Exhibit

EX-99.1 2 pfe-07012018xex99.htm EXHIBIT 99.1 Exhibit

Exhibit 99

PFIZER REPORTS SECOND-QUARTER 2018 RESULTS


▪	Second-Quarter 2018 Revenues of $13.5 Billion, Reflecting 2% Operational Growth


▪	Second-Quarter 2018 Reported Diluted EPS⁽¹⁾ of $0.65, Adjusted Diluted EPS⁽²⁾ of $0.81


▪	Raised 2018 Financial Guidance for Adjusted Diluted EPS⁽²⁾ by $0.05 to a Range of $2.95 to $3.05


▪	Lowered Midpoint of 2018 Revenue Guidance Range by $500 Million Solely to Reflect Recent Unfavorable Changes in Foreign Exchange Rates

NEW YORK, NY, Tuesday, July 31, 2018 – Pfizer Inc. (NYSE: PFE) reported financial results for second-quarter 2018 and raised 2018 financial guidance for Adjusted diluted EPS⁽²⁾.

Results for the second quarter and first six months of 2018 and 2017⁽³⁾ are summarized below.

OVERALL RESULTS


($ in millions, except per share amounts)	Second-Quarter			Six Months
	2018	2017	Change	2018	2017	Change
Revenues	$ 13,466	$ 12,896	4%	$ 26,373	$ 25,675	3%
Reported Net Income⁽¹⁾	3,872	3,073	26%	7,432	6,194	20%
Reported Diluted EPS⁽¹⁾	0.65	0.51	28%	1.24	1.02	21%
Adjusted Income⁽²⁾	4,827	4,063	19%	9,495	8,255	15%
Adjusted Diluted EPS⁽²⁾	0.81	0.67	21%	1.58	1.36	16%

REVENUES


($ in millions)	Second-Quarter				Six Months
	2018	2017	% Change		2018	2017	% Change
	2018	2017	Total	Oper.	2018	2017	Total	Oper.
Innovative Health	$ 8,273	$ 7,671	8%	5%	$ 16,102	$ 15,086	7%	4%
Essential Health	5,193	5,226	(1%)	(4%)	10,271	10,590	(3%)	(7%)
Total Company	$ 13,466	$ 12,896	4%	2%	$ 26,373	$ 25,675	3%	—

On February 3, 2017, Pfizer completed the sale of its global infusion therapy net assets, Hospira Infusion Systems (HIS). Therefore, financial results for the first six months of 2018 do not reflect any contribution from legacy HIS operations, while the first six months of 2017 reflect approximately one month of legacy HIS domestic operations and approximately two months of legacy HIS international operations⁽³⁾.

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Some amounts in this press release may not add due to rounding. All percentages have been calculated using unrounded amounts. References to operational variances pertain to period-over-period growth rates that exclude the impact of foreign exchange⁽⁴⁾.

2018 FINANCIAL GUIDANCE⁽⁵⁾

Pfizer’s updated 2018 financial guidance is presented below.


•	Revenue guidance was updated solely to reflect recent unfavorable changes in foreign exchange rates in relation to the U.S. dollar from mid-April 2018 to mid-July 2018, primarily the weakening of the euro, Chinese yuan and Japanese yen.


•	Guidance for Adjusted R&D expenses⁽²⁾ was updated primarily to reflect higher anticipated spend in the second half of 2018 than previously projected, largely related to our late-stage development programs.


•	Guidance for Adjusted other (income)/deductions⁽²⁾ was updated primarily to reflect unrealized net gains on equity securities, one-time milestone payments from certain collaborations and out-licensing arrangements and a gain on the sale of certain compound/product rights in the first-half of 2018.

•

Guidance for the effective tax rate on Adjusted income^(2),(6) was updated primarily to reflect Pfizer’s evolving understanding of the impact of the Tax Cuts and Jobs Act (“TCJA”)⁽⁶⁾ on its business. Although these estimates continue to be subject to further analysis, interpretation and clarification of the TCJA, Pfizer’s current expectation is that this tax rate guidance will be sustainable beyond 2018.




Revenues	$53.0 to $55.0 billion
Revenues	(previously $53.5 to $55.5 billion)
Adjusted Cost of Sales⁽²⁾ as a Percentage of Revenues	20.5% to 21.5%
Adjusted SI&A Expenses⁽²⁾	$14.0 to $15.0 billion
Adjusted R&D Expenses⁽²⁾	$7.7 to $8.1 billion
Adjusted R&D Expenses⁽²⁾	(previously $7.4 to $7.9 billion)
Adjusted Other (Income)/Deductions⁽²⁾	Approximately $1.0 billion of income
Adjusted Other (Income)/Deductions⁽²⁾	(previously approximately $400 million of income)
Effective Tax Rate on Adjusted Income^(2),(6)	Approximately 16.0%
Effective Tax Rate on Adjusted Income^(2),(6)	(previously approximately 17.0%)
Adjusted Diluted EPS⁽²⁾	$2.95 to $3.05
Adjusted Diluted EPS⁽²⁾	(previously $2.90 to $3.00)

Financial guidance for Adjusted diluted EPS⁽²⁾ reflects share repurchases totaling approximately $6.1 billion already completed in 2018. Dilution related to share-based employee compensation programs is expected to offset by approximately half the reduction in shares associated with these share repurchases.

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CAPITAL ALLOCATION


▪	During the first six months of 2018, Pfizer returned $10.1 billion directly to shareholders, through a combination of:


–	$4.0 billion of dividends, composed of $0.34 per share of common stock in each of the first and second quarters of 2018; and


–	$6.1 billion of share repurchases, composed of $2.1 billion of open-market share repurchases in first-quarter 2018 and a $4.0 billion accelerated share repurchase agreement executed in March 2018.


▪	As of July 31, 2018, Pfizer’s remaining share repurchase authorization was $10.3 billion.

EXECUTIVE COMMENTARY

Ian Read, Chairman and Chief Executive Officer, stated, “We reported solid second-quarter 2018 financial results, with total company revenues up 2% operationally, driven by the continued growth of key brands such as Eliquis, Ibrance and Xeljanz, as well as biosimilars and emerging markets. The performance of these growth drivers was partially offset by product losses of exclusivity, a decline in legacy Established Products in developed markets and ongoing legacy Hospira supply shortages.

“Regarding our investment in innovation, we continue to advance our pipeline, which we believe currently has the largest and most promising array of late-stage prospects it has had in decades. We are looking ahead to several potential near-term opportunities in core therapeutic areas, and continue to see the potential for approximately 25-30 approvals through 2022, of which up to 15 have the potential to be blockbusters. We continue to believe our pipeline positions us to deliver life-changing medicines to patients while enhancing shareholder value.

“In addition, we recently announced a new organizational structure. The new structure is a natural evolution of our business as we transition to a period post-2020 where we expect a higher and more sustained revenue growth profile driven by this new structure, the ongoing success of our in-market products, our advancing pipeline and a dramatic reduction in loss of exclusivity impacts,” Mr. Read concluded.

Frank D’Amelio, Executive Vice President, Business Operations and Chief Financial Officer, stated, “I am pleased with our results over the first-half of 2018, which keep us on track to deliver a solid financial performance this year. We are raising our 2018 guidance range for Adjusted diluted EPS⁽²⁾, which at the midpoint implies 13% growth compared to last year. Additionally, in the first half of 2018, we returned $10.1 billion directly to shareholders through dividends and share repurchases, demonstrating our continued commitment to returning capital to our shareholders.”

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QUARTERLY FINANCIAL HIGHLIGHTS (Second-Quarter 2018 vs. Second-Quarter 2017)

Second-quarter 2018 revenues totaled $13.5 billion, an increase of $570 million, or 4%, compared to the prior-year quarter, reflecting the favorable impact of foreign exchange of $377 million, or 3%, and operational growth of $194 million, or 2%.

Innovative Health (IH) Highlights


▪	IH revenues increased 5% operationally in second-quarter 2018, primarily driven by continued growth from key brands including Eliquis, Ibrance and Xeljanz globally, Prevnar 13/Prevenar 13 primarily in emerging markets and the U.S., as well as Xtandi in the U.S. Operational revenue growth for Eliquis, Ibrance, Xeljanz and Xtandi was 42%, 19%, 37% and 21%, respectively.

▪

Second-quarter 2018 IH operational revenue growth was negatively impacted primarily by the loss of exclusivity of Viagra in the U.S. in December 2017 and the resulting shift in the reporting of Viagra revenues in the U.S. and Canada to the Essential Health business at the beginning of 2018⁽³⁾. IH operational revenue growth was also negatively impacted by lower revenues for Enbrel in most developed Europe markets due to continued biosimilar competition.


▪	Global Prevnar 13/Prevenar 13 revenues increased 7% operationally in second-quarter 2018.


