Segment, Geographic and Other Revenue Information

6 Months Ended

Jun. 30, 2019

Segment, Geographic and Other Revenue Information

A. Segment Information

At the beginning of our 2019 fiscal year, we began to manage our commercial operations through a new global structure consisting of three distinct business segments: Pfizer Biopharmaceuticals Group (Biopharma), Upjohn and through July 31, 2019, Pfizer’s Consumer Healthcare business (Consumer Healthcare). The Biopharma, Upjohn and Consumer Healthcare segments are each led by a single manager. Each operating segment has responsibility for its commercial activities. Upjohn and Consumer Healthcare are responsible for their own R&D activities while Biopharma receives its R&D services from GPD and WRDM. These services include IPR&D projects for new investigational products and additional indications for in-line products. Each business has a geographic footprint across developed and emerging markets. Our chief operating decision maker uses the revenues and earnings of the three operating segments, among other factors, for performance evaluation and resource allocation. Biopharma and Upjohn are the only reportable segments. We have revised prior-period information (Revenues and Earnings, as defined by management) to conform to the current management structure. As our operations were not managed under the new structure until the beginning of fiscal 2019, certain costs and expenses could not be directly attributed to one of the new operating segments. As a result, our operating segment results for the second quarter and first six months of 2018 include allocations, which management believes are reasonable.

Operating Segments



Some additional information about our Biopharma and Upjohn business segments follows:
	Pfizer Biopharmaceuticals Group
Biopharma is a science-based innovative medicines business that includes six business units – Oncology, Inflammation & Immunology, Rare Disease, Hospital, Vaccines and Internal Medicine. The new Hospital unit commercializes our global portfolio of sterile injectable and anti-infective medicines and includes Pfizer’s contract manufacturing operation, Pfizer CentreOne. At the beginning of our 2019 fiscal year, we also incorporated our biosimilar portfolio into our Oncology and Inflammation & Immunology business units and certain legacy established products into the Internal Medicine business unit. Each business unit is committed to delivering breakthroughs that change patients’ lives.		Upjohn is a global, primarily off-patent branded and generic established medicines business, which includes 20 primarily off-patent solid oral dose legacy brands, as well as certain generic medicines.
Select products include: - Prevnar 13/Prevenar 13 - Ibrance - Eliquis - Xeljanz - Enbrel (outside the U.S. and Canada) - Chantix/Champix - Sutent - Xtandi		Select products include: - Lyrica - Lipitor - Norvasc - Celebrex - Viagra - Certain generic medicines

On July 29, 2019, which fell in the third fiscal quarter of 2019, we announced that we entered into a definitive agreement to combine Upjohn with Mylan, creating a new global pharmaceutical company. For additional information, see Note 1A.

Pfizer’s Consumer Healthcare segment is an over-the-counter medicines business, which on July 31, 2019 was combined with GSK’s consumer healthcare business to form a new consumer healthcare joint venture. See Note 2 for additional information.

Other Costs and Business Activities

Certain pre-tax costs are not allocated to our operating segment results, such as costs associated with the following:

•

WRDM––the R&D and Medical expenses managed by our WRDM organization, which is generally responsible for research projects for our Biopharma portfolio until proof-of-concept is achieved and then for transitioning those projects to the GPD organization for possible clinical and commercial development. R&D spending may include upfront and milestone payments for intellectual property rights. The WRDM organization also has responsibility for certain science-based and other platform-services organizations, which provide end-to-end technical expertise and other services to the various R&D projects, as well as the Worldwide Medical and Safety group, which ensures that Pfizer provides all stakeholders––including patients, healthcare providers, pharmacists, payers and health authorities––with complete and up-to-date information on the risks and benefits associated with Pfizer products so that they can make appropriate decisions on how and when to use Pfizer’s medicines.


•	GPD––the costs associated with our GPD organization, which is generally responsible for clinical trials from WRDM in the Biopharma portfolio, including late stage portfolio spend. GPD also provides technical support and other services to Pfizer R&D projects. GPD is responsible for facilitating all regulatory submissions and interactions with regulatory agencies.


