EX-99 2 pfe-09272020xex99.htm EX-99 Document
Exhibit 99
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PFIZER REPORTS THIRD-QUARTER 2020 RESULTS
Third-Quarter 2020 Revenues of $12.1 Billion; Reported Diluted EPS(1) of $0.39, Adjusted Diluted EPS(2) of $0.72
4% Operational Growth from Biopharma, Primarily Driven by the Ongoing Strong Performance of Vyndaqel/Vyndamax, Growth from our Leading Portfolio of Biosimilars, as Well as Continued Strength from Key Brands Including Eliquis, Ibrance, Xeljanz, Inlyta and Xtandi
Updated and Tightened Ranges for Certain Components of Total Company(3) 2020 Financial Guidance, Including a Slight Increase to the Midpoint of Adjusted Diluted EPS(2) Guidance Range
Reaffirmed All 2020 Financial Guidance Components for New Pfizer(4) and Upjohn(5) and the Projected Revenue CAGR of At Least 6% for New Pfizer(4) Through 2025
COVID Vaccine Phase 2/3 Clinical Trial has Enrolled More Than 42,000 Participants, with Nearly 36,000 Having Received their Second Vaccination, as of October 26
Continue to Expect to Close the Upjohn Transaction with Mylan N.V. (Mylan) in the Fourth Quarter of 2020
NEW YORK, NY, Tuesday, October 27, 2020 – Pfizer Inc. (NYSE: PFE) reported financial results for third-quarter 2020 and updated and tightened certain components of Total Company(3) 2020 financial guidance, which continues to reflect actual and anticipated business impacts from the novel coronavirus disease of 2019 (COVID-19) pandemic.
EXECUTIVE COMMENTARY
Dr. Albert Bourla, Chairman and Chief Executive Officer, stated, “As we enter the final stretch of what has been a historically challenging year for the world, I could not be more proud of the extraordinary effort, dedication and resolve shown by Pfizer colleagues to address the COVID-19 pandemic with unprecedented speed, while never compromising on their commitment to the patient-centered, science-driven standards that guide everything we do. I am more confident than ever in Pfizer’s future as we transition to a smaller, more agile, science-based pharmaceutical company with what we believe is an industry-leading innovative pipeline, a portion of which we were pleased to highlight at our recent investor day event.”
Frank D’Amelio, Chief Financial Officer and Executive Vice President, Global Supply, stated: “I am pleased with our performance so far this year, including our ability to maintain a steady supply of medicines to the patients who rely on them around the world during these uniquely challenging times. In the first nine months of the year, our Biopharma business grew 7% operationally, despite a COVID-19-related negative impact of approximately 2%, driven by the strong performance of many of our key brands. This performance adds to our confidence in our
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ability to achieve our expectation of at least a 6% compound annual revenue growth rate through 2025 for New Pfizer(4).”
Results for the third quarter and the first nine months of 2020 and 2019(6) are summarized below.
OVERALL RESULTS
($ in millions, except
per share amounts)
Third-QuarterNine Months
 20202019Change20202019Change
Revenues$  12,131 $  12,680 (4%)$  35,961 $  39,062 (8%)
Reported Net Income(1)
2,194 7,680 (71%)9,022 16,609 (46%)
Reported Diluted EPS(1)
0.39 1.36 (71%)1.60 2.92 (45%)
Adjusted Income(2)
4,071 4,214 (3%)12,989 13,625 (5%)
Adjusted Diluted EPS(2)
0.72 0.75 (3%)2.31 2.39 (4%)
REVENUES
($ in millions)Third-QuarterNine Months
 20202019% Change20202019% Change
 TotalOper.TotalOper.
Biopharma$  10,215 $  9,952 3%4%$  30,017 $  28,429 6%7%
Upjohn1,916 2,351 (18%)(18%)5,944 8,535 (30%)(29%)
Consumer Healthcare(7)
— 377 (100%)(100%)— 2,098 (100%)(100%)
Total Company$  12,131 $  12,680 (4%)(4%)$  35,961 $  39,062 (8%)(7%)
Beginning in 2020, Upjohn began managing Pfizer’s Meridian subsidiary, the manufacturer of EpiPen and other auto-injector products, and a pre-existing strategic collaboration between Pfizer and Mylan for generic drugs in Japan (Mylan-Japan). To facilitate comparison across periods, revenues and expenses associated with Meridian and Mylan-Japan are reported in Pfizer’s Upjohn business in all periods presented.
Acquisitions and other business development activities completed in 2019 and in the first nine months of 2020 impacted financial results in the periods presented(7). 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(8).
2020 FINANCIAL GUIDANCE(9)
Financial guidance reflects management’s current expectations for operational performance, foreign exchange rates as well as various COVID-19-related uncertainties, primarily those related to the severity, duration and global macroeconomic impact of the pandemic.
Key guidance assumptions regarding these uncertainties broadly reflect an ongoing, gradual global recovery from the macroeconomic and healthcare impacts of the COVID-19 pandemic. These assumptions are guided by the
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trajectory of the pandemic’s impact on Pfizer’s business to date, which was less severe at its peak than originally anticipated, but is recovering at a somewhat slower pace than originally expected. Current guidance continues to assume no revenue contributions from a potential COVID-19 vaccine.
Pfizer updated and tightened the ranges for certain components of Total Company(3) 2020 financial guidance, including a slight increase to the midpoint of the Adjusted Diluted EPS(2) guidance range, and reaffirmed all 2020 financial guidance components for New Pfizer(4) and Upjohn(5). Updated 2020 financial guidance for Total Company(3) is presented below.
Revenues$48.8 to $49.5 billion
(previously $48.6 to $50.6 billion)
Adjusted Cost of Sales(2) as a Percentage of Revenues
20.2% to 20.7%
(previously 19.5% to 20.5%)
Adjusted SI&A Expenses(2)
$11.5 to $12.0 billion
(previously $11.5 to $12.5 billion)
Adjusted R&D Expenses(2)
$8.8 to $9.1 billion
(previously $8.6 to $9.0 billion)
Adjusted Other (Income)/Deductions(2)
Approximately $1.0 billion of income
(previously approximately $800 million of income)
Effective Tax Rate on Adjusted Income(2)
Approximately 15.0%
Adjusted Diluted EPS(2)
$2.88 to $2.93
(previously $2.85 to $2.95)
Financial guidance for Adjusted diluted EPS(2) continues to assume no share repurchases in 2020.
2020 Financial Guidance for New Pfizer(4)
Pfizer’s reaffirmed 2020 financial guidance for New Pfizer(4) is presented below. New Pfizer(4) financial guidance reflects the Biopharma business as it is presently being managed and assumes the pending Upjohn combination with Mylan was completed at the beginning of 2020.
Revenues$40.8 to $42.4 billion
Adjusted IBT Margin(10)
Approximately 37.0%
Adjusted Diluted EPS(2)
$2.28 to $2.38
Operating Cash Flow$10.0 to $11.0 billion
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2020 Financial Guidance for Upjohn(5)
Pfizer’s reaffirmed 2020 financial guidance for Upjohn(5) is presented below. Upjohn(5) financial guidance reflects a full-year 2020 contribution from the Upjohn business as it is presently being managed.
Revenues$8.0 to $8.5 billion
Adjusted EBITDA(11)
$3.8 to $4.2 billion
CAPITAL ALLOCATION
During the first nine months of 2020, Pfizer paid $6.3 billion of dividends, composed of dividends of $0.38 per share of common stock in each of the first, second and third quarters of 2020.
No share repurchases have been completed to date in 2020. As of October 27, 2020, Pfizer’s remaining share repurchase authorization was $5.3 billion. No share repurchases are currently planned in 2020.
Third-quarter 2020 diluted weighted-average shares outstanding used to calculate Reported(1) and Adjusted(2) diluted EPS was 5,633 million shares, a reduction of 16 million shares compared to the prior-year quarter primarily due to Pfizer’s share repurchase program, reflecting the impact of share repurchases during 2019, partially offset by shares issued for employee compensation programs.