–	Prevenar 13 revenues in international markets increased 8% operationally, primarily due to the overall favorable impact of timing associated with government purchases for the pediatric indication in certain emerging markets compared with the prior-year quarter, as well as the launch of the pediatric indication in China in the second quarter of 2017.


–	In the U.S., Prevnar 13 revenues increased 6%, primarily due to higher government purchases in second-quarter 2018 compared to second-quarter 2017 for the pediatric indication, partially offset by the continued decline in revenues for the adult indication due to a smaller remaining “catch up” opportunity compared to the prior-year quarter.

Essential Health (EH) Highlights


▪	Second-quarter 2018 EH revenues declined 4% operationally, negatively impacted primarily by:


–	a 12% operational decline in the Legacy Established Products portfolio in developed markets;


–	a 17% operational decline in the Sterile Injectable Pharmaceuticals portfolio in developed markets, primarily due to continued legacy Hospira product shortages in the U.S.; and

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–	an 11% operational decline in the Peri-LOE Products portfolio in developed markets, primarily due to expected declines in Lyrica in developed Europe, partially offset by the addition of Viagra revenues from the U.S. and Canada that were previously recorded in the IH business,

partially offset by:


–	10% operational growth in emerging markets, reflecting growth across all portfolios; and


–	44% operational growth from Biosimilars, primarily from Inflectra in certain channels in the U.S. as well as in developed Europe.

GAAP Reported⁽¹⁾ Income Statement Highlights

SELECTED TOTAL COMPANY REPORTED COSTS AND EXPENSES⁽¹⁾


($ in millions) (Favorable)/Unfavorable	Second-Quarter							Six Months
	2018			2017		% Change		2018			2017		% Change
	2018			2017		Total	Oper.	2018			2017		Total	Oper.
Cost of Sales⁽¹⁾	$ 2,916			$ 2,660		10%	5%	$ 5,479			$ 5,128		7%	—
Percent of Revenues	21.7		%	20.6	%	N/A	N/A	20.8		%	20.0	%	N/A	N/A
SI&A Expenses⁽¹⁾	3,542			3,430		3%	1%	6,954			6,745		3%	—
R&D Expenses⁽¹⁾	1,797			1,787		1%	—	3,540			3,502		1%	—
Total	$ 8,255			$ 7,877		5%	2%	$ 15,973			$ 15,375		4%	—

Other (Income)/Deductions––net⁽¹⁾		($551	)	($ 75	)	*	*		($728	)	($ 14	)	*	*
Effective Tax Rate on Reported Income^(1),(6)	14.3		%	19.4	%			13.9		%	20.1	%

* Indicates calculation not meaningful or result is equal to or greater than 100%.

Pfizer recorded higher other income––net⁽¹⁾ insecond-quarter 2018 compared with the prior-year quarter, primarily due to:

▪

unrealized net gains on equity securities, primarily from gains on shares of ICU Medical, Inc. stock held by Pfizer that was received as part of the consideration for the sale of HIS net assets (the recording of these unrealized net gains on equity securities reflects the adoption of a new accounting standard in first-quarter 2018; prior to the adoption of the new standard, net unrealized gains and losses on virtually all equity securities with readily determinable fair values were reported in Accumulated other comprehensive income);


▪	higher income from collaborations, out-licensing arrangements and sale of compound/product rights; and


▪	lower charges for certain legal matters, primarily reflecting the reversal of a legal accrual in second-quarter 2018 where a loss was no longer deemed probable.

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Pfizer’s effective tax rate on Reported income⁽¹⁾ for second-quarter 2018 was favorably impacted by the December 2017 enactment of the TCJA⁽⁶⁾.

Adjusted⁽²⁾ Income Statement Highlights

SELECTED TOTAL COMPANY ADJUSTED COSTS AND EXPENSES⁽²⁾


($ in millions) (Favorable)/Unfavorable	Second-Quarter						Six Months
	2018		2017		% Change		2018		2017		% Change
	2018		2017		Total	Oper.	2018		2017		Total	Oper.
Adjusted Cost of Sales⁽²⁾	$ 2,876		$ 2,592		11%	6%	$ 5,413		$ 5,024		8%	—
Percent of Revenues	21.4	%	20.1	%	N/A	N/A	20.5	%	19.6	%	N/A	N/A
Adjusted SI&A Expenses⁽²⁾	3,507		3,390		3%	1%	6,793		6,685		2%	(1%)
Adjusted R&D Expenses⁽²⁾	1,789		1,777		1%	—	3,528		3,490		1%	—
Total	$ 8,173		$ 7,759		5%	2%	$ 15,733		$ 15,199		4%	—

Adjusted Other (Income)/Deductions––net⁽²⁾	($519	)	($179	)	*	*	($841	)	($279	)	*	*
Effective Tax Rate on Adjusted Income^(2),(6)	15.8	%	22.9	%			16.1	%	22.6	%

* Indicates calculation not meaningful or result is equal to or greater than 100%.

Pfizer’s effective tax rate on Adjusted income⁽²⁾ for second-quarter 2018 was favorably impacted by the aforementioned December 2017 enactment of the TCJA⁽⁶⁾.

Second-quarter 2018 diluted weighted-average shares outstanding used to calculate Reported⁽¹⁾ and Adjusted⁽²⁾ diluted EPS declined by 85 million shares compared to the prior-year quarter primarily due to Pfizer’s ongoing share repurchase program, reflecting the impact of share repurchases during first-quarter 2018, partially offset by dilution related to share-based employee compensation programs.

A full reconciliation of Reported⁽¹⁾ to Adjusted⁽²⁾ financial measures and associated footnotes can be found starting on page 21 of this press release.

RECENT NOTABLE DEVELOPMENTS (Since May 1, 2018)

Product Developments

▪

Bavencio (avelumab) and talazoparib -- In July 2018, the first patient was enrolled in the Phase 3 JAVELIN Ovarian PARP trial evaluating avelumab in combination with talazoparib in patients with previously untreated advanced ovarian cancer. JAVELIN Ovarian PARP is an open-label, international, multi-center, randomized study designed to evaluate the efficacy and safety of avelumab in combination with chemotherapy followed by maintenance therapy of avelumab in combination with talazoparib in treatment

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naïve patients with locally advanced or metastatic ovarian cancer (Stage III or Stage IV). This trial further explores the potential of novel combinations with avelumab, which is being developed as part of the alliance between Merck KGaA, Darmstadt, Germany, and Pfizer.

▪

Ibrance (palbociclib) -- In June 2018, Pfizer announced the receipt of overall survival (OS) results from the Phase 3 PALOMA-3 trial, which evaluated Ibrance in combination with fulvestrant compared to placebo plus fulvestrant in women with hormone receptor-positive (HR+), human epidermal growth factor receptor 2-negative (HER2-) metastatic breast cancer whose disease has progressed after prior endocrine therapy. The results demonstrated a positive trend in the hazard ratio favoring the Ibrance combination, although this trend did not reach statistical significance. OS is a secondary endpoint of the PALOMA-3 trial and, as such, the trial design was not optimized to detect a statistically significant difference in OS. Pfizer expects to present the detailed OS data at an upcoming medical meeting.

▪

Lyrica (pregabalin) -- In May 2018, Pfizer announced positive top-line results of a Phase 3 study examining the use of Lyrica Oral Solution CV as adjunctive therapy for partial onset seizures in pediatric epilepsy patients one month to less than four years of age. Results showed that adjunctive treatment with Lyrica 14 mg/kg/day resulted in a statistically significant reduction in seizure frequency versus placebo, the primary efficacy endpoint. Treatment with Lyrica at the lower dose (7 mg/kg/day) did not result in a statistically significant reduction in seizure frequency versus placebo. The study was a post-marketing requirement by the U.S. Food and Drug Administration (FDA). Lyrica is not approved as adjunctive therapy for partial onset seizures in pediatric epilepsy patients one month to less than four years of age. Complete study results are expected to be submitted for publication in a peer-reviewed medical journal and to the FDA for pediatric exclusivity determination.


▪	Nivestym (filgrastim-aafi) -- In July 2018, Pfizer announced that the FDA approved Nivestym, a biosimilar to Neupogen^®(7) (filgrastim), for all eligible indications of the reference product.

▪

Prevnar 13 / Prevenar 13 (pneumococcal 13-valent conjugate vaccine [diphtheria CRM197 Protein]) -- In May 2018, Pfizer announced results from a study analyzing real-world effectiveness data that found that Prevnar 13 reduced the risk of hospitalization from vaccine-type pneumococcal community-acquired pneumonia by 73% (95% CI: 12.8-91.5%) in adults aged 65 and older. Importantly, Prevnar 13 worked under real-world conditions where people received pneumococcal vaccination as advised by their health care providers, and many had underlying medical conditions that increase the risk for pneumococcal pneumonia. The results were published in Clinical Infectious Diseases.