•	Other––the operating results of our Consumer Healthcare business, and costs associated with other commercial activities not managed as part of Biopharma or Upjohn, including all strategy, business development, portfolio management and valuation capabilities, which previously had been reported in various parts of the organization.

•

Corporate and Other Unallocated––the costs associated with platform functions (such as worldwide technology, global real estate operations, legal, finance, human resources, worldwide public affairs, compliance, and worldwide procurement), patient advocacy activities and certain compensation and other corporate costs, such as interest income and expense, and gains and losses on investments, as well as overhead expenses associated with our manufacturing (which include manufacturing variances associated with production) and commercial operations that are not directly assessed to an operating segment, as business unit (segment) management does not manage these costs.

•

Certain transactions and events such as (i) purchase accounting adjustments, where we incur expenses associated with the amortization of fair value adjustments to inventory, intangible assets and PP&E; (ii) acquisition-related costs, where we incur costs for executing the transaction, integrating the acquired operations and restructuring the combined company; and (iii) certain significant items, representing substantive and/or unusual, and in some cases recurring, items (such as restructuring charges, legal charges or net gains and losses on investments in equity securities) that are evaluated on an individual basis by management and that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis. Such items can include, but are not limited to, non-acquisition-related restructuring costs, as well as costs incurred for legal settlements, asset impairments and disposals of assets or businesses, including, as applicable, any associated transition activities.

Segment Assets

We manage our assets on a total company basis, not by operating segment, as many of our operating assets are shared or commingled (such as accounts receivable, as many of our customers are served by multiple operating segments). Therefore, our chief operating decision maker does not regularly review any asset information by operating segment and, accordingly, we do not report asset information by operating segment. Total assets were approximately $156 billion as of June 30, 2019 and $159 billion as of December 31, 2018.

Selected Income Statement Information



The following table provides selected income statement information by reportable segment:
	Three Months Ended
	Revenues				Earnings^(a)
(MILLIONS OF DOLLARS)	June 30, 2019		July 1, 2018		June 30, 2019			July 1, 2018
Reportable Segments:
Biopharma	$	9,595	$	9,434	$	6,093		$	5,958
Upjohn	2,807		3,147		1,951			2,222
Total reportable segments	12,402		12,581		8,044			8,181
Other business activities	—		—		(1,193		)	(1,119		)
Reconciling Items:
Corporate and other unallocated	862		886		(1,399		)	(1,576		)
Purchase accounting adjustments	—		—		(1,178		)	(1,134		)
Acquisition-related costs	—		—		176			(62		)
Certain significant items^(b)	—		—		(309		)	237
	$	13,264	$	13,466	$	4,141		$	4,527

	Six Months Ended
	Revenues				Earnings^(a)
(MILLIONS OF DOLLARS)	June 30, 2019		July 1, 2018		June 30, 2019			July 1, 2018
Reportable Segments:
Biopharma	$	18,779	$	18,315	$	11,981		$	11,781
Upjohn	5,882		6,267		4,225			4,391
Total reportable segments	24,661		24,582		16,206			16,172
Other business activities	—		—		(2,306		)	(2,307		)
Reconciling Items:
Corporate and other unallocated	1,721		1,791		(2,676		)	(2,900		)
Purchase accounting adjustments	—		—		(2,217		)	(2,355		)
Acquisition-related costs	—		—		148			(110		)
Certain significant items^(b)	—		—		(691		)	154
	$	26,382	$	26,373	$	8,463		$	8,654


^(a)	Income from continuing operations before provision/(benefit) for taxes on income. Biopharma’s earnings include dividend income of $76 million in the second quarter of 2019 and $76 million in the second quarter of 2018, and $140 million in the first six months of 2019 and $135 million in the first six months of 2018 from our investment in ViiV. For additional information, see Note 4.


^(b)	Certain significant items are substantive and/or unusual, and in some cases recurring, items (such as restructuring or legal charges) that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis.