QUARTERLY FINANCIAL HIGHLIGHTS (Third-Quarter 2020 vs. Third-Quarter 2019)
Third-quarter 2020 revenues totaled $12.1 billion, a decrease of $549 million, or 4%, compared to the prior-year quarter, reflecting an operational decline of $444 million, or 4%, as well as the unfavorable impact of foreign exchange of $104 million, or 1%. Excluding the impact of Consumer Healthcare(7), revenues declined 1% operationally compared to the prior-year quarter.
Impact of COVID-19 on Third-Quarter 2020 Revenues
Third-quarter 2020 revenues included an estimated unfavorable impact of approximately $500 million, or 4%, due to COVID-19, primarily driven by lower demand for certain products in China and unfavorable disruptions to wellness visits for patients in the U.S., which negatively impacted prescribing patterns for certain products, partially offset by increased adult uptake for Prevenar 13 in certain international markets resulting from greater vaccine awareness for respiratory illnesses, as well as the recovery of a portion of the missed doses of Prevnar 13 in the U.S. from second-quarter 2020.
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Biopharma Revenue Highlights
Third-quarter 2020 Biopharma revenues totaled $10.2 billion, up 4% operationally, primarily driven by:
Vyndaqel/Vyndamax global revenues of $351 million, up 125% operationally, driven by:
101% growth in the U.S., driven by the launches of Vyndaqel in May 2019 and Vyndamax in September 2019 for the treatment of transthyretin amyloid cardiomyopathy (ATTR-CM); and
150% operational growth in international markets, primarily driven by the March 2019 launch of the ATTR-CM indication in Japan and the February 2020 approval of the ATTR-CM indication in the European Union (EU);
Biosimilars global revenues of $424 million, up 80% operationally, primarily driven by recent oncology biosimilar launches of Ruxience (rituximab), Zirabev (bevacizumab) and Trazimera (trastuzumab) in the U.S. and other global markets, as well as continued growth from Retacrit (epoetin zeta), primarily in the U.S.;
Eliquis globally, up 9% operationally, primarily driven by continued increased adoption in non-valvular atrial fibrillation as well as oral anti-coagulant market share gains. In the U.S., strong volume growth was partially offset by a lower net price due to an increased impact from the Medicare “coverage gap” and unfavorable channel mix;
Prevenar 13 internationally, up 14% operationally, primarily reflecting continued strong pediatric uptake in China, as well as increased adult uptake in certain international markets resulting from greater vaccine awareness for respiratory illnesses, including specifically pneumococcal disease, due to the COVID-19 pandemic;
Ibrance in the U.S., up 9%, primarily driven by increased cyclin-dependent kinase (CDK) class penetration and Ibrance’s continued CDK market share leadership in metastatic breast cancer;
Xeljanz globally, up 10% operationally, primarily driven by:
6% growth in the U.S., reflecting higher volumes within the rheumatoid arthritis (RA) and psoriatic arthritis (PsA) indications driven by continued improvements in formulary access, partially offset by increased discounts from recently-signed contracts which were entered into in order to unlock access to additional patient lives; and
23% operational growth in international markets, primarily reflecting continued uptake in the RA indication and, to a lesser extent, the ulcerative colitis (UC) indication in certain developed markets;
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Inlyta globally, up 41% operationally, primarily reflecting increased demand in the U.S. and certain developed international markets following the approvals in 2019 for combinations of certain immune checkpoint inhibitors and Inlyta for the first-line treatment of patients with advanced renal cell carcinoma; and
Xtandi in the U.S., up 18%, primarily driven by continued strong demand in the metastatic and non-metastatic castration-resistant prostate cancer indications, as well as the metastatic castration-sensitive prostate cancer indication, which was approved in the U.S. in December 2019,
partially offset primarily by lower revenues for:
Prevnar 13 in the U.S., down 14%, primarily reflecting the unfavorable impact of timing associated with government purchases for the pediatric indication and the impact of the revised Advisory Committee on Immunization Practices (ACIP) recommendation for the adult indication to shared clinical decision making, which was published by the Centers for Disease Control and Prevention (CDC) in the Morbidity and Mortality Weekly Report in the fourth quarter of 2019, partially offset by the recovery of a portion of the missed doses from second-quarter 2020 resulting from COVID-19;
Enbrel internationally, down 21% operationally, primarily reflecting continued biosimilar competition in most developed Europe markets as well as in Japan and Brazil;
the Hospital business in emerging markets, down 11% operationally, primarily driven by lower demand for certain anti-infective products in China due to lower infection rates driven by fewer elective surgical procedures, shorter in-patient hospital stays and improved infection control compared to the prior-year quarter;
Ibrance in developed Europe, down 17% operationally, primarily reflecting continued strong volume growth, more than offset by pricing pressures in certain developed Europe markets; and
Chantix in the U.S., down 19%, primarily reflecting expected lower demand resulting from reduced doctor visits, including wellness visits when Chantix is typically prescribed, due to COVID-19.
Upjohn Revenue Highlights
Third-quarter 2020 Upjohn revenues totaled $1.9 billion, down 18% operationally, primarily driven by the following negative drivers, each of which was expected:
Significant volume declines for Lyrica in the U.S. due to multi-source generic competition that began in July 2019;
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Lower revenues for Lipitor and Norvasc in China due to the impact of the volume-based procurement (VBP) program which was initially implemented in March 2019 and expanded nationwide in December 2019; and
Lower volume for Celebrex in Japan, resulting from generic competition which began in June 2020.
GAAP Reported(1) Income Statement Highlights
SELECTED TOTAL COMPANY REPORTED COSTS AND EXPENSES(1)
($ in millions)Third-QuarterNine Months
 20202019% Change20202019% Change
 TotalOper.TotalOper.
Cost of Sales(1)
$  2,529 $  2,602 (3%)(4%)$  7,188 $  7,611 (6%)(4%)
Percent of Revenues
20.8 %20.5 %N/AN/A20.0 %19.5 %N/AN/A
SI&A Expenses(1)
 3,016  3,260 (7%)(7%) 8,919  10,110 (12%)(11%)
R&D Expenses(1)
 2,360  2,283 3%3% 6,216  5,827 7%7%
Total$  7,905 $  8,145 (3%)(3%)$  22,322 $  23,548 (5%)(4%)
Other (Income)/Deductions––net(1)
$1,148 $319 **$507 $537 (6%)(48%)
Effective Tax Rate on Reported Income(1)
(1.2 %)28.4 %9.7 %13.4 %
* Indicates calculation not meaningful.
Third-quarter 2020 Cost of Sales(1) as a percentage of revenues increased compared with the prior-year quarter, primarily due to unfavorable changes in product mix driven by declines in sales of Lyrica, Lipitor, Celebrex and Norvasc within our Upjohn business, as well as incremental costs incurred in response to COVID-19, partially offset by lower inventory write-offs.
SI&A Expenses(1) decreased in third-quarter 2020 compared with the prior-year quarter, primarily driven by the impact of the July 31, 2019 completion of the Consumer Healthcare joint venture transaction with GSK(7) (Consumer Healthcare JV) and a reduction in spending associated with corporate enabling functions, as well as lower spending on sales and marketing activities due to the impact of the COVID-19 pandemic.
Third-quarter 2020 R&D Expenses(1) increased compared with the prior-year quarter, which primarily reflects, among other things, higher spending on Pfizer’s efforts to develop potential vaccines and therapeutics to help prevent and treat COVID-19, partially offset by the non-recurrence of an upfront payment associated with the acquisition of Therachon Holding AG in July 2019.
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Pfizer recorded higher other deductions––net(1) in third-quarter 2020 compared with the prior-year quarter, primarily driven by a $900 million asset impairment charge recorded in third-quarter 2020 related to in-process R&D acquired in connection with Pfizer’s 2019 acquisition of Array BioPharma Inc., partially offset by income from the Consumer Healthcare JV(7).
Pfizer’s effective tax rate on Reported income(1) for third-quarter 2020 compared to the prior-year quarter was favorably impacted primarily by the non-recurrence of the tax expense recorded in third-quarter 2019 on the gain related to the completion of the Consumer Healthcare JV(7) as well as a favorable change in the jurisdictional mix of earnings as a result of operating fluctuations in the normal course of business.
Adjusted(2) Income Statement Highlights
SELECTED TOTAL COMPANY ADJUSTED COSTS AND EXPENSES(2)
($ in millions)Third-QuarterNine Months
 20202019% Change20202019% Change
 TotalOper.TotalOper.
