Item 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.

Since inception through the third quarter of 2023, we have incurred substantially all costs of approximately $700 million in connection with separating Upjohn. 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 our R&D operations. See Note 13A.

In October 2023, we announced that we launched a multi-year, enterprise-wide cost realignment program that aims to realign our costs with our longer-term revenue expectations. The program is expected to deliver annual net cost savings of at least $3.5 billion, of which approximately $1.0 billion is expected to be realized in 2023 and at least an additional $2.5 billion is expected to be realized in 2024 compared to the midpoint of SI&A and R&D expense guidance provided on August 1, 2023. The costs to achieve the savings associated with the new cost realignment program are expected to be approximately $3.0 billion, of which the majority is expected to be cash. These costs will primarily include severance and implementation costs. We will continue to refine the estimated savings and their associated costs over the remainder of the year and will incorporate them into our full-year guidance for 2024.

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 Acquisition of Telavant Holdings, Inc. (Telavant)**––In October 2023, we and Roivant Sciences Ltd. (Roivant) entered into a definitive agreement with Roche Holdings Inc. (Roche) through which Roche would acquire Telavant for an upfront payment of $7.1 billion and a contingent milestone payment of $150 million. Roivant currently owns approximately 75% and we currently own approximately 25% of Telavant. Telavant was created through an arrangement between Roivant and us under which we out-licensed the global development and manufacturing rights and the U.S. and Japan commercialization rights to our anti-TL1a antibody PF-06480605, now RVT-3101, to Telavant in exchange for our ownership interest in Telavant and Roivant’s agreement to fund the ongoing R&D of RVT-3101. Under the original agreement, we retained commercialization rights to RVT-3101 outside of the U.S. and Japan and will continue to retain these rights after the acquisition of Telavant by Roche. In connection with this new transaction, Telavant’s development, manufacturing and U.S. and Japan commercialization

rights will transfer to Roche. Roche’s acquisition of Telavant is subject to customary closing conditions including U.S. anti-trust approval and is expected to close in the fourth quarter of 2023 or the first quarter of 2024. Upon closing of the transaction, we will receive a portion of the upfront cash payment from Roche based on our ownership interest and we will record a pre-tax gain of approximately $1.7 billion in Other (income)/deductions––net.

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.

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 Third Quarter 2023 and First Nine Months of 2023 Performance

Revenues––Revenues decreased $9.4 billion, or 42%, in the third quarter of 2023 to $13.2 billion from $22.6 billion in the third quarter of 2022, reflecting an operational decrease of $9.3 billion, or 41%, as well as a de minimis impact of foreign exchange of $94 million. The operational decrease was primarily driven by declines in Paxlovid and Comirnaty. Excluding contributions from Comirnaty and Paxlovid, revenues increased $1.1 billion, or 10%, operationally, reflecting U.S. revenues from Abrysvo following launch of the older adult indication; revenues from Nurtec ODT/Vydura and Oxbryta; and strong growth from the Vyndaqel family and the Prevnar family.

Revenues decreased $31.8 billion, or 42%, in the first nine months of 2023 to $44.2 billion from $76.0 billion in the first nine months of 2022, reflecting an operational decrease of $30.7 billion, or 40%, as well as an unfavorable impact of foreign exchange of $1.1 billion, or 1%. The operational decrease was primarily driven by declines in Comirnaty and Paxlovid. Excluding contributions from Comirnaty and Paxlovid, revenues increased $2.2 billion, or 7%, operationally, reflecting revenues from Nurtec ODT/Vydura and Oxbryta; strong growth from the Vyndaqel family; U.S. revenues from Abrysvo following launch of the older adult indication; and growth from the Prevnar family and Eliquis.

As of October 31, 2023, on a total company basis, we forecasted revenues in 2023 of $58 billion to $61 billion, reflecting an operational decline of 40% at the midpoint compared to 2022 revenues, due to expected revenue declines from our COVID-19 products, partially offset by expected operational growth from our non-COVID-19 in-line portfolio, new product and indication launches and recently acquired products. We expect these revenue declines will also have an unfavorable impact on Income from continuing operations before provision/(benefit) for taxes on income.

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 information regarding the primary indications or class of certain products, see Note 13C**.

Income/(Loss) from Continuing Operations Before Provision/(Benefit) for Taxes on Income/(Loss)––Loss from continuing operations before provision/(benefit) for taxes on income/(loss) in the third quarter of 2023 was $3.4 billion, compared to income of $9.0 billion in the same period in 2022, primarily due to lower revenues and increases in Cost of sales and Amortization of intangible assets, partially offset by lower Acquired in-process research and development expenses.

The decrease in Income from continuing operations before provision for taxes on income of $24.3 billion, to $5.2 billion in the first nine months of 2023 from $29.5 billion in the first nine months of 2022, was primarily due to lower revenues and increases in Selling, informational and administrative expenses and Amortization of intangible assets, partially offset by lower Cost of sales, lower Acquired in-process research and development expenses, lower net losses on equity securities and lower net interest expense.

See the Analysis of the Condensed Consolidated Statements of Operations section 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, risks and uncertainties. For information on our tax provision and effective tax rate, see the Provision/(Benefit) for Taxes on Income/(Loss) 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 judgments, 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, legislative or regulatory pricing reforms, drug formularies (including tiering and utilization management tools), 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. The drug pricing provisions of the IRA, which was signed into law in August 2022, began to be implemented in 2023 and implementation efforts will continue over the next several years. In August 2023, the Biden Administration unveiled the first round of medicines subject to the “Medicare Drug Price Negotiation Program,” which requires manufacturers of select drugs to engage in a process with the Federal government to set new Medicare prices which would go into effect in 2026. Among the medicines included in the first round is Eliquis. We continue to evaluate the impact of the IRA 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. As of the date of the filing of this Form 10-Q, the majority of the facility’s manufacturing lines have restarted. This expedited restart is the first step toward full recovery for the facility, as Pfizer restarts production through a phased approach, with full production across the site’s three manufacturing suites anticipated by the end of 2023. While manufacturing has resumed, the supply of medicines impacted by the tornado is expected to be affected through at least mid-2024.