▪	Retacrit (epoetin alfa-epbx) -- In May 2018, Pfizer announced that the FDA approved Retacrit, a biosimilar to Epogen® and Procrit® (epoetin alfa)⁽⁸⁾, for all indications of the reference product. Pfizer has entered into an agreement with Vifor Pharma Inc. for the commercialization of Retacrit in certain channels.


▪	Vyndaqel (tafamidis) -- In May 2018, Pfizer announced that the FDA granted Breakthrough Therapy designation for tafamidis for the treatment of patients with transthyretin cardiomyopathy (TTR-CM), a rare,

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fatal, and underdiagnosed condition associated with progressive heart failure. This decision is supported by topline results from the Phase 3 TTR-CM study, ATTR-ACT, in which tafamidis demonstrated a statistically significant reduction in the combination of all-cause mortality and frequency of cardiovascular-related hospitalizations. Currently, there are no approved pharmacological treatments specifically indicated for this disease, and the average life expectancy for people with TTR-CM is 3 to 5 years from diagnosis. The FDA’s Breakthrough Therapy designation is intended to expedite the development and review of a medicine if it is intended to treat a serious or life-threatening disease and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies. Pfizer expects results of the Phase 3 ATTR-ACT trial to be presented as a late-breaker at the European Society of Cardiology Congress 2018 in Munich, Germany on August 27, 2018.

▪

Xalkori (crizotinib) -- In May 2018, Pfizer announced that the FDA granted Breakthrough Therapy designation for Xalkori for the treatment of patients with metastatic non-small cell lung cancer (NSCLC) with MET exon 14 alterations with disease progression on or after platinum-based chemotherapy. The FDA also granted Breakthrough Therapy designation for Xalkori for the treatment of patients with relapsed or refractory systemic anaplastic large cell lymphoma that is anaplastic lymphoma kinase (ALK)-positive.


▪	Xeljanz (tofacitinib)


–	In June 2018, Pfizer announced that the European Commission (EC) approved Xeljanz 5 mg twice daily (BID) in combination with methotrexate for the treatment of active psoriatic arthritis in adult patients who have had an inadequate response or who have been intolerant to a prior disease-modifying antirheumatic drug therapy.

–

In June 2018, Pfizer initiated a Phase 3, randomized, double-blind, placebo-controlled, investigational study evaluating the efficacy and safety of Xeljanz 5 mg BID compared to placebo in adult patients with active ankylosing spondylitis (AS). The study is being conducted in adult patients who have had an inadequate response or who have been intolerant to a nonsteroidal anti-inflammatory drug therapy. Xeljanz is not approved for the treatment of AS in any market.

–

In May 2018, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) adopted a positive opinion, recommending marketing authorization for Xeljanz for the treatment of adult patients with moderately to severely active ulcerative colitis (UC). The CHMP’s opinion will now be reviewed by the EC, which has the authority to approve medications for the European Union (EU).


–	In May 2018, Pfizer announced that the FDA approved Xeljanz 10 mg BID for at least eight weeks, followed by Xeljanz 5 mg BID or 10 mg BID, for the treatment of adult patients in the U.S. with moderately to severely active UC.

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▪

Xtandi (enzalutamide) -- In July 2018, Pfizer and Astellas Pharma Inc. (Astellas) announced that the FDA approved a supplemental New Drug Application for Xtandi. The FDA action broadens the indication for Xtandi to men with castration-resistant prostate cancer (CRPC), now including men with non-metastatic CRPC. This approval makes Xtandi the first and only oral medication FDA-approved for both non-metastatic and metastatic CRPC.

Pipeline Developments

A comprehensive update of Pfizer’s development pipeline was published today and is now available at www.pfizer.com/science/drug-product-pipeline. It includes an overview of Pfizer’s 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.

▪

Dacomitinib (PF-00299804) -- In June 2018, Pfizer announced OS data from the ARCHER 1050 trial evaluating dacomitinib as a first-line treatment for patients with locally advanced or metastatic NSCLC with EGFR-activating mutations compared to gefitinib. The trial showed a median OS of 34.1 months for patients receiving dacomitinib (95% CI: 29.5, 37.7), representing a more than seven-month improvement compared to 26.8 months with gefitinib (95% CI: 23.7, 32.1). The OS data from ARCHER 1050 were presented as an oral presentation at the 54^th Annual Meeting of the American Society of Clinical Oncology and were published simultaneously in the Journal of Clinical Oncology.


▪	Fidanacogene elaparvovec (PF-06838435, SPK-9001)

–

In July 2018, Pfizer and Spark Therapeutics (Spark) announced that Pfizer initiated a Phase 3 open-label, multi-center, lead-in study to evaluate the efficacy and safety of current factor IX prophylaxis replacement therapy in the usual care setting. The factor IX prophylaxis efficacy data obtained in the lead-in study will serve as the within-subject control group for those patients that enroll into the next part of the Phase 3 study, which will evaluate the investigational gene therapy fidanacogene elaparvovec for the treatment of hemophilia B. The Phase 3 program was initiated following the recent transfer of the responsibility for Spark’s hemophilia B gene therapy program to Pfizer. Fidanacogene elaparvovec is a novel, investigational vector that contains a bio-engineered adeno-associated virus capsid and a high-activity human coagulation factor IX gene. It enables patients to produce factor IX themselves, rather than having to regularly inject factor IX.

–

In May 2018, Pfizer and Spark announced that, with a cumulative follow-up of more than 18 patient years of observation (5 to 121 weeks), all 15 participants in the ongoing Phase 1/2 clinical trial of investigational SPK-9001 for severe or moderately severe (FIX:C < 2 percent) hemophilia B, had discontinued routine infusions of factor IX concentrates. Annualized bleeding rates for all 15 participants was reduced by 98%, while annualized infusion rate was reduced by 99%. None of the 15 participants experienced serious adverse events, and there were no thrombotic events or factor IX

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inhibitors, as of the May 7, 2018 data cutoff. Full results of the study were presented at the World Federation of Hemophilia World Congress on May 22, 2018.

▪

Glasdegib (PF-04449913) -- In June 2018, Pfizer announced that the FDA accepted the company’s New Drug Application (NDA) and granted Priority Review status for glasdegib, an investigational oral smoothened inhibitor, being evaluated for the treatment of adult patients with previously untreated acute myeloid leukemia in combination with low-dose cytarabine, a type of chemotherapy. The Prescription Drug User Fee Act (PDUFA) goal date for a decision by the FDA is in December 2018. The FDA grants Priority Review to medicines that may offer significant advances in treatment or may provide a treatment where no adequate therapy exists.

▪

Lorlatinib (PF-06463922) -- In July 2018, the FDA notified Pfizer that the review period for the NDA for lorlatinib has been extended by three months to allow time to review additional information recently submitted by Pfizer in response to an FDA information request. The submission of the additional information was determined by the FDA to constitute a major amendment to the NDA, resulting in an extension of the PDUFA goal date by three months, from August 2018 to November 2018. The FDA previously granted Priority Review status to the lorlatinib NDA in February 2018. Lorlatinib is Pfizer’s investigational next-generation ALK/ROS1 tyrosine kinase inhibitor under regulatory review for the treatment of patients with ALK-positive metastatic NSCLC, previously treated with one or more ALK inhibitors.

▪

PF-06482077 -- In second-quarter 2018, Pfizer achieved proof-of-concept for PF-06482077, Pfizer’s next-generation multi-valent pneumococcal conjugate vaccine candidate. Results from the recently-completed Phase 2 trial demonstrated that the vaccine candidate was safe and well-tolerated and induced functional immune responses that could kill all twenty serotypes. PF-06482077 is being developed to potentially extend coverage beyond the thirteen serotypes covered by Prevnar 13 to include seven additional serotypes prevalent in causing pneumococcal disease in adults and children. Pfizer is currently planning its Phase 3 program for PF-06482077.

▪

Rivipansel (GMI-1070) -- In July 2018, Pfizer updated the estimated completion date for the Rivipansel Evaluating Safety, Efficacy and Time to Discharge (RESET) Phase 3 trial. Investigators in the U.S. and Canada continue to enroll sickle cell disease (SCD) patients and study completion is now expected in the second quarter of 2019. The study was previously expected to be completed in late 2018. This update was calculated based on historical enrollment over the last 12 months. Rivipansel is being studied for the treatment of vaso-occlusive crisis in hospitalized subjects with SCD.

▪

Talazoparib (MDV3800) -- In June 2018, Pfizer announced that the FDA accepted for filing and granted Priority Review status to the company’s NDA for talazoparib, an investigational, once-daily, oral poly ADP ribose polymerase (PARP) inhibitor, for the treatment of germline (inherited) BRCA-mutated, HER2- locally advanced or metastatic breast cancer. The PDUFA goal date for a decision by the FDA is in December 2018.

