filings.toolsItem 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS**
GENERAL
The following MD&A is intended to assist the reader in understanding our financial condition and results of operations, including an evaluation of the amounts and certainty of cash flows from operations and from outside sources, and is provided as a supplement to and should be read in conjunction with the condensed consolidated financial statements and related notes in Item 1. Financial Statements in this Form 10-Q.
References to operational variances pertain to period-over-period changes that exclude the impact of foreign exchange rates. Although foreign exchange rate changes are part of our business, they are not within our control and because they can mask positive or negative trends in the business, we believe presenting operational variances excluding these foreign exchange changes provides useful information to evaluate our results.
OVERVIEW OF OUR PERFORMANCE, OPERATING ENVIRONMENT, STRATEGY AND OUTLOOK
Our Business and Strategy––Pfizer Inc. is a research-based, global biopharmaceutical company. We apply science and our global resources to bring therapies to people that extend and significantly improve their lives. In 2023, we are making additional investments in both R&D and SI&A to support Pfizer’s near- and longer-term growth plans, including to support anticipated new launches, commercial launch of COVID-19 products, potential pipeline programs and recently acquired assets. We manage our commercial operations through a global structure consisting of two operating segments: Biopharma and Business Innovation. Biopharma is the only reportable segment. See Note 13A.
We expect to incur costs of approximately $700 million in connection with separating Upjohn, of which approximately 90% has been incurred since inception and through the second quarter of 2023. These charges include costs and expenses related to separation of legal entities and transaction costs.
In the fourth quarter of 2022, we began taking steps through our Transforming to a More Focused Company restructuring program to optimize our end-to-end R&D operations to reduce costs and cycle times as well as to further prioritize our internal R&D portfolio in areas where our capabilities are differentiated while increasing external innovation efforts to leverage an expanding and productive biotech sector. See Note 3. For a description of savings related to this program, see the Costs and Expenses––Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives section within MD&A*.*
In July 2023, we announced that in consideration of planned future investments in oncology, including the proposed acquisition of Seagen, we are reorganizing how our R&D operations are conducted. Beginning in July 2023, discovery to early- and late-phase clinical development for oncology will be performed by a new end-to-end Oncology Research and Development platform function and discovery to early- and late-phase clinical development for all remaining therapeutic areas will be consolidated in the Pfizer Research and Development platform function.
For additional information about our business, strategy and operating environment, see the Item 1. Business section and Overview of Our Performance, Operating Environment, Strategy and Outlook section within MD&A of our 2022 Form 10-K.
Our Business Development Initiatives––We are committed to strategically capitalizing on growth opportunities, primarily by advancing our own product pipeline and maximizing the value of our existing products, but also through various business development activities. Our significant recent business development activities include the transactions discussed in Notes 1A and 2**, including the proposed acquisition of Seagen, as well as the following:
Proposed Divestiture of Early-Stage Rare Disease Gene Therapy Portfolio*–*–In July 2023, we entered into an agreement with Alexion, a subsidiary of AstraZeneca plc, under which Alexion will purchase and license the assets of our early-stage rare disease gene therapy portfolio. This agreement is consistent with our previously announced strategy to pivot from viral capsid-based gene therapy approaches to harnessing new platform technologies that we believe can have a transformative impact on patients, such as mRNA or in vivo gene editing. Under the terms of the agreement, Alexion will pay us total consideration of up to $1 billion, plus tiered royalties based on annual net sales of the assets. The transaction is expected to close in the third quarter of 2023, subject to customary closing conditions.
Agreement with Flagship Pioneering, Inc. (Flagship)**––In July 2023, we and Flagship announced that we have partnered to create a new pipeline of innovative medicines. Under the terms of the novel agreement, we and Flagship will each invest $50 million upfront to explore opportunities to develop 10 single-asset programs by leveraging Flagship’s ecosystem of more than 40 human health companies and multiple biotechnology platforms. Pfizer will fund and have an option to acquire each selected development program. Flagship and its bioplatform companies will be eligible to receive up to $700 million in milestones and royalties for each successfully commercialized program.
Termination of Collaboration Arrangement with Merck KGaA, Darmstadt, Germany (Merck KGaA)**––In March 2023, it was announced that our alliance with Merck KGaA to co-develop and co-commercialize Bavencio (avelumab) will terminate. Effective June 30, 2023, Merck KGaA took full control of the global commercialization of Bavencio. Beginning in the third quarter of 2023, the current profit share will be replaced by a 15% royalty to Pfizer on net sales of Bavencio. We and Merck KGaA will continue to operationalize our respective ongoing clinical trials for Bavencio; and Merck KGaA will control all future R&D activities.
For a description of the more significant recent transactions through February 23, 2023, the filing date of our 2022 Form 10-K, see Note 2 in our 2022 Form 10-K.
Our Second Quarter 2023 and First Six Months of 2023 Performance
Revenues––Revenues decreased $15.0 billion, or 54%, in the second quarter of 2023 to $12.7 billion from $27.7 billion in the second quarter of 2022, reflecting an operational decrease of $14.7 billion, or 53%, as well as an unfavorable impact of foreign exchange of $283 million, or 1%. The operational decrease was primarily driven by declines in Paxlovid and Comirnaty. Excluding contributions from Comirnaty and Paxlovid, revenues increased $537 million, or 5%, operationally, reflecting revenues from recently acquired products, Nurtec ODT/Vydura and Oxbryta, and strong growth from the Vyndaqel family, partially offset by declines in Inflectra in the U.S. and Ibrance.
Revenues decreased $22.4 billion, or 42%, in the first six months of 2023 to $31.0 billion from $53.4 billion in the first six months of 2022, reflecting an operational decrease of $21.4 billion, or 40%, as well as an unfavorable impact of foreign exchange of $1.0 billion, or 2%. The operational decrease was primarily driven by declines in Comirnaty and Paxlovid. Excluding contributions from Comirnaty and Paxlovid, revenues increased $1.1 billion, or 5%, operationally, reflecting revenues from recently acquired products, Nurtec ODT/Vydura and Oxbryta, as well as strong growth from the Vyndaqel family and Eliquis, and increased Sulperazon revenues in China in the first quarter of 2023, partially offset by a decline in Ibrance.
As of August 1, 2023, on a total company basis, we forecasted revenues in 2023 of $67 billion to $70 billion, reflecting an operational decline of 31% at the midpoint from 2022 results, which we expect will also have an unfavorable impact on Income from continuing operations before provision/(benefit) for taxes on income. The total company expected revenue declines in 2023 are driven by an expected reduction in sales of our COVID-19 products, partially offset by expected operational growth from our non-COVID-19 in-line portfolio, anticipated new product and indication launches, and recently acquired products.
See the Revenues by Geography and Revenues––Selected Product Discussion sections for more information, including a discussion of key drivers of our revenue performance. See also The Global Economic Environment––COVID-19 section below for information about our COVID-19 products, including expectations, risks and uncertainties for 2023. For information regarding the primary indications or class of certain products, see Note 13C**.
Income from Continuing Operations Before Provision/(Benefit) for Taxes on Income––The decreases in Income from continuing operations before provision/(benefit) for taxes on income of $9.2 billion in the second quarter of 2023 and $12.0 billion in the first six months of 2023, compared to the same periods in 2022, were primarily due to lower revenues and an increase in Selling, informational and administrative expenses, partially offset by lower Cost of sales and net gains on equity securities in the second quarter of 2023 versus net losses recognized in the second quarter of 2022, and lower net losses on equity securities for the first six months of 2023*.*
See the Analysis of the Condensed Consolidated Statements of Income within MD&A and Note 4. See also The Global Economic Environment––COVID-19 section below for information about our COVID-19 products, including expectations for 2023. For information on our tax provision and effective tax rate, see the Provision/(Benefit) for Taxes on Income section within MD&A and Note 5.
Our Operating Environment––We, like other businesses in our industry, are subject to certain industry-specific challenges. These include, among others, the topics listed below, as well as in the Item 1. Business––Government Regulation and Price Constraints and Item 1A. Risk Factors sections, and the Overview of Our Performance, Operating Environment, Strategy and Outlook––Our Operating Environment section of the MD&A of our 2022 Form 10-K and the Item 1A. Risk Factors section of this Form 10-Q.
Intellectual Property Rights and Collaboration/Licensing Rights––The loss, expiration or invalidation of intellectual property rights, patent litigation settlements and the expiration of co-promotion and licensing rights can have a material adverse effect on our revenues. Certain of our products have experienced patent-based expirations or loss of regulatory exclusivity in certain markets in the last few years, and we expect certain products to face increased generic competition over the next few years. While additional patent expiries will continue, we expect a moderate impact of reduced revenues due to patent expiries from 2023 through 2025. We anticipate a more significant impact of reduced revenues from patent expiries in 2026 through 2030 as several of our in-line products experience patent-based expirations. We continue to vigorously defend our patent rights against
infringement, and we will continue to support efforts that strengthen worldwide recognition of patent rights while taking necessary steps to help ensure appropriate patient access.
For additional information, see the Item 1. Business––Patents and Other Intellectual Property Rights and the Item 1A. Risk Factors––Intellectual Property Protection sections of our 2022 Form 10-K. For a discussion of recent developments with respect to patent litigation, see Note 12A1**.
Regulatory Environment/Pricing and Access––Government and Other Payer Group Pressures––Governments globally, as well as private third-party payers in the U.S., may use a variety of measures to control costs, including, among others, proposing pricing reform or legislation, employing formularies to control costs, cross country collaboration and procurement, price cuts, mandatory rebates, health technology assessments, forced localization as a condition of market access, “international reference pricing” (i.e., the practice of a country linking its regulated medicine prices to those of other countries), quality consistency evaluation processes and volume-based procurement. We anticipate that these and similar initiatives will continue to increase pricing and access pressures globally. In the U.S., we expect to see continued focus by Congress and the Biden Administration on regulating pricing, which could result in legislative and regulatory changes designed to control costs. We continue to evaluate the impact of the IRA, which was signed into law in August 2022, on our business, operations and financial condition and results as the full effect of the IRA on our business and the pharmaceutical industry remains uncertain. In addition, changes to the Medicaid program or the federal 340B drug pricing program, including legal or legislative developments at the federal or state level with respect to the 340B program, could have a material impact on our business. See the Item 1. Business––Pricing Pressures and Managed Care Organizations and ––Government Regulation and Price Constraints and the Item 1A. Risk Factors––Pricing and Reimbursement sections, and the Overview of Our Performance, Operating Environment, Strategy and Outlook––Our Operating Environment section of the MD&A of our 2022 Form 10-K*.*
Impact of Recent Tornado in Rocky Mount, North Carolina (NC*)**––*Our manufacturing facility in Rocky Mount, NC was damaged by a tornado in July 2023. The facility is a key producer of sterile injectables and is responsible for manufacturing nearly 25 percent of all our sterile injectables—including anesthesia, analgesia, and micronutrients—which is nearly eight percent of all the sterile injectables used in U.S. hospitals. The HiRise warehouse sustained major damage and all raw materials, packaging supplies and finished medicines stored within were damaged. All necessary supplies have been reordered for expedited delivery and we are actively engaging with suppliers. We are working diligently to move product stored within other areas of the facility not impacted by the event to other nearby sites for storage and to secure temporary warehouse space in the vicinity, as an interim solution, until the warehouse on the Rocky Mount campus can be rebuilt. We are also exploring alternative manufacturing locations for production across our significant manufacturing presence in the U.S. and internationally and across our partner network. After an initial assessment, there does not appear to be major damage to the production areas. We are committed to rapidly restoring full function to the site. We are providing financial support to help local communities affected by the natural disaster. We are currently evaluating the financial impact of the tornado on our business, including costs to repair and rebuild the site, inventory losses, potential losses from stock outages at the hospital/retail level, overhead costs related to the period in which the plant may be inoperable, as well as other one-time remediation and/or other incremental costs which may be necessary as we work to bring our plant back online, but we are unable to predict the impact or insurance recoveries with certainty at this time.
Product Supply––We periodically encounter supply delays, disruptions and shortages, including due to voluntary product recalls and natural or man-made disasters. In response to requests from various regulatory authorities, manufacturers across the pharmaceutical industry, including Pfizer, are evaluating their product portfolios for the potential presence or formation of nitrosamines. This has led to recalls, including our voluntary recall of Chantix in 2021 and additional voluntary recalls initiated for other products in 2022 due to the presence of nitrosamines above the FDA interim acceptable intake limit, and may lead to additional recalls or other market actions for Pfizer products.
