EX-99 2 pfe-03292015xex99.htm EXHIBIT 99 PFE - 03.29.2015-EX 99
Exhibit 99

PFIZER REPORTS FIRST-QUARTER 2015 RESULTS
First-Quarter 2015 Reported Revenues(1) of $10.9 Billion
First-Quarter 2015 Adjusted Diluted EPS(2) of $0.51, Reported Diluted EPS(1) of $0.38; Both Adjusted Diluted EPS(2) and Reported Diluted EPS(1) Include a $0.03 Negative Impact Associated with an Upfront Payment to OPKO Health, Inc. (OPKO)
Repurchased $6.0 Billion of Common Stock in First-Quarter 2015, Including a $5.0 Billion Accelerated Share Repurchase Agreement Executed in February
Updated Certain Components of 2015 Financial Guidance Solely to Reflect the Negative Impact of Recent Changes in Foreign Exchange Rates
NEW YORK, N.Y., Tuesday, April 28, 2015 – Pfizer Inc. (NYSE: PFE) reported financial results for first-quarter 2015. The company manages its commercial operations through two distinct businesses: an Innovative Products business and an Established Products business. The Innovative Products business is composed of two operating segments: the Global Innovative Pharmaceutical segment (GIP)(3) and the Global Vaccines, Oncology and Consumer Healthcare segment (VOC)(3). The Established Products business consists of the Global Established Pharmaceutical segment (GEP)(3). Financial results for each of these segments are presented in the Operating Segment Information section. Some amounts in this press release may not add due to rounding. All percentages have been calculated using unrounded amounts. Results are summarized below.
OVERALL RESULTS
 
 
 
 
($ in millions, except
per share amounts)
First-Quarter
 
2015
2014
Change
Reported Revenues(1)
$ 10,864

$ 11,353

(4%)
Adjusted Income(2)
3,196

3,665

(13%)
Adjusted Diluted EPS(2)
0.51

0.57

(11%)
Reported Net Income(1)
2,376

2,329

2%
Reported Diluted EPS(1)
0.38

0.36

6%
 
 
 
 
REVENUES
 
 
 
 
 
($ in millions)
Favorable/(Unfavorable)
First-Quarter
 
2015
2014
% Change
 
Total
Oper.
Established Products
$ 5,014

$ 5,990

(16%)
(10%)
GEP(3)
5,014

5,990

(16%)
(10%)
Innovative Products
$ 5,738

$ 5,250

9%
16%
GIP(3)
3,075

3,076

7%
Global Vaccines(3)
1,328

925

44%
51%
Consumer Healthcare(3)
808

761

6%
12%
Global Oncology(3)
528

488

8%
17%
Other(4)
111

113

(2%)
Total
$ 10,864

$ 11,353

(4%)
2%
 
 
 
 
 

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SELECTED TOTAL COMPANY ADJUSTED COSTS AND EXPENSES(2) 
 
 
 
 
 
($ in millions)
(Favorable)/Unfavorable
First-Quarter
 
2015
2014
% Change
 
Total
Oper.
Cost of Sales(2)
$ 1,807

$ 1,986

(9%)
5%
Percent of Revenues(1)
16.6
%
17.5
%
N/A
N/A
SI&A Expenses(2)
 3,078

 3,020

2%
7%
R&D Expenses(2)
 1,877

 1,612

16%
18%
Total
$ 6,762

$ 6,618

2%
9%
 
 
 
 
 
Effective Tax Rate(2)
24.4
%
25.0
%
 
 
 
 
 
 
 
2015 FINANCIAL GUIDANCE(5) 
Pfizer's 2015 financial guidance was updated solely to reflect changes in foreign exchange rates in relation to the U.S. dollar from mid-January 2015 to mid-April 2015, primarily the weakening of the euro.
 
 
Reported Revenues(1)
$44.0 to $46.0 billion
(previously $44.5 to $46.5 billion)
Adjusted Cost of Sales(2) as a Percentage of Reported Revenues(1)
18.5% to 19.5%
Adjusted SI&A Expenses(2)
$12.8 to $13.8 billion
Adjusted R&D Expenses(2)
$6.9 to $7.4 billion
Adjusted Other (Income)/Deductions(2)
Approximately ($500 million) of income
Effective Tax Rate on Adjusted Income(2)
Approximately 25.0%
Reported Diluted EPS(1)
$1.32 to $1.47
(previously $1.37 to $1.52)
Adjusted Diluted EPS(2)
$1.95 to $2.05
(previously $2.00 to $2.10)
 
 
A reconciliation of Pfizer's full-year 2014 financial results to certain components of its updated 2015 financial guidance is below.
 
 
 
 
 
 
 
 
Full-Year
2014
2015 Financial Guidance at 2014 FX Rates
(Excluding OPKO Transaction)
Impact of Mid-January 2015 FX Rates Compared to 2014 FX Rates
Impact of OPKO Transaction
Impact of Mid-April 2015 FX Rates Compared to Mid-January 2015 FX Rates
2015 Financial Guidance
 
 
 
 
 
 
 
Reported Revenues(1)
$49.6 billion
$47.3 to $49.3 billion
($2.8 billion)
($0.5 billion)
$44.0 to $46.0 billion
Reported Diluted EPS(1)
$1.42
$1.57 to $1.72
($0.17)
($0.03)
($0.05)
$1.32 to $1.47
Adjusted Diluted EPS(2)
$2.26
$2.20 to $2.30
($0.17)
($0.03)
($0.05)
$1.95 to $2.05
 
 
 
 
 
 
 

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EXECUTIVE COMMENTARY
Ian Read, Chairman and Chief Executive Officer, stated, “We began the year with good performance on both the top and bottom line and I believe the company is well-positioned in terms of in-line products, recent product launches, geographic reach and product pipeline.”
“During the first quarter of 2015, our new products delivered strong performances. We continued to see strong uptake for our Prevnar 13 vaccine in older adults in the U.S. Ibrance, our recently approved therapy for first-line advanced breast cancer in the U.S., performed very well following its February launch. We also announced this month that a Phase 3 trial of Ibrance for recurrent breast cancer had met its primary endpoint of progression-free survival (PFS). Additionally, Eliquis delivered another strong quarter of growth as adoption among cardiologists continues to improve globally.”
“Also during the first quarter of 2015, we announced the proposed acquisition of Hospira, Inc. (Hospira). This business represents an excellent strategic fit in growing market segments and is expected to accelerate the growth trajectory of our Global Established Pharmaceuticals business. In addition to share repurchases and dividend payments, we continue to consider business development to be an attractive use of shareholder capital.”
“We continue to advance our product pipeline, which currently includes a competitive and diverse mix across small and large molecules and vaccines. I believe we are well-positioned in promising new areas of biology such as immune-oncology, anti-PCSK9 for improved cardiovascular outcomes associated with LDL cholesterol reduction and vaccines for the potential prevention of life threatening infections such as staphylococcus aureus and clostridium difficile.”
“During the remainder of 2015 and beyond, we will continue to focus on driving growth for our key products and geographies, accelerating innovation and continuing to allocate capital to value-creating opportunities,” Mr. Read concluded.
Frank D’Amelio, Chief Financial Officer, stated, “Overall, I am pleased with our first-quarter 2015 financial results and with our ability to continue delivering shareholder value through prudent capital allocation. We were able to grow revenues on an operational basis by 2% despite the significant negative impact from product losses of exclusivity, including Celebrex in the U.S., and the termination of the Spiriva co-promotion collaboration in the U.S. In addition, in first-quarter 2015, we entered into a definitive merger agreement with Hospira under which Pfizer agreed to acquire Hospira, the world’s leading provider of injectable drugs and infusion technologies and a global leader in biosimilars, for a total enterprise value of approximately $17 billion. We also continued to demonstrate our commitment to delivering significant value directly to shareholders by returning approximately $7.8 billion to shareholders through dividends and share repurchases so far this year, including entering into a $5 billion accelerated share repurchase agreement executed in February. After repurchasing $6.0