For Earnings in the second quarter of 2019, certain significant items includes: (i) restructuring charges and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $113 million, (ii) charges for certain legal matters of $15 million, (iii) certain asset impairment charges of $10 million, (iv) charges for business and legal entity alignment of $141 million, (v) net gains recognized during the period on investments in equity securities of $25 million and (vi) other charges of $56 million. For additional information, see Note 3 and Note 4.

For Earnings in the second quarter of 2018, certain significant items includes: (i) restructuring credits and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $42 million, (ii) a net credit for certain legal matters of $88 million, (iii) certain asset impairment charges of $31 million, (iv) charges for business and legal entity alignment of $1 million, (v) net gains recognized during the period on investments in equity securities of $257 million and (vi) other charges of $35 million, which 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 CAR T cell therapy development program assets in connection with our contribution agreement entered into with Allogene. For additional information, see Note 3 and Note 4.

For Earnings in the first six months of 2019, certain significant items includes: (i) restructuring charges and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $170 million, (ii) charges for certain legal matters of $9 million, (iii) certain asset impairment charges of $149 million, (iv) charges for business and legal entity alignment of $264 million, (v) net gains recognized during the period on investments in equity securities of $136 million, (vi) net losses on early retirement of debt of $138 million and (vii) other charges of $97 million. For additional information, see Note 3 and Note 4.

For Earnings in the first six months of 2018, certain significant items includes: (i) restructuring credits and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $93 million, (ii) net credits for certain legal matters of $107 million, (iii) certain asset impairment charges of $31 million, (iv) charges for business and legal entity alignment of $4 million, (v) net gains recognized during the period on investments in equity securities of $375 million, (vi) net losses on early retirement of debt of $3 million and (vii) other charges of $197 million, which 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 CAR T cell therapy development program assets in connection with our contribution agreement entered into with Allogene, and a $119 million charge, 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 TCJA. For additional information, see Note 3 and Note 4.

Equity in the net income of investees accounted for by the equity method is not significant for any of our operating segments.

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

B. Geographic Information



The following table provides revenues by geographic area:
	Three Months Ended						Six Months Ended
(MILLIONS OF DOLLARS)	June 30, 2019		July 1, 2018		% Change		June 30, 2019		July 1, 2018		% Change
U.S.	$	6,335	$	6,225	2		$	12,510	$	12,500	—
Developed Europe^(a)	2,228		2,334		(5	)	4,315		4,426		(3	)
Developed Rest of World^(b)	1,639		1,694		(3	)	3,174		3,155		1
Emerging Markets^(c)	3,062		3,214		(5	)	6,383		6,292		1
Revenues	$	13,264	$	13,466	(2	)	$	26,382	$	26,373	—


^(a)	Developed Europe region includes the following markets: Western Europe, Scandinavian countries and Finland. Revenues denominated in euros were $1.8 billion in the second quarter of 2019 and $1.9 billion in the second quarter of 2018, and were $3.5 billion in the first six months of 2019 and $3.6 billion in the first six months of 2018.


^(b)	Developed Rest of World region includes the following markets: Japan, Canada, South Korea, Australia and New Zealand.


^(c)	Emerging Markets region includes, but is not limited to, the following markets: Asia (excluding Japan and South Korea), Latin America, Eastern Europe, the Middle East, Africa, Central Europe and Turkey.