Except for the recent tornado in Rocky Mount, NC discussed above, we have not seen a significant disruption of our supply chain in the first six months of 2023 and to date, and all of our manufacturing sites globally have continued to operate at or near normal levels; however, we continue to see heightened demand in the industry for certain components and raw materials, which could potentially result in constraining available supply leading to a possible future impact on our business. We are continuing to monitor and implement mitigation strategies in an effort to reduce any potential risk or impact including active supplier management, qualification of additional suppliers and advanced purchasing to the extent possible. For information on risks related to product manufacturing, see the Item 1A. Risk Factors––Product Manufacturing, Sales and Marketing Risks section of our 2022 Form 10-K.
The Global Economic Environment––In addition to the industry-specific factors discussed above, we, like other businesses of our size and global extent of activities, are exposed to economic cycles. See the Overview of Our Performance, Operating Environment, Strategy and Outlook––The Global Economic Environment section of the MD&A of our 2022 Form 10-K.
COVID-19––In response to COVID-19, we have developed Paxlovid and collaborated with BioNTech to jointly develop Comirnaty, including, subject to approval, an Omicron XBB.1.5-adapted monovalent vaccine. As part of our strategy for
COVID-19, we are continuing to make significant additional investments in breakthrough science and global manufacturing. This includes continuing to evaluate Comirnaty and Paxlovid, including against new variants of concern, developing variant adapted vaccine candidates and developing potential combination respiratory vaccines and potential next generation vaccines and therapies. We are also evaluating Paxlovid for additional populations. See the Product Developments section within MD&A.
In the first six months of 2023 and to date, we principally sold Comirnaty globally under government contracts and Paxlovid globally to government agencies and distributors. We expect Comirnaty in the U.S. will transition to traditional commercial market sales in the second half of 2023, triggered by the expiration of current contracts and the COVID-19 vaccines from Pfizer and BioNTech purchased through them becoming either depleted or not used following the introduction of a new variant vaccine. Internationally, we expect sales of Comirnaty in international developed markets to generally be under government contracts in 2023, and in emerging markets, under a combination of private channels and government contracts; in both cases, we expect to generally transition to commercial markets starting in 2024. For Paxlovid, we expect to transition to traditional commercial markets in the second half of 2023 rather than significant government purchases. We anticipate this transition in the U.S. to occur in the second half of 2023, though at this point we have not yet agreed on a transition plan with the U.S. government. We also remain committed to helping ensure broad and equitable access to our COVID-19 products to eligible patients around the world. Revenues from our COVID-19 products are expected to go from their peak in 2022 to their low point in 2023 before potentially returning to growth in 2024. While patient demand for our COVID-19 products is expected to remain strong throughout 2023, much of that demand is expected to be fulfilled by existing supply of products that were delivered to governments and recorded as revenues in 2022. As of August 1, 2023, we forecasted Comirnaty revenues of approximately $13.5 billion in 2023, down 64% from actual 2022 results, with gross profit to be split evenly with BioNTech, and Paxlovid revenues of approximately $8 billion in 2023, down 58% from actual 2022 results. These forecasts are based on estimates and assumptions that are subject to significant uncertainties, including, among others, patient demand, which could be significantly impacted by the infectiousness and severity of the predominant strains of the SARS-CoV-2 virus during 2023, proportion of the population that receives a vaccine or is treated with an oral antiviral treatment, the number of doses per vaccinated person per year, number of symptomatic infections, market share of Comirnaty and Paxlovid and the timing for transitioning Comirnaty and Paxlovid to commercial markets in the U.S.
For information on the impact of COVID-19 on our business, operations and financial conditions and results and risks associated with COVID-19 and our COVID-19 products, as well as COVID-19 intellectual property disputes, see the Item 1A. Risk Factors—COVID-19, —Intellectual Property Protection and —Third-Party Intellectual Property Claims sections and the Overview of Our Performance, Operating Environment, Strategy and Outlook section of the MD&A of our 2022 Form 10-K, as well as Notes 8A, 12A1 and Forward-Looking Information and Factors that May Affect Future Results of this Form 10-Q*.*
Russia/Ukraine Conflict––Our global operations may be impacted by the armed conflict between Russia and Ukraine. For both the six months ended July 2, 2023 and the fiscal year ended December 31, 2022, the business of our Russia and Ukraine subsidiaries represented less than 1% of our consolidated revenues and assets, and while we are monitoring the effects of the armed conflict between Russia and Ukraine, the situation continues to evolve and the long-term implications, including the broader economic consequences of the conflict, are difficult to predict at this time. While as of now, we do not anticipate any significant negative impacts on our business from this conflict, continued regional instability, geopolitical shifts, potential additional sanctions and other restrictive measures against Russia, neighboring countries or allies of Russia, any retaliatory measures taken by Russia, neighboring countries or allies of Russia, and actions by our customers or suppliers, including financial institutions, in response to such measures could adversely affect the global macroeconomic environment, our operations, currency exchange rates and financial markets, which could in turn adversely impact our business and results of operations. For additional information on our response to the armed conflict between Russia and Ukraine as well as risks associated with the conflict, see the Item 1A. Risk Factors—Global Operations section and the Overview of Our Performance, Operating Environment, Strategy and Outlook section of the MD&A of our 2022 Form 10-K.
SIGNIFICANT ACCOUNTING POLICIES AND APPLICATION OF CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
For a description of our significant accounting policies, see Note 1 in our 2022 Form 10-K*.* Of these policies, the following are considered critical to an understanding of our consolidated financial statements as they require the application of the most subjective and the most complex judgments: Acquisitions (Note 1D); Fair Value (Note 1E); Revenues (Note 1G); Asset Impairments (Note 1M); Tax Assets and Liabilities and Income Tax Contingencies (Note 1Q); Pension and Postretirement Benefit Plans (Note 1R); and Legal and Environmental Contingencies (Note 1S).
For a discussion about the critical accounting estimates and assumptions impacting our consolidated financial statements, see the Significant Accounting Policies and Application of Critical Accounting Estimates and Assumptions section within MD&A in our 2022 Form 10-K. See also Note 1C in our 2022 Form 10-K for a discussion about the risks associated with estimates and assumptions.
For a discussion of recently adopted accounting standards, see Note 1B.
ANALYSIS OF THE CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Revenues by Geography
| The following presents worldwide revenues by geography: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | U.S. | International | World-wide | U.S. | Inter-national | |||||||||||||||||||||||||||||||||||||||||||||||||||
| (MILLIONS) | July 2, 2023 | July 3, 2022 | July 2, 2023 | July 3, 2022 | July 2, 2023 | July 3, 2022 | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||
| Operating segments: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Biopharma | $ | 12,418 | $ | 27,425 | $ | 6,095 | $ | 11,136 | $ | 6,323 | $ | 16,289 | (55) | (45) | (61) | |||||||||||||||||||||||||||||||||||||||||
| Business Innovation | 316 | 317 | 90 | 86 | 225 | 230 | — | 5 | (2) | |||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | $ | 12,734 | $ | 27,742 | $ | 6,185 | $ | 11,222 | $ | 6,548 | $ | 16,519 | (54) | (45) | (60) | |||||||||||||||||||||||||||||||||||||||||
| Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | U.S. | International | World-wide | U.S. | Inter-national | |||||||||||||||||||||||||||||||||||||||||||||||||||
| (MILLIONS) | July 2, 2023 | July 3, 2022 | July 2, 2023 | July 3, 2022 | July 2, 2023 | July 3, 2022 | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||
| Operating segments: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Biopharma | $ | 30,389 | $ | 52,748 | $ | 14,491 | $ | 19,952 | $ | 15,898 | $ | 32,795 | (42) | (27) | (52) | |||||||||||||||||||||||||||||||||||||||||
| Business Innovation | 626 | 655 | 201 | 188 | 425 | 467 | (4) | 7 | (9) | |||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | $ | 31,015 | $ | 53,402 | $ | 14,692 | $ | 20,140 | $ | 16,323 | $ | 33,262 | (42) | (27) | (51) |
Second Quarter of 2023 vs. Second Quarter of 2022
| The following provides an analysis of the change in worldwide revenues by geographic areas in the second quarter of 2023: | ||||||||||||||||||||
| Three Months Ended July 2, 2023 | ||||||||||||||||||||
| (MILLIONS) | Worldwide | U.S. | International | |||||||||||||||||
| Operational growth/(decline): | ||||||||||||||||||||
| Worldwide declines from Paxlovid(a) | $ | (7,967) | $ | (4,455) | $ | (3,512) | ||||||||||||||
| Worldwide declines from Comirnaty(a) | (7,294) | (1,063) | (6,230) | |||||||||||||||||
| Lower revenues from Inflectra, primarily driven by lower net price in the U.S. as a result of unfavorable changes in channel mix | (62) | (64) | 2 | |||||||||||||||||
| Revenues from recently acquired products: Nurtec ODT/Vydura(a) and Oxbryta | 324 | 319 | 4 | |||||||||||||||||
| Worldwide growth from the Vyndaqel family, Xeljanz, Eliquis and Xtandi, partially offset by declines from Ibrance, the Prevnar family and Inlyta(a) | 244 | 226 | 18 | |||||||||||||||||
| Other operational factors, net | 31 | — | 30 | |||||||||||||||||
| Operational growth/(decline), net | (14,725) | (5,037) | (9,688) | |||||||||||||||||
| Unfavorable impact of foreign exchange | (283) | — | (283) | |||||||||||||||||
| Revenues increase/(decrease) | $ | (15,008) | $ | (5,037) | $ | (9,971) |
(a)See the Revenues––Selected Product Discussion section within MD&A for additional analysis.
Emerging markets revenues decreased $3.2 billion, or 53%, in the second quarter of 2023 to $2.8 billion from $6.0 billion in the second quarter of 2022, reflecting an operational decrease of $3.0 billion, or 50%, and an unfavorable impact from foreign exchange of 2%. The operational decrease in emerging markets was primarily driven by declines from Comirnaty and Paxlovid.
First Six Months of 2023 vs. First Six Months of 2022
| The following provides an analysis of the worldwide change in revenues by geographic areas in the first six months of 2023: | ||||||||||||||||||||
| Six Months Ended July 2, 2023 | ||||||||||||||||||||
| (MILLIONS) | Worldwide | U.S. | International | |||||||||||||||||
| Operational growth/(decline): | ||||||||||||||||||||
| Worldwide declines from Comirnaty(a) | $ | (17,260) | $ | (3,049) | $ | (14,211) | ||||||||||||||
| Worldwide declines from Paxlovid(a) | (5,214) | (3,510) | (1,704) | |||||||||||||||||
| Revenues from recently acquired products: Nurtec ODT/Vydura(a) and Oxbryta | 561 | 553 | 8 | |||||||||||||||||
| Worldwide growth from the Vyndaqel family, Eliquis, the Prevnar family, Inlyta and Xtandi, partially offset by declines from Ibrance and Xeljanz(a) | 363 | 477 | (115) | |||||||||||||||||
| Increased revenues from Sulperazon, largely driven by demand in China in the first quarter of 2023 | 114 | — | 114 | |||||||||||||||||
| Other operational factors, net | 62 | 81 | (19) | |||||||||||||||||
| Operational growth/(decline), net | (21,374) | (5,448) | (15,926) | |||||||||||||||||
| Unfavorable impact of foreign exchange | (1,013) | — | (1,013) | |||||||||||||||||
| Revenues increase/(decrease) | $ | (22,387) | $ | (5,448) | $ | (16,939) |
(a)See the Revenues––Selected Product Discussion section within MD&A for additional analysis.
Emerging markets revenues decreased $6.1 billion, or 45%, in the first six months of 2023 to $7.3 billion from $13.4 billion in the first six months of 2022, reflecting an operational decrease of $5.6 billion, or 42%, and an unfavorable impact from foreign exchange of 3%. The operational decrease in emerging markets was primarily driven by declines from Comirnaty, partially offset by growth from Paxlovid, as well as increased Sulperazon revenues in the first quarter of 2023 largely driven by demand in China.