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billion of our common stock in first-quarter 2015, we have already met our 2015 share repurchase target and do not currently expect to repurchase additional shares this year.”
“As a result of unfavorable changes in foreign exchange rates in relation to the U.S. dollar since mid-January 2015, primarily the weakening of the euro, we lowered our 2015 financial guidance for reported revenues(1) by $500 million, which resulted in a $0.05 negative impact to our guidance ranges for reported diluted EPS(1) and adjusted diluted EPS(2). Importantly, our update to these guidance components is solely due to recent negative changes in foreign exchange rates and does not reflect any unfavorable changes to our operational outlook for the year,” Mr. D'Amelio concluded.
QUARTERLY FINANCIAL HIGHLIGHTS (First-Quarter 2015 vs. First-Quarter 2014)
Reported revenues(1) decreased $489 million, or 4%, which reflects operational growth of $250 million, or 2%, more than offset by the unfavorable impact of foreign exchange of $739 million, or 7%. Operational growth in developed markets was driven by the performance of certain key products, including Prevnar 13 and Eliquis, as well as Lyrica, Nexium 24HR, Xeljanz and Viagra primarily in the U.S., and the launch of Ibrance (palbociclib) in the U.S. in February 2015. Additionally, revenues in emerging markets increased 12% operationally, reflecting continued strong operational growth from Prevenar 13, Lipitor, Viagra and Norvasc. Operational growth was partially offset primarily by the loss of exclusivity and immediate multi-source generic competition for Celebrex in the U.S. in December 2014 as well as by other product losses of exclusivity in certain markets and the termination of the Spiriva co-promotion collaboration in certain countries.
Established Products Business Highlights
GEP(3) revenues decreased 10% operationally, primarily due to the loss of exclusivity and immediate launch of multi-source generic competition for Celebrex in the U.S. in December 2014 as well as generic competition for Zyvox IV in the U.S. beginning in January 2015 and for Lyrica in certain developed Europe markets beginning in first-quarter 2015. Revenues for Lipitor in developed markets declined as a result of continued generic competition. Additionally, the co-promotion collaboration for Spiriva has terminated in most countries, including in the U.S. in April 2014. These declines were partially offset by strong performance in emerging markets, where revenues increased 10% operationally, primarily driven by Lipitor, Viagra and Norvasc.
Innovative Products Business Highlights
Revenues for the Innovative Products business increased 16% operationally, reflecting the following:
GIP(3) revenues increased 7% operationally, primarily due to strong operational growth from Lyrica, primarily in the U.S. and Japan, as well as the performance of recently launched products, including

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Eliquis globally and Xeljanz, primarily in the U.S. Operational growth was partially offset by generic competition for Rapamune in the U.S., which began in October 2014.
VOC(3) revenues increased 29% operationally, reflecting the following:
Global Vaccines(3) revenues grew 51% operationally. Prevnar 13 revenue in the U.S. increased 80%, primarily driven by continued strong uptake among adults following the positive recommendation from the U.S. Centers for Disease Control and Prevention’s (CDC) Advisory Committee on Immunization Practices (ACIP) for use in adults aged 65 and over in third-quarter 2014 as well as the timing of government purchases for the pediatric indication compared to the year-ago quarter. International revenues increased 21% operationally, driven by Prevenar 13, which grew 15% operationally, primarily reflecting the favorable impact of Prevenar's inclusion in additional national immunization programs in certain emerging markets compared with the year-ago quarter, as well as the inclusion in first-quarter 2015 of revenues associated with the acquisition of Baxter International Inc.’s portfolio of marketed vaccines in Europe.
Consumer Healthcare(3) revenues increased 12% operationally, primarily due to the launch of Nexium 24HR in the U.S. in late-May 2014, as well as growth in the base business in certain emerging markets.
Global Oncology(3) revenues increased 17% operationally, primarily driven by the recent launch of Ibrance in the U.S. ($38 million) for advanced breast cancer as well as continued strong underlying demand for Xalkori and Inlyta globally.
Income Statement Highlights
Adjusted cost of sales, adjusted SI&A expenses and adjusted R&D expenses(2) in the aggregate increased $605 million operationally, or 9%, reflecting the following operational factors:
higher adjusted cost of sales(2), primarily reflecting an unfavorable change in product mix and an increase in sales volume;
higher adjusted SI&A expense(2), primarily as a result of increased investments to support several recent product launches and other in-line products as well as a higher cost for the Branded Prescription Drug Fee compared to the prior-year quarter, partially offset by continued benefits from cost-reduction and productivity initiatives; and
higher adjusted R&D expense(2), primarily due to the $295 million upfront payment to OPKO in first-quarter 2015 associated with a worldwide development and commercialization agreement.

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The effective tax rate on adjusted income(2) declined 0.6 percentage points to 24.4% from 25.0%. This decline was primarily due to a favorable change in the jurisdictional mix of earnings partially offset by a decrease in the favorable impact of the resolution of certain tax positions pertaining to prior years, primarily with various foreign tax authorities.
The diluted weighted-average shares outstanding declined by 184 million shares compared to the prior-year quarter due to the company’s ongoing share repurchase program, including the partial-quarter impact of the $5 billion accelerated share repurchase agreement executed in February 2015.
In addition to the aforementioned factors, first-quarter 2015 reported earnings were primarily impacted by the following:
Favorable impacts:
lower legal charges, asset impairment charges and purchase accounting adjustments in first-quarter 2015 compared to the prior-year quarter.
Unfavorable impacts:
higher charges incurred in first-quarter 2015 for business and legal entity alignment activities; and
a higher effective tax rate, primarily due to a decline in tax benefits associated with the resolution of certain tax positions pertaining to prior years, primarily with various foreign tax authorities, partially offset by the favorable change in the jurisdictional mix of earnings.
RECENT NOTABLE DEVELOPMENTS
Product Developments
Ibrance (palbociclib)
In February 2015, Pfizer announced that the U.S. Food and Drug Administration (FDA) granted accelerated approval of Ibrance, in combination with letrozole, for the treatment of postmenopausal women with estrogen receptor-positive, human epidermal growth factor receptor 2-negative (ER+/HER2-) advanced breast cancer as initial endocrine-based therapy for their metastatic disease. This indication is approved under accelerated approval based on PFS. Continued approval for this indication may be contingent upon verification and description of clinical benefit in a confirmatory trial.
Pfizer announced in April 2015 that the Phase 3 PALOMA-3 trial for Ibrance met its primary endpoint of demonstrating an improvement in PFS for the combination of Ibrance plus fulvestrant

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compared with fulvestrant plus placebo in women with hormone receptor-positive/HER2- metastatic breast cancer following disease progression during or after endocrine therapy. The adverse events observed with Ibrance in combination with fulvestrant in PALOMA-3 were generally consistent with their respective known adverse event profiles. Detailed efficacy and safety results from PALOMA-3 will be presented at the American Society of Clinical Oncology 2015 Annual Meeting.
Prevenar 13 -- Pfizer announced in March 2015 that the European Commission approved an expanded indication for the use of Prevenar 13 for the prevention of pneumonia caused by the 13 pneumococcal serotypes in the vaccine in adults aged 18 years and older. The Summary of Product Characteristics has also been updated to include efficacy data from Pfizer’s landmark Community-Acquired Pneumonia Immunization Trial in Adults (CAPiTA), which demonstrated statistically significant reductions in first episodes of vaccine-type pneumococcal community-acquired pneumonia (CAP), including non-invasive/non-bacteremic CAP, and invasive pneumococcal disease in adults aged 65 and older.
Trumenba
Pfizer announced in February 2015 that the CDC's ACIP voted to recommend serogroup B meningococcal vaccination to help protect individuals at increased risk. Specifically, the ACIP voted to recommend serogroup B meningococcal vaccination for persons aged 10 years and older at increased risk for meningococcal disease.
Pfizer announced in February 2015 positive top-line results of a Phase 2 study of Trumenba co-administered with FDA-approved, routine meningococcal (groups A, C, Y and W) (MCV4) and single-dose tetanus, diphtheria and pertussis (Tdap) vaccines in more than 2,600 healthy individuals 10 through 12 years of age. The study met its co-primary immunogenicity objectives regarding co-administration of Trumenba with MCV4 and Tdap vaccines. In addition, data from a recently completed Phase 3 study demonstrated the safety and tolerability of Trumenba in approximately 5,600 healthy individuals 10 through 25 years of age, and were consistent with data from studies that supported the October 2014 accelerated approval in the U.S. These data have been shared with the FDA. Pfizer plans to present the full results of both studies at upcoming medical meetings in 2015.
Xeljanz
Pfizer announced in February 2015 that the FDA accepted for review a supplemental New Drug Application (sNDA) for Xeljanz 5 mg and 10 mg tablets for the treatment of adult patients with moderate to severe chronic plaque psoriasis who are candidates for systemic therapy or phototherapy. The FDA has provided an anticipated Prescription Drug User Fee Act (PDUFA) action date in October 2015 for the sNDA.