Adjusted Cost of Sales(2)
$  2,502 $  2,459 2%1%$  7,088 $  7,430 (5%)(3%)
Percent of Revenues
20.6 %19.4 %N/AN/A19.7 %19.0 %N/AN/A
Adjusted SI&A Expenses(2)
 2,869  3,196 (10%)(10%) 8,421  9,971 (16%)(15%)
Adjusted R&D Expenses(2)
 2,354  1,940 21%21% 5,976  5,458 9%10%
Total$  7,724 $  7,595 2%2%$  21,485 $  22,859 (6%)(5%)
Adjusted Other (Income)/Deductions––net(2)
($351)$32 **($898)($203)**
Effective Tax Rate on Adjusted Income(2)
12.9 %15.3 %14.1 %15.8 %
* Indicates calculation not meaningful.
A full reconciliation of Reported(1) to Adjusted(2) financial measures and associated footnotes can be found in the financial tables section of this press release.
RECENT NOTABLE DEVELOPMENTS (Since July 28, 2020)
Product Developments
Daurismo (glasdegib) -- Pfizer announced today that it has stopped the Intensive cohort of the Phase 3 BRIGHT AML 1019 trial evaluating Daurismo in combination with cytarabine and daunorubicin in adults with previously untreated acute myeloid leukemia (AML). The results of an interim analysis reviewed by an independent Data Monitoring Committee (DMC) showed the trial was unlikely to achieve statistical significance in the primary endpoint of overall survival. No new safety signals were observed. Results from the trial are currently being analyzed and will be shared with the scientific community at a later date. The
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results from the BRIGHT AML 1019 trial do not impact the approved indication for Daurismo in combination with low-dose cytarabine for the treatment of newly diagnosed AML in the U.S., EU and Canada. Pfizer has notified health authorities and trial investigators of the interim findings and the decision to discontinue the trial.
Ibrance (palbociclib) -- In October 2020, the German Breast Group and Pfizer announced that the collaborative Phase 3 PENELOPE-B trial did not meet the primary endpoint of improved invasive disease-free survival in women with hormone receptor-positive (HR+), human epidermal growth factor-negative (HER2-) early breast cancer who have residual invasive disease after completing neoadjuvant chemotherapy. No unexpected safety signals were observed. Detailed findings from PENELOPE-B will be presented at an upcoming medical congress.
Lorbrena (lorlatinib) -- In August 2020, Pfizer announced that the Phase 3 CROWN study of lorlatinib in people with previously untreated advanced anaplastic lymphoma kinase (ALK)-positive non-small cell lung cancer met its primary endpoint by demonstrating significantly improved progression-free survival, as compared to Xalkori (crizotinib). The results were reviewed by an independent DMC at a planned interim analysis. The safety profile for lorlatinib and crizotinib were consistent with what has been previously seen in clinical trials. The results from CROWN were presented at the European Society for Medical Oncology Presidential Symposium in September 2020, and the data are submitted for regulatory review under the Food and Drug Administration (FDA)’s Real Time Oncology Review pilot project.
Xalkori (crizotinib) -- In September 2020, Pfizer announced that the FDA has accepted and granted priority review to a sNDA for Xalkori for the treatment of pediatric patients with relapsed or refractory systemic anaplastic large cell lymphoma that is ALK-positive. If approved, Xalkori would be the first biomarker-driven therapy for this type of pediatric lymphoma. The Prescription Drug User Fee Act (PDUFA) goal date for a decision by the FDA is January 2021.
Xeljanz (tofacitinib) -- In September 2020, Pfizer announced that the FDA approved Xeljanz for the treatment of children and adolescents 2 years and older with active polyarticular course juvenile idiopathic arthritis (pcJIA). This approval makes Xeljanz the first and only Janus kinase (JAK) inhibitor approved in the U.S. for the treatment of pcJIA.
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.
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BNT162 COVID-19 Vaccine Development Program
Clinical Updates
In September 2020, Pfizer and BioNTech SE (BioNTech) expanded the enrollment of their Phase 3 COVID-19 vaccine trial to up to approximately 44,000 participants from the initial target of up to 30,000 participants. The expansion allows the companies to further increase trial population diversity, and include adolescents as young as 16 years of age and people with chronic, stable human immunodeficiency virus (HIV), Hepatitis C, or Hepatitis B infection, as well as provide additional safety and efficacy data. Additionally, in October 2020, Pfizer and BioNTech received permission from the FDA to enroll adolescents as young as 12 years of age.
In August 2020, Pfizer and BioNTech shared additional safety and immunogenicity data from the U.S. Phase 1 trial for the BNT162b2 vaccine candidate. At 7 days after a second dose of 30μg, BNT162b2 elicited SARS-CoV-2-neutralizing geometric mean titers (GMTs) in younger adults (18-55 years of age) that were 3.8 times the GMT of a panel of 38 sera of SARS-CoV-2 convalescent patients, and in older adults (65-85 years of age) the vaccine candidate elicited a neutralizing GMT 1.6 times the GMT of the same panel, demonstrating strong immunogenicity in both younger and older adults. Further, across all populations, BNT162b2 administration was well tolerated with mild to moderate fever in fewer than 20% of the participants.
Commercial Updates
In September 2020, Pfizer and BioNTech announced that they had concluded exploratory talks with the European Commission (EC) for a proposed supply of 200 million doses of their investigational BNT162 mRNA-based vaccine candidate against SARS-CoV-2 to EU Member States, with an option for an additional 100 million doses. Deliveries would begin by the end of 2020, subject to clinical success and regulatory authorization. The companies are currently in tender negotiations with the EC.
In August 2020, Pfizer and BioNTech announced an agreement with the Government of Canada to supply their BNT162 mRNA-based vaccine candidate against SARS-CoV-2, subject to clinical success and Health Canada approval. Deliveries of the vaccine candidate are planned for over the course of 2021. Financial details of the agreement were not disclosed, but the terms were based on the timing of delivery and the volume of doses.
In July 2020, Pfizer and BioNTech announced an agreement with the Ministry of Health, Labour and Welfare in Japan to supply 120 million doses of BNT162 mRNA-based vaccine candidate against SARS-CoV-2, subject to clinical success and regulatory approval. Deliveries of the vaccine candidate are planned for the first half of 2021. Financial details of the agreement were not disclosed, but the terms were based on the timing of delivery and the volume of doses.
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In addition to the agreements cited above, supply agreements for pre-specified numbers of doses of BNT162 have been signed with multiple other developed and emerging nations around the world, subject to clinical and regulatory success.
Regulatory Updates
In October 2020, Pfizer and BioNTech announced the initiation of a rolling submission to the European Medicines Agency (EMA) for BNT162b2. The EMA’s decision to start a rolling review follows the encouraging preliminary results from pre-clinical and early clinical studies in adults, which suggest that BNT162b2 triggers the production of neutralizing antibodies and TH-1 dominant CD4+ and CD8+ T cells that target SARS-CoV-2. BioNTech and Pfizer plan to work with the EMA’s Committee for Medicinal Products for Human Use to complete the rolling review process to facilitate the final Marketing Authorization Application.
In October 2020, Pfizer Canada and BioNTech announced the initiation of a rolling submission to Health Canada for BNT162b2. The rolling submission has been accepted under the Minister of Health's Interim Order allowing companies to submit safety and efficacy data and information as they become available. Often referred to as a rolling review, this allows Health Canada to start its review right away, as information continues to come in, to accelerate the overall review process.
In September 2020, the CEOs of Pfizer, BioNTech and seven other biopharmaceutical companies signed a pledge outlining a united commitment to uphold the integrity of the scientific process as they work toward potential global regulatory filings and approvals of the first COVID-19 vaccines.
Giroctocogene fitelparvovec (SB-525 or PF-07055480) -- In October 2020, Pfizer and Sangamo Therapeutics, Inc. announced that the first participant has been dosed in the Phase 3 AFFINE study of giroctocogene fitelparvovec, an investigational gene therapy for moderately severe to severe hemophilia A patients. The primary endpoint in the AFFINE study is impact on annual bleed rate (ABR) through 12 months following treatment with giroctocogene fitelparvovec, compared to ABR on Factor VIII replacement therapy collected in the Phase 3 lead-in study period. Participants will be analyzed throughout the 5-year study period following the single infusion to further assess the durability and efficacy.
