organizational changes to further transform our operations,operations; our 2023 revenue expectations; our ongoing efforts to respond to COVID-19, including our plans and expectations regarding Comirnaty and Paxlovid, and any potential future vaccines or treatments; the forecasted revenue, demand, manufacturing and supply of Comirnaty and Paxlovid, including expectations offor the commercial market for Comirnaty;Comirnaty and Paxlovid; our expectations regarding the impact of COVID-19 on our business; the expected impact of patent expiries and competition from generic manufacturers;competition; the expected pricing pressures on our products and the anticipated impact to our business; the availability of raw materials for 2022; the expected charges and/or costs in connection with the spin-off of the Upjohn Business and its combination with Mylan;2023; the benefits expected from our business development transactions;transactions, including our proposed acquisition of Seagen; our anticipated liquidity position; the anticipated costs 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 these forward-looking statements will be realized in whole or in part. Actual outcomes may vary materially from past results and those 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 Factors section in our 20212022 Form 10-K.10-K and the Item 1A. Risk Factors of this Form 10-Q. Therefore, you are cautioned not to unduly rely on forward-looking statements, which speak only as of the date of this Form 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 make on related subjects.
Some of the factors that could cause actual results to differ are identified below, as well as those discussed in the Item 1A. Risk Factors section in our 20212022 Form 10-K, the Item 1A. Risk Factorssection of this Form 10-Q 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 20212022 Form 10-K, the Item 1A. Risk Factorssection of this Form 10-Q or within MD&A, or other risks currently unknown, could have a material adverse effect on our business, financial condition or results of operations, or 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 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 R&D activities, including, the ability to meet anticipated pre-clinical or clinical endpoints, commencement and/or completion dates for our pre-clinical or clinical trials, regulatory submission dates, and/or regulatory approval and/or launch dates; the possibility of unfavorable pre-clinical and clinical trial results, including the possibility of unfavorable new pre-clinical or clinical data and/orand further analyses of existing pre-clinical or clinical data; 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; and whether and when additional data from our pipeline programs will be published in scientific journal publications, and if so, when and with what modifications and interpretations;
•our ability to successfully address comments received from regulatory authorities such as the FDA 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
regarding the ability to obtain, recommendations by technical or advisory committees; and the timing of pricing approvals and product launches;
•claims and concerns that may arise regarding the safety or efficacy of in-line products and product candidates, including claims and concerns that may arise from the outcome of post-approval clinical trials, which could impact marketing approval, product labeling, and/or availability or commercial potential, including uncertainties regarding the commercial or other 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 on other JAK inhibitors in our portfolio;
•the success and impact of external business development activities, including the ability to identify and execute on potential business development opportunities; the ability to satisfy the conditions to closing of announced transactions in the anticipated time frame or at all; the ability to realize the anticipated benefits of any such transactions 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;
•risks and uncertainties related to Pfizer’s proposed acquisition of Seagen, including, among other things, risks related to the satisfaction or waiver of the conditions to closing the proposed acquisition (including the failure to obtain necessary regulatory approvals and failure to obtain the requisite vote by Seagen stockholders) in the anticipated timeframe or at all, including the possibility that the proposed acquisition does not close; the possibility that competing offers may be made; risks related to the ability to realize the anticipated benefits of the proposed acquisition, including the possibility that the expected benefits from the acquisition will not be realized or will not be realized within the expected time period; the risk that the businesses will not be integrated successfully; disruption from the transaction making it more difficult to maintain business and operational relationships; negative effects of the announcement or the consummation of the proposed acquisition on the market price of Pfizer’s common stock and/or operating results; significant transaction costs; unknown liabilities; the risk of litigation and/or regulatory actions related to the proposed acquisition or Seagen’s business; risks related to the financing of the transaction; other business effects and uncertainties, including the effects of industry, market, business, economic, political or regulatory conditions; future exchange and interest rates; changes in tax and other laws, regulations, rates and policies; the impact of the proposed acquisition on future business combinations or disposals; uncertainties regarding the commercial success of Pfizer’s and Seagen’s commercialized and pipeline products; the uncertainties inherent in R&D; whether and when drug applications may be filed in any jurisdictions for Pfizer’s or Seagen’s pipeline products; whether and when any such applications may be approved by regulatory authorities, which will depend on myriad factors, including making a determination as to whether the product's benefits outweigh its known risks and determination of the product's efficacy and, if approved, whether any such products will be commercially successful; and competitive developments;