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Pfizer presented in March 2015 detailed pooled results from two pivotal Phase 3 studies from the Oral treatment Psoriasis Trials (OPT) program as well as an integrated safety analysis at the 73rd American Academy of Dermatology (AAD) Annual Meeting. The detailed, pooled analysis of 16 week data from the OPT Pivotal #1 and OPT Pivotal #2 studies showed that tofacitinib 10 mg and 5 mg tablets twice daily met the co-primary efficacy endpoints of superiority over placebo at 16 weeks in the proportion of patients achieving a Physician’s Global Assessment response of “clear” or “almost clear,” and the proportion of patients achieving at least a 75% reduction in Psoriasis Area and Severity Index (PASI75), two commonly used measures of efficacy in psoriasis.
Xalkori -- Pfizer announced in April 2015 that Xalkori (crizotinib) received Breakthrough Therapy designation by the FDA for the potential treatment of patients with ROS1-positive non-small cell lung cancer (NSCLC). Occurring in approximately one percent of NSCLC cases, ROS1-positive NSCLC represents a particular molecular subgroup of NSCLC. Xalkori currently is approved in the U.S. for the treatment of patients with metastatic NSCLC whose tumors are anaplastic lymphoma kinase (ALK)-positive as detected by a FDA-approved test. Pfizer will work closely with the FDA on the development of Xalkori for ROS1-positive NSCLC and provide the information needed to support a potential regulatory submission.
Rapamune -- Pfizer announced in February 2015 that the FDA accepted for priority review a sNDA for Rapamune for the treatment of lymphangioleiomyomatosis (LAM), a rare, progressive lung disease in women of childbearing age that is often fatal. This sNDA has a PDUFA action date in June 2015.
Pipeline Developments
A comprehensive update of Pfizer's development pipeline was published today and is now available at www.pfizer.com/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 candidates from Phase 2 through registration.
Avelumab (MSB0010718C) -- Merck KGaA and Pfizer announced in April 2015 the initiation and first patient treated in a Phase 3 study designed to assess the efficacy and safety of the investigational cancer immunotherapy avelumab, compared with docetaxel, in patients with stage IIIb/IV NSCLC who have experienced disease progression after receiving a prior platinum-containing doublet therapy. The Phase 3 study is an open-label, multicenter, 1:1 randomized clinical trial where patients with stage IIIb/IV NSCLC will receive either avelumab or docetaxel, regardless of PD-L1 status. Approximately 650 patients will participate across 290 sites in more than 30 countries in North America, South America, Asia, Africa and Europe. The primary endpoint of the study is overall survival (OS) in patients with programmed death-ligand 1 positive (PD-L1+) stage IIIb/IV NSCLC who have experienced disease progression after receiving a prior platinum-containing doublet therapy. Secondary endpoints will be assessed across the

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entire study population regardless of PD-L1 status and include OS; overall response rate; PFS; and patient-reported outcomes. The study is part of the JAVELIN clinical trial program for avelumab.
ALO-02 (oxycodone hydrochloride and naltrexone hydrochloride) -- In February 2015, Pfizer announced that the FDA accepted for review the New Drug Application (NDA) for ALO-02, extended-release capsules, an abuse-deterrent formulation opioid for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. ALO-02 is an extended-release oxycodone specifically designed to reduce abuse via the oral, intranasal (i.e., snorting) and intravenous (IV) routes when crushed. The FDA has assigned a PDUFA action date in October 2015.
Tanezumab -- Pfizer and Eli Lilly and Company (Lilly) announced in March 2015 that the companies are preparing to resume the Phase 3 clinical program for tanezumab. As a result, Pfizer received a $200 million upfront payment from Lilly in accordance with the collaboration agreement between Pfizer and Lilly. This announcement followed a decision by the FDA to lift the partial clinical hold on the tanezumab development program after a review of nonclinical data characterizing the sympathetic nervous system response to tanezumab. A partial clinical hold had been in place for tanezumab since December 2012 due to adverse changes in the sympathetic nervous system of mature animals.
Inotuzumab Ozogamicin -- Pfizer announced in April 2015 that the Phase 3 INO-VATE ALL study investigating the treatment of inotuzumab ozogamicin met the primary endpoint of complete response or complete response with incomplete blood count recovery (CR/CRi) demonstrating a higher complete hematologic remission rate in adult patients with relapsed or refractory CD22-positive acute lymphoblastic leukemia compared to that achieved with standard of care chemotherapy. Pfizer is discussing these data with the FDA and other regulatory agencies. Pfizer is continuing the study to allow for the data on OS, a separate primary endpoint, to mature.
PF-06439535 (biosimilar bevacizumab) -- In April 2015, Pfizer began recruiting patients in a multinational Phase 3 clinical trial of PF-06439535, a potential biosimilar to Avastin (bevacizumab). The Phase 3 clinical trial will evaluate the efficacy and safety of PF-06439535 plus paclitaxel and carboplatin against Avastin sourced from the EU plus paclitaxel and carboplatin by comparing the best confirmed objective response rate by week 19 in first-line treatment for patients with advanced (unresectable, locally advanced, recurrent or metastatic) non-squamous NSCLC.
Corporate Developments
Pfizer announced in February 2015 that it has entered into a definitive merger agreement with Hospira under which Pfizer agreed to acquire Hospira, the world’s leading provider of injectable drugs and infusion technologies and a global leader in biosimilars, for $90 per share in cash, for a total enterprise value of

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approximately $17 billion. Pfizer expects to finance the transaction through a combination of existing cash and new debt, with approximately two-thirds of the value financed from cash and one-third from debt. The transaction is subject to customary closing conditions, including regulatory approvals in several jurisdictions and the approval of Hospira's shareholders, and is expected to close in the second half of 2015.
In February 2015, Pfizer announced that it has entered into an accelerated share repurchase agreement with Goldman, Sachs & Co. to repurchase $5 billion of Pfizer’s common stock. Pursuant to the terms of the agreement, approximately 150 million shares of Pfizer common stock were received by Pfizer on February 11, 2015. Including shares repurchased under this program as well as other share repurchases to date in 2015, the current remaining share repurchase authorization is approximately $5.5 billion. Pfizer does not currently expect to repurchase additional shares this year.
Pfizer and OPKO disclosed the closing of their worldwide agreement for the development and commercialization of hGH-CTP, a long-acting human growth hormone. The transaction closed on January 28, 2015, upon termination of the waiting period under the Hart-Scott Rodino Act.

