Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 29, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13

OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

COMMISSION FILE NUMBER 1-3619

----

PFIZER INC.

(Exact name of registrant as specified in its charter)



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

235 East 42^nd Street, New York, New York 10017

(Address of principal executive offices) (zip code)

(212) 733-2323

(Registrant’s telephone number)



Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.05 par value	PFE	New York Stock Exchange
0.250% Notes due 2022	PFE22	New York Stock Exchange
1.000% Notes due 2027	PFE27	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



Yes	x	No	☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).



Yes	x	No	☐

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

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



Yes	☐	No	x

At May 4, 2020, 5,554,833,754 shares of the issuer’s voting common stock were outstanding.

Table of Contents



PART I. FINANCIAL INFORMATION	Page

Item 1.
Financial Statements

Condensed Consolidated Statements of Income for the three months ended March 29, 2020 and March 31, 2019	5

Condensed Consolidated Statements of Comprehensive Income for the three months ended March 29, 2020 and March 31, 2019	6

Condensed Consolidated Balance Sheets as of March 29, 2020 and December 31, 2019	7

Condensed Consolidated Statements of Equity for the three months ended March 29, 2020 and March 31, 2019	8

Condensed Consolidated Statements of Cash Flows for the three months ended March 29, 2020 and March 31, 2019	9

Notes to Condensed Consolidated Financial Statements	10

Review Report of Independent Registered Public Accounting Firm	42

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations	43

Item 3.
Quantitative and Qualitative Disclosures About Market Risk	85

Item 4.
Controls and Procedures	85

PART II. OTHER INFORMATION

Item 1.
Legal Proceedings	86

Item 1A.
Risk Factors	86

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds	88

Item 3.
Defaults Upon Senior Securities	88

Item 4.
Mine Safety Disclosures	88

Item 5.
Other Information	88

Item 6.
Exhibits	89

Signature	90

GLOSSARY OF DEFINED TERMS

Unless the context requires otherwise, references to “Pfizer,” “the Company,” “we,” “us” or “our” in this Quarterly Report on Form 10-Q (defined below) refer to Pfizer Inc. and its subsidiaries. We also have used several other terms in this Quarterly Report on Form 10-Q, most of which are explained or defined below:



2019 Financial Report	Financial Report for the fiscal year ended December 31, 2019, which was filed as Exhibit 13 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2019
2019 Form 10-K	Annual Report on Form 10-K for the fiscal year ended December 31, 2019
ACA (Also referred to as U.S. Healthcare Legislation)	U.S. Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act
ACIP	Advisory Committee on Immunization Practices
ALK	anaplastic lymphoma kinase
Alliance revenues	Revenues from alliance agreements under which we co-promote products discovered or developed by other companies or us
Allogene	Allogene Therapeutics, Inc.
AML	Acute Myeloid Leukemia
Anacor	Anacor Pharmaceuticals, Inc.
Array	Array BioPharma Inc.
Astellas	Astellas Pharma Inc., Astellas US LLC and Astellas Pharma US, Inc.
Bamboo	Bamboo Therapeutics, Inc.
BioNTech	BioNTech SE
Biopharma	Pfizer Biopharmaceuticals Group
BMS	Bristol-Myers Squibb Company
CDC	U.S. Centers for Disease Control and Prevention
cGMP	current Good Manufacturing Practices
CHMP	Committee for Medicinal Products for Human Use
COVID-19	novel coronavirus disease of 2019
Developed Markets	U.S., Western Europe, Japan, Canada, South Korea, Australia, Scandinavian countries, Finland and New Zealand
EMA	European Medicines Agency
Emerging Markets	Includes, but is not limited to, the following markets: Asia (excluding Japan and South Korea), Latin America, Eastern Europe, Africa, the Middle East, Central Europe and Turkey
EPS	earnings per share
EU	European Union
Exchange Act	Securities Exchange Act of 1934, as amended
FASB	Financial Accounting Standards Board
FDA	U.S. Food and Drug Administration
GAAP	Generally Accepted Accounting Principles
GIST	gastrointestinal stromal tumors
GPD	Global Product Development organization
GSK	GlaxoSmithKline plc
hGH-CTP	human growth hormone
HIS	Hospira Infusion Systems
Hospira	Hospira, Inc.
HR+	hormone receptor-positive
IBT	Income before tax
ICU Medical	ICU Medical, Inc.
IPR&D	in-process research and development
IRS	U.S. Internal Revenue Service
IV	intravenous
Janssen	Janssen Biotech Inc.
J&J	Johnson & Johnson
JV	Joint Venture
King	King Pharmaceuticals LLC (formerly King Pharmaceuticals, Inc.)
LDL	low density lipoprotein
LIBOR	London Interbank Offered Rate
Lilly	Eli Lilly & Company
MCO	managed care organization