Revenue Deductions––Our gross product revenues are subject to a variety of deductions, which generally are estimated and recorded in the same period that the revenues are recognized. These deductions represent estimates of the related obligations and, as such, knowledge and judgment are required when estimating the impact of these revenue deductions on gross sales for a reporting period. Historically, adjustments to these estimates to reflect actual results or updated expectations, have not been material to our overall business and generally have been less than 1% of revenues. Product-specific rebates, however, can have a significant impact on year-over-year individual product revenue growth trends.
| The following presents information about revenue deductions: | ||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
| (MILLIONS) | July 2, 2023 | July 3, 2022 | July 2, 2023 | July 3, 2022 | ||||||||||||||||||||||
| Medicare rebates | $ | 207 | $ | 186 | $ | 432 | $ | 387 | ||||||||||||||||||
| Medicaid and related state program rebates | 411 | 225 | 822 | 466 | ||||||||||||||||||||||
| Performance-based contract rebates | 1,229 | 862 | 2,421 | 1,667 | ||||||||||||||||||||||
| Chargebacks | 2,305 | 1,797 | 4,589 | 3,534 | ||||||||||||||||||||||
| Sales allowances | 1,594 | 1,367 | 3,109 | 2,571 | ||||||||||||||||||||||
| Sales returns and cash discounts | 238 | 328 | 751 | 598 | ||||||||||||||||||||||
| Total | $ | 5,984 | $ | 4,765 | $ | 12,125 | $ | 9,223 |
Revenue deductions are primarily a function of product sales volume, mix of products sold, contractual or legislative discounts and rebates.
For information on our accruals for revenue deductions, including the balance sheet classification of these accruals, see Note 1C**.
Revenues––Selected Product Discussion
Biopharma
| (MILLIONS) | Revenue | % Change | ||||||||||||||||||||||||||||||||||||||||||||||||
| Product | Period | Global Revenues | Region | July 2, 2023 | July 3, 2022 | Total | Oper. | Operational Results Commentary | ||||||||||||||||||||||||||||||||||||||||||
| Comirnaty(a) | QTD | $1,488 Down 82% (operationally) | U.S. | $ | 17 | $ | 1,080 | (98) | Global declines largely driven by lower contracted deliveries and demand in international markets and lower U.S. government contracted deliveries, with anticipated transition to new variant vaccines globally and to traditional U.S. commercial market sales in the second half of 2023. | |||||||||||||||||||||||||||||||||||||||||
| Int’l. | 1,471 | 7,768 | (81) | (80) | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 1,488 | $ | 8,848 | (83) | (82) | ||||||||||||||||||||||||||||||||||||||||||||
| YTD | $4,552 Down 78% (operationally) | U.S. | $ | 345 | $ | 3,395 | (90) | |||||||||||||||||||||||||||||||||||||||||||
| Int’l. | 4,207 | 18,681 | (77) | (76) | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 4,552 | $ | 22,075 | (79) | (78) | ||||||||||||||||||||||||||||||||||||||||||||
| Paxlovid | QTD | $143 Down 98% (operationally) | U.S. | $ | — | $ | 4,455 | * | Declines primarily driven by: • No second quarter U.S. sales in anticipation of transition to traditional commercial markets in the second half of 2023, and • lower contractual deliveries in most international markets YTD declines partially offset by strong demand in China under the temporary National Reimbursement Drug List (which ended on April 1, 2023) due to surge in COVID-19 infection. | |||||||||||||||||||||||||||||||||||||||||
| Int’l. | 143 | 3,660 | (96) | (96) | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 143 | $ | 8,115 | (98) | (98) | ||||||||||||||||||||||||||||||||||||||||||||
| YTD | $4,212 Down 54% (operationally) | U.S. | $ | 1,960 | $ | 5,470 | (64) | |||||||||||||||||||||||||||||||||||||||||||
| Int’l. | 2,252 | 4,115 | (45) | (41) | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 4,212 | $ | 9,585 | (56) | (54) | ||||||||||||||||||||||||||||||||||||||||||||
| Eliquis | QTD | $1,762 Up 2% (operationally) | U.S. | $ | 1,152 | $ | 1,064 | 8 | Growth driven primarily by continued oral anti-coagulant adoption and market share gains in the non-valvular atrial fibrillation indication in the U.S. and certain markets in Europe, partially offset by declines due to LOE and generic competition in certain international markets. | |||||||||||||||||||||||||||||||||||||||||
| Int’l. | 610 | 681 | (10) | (9) | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 1,762 | $ | 1,745 | 1 | 2 | ||||||||||||||||||||||||||||||||||||||||||||
| YTD | $3,636 Up 4% (operationally) | U.S. | $ | 2,413 | $ | 2,144 | 13 | |||||||||||||||||||||||||||||||||||||||||||
| Int’l. | 1,223 | 1,394 | (12) | (8) | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 3,636 | $ | 3,537 | 3 | 4 | ||||||||||||||||||||||||||||||||||||||||||||
| Prevnar family | QTD | $1,388 Down 1% (operationally) | U.S. | $ | 825 | $ | 906 | (9) | QTD decline primarily driven by lower stocking and demand for Prevnar pediatric indication in the U.S. in anticipation of transition to Prevnar 20, as well as lower market share due to competitor entry, largely offset by the adult indications in the U.S. due to strong patient demand following the launch of Prevnar 20 for the eligible adult population, as well as growth in certain emerging markets. YTD growth primarily driven by the adult indications in the U.S. due to strong patient demand following the launch of Prevnar 20 for the eligible adult population, as well as growth in certain emerging markets, partially offset by lower stocking and demand for Prevnar pediatric indication in the U.S. in anticipation of transition to Prevnar 20, as well as lower market share due to competitor entry. | |||||||||||||||||||||||||||||||||||||||||
| Int’l. | 563 | 523 | 8 | 12 | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 1,388 | $ | 1,429 | (3) | (1) | ||||||||||||||||||||||||||||||||||||||||||||
| YTD | $2,981 Up 2% (operationally) | U.S. | $ | 1,900 | $ | 1,920 | (1) | |||||||||||||||||||||||||||||||||||||||||||
| Int’l. | 1,081 | 1,074 | 1 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 2,981 | $ | 2,994 | — | 2 | ||||||||||||||||||||||||||||||||||||||||||||
| Ibrance | QTD | $1,247 Down 4% (operationally) | U.S. | $ | 850 | $ | 868 | (2) | Declines primarily driven by lower demand globally due to competitive pressure, lower clinical trial purchases internationally, and planned price decreases in certain international developed markets. | |||||||||||||||||||||||||||||||||||||||||
| Int’l. | 397 | 452 | (12) | (9) | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 1,247 | $ | 1,320 | (6) | (4) | ||||||||||||||||||||||||||||||||||||||||||||
| YTD | $2,391 Down 5% (operationally) | U.S. | $ | 1,600 | $ | 1,621 | (1) | |||||||||||||||||||||||||||||||||||||||||||
| Int’l. | 791 | 936 | (16) | (11) | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 2,391 | $ | 2,557 | (7) | (5) | ||||||||||||||||||||||||||||||||||||||||||||
| Vyndaqel family | QTD | $782 Up 43% (operationally) | U.S. | $ | 434 | $ | 296 | 47 | Growth largely driven by continued strong uptake of the ATTR-CM indication, primarily in the U.S. and developed Europe. YTD growth partially offset by a planned price decrease that went into effect in Japan in the second quarter of 2022. | |||||||||||||||||||||||||||||||||||||||||
| Int’l. | 348 | 256 | 36 | 38 | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 782 | $ | 552 | 42 | 43 | ||||||||||||||||||||||||||||||||||||||||||||
| YTD | $1,468 Up 29% (operationally) | U.S. | $ | 818 | $ | 561 | 46 | |||||||||||||||||||||||||||||||||||||||||||
| Int’l. | 650 | 603 | 8 | 12 | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 1,468 | $ | 1,164 | 26 | 29 | ||||||||||||||||||||||||||||||||||||||||||||
| Xeljanz | QTD | $469 Up 11% (operationally) | U.S. | $ | 333 | $ | 254 | 31 | QTD growth driven primarily by higher net price in the U.S. due to favorable changes in channel mix, partially offset by decreased prescription volumes globally resulting from ongoing shifts in prescribing patterns related to label changes. YTD declines driven primarily by decreased prescription volumes globally resulting from ongoing shifts in prescribing patterns related to label changes. | |||||||||||||||||||||||||||||||||||||||||
| Int’l. | 136 | 176 | (23) | (19) | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 469 | $ | 430 | 9 | 11 | ||||||||||||||||||||||||||||||||||||||||||||
| YTD | $706 Down 10% (operationally) | U.S. | $ | 423 | $ | 457 | (7) | |||||||||||||||||||||||||||||||||||||||||||
| Int’l. | 284 | 345 | (18) | (12) | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 706 | $ | 802 | (12) | (10) | ||||||||||||||||||||||||||||||||||||||||||||
| Xtandi | QTD | $305 Up 5% (operationally) | U.S. | $ | 305 | $ | 290 | 5 | QTD growth driven by higher demand and net price realization. YTD growth driven by higher demand, partially offset by lower net price mainly due to unfavorable changes in channel mix. | |||||||||||||||||||||||||||||||||||||||||
| Int’l. | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 305 | $ | 290 | 5 | 5 | ||||||||||||||||||||||||||||||||||||||||||||
| YTD | $564 Up 1% (operationally) | U.S. | $ | 564 | $ | 558 | 1 | |||||||||||||||||||||||||||||||||||||||||||
| Int’l. | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 564 | $ | 558 | 1 | 1 |
| (MILLIONS) | Revenue | % Change | ||||||||||||||||||||||||||||||||||||||||||||||||
| Product | Period | Global Revenues | Region | July 2, 2023 | July 3, 2022 | Total | Oper. | Operational Results Commentary | ||||||||||||||||||||||||||||||||||||||||||
| Inlyta | QTD | $262 Down 3% (operationally) | U.S. | $ | 168 | $ | 162 | 3 | QTD decline primarily driven by lower net price and lower volumes in certain European markets, partially offset by continued strong performance in the U.S. and emerging markets driven by the adoption of combinations of certain immune checkpoint inhibitors and Inlyta for the first-line treatment of patients with advanced RCC. YTD growth primarily reflects continued strong performance in the U.S. and emerging markets driven by the adoption of combinations of certain immune checkpoint inhibitors and Inlyta for the first-line treatment of patients with advanced RCC, partially offset by lower volumes and lower net price in certain European markets. | |||||||||||||||||||||||||||||||||||||||||
| Int’l. | 94 | 112 | (16) | (12) | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 262 | $ | 274 | (4) | (3) | ||||||||||||||||||||||||||||||||||||||||||||
| YTD | $521 Up 5% (operationally) | U.S. | $ | 323 | $ | 302 | 7 | |||||||||||||||||||||||||||||||||||||||||||
| Int’l. | 199 | 206 | (3) | 2 | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 521 | $ | 508 | 3 | 5 | ||||||||||||||||||||||||||||||||||||||||||||
| Nurtec ODT/Vydura | QTD | $247 ***** | U.S. | $ | 244 | $ | — | * | Driven by the acquisition of Biohaven in the fourth quarter of 2022, after which Nurtec ODT/Vydura is now a Pfizer-owned product, compared to the second quarter and first six months of 2022, during which Pfizer only had commercialization rights outside of the U.S. under a collaboration and license agreement with Biohaven. See Notes 2A and 2E of our 2022 Form 10-K. | |||||||||||||||||||||||||||||||||||||||||
| Int’l. | 4 | — | * | * | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 247 | $ | — | * | * | ||||||||||||||||||||||||||||||||||||||||||||
| YTD | $414 ***** | U.S. | $ | 406 | $ | — | * | |||||||||||||||||||||||||||||||||||||||||||
| Int’l. | 7 | 1 | * | * | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 414 | $ | 1 | * | * |
Business Innovation
| (MILLIONS) | Revenue | % Change | ||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Segment | Period | Global Revenues | Region | July 2, 2023 | July 3, 2022 | Total | Oper. | Operational Results Commentary | ||||||||||||||||||||||||||||||||||||||||||
| Business Innovation | QTD | $316 Flat (operationally) | U.S. | $ | 90 | $ | 86 | 5 | Performance primarily driven by, among other things, the timing of Comirnaty supply to BioNTech, offset by - for QTD (and partially offset by - for YTD) higher manufacturing of divested products under manufacturing and supply agreements and higher COVID-19 manufacturing activities performed on behalf of customers. | |||||||||||||||||||||||||||||||||||||||||
| Int’l. | 225 | 230 | (2) | (2) | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 316 | $ | 317 | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| YTD | $626 Down 3% (operationally) | U.S. | $ | 201 | $ | 188 | 7 | |||||||||||||||||||||||||||||||||||||||||||
| Int’l. | 425 | 467 | (9) | (7) | ||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide | $ | 626 | $ | 655 | (4) | (3) |
(a)Comirnaty includes direct sales and Alliance revenues related to sales of the Pfizer-BioNTech COVID-19 vaccine, which are recorded within our Primary Care customer group. It does not include revenues for certain Comirnaty-related manufacturing activities performed on behalf of BioNTech, which are included in PC1, which is part of the Business Innovation operating segment. See Note 13C.