C. Other Revenue Information

Significant Product Revenues



The following table provides detailed revenue information:
(MILLIONS OF DOLLARS)		Three Months Ended				Six Months Ended
PRODUCT	PRIMARY INDICATIONS OR CLASS	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018
TOTAL REVENUES		$	13,264	$	13,466	$	26,382	$	26,373
PFIZER BIOPHARMACEUTICALS GROUP (BIOPHARMA)^(a)		$	9,595	$	9,434	$	18,779	$	18,315
Internal Medicine^(b)		$	2,330	$	2,276	$	4,546	$	4,347
Eliquis alliance revenues and direct sales	Atrial fibrillation, deep vein thrombosis, pulmonary embolism	1,085		889		2,096		1,654
Chantix/Champix	An aid to smoking cessation treatment in adults 18 years of age or older	276		277		549		528
Premarin family	Symptoms of menopause	193		210		361		401
BMP2	Development of bone and cartilage	79		80		145		153
Toviaz	Overactive bladder	65		70		125		130
All other Internal Medicine	Various	631		750		1,270		1,480
Oncology^(c)		$	2,236	$	1,888	$	4,198	$	3,648
Ibrance	Advanced breast cancer	1,261		1,027		2,394		1,960
Sutent	Advanced and/or metastatic RCC, adjuvant RCC, refractory GIST (after disease progression on, or intolerance to, imatinib mesylate) and advanced pancreatic neuroendocrine tumor	248		275		480		537
Xtandi alliance revenues	Castration-resistant prostate cancer	201		171		369		330
Xalkori	ALK-positive and ROS1-positive advanced NSCLC	133		137		255		290
Bosulif	Philadelphia chromosome–positive chronic myelogenous leukemia	97		77		177		138
Inlyta	Advanced RCC	104		81		177		155
Retacrit^(j)	Anemia	51		18		82		36
All other Oncology	Various	140		100		262		201
Hospital^(d)		$	1,913	$	2,077	$	3,800	$	4,103
Sulperazon	Treatment of infections	165		150		342		319
Medrol^(e)	Steroid anti-inflammatory	120		123		240		258
Vfend	Fungal infections	94		110		178		207
Zithromax^(e)	Bacterial infections	73		81		177		182
EpiPen	Epinephrine injection used in treatment of life-threatening allergic reactions	80		95		146		148
Zyvox	Bacterial infections	71		66		134		134
Fragmin	Slows blood clotting	63		74		123		145
Zosyn/Tazocin	Antibiotic	53		58		104		120
Pfizer CentreOne^(f)	Various	204		209		380		381
All other Anti-infectives	Various	367		362		721		755
All other Hospital^(d)	Various	623		748		1,254		1,455
Vaccines		$	1,375	$	1,400	$	2,988	$	2,863
Prevnar 13/Prevenar 13	Pneumococcal disease	1,179		1,250		2,665		2,631
FSME/IMMUN-TicoVac	Tick-borne encephalitis disease	95		73		133		105
Nimenrix	Meningococcal disease	58		30		107		49
All other Vaccines	Various	43		47		82		78
Inflammation & Immunology (I&I)^(g)		$	1,219	$	1,222	$	2,256	$	2,235
Xeljanz	RA, PsA, UC	613		463		1,036		788
Enbrel (Outside the U.S. and Canada)	RA, juvenile idiopathic arthritis, PsA, plaque psoriasis, pediatric plaque psoriasis, ankylosing spondylitis and nonradiographic axial spondyloarthritis	420		551		871		1,057
Inflectra/Remsima^{(g), (j)}	Inflammatory diseases	153		158		291		303
Eucrisa	Mild-to-moderate atopic dermatitis (eczema)	27		39		50		65
All other I&I	Various	6		11		9		22
Rare Disease		$	521	$	571	$	991	$	1,120
BeneFIX	Hemophilia	121		141		247		288
Genotropin	Replacement of human growth hormone	125		140		232		272
Refacto AF/Xyntha	Hemophilia	108		141		214		271
Somavert	Acromegaly	68		68		128		131
Vyndaqel	ATTR-Cardiomyopathy and Polyneuropathy	63		38		104		72
All other Rare Disease	Various	35		43		66		86