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The EMA has also accepted the Marketing Authorization Application for talazoparib in this patient population.

▪

Tanezumab (PF-4383119, RN624) -- In July 2018, Pfizer and Eli Lilly and Company (Lilly) announced that a 16-week Phase 3 study in patients with osteoarthritis (OA) pain evaluating subcutaneous administration of tanezumab, an investigational humanized monoclonal antibody, met all three co-primary endpoints. The study demonstrated that patients who received two doses of tanezumab separated by eight weeks experienced a statistically significant improvement in pain, physical function and the patients’ overall assessment of their OA, compared to those receiving placebo. Preliminary safety data showed that tanezumab was generally well tolerated, with approximately 1% of patients discontinuing treatment due to adverse events. Rapidly progressive OA was observed in tanezumab-treated patients at a frequency of less than 1.5%, and was not observed in the placebo arm. There were no events of osteonecrosis observed in the trial. No new safety signals were identified. Tanezumab is part of an investigational class of pain medications known as nerve growth factor inhibitors and in addition to OA pain, is being evaluated for chronic low back pain and cancer pain (due to bone metastases). Pfizer and Lilly expect to present the detailed efficacy and safety data for tanezumab at an upcoming medical meeting.


▪	Trazimera (biosimilar trastuzumab) -- In July 2018, Pfizer announced that the European Commission has approved Trazimera, a biosimilar to Herceptin⁽⁹⁾, for the treatment of HER2 overexpressing breast cancer and HER2 overexpressing metastatic gastric or gastroesophageal junction adenocarcinoma. This approval follows the recommendation from the CHMP in May 2018.

Corporate Developments

▪

In July 2018, Pfizer announced that it will increase its commitment to U.S. manufacturing with a $465 million investment to build one of the most technically advanced sterile injectable pharmaceutical production facilities in the world in Portage, Michigan. This U.S. investment will strengthen Pfizer’s capability to produce and supply critical, life-saving injectable medicines for patients around the world. Known as Modular Aseptic Processing, the new, multi-story, 400,000-square-foot production facility will also support the area economy by creating an estimated 450 new jobs over the next several years. This expands Pfizer’s presence in Portage, located in Kalamazoo County, where the company now employs more than 2,200 people at one of its largest plants.


▪	In July 2018, Pfizer announced that it will organize the company into three businesses, including:


–	a science-based Innovative Medicines business, which will include all of the current Innovative Health business units (except for Consumer Healthcare) as well as biosimilars and a new Hospital Medicines business unit that will commercialize Pfizer’s global portfolio of sterile injectable and anti-infective medicines;

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–	an off-patent branded and generic Established Medicines business operating with substantial autonomy within Pfizer; and


–	a Consumer Healthcare business, for which Pfizer continues to evaluate strategic alternatives, with a decision expected in 2018.

These changes will be effective at the beginning of the company’s 2019 fiscal year. Pfizer will provide financial reporting to reflect this reorganization beginning with the issuance of first-quarter 2019 earnings.

▪

In June 2018, the FDA informed Pfizer that it has completed an evaluation of corrective actions and closed out the February 2017 Warning Letter issued to Pfizer’s McPherson, Kansas manufacturing facility after determining that Pfizer has addressed the violations contained in the Warning Letter. Future FDA inspections and regulatory activities will further assess the adequacy and sustainability of these corrections. The site remains in Voluntary Action Indicated (VAI) status.

▪

In June 2018, Pfizer announced that it plans to invest $600 million in biotechnology and other emerging growth companies through Pfizer Ventures, the company’s venture investment vehicle. In addition to increased funding, Pfizer will extend its leadership as a venture capital investor with an expanded team that leverages expertise across venture capital investing, business development, drug discovery and clinical development.

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For additional details, see the attached financial schedules, product revenue tables and disclosure notice.


(1)	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 (some of which may recur, such as restructuring or legal charges, but which management does not believe are reflective of ongoing core operations). 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 in the Financial Review––Non-GAAP Financial Measure (Adjusted Income) section of Pfizer’s 2017 Financial Report, which was filed as Exhibit 13 to Pfizer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, management uses Adjusted income, among other factors, to set performance goals and to measure the performance of the overall company. Because Adjusted income is an important internal measurement for Pfizer, management believes that investors’ understanding of our performance is enhanced by disclosing this performance measure. Pfizer reports Adjusted income, certain components of Adjusted income, and Adjusted diluted EPS in order to portray the results of the company’s major operations––the discovery, development, manufacture, marketing and sale of prescription medicines, vaccines and consumer healthcare (OTC) products––prior to considering certain income statement elements. See the accompanying reconciliations of certain GAAP Reported to Non-GAAP Adjusted information for the second quarter and first six months of 2018 and 2017. 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)

Pfizer’s fiscal year-end for international subsidiaries is November 30 while Pfizer’s fiscal year-end for U.S. subsidiaries is December 31. Therefore, Pfizer’s second quarter and first six months for U.S. subsidiaries reflect the three and six months ending on July 1, 2018 and July 2, 2017 while Pfizer’s second quarter and first six months for subsidiaries operating outside the U.S. reflect the three and six months ending on May 27, 2018 and May 28, 2017.

(4)

References to operational variances in this press release pertain to period-over-period growth rates that exclude the impact of foreign exchange. The operational variances are determined by multiplying or dividing, as appropriate, the current period U.S. dollar results by the current period average foreign exchange rates and then multiplying or dividing, as appropriate, those amounts by the prior-year period

- 13 -

average foreign exchange rates. Although exchange rate changes are part of Pfizer’s business, they are not within Pfizer’s control. Exchange rate changes, however, can mask positive or negative trends in the business; therefore, Pfizer believes presenting operational variances provides useful information in evaluating the results of its business.


(5)	The 2018 financial guidance reflects the following:

▪

Pfizer does not provide guidance for GAAP Reported financial measures (other than revenues) or a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP Reported financial measures on a forward-looking basis because it is unable to predict with reasonable certainty the ultimate outcome of pending litigation, unusual gains and losses, acquisition-related expenses and potential future asset impairments without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on GAAP Reported results for the guidance period.


▪	Does not assume the completion of any business development transactions not completed as of July 1, 2018, including any one-time upfront payments associated with such transactions.

▪

Guidance for Adjusted other (income)/deductions⁽²⁾ does not attempt to forecast unrealized net gains or losses on equity securities. Pfizer is unable to predict with reasonable certainty unrealized gains or losses on equity securities in a given period. Net unrealized gains and losses on equity securities are now recorded in Adjusted other (income)/deductions⁽²⁾ during each quarter, reflecting the adoption of a new accounting standard in the first quarter of 2018. Prior to the adoption of the new standard, net unrealized gains and losses on virtually all equity securities with readily determinable fair values were reported in Accumulated other comprehensive income.


▪	Exchange rates assumed are a blend of the actual exchange rates in effect through second-quarter 2018 and mid-July 2018 exchange rates for the remainder of the year.

▪

Reflects an anticipated negative revenue impact of $1.9 billion due to recent and expected generic and biosimilar competition for certain products that have recently lost or are anticipated to soon lose patent protection. Assumes no generic competition for Lyrica in the U.S. until June 2019, which is contingent upon a six-month patent-term extension granted by the FDA for pediatric exclusivity, which the company is currently pursuing.


▪	Reflects a full year contribution from Consumer Healthcare. Pfizer continues to expect that any decision regarding strategic alternatives for Consumer Healthcare will be made during 2018.

- 14 -


▪	Reflects the anticipated favorable impact of approximately $500 million on revenues and approximately $0.03 on Adjusted diluted EPS⁽²⁾ as a result of favorable changes in foreign exchange rates relative to the U.S. dollar compared to foreign exchange rates from 2017.


▪	Guidance for Adjusted diluted EPS⁽²⁾ assumes diluted weighted-average shares outstanding of approximately 6.0 billion shares, which reflects share repurchases totaling approximately $6.1 billion already completed in 2018. Dilution related to share-based employee compensation programs is expected to offset by approximately half the reduction in shares associated with these share repurchases.


(6)	Given the significant changes resulting from and complexities associated with the Tax Cuts and Jobs Act (TCJA), the estimated financial impacts associated with the TCJA that were recorded in fourth-quarter 2017 are provisional and subject to further analysis, interpretation and clarification of the TCJA, which could result in changes to these estimates during 2018.


(7)	Neupogen^® is a registered trademark of Amgen Inc.


(8)	Epogen^® is a registered U.S. trademark of Amgen Inc.; Procrit^® is a registered U.S. trademark of Johnson & Johnson.


(9)	Herceptin^® is a registered U.S. trademark of Genentech, Inc.