•competition, including from 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 products and product candidates;
•the ability to successfully market both new and existing products, including biosimilars;
•difficulties or delays in manufacturing, sales or marketing; supply disruptions, shortages or stock-outs at our facilities or third-party facilities that we rely on; and legal or regulatory actions;
•the impact of public health outbreaks, epidemics or pandemics (such as the COVID-19 pandemic), including the impact of vaccine mandates where applicable,COVID-19) 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 continue to develop and commercialize a vaccine to help preventComirnaty and Paxlovid or any potential future COVID-19 and an oral COVID-19 treatment,vaccines, treatments or combinations, 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 COVID-19 vaccines or treatments, including, among other things, whether and when additional supply or purchase agreements will be reached and 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,not meet expectations, which may lead to excess inventory on-hand and/or in the channel or reduced revenues or excess inventory;revenues;
•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;
•interest rate and foreign currency exchange rate fluctuations, including the impact of possible currency devaluations and monetary policy actions in countries experiencing high inflation rates;
•any significant issues involving our largest wholesale distributors or government customers, which account for a substantial portion of our revenues;
•the impact of the increased presence of counterfeit medicines or vaccines in the pharmaceutical supply chain;
•any significant issues related to the outsourcing of certain operational and staff functions to third parties; and any significant issues related to our JVs and other third-party business arrangements;
•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;
•any changes in business, political and economic conditions due to actual or threatened terrorist activity, geopolitical instability, civil unrest or military action;
•the impact of product recalls, withdrawals and other unusual items, including uncertainties related to regulator-directed risk evaluations and assessments, including our ongoing evaluation of our product portfolio for the potential presence or formation of nitrosamines;
•trade buying patterns;
•the risk of an impairment charge related to our intangible assets, goodwill or equity-method investments;
•the impact of, and risks and uncertainties related to, restructurings and internal reorganizations, as well as any other corporate strategic initiatives and growth strategies, and cost-reduction and productivity initiatives, each of which requires upfront costs but may fail to yield anticipated benefits and may result in unexpected costs or organizational disruption;
the ability to successfully achieve our climate goals and progress our environmental sustainability and other ESG priorities;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, pharmaceutical product pricing, intellectual property, reimbursement or access or restrictions on U.S. direct-to-consumer advertising; limitations on interactions with healthcare professionals and other industry stakeholders; as well as pricing pressures for our products as a result of highly competitive insurance markets;
•legislation or regulatory action in markets outside of the U.S., such as China or Europe, including, China, affectingwithout limitation, laws related to pharmaceutical product pricing, intellectual property, medicine safety, environmental impact of medicines, 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 well as the impact of political unrest or civil unrest or military action, including the ongoing conflict between Russia and Ukraine and the continuedits economic consequences, unstable governments and legal systems, inter-governmental disputes and inter-governmental disputes;natural disasters or disruptions related to climate change;
•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 risk related to adequacy of reserves related to legal proceedings;
•the risk and impact of tax related litigation;litigation and investigations;
•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 outside the U.S. and potential changes to existing tax law by the current U.S. Presidential administration and Congress;
Risks Related to Intellectual Property, Technology and Security
•any significant breakdown or interruption of our information technology systems and infrastructure (including cloud services);
•any business disruption, theft of confidential or proprietary information, security threats on facilities or infrastructure, 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;
•the 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
•risks to our ability to protect ourproducts, patents and other intellectual property, such as againstas: (i) claims of invalidity that could result in LOE; (ii) claims of patent infringement, including asserted and/or unasserted intellectual property claims; (iii) claims we may assert against intellectual property rights held by third parties; (iv) challenges faced by our collaboration or licensing partners to the validity of their patent rights; and in response toor (v) 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 enforcing intellectual property rights related to our products, including Comirnaty and Paxlovid.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information required by this item is incorporated by reference from the discussion in the Analysis of Financial Condition, Liquidity, Capital Resources and Market Risk section within MD&A of our 20212022 Form 10-K.
ITEM 4. 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
Certain legal proceedings in which we are involved are discussed in Note 12A. ITEM 1A. RISK FACTORS
PENDING ACQUISITION OF SEAGEN
We may be unable to complete the acquisition of Seagen within the anticipated timeframe or at all, which could prevent us from receiving the anticipated benefits from the acquisition in the anticipated timeframe or at all.
On March 12, 2023, we entered into a merger agreement with Seagen. The companies currently expect to complete the transaction in late 2023 or early 2024, subject to customary closing conditions, including the adoption of the merger agreement by the holders of a majority of the outstanding Seagen shares entitled to vote on such matter at a meeting of Seagen stockholders, the receipt of certain required government consents and approvals, and other customary conditions. As a result of such conditions, there is no assurance that the acquisition will be consummated in the anticipated timeframe or at all. In addition, Pfizer may be required to pay Seagen a reverse termination fee of approximately $2.22 billion, subject to certain limitations set forth in the merger agreement, if the merger agreement is terminated by either party as a result of certain antitrust and/or foreign direct investment law-related conditions. Any failure to consummate the acquisition in the anticipated timeframe or at all could prevent Pfizer from receiving the expected benefits from the acquisition. For additional information, see the Overview of Our Performance, Operating Environment, Strategy and Outlook—Our Business Development Initiativesand the Forward-Looking Information and Factors That May Affect Future Results sections within MD&A. We have expended and will continue to expend significant time and resources in connection with the acquisition of Seagen and expect to incur substantial indebtedness to fund the acquisition.
Pfizer has expended and will continue to expend significant management time and resources and expenses related to the acquisition of Seagen, many of which must be paid regardless of whether the acquisition is consummated. For example, such time, resources and expenses will be incurred in connection with seeking regulatory approvals for the transaction. We also expect to incur significant additional indebtedness to finance the acquisition, with approximately $31 billion of new, long-term debt plus additional short-term indebtedness to be issued prior to the acquisition, which indebtedness may limit our operating or financial flexibility relative to our current position.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following summarizes purchases of our common stock during the thirdfirst quarter of 2022:2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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, 2022 | | 29,527 | | | $ | 52.06 | | | — | | | $ | 3,292,882,444 | |
| August 1 through August 28, 2022 | | 18,768 | | | $ | 50.29 | | | — | | | $ | 3,292,882,444 | |
| August 29 through October 2, 2022 | | 85,565 | | | $ | 45.46 | | | — | | | $ | 3,292,882,444 | |
| Total | | 133,860 | | | $ | 47.59 | | | — | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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) |
| January 1 through January 29, 2023 | | 100,047 | | | $ | 51.07 | | | — | | | $ | 3,292,882,444 | |
| January 30 through February 26, 2023 | | 8,347,800 | | | $ | 42.32 | | | — | | | $ | 3,292,882,444 | |
| February 27 through April 2, 2023 | | 3,406,317 | | | $ | 40.94 | | | — | | | $ | 3,292,882,444 | |
| Total | | 11,854,164 | | | $ | 42.00 | | | — | | | |
(a)Represents (i) 131,56411,851,457 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 2,2962,707 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.
ITEM 6. EXHIBITS
| | | | | | | | | | | |
| | - | Agreement and Plan of Merger, by and among Pfizer Inc., Aris Merger Sub, Inc. and Seagen Inc., dated as of March 12, 2023 is incorporated by reference from our Current Report on Form 8-K filed on March 13, 2023. |
| | - | Form of Acknowledgment and Consent and Summary of Key Terms for Grants of RSUs, TSRUs, PPSs and PSAs |
| | | - | 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.INS | | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| | 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 104 | | Cover Page Interactive Data File––the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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.
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| | Pfizer Inc. |
| | (Registrant) |
| | |
| | |
| Dated: | November 9, 2022May 10, 2023 | /s/ Jennifer B. Damico |
| | Jennifer B. Damico
Senior Vice President and Controller
(Principal Accounting Officer and
Duly Authorized Officer) |