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For additional details, see the attached financial schedules, product revenue tables and disclosure notice.
(1)
Reported revenues is defined as revenues in accordance with U.S. generally accepted accounting principles (GAAP). Reported net income is defined as net income attributable to Pfizer Inc. in accordance with U.S. GAAP. Reported diluted earnings per share (EPS) is defined as reported diluted EPS attributable to Pfizer Inc. common shareholders in accordance with U.S. GAAP.
(2)
Adjusted income and its components and Adjusted diluted EPS are defined as reported U.S. GAAP net income(1) and its components and reported diluted EPS(1) excluding purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items. Adjusted revenues, Adjusted cost of sales, Adjusted selling, informational and administrative (SI&A) expenses, Adjusted research and development (R&D) expenses and Adjusted other (income)/deductions are income statement line items prepared on the same basis as, and therefore components of, the overall Adjusted income measure. As described under Adjusted income in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of Pfizer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, management uses Adjusted income, among other factors, to set performance goals and to measure the performance of the overall company. We believe that investors’ understanding of our performance is enhanced by disclosing this measure. See the accompanying reconciliations of certain GAAP Reported to non-GAAP Adjusted information for first-quarter 2015 and 2014, as well as reconciliations of full-year 2015 guidance for Adjusted income and Adjusted diluted EPS to full-year 2015 guidance for Reported net income(1) and Reported diluted EPS(1). The Adjusted income and its components and Adjusted diluted EPS measures are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS.
(3)
For a description of the revenues in each business, see the “Our Strategy––Commercial Operations” sub-section in the Overview of Our Performance, Operating Environment, Strategy and Outlook section of Pfizer's 2014 Financial Report, which was filed as Exhibit 13 to Pfizer's Annual Report on Form 10-K for the fiscal year ended December 31, 2014.
(4)
Other includes revenues generated from Pfizer CentreSource, our contract manufacturing and bulk pharmaceutical chemical sales organization, and revenues related to our transitional manufacturing and supply agreements with Zoetis.

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(5)
The 2015 financial guidance reflects the following:
Does not assume the completion of any business development transactions not completed as of March 29, 2015, including any one-time upfront payments associated with such transactions. 2015 financial guidance does not reflect any impact from the proposed acquisition of Hospira. The transaction is expected to close during the second half of 2015.
Excludes the potential effects of the resolution of litigation-related matters not substantially resolved as of March 29, 2015.
Exchange rates assumed are a blend of the actual exchange rates in effect during first-quarter 2015 and the mid-April 2015 exchange rates for the remainder of the year. Excludes the impact of a potential devaluation of the Venezuelan bolivar.
Guidance for reported revenues(1) reflects the anticipated negative impact of $3.5 billion due to recent and expected generic competition for certain products that have recently lost or are anticipated to soon lose patent protection, partially offset by anticipated revenue growth from certain other products.
Guidance for reported revenues(1) also reflects the anticipated negative impact of $3.3 billion as a result of unfavorable changes in essentially all foreign exchange rates relative to the U.S. dollar compared to foreign exchange rates from 2014, which results in an anticipated $0.22 negative impact to 2015 reported(1) and adjusted diluted EPS(2).
Guidance for the effective tax rate on adjusted income(2) does not assume the renewal of the U.S. R&D tax credit. The renewal of the R&D tax credit is not anticipated to have a material impact on the effective tax rate on adjusted income(2).
Guidance for reported(1) and adjusted diluted EPS(2) assumes diluted weighted-average shares outstanding of approximately 6.25 billion shares, inclusive of share repurchases totaling $6 billion in 2015 composed of $1 billion of shares repurchased through January 30, 2015 and a $5 billion accelerated share repurchase agreement executed on February 9, 2015, partially offset by actual and projected dilution related to employee compensation programs.

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Reconciliation of the 2015 Adjusted income(2) and Adjusted diluted EPS(2) guidance to the 2015 Reported net income attributable to Pfizer Inc. and Reported diluted EPS attributable to Pfizer Inc. common shareholders guidance:
 
 
 
($ in billions, except per share amounts)
 
 
Income/(Expense)
Net Income
Diluted EPS
Adjusted income/diluted EPS(2) guidance
$12.2 - $12.8
$1.95 - $2.05
Purchase accounting impacts of transactions completed as of March 29, 2015
(2.5)
(0.41)
Restructuring and implementation costs
(0.8) - (1.1)
(0.13) - (0.18)
Business and legal entity alignment costs
(0.3)
(0.04)
Reported net income attributable to Pfizer Inc./diluted EPS(1) guidance
$8.3 - $9.2
$1.32 - $1.47
 
 
 
Contacts:
Media
 
Investors
 
 
Joan Campion
212.733.2798
Chuck Triano
212.733.3901
 
 
 
Ryan Crowe
212.733.8160
 
 
 
Bryan Dunn
212.733.8917


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PFIZER INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME(1) 
(UNAUDITED)
(millions, except per common share data)


 
 
First-Quarter
 
% Incr. /
 
 
2015
 
2014
 
(Decr.)
Revenues
 
$
10,864

 
$
11,353

 
(4)
Costs and expenses:
 
 
 
 
 
 
Cost of sales(2)
 
1,838

 
2,045

 
(10)
Selling, informational and administrative expenses(2)
 
3,104

 
3,040

 
2
Research and development expenses(2), (3)
 
1,885

 
1,623

 
16
Amortization of intangible assets(4)
 
940

 
1,117

 
(16)
Restructuring charges and certain acquisition-related costs
 
60

 
58

 
3
Other (income)/deductions––net(5)
 
(46
)
 
623

 
*
 
 
 
 
 
 
 
Income from continuing operations before provision for taxes on income
 
3,082

 
2,847

 
8
Provision for taxes on income(6)
 
706

 
582

 
21
Income from continuing operations
 
2,376

 
2,265

 
5
Discontinued operations––net of tax
 
5

 
73

 
(93)
Net income before allocation to noncontrolling interests
 
2,381

 
2,338

 
2
Less: Net income attributable to noncontrolling interests
 
6

 
9

 
(38)
Net income attributable to Pfizer Inc.
 
$
2,376

 
$
2,329

 
2
 
 
 
 
 
 
 
Earnings per common share––basic:
 
 
 
 
 

Income from continuing operations attributable to Pfizer Inc. common shareholders
 
$
0.38

 
$
0.35

 
9
Discontinued operations––net of tax
 

 
0.01

 
(100)
Net income attributable to Pfizer Inc. common shareholders
 
$
0.38

 
$
0.36

 
6
 
 
 
 
 
 
 
Earnings per common share––diluted:
 
 
 
 
 
 
Income from continuing operations attributable to Pfizer Inc. common shareholders
 
$
0.38

 
$
0.35

 
9
Discontinued operations––net of tax
 

 
0.01

 
(100)
Net income attributable to Pfizer Inc. common shareholders
 
$
0.38

 
$
0.36

 
6
Weighted-average shares used to calculate earnings per common share:
 
 
 
 
 
 
Basic
 
6,203

 
6,389

 
 
Diluted
 
6,292

 
6,476

 
 
*Calculation not meaningful.
See end of tables for notes (1) through (6).
Amounts may not add due to rounding. All percentages have been calculated using unrounded amounts.


- 14 -


PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

(1)
The financial statements present the three months ended March 29, 2015 and March 30, 2014. Subsidiaries operating outside the U.S. are included for the three months ended February 22, 2015 and February 23, 2014.
The financial results for the three months ended March 29, 2015 are not necessarily indicative of the results that could be ultimately achieved for full year.
Certain amounts in the consolidated statements of income and associated notes may not add due to rounding. All percentages have been calculated using unrounded amounts.
(2)
Exclusive of amortization of intangible assets, except as discussed in footnote (4) below.
(3)
The increase in Research and development expenses is primarily due to the $295 million upfront payment to OPKO in first-quarter 2015 associated with a worldwide development and commercialization agreement.
(4)
Amortization expense related to finite-lived acquired intangible assets that contribute to our ability to sell, manufacture, research, market and distribute products, compounds and intellectual property is included in Amortization of intangible assets, as these intangible assets benefit multiple business functions. Amortization expense related to intangible assets that are associated with a single function is included in Cost of sales, Selling, informational and administrative expenses and/or Research and development expenses, as appropriate. Amortization of intangible assets decreased 16% compared to first-quarter 2014 primarily due to assets that became fully amortized at the end of their estimated useful lives.
(5)
Other (income)/deductions––net includes the following:
 
 
First-Quarter
(millions of dollars)
 
2015
 
2014
Interest income
 
$
(93
)
 
$
(92
)
Interest expense(a)
 
309

 
321

Net interest expense
 
216

 
229

Royalty-related income(b)
 