Contacts:	Media		Investors
	Joan Campion	212.733.2798	Chuck Triano	212.733.3901
			Ryan Crowe	212.733.8160
			Bryan Dunn	212.733.8917

- 15 -

PFIZER INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF INCOME⁽¹⁾

(UNAUDITED)

(millions, except per common share data)



	Second-Quarter						% Incr. /	Six Months						% Incr. /
	2018			2017			(Decr.)	2018			2017			(Decr.)
Revenues	$	13,466		$	12,896		4	$	26,373		$	25,675		3
Costs and expenses:
Cost of sales^{(1), (2), (3)}	2,916			2,660			10	5,479			5,128			7
Selling, informational and administrative expenses^{(1), (2), (3)}	3,542			3,430			3	6,954			6,745			3
Research and development expenses^{(1), (2), (3)}	1,797			1,787			1	3,540			3,502			1
Amortization of intangible assets⁽³⁾	1,191			1,208			(1)	2,387			2,394			—
Restructuring charges and certain acquisition-related costs^{(1), (4)}	44			70			(36)	87			153			(43)
Other (income)/deductions––net^{(1), (5)}	(551		)	(75		)	*	(728		)	(14		)	*

Income from continuing operations before provision for taxes on income	4,527			3,815			19	8,654			7,767			11
Provision for taxes on income⁽⁶⁾	648			739			(12)	1,204			1,560			(23)
Income from continuing operations	3,879			3,077			26	7,450			6,207			20
Discontinued operations––net of tax	—			2			*	(1		)	1			*
Net income before allocation to noncontrolling interests	3,879			3,078			26	7,449			6,208			20
Less: Net income attributable to noncontrolling interests	7			5			30	16			14			16
Net income attributable to Pfizer Inc.	$	3,872		$	3,073		26	$	7,432		$	6,194		20

Earnings per common share––basic:
Income from continuing operations attributable to Pfizer Inc. common shareholders	$	0.66		$	0.52		28	$	1.26		$	1.04		21
Discontinued operations––net of tax	—			—			—	—			—			—
Net income attributable to Pfizer Inc. common shareholders	$	0.66		$	0.52		28	$	1.26		$	1.04		21

Earnings per common share––diluted:
Income from continuing operations attributable to Pfizer Inc. common shareholders	$	0.65		$	0.51		28	$	1.24		$	1.02		21
Discontinued operations––net of tax	—			—			—	—			—			—
Net income attributable to Pfizer Inc. common shareholders	$	0.65		$	0.51		28	$	1.24		$	1.02		21
Weighted-average shares used to calculate earnings per common share:
Basic	5,866			5,958				5,911			5,982
Diluted	5,952			6,037				6,004			6,065


*	Indicates calculation not meaningful or result is equal to or greater than 100%.

See end of tables for notes (1) through (6).

Amounts may not add due to rounding. All percentages have been calculated using unrounded amounts.

- 16 -

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


(1)	The financial statements present the three and six months ended July 1, 2018 and July 2, 2017. Subsidiaries operating outside the U.S. are included for the three and six months ended May 27, 2018 and May 28, 2017.

The financial results for the three and six months ended July 1, 2018 are not necessarily indicative of the results that ultimately could be achieved for the full year.

The adoption of certain new accounting standards in the first quarter of 2018 impacted our consolidated statements of income as follows:

•

Financial Assets and Liabilities––We adopted a new accounting standard on January 1, 2018 utilizing the modified retrospective method, and, therefore, no adjustments were made to amounts in our prior period financial statements. The standard requires certain equity investments to be measured at fair value with changes in fair value now recognized in net income. However, equity investments that do not have readily determinable fair values may be measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. Therefore, in the three and six months ended July 1, 2018, Other (income)/deductions––net includes unrealized net gains on equity securities. See Note (5) below for additional information.

•

Revenues––We adopted a new accounting standard on January 1, 2018 for revenue recognition. Under the new standard, revenue is recognized upon transfer of control of the product to our customer in an amount that reflects the consideration we expect to receive in exchange. We adopted the new accounting standard utilizing the modified retrospective method, and, therefore, no adjustments were made to amounts in our prior period financial statements. However, the adoption of this new standard did impact the timing of recognizing Other (income)/deductions––net, primarily for upfront and milestone payments on our collaboration arrangements and, to a lesser extent, product rights and out-licensing arrangements, and the timing of recognizing Revenues and Cost of sales on certain product shipments. The impact of adoption did not have a material impact to our condensed consolidated statements of income for the three and six months ended July 1, 2018. See Note (5) below for additional information.

•

Presentation of Net Periodic Pension and Postretirement Benefit Cost––We adopted a new accounting standard on January 1, 2018 that requires the net periodic pension and postretirement benefit costs other than the service costs be presented in Other (income)/deductions––net, and that the presentation be applied retrospectively. We adopted the presentation of the net periodic benefit costs other than service costs by reclassifying these costs from Cost of sales, Selling, informational and administrative expenses, Research and development expenses and Restructuring charges and certain acquisition-related costs to Other (income)/deductions––net. We have therefore reclassified the prior period net periodic benefit costs/(credits) to apply the retrospective presentation for comparative periods. See Note (5) below for additional information.

On February 3, 2017, we completed the sale of our global infusion systems net assets, Hospira Infusion Systems (HIS). The operating results of HIS are included in the consolidated statement of income and EH’s operating results through February 2, 2017 and, therefore, our financial results, and EH’s operating results, for the second quarter of 2017 do not reflect any contribution from HIS global operations, while our financial results, and EH’s operating results, for the first six months of 2017 reflect approximately one month of HIS domestic operations and approximately two months of HIS international operations. Our financial results, and EH’s operating results, for 2018 do not reflect any contribution from HIS global operations.

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 (3) below.

(3)

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.

- 17 -

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


(4)	Restructuring charges and certain acquisition-related costs include the following:



	Second-Quarter						Six Months
(MILLIONS OF DOLLARS)	2018			2017			2018			2017
Restructuring (credits)/charges––acquisition-related costs^(a)	$	(11	)	$	3		$	(19	)	$	10
Restructuring credits––cost reduction initiatives^(b)	(13		)	(25		)	(14		)	(37		)
Restructuring credits	(24		)	(23		)	(33		)	(27		)
Transaction costs^(c)	—			6			—			18
Integration costs^(d)	68			86			120			163
Restructuring charges and certain acquisition-related costs	$	44		$	70		$	87		$	153

(a)

Restructuring (credits)/charges––acquisition-related costs include employee termination costs, asset impairments and other exit costs associated with business combinations. Credits for the second quarter of 2018 were primarily due to reserve releases associated with lower employee termination costs related to our acquisition of Hospira, Inc. (Hospira) and credits for the first six months of 2018 were primarily due to reserve releases associated with lower exit and employee termination costs related to our acquisition of Hospira. Restructuring charges for the second quarter of 2017 were mainly related to our acquisition of Anacor Pharmaceuticals, Inc. (Anacor) and, for the first six months of 2017, restructuring charges were mainly related to our acquisitions of Anacor and Medivation, Inc. (Medivation).

(b)

Restructuring credits––cost reduction initiatives relate to employee termination costs, asset impairments and other exit costs not associated with acquisitions. For the second quarter of 2018, the credits are mostly related to reserve releases associated with lower employee termination costs and, for the first six months of 2018, the credits are mostly related to reserve releases associated with lower costs for employee terminations and asset write downs, partially offset by exit costs. For the second quarter of 2017, the credits are mostly related to reserve releases associated with lower employee termination costs and, for the first six months of 2017, the credits are mostly related to reserve releases associated with lower employee termination costs, partially offset by asset write downs.


(c)	Transaction costs represent external costs for banking, legal, accounting and other similar services, virtually all of which for the second quarter and first six months of 2017 were directly related to our acquisition of Medivation.

(d)

Integration costs represent external, incremental costs directly related to integrating acquired businesses, and primarily include expenditures for consulting and the integration of systems and processes. In the second quarter and first six months of 2018, integration costs were primarily related to our acquisition of Hospira. In the second quarter and first six months of 2017, integration costs were primarily related to our acquisitions of Hospira and Medivation.