PF-06482077 (20-Valent Pneumococcal Conjugate Vaccine candidate)
Phase 3 Pivotal Adult Trial
In October 2020, Pfizer presented the full analysis from a Phase 3 study which evaluated the safety and immunogenicity of its 20-valent pneumococcal conjugate vaccine (20vPnC) candidate in adults 18 years of age or older not previously vaccinated against pneumococcal disease. In the
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study, researchers found that all 20 vaccine serotypes induced robust responses across three age cohorts (≥60 years, 50-59 years, 18-49 years).
For the primary immunogenicity objectives in adults ages 60 years or older, the ratio of serotype-specific OPA geometric mean titers (GMTs) responses one month after vaccination were noninferior for all the serotypes in common with licensed Prevnar 13 and six of the seven additional serotypes when compared to a licensed pneumococcal polysaccharide vaccine (PPSV23). One of the new seven serotypes (serotype 8) missed the noninferiority lower bound criteria of >0.5 by a small margin (0.55 [0.49, 0.62]) but showed immune responses in other immunological parameters, including fold-rises in OPA titers, proportions of subjects with ≥4-fold rise in OPA titers and proportions of subjects with OPA titer ≥ lower limit of quantification after vaccination.
For the primary safety analysis, the frequency of adverse events among participants within 1 month after receiving 20vPnC was generally similar to participants receiving Prevnar 13.
Phase 2 Proof-of-Concept Infant Trial
In October 2020, Pfizer presented results from a Phase 2 study in infants ages 42 to 98 days randomized (1:1) to receive either 20vPnC or Prevnar 13 at 2, 4, and 6 months of age (infant series Doses 1 through 3) and 12 months of age (Dose 4). Overall, the safety profile of a four-dose schedule of 20vPnC was consistent with Prevnar 13 given in the same schedule.
In the study, 20vPnC elicited pneumococcal immune responses to all 20 serotypes one month after Dose 3, as measured by both the percentages of participants with prespecified serotype-specific IgG concentrations and IgG Geometric Means Concentrations (GMCs). Booster responses were observed for all serotypes after Dose 4 when comparing the serotype-specific IgG GMCs from one month after Dose 4 to responses both 1 month after Dose 3 and before Dose 4 indicating the induction of immunological memory. 20vPnC elicited functional antibody responses to all 20 serotypes at one month after Dose 3 and one month after Dose 4, as measured by OPA GMTs. Boosting of OPA responses was also observed for all serotypes after Dose 4 consistent with the trend observed with IgG responses.
PF-06939926 (Duchenne muscular dystrophy (DMD) gene therapy) -- In October 2020, Pfizer announced that its investigational gene therapy candidate (PF-06939926) being developed to treat DMD received Fast Track designation from the FDA. Fast Track is a process designed to facilitate the development, and expedite the review, of new drugs that are intended to treat or prevent serious conditions that have the potential to address an unmet medical need.
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Somatrogon (MOD-4023) -- In October 2020, Pfizer and OPKO Health Inc. announced that the Phase 3, randomized, multicenter, open-label, crossover study evaluating somatrogon dosed once-weekly in children 3 to <18 years of age with growth hormone deficiency, met its primary endpoint of improved treatment burden compared to Genotropin (somatropin) for injection administered once-daily.
Tanezumab (PF-04383119) -- Pfizer and Eli Lilly and Company (Lilly) have been informed by the FDA that the agency intends to hold an Advisory Committee meeting, likely around March 2021, to discuss the tanezumab application. As a result, the FDA’s review will extend past the current December 2020 PDUFA date. The FDA has not provided a new PDUFA date. The FDA communicated that its review of the application is ongoing and has not requested any new clinical or pre-clinical studies to be completed at this time. Pfizer and Lilly will continue to work with the FDA as it completes its review of the application. Tanezumab 2.5 mg administered subcutaneously is being evaluated for the treatment of adult patients with chronic pain due to moderate-to-severe osteoarthritis for whom the use of other analgesics is ineffective or inappropriate. If approved, tanezumab would be a first-in-class, non-opioid treatment option for these patients.
Corporate Developments
In September 2020, Pfizer announced a strategic collaboration between certain of its subsidiaries and CStone Pharmaceuticals (CStone) to address oncological needs in China. The collaboration encompasses a $200 million upfront equity investment by Pfizer in CStone, a collaboration between the companies for the development and commercialization of CStone’s sugemalimab (CS1001, PD-L1 antibody) in mainland China, and a framework between the companies to bring additional oncology assets to the Greater China market. The transaction closed in October 2020.
In September 2020, Pfizer held a two-day Investor Day event, its first in more than 12 years, highlighting 27 of its key pipeline programs, including assets that could potentially contribute revenue by 2025 and others in the 2026-2028 time frame.
In August 2020, Pfizer announced a multi-year agreement with Gilead Science, Inc. (Gilead) to manufacture and supply Gilead’s investigational antiviral remdesivir, as one of multiple external manufacturing organizations supporting efforts to scale up supply of the investigational treatment for COVID-19. Under the terms of the agreement, Pfizer will provide contract manufacturing services at Pfizer’s McPherson, Kansas facility to manufacture and supply remdesivir for Gilead. This agreement further demonstrates Pfizer’s ongoing commitment to its five-point plan to battle COVID-19, announced in March 2020, which includes
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offering its manufacturing capabilities to help rapidly scale and deploy approved therapies or vaccines around the world.
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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 and its components are defined as net income attributable to Pfizer Inc. and its components in accordance with U.S. GAAP. Reported diluted earnings per share (EPS) is defined as 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 gains on the completion of joint venture transactions, restructuring charges, legal charges or gains and losses from equity securities, 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 2019 Financial Report, which was filed as Exhibit 13 to Pfizer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, 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 and vaccines––prior to considering certain income statement elements. See the accompanying reconciliations of certain GAAP Reported to Non-GAAP Adjusted information for the third quarter and first nine months of 2020 and 2019. 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)Financial guidance for Total Company reflects a full-year 2020 contribution from Biopharma and Upjohn, the current construct of the company, and excludes any impact from the pending Upjohn combination with Mylan. In addition, Total Company 2020 financial guidance reflects the following:
Does not assume the completion of any business development transactions not completed as of September 27, 2020, including any one-time upfront payments associated with such transactions.
Includes Pfizer’s pro rata share of the Consumer Healthcare JV(7) anticipated earnings, which is recorded in Adjusted other (income)/deductions(2) on a one-quarter lag.
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Reflects an anticipated negative revenue impact of $2.4 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.
Exchange rates assumed are a blend of actual exchange rates in effect through third-quarter 2020 and mid-October 2020 rates for the remainder of the year. Financial guidance reflects the anticipated unfavorable impact of approximately $0.5 billion on revenues and approximately $0.04 on Adjusted diluted EPS(2) as a result of changes in foreign exchange rates relative to the U.S. dollar compared to foreign exchange rates from 2019.
Guidance for Adjusted diluted EPS(2) assumes diluted weighted-average shares outstanding of approximately 5.6 billion shares, which assumes no share repurchases in 2020.
(4)New Pfizer reflects contributions from the Biopharma business as it is presently being managed, which excludes contributions from Pfizer’s Meridian subsidiary and the Pfizer-Mylan strategic collaboration in Japan (Mylan-Japan). Pfizer’s Meridian subsidiary and Mylan-Japan were managed by Pfizer’s Biopharma business in 2019 but were moved to Upjohn in 2020. Financial guidance for New Pfizer also includes the full-year effect of the following items that assume the Upjohn combination with Mylan was completed at the beginning of 2020:
$12 billion of net proceeds from Upjohn to be retained by Pfizer, which Pfizer will use to repay its own existing indebtedness; and
other transaction-related items, such as income from transition services agreements between Pfizer and Viatris, the new company to be formed by the planned combination of Mylan and Upjohn.