- Indicates calculation not meaningful.
See the Item 1. Business—Patents and Other Intellectual Property Rights section of our 2022 Form 10-K for information regarding the expiration of various patent rights, Note 12 for a discussion of recent developments concerning patent and product litigation relating to certain of the products discussed above and Note 13C for additional information regarding the primary indications or class of the selected products discussed above.
Costs and Expenses
| Costs and expenses follow: | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||
| (MILLIONS) | July 2, 2023 | July 3, 2022 | % Change | July 2, 2023 | July 3, 2022 | % Change | ||||||||||||||||||||||||||||||||
| Cost of sales | $ | 3,237 | $ | 8,648 | (63) | $ | 8,122 | $ | 18,632 | (56) | ||||||||||||||||||||||||||||
| Percentage of Revenues | 25.4 | % | 31.2 | % | 26.2 | % | 34.9 | % | ||||||||||||||||||||||||||||||
| Selling, informational and administrative expenses | 3,497 | 3,048 | 15 | 6,914 | 5,642 | 23 | ||||||||||||||||||||||||||||||||
| Research and development expenses | 2,648 | 2,815 | (6) | 5,153 | 5,116 | 1 | ||||||||||||||||||||||||||||||||
| Acquired in-process research and development expenses | 33 | 1 | * | 55 | 356 | (85) | ||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 1,184 | 822 | 44 | 2,287 | 1,657 | 38 | ||||||||||||||||||||||||||||||||
| Restructuring charges and certain acquisition-related costs | 214 | 189 | 13 | 222 | 381 | (42) | ||||||||||||||||||||||||||||||||
| Other (income)/deductions—net | (347) | 772 | * | (277) | 1,122 | * | ||||||||||||||||||||||||||||||||
| * Indicates calculation not meaningful. |
Cost of Sales
Cost of sales decreased $5.4 billion in the second quarter of 2023 and $10.5 billion in the first six months of 2023, primarily due to:
-
a reduction of $4.3 billion in the second quarter and $9.8 billion in the first six months due to lower sales of Comirnaty and, to a much lesser extent, by lower write-offs of approximately $300 million in the second quarter and $240 million in the first six months for Comirnaty inventory that exceeded or was expected to exceed its approved shelf-life prior to being used; and
-
a reduction of $1.0 billion in the second quarter and $630 million in the first six months due to lower sales of Paxlovid.
The decrease in Cost of sales as a percentage of revenues in the second quarter and in the first six months of 2023 was mainly driven by favorable changes in sales mix, including lower sales of Comirnaty, and to a much lesser extent by lower write-offs for Comirnaty discussed above, partially offset by lower sales of Paxlovid.
Selling, Informational and Administrative Expenses
Selling, informational and administrative expenses increased $448 million in the second quarter of 2023 and $1.3 billion in the first six months of 2023, primarily due to:
-
increases of $410 million in the second quarter and $970 million in the first six months in marketing and promotional expenses ($280 million in the second quarter and $560 million in the first six months for recently acquired and launched products, and $130 million in the second quarter and $410 million in the first six months for the expected Paxlovid commercial launch); and
-
increases of $130 million in the second quarter and $210 million in the first six months in our liability to be paid to participants of our supplemental savings plan,
partially offset by:
- decreases of $120 million in the second quarter and $170 million in the first six months due to a lower provision for U.S. healthcare reform fees associated with lower sales of Paxlovid and Comirnaty.
Research and Development Expenses
Research and development expenses decreased $167 million in the second quarter of 2023, primarily due to:
-
lower spending of $190 million on programs to prevent and treat COVID-19; and
-
a decrease of $100 million in the value of the portfolio performance share grants reflecting the decrease in the price of Pfizer’s common stock,
partially offset by:
- increased investments of $130 million to develop recently acquired assets and certain vaccine programs, as well as activities to support upcoming product launches.
Research and development expenses increased $37 million in the first six months of 2023, primarily driven by:
- increased costs of $530 million to develop recently acquired assets and certain vaccine programs, and other late stage clinical programs as well as activities to support upcoming product launches,
partially offset by:
-
lower spending of $390 million on programs to prevent and treat COVID-19; and
-
a decrease of $80 million in the value of the portfolio performance share grants reflecting the decrease in the price of Pfizer’s common stock.
Acquired In-Process Research and Development Expenses
Acquired in-process research and development expenses decreased $301 million in the first six months of 2023, primarily reflecting the non-recurrence of (i) an upfront payment to Biohaven and a premium paid on our equity investment in Biohaven totaling $263 million and (ii) a $76 million premium paid on our equity investment in BioNTech to develop a potential mRNA vaccine against shingles, both recorded in the first quarter of 2022.
Amortization of Intangible Assets
Amortization of intangible assets increased $362 million in the second quarter of 2023 and $630 million in the first six months of 2023, primarily as a result of amortization of intangible assets from our acquisitions of Biohaven and GBT, partially offset by fully amortized assets.
Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives
Transforming to a More Focused Company Program––For a description of our program, as well as the anticipated and actual costs, see Note 3A**. The program savings discussed below may be rounded and represent approximations. In connection with restructuring our corporate enabling functions, we achieved gross cost savings of $1.0 billion, or net cost savings, excluding
merit and inflation growth and certain real estate cost increases, of $700 million, in the two year period from 2021 through 2022. In connection with transforming our commercial go-to market strategy, we expect net cost savings of $1.4 billion, to be achieved primarily from 2022 through 2024. In connection with manufacturing network optimization, we expect net cost savings of $550 million to be achieved primarily from 2020 through 2023. In connection with optimizing our end-to-end R&D operations, we expect net cost savings of $2.3 billion to be achieved primarily from 2023 through 2025.
Certain qualifying costs for this program in all periods since inception were recorded and reflected as Certain Significant Items and excluded from our non-GAAP measure of Adjusted Income. See the Non-GAAP Financial Measure: Adjusted Income section within MD&A.
In addition to this program, we continuously monitor our operations for cost reduction and/or productivity opportunities, especially in light of the losses of exclusivity and the expiration of collaborative arrangements for various products.
Other (Income)/Deductions—Net
The favorable period-over-period change of $1.1 billion for the second quarter of 2023, compared to the second quarter of 2022, was primarily driven by (i) net gains on equity securities recognized in the second quarter of 2023 versus net losses in the second quarter of 2022, and (ii) net periodic benefit credits associated with pension and postretirement plans recorded in the second quarter of 2023 versus net periodic benefit costs recorded in the second quarter of 2022.
The favorable period-over-period change of $1.4 billion for the first six months of 2023, compared to the first six months of 2022, was primarily driven by (i) lower net losses on equity securities, (ii) higher dividend income and (iii) lower net interest expense, partially offset by (iv) intangible asset impairment charges recorded in the first six months of 2023.
See Note 4**.
Provision/(Benefit) for Taxes on Income
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||
| (MILLIONS) | July 2, 2023 | July 3, 2022 | % Change | July 2, 2023 | July 3, 2022 | % Change | ||||||||||||||||||||||||||||||||
| Provision/(benefit) for taxes on income | $ | (71) | $ | 1,570 | * | $ | 644 | $ | 2,742 | (77) | ||||||||||||||||||||||||||||
| Effective tax rate on continuing operations | (3.1) | % | 13.7 | % | 7.5 | % | 13.4 | % | ||||||||||||||||||||||||||||||
| * Indicates calculation not meaningful. |
For information about our effective tax rate and the events and circumstances contributing to the changes between periods, as well as details about discrete elements that impacted our tax provisions, see Note 5**.
Discontinued Operations
For information about our discontinued operations, see Note 2B.
PRODUCT DEVELOPMENTS
A comprehensive update of Pfizer’s development pipeline was published as of August 1, 2023 and is available at www.pfizer.com/science/drug-product-pipeline. It includes an overview of our research and a list of compounds in development with targeted indication and phase of development, as well as mechanism of action for some candidates in Phase 1 and all candidates from Phase 2 through registration.
This section provides information as of the date of this filing about significant marketing application-related regulatory actions by, and filings pending with, the FDA and regulatory authorities in the EU and Japan.
The tables below include filing and approval milestones for products that have occurred in the last twelve months and generally do not include approvals that may have occurred prior to that time. The tables include filings with regulatory decisions pending (even if the filing occurred outside of the last twelve-month period).
COVID-19 Vaccine Products
U.S.––In April 2023, in order to simplify the vaccination schedule for most individuals, the FDA amended an EUA for the emergency use of the Pfizer‑BioNTech COVID-19 Vaccine, Bivalent (Original and Omicron BA.4/BA.5), which has been developed in collaboration with BioNTech, for active immunization to prevent COVID-19 caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) in individuals 6 months of age and older. In the U.S., the original monovalent Pfizer-BioNTech COVID-19 Vaccine is no longer authorized for emergency use or CDC-recommended, although Comirnaty remains a licensed vaccine. This decision relates entirely to the FDA’s strategy to harmonize COVID-19 vaccines and is not indicative of any safety-related signals or concerns.
In February 2023, Pfizer and BioNTech announced the submission of a supplemental Biologics License Application (sBLA) to the FDA for approval of the companies’ Omicron BA.4/BA.5-adapted bivalent COVID-19 vaccine (Pfizer-BioNTech COVID-19 Vaccine, Bivalent (Original and Omicron BA.4/BA.5)) as a primary series and booster dose(s) for individuals 12 years of age and older.
In June 2023, Pfizer and BioNTech announced the companies have submitted a regulatory application to the FDA for their Omicron XBB.1.5-adapted monovalent COVID-19 vaccine.
The following table contains the authorized uses of the Pfizer‑BioNTech COVID-19 Vaccine, Bivalent (Original and Omicron BA.4/BA.5) for the various patient populations in the U.S.:
| PATIENT POPULATION AND AUTHORIZATIONS (U.S. ONLY) | ||||||||||||||||||||||||||||||||
| AGE | Individuals 6 months of age and older not previously vaccinated with a COVID-19 vaccine | Individuals 5 years of age and older previously vaccinated with 1 or more doses of the original monovalent COVID-19 Vaccine(a) | Individuals 6 months through 4 years of age previously vaccinated with the original monovalent Pfizer-BioNTech COVID-19 Vaccine | |||||||||||||||||||||||||||||
| One previous dose of the Pfizer-BioNTech COVID-19 Vaccine | Two previous doses of the Pfizer-BioNTech COVID-19 Vaccine | Three previous doses of the Pfizer-BioNTech COVID-19 Vaccine | ||||||||||||||||||||||||||||||
| 6 months – 4 years(b) | 3 doses, 0.2 mL each Dose 1: Week 0 Dose 2: Week 3 Dose 3: ≥ 8 weeks after Dose 2 | 2 doses(c), 0.2 mL each Dose 1: 3 weeks after receipt of the Pfizer-BioNTech COVID-19 Vaccine Dose 2: ≥8 weeks after Dose 1 | Single dose, 0.2 mL ≥8 weeks after receipt of second dose of the Pfizer-BioNTech COVID-19 Vaccine | Single dose, 0.2 mL ≥2 months after receipt of third dose of the Pfizer-BioNTech COVID-19 Vaccine | ||||||||||||||||||||||||||||
| 5-11 years | Single dose, 0.2 mL | Single dose, 0.2 mL ≥2 months after original monovalent COVID-19 Vaccine | ||||||||||||||||||||||||||||||
| 12-64 years | Single dose, 0.3 mL | Single dose, 0.3 mL ≥2 months after original monovalent COVID-19 Vaccine | ||||||||||||||||||||||||||||||
| ≥65 years | Single dose, 0.3 mL. One additional dose, 0.3 mL, may be administered ≥4 months after first dose of an authorized bivalent COVID-19 vaccine | Single dose, 0.3 mL ≥2 months after original monovalent COVID-19 vaccine One additional dose, 0.3 mL, may be administered ≥4 months after first dose of an authorized bivalent COVID-19 vaccine |
(a)“Original monovalent” refers to a COVID-19 vaccine that contains or encodes the spike protein of only the Original SARS-CoV-2.