- 18 -

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


(5)	Other (income)/deductions––net includes the following:



	Second-Quarter						Six Months
(MILLIONS OF DOLLARS)	2018			2017			2018			2017
Interest income^(a)	$	(80	)	$	(94	)	$	(157	)	$	(175	)
Interest expense^(a)	326			312			635			621
Net interest expense	245			218			478			446
Royalty-related income	(121		)	(105		)	(217		)	(191		)
Net gains on asset disposals^(b)	(17		)	(34		)	(36		)	(125		)
Income from collaborations, out-licensing arrangements and sales of compound/product rights^(c)	(174		)	(37		)	(316		)	(85		)
Net unrealized gains on equity securities^(d)	(226		)	—			(337		)	—
Net periodic benefit costs/(credits) other than service costs^(e)	(84		)	(8		)	(166		)	53
Certain legal matters, net^(f)	(88		)	3			(107		)	11
Certain asset impairments	31			—			31			13
Adjustments to loss on sale of HIS net assets^(g)	(2		)	28			1			64
Business and legal entity alignment costs^(h)	1			17			4			38
Other, net⁽ⁱ⁾	(115		)	(155		)	(64		)	(239		)
Other (income)/deductions––net	$	(551	)	$	(75	)	$	(728	)	$	(14	)


(a)	Interest income decreased in the second quarter and first six months of 2018, primarily driven by a lower investment balance. Interest expense increased in the second quarter and first six months of 2018, primarily as a result of higher short-term interest rates, offset, in part, by refinancing activity that occurred in the fourth quarter of 2017.

(b)

In the second quarter of 2018, primarily includes gains on fixed assets and other asset disposals of $15 million. In the first six months of 2018, includes gains on fixed assets and other asset disposals of $22 million and net gains on sales of investments in equity and debt securities of approximately $14 million. In the second quarter of 2017, primarily includes gains on sales and redemptions of investments in equity and debt securities (approximately $60 million), partially offset by a net loss related to the sale of our 40% ownership investment in Laboratório Teuto Brasileiro S.A. (Teuto), including the extinguishment of a put option for the then remaining 60% ownership interest (approximately $30 million). In the first six months of 2017, primarily includes gains on sales and redemptions of investments in equity and debt securities (approximately $102 million) and a gain on sale of property (approximately $50 million), partially offset by the net loss related to the sale of our investment in Teuto discussed above.


(c)	Includes income from upfront and milestone payments from our collaboration partners and income from out-licensing arrangements and sales of compound/product rights.

(d)

Represents the unrealized net gains on equity securities reflecting the adoption of a new accounting standard in the first quarter of 2018. Approximately $142 million of these unrealized gains in the second quarter of 2018 and approximately $203 million of these unrealized gains in the first six months of 2018 relate to 3.2 million shares of ICU Medical, Inc. (ICU Medical) stock that were received as part of the consideration for the sale of HIS net assets to ICU Medical. Prior to the adoption of the new standard, net unrealized gains and losses on virtually all equity securities with readily determinable fair values were reported in Accumulated other comprehensive income.

(e)

Represents the net periodic benefit costs/(credits), excluding service costs, as a result of the adoption of a new accounting standard in the first quarter of 2018. Effective January 1, 2018, the U.S. Pfizer Consolidated Pension Plan was frozen to future benefit accruals and for the second quarter and first six months of 2018, resulted in the recognition of lower net periodic benefit costs due to the extension of the amortization period for the actuarial losses and the elimination of service costs. There was also a greater than expected gain on plan assets due to a higher plan asset base compared to the second quarter and first six months of 2017. See note (1) above for additional information.


(f)	In the second quarter and first six months of 2018, primarily represents the reversal of a legal accrual where a loss was no longer deemed probable.


(g)	In the second quarter and first six months of 2018 and 2017, represents adjustments to amounts previously recorded in 2016 to write down the HIS net assets to fair value less costs to sell related to the sale of HIS net assets to ICU Medical on February 3, 2017.

- 19 -

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


(h)	In the second quarter and first six months of 2018 and 2017, represents expenses for changes to our infrastructure to align our commercial operations of our current segments, including costs to internally separate our businesses into distinct legal entities, as well as to streamline our intercompany supply operations to better support each business.

(i)

In the second quarter and first six months of 2018, includes, among other things, dividend income of $76 million and $135 million, respectively, from our investment in ViiV Healthcare Limited (ViiV), and charges of $23 million and $135 million, respectively, reflecting the change in the fair value of contingent consideration. The second quarter and first six months of 2018 also include a non-cash $50 million pre-tax gain on the contribution of Pfizer’s allogeneic chimeric antigen receptor T cell (CAR T) therapy development program assets in connection with our asset contribution agreement entered into with Allogene Therapeutics, Inc. (Allogene) in which Pfizer obtained a 25% ownership stake in Allogene, and a $17 million non-cash gain on the cash settlement of a liability that we incurred in April 2018 upon the European Union approval of Mylotarg. In the second quarter and first six months of 2017, primarily includes, among other things, dividend income of $114 million and $157 million, respectively, from our investment in ViiV.

(6)

The decrease in the effective tax rate for the second quarter and first six months of 2018 compared to the second quarter and first six months of 2017 was primarily due to (i) the December 2017 enactment of the legislation commonly referred to as the U.S. Tax Cuts and Jobs Act (TCJA), (ii) the favorable change in the jurisdictional mix of earnings as a result of operating fluctuations in the normal course of business, as well as (iii) an increase in benefits associated with the resolution of certain tax positions pertaining to prior years primarily with various foreign authorities, and the expiration of certain statutes of limitations. Given the significant changes resulting from and complexities associated with the TCJA, the estimated financial impacts recorded in 2017 are provisional and are subject to further analysis, interpretation and clarification of the TCJA, which could result in changes to these estimates during 2018. Under guidance issued by the staff of the U.S. Securities and Exchange Commission, we expect to finalize our accounting related to the tax effects of the TCJA on deferred taxes, valuation allowances, state tax considerations, the repatriation tax liability, global intangible low-taxed income, and any remaining outside basis differences in our foreign subsidiaries during 2018 as we complete our analysis, computations and assertions. It is possible that others, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts. We will revise these estimates during the second half of 2018 as we gather additional information to complete our tax returns and as any interpretation or clarification of the TCJA occurs through legislation, U.S. Treasury actions or other means.

- 20 -

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)



	Second-Quarter 2018
	GAAP Reported⁽²⁾			Purchase Accounting Adjustments			Acquisition-Related Costs⁽³⁾			Discontinued Operations		Certain Significant Items⁽⁴⁾			Non-GAAP Adjusted⁽⁵⁾
Revenues	$	13,466		$	—		$	—		$	—	$	—		$	13,466
Cost of sales^{(6), (7)}	2,916			(2		)	(3		)	—		(35		)	2,876
Selling, informational and administrative expenses^{(6), (7)}	3,542			—			—			—		(35		)	3,507
Research and development expenses^{(6), (7)}	1,797			1			—			—		(9		)	1,789
Amortization of intangible assets⁽⁷⁾	1,191			(1,121		)	—			—		—			70
Restructuring charges and certain acquisition-related costs	44			—			(57		)	—		13			—
Other (income)/deductions––net	(551		)	(12		)	(2		)	—		46			(519		)
Income from continuing operations before provision for taxes on income	4,527			1,134			62			—		20			5,742
Provision for taxes on income	648			233			11			—		16			908
Income from continuing operations	3,879			901			51			—		4			4,834
Discontinued operations––net of tax	—			—			—			—		—			—
Net income attributable to noncontrolling interests	7			—			—			—		—			7
Net income attributable to Pfizer Inc.	3,872			901			51			—		4			4,827
Earnings per common share attributable to Pfizer Inc.––diluted	0.65			0.15			0.01			—		—			0.81



	Six Months Ended July 1, 2018
	GAAP Reported⁽²⁾			Purchase Accounting Adjustments			Acquisition-Related Costs⁽³⁾			Discontinued Operations		Certain Significant Items⁽⁴⁾			Non-GAAP Adjusted⁽⁵⁾
Revenues	$	26,373		$	—		$	—		$	—	$	—		$	26,373
Cost of sales^{(6), (7)}	5,479			(3		)	(6		)	—		(58		)	5,413
Selling, informational and administrative expenses^{(6), (7)}	6,954			1			—			—		(161		)	6,793
Research and development expenses^{(6), (7)}	3,540			2			—			—		(14		)	3,528
Amortization of intangible assets⁽⁷⁾	2,387			(2,246		)	—			—		—			141
Restructuring charges and certain acquisition-related costs	87			—			(102		)	—		14			—
Other (income)/deductions––net	(728		)	(109		)	(2		)	—		(2		)	(841		)
Income from continuing operations before provision for taxes on income	8,654			2,355			110			—		221			11,339
Provision for taxes on income	1,204			472			19			—		132			1,828
Income from continuing operations	7,450			1,883			91			—		88			9,512
Discontinued operations––net of tax	(1		)	—			—			1		—			—
Net income attributable to noncontrolling interests	16			—			—			—		—			16
Net income attributable to Pfizer Inc.	7,432			1,883			91			1		88			9,495
Earnings per common share attributable to Pfizer Inc.––diluted	1.24			0.31			0.02			—		0.01			1.58

See end of tables for notes (1) through (7).

Amounts may not add due to rounding.