2020 financial guidance for New Pfizer Adjusted IBT Margin(10) and Adjusted diluted EPS(2) reflects Pfizer’s share of the earnings generated by the GSK Consumer Healthcare joint venture(7) in the fourth quarter of 2019 and in the first and second quarters of 2020 (recorded by Pfizer in the first nine months of 2020), as well as Pfizer’s share of the joint venture’s projected earnings during the third quarter of 2020 (to be recorded by Pfizer in the fourth quarter of 2020).
Financial guidance for New Pfizer operating cash flow includes a $1.25 billion voluntary contribution to the U.S. qualified pension plans, which was made in third-quarter 2020.
(5)Financial guidance for Upjohn reflects a full-year 2020 contribution from the Upjohn business as it is presently being managed, which includes contributions from Pfizer’s Meridian subsidiary and the Pfizer-Mylan strategic collaboration in Japan (Mylan-Japan). Pfizer’s Meridian subsidiary and Mylan-Japan were managed by Pfizer’s Biopharma business in 2019 but were moved to Upjohn in 2020.
- 16 -



(6)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 third quarter and first nine months for U.S. subsidiaries reflects the three and nine months ending on September 27, 2020 and September 29, 2019 while Pfizer’s third quarter and first nine months for subsidiaries operating outside the U.S. reflects the three and nine months ending on August 23, 2020 and August 25, 2019.
(7)The following acquisitions and other business development activity impacted financial results for the periods presented:
On June 8, 2020, Valneva SE (Valneva) announced that the antitrust-related condition precedent was met and, consequently, the agreement between Valneva and Pfizer that was previously announced in April 2020 became effective. Under the terms of the agreement, the companies will co-develop and commercialize Valneva’s Lyme disease vaccine candidate VLA15, which is currently in Phase 2 clinical studies. In connection with the agreement, Pfizer paid Valneva an upfront cash payment of $130 million in second-quarter 2020.
On April 9, 2020, Pfizer signed a global agreement with BioNTech to co-develop a potential first-in-class, mRNA-based coronavirus vaccine program, BNT162, aimed at preventing COVID-19 infection. In connection with the agreement, Pfizer paid BioNTech an upfront cash payment of $72 million in second-quarter 2020. Pfizer also made an equity investment of $113 million in BioNTech common stock. Pfizer made an additional investment of $50 million in common stock of BioNTech as part of an underwritten equity offering by BioNTech, which closed in July 2020.
On July 31, 2019, Pfizer and GlaxoSmithKline plc (GSK) completed a transaction that combined the two companies’ respective consumer healthcare businesses into a joint venture (JV), operating under the GSK Consumer Healthcare name. In exchange for contributing its Consumer Healthcare business to the JV, Pfizer received a 32% equity stake in the JV and GSK owns the remaining 68% of the JV. Upon the closing of the transaction, Pfizer deconsolidated its Consumer Healthcare business and began recording its share of earnings from the Consumer Healthcare JV on a quarterly basis on a one-quarter lag in Other (income)/deductions––net commencing from August 1, 2019. Therefore, Pfizer recorded its share of the JV’s earnings generated in second-quarter 2020 in its third-quarter 2020 operating results. Likewise, Pfizer recorded its share of the JV’s earnings generated in fourth-quarter 2019, first-quarter 2020 and second-quarter 2020 in its operating results for the first nine months of 2020.
On July 30, 2019, Pfizer announced the successful completion of its acquisition of Array BioPharma Inc. (Array). Array’s portfolio included two approved products, Braftovi (encorafenib) and Mektovi (binimetinib).
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On July 1, 2019, Pfizer announced the successful completion of its acquisition of the privately held clinical-stage biotechnology company, Therachon Holding AG.
(8)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 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.
(9)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, gains and losses from equity securities 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.
(10)Adjusted income(2) before tax margin (Adjusted IBT margin) is defined as revenue less the sum of Adjusted cost of sales(2), Adjusted SI&A expenses(2), Adjusted R&D expenses(2), Adjusted amortization of intangible assets(2) and Adjusted other (income)/deductions(2) as a percentage of revenue. Adjusted IBT margin is presented because management believes this performance measure supplements investors’ and other readers’ understanding and assessment of the financial performance of New Pfizer(4). Adjusted IBT margin is not, and should not be viewed as, a substitute for U.S. GAAP income before tax margin.
(11)Adjusted Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) is defined as reported U.S. GAAP net income(1), and its components, adjusted for interest expense, provision for taxes on income and depreciation and amortization, further adjusted to exclude purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items (some of which may recur, such as gains on the completion of joint venture transactions, restructuring charges, legal charges or gains and losses from equity securities, but which management does not believe are reflective of ongoing core operations). Adjusted EBITDA is presented because management believes this performance measure supplements investors’ and other readers’ understanding and assessment of the financial performance of Upjohn. Adjusted EBITDA as defined is not a measurement of financial performance under GAAP, and
- 18 -



should not be considered as an alternative to net income(1) or cash flow from operations determined in accordance with GAAP.
Contacts:Media Investors 
 Amy Rose212.733.7410Chuck Triano212.733.3901
Bryan Dunn212.733.8917
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PFIZER INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME(1)
(UNAUDITED)
(millions, except per common share data)

 Third-Quarter% Incr. /Nine Months% Incr. /
 20202019(Decr.)20202019(Decr.)
Revenues
$12,131 $12,680 (4)$35,961 $39,062 (8)
Costs and expenses:
Cost of sales (2), (3)
2,529 2,602 (3)7,188 7,611 (6)
Selling, informational and administrative expenses(2), (3)
3,016 3,260 (7)8,919 10,110 (12)
Research and development expenses(2), (3)
2,360 2,283 36,216 5,827 7
Amortization of intangible assets(3)
898 1,212 (26)2,688 3,578 (25)
Restructuring charges and certain acquisition-related costs(4)
365 (99)435 295 47
(Gain) on completion of Consumer Healthcare JV transaction(1)
— (8,087)*(6)(8,087)*
Other (income)/deductions––net(5)
1,148 319 *507 537 (6)
Income from continuing operations before provision/(benefit) for taxes on income2,176 10,727 (80)10,014 19,190 (48)
Provision/(benefit) for taxes on income(6)
(26)3,047 *968 2,566 (62)
Income from continuing operations2,202 7,680 (71)9,046 16,625 (46)
Discontinued operations––net of tax— *— *
Net income before allocation to noncontrolling interests
2,202 7,684 (71)9,046 16,628 (46)
Less: Net income attributable to noncontrolling interests*25 19 31
Net income attributable to Pfizer Inc.$2,194 $7,680 (71)$9,022 $16,609 (46)
Earnings per common share––basic:
Income from continuing operations attributable to Pfizer Inc. common shareholders
$0.39 $1.38 (71)$1.62 $2.98 (45)
Discontinued operations––net of tax
— — — — 
Net income attributable to Pfizer Inc. common shareholders
$0.39 $1.38 (71)$1.62 $2.98 (45)
Earnings per common share––diluted:
Income from continuing operations attributable to Pfizer Inc. common shareholders
$0.39 $1.36 (71)$1.60 $2.92 (45)
Discontinued operations––net of tax
— — — — 
Net income attributable to Pfizer Inc. common shareholders
$0.39 $1.36 (71)$1.60 $2.92 (45)
Weighted-average shares used to calculate earnings per common share:
 
Basic
5,557 5,545  5,552 5,581 
Diluted
5,633 5,649  5,622 5,690 
*Indicates calculation not meaningful or result is equal to or greater than 100%.
Amounts may not add due to rounding. All percentages have been calculated using unrounded amounts.
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PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(1)The financial statements present the three and nine months ended September 27, 2020 and September 29, 2019. Subsidiaries operating outside the U.S. are included for the three and nine months ended August 23, 2020 and August 25, 2019.
The financial results for the three and nine months ended September 27, 2020 are not necessarily indicative of the results that ultimately could be achieved for the full year.