(MILLIONS OF DOLLARS)		Three Months Ended				Six Months Ended
PRODUCT	PRIMARY INDICATIONS OR CLASS	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018
UPJOHN^(b)^,^(h)		$	2,807	$	3,147	$	5,882	$	6,267
Lyrica	Epilepsy, post-herpetic neuralgia and diabetic peripheral neuropathy, fibromyalgia, neuropathic pain due to spinal cord injury	1,175		1,223		2,362		2,436
Lipitor	Reduction of LDL cholesterol	407		521		1,029		1,032
Norvasc	Hypertension	216		273		516		529
Celebrex	Arthritis pain and inflammation, acute pain	174		161		347		306
Viagra	Erectile dysfunction	114		185		259		372
Effexor	Depression and certain anxiety disorders	86		79		163		150
Zoloft	Depression and certain anxiety disorders	73		77		143		151
Xalatan/Xalacom	Glaucoma and ocular hypertension	72		85		133		157
Revatio	Pulmonary arterial hypertension	56		54		98		109
Xanax	Anxiety disorders	52		56		98		111
All other Upjohn	Various	382		433		735		914
CONSUMER HEALTHCARE BUSINESS⁽ⁱ⁾		$	862	$	886	$	1,721	$	1,791
Total Alliance revenues	Various	$	1,187	$	987	$	2,277	$	1,842
Total Biosimilars^(j)	Various	$	217	$	188	$	396	$	361
Total Sterile Injectable Pharmaceuticals^(k)		$	1,218	$	1,329	$	2,455	$	2,688


^(a)	The Pfizer Biopharmaceuticals Group encompasses Internal Medicine, Oncology, Hospital, Vaccines, Inflammation & Immunology and Rare Disease. The new Hospital business unit commercializes our global portfolio of sterile injectable and anti-infective medicines, and also includes Pfizer CentreOne^(f).


^(b)	We reclassified certain products from the LEP category, including Premarin family products, and certain other products from the legacy Peri-LOE category, including Pristiq, to the Internal Medicine category and reclassified Lyrica from the Internal Medicine category to the Upjohn business to conform 2018 product revenues to the current presentation.


^(c)	We performed certain reclassifications in the All other Oncology category to conform 2018 product revenues to the current presentation.

^(d)

Hospital is a new business unit that commercializes our global portfolio of sterile injectable and anti-infective medicines. We performed certain reclassifications, primarily from the legacy Sterile Injectables Pharmaceuticals (SIP) category (Sulperazon, Medrol, Fragmin, Tygacil, Zosyn/Tazocin and Precedex, among other products), the LEP category (Epipen and Zithromax), and the legacy Peri-LOE category (Vfend and Zyvox) to the Hospital category to conform 2018 product revenues to the current presentation. Hospital also includes Pfizer CentreOne^(f). All other Hospital primarily includes revenues from legacy SIP products (that are not anti-infective products) and, to a much lesser extent, solid oral dose products (that are not anti-infective products). SIP anti-infective products that are not individually listed above are recorded in “All other Anti-infectives”.


^(e)	2018 revenues for Medrol and Zithromax may not agree to previously disclosed revenues because revenues for those products were previously split between LEP and the legacy SIP categories. All revenues for these products are currently reported in the Hospital category.

^(f)

Pfizer CentreOne includes revenues from our contract manufacturing and active pharmaceutical ingredient sales operation, including sterile injectables contract manufacturing, and revenues related to our manufacturing and supply agreements, including with Zoetis Inc. In the fourth quarter of 2017, we sold our equity share in Hisun Pfizer. As a result, effective in the first quarter of 2018, Hisun Pfizer-related revenues, previously reported in emerging markets within legacy All Other LEP and legacy All Other SIP, are reported in emerging markets within Pfizer CentreOne.


^(g)	We reclassified Inflectra/Remsima from the legacy Biosimilars category to the Inflammation & Immunology category to conform 2018 product revenues to the current presentation.


^(h)	Pfizer’s Upjohn business encompasses primarily off-patent branded and generic established medicines that includes 20 of our primarily off-patent solid oral dose legacy brands including Lyrica, Lipitor, Norvasc, Celebrex and Viagra, as well as certain generic medicines.


⁽ⁱ⁾	Pfizer’s Consumer Healthcare business is an over-the-counter medicines business, which on July 31, 2019 was combined with GSK’s consumer healthcare business to form a new consumer healthcare joint venture. For additional information, see Note 2.


^(j)	Biosimilars are highly similar versions of approved and authorized biological medicines and primarily include revenues from Inflectra/Remsima and Retacrit.

^(k)

Sterile Injectable Pharmaceuticals represents the total of all branded and generic injectable products in the Hospital business, including anti-infective sterile injectable pharmaceuticals.