- 21 -

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)



	Second-Quarter 2017
	GAAP Reported⁽²⁾			Purchase Accounting Adjustments			Acquisition-Related Costs⁽³⁾			Discontinued Operations			Certain Significant Items⁽⁴⁾			Non-GAAP Adjusted⁽⁵⁾
Revenues	$	12,896		$	—		$	—		$	—		$	—		$	12,896
Cost of sales^(2), ^{(6), (7)}	2,660			(10		)	(9		)	—			(50		)	2,592
Selling, informational and administrative expenses^{(2), (6), (7)}	3,430			(10		)	—			—			(30		)	3,390
Research and development expenses^{(2), (6), (7)}	1,787			1			—			—			(11		)	1,777
Amortization of intangible assets⁽⁷⁾	1,208			(1,167		)	—			—			—			41
Restructuring charges and certain acquisition-related costs⁽²⁾	70			—			(95		)	—			25			—
Other (income)/deductions––net⁽²⁾	(75		)	(15		)	36			—			(126		)	(179		)
Income from continuing operations before provision for taxes on income	3,815			1,201			68			—			191			5,275
Provision for taxes on income	739			344			22			—			103			1,207
Income from continuing operations	3,077			857			46			—			88			4,068
Discontinued operations––net of tax	2			—			—			(2		)	—			—
Net income attributable to noncontrolling interests	5			—			—			—			—			5
Net income attributable to Pfizer Inc.	3,073			857			46			(2		)	88			4,063
Earnings per common share attributable to Pfizer Inc.––diluted	0.51			0.14			0.01			—			0.01			0.67



	Six Months Ended July 2, 2017
	GAAP Reported⁽²⁾			Purchase Accounting Adjustments			Acquisition-Related Costs⁽³⁾			Discontinued Operations			Certain Significant Items⁽⁴⁾			Non-GAAP Adjusted⁽⁵⁾
Revenues	$	25,675		$	—		$	—		$	—		$	—		$	25,675
Cost of sales^(2), ^{(6), (7)}	5,128			(17		)	(12		)	—			(76		)	5,024
Selling, informational and administrative expenses^{(2), (6), (7)}	6,745			(16		)	—			—			(44		)	6,685
Research and development expenses^{(2), (6), (7)}	3,502			5			—			—			(17		)	3,490
Amortization of intangible assets⁽⁷⁾	2,394			(2,318		)	—			—			—			76
Restructuring charges and certain acquisition-related costs⁽²⁾	153			—			(191		)	—			37			—
Other (income)/deductions––net⁽²⁾	(14		)	(28		)	10			—			(248		)	(279		)
Income from continuing operations before provision for taxes on income	7,767			2,373			192			—			348			10,679
Provision for taxes on income	1,560			684			64			—			102			2,410
Income from continuing operations	6,207			1,689			128			—			246			8,269
Discontinued operations––net of tax	1			—			—			(1		)	—			—
Net income attributable to noncontrolling interests	14			—			—			—			—			14
Net income attributable to Pfizer Inc.	6,194			1,689			128			(1		)	246			8,255
Earnings per common share attributable to Pfizer Inc.––diluted	1.02			0.28			0.02			—			0.04			1.36

See end of tables for notes (1) through (7).

Amounts may not add due to rounding.

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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 and six months ended July 1, 2018 and July 2, 2017. Subsidiaries operating outside the U.S. are included for the three and six months ended May 27, 2018 and May 28, 2017.

The adoption of certain new accounting standards in the first quarter of 2018 impacted our consolidated statements of income. Among other items, GAAP Reported and Non-GAAP Adjusted amounts for the three and six months ended July 2, 2017 have been revised from previously reported amounts to reflect the retrospective adoption of a new accounting standard in the first quarter of 2018, as of January 1, 2018, requiring the reclassification of the non-service cost components of net periodic pension and postretirement benefit costs to Other (income)/deductions––net from their classification within Cost of sales, Selling, informational and administrative expenses, Research and development expenses and Restructuring charges and certain acquisition-related costs. See Note (1) and Note (5) to Notes to Consolidated Statements of Income above and Note (3) below for additional information.


(3)	Acquisition-related costs include the following:



	Second-Quarter						Six Months
(MILLIONS OF DOLLARS)	2018			2017			2018			2017
Restructuring (credits)/charges^(a)	$	(11	)	$	3		$	(19	)	$	10
Transaction costs^(b)	—			6			—			18
Integration costs^(c)	68			86			120			163
Net periodic benefit costs/(credits) other than service costs^(d)	2			(36		)	2			(10		)
Additional depreciation––asset restructuring^(e)	3			9			6			12
Total acquisition-related costs––pre-tax	62			68			110			192
Income taxes^(f)	(11		)	(22		)	(19		)	(64		)
Total acquisition-related costs––net of tax	$	51		$	46		$	91		$	128

(a)

Restructuring (credits)/charges include employee termination costs, asset impairments and other exit costs associated with business combinations. Credits for the second quarter of 2018 were primarily due to reserve releases associated with lower employee termination costs related to our acquisition of Hospira, Inc. (Hospira) and credits for the first six months of 2018 were primarily due to reserve releases associated with lower exit and employee termination costs related to our acquisition of Hospira. Restructuring charges for the second quarter of 2017 were mainly related to our acquisition of Anacor Pharmaceuticals, Inc. (Anacor) and, for the first six months of 2017, restructuring charges were mainly related to our acquisitions of Anacor and Medivation, Inc. (Medivation). All of these costs and charges are included in Restructuring charges and certain acquisition-related costs.


(b)	Transaction costs represent external costs for banking, legal, accounting and other similar services, virtually all of which for the second quarter and first six months of 2017 were directly related to our acquisition of Medivation. All of these costs and charges are included in Restructuring charges and certain acquisition-related costs.

(c)


(d)	In the second quarter and first six months of 2017, this amount represents the net periodic benefit credits, excluding service costs, reclassified to Other (income)/deductions––net as a result of the retrospective adoption of a new accounting standard in the first quarter of 2018. See Note (2) above for additional information. These

- 23 -

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION

CERTAIN LINE ITEMS

(UNAUDITED)

credits included a net settlement gain, partially offset by accelerated amortization of actuarial losses and prior service costs upon the settlement of the remaining obligation associated with the Hospira U.S. qualified defined benefit pension plan.


(e)	Included in Cost of sales. Represents the impact of changes in the estimated useful lives of assets involved in restructuring actions related to acquisitions.


(f)	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:



	Second-Quarter						Six Months
(MILLIONS OF DOLLARS)	2018			2017			2018			2017
Restructuring credits––cost reduction initiatives^(a)	$	(13	)	$	(25	)	$	(14	)	$	(37	)
Implementation costs and additional depreciation––asset restructuring^(b)	54			74			107			116
Certain legal matters, net^(c)	(88		)	—			(107		)	8
Adjustments to loss on sale of HIS net assets^(d)	(2		)	28			1			64
Certain asset impairments	31			—			31			—
Business and legal entity alignment costs^(e)	1			17			4			38
Other^(f)	37			97			199			158
Total certain significant items––pre-tax	20			191			221			348
Income taxes^(g)	(16		)	(103		)	(132		)	(102		)
Total certain significant items––net of tax	$	4		$	88		$	88		$	246

(a)

Restructuring credits––cost reduction initiatives relate to employee termination costs, asset impairments and other exit costs not associated with acquisitions, which are included in Restructuring charges and certain acquisition-related costs. For the second quarter of 2018, the credits are mostly related to reserve releases associated with lower employee termination costs and, for the first six months of 2018, the credits are mostly related to reserve releases associated with lower costs for employee terminations and asset write downs, partially offset by exit costs. For the second quarter of 2017, the credits are mostly related to reserve releases associated with lower employee termination costs, and for the first six months of 2017, the credits are mostly related to reserve releases associated with lower employee termination costs, partially offset by asset write downs.

(b)

Relates to our cost-reduction and productivity initiatives not related to acquisitions. Included in Cost of sales ($30 million), Selling, informational and administrative expenses ($16 million) and Research and development expenses ($7 million) for the second quarter of 2018. Included in Cost of sales ($61 million), Selling, informational and administrative expenses ($34 million) and Research and development expenses ($13 million) for the first six months of 2018. Included in Cost of sales ($48 million), Selling, informational and administrative expenses ($15 million) and Research and development expenses ($11 million) for the second quarter of 2017. Included in Cost of sales ($75 million), Selling, informational and administrative expenses ($24 million) and Research and development expenses ($17 million) for the first six months of 2017.


(c)	Included in Other (income)/deductions––net. In the second quarter and first six months of 2018, primarily represents the reversal of a legal accrual where a loss was no longer deemed probable.


(d)	Included in Other (income)/deductions––net. In the second quarter and first six months of 2018 and 2017, represents adjustments to amounts previously recorded in 2016 to write down the HIS net assets to fair value less costs to sell related to the sale of HIS net assets to ICU Medical, Inc. on February 3, 2017.