The Array BioPharma Inc. (Array) and Therachon Holding AG acquisitions and the contribution of our Consumer Healthcare business to the GSK Consumer Healthcare joint venture that were completed in 2019, as well as other business development activities in the first nine months of 2020, impacted our results of operations in the periods presented. Upon the closing of the GSK Consumer Healthcare joint venture transaction, we deconsolidated our Consumer Healthcare business and recognized a pre-tax gain of $8.1 billion ($5.4 billion, net of tax) in our fiscal third quarter of 2019 in (Gain) on completion of Consumer Healthcare JV transaction for the difference in the fair value of our 32% equity stake in the new company and the carrying value of our Consumer Healthcare business. Our financial results, and our Consumer Healthcare segment’s operating results, for the third quarter of 2019 reflect one month of Consumer Healthcare segment domestic operations and two months of Consumer Healthcare segment international operations. Likewise, our financial results, and our Consumer Healthcare segment’s operating results, for the first nine months of 2019 reflect seven months of Consumer Healthcare segment domestic operations and eight months of Consumer Healthcare segment international operations. The financial results for the third quarter and first nine months of 2020 do not reflect any contribution from the Consumer Healthcare business. We record our share of earnings from the GSK Consumer Healthcare joint venture on a quarterly basis on a one-quarter lag in Other (income)/deductions––net commencing from August 1, 2019. Therefore, our operating results for the third quarter of 2020 include our share of the joint venture’s earnings/losses generated in the second quarter of 2020, and our operating results for the first nine months of 2020 include our share of the joint venture’s earnings/losses generated in the fourth quarter of 2019 and the first six months of 2020. See footnote (5) below.
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 of 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 of 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.
(4)Restructuring charges and certain acquisition-related costs include the following:
 Third-QuarterNine Months
(MILLIONS OF DOLLARS)2020201920202019
Restructuring charges/(credits)––acquisition-related costs(a)
$$19 $$(196)
Restructuring charges/(credits)––cost reduction initiatives(b)
(7)64 389 145 
Restructuring charges/(credits)
(4)83 392 (50)
Transaction costs(c)
— 65 14 65 
Integration costs and other(d)
217 29 281 
Restructuring charges and certain acquisition-related costs
$$365 $435 $295 
(a)Includes employee termination costs, asset impairments and other exit costs associated with business combinations. Credits for the first nine months of 2019 were mostly due to the reversal of certain accruals related to our acquisition of Wyeth upon the effective favorable settlement of a U.S. Internal Revenue Service (IRS) audit for multiple years. See footnote (6) below.
(b)Includes employee termination costs, asset impairments and other exit costs not associated with acquisitions. The charges for the first nine months of 2020 primarily represent employee termination costs associated with our Transforming to a More Focused Company program.
(c)Transaction costs represent external costs for banking, legal, accounting and other similar services.
(d)Integration costs and other represent external, incremental costs directly related to integrating acquired businesses, such as expenditures for consulting and the integration of systems and processes, and certain other qualifying costs. In the third quarter and first nine months of 2019, integration costs and other were mainly related to our acquisition of Array.
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PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(5)Other (income)/deductions––net includes the following:
 Third-QuarterNine Months
(MILLIONS OF DOLLARS)2020201920202019
Interest income$(17)$(60)$(70)$(185)
Interest expense416 409 1,178 1,158 
Net interest expense
399 348 1,108 973 
Royalty-related income(214)(155)(525)(475)
Net gains on asset disposals(2)(32)— (33)
Net (gains)/losses recognized during the period on equity securities(a)
70 (6)(408)(153)
Income from collaborations, out-licensing arrangements and sales of compound/product rights
(30)(20)(245)(124)
Net periodic benefit costs/(credits) other than service costs54 (19)(122)(110)
Certain legal matters, net
38 64 64 84 
Certain asset impairments(b)
900 28 900 188 
Business and legal entity alignment costs(c)
— 87 — 343 
Net losses on early retirement of debt— — — 138 
GSK Consumer Healthcare JV equity method (income)/loss(d)
(103)— (196)— 
Other, net(e)
38 24 (69)(294)
Other (income)/deductions––net
$1,148 $319 $507 $537 
(a)The losses in the third quarter of 2020 include, among other things, unrealized losses of $131 million related to our investment in Allogene Therapeutics, Inc. (Allogene). The gains in the first nine months of 2020 include, among other things, unrealized gains of $243 million related to our investment in Allogene and unrealized gains of $154 million related to our investment in BioNTech SE. The gains in the first nine months of 2019 included, among other things, unrealized gains of $115 million related to our investments in Cortexyme, Inc. and SpringWorks Therapeutics, Inc.
(b)In the third quarter and first nine months of 2020, includes intangible asset impairment charges of $900 million related to in-process research and development assets acquired in connection with our Array acquisition.
(c)In the third quarter and first nine months of 2019, represents incremental costs associated with the design, planning and implementation of our new organizational structure, effective in the beginning of 2019, and primarily includes consulting, legal, tax and advisory services.
(d)The income for the third quarter and first nine months of 2020 represents our pro-rata share of earnings from the GSK Consumer Healthcare joint venture, partially offset by equity method basis difference write-offs and amortization. For additional information, see footnote (1) above.
(e)The third quarter of 2020 includes, among other things, charges of $144 million related to the remeasurement of Euro debt issued by a subsidiary of Upjohn in the second quarter of 2020 and dividend income of $44 million from our investment in ViiV Healthcare Limited (ViiV). The first nine months of 2020 include, among other things, dividend income of $196 million from our investment in ViiV and charges of $110 million, reflecting the change in the fair value of contingent consideration. The third quarter of 2019 included, among other things, dividend income of $43 million from our investment in ViiV and charges of $121 million for external incremental costs, such as transaction costs and costs to separate our Consumer Healthcare business into a separate legal entity, associated with the formation of the GSK Consumer Healthcare joint venture. The first nine months of 2019 included, among other things, (i) dividend income of $184 million from our investment in ViiV, (ii) charges of $146 million for external incremental costs, such as transaction costs and costs to separate our Consumer Healthcare business into a separate legal entity, associated with the formation of the GSK Consumer Healthcare joint venture and (iii) $50 million of income from insurance recoveries related to Hurricane Maria.
(6)The decrease in the effective tax rate for the third quarter of 2020, compared to the third quarter of 2019, was primarily due to the non-recurrence of the tax expense associated with the gain related to the completion of the Consumer Healthcare joint venture transaction with GSK, as well as the favorable change in the jurisdictional mix of earnings as a result of operating fluctuations in the normal course of business. The decrease in the effective tax rate for the first nine months of 2020, compared to the first nine months of 2019, was due to the aforementioned factors above, partially offset by the non-recurrence of $1.4 billion in tax benefits, representing taxes and interest, recorded in the second quarter of 2019 due to the favorable settlement of a U.S. IRS audit for multiple tax years and the non-recurrence of a tax benefit recorded in the first nine months of 2019 as a result of additional guidance issued by the U.S. Department of Treasury related to the legislation commonly referred to as the U.S. Tax Cuts and Jobs Act of 2017 (TCJA).
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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)
 Third-Quarter 2020
 GAAP ReportedPurchase Accounting Adjustments
Acquisition-Related Items(2)
Discontinued Operations
Certain Significant Items(3)
Non-GAAP Adjusted(4)
Revenues$12,131 $— $— $— $— $12,131 
Cost of sales(5), (6)
2,529 — — (32)2,502 
Selling, informational and administrative expenses(5), (6)
3,016 (1)— — (147)2,869 
Research and development expenses (5), (6)
2,360 — — (8)2,354 
Amortization of intangible assets(6)
898 (826)— — — 73 
Restructuring charges and certain acquisition-related costs
4 — (11)— — 
(Gain) on completion of Consumer Healthcare JV transaction
 — — — — — 
Other (income)/deductions––net(7)
1,148 (4)— — (1,495)(351)
Income from continuing operations before provision/(benefit) for taxes on income2,176 823 11 — 1,675 4,685 
Provision/(benefit) for taxes on income(26)197 — 432 606 
Income from continuing operations2,202 626 — 1,242 4,079 
Discontinued operations––net of tax — — — — — 
Net income attributable to noncontrolling interests
8 — — — — 
Net income attributable to Pfizer Inc.2,194 626 — 1,242 4,071 
Earnings per common share attributable to Pfizer Inc.––diluted
0.39 0.11 — — 0.22 0.72 
 Nine Months Ended September 27, 2020
 GAAP ReportedPurchase Accounting Adjustments
Acquisition-Related Items(2)
Discontinued Operations
Certain Significant Items(3)
Non-GAAP Adjusted(4)
Revenues$35,961 $— $— $— $— $35,961 
Cost of sales(5), (6)
7,188 14 — — (114)7,088 
Selling, informational and administrative expenses(5), (6)
8,919 (1)— — (497)8,421 
Research and development expenses (5), (6)
6,216 — — (244)5,976 
Amortization of intangible assets(6)
2,688 (2,474)— — — 215 
Restructuring charges and certain acquisition-related costs
435 — (46)— (389)— 
(Gain) on completion of Consumer Healthcare JV transaction
(6)— — — — 
Other (income)/deductions––net(7)
507 (89)— — (1,316)(898)
Income from continuing operations before provision/(benefit) for taxes on income10,014 2,545 46 — 2,554 15,159 
Provision/(benefit) for taxes on income968 564 11 — 602 2,145 
Income from continuing operations9,046 1,981 35 — 1,952 13,014 
Discontinued operations––net of tax — — — — — 
Net income attributable to noncontrolling interests
25 — — — — 25 
Net income attributable to Pfizer Inc.9,022 1,981 35 — 1,952 12,989 
Earnings per common share attributable to Pfizer Inc.––diluted
1.60 0.35 0.01 — 0.35 2.31 
Amounts may not add due to rounding.