(222
)
 
(248
)
Certain legal matters, net(c)
 

 
694

Net gains on asset disposals(d)
 
(175
)
 
(181
)
Certain asset impairments(e)
 

 
115

Business and legal entity alignment costs(f)
 
101

 
29

Other, net
 
34

 
(15
)
Other (income)/deductions––net
 
$
(46
)
 
$
623

(a)
Interest expense decreased in first-quarter 2015, primarily due to lower interest rates on new fixed rate debt added in second-quarter 2014 and the benefit of the effective conversion of some fixed-rate liabilities to floating-rate liabilities.
(b)
Royalty-related income decreased in first-quarter 2015, primarily due to a decrease in royalties earned on Amgen Inc.'s sales of Enbrel in the U.S. and Canada due to a decrease in the royalty rate per the terms of the collaboration agreement.
(c)
In first-quarter 2014, primarily includes approximately $620 million for Neurontin-related matters (including off-label promotion actions and antitrust actions) and approximately $50 million for an Effexor-related matter.
(d)
In first-quarter 2015, primarily includes gains on sales/out-licensing of product and compound rights (approximately $45 million) and gains on sales of investments in equity securities (approximately $120 million). In first-quarter 2014, primarily includes gains on sales/out-licensing of product and compound rights (approximately $70 million) and gains on sales of investments in equity securities (approximately $95 million).
(e)
In first-quarter 2014, virtually all relates to an in-process research and development (IPR&D) compound for the treatment of skin fibrosis.
(f)
In first-quarter 2015 and 2014, represents expenses for planning and implementing changes to our infrastructure to align our operations and reporting for our business segments established in 2014.

- 15 -


PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

(6)
The increase in the effective tax rate for first-quarter 2015 compared to first-quarter 2014 is primarily due to a decline in favorable benefits associated with the resolution of certain tax positions pertaining to prior years, primarily with various foreign tax authorities, and the expiration of certain statutes of limitations, partially offset by the favorable change in the jurisdictional mix of earnings as a result of operating fluctuations in the normal course of business.


- 16 -

PFIZER INC. AND SUBSIDIARY COMPANIES
RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION(1) 
CERTAIN LINE ITEMS
(UNAUDITED)
(millions of dollars, except per common share data)

 
First-Quarter 2015
 
GAAP Reported(2)
 
Purchase Accounting Adjustments
 
Acquisition-Related Costs(3)
 
Discontinued Operations
 
Certain Significant Items(4)
 
Non-GAAP Adjusted(5)
Revenues
$
10,864

 
$

 
$

 
$

 
$

 
$
10,864

Cost of sales(6)
1,838

 
(1
)
 
(9
)
 

 
(21
)
 
1,807

Selling, informational and administrative expenses(6)
3,104

 
1

 

 

 
(28
)
 
3,078

Research and development expenses(6)
1,885

 
1

 

 

 
(10
)
 
1,877

Amortization of intangible assets(7)
940

 
(906
)
 

 

 

 
34

Restructuring charges and certain acquisition-related costs
60

 

 
(14
)
 

 
(46
)
 

Other (income)/deductions––net
(46
)
 
2

 

 

 
(123
)
 
(167
)
Income from continuing operations before provision for taxes on income
3,082

 
903

 
23

 

 
228

 
4,235

Provision for taxes on income
706

 
261

 
6

 

 
61

 
1,033

Income from continuing operations
2,376

 
641

 
17

 

 
167

 
3,201

Discontinued operations––net of tax
5

 

 

 
(5
)
 

 

Net income attributable to noncontrolling interests
6

 

 

 

 

 
6

Net income attributable to Pfizer Inc.
2,376

 
641

 
17

 
(5
)
 
167

 
3,196

Earnings per common share attributable to Pfizer Inc.––diluted
0.38

 
0.10

 

 

 
0.03

 
0.51

 
 
 
 
 
 
 
 
 
 
 
 
 
First-Quarter 2014
 
GAAP Reported(2)
 
Purchase Accounting Adjustments
 
Acquisition-Related Costs(3)
 
Discontinued Operations
 
Certain Significant Items(4)
 
Non-GAAP Adjusted(5)
Revenues
$
11,353

 
$

 
$

 
$

 
$
(57
)
 
$
11,296

Cost of sales(6)
2,045

 
69

 
(6
)
 

 
(122
)
 
1,986

Selling, informational and administrative expenses(6)
3,040

 

 

 

 
(20
)
 
3,020

Research and development expenses(6)
1,623

 

 

 

 
(11
)
 
1,612

Amortization of intangible assets(7)
1,117

 
(1,076
)
 

 

 

 
41

Restructuring charges and certain acquisition-related costs
58

 

 
(24
)
 

 
(34
)
 

Other (income)/deductions––net
623

 
(1
)
 

 

 
(886
)
 
(264
)
Income from continuing operations before provision for taxes on income
2,847

 
1,008

 
30

 

 
1,016

 
4,901

Provision for taxes on income
582

 
288

 
9

 

 
348

 
1,227

Income from continuing operations
2,265

 
720

 
21

 

 
668

 
3,674

Discontinued operations––net of tax
73

 

 

 
(73
)
 

 

Net income attributable to noncontrolling interests
9

 

 

 

 

 
9

Net income attributable to Pfizer Inc.
2,329

 
720

 
21

 
(73
)
 
668

 
3,665

Earnings per common share attributable to Pfizer Inc.––diluted
0.36

 
0.11

 

 
0.01

 
0.10

 
0.57

See end of tables for notes (1) through (7).
Amounts may not add due to rounding.
 
 
 
 
 
 
 
 
 
 
 
 

- 17 -


PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS
(UNAUDITED)

(1)
Certain amounts in the reconciliation of GAAP reported to Non-GAAP adjusted information and associated notes may not add due to rounding.
(2)
The financial statements present the three months ended March 29, 2015 and March 30, 2014. Subsidiaries operating outside the U.S. are included for the three months ended February 22, 2015 and February 23, 2014.
(3)
Acquisition-related costs include the following:
 
 
First-Quarter
(millions of dollars)
 
2015
 
2014
Restructuring charges(a)
 
$
(4
)
 
$
6

Transaction costs(a)
 
5

 

Integration costs(a)
 
13

 
18

Additional depreciation––asset restructuring(b)
 
9

 
6

Total acquisition-related costs––pre-tax
 
23

 
30

Income taxes(c)
 
(6
)
 
(9
)
Total acquisition-related costs––net of tax
 
$
17

 
$
21

(a)
Restructuring charges include employee termination costs, asset impairments and other exit costs associated with business combinations. Transaction costs represent external costs directly related to acquired businesses and primarily include expenditures for banking, legal, accounting and other similar services. Integration costs represent external, incremental costs directly related to integrating acquired businesses, and primarily include expenditures for consulting and the integration of systems and processes. All of these costs and charges are included in Restructuring charges and certain acquisition-related costs.
(b)
Represents the impact of changes in the estimated useful lives of assets involved in restructuring actions related to acquisitions. Included in Cost of sales for both first-quarter 2015 and first-quarter 2014.
(c)
Included in Provision for taxes on income. Income taxes includes the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction’s applicable tax rate.
(4)
Certain significant items include the following:
 
 
First-Quarter
(millions of dollars)
 
2015
 
2014
Restructuring charges(a)
 
$
46

 
$
34

Implementation costs and additional depreciation––asset restructuring(b)
 
58

 
100

Certain legal matters, net(c)
 

 
694

Certain asset impairments(d)
 

 
114

Business and legal entity alignment costs(e)
 
101

 
29

Income associated with the transitional manufacturing and supply agreements with Zoetis(f)
 

 
(8
)
Other(g)
 
23

 
53

Total certain significant items––pre-tax
 
228

 
1,016

Income taxes(h)
 
(61
)
 
(348
)
Total certain significant items––net of tax
 
$
167

 
$
668

(a)
Relates to our cost-reduction and productivity initiatives. Included in Restructuring charges and certain acquisition-related costs.
(b)
Relates to our cost-reduction and productivity initiatives. Included in Cost of sales ($22 million), Selling, informational and administrative expenses ($26 million) and Research and development expenses ($10 million) for first-quarter 2015. Included in Cost of sales ($74 million), Selling, informational and administrative expenses ($15 million) and Research and development expenses ($11 million) for first-quarter 2014.