During the third quarter of 2023, we recorded $209 million to Cost of sales for inventory losses, overhead costs related to the period in which the facility could not operate, and incremental costs resulting from the tornado damage. We continue to evaluate the financial impact of the tornado on our business and may record additional losses and/or costs in future periods in order to bring our facility fully back online, but we are unable to predict them, along with 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 nine 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 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 nine months of 2023 and to date, we principally sold Comirnaty globally under government contracts. In September 2023, Comirnaty transitioned to traditional commercial market sales in the U.S., 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 start transitioning to commercial markets in 2024.

In the first nine months of 2023 and to date, we principally sold Paxlovid globally to government agencies and distributors. Internationally, for Paxlovid, we are continuing the transition to commercial markets and are expecting most revenue to be generated through commercial channels in 2024. On October 13, 2023, we announced an amended agreement with the U.S. government, which will facilitate the expected transition of Paxlovid to traditional commercial markets in November 2023, with minimal uptake of NDA-labeled commercial product expected before January 1, 2024. See Note 14.

To date, the majority of demand for our COVID-19 products in 2023 has been fulfilled by existing supply of products that were delivered to governments and recorded as revenues in 2022. As of October 31, 2023, we forecasted Comirnaty revenues of approximately $11.5 billion in 2023, down 70% from 2022 results, with gross profit to be split evenly with BioNTech, and Paxlovid revenues of approximately $1 billion in 2023, down 95% from 2022 results. This forecast reflects an expected $9 billion revenue decline, composed of $7 billion for Paxlovid and $2 billion for Comirnaty, versus forecasted revenues as of August 1, 2023, primarily due to an expected $4.2 billion non-cash sales-return of EUA-labeled Paxlovid from the U.S. government, lower-than-expected vaccination- and infection-rates, and delayed commercialization in the U.S. for Paxlovid. 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, number of symptomatic infections, and market share of Comirnaty and Paxlovid.

For information on the impact of COVID-19 on our business, operations and financial condition 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, 13 and the Forward-Looking Information and Factors that May Affect Future Results section of this Form 10-Q*.*

Israel/Hamas Conflict––Our global operations may be impacted by the armed conflict between Israel and Hamas that began on October 7, 2023. For both the nine months ended October 1, 2023 and the fiscal year ended December 31, 2022, the business of our Israel subsidiary represented less than 1% of our consolidated revenues and assets. We are closely monitoring developments in this conflict, including evaluating potential impacts to our business, customers, suppliers, employees, and operations in Israel and elsewhere in the Middle East. At this time, impacts to the Company are uncertain and subject to change given the volatile nature of the situation.

Russia/Ukraine Conflict––Our global operations may be impacted by the armed conflict between Russia and Ukraine. For both the nine months ended October 1, 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 of 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 OPERATIONS

Revenues by Geography

The following presents worldwide revenues by geography:
Three Months Ended
WorldwideU.S.InternationalWorld-wideU.S.Inter-national
(MILLIONS)Oct. 1, 2023Oct. 2, 2022Oct. 1, 2023Oct. 2, 2022Oct. 1, 2023Oct. 2, 2022% Change
Operating segments:
Biopharma$12,930$22,319$7,717$13,748$5,214$8,571(42)(44)(39)
Business Innovation30231988103214216(5)(15)(1)
Total revenues$13,232$22,638$7,804$13,851$5,427$8,786(42)(44)(38)
Nine Months Ended
WorldwideU.S.InternationalWorld-wideU.S.Inter-national
(MILLIONS)Oct. 1, 2023Oct. 2, 2022Oct. 1, 2023Oct. 2, 2022Oct. 1, 2023Oct. 2, 2022% Change
Operating segments:
Biopharma$43,320$75,066$22,208$33,700$21,112$41,366(42)(34)(49)
Business Innovation928974289291639683(5)(1)(6)
Total revenues$44,247$76,040$22,497$33,991$21,750$42,049(42)(34)(48)

Third Quarter of 2023 vs. Third Quarter of 2022

The following provides an analysis of the change in worldwide revenues by geographic areas in the third quarter of 2023:
Three Months Ended October 1, 2023
(MILLIONS)WorldwideU.S.International
Operational growth/(decline):
Worldwide declines from Paxlovid$(7,304)$(5,044)$(2,260)
Worldwide declines from Comirnaty(3,091)(1,913)(1,178)
Worldwide growth from the Vyndaqel family, the Prevnar family, Eliquis, Xeljanz and Inlyta, partially offset by declines from Ibrance and Xtandi52943891
U.S. revenues from Abrysvo following launch of the older adult indication in July of 2023375375—
Revenues from Nurtec ODT/Vydura and Oxbryta, which were acquired in the fourth quarter of 20223173107
Other operational factors, net(138)(212)74
Operational growth/(decline), net(9,311)(6,047)(3,265)
Unfavorable impact of foreign exchange(94)—(94)
Revenues increase/(decrease)$(9,406)$(6,047)$(3,359)

Emerging markets revenues decreased $927 million, or 28%, in the third quarter of 2023 to $2.4 billion from $3.3 billion in the third quarter of 2022, reflecting an operational decrease of $780 million, or 24%, and an unfavorable impact from foreign exchange of 4%. The operational decrease in emerging markets was primarily driven by declines from Comirnaty and Paxlovid as well as lower Sulperazon revenues largely driven by volume-based procurement in China, partially offset by growth from Eliquis and Lorbrena.