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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)
Third-Quarter 2019
 GAAP ReportedPurchase Accounting Adjustments
Acquisition-Related Items(2)
Discontinued Operations
Certain Significant Items(3)
Non-GAAP Adjusted(4)
Revenues$12,680 $— $— $— $— $12,680 
Cost of sales(5), (6)
2,602 — — (147)2,459 
Selling, informational and administrative expenses(5), (6)
3,260 — — (64)3,196 
Research and development expenses(5), (6)
2,283 — — (343)1,940 
Amortization of intangible assets(6)
1,212 (1,140)— — — 72 
Restructuring charges and certain acquisition-related costs
365 — (300)— (64)— 
(Gain) on completion of Consumer Healthcare JV transaction(1)
(8,087)— — — 8,087 — 
Other (income)/deductions––net(7)
319 (6)— — (281)32 
Income from continuing operations before provision/(benefit) for taxes on income10,727 1,141 300 — (7,187)4,981 
Provision/(benefit) for taxes on income3,047 239 58 — (2,581)763 
Income from continuing operations7,680 902 242 — (4,606)4,218 
Discontinued operations––net of tax4 — — (4)— — 
Net income attributable to noncontrolling interests
4 — — — — 
Net income attributable to Pfizer Inc.7,680 902 242 (4)(4,606)4,214 
Earnings per common share attributable to Pfizer Inc.––diluted
1.36 0.16 0.04 — (0.82)0.75 
 Nine Months Ended September 29, 2019
 GAAP ReportedPurchase Accounting Adjustments
Acquisition-Related Items(2)
Discontinued Operations
Certain Significant Items(3)
Non-GAAP Adjusted(4)
Revenues$39,062 $— $— $— $— $39,062 
Cost of sales(5), (6)
7,611 15 — — (196)7,430 
Selling, informational and administrative expenses(5), (6)
10,110 (2)— (139)9,971 
Research and development expenses(5), (6)
5,827 — — (372)5,458 
Amortization of intangible assets(6)
3,578 (3,377)— — — 201 
Restructuring charges and certain acquisition-related costs
295 — (150)— (145)— 
(Gain) on completion of Consumer Healthcare JV transaction(1)
(8,087)— — — 8,087 — 
Other (income)/deductions––net(7)
537 — — — (740)(203)
Income from continuing operations before provision/(benefit) for taxes on income19,190 3,357 152 — (6,495)16,204 
Provision/(benefit) for taxes on income2,566 685 69 — (759)2,560 
Income from continuing operations16,625 2,673 83 — (5,737)13,644 
Discontinued operations––net of tax4 — — (4)— — 
Net income attributable to noncontrolling interests
19 — — — — 19 
Net income attributable to Pfizer Inc.16,609 2,673 83 (4)(5,737)13,625 
Earnings per common share attributable to Pfizer Inc.––diluted
2.92 0.47 0.01 — (1.01)2.39 
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)The Array BioPharma Inc. (Array) and Therachon Holding AG (Therachon) acquisitions and the contribution of our Consumer Healthcare business to the GSK Consumer Healthcare joint venture that were completed in 2019, as well as other business development activities in the first nine months of 2020, impacted our results of operations in the periods presented. Upon the closing of the GSK Consumer Healthcare joint venture transaction, we deconsolidated our Consumer Healthcare business and recognized a pre-tax gain of $8.1 billion ($5.4 billion, net of tax) in our fiscal third quarter of 2019 in (Gain) on completion of Consumer Healthcare JV transaction for the difference in the fair value of our 32% equity stake in the new company and the carrying value of our Consumer Healthcare business. Our financial results, and our Consumer Healthcare segment’s operating results, for the third quarter of 2019 reflect one month of Consumer Healthcare segment domestic operations and two months of Consumer Healthcare segment international operations. Likewise, our financial results, and our Consumer Healthcare segment’s operating results, for the first nine months of 2019 reflect seven months of Consumer Healthcare segment domestic operations and eight months of Consumer Healthcare segment international operations. The financial results for the third quarter and first nine months of 2020 do not reflect any contribution from the Consumer Healthcare business. We record our share of earnings from the GSK Consumer Healthcare joint venture on a quarterly basis on a one-quarter lag in Other (income)/deductions––net commencing from August 1, 2019. Therefore, our operating results for the third quarter of 2020 include our share of the joint venture’s earnings/losses generated in the second quarter of 2020, and our operating results for the first nine months of 2020 include our share of the joint venture’s earnings/losses generated in the fourth quarter of 2019 and the first six months of 2020. For the non-GAAP measure of Adjusted Earnings (see footnote (4) below), charges primarily related to our pro rata share of restructuring and business combination accounting charges recorded by the GSK Consumer Healthcare joint venture have been excluded from the measure.
Certain amounts in the reconciliation of GAAP reported to Non-GAAP adjusted information and associated notes may not add due to rounding.
The financial statements present the three and nine months ended September 27, 2020 and September 29, 2019. Subsidiaries operating outside the U.S. are included for the three and nine months ended August 23, 2020 and August 25, 2019.
(2)Acquisition-related items include the following:
 Third-QuarterNine Months
(MILLIONS OF DOLLARS)2020201920202019
Restructuring charges/(credits)(a)
$$19 $$(196)
Transaction costs(b)
— 65 14 65 
Integration costs and other(c)
217 29 281 
Additional depreciation––asset restructuring(d)
— — — 
Total acquisition-related items––pre-tax
11 300 46 152 
Income taxes(e)
(3)(58)(11)(69)
Total acquisition-related items––net of tax
$$242 $35 $83 
(a)Includes employee termination costs, asset impairments and other exit costs associated with business combinations. Credits for the first nine months of 2019 were mostly due to the reversal of certain accruals related to our acquisition of Wyeth upon the effective favorable settlement of a U.S. Internal Revenue Service (IRS) audit for multiple years. All of these items are included in Restructuring charges and certain acquisition-related costs.
(b)Transaction costs represent external costs for banking, legal, accounting and other similar services. All of these items are included in Restructuring charges and certain acquisition-related costs.
(c)Integration costs and other represent external, incremental costs directly related to integrating acquired businesses, such as expenditures for consulting and the integration of systems and processes, and certain other qualifying costs. In the third quarter and first nine months of 2019, integration costs and other were mainly related to our acquisition of Array. All of these costs and charges are included in Restructuring charges and certain acquisition-related costs.
(d)Represents the impact of changes in the estimated useful lives of assets involved in restructuring actions related to acquisitions. In the first nine months of 2019, included in Selling, informational and administrative expenses.
(e)Included in Provision/(benefit) 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 nine months of 2019 include the impact of the non-taxable reversal of certain accruals related to our acquisition of Wyeth upon the effective favorable settlement of a U.S. IRS audit for multiple tax years.