- 18 -


PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS
(UNAUDITED)

(c)
Included in Other (income)/deductions––net. In first-quarter 2014, primarily includes approximately $620 million for Neurontin-related matters (including off-label promotion actions and antitrust actions) and approximately $50 million for an Effexor-related matter.
(d)
Included in Other (income)/deductions––net. In first-quarter 2014, virtually all relates to an in-process research and development (IPR&D) compound for the treatment of skin fibrosis.
(e)
Included in Other (income)/deductions––net. In first-quarter 2015 and 2014, represents expenses for planning and implementing changes to align our operations and reporting for our business segments established in 2014.
(f)
Primarily included in Revenues ($57 million) and in Cost of sales ($50 million) for first-quarter 2014.
(g)
Virtually all included in Other (income)/deductions––net for first-quarter 2015 and 2014.
(h)
Included in Provision for taxes on income. Income taxes includes the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction’s applicable tax rate.
(5)
Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS. Despite the importance of these measures to management in goal setting and performance measurement, Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS are Non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS (unlike U.S. GAAP net income and its components and diluted EPS) may not be comparable to the calculation of similar measures of other companies. Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS are presented solely to permit investors to more fully understand how management assesses performance.
(6)
Exclusive of amortization of intangible assets, except as discussed in footnote (7) below.
(7)
Amortization expense related to finite-lived acquired intangible assets that contribute to our ability to sell, manufacture, research, market and distribute products, compounds and intellectual property is included in Amortization of intangible assets as these intangible assets benefit multiple business functions. Amortization expense related to intangible assets that are associated with a single function is included in Cost of sales, Selling, informational and administrative expenses and/or Research and development expenses, as appropriate.

- 19 -

PFIZER INC. AND SUBSIDIARY COMPANIES
OPERATING SEGMENT INFORMATION(1) 
(UNAUDITED)
(millions of dollars)

 
 
First-Quarter 2015
 
 
GIP(2)
 
VOC(2)
 
Total Innovative Products(3)
 
Established Products (GEP)(2)
 
Other(4)
 
Non-GAAP Adjusted(5)
 
Reconciling Items(6)
 
GAAP Reported
Revenues
 
$
3,075

 
$
2,664

 
5,738

 
$
5,014

 
$
111

 
$
10,864

 
$

 
$
10,864

Cost of sales
 
342

 
424

 
766

 
917

 
124

 
1,807

 
31

 
1,838

Selling, informational and administrative expenses
 
808

 
595

 
1,403

 
704

 
971

 
3,078

 
27

 
3,104

Research and development expenses
 
623

 
193

 
816

 
134

 
927

 
1,877

 
8

 
1,885

Amortization of intangible assets
 
11

 
12

 
24

 
10

 

 
34

 
906

 
940

Restructuring charges and certain acquisition-related costs
 

 

 

 

 

 

 
60

 
60

Other (income)/deductions––net
 
(220
)
 
(25
)
 
(245
)
 
(7
)
 
85

 
(167
)
 
121

 
(46
)
Income from continuing operations before provision for taxes on income
 
1,511

 
1,464

 
2,975

 
3,256

 
(1,997
)
 
4,235

 
(1,153
)
 
3,082

 
 
First-Quarter 2014
 
 
GIP(2)
 
VOC(2)
 
Total Innovative Products(3)
 
Established Products (GEP)(2)
 
Other(4)
 
Non-GAAP Adjusted(5)
 
Reconciling Items(6)
 
GAAP Reported
Revenues
 
$
3,076

 
$
2,174

 
5,250

 
$
5,990

 
$
56

 
$
11,296

 
$
57

 
$
11,353

Cost of sales
 
415

 
409

 
824

 
1,025

 
137

 
1,986

 
59

 
2,045

Selling, informational and administrative expenses
 
765

 
531

 
1,296

 
837

 
887

 
3,020

 
20

 
3,040

Research and development expenses
 
394

 
184

 
578

 
138

 
896

 
1,612

 
11

 
1,623

Amortization of intangible assets
 
11

 
4

 
15

 
25

 
1

 
41

 
1,076

 
1,117

Restructuring charges and certain acquisition-related costs
 

 

 

 

 

 

 
58

 
58

Other (income)/deductions––net
 
(276
)
 
(11
)
 
(287
)
 
(84
)
 
107

 
(264
)
 
887

 
623

Income from continuing operations before provision for taxes on income
 
1,767

 
1,057

 
2,824

 
4,049

 
(1,972
)
 
4,901

 
(2,054
)
 
2,847

See end of tables for notes (1) through (6).
Amounts may not add due to rounding.

- 20 -

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO OPERATING SEGMENT INFORMATION
(UNAUDITED)


(1)
Certain amounts in the operating segment information and associated notes may not add due to rounding.
(2)
Amounts represent the revenues and costs managed by each of our operating segments: the Global Innovative Pharmaceutical segment (GIP); the Global Vaccines, Oncology and Consumer Healthcare segment (VOC); and the Global Established Pharmaceutical segment (GEP). The expenses generally include only those costs directly attributable to the operating segment. For a description of each operating segment, see the "Our Strategy––Commercial Operations" sub-section in the Overview of Our Performance, Operating Environment, Strategy and Outlook section of Pfizer's 2014 Financial Report, which was filed as Exhibit 13 to Pfizer's Annual Report on Form 10-K for the fiscal year ended December 31, 2014.
First-quarter 2015 reflects the following, as compared to first-quarter 2014:
GIP––The decrease in Cost of sales as a percentage of Revenues is primarily driven by favorable foreign exchange and an increase in alliance revenue which has no associated cost of sales. The decrease in Cost of sales is primarily driven by favorable foreign exchange and, to a lesser extent, by a favorable change in product mix. The increase in Selling, informational and administrative expenses reflects additional investment in recently launched products and certain in-line products, partially offset by favorable foreign exchange. The increase in Research and development expenses primarily reflects incremental investment in collaborations, primarily the $295 million upfront payment to OPKO Health, Inc., partially offset by lower clinical trial expenses as a result of the completion of Phase 3 studies and postmarketing commitments for certain products; and the unfavorable change in Other (income)/deductions––net primarily reflects a decrease in royalty income and a decrease in our share in the income of certain equity method investments.
VOC––The decrease in Cost of sales as a percentage of Revenues is primarily driven by favorable foreign exchange and a favorable change in product mix; the increase in Cost of sales is primarily due to an increase in sales volumes and, to a lesser extent, an increase in royalty expense, largely offset by favorable foreign exchange; the increase in Selling, informational and administrative expenses is primarily driven by promotional expenses for Prevnar 13 adult indication and Nexium 24HR as well as the launch expenses for Trumenba (meningitis B vaccine) and Ibrance (palbociclib), partially offset by favorable foreign exchange; and the increase in Research and development expenses primarily reflects increased investment in Ibrance program expenses as well as costs associated with our anti-PD-LI alliance with Merck KGaA and other oncology products, partially offset by lower Prevnar 13 adult and Trumenba clinical spend.
GEP––The increase in Cost of sales as a percentage of Revenues is primarily due to the impact of losses of exclusivity resulting in an unfavorable change in product mix, partially offset by favorable foreign exchange. The decrease in Cost of sales is primarily driven by favorable foreign exchange, partially offset by the unfavorable change in product mix. The decrease in Selling, informational and administrative expenses is primarily due to lower field force, advertising and promotional expenses, reflecting the benefits of cost-reduction and productivity initiatives, and the favorable impact of foreign exchange, partially offset by a higher cost for the Branded Prescription Drug Fee compared to the prior year. Research and development expenses were largely unchanged reflecting increased investment in biosimilars development programs, offset by lower clinical trial expenses related to postmarketing commitments, primarily for Celebrex; and the unfavorable change in Other (income)/deductions––net primarily reflects the non-recurrence of prior year gains on the sale of product rights.
(3)
Total Innovative Products represents the sum of the GIP and VOC segments.
(4)
Other comprises the revenues and costs included in our Adjusted income components(5) that are managed outside of our three operating segments and includes the following:
 