(b)Notwithstanding the age limitations for use of the vaccine, individuals turning from 4 to 5 years of age during the vaccination series should receive all doses with the Pfizer-BioNTech COVID-19 Vaccine, Bivalent.
(c)Notwithstanding the age limitations for use of the vaccine, individuals turning from 4 to 5 years of age during the vaccination series should receive 2 doses with the Pfizer-BioNTech COVID-19 Vaccine, Bivalent.
For individuals with certain kinds of immunocompromise 6 months through 4 years of age who have received three 0.2 mL doses (the Pfizer‑BioNTech COVID-19 Vaccine or the Pfizer-BioNTech COVID-19 Vaccine, Bivalent), a fourth dose (0.2 mL) with the Pfizer-BioNTech COVID-19 Vaccine, Bivalent may be administered at least one month following the most recent dose; additional doses of the Pfizer-BioNTech COVID-19 Vaccine, Bivalent may be administered at the discretion of the healthcare provider, taking into consideration the individual’s clinical circumstances. For individuals with certain kinds of immunocompromise 5 years of age and older, a single additional age-appropriate dose of the Pfizer‑BioNTech COVID-19 Vaccine, Bivalent may be administered at least 2 months following the initial dose of a bivalent COVID-19 vaccine; additional age‑appropriate doses of the Pfizer‑BioNTech COVID‑19 Vaccine, Bivalent may be administered at the discretion of the healthcare provider, taking into consideration the individual’s clinical circumstances.
EU and Japan––In March 2023, Pfizer and BioNTech announced the submission of an application to the EMA to extend the Omicron BA.4/BA.5-adapted bivalent vaccine’s marketing authorization (MA) to include use in children six months through 4 years of age as both primary series (all three doses) and booster vaccination (fourth dose).
In February 2023, Pfizer and BioNTech announced the submission of an application to the EMA for a variation of the MA to include the bivalent vaccine as a primary course of vaccination in individuals 5 years of age and older.
In July 2023, Pfizer and BioNTech announced the companies have submitted a regulatory application to the Pharmaceuticals and Medical Devices Agency (Japan) for their Omicron XBB.1.5-adapted monovalent COVID-19 vaccine.
In June 2023, Pfizer and BioNTech announced the companies have submitted regulatory application to the EMA for their Omicron XBB.1.5-adapted monovalent COVID-19 vaccine.
The following table includes filings and approvals for our COVID-19 vaccine products in the EU and Japan. All COVID-19 vaccine products listed in this table have been developed in collaboration with BioNTech.
| PATIENT POPULATION AND DATE OF APPROVAL/FILING(a) | ||||||||||||||||||||||||||||||||||||||||||||
| COVID-19 VACCINE PRODUCT(b) | PRIMARY SERIES OR BOOSTER | 16 Years of age and older | 12-15 Years of age | 5-11 Years of age | 6 Months through 4 Years of age | |||||||||||||||||||||||||||||||||||||||
| EU | JAPAN | EU | JAPAN | EU | JAPAN | EU | JAPAN | |||||||||||||||||||||||||||||||||||||
| Comirnaty | 30-µg 2-dose primary | 10-µg 2-dose primary | 3-µg 3-dose primary | |||||||||||||||||||||||||||||||||||||||||
| Primary | Approved December 2020 | Cond. J-NDA February 2021 | Approved May 2021 | Cond. J-NDA May 2021 | Approved November 2021 | Cond. J-NDA January 2022 | CMA October 2022 | Cond. J-NDA October 2022 | ||||||||||||||||||||||||||||||||||||
| 30-µg booster dose | 10-µg booster dose | |||||||||||||||||||||||||||||||||||||||||||
| Booster | Approved October 2021 | Cond. J-NDA November 2021 | Approved February 2022 | Cond. J-NDA March 2022 | Approved September 2022 | Cond. J-NDA August 2022 | ||||||||||||||||||||||||||||||||||||||
| Comirnaty Original/Omicron BA.4/BA.5 Vaccine(b) | 30-µg 2-dose primary | 10-µg 2-dose primary | 3-µg 3-dose primary | |||||||||||||||||||||||||||||||||||||||||
| Primary | Filed April 2023 | Filed April 2023 | Approved August 2023 | Approved August 2023 | ||||||||||||||||||||||||||||||||||||||||
| 30-µg booster dose | 10-µg booster dose | 3-µg booster dose | ||||||||||||||||||||||||||||||||||||||||||
| Booster | Approved September 2022 | Cond. J-NDA October 2022 | Approved September 2022 | Cond. J-NDA October 2022 | Approved September 2022 | Cond. J-NDA February 2023 | Approved August 2023 | |||||||||||||||||||||||||||||||||||||
| Comirnaty Original/Omicron BA.1 Vaccine | Booster | 30-µg booster dose | ||||||||||||||||||||||||||||||||||||||||||
| Approved September 2022 | Cond. J-NDA October 2022 | Approved September 2022 | Cond. J-NDA October 2022 |
*For the EU, the filing date is the date on which the EMA validated our submission.
(a)All EU approvals prior to October 10, 2022 were under the CMA, and later converted to full MA as of October 10, 2022. Dates shown in table reflect original CMA date.
(b)Refers to the Pfizer-BioNTech COVID-19 Vaccine, Bivalent (Original and Omicron BA.4/BA.5) and Comirnaty Original/Omicron BA.4/BA.5 Vaccine.
Other Products
| PRODUCT | INDICATION OR PROPOSED INDICATION | APPROVED/FILED* | ||||||||||||
| U.S. | EU | JAPAN | ||||||||||||
| Myfembree (relugolix, estradiol, and norethindrone acetate)(a) | Moderate to severe pain associated with endometriosis | Approved August 2022 | ||||||||||||
| Ngenla (somatrogon)(b) | Pediatric growth hormone deficiency | Approved June 2023 | Approved February 2022 | Approved January 2022 | ||||||||||
| Prevnar 20/Apexxnar (Vaccine) | Active immunization to prevent pneumonia, invasive disease and otitis media caused by Streptococcus pneumoniae (adults) | Approved June 2021 | Approved February 2022 | |||||||||||
| Active immunization to prevent pneumonia, invasive disease and otitis media caused by Streptococcus pneumoniae (pediatric) | Approved April 2023 | Filed March 2023 | ||||||||||||
| TicoVac (Vaccine) | Active immunization to prevent tick-borne encephalitis disease | Approved August 2021 | Filed March 2023 | |||||||||||
| Paxlovid**(c)** (nirmatrelvir and ritonavir) | COVID-19 in high-risk adults | Approved May 2023 | Approved February 2023 | Approved February 2022 | ||||||||||
| Nurtec ODT/Vydura (rimegepant) | Acute treatment of migraine with or without aura (adults) | Approved February 2020 | Approved April 2022 | |||||||||||
| Prevention of episodic migraine (adults) | Approved May 2021 | Approved April 2022 | ||||||||||||
| Litfulo/Ritfulo (ritlecitinib) | Alopecia areata | Approved June 2023 | Filed September 2022 | Approved June 2023 | ||||||||||
| Zavzpret (zavegepant) (intranasal) | Acute treatment of migraine with or without aura (adults) | Approved March 2023 | ||||||||||||
| PF-06886992 (Vaccine) | Active immunization to prevent serogroups ABCWY meningococcal infections (adolescent and young adults) | Filed December 2022 | Filed June 2023 | |||||||||||
| Abrysvo (Vaccine) | Active immunization to prevent respiratory syncytial virus infection (maternal) | Filed February 2023 | Filed January 2023 | Filed February 2023 | ||||||||||
| Active immunization to prevent respiratory syncytial virus infection (older adults) | Approved May 2023 | Filed January 2023 | Filed May 2023 | |||||||||||
| etrasimod | Ulcerative colitis (moderately to severely active) | Filed December 2022 | Filed November 2022 | |||||||||||
| Braftovi (encorafenib) and Mektovi (binimetinib) | BRAFV600E-mutant metastatic non-small cell lung cancer | Filed April 2023 | ||||||||||||
| elranatamab (PF-06863135) | Multiple myeloma triple-class relapsed/refractory | Filed February 2023 | Filed February 2023 | Filed June 2023 | ||||||||||
| Talzenna (talazoparib) | Combination with Xtandi (enzalutamide) for adult patients with homologous recombination repair (HRR) gene-mutated mCRPC(d) | Approved June 2023 | Filed February 2023 | |||||||||||
| fidanacogene elaparvovec (PF-06838435)(e) | Hemophilia B | Filed June 2023 | Filed June 2023 |
*For the U.S., the filing date is the date on which the FDA accepted our submission. For the EU, the filing date is the date on which the EMA validated our submission.
(a)Being developed in collaboration with Sumitomo Pharma America, Inc. (formerly known as Myovant Sciences Ltd.)
(b)Being developed in collaboration with OPKO.
(c)Previously authorized under EUA in the U.S. (December 2021) and approved by the FDA in high-risk adults (May 2023). Remains under EUA for children (12-18 years of age; >88lbs) in the U.S.
(d)Listed patient population applies to U.S. only. Patient population in the filed application in the EU is an all-comers population in men with mCRPC.
(e)Being developed in collaboration with Spark Therapeutics, Inc.
In China, the following products received regulatory approvals in the last twelve months: Xeljanz for the treatment of adult patients with active psoriatic arthritis in October 2022; and Prevenar 13 in infants and children aged 6 weeks to 15 months, in April 2023.
The following provides information about additional indications and new drug candidates in late-stage development:
| PRODUCT/CANDIDATE | PROPOSED DISEASE AREA | ||||||||||
| LATE-STAGE CLINICAL PROGRAMS FOR ADDITIONAL USES AND DOSAGE FORMS FOR IN-LINE AND IN-REGISTRATION PRODUCTS | Ibrance (palbociclib)(a) | ER+/HER2+ metastatic breast cancer | |||||||||
| Xtandi (enzalutamide)(b) | Non-metastatic high-risk castration sensitive prostate cancer | ||||||||||
| Talzenna (talazoparib) | Combination with Xtandi (enzalutamide) for DNA Damage Repair (DDR)-deficient mCSPC | ||||||||||
| somatrogon (PF-06836922)(c) | Adult growth hormone deficiency | ||||||||||
| Braftovi (encorafenib) and Erbitux® (cetuximab)(d) | First-line BRAFV600E-mutant mCRC | ||||||||||
| Braftovi (encorafenib) and Mektovi (binimetinib) and Keytruda® (pembrolizumab)(e) | BRAFV600E/K-mutant metastatic or unresectable locally advanced melanoma | ||||||||||
| Paxlovid (nirmatrelvir (PF-07321332); ritonavir) | COVID-19 in high-risk children (6-11 years of age; >88lbs) | ||||||||||
| zavegepant (oral) | Prevention of chronic migraine (adults) | ||||||||||
| Litfulo (ritlecitinib) | Vitiligo | ||||||||||
| elranatamab (PF-06863135) | Multiple myeloma double-class exposed | ||||||||||
| Newly diagnosed multiple myeloma post-transplant maintenance | |||||||||||
| Newly diagnosed multiple myeloma transplant-ineligible | |||||||||||
| Oxbryta (voxelotor) | Sickle cell disease (pediatric) | ||||||||||
| Eliquis (apixaban) | Venous thromboembolism (pediatric) | ||||||||||
| NEW DRUG CANDIDATES IN LATE-STAGE DEVELOPMENT | aztreonam-avibactam (PF-06947387) | Treatment of infections caused by Gram-negative bacteria with limited or no treatment options | |||||||||
| giroctocogene fitelparvovec (PF-07055480)(f) | Hemophilia A | ||||||||||
| PF-06425090 (Vaccine) | Immunization to prevent primary clostridioides difficile infection | ||||||||||
| sasanlimab (PF-06801591) | Combination with Bacillus Calmette-Guerin for non-muscle-invasive bladder cancer | ||||||||||
| fordadistrogene movaparvovec (PF-06939926) | Duchenne muscular dystrophy (ambulatory) | ||||||||||
| marstacimab (PF-06741086) | Hemophilia | ||||||||||
| Omicron-based mRNA vaccine(g) | Immunization to prevent COVID-19 (adults) | ||||||||||
| VLA15 (PF-07307405) vaccine(h) | Immunization to prevent Lyme disease | ||||||||||
| PF-07252220 (quadrivalent mRNA-based vaccine) | Immunization to prevent influenza | ||||||||||
| Vepdegestrant (PF-07850327)(i) | Breast cancer metastatic - 2nd line + ER+/HER2- | ||||||||||
| inclacumab (PF-07940370) | Sickle cell disease | ||||||||||
| PF-06823859 | Dermatomyositis, polymyositis |
(a)Being developed in collaboration with The Alliance Foundation Trials, LLC.