First Nine Months of 2023 vs. First Nine Months of 2022

The following provides an analysis of the worldwide change in revenues by geographic areas in the first nine months of 2023:
Nine Months Ended October 1, 2023
(MILLIONS)WorldwideU.S.International
Operational growth/(decline):
Worldwide declines from Comirnaty$(20,351)$(4,962)$(15,389)
Worldwide declines from Paxlovid(12,517)(8,554)(3,963)
Worldwide growth from the Vyndaqel family, the Prevnar family, Eliquis and Inlyta, partially offset by declines from Ibrance, Xeljanz and Xtandi892916(23)
Revenues from Nurtec ODT/Vydura and Oxbryta, which were acquired in the fourth quarter of 202287886315
U.S. revenues from Abrysvo following launch of the older adult indication in July of 2023375375—
Other operational factors, net38(131)169
Operational growth/(decline), net(30,686)(11,495)(19,191)
Unfavorable impact of foreign exchange(1,107)—(1,107)
Revenues increase/(decrease)$(31,793)$(11,495)$(20,298)

Emerging markets revenues decreased $7.0 billion, or 42%, in the first nine months of 2023 to $9.7 billion from $16.7 billion in the first nine months of 2022, reflecting an operational decrease of $6.4 billion, or 39%, 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, Lorbrena and Zavicefta.

See the Revenues––Selected Product Discussion section within MD&A for additional analysis.

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 EndedNine Months Ended
(MILLIONS)October 1, 2023October 2, 2022October 1, 2023October 2, 2022
Medicare rebates$286$195$718$582
Medicaid and related state program rebates4062231,228689
Performance-based contract rebates1,3638513,7842,518
Chargebacks2,6271,9467,2165,480
Sales allowances1,7321,3344,8413,905
Sales returns and cash discounts3792471,130845
Total$6,793$4,796$18,918$14,019

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
ProductPeriodGlobal RevenuesRegionOct. 1, 2023Oct. 2, 2022TotalOper.Operational Results Commentary
Comirnaty(a)QTD$1,307 Down 70% (operationally)U.S.$995$2,908(66)QTD declines largely driven by lower U.S. government contracted deliveries and lower contracted deliveries and demand in international markets, due to anticipated transition to new variant vaccines globally and to traditional U.S. commercial market sales beginning in September 2023. YTD declines largely driven by lower contracted deliveries and demand in international markets and lower U.S. government contracted deliveries, due to anticipated transition to new variant vaccines globally and to traditional U.S. commercial market sales beginning in September 2023.
Int’l.3121,494(79)(79)
Worldwide$1,307$4,402(70)(70)
YTD$5,859 Down 77% (operationally)U.S.$1,340$6,303(79)
Int’l.4,51920,174(78)(76)
Worldwide$5,859$26,477(78)(77)
EliquisQTD$1,498 Up 3% (operationally)U.S.$883$8356Growth 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.615628(2)(1)
Worldwide$1,498$1,46423
YTD$5,135 Up 4% (operationally)U.S.$3,296$2,97911
Int’l.1,8382,022(9)(6)
Worldwide$5,135$5,00134
Prevnar familyQTD$1,854 Up 15% (operationally)U.S.$1,310$1,08920QTD growth primarily driven by: • the adult indications in the U.S. driven by strong patient demand for Prevnar 20 for the eligible adult population, and • the pediatric indication in the U.S. due to the approval of Prevnar 20 and associated stocking, partially offset by lower market share due to competitive entry, as well as • growth of the pediatric indication for Prevenar 13 in certain emerging markets. YTD growth primarily driven by the adult indications in the U.S. due to strong patient demand for Prevnar 20 for the eligible adult population, as well as growth of Prevenar 13 in certain emerging markets, partially offset by the Prevnar pediatric indication in the U.S. driven by lower market share due to competitor entry and unfavorable timing of purchases.
Int’l.54451755
Worldwide$1,854$1,6071515
YTD$4,835 Up 6% (operationally)U.S.$3,210$3,0107
Int’l.1,6241,59126
Worldwide$4,835$4,60156
PaxlovidQTD$202 Down 97% (operationally)U.S.$—$5,044*QTD declines primarily driven by: • No third quarter U.S. sales in anticipation of commercial transition, and • lower contractual deliveries in most international markets. YTD declines primarily driven by the above factors as well as no second quarter U.S. sales, 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 during the first quarter of 2023.
Int’l.2022,470(92)(91)
Worldwide$202$7,514(97)(97)
YTD$4,414 Down 73% (operationally)U.S.$1,960$10,514(81)
Int’l.2,4546,584(63)(60)
Worldwide$4,414$17,099(74)(73)
(MILLIONS)Revenue% Change
ProductPeriodGlobal RevenuesRegionOct. 1, 2023Oct. 2, 2022TotalOper.Operational Results Commentary
IbranceQTD$1,244 Down 3% (operationally)U.S.$838$872(4)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.406411(1)(1)
Worldwide$1,244$1,283(3)(3)
YTD$3,635 Down 4% (operationally)U.S.$2,438$2,493(2)
Int’l.1,1971,347(11)(8)
Worldwide$3,635$3,841(5)(4)
Vyndaqel familyQTD$892 Up 47% (operationally)U.S.$511$32955Growth 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.3812734036
Worldwide$892$6024847
YTD$2,360 Up 35% (operationally)U.S.$1,329$89049
Int’l.1,0318761820
Worldwide$2,360$1,7663435
XeljanzQTD$503 Up 1% (operationally)U.S.$371$3458QTD 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.132157(16)(15)
Worldwide$503$502—1
YTD$1,210 Down 6% (operationally)U.S.$794$802(1)
Int’l.416502(17)(13)
Worldwide$1,210$1,304(7)(6)
XtandiQTD$313 Down 2% (operationally)U.S.$313$320(2)QTD decline driven by lower net price mainly due to unfavorable changes in channel mix, partially offset by higher demand. YTD performance driven by higher demand, offset by lower net price mainly due to unfavorable changes in channel mix.
Int’l.————
Worldwide$313$320(2)(2)
YTD$877 Flat (operationally)U.S.$877$878—
Int’l.————
Worldwide$877$878——
InlytaQTD$252 Up 1% (operationally)U.S.$153$1521Growth primarily reflects continued growth in emerging markets and the U.S. 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.98100(2)1
Worldwide$252$252—1
YTD$773 Up 3% (operationally)U.S.$476$4545
Int’l.297306(3)1
Worldwide$773$76023
Nurtec ODT/VyduraQTD$233 *****U.S.$227$—*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 third quarter and first nine 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.6—**
Worldwide$233$—**
YTD$646 *****U.S.$633$—*
Int’l.131**
Worldwide$646$1**

Business Innovation

(MILLIONS)Revenue% Change
Operating SegmentPeriodGlobal RevenuesRegionOct. 1, 2023Oct. 2, 2022TotalOper.Operational Results Commentary
Business InnovationQTD$302 Down 7% (operationally)U.S.$88$103(15)QTD declines primarily driven by lower revenues from our active pharmaceutical ingredient sales operation and lower manufacturing of divested products under manufacturing and supply agreements. YTD declines primarily driven by a reduction in Comirnaty supply to BioNTech and lower revenues from our active pharmaceutical ingredient sales operation, partially offset by higher COVID-19 manufacturing activities performed on behalf of customers.
Int’l.214216(1)(3)
Worldwide$302$319(5)(7)
YTD$928 Down 4% (operationally)U.S.$289$291(1)
Int’l.639683(6)(6)
Worldwide$928$974(5)(4)

(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 EndedNine Months Ended
(MILLIONS)October 1, 2023October 2, 2022% ChangeOctober 1, 2023October 2, 2022% Change
Cost of sales$9,269$6,06353$17,391$24,696(30)
Percentage of Revenues70.0%26.8%39.3%32.5%
Selling, informational and administrative expenses3,2813,391(3)10,1969,03213
Research and development expenses2,7112,69617,8647,8131
Acquired in-process research and development expenses67524(87)122880(86)
Amortization of intangible assets1,179822433,4662,47840
Restructuring charges and certain acquisition-related costs155199(22)377580(35)
Other (income)/deductions—net(79)(59)33(356)1,063*
* Indicates calculation not meaningful.

Cost of Sales

Cost of sales increased $3.2 billion in the third quarter of 2023, primarily due to:

  • a non-cash charge of $5.6 billion recorded in the third quarter of 2023 for inventory write-offs and related charges ($4.7 billion for Paxlovid and $0.9 billion for Comirnaty); and

  • $209 million in inventory losses, overhead costs related to the period in which the facility could not operate, and incremental costs resulting from tornado damage to our manufacturing facility in Rocky Mount, NC,

partially offset by:

  • a reduction of $2.6 billion due to lower sales of Comirnaty; and

  • a reduction of $405 million due to lower sales of Paxlovid.

Cost of sales decreased $7.3 billion in the first nine months of 2023, mainly due to:

  • a reduction of $12.7 billion due to lower sales of Comirnaty; and

  • a reduction of $1.2 billion due to lower sales of Paxlovid,

partially offset by:

  • a non-cash charge of $5.8 billion for inventory write-offs and related charges ($4.8 billion for Paxlovid and $1.0 billion for Comirnaty); and

  • $209 million in inventory losses, overhead costs related to the period in which the facility could not operate, and incremental costs resulting from tornado damage to our manufacturing facility in Rocky Mount, NC.

The increase in Cost of sales as a percentage of revenues in the third quarter and in the first nine months of 2023 was mainly driven by the non-cash charge of $5.6 billion discussed above, partially offset to a much lesser extent by favorable changes in sales mix.

Selling, Informational and Administrative Expenses

Selling, informational and administrative expenses decreased $109 million in the third quarter of 2023, primarily due to:

  • a decrease of $325 million due to a lower provision for U.S. healthcare reform fees related to Comirnaty and Paxlovid; and

  • a $140 million decrease in spending on products across multiple customer groups,

partially offset by:

  • an increase of $320 million for marketing and promotional expenses for recently acquired and launched products.

Selling, informational and administrative expenses increased $1.2 billion in the first nine months of 2023, primarily due to:

  • an increase of $780 million in marketing and promotional expenses for recently acquired and launched products;

  • an increase of $450 million for the expected Paxlovid commercial launch;

  • a $285 million increase in spending on products across multiple customer groups; and

  • an increase of $200 million in our liability to be paid to participants of our supplemental savings plan,

partially offset by:

  • a decrease of $490 million due to a lower provision for U.S. healthcare reform fees related to Comirnaty and Paxlovid.

Research and Development Expenses

Research and development expenses increased $14 million in the third quarter of 2023, primarily due to:

  • increased investments of $280 million, mainly to develop recently acquired assets, as well as activities to support upcoming product launches,

partially offset by:

  • a decrease of $260 million mainly due to lower compensation-related expenses.

Research and development expenses increased $51 million in the first nine months of 2023, primarily driven by:

  • increased costs of $560 million to develop recently acquired assets, activities to support upcoming product launches as well as ongoing late stage internal medicine programs,

partially offset by:

  • lower spending of $430 million mainly for ongoing late stage vaccine and hospital programs as well as lower compensation-related expenses; 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 $457 million in the third quarter of 2023 and decreased $759 million in the first nine months of 2023, primarily reflecting the non-recurrence of an upfront payment of $426 million related to the closing of the acquisition of ReViral Ltd. in the third quarter of 2022. The decrease for the first nine months of 2023 also reflects 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 $357 million in the third quarter of 2023 and $987 million in the first nine months of 2023, primarily as a result of amortization of intangible assets from our acquisitions of Biohaven and GBT, as well as higher amortization of intangible assets related to Prevnar, 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/(Loss). See the Non-GAAP Financial Measure: Adjusted Income/(Loss) 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. In October 2023, we announced that we launched a multi-year, enterprise-wide cost realignment program that aims to realign our costs with our longer-term revenue expectations. See the Overview of Our Performance, Operating Environment, Strategy and Outlook––Our Business and Strategy section within MD&A.

Other (Income)/Deductions—Net

The favorable period-over-period change of $19 million for the third quarter of 2023, compared to the third quarter of 2022, was primarily driven by (i) a gain on the divestiture of our early-stage rare disease gene therapy portfolio to Alexion in the third quarter of 2023 (see Note 2B), (ii) the non-recurrence of an asset impairment charge incurred in the third quarter of 2022, and (iii) equity income from our investment in Haleon in the third quarter of 2023 versus equity losses in the third quarter of 2022, partially offset by (iv) higher net losses on equity securities, and (v) lower net periodic benefit credits associated with pension and postretirement plans recorded in the third quarter of 2023.

The favorable period-over-period change of $1.4 billion for the first nine months of 2023, compared to the first nine months of 2022, was primarily driven by (i) lower net losses on equity securities, (ii) lower net interest expense, (iii) a gain on the divestiture of our early-stage rare disease gene therapy portfolio to Alexion (see Note 2B), and (iv) higher dividend income.

See Note 4**.

Provision/(Benefit) for Taxes on Income/(Loss)

Three Months EndedNine Months Ended
(MILLIONS)October 1, 2023October 2, 2022% ChangeOctober 1, 2023October 2, 2022% Change
Provision/(benefit) for taxes on income/(loss)$(964)$356*$(320)$3,098*
Effective tax rate on continuing operations28.8%4.0%(6.2)%10.5%
* 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 October 31, 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

Beginning with the original monovalent Pfizer-BioNTech COVID-19 Vaccine, initially authorized for emergency use, to Comirnaty (COVID-19 Vaccine, mRNA, 2023-2024 Formula), approved by the FDA for individuals 12 years and older and Pfizer-BioNTech COVID-19 Vaccine (2023-2024 Formula) authorized by the FDA for emergency use for individuals 6 months through 11 years of age, efforts to stay current with circulating COVID-19 strains have resulted in the rapid development of targeted, adapted vaccines for licensure in the U.S., Europe, Japan and other markets. The adapted vaccines have included two bivalent formulations (Original and Omicron BA.1, not authorized in the U.S., and Original and Omicron BA.4/BA.5). As updated COVID-19 vaccines are formulated to more closely target currently circulating vaccines, prior vaccine formulations are generally no longer utilized in a majority of the markets.

The 2023-2024 Formula includes a monovalent (single) component that corresponds to the Omicron sub-variant XBB.1.5 of severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The table below summarizes the approval of the 2023-2024 Formula in the markets indicated:

ProductIndicationRegulatory Status
U.S.(a)EUJapan
Comirnaty (COVID-19 Vaccine, mRNA, 2023-2024 Formula)Active immunization to prevent COVID-19 caused by SARS-CoV-2 for individuals 6 months through 4 years of ageAuthorized September 2023Approved August 2023Approved September 2023
Active immunization to prevent COVID-19 caused by SARS-CoV-2 for individuals 5 through 11 years of ageAuthorized September 2023Approved August 2023Approved September 2023
Active immunization to prevent COVID-19 caused by SARS-CoV-2 in individuals 12 years of age and olderApproved September 2023Approved August 2023Approved September 2023

(a)In September 2023, Pfizer and BioNTech announced the FDA approved a regulatory application for their Omicron XBB.1.5-adapted monovalent COVID-19 vaccine for individuals 12 years of age and older (Comirnaty (COVID-19 Vaccine, mRNA, 2023-2024 Formula)). The FDA also granted EUA for the Omicron XBB.1.5-adapted monovalent COVID-19 vaccine for individuals 6 months through 11 years of age (Pfizer-BioNTech COVID-19 Vaccine (2023-2024 Formula)).

Other Products

PRODUCTINDICATION OR PROPOSED INDICATIONAPPROVED/FILED*
U.S.EUJAPAN
Ngenla (somatrogon)(a)Pediatric growth hormone deficiencyApproved June 2023Approved February 2022Approved January 2022
Prevnar 20/Apexxnar (Vaccine)Active immunization to prevent pneumonia, invasive disease and otitis media caused by Streptococcus pneumoniae (adults)Approved June 2021Approved February 2022Filed September 2023
Active immunization to prevent pneumonia, invasive disease and otitis media caused by Streptococcus pneumoniae (pediatric)Approved April 2023Filed November 2022Filed March 2023
TicoVac (Vaccine)Active immunization to prevent tick-borne encephalitis diseaseApproved August 2021Filed March 2023
Paxlovid(b**)** (nirmatrelvir and ritonavir)COVID-19 in high-risk adultsApproved May 2023Approved February 2023Approved February 2022
Nurtec ODT/Vydura (rimegepant)Acute treatment of migraine with or without aura (adults)Approved February 2020Approved April 2022
Prevention of episodic migraine (adults)Approved May 2021Approved April 2022
Litfulo/Ritfulo (ritlecitinib)Alopecia areataApproved June 2023Approved September 2023Approved June 2023
Zavzpret (zavegepant) (intranasal)Acute treatment of migraine with or without aura (adults)Approved March 2023
Penbraya (PF-06886992) (Vaccine)Active immunization to prevent serogroups ABCWY meningococcal infections (adolescent and young adults)Approved October 2023Filed June 2023
Abrysvo (Vaccine)Active immunization to prevent RSV infection (maternal)Approved August 2023Approved August 2023Filed February 2023
Active immunization to prevent RSV infection (older adults)Approved May 2023Approved August 2023Filed May 2023
Velsipity (etrasimod)Ulcerative colitis (moderately to severely active)Approved October 2023Filed November 2022
Braftovi (encorafenib) and Mektovi (binimetinib)BRAFV600E-mutant metastatic non-small cell lung cancerApproved October 2023
Elrexfio (elranatamab)Multiple myeloma triple-class relapsed/refractoryApproved August 2023Filed January 2023Filed June 2023
Talzenna (talazoparib)Combination with Xtandi (enzalutamide) for adult patients with homologous recombination repair (HRR) gene-mutated mCRPC(c)Approved June 2023Filed February 2023Filed February 2023
fidanacogene elaparvovec (PF-06838435)(d)Hemophilia BFiled June 2023Filed June 2023
Xtandi (enzalutamide)(e)Non-metastatic castration-sensitive prostate cancer (nmCSPC) with high risk of biochemical recurrence (BCR)Filed August 2023Filed September 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 OPKO.

(b)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.

(c)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.

(d)Being developed in collaboration with Spark Therapeutics, Inc.

(e)Being developed in collaboration with Astellas.

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; Prevenar 13 in infants and children aged 6 weeks to 15 months, in April 2023; Staquis (crisaborole) for the topical treatment of mild to moderate atopic dermatitis patients aged 3 months and older in August 2023; and Litfulo (ritlecitinib), a once-daily oral treatment, for individuals 12 years of age and older with severe alopecia areata (AA) in October 2023.

The following provides information about additional indications and new drug candidates in late-stage development:

PRODUCT/CANDIDATEPROPOSED DISEASE AREA
LATE-STAGE CLINICAL PROGRAMS FOR ADDITIONAL USES AND DOSAGE FORMS FOR IN-LINE AND IN-REGISTRATION PRODUCTSIbrance (palbociclib)(a)ER+/HER2+ metastatic breast cancer
Talzenna (talazoparib)Combination with Xtandi (enzalutamide) for DNA Damage Repair (DDR)-deficient mCSPC
Ngenla (somatrogon) (b)Adult growth hormone deficiency
Braftovi (encorafenib) and Erbitux® (cetuximab)(c)First-line BRAFV600E-mutant mCRC
Braftovi (encorafenib) and Mektovi (binimetinib) and Keytruda® (pembrolizumab)(d)BRAFV600E/K-mutant metastatic or unresectable locally advanced melanoma
Paxlovid (nirmatrelvir; ritonavir)COVID-19 in high-risk children (6-11 years of age; >88lbs)
zavegepant (oral)Prevention of chronic migraine (adults)
Litfulo (ritlecitinib)Vitiligo
Elrexfio (elranatamab)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)
Abrysvo (vaccine)Active immunization to prevent RSV infection in high-risk adults
NEW DRUG CANDIDATES IN LATE-STAGE DEVELOPMENTaztreonam-avibactam (PF-06947387)Treatment of infections caused by Gram-negative bacteria with limited or no treatment options
giroctocogene fitelparvovec (PF-07055480)(e)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
VLA15 (PF-07307405) vaccine(f)Immunization to prevent Lyme disease
PF-07252220 (quadrivalent mRNA-based vaccine)Immunization to prevent influenza
Vepdegestrant (PF-07850327)(g)Breast cancer metastatic - 2nd line ER+/HER2-
inclacumab (PF-07940370)Sickle cell disease
PF-06823859Dermatomyositis, polymyositis

(a)Being developed in collaboration with The Alliance Foundation Trials, LLC.

(b)Being developed in collaboration with OPKO.

(c)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.

(d)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.

(e)Being developed in collaboration with Sangamo Therapeutics, Inc.

(f)Being developed in collaboration with Valneva SE.

(g)Being developed in collaboration with Arvinas.

For additional information about our R&D organization, see Note 13 and the Item 1. Business—Research and Development section of our 2022 Form 10-K.

NON-GAAP FINANCIAL MEASURE: ADJUSTED INCOME/(LOSS)

Adjusted income/(loss) 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/(loss), certain components of Adjusted income/(loss) and Adjusted diluted EPS/(LPS) 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:

MeasureDefinitionRelevance of Metrics to Our Business Performance
Adjusted income/(loss)Net income/(loss) 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*––*netCost 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/(loss) measure
Adjusted diluted EPS/(LPS)EPS/(LPS) 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/(loss) 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/(loss), which is derived from Adjusted income/(loss). 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/(loss) and its components and Adjusted diluted EPS/(LPS) 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/(loss) attributable to Pfizer Inc. common shareholders, components of Net income/(loss) attributable to Pfizer Inc. common shareholders and EPS/(LPS) 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/(Loss) and Adjusted Diluted EPS/(LPS)

Amortization of Intangible Assets—Adjusted income/(loss) excludes all amortization of intangible assets.

Acquisition-Related Items—Adjusted income/(loss) excludes certain acquisition-related items, which are composed 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/(loss) 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/(loss) measure for the compensation in respect of the restated periods, but are presented for consistency across all periods.

Certain Significant Items—Adjusted income/(loss) 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 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 October 1, 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/(loss) attributable to Pfizer Inc. common shareholders(a), (b)Earnings/(loss) per common share attributable to Pfizer Inc. common shareholders––diluted(c)
GAAP Reported$9,269$3,281$(79)$(2,382)$(0.42)
Amortization of intangible assets———1,179
Acquisition-related items(127)(2)(8)227
Discontinued operations(d)———(13)
Certain significant items:
Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(e)(20)(71)—185
(Gains)/losses on equity securities(f)——(393)393
Actuarial valuation and other pension and postretirement plan (gains)/losses——6(6)
Other(g)(216)(4)85137
Income tax provision—non-GAAP items(687)
Non-GAAP Adjusted$8,906$3,205$(388)$(968)$(0.17)
Nine Months Ended October 1, 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/(loss) attributable to Pfizer Inc. common shareholders(a), (b)Earnings/(loss) per common share attributable to Pfizer Inc. common shareholders––diluted
GAAP Reported$17,391$10,196$(356)$5,488$0.96
Amortization of intangible assets———3,466
Acquisition-related items(360)(7)(158)778
Discontinued operations(d)———(11)
Certain significant items:
Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(e)(70)(196)—450
Certain asset impairments(f)——(264)264
(Gains)/losses on equity securities(f)——(711)711
Actuarial valuation and other pension and postretirement plan (gains)/losses————
Other(g)(238)(18)21242
Income tax provision—Non-GAAP items(1,478)
Non-GAAP Adjusted$16,723$9,974$(1,466)$9,908$1.73
Three Months Ended October 2, 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/(loss) attributable to Pfizer Inc. common shareholders(a), (b)Earnings/(loss) per common share attributable to Pfizer Inc. common shareholders––diluted
GAAP Reported$6,063$3,391$(59)$8,608$1.51
Amortization of intangible assets———822
Acquisition-related items3(2)(12)62
Discontinued operations(d)———15
Certain significant items:
Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(e)(20)(137)—306
Certain asset impairments(f)——(200)200
(Gains)/losses on equity securities(f)——(111)111
Actuarial valuation and other pension and postretirement plan (gains)/losses——193(193)
Other(g)(8)(12)(325)349
Income tax provision—non-GAAP items(109)
Non-GAAP Adjusted$6,038$3,239$(515)$10,172$1.78
Nine Months Ended October 2, 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/(loss) attributable to Pfizer Inc. common shareholders(a), (b)Earnings/(loss) per common share attributable to Pfizer Inc. common shareholders––diluted
GAAP Reported$24,696$9,032$1,063$26,378$4.60
Amortization of intangible assets———2,478
Acquisition-related items12(5)(51)331
Discontinued operations(d)———(9)
Certain significant items:
Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(e)(62)(344)—701
Certain asset impairments(f)——(200)200
(Gains)/losses on equity securities(f)——(1,348)1,348
Actuarial valuation and other pension and postretirement plan (gains)/losses——(225)225
Other(g)(24)(47)(536)621
Income tax provision—Non-GAAP items(1,107)
Non-GAAP Adjusted$24,621$8,635$(1,298)$31,165$5.44

(a)Items that reconcile GAAP Reported to non-GAAP Adjusted balances are shown pre-tax. Our effective tax rates for GAAP Reported income/(loss) from continuing operations were: 28.8% and (6.2)% in the three and nine months ended October 1, 2023, respectively, and 4.0% and 10.5% in the three and nine months ended October 2, 2022, respectively. See Note 5. Our effective tax rates for non-GAAP Adjusted income/(loss) were 22.3% and 10.4% in the three and nine months ended October 1, 2023, respectively, and 4.4% and 11.9% in the three and nine months ended October 2, 2022, respectively.

(b)The amounts for the three and nine months ended October 1, 2023 and October 2, 2022 include reconciling amounts for Research and development expenses that are not material.

(c)For the third quarter of 2023, basic weighted-average shares outstanding of 5,646 million (excluding common share equivalents) were used to calculate GAAP Reported and non-GAAP Adjusted Loss per common share attributable to Pfizer Inc. common shareholders––diluted.

(d)See Note 2B.

(e)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**.

(f)See Note 4.

(g)For the third quarter and first nine months of 2023, the total Cost of sales adjustments of $216 million and $238 million, respectively, primarily include $209 million in inventory losses, overhead costs related to the period in which the facility could not operate, and incremental costs resulting from tornado damage to our manufacturing facility in Rocky Mount, NC. For the third quarter of 2023, the total Other (income)/deductions––net adjustment of $85 million primarily includes a $222 million gain on the divestiture of our early-stage rare disease gene therapy portfolio to Alexion, partially offset by charges of $71 million for certain legal matters, representing legal obligations related to pre-acquisition matters and certain product liability expenses related to products discontinued and/or divested by Pfizer. For the first nine months of 2023, the total Other (income)/deductions––net adjustment of $21 million primarily includes (i) the $222 million gain on the divestiture of our early-stage rare disease gene therapy portfolio to Alexion, and (ii) 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, partially offset by charges of (i) $246 million for certain legal matters, primarily representing certain product liability and other legal expenses related to products discontinued and/or divested by Pfizer and legal obligations related to pre-acquisition matters, and (ii) $92 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. For the third quarter of 2022, the total Other (income)/deductions––net adjustment of $325 million primarily included charges of (i) $212 million mostly representing our equity-method accounting pro rata share of costs of separating from GSK recorded by Haleon/the Consumer Healthcare JV, and adjustments to our equity-method basis differences which are also related to the separation of Haleon/the Consumer Healthcare JV from GSK, and (ii) $77 million for certain legal matters, representing certain product liability and other legal expenses related to products discontinued and/or divested by Pfizer. For the first nine months of 2022, the total Other (income)/deductions––net adjustment of $536 million primarily included charges of (i) $273 million mostly representing our equity-method accounting pro rata share of restructuring charges and costs of separating from GSK recorded by Haleon/the Consumer Healthcare JV, and adjustments to our equity-method basis differences which are also related to the separation of Haleon/the Consumer Healthcare JV from GSK, and (ii) $175 million for certain legal matters, primarily representing certain product liability and other legal expenses related to products discontinued and/or divested by Pfizer.

ANALYSIS OF THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended
(MILLIONS)October 1, 2023October 2, 2022Drivers of change
Cash provided by/(used in):
Operating activities$3,460$20,685The change was primarily driven by a decrease in net income adjusted for non-cash items and the timing of receipts and payments in the ordinary course of business, including a decrease in advance payments for Comirnaty and Paxlovid and net changes in inventory greater than one year (see Note 8A).
Investing activities$(21,282)$(11,373)The change was driven mainly by $12.7 billion greater net purchases of short-term investments in 2023 and a $4.0 billion dividend received from the Consumer Healthcare JV in 2022 that was allocated to investing activities, partially offset by $6.2 billion cash used to acquire Arena, net of cash acquired, in 2022 and a $1.5 billion decrease in purchases of long-term investments.
Financing activities$20,624$(9,819)The change was driven mainly by $30.8 billion of proceeds from the issuance of long-term debt in 2023.

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 section 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 of 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 its outlook on our long-term debt to Negative; S&P downgraded our short-term rating from A-1+ to A-1. In October 2023, following the announcement of the amended Paxlovid supply agreement with the U.S. government and updated 2023 guidance, S&P changed its outlook on our long-term debt to Negative.

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 AGENCYPfizer Short-Term RatingPfizer Long-Term RatingOutlook/Watch
Moody’sP-1A1Negative Outlook
S&PA-1A+Negative Outlook

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 the date of the filing of this Form 10-Q, we had access to a total of $15 billion in committed U.S. revolving credit facilities, consisting of an $8.0 billion facility maturing in November 2024 and a $7 billion facility maturing in November 2028, which may be used for general corporate purposes including to support our global commercial paper borrowings. In addition to the U.S. revolving credit facilities, our lenders have provided us an additional $298 million in lines of credit, of which $268 million expire within one year. Essentially all lines of credit were unused as of the date of the filing of this Form 10-Q.

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. On October 4, 2023, our BOD declared a dividend of $0.41 per share, payable on December 4, 2023, to shareholders of record at the close of business on November 10, 2023. At October 1, 2023, our remaining share-purchase authorization was $3.3 billion, with no repurchases in the first nine 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 October 1, 2023
Standard/DescriptionEffective DateEffect 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:

  • our anticipated operating and financial performance, including financial guidance and projections;

  • reorganizations, business plans, strategy and prospects;

  • 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, size and utilization rates; growth, performance, timing of exclusivity and potential benefits;

  • strategic reviews, capital allocation objectives, dividends and share repurchases;

  • plans for and prospects of our acquisitions, dispositions and other business development activities, and our ability to successfully capitalize on growth opportunities and prospects;

  • sales, expenses, interest rates, foreign exchange rates and the outcome of contingencies, such as legal proceedings;

  • expectations for impact of or changes to existing or new government regulations or laws;

  • our ability to anticipate and respond to macroeconomic, geopolitical, health and industry trends, pandemics, acts of war and other large-scale crises; and

  • 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; our anticipated operating cash flows and liquidity position; the anticipated costs, savings and potential benefits from certain of our initiatives, including our enterprise-wide cost realignment program, which we launched in October 2023, and our Transforming to a More Focused Company program; our expectations regarding the impact from the recent tornado on our manufacturing facility in Rocky Mount, NC; 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

  • 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;

  • 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;

  • 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;

  • 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;

  • 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 further 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;

  • 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;

  • 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;

  • the ability to successfully market both new and existing products, including biosimilars;

  • 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;

  • 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;

  • 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 has and may continue to be reduced or not meet expectations, or may no longer exist, which has and may continue to lead to reduced revenues, excess inventory on-hand and/or in the channel which, for Paxlovid and Comirnaty, has resulted in significant inventory write-offs in the third quarter of 2023 and could continue to result in inventory write-offs or other unanticipated charges; challenges related to the transition to the commercial market for our COVID-19 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;

  • 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;

  • 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;

  • any significant issues involving our largest wholesale distributors or government customers, which account for a substantial portion of our revenues, including contract negotiations or renegotiations with government customers;

  • the impact of the increased presence of counterfeit medicines or vaccines in the pharmaceutical supply chain;

  • 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;

  • 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;

  • 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, unstable governments and legal systems and inter-governmental disputes;

  • the impact of 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, NC;

  • any changes in business, political and economic conditions due to actual or threatened terrorist activity, geopolitical instability, political or civil unrest or military action, including the ongoing conflicts between Russia and Ukraine and in the Middle East and their economic consequences;

  • 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;

  • trade buying patterns;

  • the risk of an impairment charge related to our intangible assets, goodwill or equity-method investments;

  • 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, organizational disruption or other unintended consequences;

  • 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

  • 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;

  • 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;

  • 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;

  • legal defense costs, insurance expenses, settlement costs and contingencies, including those related to actual or alleged environmental contamination;

  • the risk and impact of an adverse decision or settlement and the risk related to adequacy of reserves related to legal proceedings;

  • the risk and impact of tax related litigation and investigations;

  • 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. generally effective in most jurisdictions January 1, 2024 and potential changes to existing tax law by the current U.S. Presidential administration and Congress;

Risks Related to Intellectual Property, Technology and Security

  • any significant breakdown or interruption of our information technology systems and infrastructure (including cloud services);

  • 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;

  • 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

  • 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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