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PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS - (UNAUDITED)
(3)Certain significant items include the following:
 Third-QuarterNine Months
(MILLIONS OF DOLLARS)2020201920202019
Restructuring charges/(credits)––cost reduction initiatives(a)
$(7)$64 $389 $145 
Implementation costs and additional depreciation––asset restructuring(b)
52 46 158 135 
Net (gains)/losses recognized during the period on equity securities(c)
73 (3)(429)(139)
Certain legal matters, net(c)
38 63 64 72 
Certain asset impairments(c)
900 — 900 149 
Business and legal entity alignment costs(d)
127 89 416 353 
(Gain) on completion of Consumer Healthcare JV transaction(e)
— (8,087)(6)(8,087)
Net losses on early retirement of debt(c)
— — — 138 
Other(f)
493 641 1,062 738 
Total certain significant items––pre-tax
1,675 (7,187)2,554 (6,495)
Income taxes(g)
(432)2,581 (602)759 
Total certain significant items––net of tax
$1,242 $(4,606)$1,952 $(5,737)
(a)Includes employee termination costs, asset impairments and other exit costs not associated with acquisitions, which are included in Restructuring charges and certain acquisition-related costs. The charges for the first nine months of 2020 primarily represent employee termination costs associated with our Transforming to a More Focused Company program.
(b)Relates to our cost-reduction and productivity initiatives not related to acquisitions. Primarily included in Cost of sales ($15 million) and Selling, informational and administrative expenses ($36 million) for the third quarter of 2020. Primarily included in Cost of sales ($46 million) and Selling, informational and administrative expenses ($114 million) for the first nine months of 2020. Primarily included in Cost of sales ($20 million) and Selling, informational and administrative expenses ($23 million) for the third quarter of 2019. Included in Cost of sales ($65 million), Selling, informational and administrative expenses ($48 million) and Research and development expenses ($21 million) for the first nine months of 2019.
(c)Included in Other (income)/deductions––net. See Note (5) to Consolidated Statements of Income above.
(d)In the third quarter of 2020, primarily included in Cost of sales ($19 million) and Selling, informational and administrative expenses ($102 million) and primarily represents separation costs associated with our planned Upjohn transaction with Mylan N.V. (Mylan), as well as legal entity restructuring costs, and mainly includes consulting, legal, tax and advisory services. In the first nine months of 2020, included in Cost of sales ($64 million), Research and development expenses ($15 million) and Selling, informational and administrative expenses ($337 million) and primarily represents legal entity restructuring costs, as well as separation costs associated with our planned Upjohn transaction with Mylan, and mainly includes consulting, legal, tax and advisory services. In the third quarter and first nine months of 2019, primarily included in Other (income)/deductions––net and represented incremental costs associated with the design, planning and implementation of our new organizational structure, effective in the beginning of 2019, and primarily included consulting, legal, tax and advisory services.
(e)Included in (Gain) on completion of Consumer Healthcare JV transaction. See note (1) above.
(f)For the third quarter of 2020, primarily included in Other (income)/deductions––net. For the first nine months of 2020, primarily included in Selling, informational and administrative expenses ($46 million), Research and development expenses ($231 million) and Other (income)/deductions––net ($781 million). For the third quarter of 2019, included in Cost of sales ($128 million), Selling, informational and administrative expenses ($39 million), Research and development expenses ($340 million) and Other (income)/deductions––net ($134 million). For the first nine months of 2019, included in Cost of sales ($130 million), Selling, informational and administrative expenses ($80 million), Research and development expenses ($351 million) and Other (income)/deductions––net ($178 million). The third quarter and first nine months of 2020 include, among other things, the following charges recorded in Other (income)/deductions––net: (i) $220 million for foreign exchange remeasurement and interest expense related to debt issued by a subsidiary of Upjohn in the second quarter of 2020 and (ii) $167 million of settlement losses within the U.S. Pfizer Consolidated Pension Plan. The first nine months of 2020 also includes (i) charges of $297 million recorded in Other (income)/deductions––net, primarily representing our pro rata share of restructuring and business combination accounting charges recorded by the GSK Consumer Healthcare joint venture, partially offset by gains from the divestiture of certain of the joint venture’s brands recorded by the GSK Consumer Healthcare joint venture, and our write-off and amortization of equity method basis differences primarily related to those brand divestitures and to inventory and (ii) upfront payments of $130 million to Valneva
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PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS - (UNAUDITED)
SE and $72 million to BioNTech SE, which were both recorded to Research and development expenses. The third quarter and first nine months of 2019 include, among other things, (i) a $337 million charge in Research and development expenses related to our acquisition of Therachon and (ii) a $127 million charge in Cost of sales related to rivipansel, primarily for inventory manufactured for expected future sale. In addition, the third quarter of 2019 includes charges of $161 million, primarily in Other (income)/deductions––net ($121 million) and Selling, informational and administrative expenses ($39 million), and the first nine months of 2019 include charges of $223 million, primarily in Other (income)/deductions––net ($146 million) and Selling, informational and administrative expenses ($76 million), for external incremental costs, such as transaction costs and costs to separate our Consumer Healthcare business into a separate legal entity associated with the formation of the GSK Consumer Healthcare joint venture.
(g)Included in Provision/(benefit) 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 third quarter and first nine months of 2019 were unfavorably impacted by the tax expense associated with the gain related to the completion of the Consumer Healthcare joint venture transaction with GSK. The first nine months of 2019 were favorably impacted by a benefit of approximately $1.4 billion, representing tax and interest, resulting from a favorable settlement of a U.S. IRS audit for multiple tax years, as well as a tax benefit recorded as a result of additional guidance issued by the U.S. Department of Treasury related to the U.S. Tax Cuts and Jobs Act of 2017.
(4)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 2019 Financial Report, which was filed as Exhibit 13 to Pfizer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019), 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, are limited 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.
(5)Exclusive of amortization of intangible assets, except as discussed in footnote (6) below.
(6)Amortization of 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 of 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.
(7)Non-GAAP Adjusted Other (income)/deductions––net includes the following:
 Third-QuarterNine Months
(MILLIONS OF DOLLARS)2020201920202019
Interest income$(16)$(60)$(69)$(185)
Interest expense344 414 1,118 1,175 
Net interest expense
329 354 1,049 990 
Royalty-related income(214)(155)(525)(475)
Net gains on asset disposals(2)(32)— (33)
Net (gains)/losses recognized during the period on equity securities
(2)(3)21 (14)
Income from collaborations, out-licensing arrangements and sales of compound/product rights
(30)(20)(245)(124)
Net periodic benefit credits other than service costs
(120)(28)(338)(129)
Certain legal matters, net
— — 12 
Certain asset impairments
— 28 — 39 
GSK Consumer Healthcare JV equity method (income)/loss(155)— (492)— 
Other, net(155)(113)(367)(469)
Non-GAAP Adjusted Other (income)/deductions––net
$(351)$32 $(898)$(203)
For additional information regarding the adjustments, see the accompanying reconciliations. See Note (5) to Consolidated Statements of Income for the third quarter and first nine months of 2020 and 2019 above for additional information on the components comprising GAAP reported Other (income)/deductions––net. For additional
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PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS - (UNAUDITED)
information on certain significant items excluded from GAAP reported Other (income)/deductions––net in calculating Non-GAAP Adjusted Other (income)/deductions––net, refer to footnote (3) above.
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PFIZER INC. AND SUBSIDIARY COMPANIES
OPERATING SEGMENT INFORMATION(1) - (UNAUDITED)
(millions of dollars)
The following tables provide revenue and cost information by reportable operating segment and a reconciliation of that information to our consolidated statements of income:
Third-Quarter 2020
Biopharma(2)
Upjohn(2)
Other(3)
Non-GAAP Adjusted(4)
Reconciling Items(5)
GAAP Reported
Revenues$10,215 $1,916 $— $12,131 $— $12,131 
Cost of sales1,883 560 60 2,502 27 2,529 
% of revenue
18.4 %29.2 %*20.6 %*20.8 %
Selling, informational and administrative expenses1,513 299 1,057 2,869 148 3,016 
Research and development expenses228 58 2,067 2,354 2,360 
Amortization of intangible assets71 — 73 826 898 
Restructuring charges and certain acquisition-related costs— — — — 4 
(Gain) on completion of Consumer Healthcare JV transaction
— — — — —  
Other (income)/deductions––net(287)(10)(54)(351)1,499