(b)Being developed in collaboration with Astellas.
(c)Being developed in collaboration with OPKO.
(d)Erbitux® is a registered trademark of ImClone LLC. In the EU, we are developing in collaboration with the Pierre Fabre Group. In Japan, we are developing in collaboration with Ono.
(e)Keytruda® is a registered trademark of Merck Sharp & Dohme Corp. In the EU, we are developing in collaboration with the Pierre Fabre Group. In Japan, we are developing in collaboration with Ono.
(f)Being developed in collaboration with Sangamo Therapeutics, Inc..
(g)Being developed in collaboration with BioNTech.
(h)Being developed in collaboration with Valneva SE.
(i)Being developed in collaboration with Arvinas, Inc.
For additional information about our R&D organization, see the Overview of Our Performance, Operating Environment, Strategy and Outlook––Our Business and Strategy section within MD&A and Item 1. Business—Research and Development section of our 2022 Form 10-K.
NON-GAAP FINANCIAL MEASURE: ADJUSTED INCOME
Adjusted income is an alternative measure of performance used by management to evaluate our overall performance as a supplement to our GAAP Reported performance measures. As such, we believe that investors’ understanding of our performance is enhanced by disclosing this measure. We use Adjusted income, certain components of Adjusted income and Adjusted diluted EPS to present the results of our major operations––the discovery, development, manufacture, marketing, sale and distribution of biopharmaceutical products worldwide––prior to considering certain income statement elements as follows:
| Measure | Definition | Relevance of Metrics to Our Business Performance | ||||||||||||
| Adjusted income | Net income attributable to Pfizer Inc. common shareholders(a) before the impact of amortization of intangible assets, certain acquisition-related items, discontinued operations and certain significant items | •Provides investors useful information to: ◦evaluate the normal recurring operational activities, and their components, on a comparable year-over-year basis ◦assist in modeling expected future performance on a normalized basis •Provides investors insight into the way we manage our budgeting and forecasting, how we evaluate and manage our recurring operations and how we reward and compensate our senior management(b) | ||||||||||||
| Adjusted cost of sales, Adjusted selling, informational and administrative expenses, Adjusted research and development expenses and Adjusted other (income)/deductions*––*net | Cost of sales, Selling, informational and administrative expenses, Research and development expenses and Other (income)/deductions––net(a), each before the impact of amortization of intangible assets, certain acquisition-related items, discontinued operations and certain significant items, which are components of the Adjusted income measure | |||||||||||||
| Adjusted diluted EPS | EPS attributable to Pfizer Inc. common shareholders––diluted(a) before the impact of amortization of intangible assets, certain acquisition-related items, discontinued operations and certain significant items |
(a)Most directly comparable GAAP measure.
(b)The short-term incentive plans for substantially all non-sales-force employees worldwide are funded from a pool based on our performance, measured in significant part versus three budgeted metrics, one of which is Adjusted diluted EPS (as defined for annual incentive compensation purposes), which is derived from Adjusted income and accounts for 40% of the bonus pool funding tied to financial performance. Additionally, the payout for performance share awards is determined in part by Adjusted net income, which is derived from Adjusted income. Beginning in the first quarter of 2022, we no longer exclude any expenses for acquired IPR&D from our non-GAAP Adjusted results but we continue to exclude certain of these expenses for our financial results for annual incentive compensation purposes. The bonus pool funding, which is largely based on financial performance, is adjusted by our R&D pipeline performance, as measured by four metrics, and performance against certain of our ESG metrics, and may be further modified by our Compensation Committee’s assessment of other factors.
Adjusted income and its components and Adjusted diluted EPS are non-GAAP financial measures that have no standardized meaning prescribed by GAAP and, therefore, are limited in their usefulness to investors. Because of their non-standardized definitions, they may not be comparable to the calculation of similar measures of other companies and are presented to permit investors to more fully understand how management assesses performance. A limitation of these measures is that they provide a view of our operations without including all events during a period, and do not provide a comparable view of our performance to peers. These measures are not, and should not be viewed as, substitutes for their most directly comparable GAAP measures of Net income attributable to Pfizer Inc. common shareholders, components of Net income attributable to Pfizer Inc. common shareholders and EPS attributable to Pfizer Inc. common shareholders—diluted, respectively.
We also recognize that, as internal measures of performance, these measures have limitations, and we do not restrict our performance-management process solely to these measures. We also use other tools designed to achieve the highest levels of performance. For example, our R&D organization has productivity targets, upon which its effectiveness is measured. In addition, total shareholder return, both on an absolute basis and relative to a publicly traded pharmaceutical index, plays a significant role in determining payouts under certain of our incentive compensation plans.
Adjusted Income and Adjusted Diluted EPS
Amortization of Intangible Assets—Adjusted income excludes all amortization of intangible assets.
Acquisition-Related Items—Adjusted income excludes certain acquisition-related items, which are comprised of transaction, integration, restructuring charges and additional depreciation costs for business combinations because these costs are unique to each transaction and represent costs that were incurred to restructure and integrate businesses as a result of an acquisition. We have made no adjustments for resulting synergies. Acquisition-related items may include purchase accounting impacts such as the incremental charge to cost of sales from the sale of acquired inventory that was written up to fair value, depreciation related to the increase/decrease in fair value of acquired fixed assets, amortization related to the increase in fair value of acquired debt, and the fair value changes for contingent consideration.
Discontinued Operations—Adjusted income excludes the results of discontinued operations, as well as any related gains or losses on the disposal of such operations. We believe that this presentation is meaningful to investors because, while we review our product portfolio for strategic fit with our operations, we do not build or run our business with the intent to discontinue parts of our business. Restatements due to discontinued operations do not impact compensation or change the Adjusted income measure for the compensation in respect of the restated periods, but are presented for consistency across all periods.
Certain Significant Items—Adjusted income excludes certain significant items representing substantive and/or unusual items that are evaluated individually on a quantitative and qualitative basis. Certain significant items may be highly variable and difficult to predict. Furthermore, in some cases it is reasonably possible that they could reoccur in future periods. For example, although major non-acquisition-related cost-reduction programs are specific to an event or goal with a defined term, we may have subsequent programs based on reorganizations of the business, cost productivity or in response to LOE or economic conditions. Legal charges to resolve litigation are also related to specific cases, which are facts and circumstances specific and, in some cases, may also be the result of litigation matters at acquired companies that were inestimable, not probable or unresolved at the date of acquisition, or legal matters related to divested products or businesses. Gains and losses on equity securities, and pension and postretirement actuarial remeasurement gains and losses have a very high degree of inherent market volatility, which we do not control and cannot predict with any level of certainty and because we do not believe including these gains and losses assists investors in understanding our business or is reflective of our core operations and business. Unusual items represent items that are not part of our ongoing business; items that, either as a result of their nature or size, we would not expect to occur as part of our normal business on a regular basis; items that would be non-recurring; or items that relate to products we no longer sell. See the Reconciliations of GAAP Reported to Non-GAAP Adjusted information—Certain Line Items below for a non-inclusive list of certain significant items and the Non-GAAP Financial Measure: Adjusted Income section within MD&A of our 2022 Form 10-K.
Reconciliations of GAAP Reported to Non-GAAP Adjusted Information––Certain Line Items
| Three Months Ended July 2, 2023 | ||||||||||||||||||||||||||||||||
| Data presented will not (in all cases) aggregate to totals. (MILLIONS, EXCEPT PER SHARE DATA) | Cost of sales(a) | Selling, informational and administrative expenses(a) | Other (income)/deductions––net(a) | Net income attributable to Pfizer Inc. common shareholders(a), (b) | Earnings per common share attributable to Pfizer Inc. common shareholders––diluted | |||||||||||||||||||||||||||
| GAAP Reported | $ | 3,237 | $ | 3,497 | $ | (347) | $ | 2,327 | $ | 0.41 | ||||||||||||||||||||||
| Amortization of intangible assets | — | — | — | 1,184 | ||||||||||||||||||||||||||||
| Acquisition-related items | (136) | (2) | (168) | 387 | ||||||||||||||||||||||||||||
| Discontinued operations(c) | — | — | — | 3 | ||||||||||||||||||||||||||||
| Certain significant items: | ||||||||||||||||||||||||||||||||
| Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(d) | (17) | (67) | — | 235 | ||||||||||||||||||||||||||||
| (Gains)/losses on equity securities(e) | — | — | 135 | (135) | ||||||||||||||||||||||||||||
| Actuarial valuation and other pension and postretirement plan (gains)/losses | — | — | 1 | (1) | ||||||||||||||||||||||||||||
| Other(f) | (12) | (8) | (171) | 194 | ||||||||||||||||||||||||||||
| Income tax provision—non-GAAP items | (355) | |||||||||||||||||||||||||||||||
| Non-GAAP Adjusted | $ | 3,072 | $ | 3,419 | $ | (551) | $ | 3,839 | $ | 0.67 |
| Six Months Ended July 2, 2023 | ||||||||||||||||||||||||||||||||
| Data presented will not (in all cases) aggregate to totals. (MILLIONS, EXCEPT PER SHARE DATA) | Cost of sales(a) | Selling, informational and administrative expenses(a) | Other (income)/deductions––net(a) | Net income attributable to Pfizer Inc. common shareholders(a), (b) | Earnings per common share attributable to Pfizer Inc. common shareholders––diluted | |||||||||||||||||||||||||||
| GAAP Reported | $ | 8,122 | $ | 6,914 | $ | (277) | $ | 7,870 | $ | 1.38 | ||||||||||||||||||||||
| Amortization of intangible assets | — | — | — | 2,287 | ||||||||||||||||||||||||||||
| Acquisition-related items | (233) | (5) | (150) | 550 | ||||||||||||||||||||||||||||
| Discontinued operations(c) | — | — | — | 2 | ||||||||||||||||||||||||||||
| Certain significant items: | ||||||||||||||||||||||||||||||||
| Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(d) | (50) | (126) | — | 265 | ||||||||||||||||||||||||||||
| Certain asset impairments(e) | — | — | (264) | 264 | ||||||||||||||||||||||||||||
| (Gains)/losses on equity securities(e) | — | — | (317) | 317 | ||||||||||||||||||||||||||||
| Actuarial valuation and other pension and postretirement plan (gains)/losses | — | — | (6) | 6 | ||||||||||||||||||||||||||||
| Other(f) | (22) | (14) | (64) | 105 | ||||||||||||||||||||||||||||
| Income tax provision—Non-GAAP items | (791) | |||||||||||||||||||||||||||||||
| Non-GAAP Adjusted | $ | 7,818 | $ | 6,769 | $ | (1,079) | $ | 10,876 | $ | 1.90 | ||||||||||||||||||||||
| Three Months Ended July 3, 2022 | ||||||||||||||||||||||||||||||||
| Data presented will not (in all cases) aggregate to totals. (MILLIONS, EXCEPT PER SHARE DATA) | Cost of sales(a) | Selling, informational and administrative expenses(a) | Other (income)/deductions––net(a) | Net income attributable to Pfizer Inc. common shareholders(a), (b) | Earnings per common share attributable to Pfizer Inc. common shareholders––diluted | |||||||||||||||||||||||||||
| GAAP Reported | $ | 8,648 | $ | 3,048 | $ | 772 | $ | 9,906 | $ | 1.73 | ||||||||||||||||||||||
| Amortization of intangible assets | — | — | — | 822 | ||||||||||||||||||||||||||||
| Acquisition-related items | 5 | (2) | (13) | 82 | ||||||||||||||||||||||||||||
| Discontinued operations(c) | — | — | — | (34) | ||||||||||||||||||||||||||||
| Certain significant items: | ||||||||||||||||||||||||||||||||
| Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(d) | (22) | (134) | — | 272 | ||||||||||||||||||||||||||||
| (Gains)/losses on equity securities(e) | — | — | (539) | 539 | ||||||||||||||||||||||||||||
| Actuarial valuation and other pension and postretirement plan (gains)/losses | — | — | (490) | 490 | ||||||||||||||||||||||||||||
| Other(f) | (6) | (13) | (107) | 130 | ||||||||||||||||||||||||||||
| Income tax provision—non-GAAP items | (551) | |||||||||||||||||||||||||||||||
| Non-GAAP Adjusted | $ | 8,625 | $ | 2,900 | $ | (377) | $ | 11,656 | $ | 2.04 |
| Six Months Ended July 3, 2022 | ||||||||||||||||||||||||||||||||
| Data presented will not (in all cases) aggregate to totals. (MILLIONS, EXCEPT PER SHARE DATA) | Cost of sales(a) | Selling, informational and administrative expenses(a) | Other (income)/deductions––net(a) | Net income attributable to Pfizer Inc. common shareholders(a), (b) | Earnings per common share attributable to Pfizer Inc. common shareholders––diluted | |||||||||||||||||||||||||||
| GAAP Reported | $ | 18,632 | $ | 5,642 | $ | 1,122 | $ | 17,769 | $ | 3.10 | ||||||||||||||||||||||
| Amortization of intangible assets | — | — | — | 1,657 | ||||||||||||||||||||||||||||
| Acquisition-related items | 8 | (3) | (39) | 269 | ||||||||||||||||||||||||||||
| Discontinued operations(c) | — | — | — | (24) | ||||||||||||||||||||||||||||
| Certain significant items: | ||||||||||||||||||||||||||||||||
| Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(d) | (42) | (208) | — | 394 | ||||||||||||||||||||||||||||
| (Gains)/losses on equity securities(e) | — | — | (1,237) | 1,237 | ||||||||||||||||||||||||||||
| Actuarial valuation and other pension and postretirement plan (gains)/losses | — | — | (418) | 418 | ||||||||||||||||||||||||||||
| Other(f) | (17) | (35) | (211) | 273 | ||||||||||||||||||||||||||||
| Income tax provision—Non-GAAP items | (999) | |||||||||||||||||||||||||||||||
| Non-GAAP Adjusted | $ | 18,582 | $ | 5,396 | $ | (783) | $ | 20,993 | $ | 3.66 |
(a)Items that reconcile GAAP Reported to non-GAAP Adjusted balances are shown pre-tax. Our effective tax rates for GAAP Reported income from continuing operations were: (3.1)% and 7.5% in the three and six months ended July 2, 2023, respectively, and 13.7% and 13.4% in the three and six months ended July 3, 2022, respectively. See Note 5. Our effective tax rates for non-GAAP Adjusted income were 6.8% and 11.6% in the three and six months ended July 2, 2023, respectively, and 15.4% and 15.1% in the three and six months ended July 3, 2022, respectively.