(e)	Included in Other (income)/deductions––net. Represents expenses for changes to our infrastructure to align our commercial operations of our current segments, including costs to internally separate our businesses into distinct legal entities, as well as to streamline our intercompany supply operations to better support each business.

- 24 -

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION

CERTAIN LINE ITEMS

(UNAUDITED)

(f)

For second-quarter 2018, primarily included in Selling, informational and administrative expenses ($18 million) and Other (income)/deductions––net ($12 million) and includes, among other things, a non-cash $50 million pre-tax gain in Other (income)/deductions––net as a result of the contribution of our allogeneic chimeric antigen receptor T cell (CAR T) therapy development program assets in connection with our asset contribution agreement entered into with Allogene Therapeutics, Inc. (Allogene) in which Pfizer obtained a 25% ownership stake in Allogene. For the first six months of 2018, primarily included in Selling, informational and administrative expenses ($128 million) and Other (income)/deductions––net ($73 million), and includes, among other things, $119 million, in the aggregate, in Selling, informational and administrative expenses for a special, one-time bonus paid to virtually all Pfizer colleagues, excluding executives, which was one of several actions taken by us after evaluating the expected positive net impact of the December 2017 enactment of the legislation commonly referred to as the U.S. Tax Cuts and Jobs Act (TCJA) on us. In second-quarter 2017, virtually all included in Other (income)/deductions––net ($81 million) and Selling, informational and administrative expenses ($15 million). In the first six months of 2017, virtually all included in Other (income)/deductions––net ($137 million) and Selling, informational and administrative expenses ($20 million). For the second quarter and first six months of 2017, includes a net loss of approximately $30 million in Other (income)/deductions––net related to the sale of our 40% ownership investment in Laboratório Teuto Brasileiro S.A., including the extinguishment of a put option for the then remaining 60% ownership interest.

(g)

Included in Provision for taxes on income. Income taxes includes the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction’s applicable tax rate. The first six months of 2018 were favorably impacted by the December 2017 enactment of the TCJA, primarily related to certain tax initiatives associated with the lower U.S. tax rate as a result of the TCJA. Given the significant changes resulting from and complexities associated with the TCJA, the estimated financial impacts recorded in 2017 are provisional and are subject to further analysis, interpretation and clarification of the TCJA, which could result in changes to these estimates during 2018. Under guidance issued by the staff of the U.S. Securities and Exchange Commission, we expect to finalize our accounting related to the tax effects of the TCJA on deferred taxes, valuation allowances, state tax considerations, the repatriation tax liability, global intangible low-taxed income, and any remaining outside basis differences in our foreign subsidiaries during 2018 as we complete our analysis, computations and assertions. It is possible that others, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts. We will revise these estimates during the second half of 2018 as we gather additional information to complete our tax returns and as any interpretation or clarification of the TCJA occurs through legislation, U.S. Treasury actions or other means.

(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 (as described in the Financial Review––Non-GAAP Financial Measure (Adjusted Income) section of Pfizer’s 2017 Financial Report, which was filed as Exhibit 13 to Pfizer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, 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 their 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.

- 25 -

PFIZER INC. AND SUBSIDIARY COMPANIES

OPERATING SEGMENT INFORMATION⁽¹⁾- (UNAUDITED)

(millions of dollars)



	Second-Quarter 2018
	Innovative Health (IH)⁽²⁾			Essential Health (EH)⁽²⁾			Other⁽³⁾			Non-GAAP Adjusted⁽⁴⁾			Reconciling Items⁽⁵⁾			GAAP Reported
Revenues	$	8,273		$	5,193		$	—		$	13,466		$	—		$	13,466
Cost of sales	1,081			1,592			203			2,876			40			2,916
% of revenue	13.1		%	30.7		%	*			21.4		%	*			21.7		%
Selling, informational and administrative expenses	1,721			619			1,168			3,507			35			3,542
Research and development expenses	600			238			952			1,789			8			1,797
Amortization of intangible assets	56			8			7			70			1,121			1,191
Restructuring charges and certain acquisition-related costs	—			—			—			—			44			44
Other (income)/deductions––net	(285		)	(80		)	(154		)	(519		)	(32		)	(551		)
Income/(loss) from continuing operations before provision for taxes on income	5,100			2,818			(2,175		)	5,742			(1,216		)	4,527

	Six Months Ended July 1, 2018
	Innovative Health (IH)⁽²⁾			Essential Health (EH)⁽²⁾			Other⁽³⁾			Non-GAAP Adjusted⁽⁴⁾			Reconciling Items⁽⁵⁾			GAAP Reported
Revenues	$	16,102		$	10,271		$	—		$	26,373		$	—		$	26,373
Cost of sales	2,068			3,028			316			5,413			67			5,479
% of revenue	12.8		%	29.5		%	*			20.5		%	*			20.8		%
Selling, informational and administrative expenses	3,273			1,246			2,274			6,793			161			6,954
Research and development expenses	1,187			458			1,882			3,528			13			3,540
Amortization of intangible assets	107			27			7			141			2,246			2,387
Restructuring charges and certain acquisition-related costs	—			—			—			—			87			87
Other (income)/deductions––net	(563		)	(95		)	(182		)	(841		)	112			(728		)
Income/(loss) from continuing operations before provision for taxes on income	10,031			5,606			(4,297		)	11,339			(2,686		)	8,654



	Second-Quarter 2017
	Innovative Health (IH)⁽²⁾			Essential Health (EH)⁽²⁾			Other⁽³⁾			Non-GAAP Adjusted⁽⁴⁾			Reconciling Items⁽⁵⁾			GAAP Reported
Revenues	$	7,671		$	5,226		$	—		$	12,896		$	—		$	12,896
Cost of sales⁽⁶⁾	982			1,421			189			2,592			69			2,660
% of revenue	12.8		%	27.2		%	*			20.1		%	*			20.6		%
Selling, informational and administrative expenses⁽⁶⁾	1,553			734			1,103			3,390			40			3,430
Research and development expenses⁽⁶⁾	542			256			980			1,777			9			1,787
Amortization of intangible assets	24			17			—			41			1,167			1,208
Restructuring charges and certain acquisition-related costs⁽⁶⁾	—			—			—			—			70			70
Other (income)/deductions––net⁽⁶⁾	(216		)	(35		)	72			(179		)	105			(75		)
Income/(loss) from continuing operations before provision for taxes on income	4,786			2,832			(2,344		)	5,275			(1,459		)	3,815

	Six Months Ended July 2, 2017
	Innovative Health (IH)⁽²⁾			Essential Health (EH)⁽²⁾			Other⁽³⁾			Non-GAAP Adjusted⁽⁴⁾			Reconciling Items⁽⁵⁾			GAAP Reported
Revenues	$	15,086		$	10,590		$	—		$	25,675		$	—		$	25,675
Cost of sales⁽⁶⁾	1,830			2,871			322			5,024			104			5,128
% of revenue	12.1		%	27.1		%	*			19.6		%	*			20.0		%
Selling, informational and administrative expenses⁽⁶⁾	2,979			1,411			2,296			6,685			60			6,745
Research and development expenses⁽⁶⁾	1,060			509			1,921			3,490			12			3,502
Amortization of intangible assets	50			26			—			76			2,318			2,394
Restructuring charges and certain acquisition-related costs⁽⁶⁾	—			—			—			—			153			153
Other (income)/deductions––net⁽⁶⁾	(367		)	(99		)	187			(279		)	265			(14		)
Income from continuing operations before provision for taxes on income	9,534			5,871			(4,726		)	10,679			(2,913		)	7,767

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


*	Indicates calculation not meaningful or result is equal to or greater than 100%.

- 26 -

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: Pfizer Innovative Health (IH) and Pfizer Essential Health (EH). The expenses generally include only those costs directly attributable to the operating segment. The operating segment information presents the three and six months ended July 1, 2018 and July 2, 2017. Subsidiaries operating outside the U.S. are included for the three and six months ended May 27, 2018 and May 28, 2017.

The adoption of certain new accounting standards in the first quarter of 2018 impacted our consolidated statements of income. See Note (1) and Note (5) to Notes to Consolidated Statements of Income, Note (3) to Notes to Reconciliation of GAAP Reported to Non-GAAP Adjusted Information Certain Line Items and Note (6) below for additional information.

On February 3, 2017, we completed the sale of our global infusion systems net assets, Hospira Infusion Systems (HIS). The operating results of HIS are included in EH’s operating results through February 2, 2017 and, therefore, EH’s operating results for second-quarter 2017 do not reflect any contributions from HIS global operations, while EH’s operating results for the first six months of 2017 reflect approximately one month of HIS domestic operations and approximately two months of HIS international operations. Financial results for 2018 do not reflect any contribution from HIS global operations.



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