mCRC	metastatic colorectal cancer
MD&A	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Medivation	Medivation LLC (formerly Medivation, Inc.)
Meridian	Meridian Medical Technologies, Inc.
Moody’s	Moody’s Investors Service
Mylan	Mylan N.V.
NDA	new drug application
NSCLC	non-small cell lung cancer
OPKO	OPKO Health, Inc.
OTC	over-the-counter
PARP	poly ADP ribose polymerase
PBM	pharmacy benefit manager
Pharmacia	Pharmacia Corporation
PP&E	property, plant & equipment
PsA	psoriatic arthritis
Quarterly Report on Form 10-Q	Quarterly Report on Form 10-Q for the quarterly period ended March 29, 2020
RA	rheumatoid arthritis
RCC	renal cell carcinoma
R&D	research and development
Sandoz	Sandoz, Inc., a division of Novartis AG
SEC	U.S. Securities and Exchange Commission
SI&A	selling, informational and administrative
S&P	Standard and Poor’s
TCJA	legislation commonly referred to as the U.S. Tax Cuts and Jobs Act of 2017
Therachon	Therachon Holding AG
UC	ulcerative colitis
U.K.	United Kingdom
U.S.	United States
ViiV	ViiV Healthcare Limited
VBP	Volume-based procurement program
WRDM	Worldwide Research, Development and Medical

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

PFIZER INC. AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)



	Three Months Ended
(MILLIONS, EXCEPT PER COMMON SHARE DATA)	March 29, 2020			March 31, 2019
Revenues	$	12,028		$	13,118
Costs and expenses:
Cost of sales^(a)	2,378			2,433
Selling, informational and administrative expenses^(a)	2,873			3,339
Research and development expenses^(a)	1,724			1,703
Amortization of intangible assets	885			1,183
Restructuring charges and certain acquisition-related costs	69			46
(Gain) on completion of Consumer Healthcare JV transaction	(6		)	—
Other (income)/deductions––net	221			92
Income from continuing operations before provision for taxes on income	3,885			4,323
Provision for taxes on income	475			433
Income from continuing operations	3,410			3,889
Discontinued operations––net of tax	—			—
Net income before allocation to noncontrolling interests	3,410			3,889
Less: Net income attributable to noncontrolling interests	9			6
Net income attributable to Pfizer Inc.	$	3,401		$	3,884

Earnings per common share––basic:
Income from continuing operations attributable to Pfizer Inc. common shareholders	$	0.61		$	0.69
Discontinued operations––net of tax	—			—
Net income attributable to Pfizer Inc. common shareholders	$	0.61		$	0.69

Earnings per common share––diluted:
Income from continuing operations attributable to Pfizer Inc. common shareholders	$	0.61		$	0.68
Discontinued operations––net of tax	—			—
Net income attributable to Pfizer Inc. common shareholders	$	0.61		$	0.68

Weighted-average shares––basic	5,545			5,635
Weighted-average shares––diluted	5,613			5,750


^(a)	Excludes amortization of intangible assets, except as disclosed in Note 9A. Identifiable Intangible Assets and Goodwill: Identifiable Intangible Assets.

Amounts may not add due to rounding.

See Notes to Condensed Consolidated Financial Statements.

PFIZER INC. AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)



	Three Months Ended
(MILLIONS OF DOLLARS)	March 29, 2020			March 31, 2019
Net income before allocation to noncontrolling interests	$	3,410		$	3,889