(b)The amounts for the three and six months ended July 2, 2023 and July 3, 2022 include reconciling amounts for Research and development expenses that are not material.
(c)See Note 2B.
(d)Includes employee termination costs, asset impairments and other exit costs related to our cost-reduction and productivity initiatives not associated with acquisitions. See Note 3**.
(e)See Note 4.
(f)For the second quarter of 2023, the total Other (income)/deductions––net adjustment of $171 million primarily includes charges of $139 million for certain legal matters, primarily representing certain product liability and other legal expenses related to products discontinued and/or divested by Pfizer. For the first six months of 2023, the total Other (income)/deductions––net adjustment of $64 million primarily includes charges of (i) $175 million for certain legal matters, primarily for certain product liability and other legal expenses related to products discontinued and/or divested by Pfizer, and (ii) $70 million mostly related to our equity-method accounting pro-rata share of intangible asset amortization and impairments, costs of separating from GSK and restructuring costs recorded by Haleon, partially offset by dividend income of $211 million related to our investment in Nimbus resulting from Takeda Pharmaceutical Company Limited’s acquisition of Nimbus’s oral, selective allosteric tyrosine kinase 2 (TYK2) inhibitor program subsidiary. For the second quarter of 2022, the total Other (income)/deductions––net adjustment of $107 million primarily included charges of $55 million mostly representing our equity-method accounting pro rata share of costs of separating from GSK recorded by the GSK Consumer Healthcare JV, and charges of $19 million for certain legal matters, primarily representing certain product liability expenses related to products discontinued and/or divested by Pfizer. For the first six months of 2022, the total Other (income)/deductions––net adjustment of $211 million primarily included charges of $98 million for certain legal matters, primarily representing certain product liability expenses related to products discontinued and/or divested by Pfizer, and to a lesser extent, legal obligations related to pre-acquisition commitments, and charges of $61 million mostly representing our equity-method accounting pro rata share of restructuring charges and costs of separating from GSK recorded by the GSK Consumer Healthcare JV.
ANALYSIS OF THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six Months Ended | ||||||||||||||||||||||||||
| (MILLIONS) | July 2, 2023 | July 3, 2022 | Drivers of change | |||||||||||||||||||||||
| Cash provided by/(used in): | ||||||||||||||||||||||||||
| Operating activities | $ | 4 | $ | 14,711 | The change was primarily driven by a decrease in net income adjusted for non-cash items and the timing of receipts and payments in the ordinary course of business, including timing of payments to BioNTech for the gross profit split for Comirnaty (see Note 8B) and a decrease in advance payments for Comirnaty and Paxlovid. | |||||||||||||||||||||
| Investing activities | $ | (22,170) | $ | (10,746) | The change was driven mainly by $17.7 billion greater net purchases of short-term investments in 2023, partially offset by $6.2 billion cash used to acquire Arena, net of cash acquired, in 2022. | |||||||||||||||||||||
| Financing activities | $ | 24,403 | $ | (4,058) | The change was driven mainly by $30.8 billion of proceeds from the issuance of long-term debt in 2023 and $2.0 billion of purchases of common stock in 2022, partially offset by a net $4.4 billion decrease in proceeds from short-term borrowings. | |||||||||||||||||||||
ANALYSIS OF FINANCIAL CONDITION, LIQUIDITY, CAPITAL RESOURCES AND MARKET RISK
Our historically robust operating cash flows, which we expect to continue, is a key strength of our liquidity and capital resources and our primary funding source. We believe as a result of this, together with our financial assets, access to capital markets, revolving credit agreements, and available lines of credit, we have and will maintain the ability to meet our liquidity needs to support ongoing operations, our capital allocation objectives, and our contractual and other obligations for the foreseeable future. For information about the sources and uses of our funds and capital resources, as well as our operating cash flows, see our Condensed Consolidated Statements of Cash Flows, Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Equity, and the Analysis of the Condensed Consolidated Statements of Cash Flows within MD&A. For information on our money market funds, available-for sale-debt securities and long-term debt, see Note 7.
For information about our diverse sources of funds, off-balance sheet arrangements, contractual and other obligations, global economic conditions, market risk and LIBOR, see the Analysis of Financial Condition, Liquidity, Capital Resources and Market Risk section within MD&A in our 2022 Form 10-K. For more information on guarantees and indemnifications, see Note 12B.
Debt Issuance––In May 2023, we completed a public offering of $31 billion aggregate principal amount of senior unsecured notes as part of the financing for our proposed acquisition of Seagen. The net proceeds have been invested in short-term investments in a combination of money market funds and available-for-sale debt securities until the completion of the proposed acquisition. See Notes 7A and 7D.
Credit Ratings––The cost and availability of financing are influenced by credit ratings, and an increase or decrease in our credit rating could have a beneficial or adverse effect on financing. Our long-term debt is rated high-quality by both S&P and Moody’s. In March 2023, following the announcement of the proposed acquisition of Seagen, Moody’s changed the outlook on our long-term debt to Negative; S&P downgraded our short-term rating from A-1+ to A-1.
| As of the date of the filing of this Form 10-Q, the ratings assigned to our commercial paper and senior unsecured long-term debt: | ||||||||||||||||||||
| NAME OF RATING AGENCY | Pfizer Short-Term Rating | Pfizer Long-Term Rating | Outlook/Watch | |||||||||||||||||
| Moody’s | P-1 | A1 | Negative Outlook | |||||||||||||||||
| S&P | A-1 | A+ | Stable |
These ratings are not recommendations to buy, sell or hold securities and the ratings are subject to revision or withdrawal at any time by the rating organizations. Each rating should be evaluated independently of any other rating.
Debt Capacity––Lines of Credit––As of July 2, 2023, we had access to a $7 billion committed U.S. revolving credit facility, which may be used for general corporate purposes including to support our commercial paper borrowings. Lenders under this facility have approximately $700 million of commitments maturing in November 2026 and $6.3 billion of commitments maturing in November 2027. In addition to the U.S. revolving credit facility, our lenders have provided us an additional $304 million in lines of credit, of which $274 million expire within one year. Essentially all lines of credit were unused as of July 2, 2023.
Capital Allocation Framework––Our capital allocation framework is primarily devised to facilitate the achievement of medical breakthroughs through R&D investments and business development activities and returning capital to shareholders through dividends and share repurchases. We expect to finance the proposed acquisition of Seagen substantially through $31 billion of long-term debt issued in May 2023, and the balance from a combination of short-term financing and existing cash. See Note 1A and the Item 1A. Risk Factors section for additional information about our proposed acquisition of Seagen. In April 2023, our BOD declared a dividend of $0.41 per share, paid on June 9, 2023, to shareholders of record at the close of business on May 12, 2023. In June 2023, our BOD declared a dividend of $0.41 per share, payable on September 5, 2023, to shareholders of record at the close of business on July 28, 2023. At July 2, 2023, our remaining share-purchase authorization was $3.3 billion, with no repurchases in the first six months of 2023. See Note 12 in our 2022 Form 10-K for more information on our publicly announced share-purchase plans.
Our financing plan for Seagen does not involve monetizing any portion of our Haleon stake. Our intentions with respect to our Haleon stake are set out in our Schedule 13D (as amended) initially filed with the SEC on July 27, 2022.
NEW ACCOUNTING STANDARDS
Recently Adopted Accounting Standards
See Note 1B**.
| Recently Issued Accounting Standard, Not Adopted as of July 2, 2023 | ||||||||||||||
| Standard/Description | Effective Date | Effect on the Financial Statements | ||||||||||||
| In June 2022, the FASB issued final guidance to clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered when measuring fair value. Recognizing a contractual sale restriction as a separate unit of account is not permitted. | January 1, 2024, with early adoption permitted. | We are assessing the impact, but currently do not expect this new guidance to have a material impact on our consolidated financial statements. |
FORWARD-LOOKING INFORMATION AND FACTORS THAT MAY AFFECT FUTURE RESULTS
This Form 10-Q contains forward-looking statements. We also provide forward-looking statements in other materials we release to the public, as well as public oral statements. Given their forward-looking nature, these statements involve substantial risks, uncertainties and potentially inaccurate assumptions.
We have tried, wherever possible, to identify such statements by using words such as “will,” “may,” “could,” “likely,” “ongoing,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “assume,” “target,” “forecast,” “guidance,” “goal,” “objective,” “aim,” “seek,” “potential,” “hope” and other words and terms of similar meaning or by using future dates.
We include forward-looking information in our discussion of the following, among other topics:
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our anticipated operating and financial performance, reorganizations, business plans, strategy and prospects;
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expectations for our product pipeline, in-line products and product candidates, including anticipated regulatory submissions, data read-outs, study starts, approvals, launches, clinical trial results and other developing data; revenue contribution and projections; potential pricing and reimbursement; potential market dynamics and size; growth, performance, timing of exclusivity and potential benefits;
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strategic reviews, capital allocation objectives, dividends and share repurchases;
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plans for and prospects of our acquisitions, dispositions and other business development activities, and our ability to successfully capitalize on growth opportunities and prospects;
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sales, expenses, interest rates, foreign exchange rates and the outcome of contingencies, such as legal proceedings;
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expectations for impact of or changes to existing or new government regulations or laws;
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our ability to anticipate and respond to macroeconomic, geopolitical, health and industry trends, pandemics, acts of war and other large-scale crises; and
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manufacturing and product supply.
In particular, forward-looking information in this Form 10-Q includes statements relating to specific future actions, performance and effects, including, among others, plans for and prospects of our proposed acquisition of Seagen, including expectations regarding financing and closing of the transaction; the expected benefits of the organizational changes to our operations; our 2023 revenue expectations; our ongoing efforts to respond to COVID-19, including our plans and expectations regarding Comirnaty and Paxlovid, and any potential future vaccines or treatments; the forecasted revenue, demand, manufacturing and supply of Comirnaty and Paxlovid, including expectations for the commercial market for Comirnaty and
Paxlovid; our expectations regarding the impact of COVID-19 on our business; the expected impact of patent expiries and generic competition; the expected pricing pressures on our products and the anticipated impact to our business; the availability of raw materials for 2023; the benefits expected from our business development transactions, including our proposed acquisition of Seagen; our anticipated operating cash flows and liquidity position; the anticipated costs and savings from certain of our initiatives, including our Transforming to a More Focused Company program; and our planned capital spending.
Given their nature, we cannot assure that any outcome expressed in these forward-looking statements will be realized in whole or in part. Actual outcomes may vary materially from past results and those anticipated, estimated, implied or projected. These forward-looking statements may be affected by underlying assumptions that may prove inaccurate or incomplete, or by known or unknown risks and uncertainties, including those described in this section and in the Item 1A. Risk Factors section in our 2022 Form 10-K and the Item 1A. Risk Factors section of this Form 10-Q.
Therefore, you are cautioned not to unduly rely on forward-looking statements, which speak only as of the date of this Form 10-Q. We undertake no obligation to update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities law. You are advised, however, to consult any further disclosures we make on related subjects.
Some of the factors that could cause actual results to differ are identified below, as well as those discussed in the Item 1A. Risk Factors section in our 2022 Form 10-K, the Item 1A. Risk Factors section of this Form 10-Q and within MD&A. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. The occurrence of any of the risks identified below, in the Item 1A. Risk Factors section in our 2022 Form 10-K, the Item 1A. Risk Factors section of this Form 10-Q or within MD&A, or other risks currently unknown, could have a material adverse effect on our business, financial condition or results of operations, or we may be required to increase our accruals for contingencies. It is not possible to predict or identify all such factors. Consequently, you should not consider the following to be a complete discussion of all potential risks or uncertainties:
Risks Related to Our Business, Industry and Operations, and Business Development
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the outcome of R&D activities, including, the ability to meet anticipated pre-clinical or clinical endpoints, commencement and/or completion dates for our pre-clinical or clinical trials, regulatory submission dates, and/or regulatory approval and/or launch dates; the possibility of unfavorable pre-clinical and clinical trial results, including the possibility of unfavorable new pre-clinical or clinical data and further analyses of existing pre-clinical or clinical data; risks associated with preliminary, early stage or interim data; the risk that pre-clinical and clinical trial data are subject to differing interpretations and assessments, including during the peer review/publication process, in the scientific community generally, and by regulatory authorities; and whether and when additional data from our pipeline programs will be published in scientific journal publications, and if so, when and with what modifications and interpretations;
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our ability to successfully address comments received from regulatory authorities such as the FDA or the EMA, or obtain approval for new products and indications from regulators on a timely basis or at all;
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regulatory decisions impacting labeling, including the scope of indicated patient populations, product dosage, manufacturing processes, safety and/or other matters, including decisions relating to emerging developments regarding potential product impurities, uncertainties regarding the ability to obtain, and the scope of, recommendations by technical or advisory committees, and the timing of, and ability to obtain, pricing approvals and product launches, all of which could impact the availability or commercial potential of our products and product candidates;
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claims and concerns that may arise regarding the safety or efficacy of in-line products and product candidates, including claims and concerns that may arise from the outcome of post-approval clinical trials, which could impact marketing approval, product labeling, and/or availability or commercial potential, including uncertainties regarding the commercial or other impact of the results of the Xeljanz ORAL Surveillance (A3921133) study or actions by regulatory authorities based on analysis of ORAL Surveillance or other data, including on other JAK inhibitors in our portfolio;
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the success and impact of external business development activities, including the ability to identify and execute on potential business development opportunities; the ability to satisfy the conditions to closing of announced transactions in the anticipated time frame or at all; the ability to realize the anticipated benefits of any such transactions in the anticipated time frame or at all; the potential need for and impact of additional equity or debt financing to pursue these opportunities, which could result in increased leverage and/or a downgrade of our credit ratings; challenges integrating the businesses and operations; disruption to business and operations relationships; risks related to growing revenues for certain acquired products; significant transaction costs; and unknown liabilities;
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risks and uncertainties related to Pfizer’s proposed acquisition of Seagen, including, among other things, risks related to the satisfaction or waiver of the conditions to closing the proposed acquisition (including the failure to obtain necessary regulatory approvals) in the anticipated timeframe or at all, including the possibility that the proposed acquisition does not close; risks related to the ability to realize the anticipated benefits of the proposed acquisition, including the possibility that the expected benefits from the acquisition will not be realized or will not be realized within the expected time period; the risk that the businesses will not be integrated successfully; disruption from the transaction making it more difficult to maintain
business and operational relationships; negative effects of the announcement or the consummation of the proposed acquisition on the market price of Pfizer’s common stock and/or operating results; significant transaction costs; unknown liabilities; the risk of litigation and/or regulatory actions related to the proposed acquisition or Seagen’s business; risks related to the financing of the transaction; other business effects and uncertainties, including the effects of industry, market, business, economic, political or regulatory conditions; future exchange and interest rates; changes in tax and other laws, regulations, rates and policies; the impact of the proposed acquisition on future business combinations or disposals; uncertainties regarding the commercial success of Pfizer’s and Seagen’s commercialized and pipeline products; the uncertainties inherent in R&D; whether and when drug applications may be filed in any jurisdictions for Pfizer’s or Seagen’s pipeline products; whether and when any such applications may be approved by regulatory authorities, which will depend on myriad factors, including making a determination as to whether the product's benefits outweigh its known risks and determination of the product's efficacy and, if approved, whether any such products will be commercially successful; and competitive developments;
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competition, including from new product entrants, in-line branded products, generic products, private label products, biosimilars and product candidates that treat or prevent diseases and conditions similar to those treated or intended to be prevented by our in-line products and product candidates;
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the ability to successfully market both new and existing products, including biosimilars;
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difficulties or delays in manufacturing, sales or marketing; supply disruptions, shortages or stock-outs at our facilities or third-party facilities that we rely on; and legal or regulatory actions;
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the impact of public health outbreaks, epidemics or pandemics (such as COVID-19) on our business, operations and financial condition and results, including impacts on our employees, manufacturing, supply chain, sales and marketing, R&D and clinical trials;
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risks and uncertainties related to our efforts to continue to develop and commercialize Comirnaty and Paxlovid or any potential future COVID-19 vaccines, treatments or combinations, as well as challenges related to their manufacturing, supply and distribution, including, among others, the risk that as the market for COVID-19 products becomes more endemic and seasonal, demand for any of our COVID-19 products may be reduced, no longer exist or not meet expectations, which may lead to reduced revenues or excess inventory on-hand and/or in the channel which, for Paxlovid, could result in significant inventory write-offs; challenges related to and uncertainties regarding the timing of a transition to the commercial market for any of our products; uncertainties related to the public’s adherence to vaccines, boosters and treatments; and risks related to our ability to achieve our revenue forecasts for Comirnaty and Paxlovid or any potential future COVID-19 vaccines or treatments;
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trends toward managed care and healthcare cost containment, and our ability to obtain or maintain timely or adequate pricing or favorable formulary placement for our products;
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interest rate and foreign currency exchange rate fluctuations, including the impact of possible currency devaluations and monetary policy actions in countries experiencing high inflation rates;
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any significant issues involving our largest wholesale distributors or government customers, which account for a substantial portion of our revenues;
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the impact of the increased presence of counterfeit medicines or vaccines in the pharmaceutical supply chain;
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any significant issues related to the outsourcing of certain operational and staff functions to third parties; and any significant issues related to our JVs and other third-party business arrangements;
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uncertainties related to general economic, political, business, industry, regulatory and market conditions including, without limitation, uncertainties related to the impact on us, our customers, suppliers and lenders and counterparties to our foreign-exchange and interest-rate agreements of challenging global economic conditions, such as inflation, and recent and possible future changes in global financial markets;
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the exposure of our operations globally to possible capital and exchange controls, economic conditions, expropriation and other restrictive government actions, changes in intellectual property legal protections and remedies, the impact of political or civil unrest or military action, including the ongoing conflict between Russia and Ukraine and its economic consequences, unstable governments and legal systems, inter-governmental disputes, disruptions related to climate change and natural disasters, including uncertainties related to the impact of the recent tornado at our manufacturing facility in Rocky Mount, North Carolina;
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any changes in business, political and economic conditions due to actual or threatened terrorist activity, geopolitical instability, civil unrest or military action;
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the impact of product recalls, withdrawals and other unusual items, including uncertainties related to regulator-directed risk evaluations and assessments, including our ongoing evaluation of our product portfolio for the potential presence or formation of nitrosamines;
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trade buying patterns;
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the risk of an impairment charge related to our intangible assets, goodwill or equity-method investments;
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the impact of, and risks and uncertainties related to, restructurings and internal reorganizations, as well as any other corporate strategic initiatives and growth strategies, and cost-reduction and productivity initiatives, each of which requires upfront costs but may fail to yield anticipated benefits and may result in unexpected costs or organizational disruption;
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the ability to successfully achieve our climate goals and progress our environmental sustainability and other ESG priorities;
Risks Related to Government Regulation and Legal Proceedings
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the impact of any U.S. healthcare reform or legislation or any significant spending reductions or cost controls affecting Medicare, Medicaid or other publicly funded or subsidized health programs, including the IRA, or changes in the tax treatment of employer-sponsored health insurance that may be implemented;
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U.S. federal or state legislation or regulatory action and/or policy efforts affecting, among other things, pharmaceutical product pricing, intellectual property, reimbursement or access or restrictions on U.S. direct-to-consumer advertising; limitations on interactions with healthcare professionals and other industry stakeholders; as well as pricing pressures for our products as a result of highly competitive insurance markets;
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legislation or regulatory action in markets outside of the U.S., such as China or Europe, including, without limitation, laws related to pharmaceutical product pricing, intellectual property, medicine safety, environmental impact of medicines, reimbursement or access, including, in particular, continued government-mandated reductions in prices and access restrictions for certain biopharmaceutical products to control costs in those markets;
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legal defense costs, insurance expenses, settlement costs and contingencies, including those related to actual or alleged environmental contamination;
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the risk and impact of an adverse decision or settlement and the risk related to adequacy of reserves related to legal proceedings;
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the risk and impact of tax related litigation and investigations;
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governmental laws and regulations affecting our operations, including, without limitation, the IRA, changes in laws and regulations or their interpretation, including, among others, changes in tax laws and regulations internationally and in the U.S., the adoption of global minimum taxation requirements outside the U.S. and potential changes to existing tax law by the current U.S. Presidential administration and Congress;
Risks Related to Intellectual Property, Technology and Security
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any significant breakdown or interruption of our information technology systems and infrastructure (including cloud services);
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any business disruption, theft of confidential or proprietary information, security threats on facilities or infrastructure, extortion or integrity compromise resulting from a cyber-attack or other malfeasance by, but not limited to, nation states, employees, business partners or others;
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the risk that our currently pending or future patent applications may not be granted on a timely basis or at all, or any patent-term extensions that we seek may not be granted on a timely basis, if at all; and
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risks to our products, patents and other intellectual property, such as: (i) claims of invalidity that could result in LOE; (ii) claims of patent infringement, including asserted and/or unasserted intellectual property claims; (iii) claims we may assert against intellectual property rights held by third parties; (iv) challenges faced by our collaboration or licensing partners to the validity of their patent rights; or (v) any pressure, or legal or regulatory action by, various stakeholders or governments that could potentially result in us not seeking intellectual property protection or agreeing not to enforce or being restricted from enforcing intellectual property rights related to our products, including Comirnaty and Paxlovid.
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