 
First-Quarter 2015
 
 
Other Business Activities
 
 
 
 
(IN MILLIONS)
 
PCS(a)
 
WRD(b), (f)
 
Medical(c), (f)
 
Corporate(d), (f)
 
Other Unallocated(e), (f)
 
Total
Revenues
 
$
111

 
$

 
$

 
$

 
$

 
$
111

Cost of sales
 
86

 

 

 
22

 
15

 
124

Selling, informational and administrative expenses
 
3

 

 
26

 
936

 
6

 
971

Research and development expenses
 
1

 
688

 
6

 
230

 
3

 
927

Amortization of intangible assets
 

 

 

 

 

 

Restructuring charges and certain acquisition-related costs
 

 

 

 

 

 

Other (income)/deductions––net
 

 
(29
)
 

 
98

 
17

 
85

Income from continuing operations before provision for taxes on income
 
$
21

 
$
(659
)
 
$
(32
)
 
$
(1,287
)
 
$
(41
)
 
$
(1,997
)
 
 
 
 
 
 
 
 
 
 
 
 
 

- 21 -

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO OPERATING SEGMENT INFORMATION
(UNAUDITED)


 
 
First-Quarter 2014
 
 
Other Business Activities
 
 
 
 
(IN MILLIONS)
 
PCS(a)
 
WRD(b), (f)
 
Medical(c), (f)
 
Corporate(d), (f)
 
Other Unallocated(e), (f)
 
Total
Revenues
 
$
56

 
$

 
$

 
$

 
$

 
$
56

Cost of sales
 
36

 

 

 
11

 
90

 
137

Selling, informational and administrative expenses
 
3

 

 
24

 
851

 
9

 
887

Research and development expenses
 
1

 
663

 
6

 
220

 
6

 
896

Amortization of intangible assets
 
1

 

 

 

 

 
1

Restructuring charges and certain acquisition-related costs
 

 

 

 

 

 

Other (income)/deductions––net
 

 
(11
)
 

 
118

 

 
107

Income from continuing operations before provision for taxes on income
 
$
15

 
$
(652
)
 
$
(30
)
 
$
(1,200
)
 
$
(105
)
 
$
(1,972
)
(a)
PCS––the revenues and costs of Pfizer CentreSource (PCS), our contract manufacturing and bulk pharmaceutical chemical sales operation. In first-quarter 2015, PCS revenues also include revenues related to our transitional manufacturing and supply agreements with Zoetis.
(b)
WRD––the research and development expenses managed by our Worldwide Research and Development organization (WRD), which is generally responsible for research projects until proof-of-concept is achieved and then for transitioning those projects to the appropriate operating segment for possible clinical and commercial development. This organization also has responsibility for certain science-based and other platform-services organizations, which provide technical expertise and other services to the various R&D projects. WRD is also responsible for facilitating all regulatory submissions and interactions with regulatory agencies, including all safety-event activities.
(c)
Medical––the costs associated with our Pfizer Medical organization (Medical), which is responsible for the provision of medical information to healthcare providers, patients and other parties, transparency and disclosure activities, clinical trial results publication, grants for healthcare quality improvement and medical education, partnerships with global public health and medical associations, regulatory inspection readiness reviews, internal audits of Pfizer-sponsored clinical trials and internal regulatory compliance processes.
(d)
Corporate––the costs associated with Corporate, representing platform functions (such as worldwide technology, global real estate operations, legal, finance, human resources, worldwide public affairs, compliance, and worldwide procurement) and certain compensation and other corporate costs, such as interest income and expense, and gains and losses on investments.
(e)
Other Unallocated––other unallocated costs, representing overhead expenses associated with our manufacturing and commercial operations not directly attributable to an operating segment.
(f)
See the "Analysis of Operating Segment Information" section of Pfizer's 2014 Financial Report, which was filed as Exhibit 13 to Pfizer's Annual Report on Form 10-K for the fiscal year ended December 31, 2014, for certain qualitative information about our Other costs. This information will be provided on an annual basis.
(5)
These “Adjusted Income” components are defined as the corresponding reported U.S. GAAP components, excluding purchase accounting adjustments, acquisition-related costs and certain significant items. Adjusted Revenues, Adjusted Cost of Sales, Adjusted Selling, Informational and Administrative (SI&A) expenses, Adjusted Research and Development (R&D) expenses, Adjusted Amortization of Intangible Assets and Adjusted Other (Income)/Deductions––Net are income statement line items prepared on the same basis as, and therefore components of, the overall adjusted income measure. As described in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations––Adjusted Income” section of Pfizer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, management uses adjusted income, among other factors, to set performance goals and to measure the performance of the overall company. We believe that investors’ understanding of our performance is enhanced by disclosing this measure. See the accompanying reconciliations of certain GAAP reported to non-GAAP adjusted information for first-quarter 2015 and 2014. The adjusted income component measures are not, and should not be viewed as, substitutes for the U.S. GAAP component measures.
(6)
Includes costs associated with (i) purchase accounting adjustments; (ii) acquisition-related costs; and (iii) certain significant items, which are substantive, unusual items that are evaluated on an individual basis by management. See the accompanying reconciliations of certain GAAP reported to non-GAAP adjusted information for first-quarter 2015 and 2014



- 22 -


PFIZER INC.
REVENUES
FIRST-QUARTER 2015 and 2014
(UNAUDITED)
(millions of dollars)
 
 
WORLDWIDE
UNITED STATES
TOTAL INTERNATIONAL(a)
 
 
2015
2014
% Change
2015
2014
% Change
2015
2014
% Change
 
BUSINESS(b)
Total
Oper.
Total
Total
Oper.
TOTAL REVENUES
ALL
$
10,864

$
11,353

(4%)
2%
$
4,433

$
4,275

4%
$
6,430

$
7,078

(9%)
1%
BIOPHARMACEUTICAL REVENUES:
GEP/GIP/V/O
$
9,945

$
10,479

(5%)
2%
$
3,980

$
3,887

2%
$
5,964

$
6,592

(10%)
1%
Prevnar family
V
1,306

927

41%
48%
846

471

80%
459

456

1%
15%
Lyrica(c)
GEP/GIP
1,187

1,150

3%
10%
621

514

21%
565

636

(11%)
1%
Enbrel (Outside the U.S. and Canada)
GIP
759

914

(17%)
(6%)


759

914

(17%)
(6%)
Lipitor
GEP
441

457

(4%)
2%
39

50

(21%)
402

407

(1%)
5%
Viagra(d)
GEP/GIP
396

374

6%
10%
279

241

16%
117

133

(12%)
(1%)
Zyvox
GEP
271

321

(15%)
(10%)
119

165

(28%)
152

156

(3%)
9%
Norvasc
GEP
252

278

(9%)
(3%)
9

11

(13%)
243

267

(9%)
(2%)
Sutent
O
242

268

(10%)
73

78

(6%)
169

190

(11%)
2%
Premarin family
GEP
232

248

(7%)
(6%)
215

228

(6%)
16

20

(17%)
(9%)
Celebrex
GEP
205

624

(67%)
(64%)
22

402

(95%)
183

222

(18%)
(10%)
Vfend
GEP
182

177

3%
13%
13

12

7%
169

165

3%
14%
BeneFIX
GIP
173

201

(14%)
(7%)
70

92

(24%)
104

109

(5%)
7%
Pristiq
GEP
161

172

(6%)
(4%)
118

134

(12%)
43

38

13%
25%
Chantix/Champix
GIP
158

147

7%
12%
97

86

12%
61

61

12%
Genotropin
GIP
138

166

(17%)
(8%)
32

37

(13%)
107

129

(17%)
(6%)
Refacto AF/Xyntha
GIP
120

145

(17%)
(8%)
28

30

(6%)
93

115

(20%)
(9%)
Xalkori
O
111

88

26%
34%
49

40

22%
62

48

29%
44%
Xalatan/Xalacom
GEP
102

119

(14%)
(1%)
8

6

34%
94

113

(16%)
(3%)
Medrol
GEP
101

106

(5%)
1%
45

43

4%
56

63

(10%)
Sulperazon
GEP
98

88

12%
15%


98

88

12%
15%
Xeljanz
GIP
96

52

85%
87%
89

50

78%
8

2

*
*
Inlyta
O
95

88

8%
16%
44

40

10%
52

48

7%
22%
Zoloft
GEP
86

101

(15%)
(6%)
11

13

(11%)
75

88

(15%)
(5%)
Zithromax/Zmax
GEP
86

92

(7%)
4

2

134%
82

90

(9%)
(2%)
Relpax
GEP
80

87

(8%)
(3%)
52

53

(3%)
28

34

(15%)
(3%)
EpiPen
GEP
76

63

22%
23%
68

55

24%
8

8

4%
15%
Fragmin
GEP
74

81

(9%)
3%
1


*
73

81

(10%)
2%
Tygacil
GEP
74

74

6%
29

30

44

44

(1%)
10%
Effexor
GEP
73

82

(11%)
(5%)
23

26

(15%)
51

56

(9%)
Toviaz
GIP
63

63

1%
8%
29

31

(7%)
35

32

8%
22%
Revatio
GEP
63

76

(18%)
(8%)
15

15

(2%)
48

61

(22%)
(10%)
Unasyn
GEP
55

46

19%
29%
2


*
53

46

16%
25%
Neurontin
GEP
55

49

12%
19%
13

12

11%
42

37

12%
21%
Xanax/Xanax XR
GEP
54

59

(8%)
1%
10

10

(6%)
45

49

(9%)
3%
Rapamune
GIP
53

88

(39%)
(35%)
26

54

(53%)
27

34

(16%)
(5%)
Cardura
GEP
52

66

(22%)
(13%)
1

1

(29%)
51

65

(22%)
(13%)
Ibrance
O
38


*
*
38


*


Alliance revenues(e)
GEP/GIP
222

213

4%
10%
139

167

(17%)
83

46

80%
106%
All other biopharmaceutical(f)
GIP/GEP/V/O
1,913

2,131

(10%)
(4%)
704

689

2%
1,209

1,442

(16%)
(7%)
All other GIP(f)
GIP
179

196

(9%)
(3%)
87

89

(2%)
92

107

(14%)
(3%)
All other GEP(f)
GEP
1,671

1,894

(12%)
(6%)
588

574

3%
1,082

1,320

(18%)
(9%)
All other V/O(f)
V/O
63

41

53%
67%
29

27

8%
34

14

137%
177%
OTHER REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
CONSUMER HEALTHCARE
C
$
808

$
761

6%
12%
$
403

$
345

17%
$
405

$
416

(3%)
8%
OTHER(g)

$
111

$
113

(2%)
$
50

$
43

16%
$
61

$
70

(13%)
(10%)
See end of tables for notes (a) through (g).
* Indicates calculation not meaningful.
Amounts may not add due to rounding. All percentages have been calculated using unrounded amounts.




- 23 -


PFIZER INC.
INTERNATIONAL REVENUES BY GEOGRAPHIC REGION
FIRST-QUARTER 2015 and 2014
(UNAUDITED)
(millions of dollars)
 
 
DEVELOPED EUROPE(h)
DEVELOPED REST OF WORLD(i)
EMERGING MARKETS(j)
 
 
2015
2014
% Change
2015
2014
% Change
2015
2014
% Change
 
BUSINESS(b)
Total
Oper.
Total
Oper.
Total
Oper.
TOTAL INTERNATIONAL REVENUES
ALL
$
2,312

$
2,795

(17%)
(6%)
$
1,493

$
1,728

(14%)
(3%)
$
2,626

$
2,555

3%
12%
BIOPHARMACEUTICAL REVENUES - INTERNATIONAL:
GEP/GIP/V/O
$
2,168

$
2,644

(18%)
(6%)
$
1,418

$
1,643

(14%)
(3%)
$
2,378

$
2,305

3%
12%
Prevnar family
V
134

148

(10%)
4%
103

124

(17%)
(8%)
222

184

21%
38%
Lyrica(c)
GEP/GIP
307

370

(17%)
(6%)
161

156

3%
17%
98

110

(12%)
4%
Enbrel (Outside Canada)
GIP
490

609

(20%)
(8%)
98

118

(17%)
(6%)
171

187

(9%)
2%
Lipitor
GEP
49

73

(33%)
(23%)
66

89

(25%)
(18%)
286

245

17%
22%
Viagra(k)
GEP/GIP
14

26

(45%)
(37%)
19

32

(41%)
(35%)
83

75

12%
26%
Zyvox
GEP
72

81

(11%)
3%
24

29

(17%)
(5%)
56

46

21%
30%
Norvasc
GEP
20

26

(22%)
(10%)
66

96

(31%)
(23%)
157

145

8%
13%
Sutent
O
82

105

(22%)
(10%)
28

31

(10%)
1%
60

54

10%
26%
Premarin family
GEP
2

2

(2%)
7%
6

7

(13%)
(3%)
8

11

(22%)
(16%)
Celebrex
GEP
14

34

(57%)
(51%)
83

105

(21%)
(12%)
86

83

3%
10%
Vfend
GEP
62

74

(16%)
(4%)
29

35

(18%)
(6%)
78

56

40%
50%
BeneFIX
GIP
61

66

(7%)
6%
35

33

4%
14%
8

10

(21%)
(12%)
Pristiq
GEP
4

2

86%
115%
25

23

5%
16%
15

13

16%
29%
Chantix/Champix
GIP
19

24

(18%)
(8%)
31

28

10%
22%
11

9

17%
32%
Genotropin
GIP
48

62

(23%)
(12%)
38

43

(11%)
1%
21

24

(15%)
(5%)
Refacto AF/Xyntha
GIP
75

92

(19%)
(8%)
9

14

(39%)
(33%)
9

9

7%
16%
Xalkori
O
31

21

48%
69%
14

13

6%
20%
17

14

22%
30%
Xalatan/Xalacom
GEP
22

33

(32%)
(22%)
39

48

(18%)
(7%)
33

32

3%
21%
Medrol
GEP
20

23

(13%)
7

8

(16%)
(5%)
30

32

(7%)
1%
Sulperazon
GEP


4

6

(30%)
(19%)
94

82

14%
18%
Xeljanz
GIP
2

1

101%
114%
3


*
*
3

1

*
*
Inlyta
O
25

24

4%
18%
20

20

(4%)
11%
7

4

84%
112%
Zoloft
GEP
7

14

(50%)
(42%)
38

43

(11%)
2%
30

31

(4%)
2%
Zithromax/Zmax
GEP
14

16

(14%)
(1%)
17

24

(31%)
(21%)
52

50

2%
6%
Relpax
GEP
15

18

(16%)
(3%)
9

11

(12%)
1%
4

5

(22%)
(8%)
EpiPen
GEP


8

8

4%
15%


Fragmin
GEP
42

48

(12%)
(1%)
19

18

10%
12

15

(16%)
2%
Tygacil
GEP
16

17

(5%)
9%
2

1

6%
26

26

2%
11%
Effexor
GEP
18

23

(20%)
(9%)
8

11

(25%)
(18%)
24

22

11%
17%
Toviaz
GIP
16

22

(27%)
(17%)
15

7

133%
164%
3

3

3%
14%
Revatio
GEP
32

42

(24%)
(14%)
9

12

(24%)
(13%)
7

7

(1%)
22%
Unasyn
GEP
8

9

(14%)
13

15

(14%)
(1%)
32

22

48%
54%
Neurontin
GEP
12

13

(10%)
3%
8

8

(1%)
6%
22

16

37%
45%
Xanax/Xanax XR
GEP
21

27

(22%)
(10%)