Foreign currency translation adjustments, net^(a)	(1,272		)	324
Reclassification adjustments	—			2
	(1,272		)	326
Unrealized holding gains/(losses) on derivative financial instruments, net	(501		)	267
Reclassification adjustments for (gains)/losses included in net income^(b)	19			(263		)
	(482		)	4
Unrealized holding gains/(losses) on available-for-sale securities, net	(51		)	40
Reclassification adjustments for losses included in net income^(b)	15			11
	(36		)	51
Benefit plans: actuarial losses, net	(166		)	—
Reclassification adjustments related to amortization	66			60
Reclassification adjustments related to settlements, net	53			—
Other	16			(23		)
	(31		)	37
Reclassification adjustments related to amortization of prior service costs and other, net	(45		)	(46		)
Other	(1		)	—
	(45		)	(46		)
Other comprehensive income/(loss), before tax	(1,867		)	372
Tax provision/(benefit) on other comprehensive income/(loss)	(377		)	25
Other comprehensive income/(loss) before allocation to noncontrolling interests	$	(1,490	)	$	348
Comprehensive income before allocation to noncontrolling interests	$	1,920		$	4,237
Less: Comprehensive income attributable to noncontrolling interests	9			1
Comprehensive income attributable to Pfizer Inc.	$	1,911		$	4,236


^(a)	Amounts in the first quarter of 2020 include a loss of approximately $1.6 billion pre-tax ($1.2 billion after-tax) related to foreign currency translation adjustments attributable to our equity method investment in the GSK Consumer Healthcare joint venture (see Note 2B), partially offset by the results of our net investment hedging program.


^(b)	Reclassified into Other (income)/deductions—net and Cost of sales in the condensed consolidated statements of income. For additional information on amounts reclassified into Other (income)/deductions—net and Cost of sales, see Note 7E. Financial Instruments: Derivative Financial Instruments and Hedging Activities.

Amounts may not add due to rounding.

See Notes to Condensed Consolidated Financial Statements.

PFIZER INC. AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS



(MILLIONS OF DOLLARS)	March 29, 2020			December 31, 2019
	(Unaudited)
Assets
Cash and cash equivalents	$	2,151		$	1,305
Short-term investments	8,199			8,525
Trade accounts receivable, less allowance for doubtful accounts: 2020—$527; 2019—$527	9,881			8,724
Inventories	8,423			8,283
Current tax assets	3,346			3,344
Other current assets	2,737			2,622
Total current assets	34,738			32,803
Equity-method investments	15,524			17,133
Long-term investments	2,696			3,014
Property, plant and equipment, less accumulated depreciation: 2020—$16,929; 2019—$16,789	14,040			13,967
Identifiable intangible assets, less accumulated amortization	34,464			35,370
Goodwill	58,502			58,653
Noncurrent deferred tax assets and other noncurrent tax assets	2,207			2,099
Other noncurrent assets	4,166			4,450
Total assets	$	166,336		$	167,489

Liabilities and Equity
Short-term borrowings, including current portion of long-term debt: 2020—$337; 2019—$1,462	$	16,007		$	16,195
Trade accounts payable	3,972			4,220
Dividends payable	—			2,104
Income taxes payable	1,150			980
Accrued compensation and related items	2,246			2,720
Other current liabilities	10,515			11,083
Total current liabilities	33,890			37,304

Long-term debt	36,281			35,955
Pension benefit obligations, net	5,442			5,638
Postretirement benefit obligations, net	1,093			1,124
Noncurrent deferred tax liabilities	5,268			5,578
Other taxes payable	12,212			12,126
Other noncurrent liabilities	6,812			6,317
Total liabilities	100,998			104,042

Commitments and Contingencies

Preferred stock	17			17
Common stock	470			468
Additional paid-in capital	87,680			87,428
Treasury stock	(111,010		)	(110,801		)
Retained earnings	101,000			97,670
Accumulated other comprehensive loss	(13,131		)	(11,640		)
Total Pfizer Inc. shareholders’ equity	65,026			63,143
Equity attributable to noncontrolling interests	312			303
Total equity	65,338			63,447
Total liabilities and equity	$	166,336		$	167,489

Amounts may not add due to rounding.

See Notes to Condensed Consolidated Financial Statements.

PFIZER INC. AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(UNAUDITED)



	PFIZER INC. SHAREHOLDERS
	Preferred Stock			Common Stock					Treasury Stock
(MILLIONS, EXCEPT PREFERRED SHARES)	Shares	Stated Value		Shares	Par Value		Add’l Paid-In Capital		Shares		Cost			Retained Earnings		Accum. Other Comp. Loss			Share- holders’ Equity			Non-controlling interests		Total Equity
Balance, January 1, 2020	431	$	17	9,369	$	468	$	87,428	(3,835	)	$	(110,801	)	$	97,670	$	(11,640	)	$	63,143		$	303	$	63,447
Net income														3,401					3,401			9		3,410
Other comprehensive income/(loss), net of tax																(1,490		)	(1,490		)	—		(1,490		)
Cash dividends declared: