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. Our 2025 key priorities are to:

1. Improve R&D productivity with sharpened focus

2. Expand margins and maximize operational efficiency

3, Achieve commercial excellence in our key categories

4. Optimize capital allocation.

One way we believe we will be more efficient, effective and able to execute on these strategic priorities is through digital enablement, including automation and AI.

Segments––We manage our commercial operations through a global structure consisting of three operating segments: Biopharma, PC1 and Pfizer Ignite. Biopharma is the only reportable segment. See Note 13A.

Restructuring Programs

Realigning Our Cost Base Program

  • In the fourth quarter of 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.

  • In the second quarter of 2025, we announced additional anticipated productivity opportunities, designed to further reduce costs primarily in SI&A, driven in large part by enhanced digital enablement, including automation and AI, and simplification of business processes.

  • In connection with our efforts to simplify the structure and sharpen the focus of our R&D organization, in the first quarter of 2025 we expanded this program after having identified additional opportunities to drive improvements in productivity and operational efficiencies through enhanced digital enablement, including automation and AI, and simplification of business processes.

Manufacturing Optimization Program––In the second quarter of 2024, we announced that we launched a multi-year, multi-phased program to reduce our costs of goods sold, which is expected to include operational efficiencies, network structure changes, and product portfolio enhancements.

See Note 3 for the anticipated and actual costs of these programs. For a description of anticipated savings related to these programs, see the Costs and Expenses––Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives section within MD&A*.*

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 2024 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. For a description of the more significant recent transactions through February 27, 2025, the filing date of our 2024 Form 10-K, see Note 2 in our 2024 Form 10-K. See Note 2 for significant recent activities.

Our First Quarter 2025 Performance

Total Revenues––Total revenues decreased $1.2 billion, or 8%, in the first quarter of 2025 to $13.7 billion from $14.9 billion in the first quarter of 2024, reflecting an operational decrease of $908 million, or 6%, as well as an unfavorable impact of foreign exchange of $256 million, or 2%. The operational decrease was primarily driven by a decline in Paxlovid, partially offset by

growth from the Vyndaqel family, Comirnaty and several other products despite the unfavorable impact of higher manufacturer discounts resulting from the IRA Medicare Part D Redesign.

See the Total Revenues by Geography and Total Revenues––Selected Product Discussion sections for more information, including a discussion of key drivers of our revenue performance. Certain of our vaccines, including Comirnaty, are subject to seasonality of demand, with a greater portion of revenues anticipated in the fall and winter seasons, and Paxlovid revenues trend with infection rates. See also The Global Economic Environment––COVID-19 section below for information about our COVID-19 products. For information regarding the primary indications or class of certain products, see Note 13C**.

Income from Continuing Operations Before Provision/(Benefit) for Taxes on Income––The decrease in Income from continuing operations before provision/(benefit) for taxes on income of $636 million, to $2.8 billion in the first quarter of 2025, from $3.4 billion in the first quarter of 2024, was primarily due to lower revenues and an increase in Restructuring charges and certain acquisition-related costs, partially offset by a decreases in Cost of sales and Selling, informational and administrative expenses.

See the Analysis of the Condensed Consolidated Statements of Operations section within MD&A and Note 4. For information on our tax provision and effective tax rate, see the Provision/(Benefit) for Taxes on Income section within MD&A and Note 5.

Our Operating Environment––We, like other businesses in our industry, are subject to certain industry-specific challenges. These include, among others, the topics listed below. See also 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 2024 Form 10-K.

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-based or regulatory exclusivity expiries will continue, we expect a moderate impact of reduced revenues due to patent expiries in 2025 and anticipate a more significant impact of reduced revenues from patent-based or regulatory exclusivity expiries in 2026 through 2030 as several of our in-line products experience these 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 on patent rights we consider most significant to our business as a whole, see the Item 1. Business––Patents and Other Intellectual Property Rights section of our 2024 Form 10-K. For a discussion of recent developments with respect to patent litigation involving certain of our products, see Note 12A1**.

Regulatory Environment/Pricing and Access––Government and Other Payor Group Pressures––Governments globally, as well as private third-party payors 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 the U.S. government on regulating drug pricing and access to medicine, including but not limited to, the potential for international reference pricing. The drug pricing provisions of the IRA are being implemented over the next several years. In August 2023, CMS published the first ten 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. Eliquis was among the first ten medicines subject to the Medicare Drug Price Negotiation Program. In August 2024, the government released the new Medicare price for Eliquis, which, effective January 1, 2026, will be required to be offered to all Medicare beneficiaries and to covered entities participating in the 340B Program that dispense Eliquis to a Medicare beneficiary if that maximum fair price is lower than the discounted price such entities are offered under the 340B Program ceiling price calculation. The Eliquis Medicare price is factored into our long-term financial planning, in accordance with our standard financial reporting and forecasting protocols. On January 17, 2025, CMS announced the selection of another 15 drugs from Medicare Part D for the maximum fair price, with prices to be set and effective on January 1, 2027. Ibrance and Xtandi were included in the list of 15 drugs selected. Another 15 drugs from Medicare Part B or Medicare Part D will be selected by February 1, 2026, for the maximum price to be set and in effect by January 1, 2028. It is possible that more of our products could be selected in future years, which could, among other things, lead to lower revenues prior to expiry of intellectual property protections. 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. The IRA also made significant changes to the Medicare Part D benefit design (IRA Medicare Part D Redesign), which will impact our revenues in 2025, including: an expected favorable impact from the $2,000 annual out-of-pocket cap and new Prescription Payment Plan,

more than offset by an expected unfavorable impact from the sunsetting of the Coverage Gap Discount Program and the addition of new manufacturer discounts in the initial and catastrophic coverage phases. We anticipate a net unfavorable impact to revenue in 2025 of approximately $1 billion, year-over-year, related to the Medicare Part D Redesign changes that take effect in 2025. We expect a higher impact in the beginning of 2025, moderating through the remainder of the year, when compared to 2024. We expect these changes will more acutely impact our higher-priced medicines as they are expected to reach catastrophic coverage earlier in the year. In addition, changes to the Medicaid Drug Rebate Program or the 340B 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 2024 Form 10-K*.*

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 and we are actively engaging with regulatory authorities on this topic. If nitrosamines are detected in products, this may lead to submission of comprehensive data packages to regulatory authorities to support discussions on the relevant intake limit for the product and potential impact on patient supply, and, in some instances, may lead to market action for such products. For example, in 2021, Pfizer recalled Chantix due to the presence of a nitrosamine, N-nitroso-varenicline, at or above acceptable intake limits communicated by various regulatory authorities. Following issuance of updated guidance on acceptable intake limits for N-nitroso-varenicline by regulatory authorities, Chantix has returned to market in certain international markets and may return to additional markets, including the U.S., in the future.

We have not seen a significant disruption of our supply chain in the first three months of 2025 and through the date of filing of this Form 10-Q, and all of our manufacturing sites globally have continued to operate at or near normal levels. We do not anticipate the availability of raw materials to have a significant impact on our operations in 2025, but are monitoring potential supply chain disruptions as a result of ongoing geopolitical and trade negotiations, which could, among other things, impact costs. We are continuing to monitor and implement mitigation strategies 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 2024 Form 10-K.

Voluntary Withdrawal of Oxbryta*––*See the Product Developments section within MD&A.

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 Item 1A. Risk Factors—Global Operations section of our 2024 Form 10-K, as well as the Overview of Our Performance, Operating Environment, Strategy and Outlook––The Global Economic Environment section of the MD&A of our 2024 Form 10-K.

Global Trade Environment––Issued or future executive orders or other new or changes in laws, regulations or policy regarding tariffs, could have a material adverse effect on our business, earnings, cash flows, liquidity and financial guidance. The actual impact of new tariffs on our business would be subject to a number of factors including, but not limited to, restrictions on trade, the effective date and duration of such tariffs, countries included in the scope of tariffs, changes to amounts of tariffs, and potential retaliatory tariffs or other retaliatory actions imposed by other countries. We are evaluating opportunities and developing plans which may help mitigate the potential impact of tariffs on our business and operations. See the Item 1A. Risk Factors—Global Operations section of our 2024 Form 10-K.

COVID-19––In response to COVID-19, we developed Paxlovid and collaborated with BioNTech to jointly develop Comirnaty. As part of our strategy for COVID-19, we are continuing to make significant investments in breakthrough science. 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 certain pediatric patients. See the Product Developments section within MD&A.

In 2025, for Comirnaty, we expect vaccination rates and market share in commercial markets and revenue phasing similar to 2024, primarily concentrated in the second-half of the year. We have assumed no material U.S. policy changes for our vaccines portfolio in 2025 for purposes of our financial guidance, but see the Item 1A. Risk Factors—U.S. Healthcare Regulation section of our 2024 Form 10-K for a description of risks and uncertainties that could impact revenue from our portfolio of vaccines.

In 2025, for Paxlovid, we expect most revenue to be generated through commercial channels. We also expect utilization for Paxlovid to follow infection rates and stable market share, and revenues may fluctuate based on the timing, duration and severity of COVID-19 cases.

For additional information on risks associated with our COVID-19 products, as well as COVID-19 intellectual property disputes, see the Overview of Our Performance, Operating Environment, Strategy and Outlook––The Global Economic

Environment––COVID-19 section of the MD&A of our 2024 Form 10-K, Item 1A. Risk Factors—COVID-19, —Intellectual Property Protection and —Third-Party Intellectual Property Claims sections of our 2024 Form 10-K, as well as Note 17C in our 2024 Form 10-K, and Note 12A1 and the Forward-Looking Information and Factors that May Affect Future Results section of this Form 10-Q*.*

SIGNIFICANT ACCOUNTING POLICIES AND APPLICATION OF CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS

For a description of our significant accounting policies, see Note 1 in our 2024 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); Long-Lived Assets (Note 1M); Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives (Note 1N); 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 2024 Form 10-K. See also Note 1C in our 2024 Form 10-K for a discussion about the risks associated with estimates and assumptions.

ANALYSIS OF THE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Total Revenues by Geography

The following presents worldwide Total revenues by geography:
Three Months Ended
WorldwideU.S.InternationalWorld-wideU.S.Inter-national
(MILLIONS)March 30, 2025March 31, 2024March 30, 2025March 31, 2024March 30, 2025March 31, 2024% Change
Operating segments:
Biopharma$13,441$14,604$8,285$9,426$5,156$5,178(8)(12)—
Pfizer CentreOne2572587271185187—2(1)
Pfizer Ignite17171717——(3)(3)—
Total revenues$13,715$14,879$8,374$9,514$5,341$5,365(8)(12)—
The following provides an analysis of the worldwide change in Total revenues by geographic areas in the first quarter of 2025 compared to the first quarter of 2024:
(MILLIONS)WorldwideU.S.International
Operational growth/(decline):
Worldwide declines from Paxlovid$(1,536)$(1,454)$(82)
Worldwide growth from the Vyndaqel family, Padcev, Nurtec ODT/Vydura, Lorbrena and Xtandi, partially offset by worldwide declines from Eliquis, Xeljanz, Ibrance, Adcetris, the Prevnar Family and Abrysvo372178194
Worldwide growth from Comirnaty218111107
Other operational factors, net382513
Operational growth/(decline), net(908)(1,140)232
Unfavorable impact of foreign exchange(256)—(256)
Total revenues increase/(decrease)$(1,164)$(1,140)$(24)

See the Total Revenues––Selected Product Discussion section within MD&A for additional analysis and Note 13C.

Product 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 product 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 product revenue deductions:
Three Months Ended
(MILLIONS)March 30, 2025March 31, 2024
Medicare rebates(a)$1,068$720
Medicaid and related state program rebates397609
Performance-based contract rebates1,6121,382
Chargebacks2,9392,751
Sales allowances1,7811,493
Sales returns and cash discounts(b)335(183)
Total$8,133$6,773

(a)The increase in Medicare rebates in the first quarter of 2025 is primarily driven by the impact of higher manufacturer discounts as a result of IRA Medicare Part D Redesign. See the Overview of Our Performance, Operating Environment, Strategy and Outlook section within MD&A.

(b)The 2024 amount included a $771 million favorable final adjustment to the estimated non-cash Paxlovid revenue reversal of $3.5 billion recorded in the fourth quarter of 2023.

Product 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 product revenue deductions, including the balance sheet classification of these accruals, see Note 1B**.

Total Revenues––Selected Product Discussion

Biopharma

(MILLIONS)Revenue% Change
ProductGlobal RevenuesRegionMarch 30, 2025March 31, 2024TotalOper.Operational Results Commentary
Eliquis$1,923 Down 4% (operationally)U.S.$1,299$1,413(8)Decline primarily driven by lower net price in the U.S., including the impact of higher manufacturer discounts resulting from the IRA Medicare Part D Redesign, partially offset by strong underlying demand as well as higher revenues in international markets partly due to timing of shipments.
Int’l.624626—5
Worldwide$1,923$2,040(6)(4)
Prevnar family$1,660 Down 1% (operationally)U.S.$1,170$1,1492Decline primarily driven by lower pediatric indication sales, timing of shipments and lower demand due to competitive pressures in most international developed markets, partially offset by strong uptake of the adult indication in the U.S. as a result of strong demand following the CDC’s recommendation for ages 50-64.
Int’l.491542(9)(6)
Worldwide$1,660$1,691(2)(1)
Vyndaqel family$1,486 Up 33% (operationally)U.S.$986$75131Growth primarily driven by strong demand with continuing uptake in patient diagnosis, primarily in the U.S. and international developed markets, partially offset by lower net price in the U.S. mostly due to the impact of higher manufacturer discounts resulting from the IRA Medicare Part D Redesign.
Int’l.4993862936
Worldwide$1,486$1,1373133
Ibrance$977 Down 6% (operationally)U.S.$659$679(3)Declines primarily driven by generic entry and timing of shipments in certain international markets, as well as lower net price in the U.S. mostly due to the impact of higher manufacturer discounts resulting from the IRA Medicare Part D Redesign.
Int’l.318375(15)(10)
Worldwide$977$1,054(7)(6)
Comirnaty$565 Up 62% (operationally)U.S.$229$11894Growth primarily driven by higher revenues in the U.S. reflecting lower expected returns and higher market share, as well as higher contractual deliveries in certain international markets.
Int’l.3352364245
Worldwide$565$3546062
Paxlovid$491 Down 75% (operationally)U.S.$347$1,800(81)Declines primarily driven by: • the non-recurrence of the $771 million favorable final adjustment recorded in the first quarter of 2024 to the estimated non-cash revenue reversal of $3.5 billion recorded in the fourth quarter of 2023; and • lower COVID-19 infections across U.S. and international markets and lower international government purchases.
Int’l.145234(38)(35)
Worldwide$491$2,035(76)(75)
Xtandi$458 Up 9% (operationally)U.S.$458$4189Growth mainly driven by strong demand, partially offset by unfavorable customer buying patterns and lower net price partly due to the impact of higher manufacturer discounts resulting from the IRA Medicare Part D Redesign.
Int’l.————
Worldwide$458$41899
Padcev$426 Up 25% (operationally)U.S.$419$33425Growth primarily driven by increased market share in first-line metastatic urothelial carcinoma (mUC).
Int’l.77—2
Worldwide$426$3412525
(MILLIONS)Revenue% Change
ProductGlobal RevenuesRegionMarch 30, 2025March 31, 2024TotalOper.Operational Results Commentary
Nurtec ODT/Vydura$248 Up 40% (operationally)U.S.$228$16736Growth primarily driven by strong demand in the U.S. and favorable changes in channel mix and, to a much lesser extent, recent launches in certain international markets.
Int’l.2010**
Worldwide$248$1784040
Lorbrena$222 Up 39% (operationally)U.S.$92$5955Growth primarily driven by increased patient share in the first-line ALK+ mNSCLC treatment setting in the U.S., China and certain other international markets.
Int’l.1301042529
Worldwide$222$1643639
Adcetris$218 Down 15% (operationally)U.S.$213$252(16)Declines primarily driven by lower volume due to competitive pressures in the U.S.
Int’l.55(9)(3)
Worldwide$218$257(15)(15)
Abrysvo$131 Down 6% (operationally)U.S.$63$131(52)Decline in the U.S. driven by significant reduction in vaccination rates for the older adult indication following updated Advisory Committee on Immunization Practices recommendation, partially offset by strong demand for the maternal indication and increased market share in the older adult indication. Growth in international markets driven by launch uptake for both indications in certain international markets.
Int’l.6814**
Worldwide$131$145(9)(6)
Xeljanz$128 Down 31% (operationally)U.S.$20$74(73)Declines primarily driven by lower net price in the U.S. due to unfavorable changes in channel mix as well as the impact of higher manufacturer discounts resulting from the IRA Medicare Part D Redesign.
Int’l.108120(10)(6)
Worldwide$128$194(34)(31)

Pfizer CentreOne

(MILLIONS)Revenue% Change
Operating SegmentGlobal RevenuesRegionMarch 30, 2025March 31, 2024TotalOper.Operational Results Commentary
PC1$257 Up 2% (operationally)U.S.$72$712Growth driven by higher manufacturing of third-party products under manufacturing and supply agreements, offset by lower active product ingredient sales and lower manufacturing-related services.
Int’l.185187(1)2
Worldwide$257$258—2

See the Item 1. Business—Patents and Other Intellectual Property Rights section of our 2024 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

Three Months Ended
(MILLIONS)March 30, 2025March 31, 2024% Change
Cost of sales$2,845$3,379(16)
Percentage of Total revenues20.7%22.7%
Selling, informational and administrative expenses3,0313,495(13)
Research and development expenses2,2032,493(12)
Acquired in-process research and development expenses9—*
Amortization of intangible assets1,2111,308(7)
Restructuring charges and certain acquisition-related costs678102*
Other (income)/deductions—net95368040

First Quarter of 2025 vs. First Quarter of 2024

Cost of Sales

Cost of sales decreased $534 million in the first quarter of 2025, primarily due to:

  • a favorable revision of our estimate of accrued royalties; and

  • a $210 million favorable impact of foreign exchange,

partially offset by:

  • a $260 million unfavorable impact of changes in sales mix.

The decrease in Cost of sales as a percentage of revenues in the first quarter of 2025 was primarily due to all the factors discussed above, as well as the non-recurrence of the Paxlovid favorable final adjustment of $771 million recorded in the first quarter of 2024 to the estimated non-cash Paxlovid revenue reversal recorded in the fourth quarter of 2023.

Certain of our vaccines, including Comirnaty, are subject to seasonality of demand, with a greater portion of revenues and related cost of sales anticipated in the fall and winter seasons. See also the Overview of Our Performance, Operating Environment, Strategy and Outlook—The Global Economic Environment––COVID-19 section for information about our COVID-19 products.

Selling, Informational and Administrative Expenses

Selling, informational and administrative expenses decreased $464 million in the first quarter of 2025, primarily reflecting ongoing productivity improvements as part of our cost realignment program that drove both a decrease of $185 million in marketing and promotional spend for various products and lower spending of $145 million in corporate enabling functions, as well as lower spending of $90 million on COVID-19 products.

Research and Development Expenses

Research and development expenses decreased $290 million in the first quarter of 2025, primarily driven by a net decrease in spending of $260 million due to pipeline focus and optimization, as well as lower compensation-related expenses.

Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives

Realigning Our Cost Base Program*––*This program is expected to deliver total net cost savings of approximately $5.7 billion through 2027. The total net cost savings are composed of: (i) net cost savings of $4.5 billion expected to be achieved by the end of 2025, most of which was achieved by year-end 2024, and (ii) our recently announced additional anticipated net cost savings of $1.2 billion, primarily in SI&A, expected to be achieved by the end of 2027. In addition, we expect cost savings of approximately $500 million from our recently announced expansion of this program related to our R&D re-organization to be realized by the end of 2026, with the savings expected to be reinvested in R&D programs.

Manufacturing Optimization Program*––*We expect to begin to achieve initial savings from Phase 1 of this multi-phased program in the latter part of 2025 and continue to expect approximately $1.5 billion in net cost savings from this first phase by the end of 2027.

Certain qualifying costs for these programs in all periods since inception were recorded and reflected as Certain Significant Items and excluded from our non-GAAP measure of Adjusted Income. See the Non-GAAP Financial Measure: Adjusted Income section within MD&A.

For a description of our programs, as well as the anticipated and actual costs, see Note 3. The program savings discussed above may be rounded and represent approximations. In addition to these programs, we continuously monitor our operations for cost reduction and/or productivity opportunities, especially in light of patent-based and regulatory exclusivity expiries as well as the expiration of collaborative arrangements for various products. Long-term improvement in gross margin will remain a key focus for the Company over the next few years.

Seagen acquisition*––*In connection with our acquisition of Seagen, we are focusing our efforts on achieving an appropriate cost structure for the combined company. We expect to generate approximately $1 billion of annual cost synergies, to be achieved by 2026. The one-time costs to generate these synergies are expected to be approximately $1.7 billion, incurred primarily from 2023 through 2025.

Other (Income)/Deductions—Net

The unfavorable period-over-period change of $273 million in the first quarter of 2025 was primarily driven by (i) net losses on equity securities in the first quarter of 2025 versus net gains on equity securities in the first quarter of 2024, (ii) the non-recurrence of a gain on the partial sale of our investment in Haleon in the first quarter of 2024 and (iii) higher intangible asset impairment charges, partially offset by (iv) lower net interest expense. See Note 4**.

Provision/(Benefit) for Taxes on Income

Three Months Ended
(MILLIONS)March 30, 2025March 31, 2024% Change
Provision/(benefit) for taxes on income$(189)$293*
Effective tax rate on continuing operations(6.8)%8.6%

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**. See Note 5A in our 2024 Form 10-K for information on our cash paid for income taxes, net of refunds.

*Changes in Tax Laws––*Many countries outside the U.S. have enacted legislation for global minimum taxation resulting from the Organization for Economic Co-operation and Development’s (OECD) Base Erosion and Profit Shifting “Pillar 2” project. The EU has approved a directive requiring member states to incorporate the OECD provisions into their respective domestic laws, and countries outside the EU are also enacting the provisions into their domestic law. The provisions are generally effective for Pfizer since 2024, though significant details and guidance around the provisions are still pending. Income tax expense could be adversely affected as the legislation becomes effective in countries in which we do business, and such impact could be material to our results of operations. We continue to monitor pending OECD guidance and legislation enactment and implementation by individual countries.

PRODUCT DEVELOPMENTS

A comprehensive update of Pfizer’s development pipeline was published as of April 29, 2025 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 table below includes filing and approval milestones for products that have occurred in the last twelve months and generally does not include approvals that may have occurred prior to that time. The table includes filings with regulatory decisions pending (even if the filing occurred outside of the last twelve-month period).

Products

PRODUCTINDICATION OR PROPOSED INDICATIONAPPROVED/FILED^
U.S.EUJAPAN
Prevnar 20/Prevenar 20 (Vaccine)Active immunization to prevent invasive disease and pneumonia caused by the 20 Streptococcus pneumoniae (pneumococcus) serotypes in the vaccine in adults ages 18 years and older.Approved June 2021Approved February 2022Approved August 2024
Nurtec ODT/Vydura (rimegepant)Acute treatment of migraine with or without aura in adultsApproved February 2020Approved April 2022Filed November 2024
Prevention of episodic migraine in adultsApproved May 2021Approved April 2022Filed November 2024
Abrysvo (Vaccine)Active immunization for the prevention of lower respiratory tract disease caused by RSV in individuals 18-59 years of age who are at increased risk of lower respiratory tract disease caused by RSVApproved October 2024Approved March 2025
Velsipity (etrasimod)Moderately to severely active ulcerative colitis in adultsApproved October 2023Approved February 2024Filed June 2024
Braftovi (encorafenib) and Mektovi (binimetinib)(a)BRAFV600E-mutant metastatic non-small cell lung cancer in adult patientsApproved October 2023Approved August 2024
Braftovi (encorafenib), Erbitux**®** (cetuximab) and mFOLFOX6(b)First-line BRAFV600E-mutant mCRCApproved December 2024
Xtandi (enzalutamide)(c)nmCSPC with biochemical recurrence at high risk for metastasis (high-risk BCR)Approved November 2023Approved April 2024
Hympavzi (marstacimab-hncq)Hemophilia A and B without inhibitorsApproved October 2024Approved November 2024Approved December 2024
Emblaveo (aztreonam-avibactam)(d)Treatment of infections in adult patients caused by Gram-negative bacteria with limited or no treatment optionsApproved February 2025Approved April 2024
Padcev (enfortumab vedotin-ejfv)(e)In combination with Keytruda®(f) (pembrolizumab) for locally advanced or metastatic urothelial cancer in adultsApproved December 2023Approved August 2024Approved September 2024
Tivdak (tisotumab vedotin-tftv(g)Recurrent or metastatic cervical cancer with disease progression on or after chemotherapyApproved April 2024Approved March 2025Approved March 2025
Comirnaty (COVID-19 Vaccine, mRNA) 2024-2025 Formula, Omicron KP.2-adapted(h)Active immunization to prevent COVID-19 caused by SARS-CoV-2 for individuals 12 years of age and olderApproved August 2024Approved September 2024
Comirnaty (COVID-19 Vaccine, mRNA) 2024-2025 Formula, Omicron JN.1-adaptedActive immunization to prevent COVID-19 caused by SARS-CoV-2 for individuals 6 months of age and olderApproved July 2024Approved August 2024
Adcetris (brentuximab vedotin)(i)Relapsed/refractory diffuse large B-cell lymphomaApproved February 2025
Paxlovid (nirmatrelvir; ritonavir)COVID-19 infection in high-risk childrenFiled February 2025Filed January 2025Filed April 2025
Eliquis (apixaban)****(j)Venous thromboembolism (pediatric)Approved April 2025Approved July 2024

^ 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)Pierre Fabre is the Marketing Authorization Holder for Braftovi (encorafenib) and Mektovi (binimetinib) in the EU. We have exclusive rights to Braftovi and Mektovi in the U.S., Canada and certain emerging markets, and Ono, Medison Pharma and Pierre Fabre have exclusive rights in all other markets.

(b)Erbitux® is a registered trademark of ImClone LLC. We have exclusive rights to Braftovi in the U.S., Canada, and certain emerging markets, and Ono. Medison Pharma and Pierre Fabre have exclusive rights in all other markets. The December 2024 U.S. approval date reflects accelerated approval.

(c)Xtandi is being jointly developed and commercialized with Astellas.

(d)Emblaveo is being developed in collaboration with AbbVie. AbbVie has the exclusive commercialization rights in the U.S. and Canada; Pfizer leads the joint development program and has commercialization rights in all other countries.

(e)Padcev is being jointly developed and commercialized with Astellas.

(f)Keytruda® is a registered trademark of Merck Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc.

(g)Tivdak is being developed in collaboration with Genmab A/S.

(h)In September 2024, the European Commission (EC) approved the Pfizer/BioNTech Omicron KP.2-adapted monovalent COVID-19 vaccine for active immunization to prevent COVID-19 caused by SARS-CoV-2 in individuals 6 months of age and older. U.S. approval (August 2024) is for individuals 12 years of age and older, with EUA granted for individuals 6 months through 11 years of age.

(i)Adcetris is being developed in collaboration with Takeda. Takeda has ex-U.S./Canada rights.

(j)Eliquis is being developed in collaboration with BMS. U.S. approval is for children 5 days and older; EU approval is for children 28 days and older.

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-deficient mCSPC
Litfulo (ritlecitinib)Vitiligo
Elrexfio (elranatamab)Multiple myeloma double-class exposed
Newly diagnosed multiple myeloma post-transplant maintenance
Newly diagnosed multiple myeloma transplant-ineligible
2nd line + relapsed refractory multiple myeloma
Padcev (enfortumab vedotin)(b)Cisplatin-ineligible/decline muscle-invasive bladder cancer
Cisplatin-eligible muscle-invasive bladder cancer
Tukysa (tucatinib)HER2+ adjuvant breast cancer
2nd line/3rd line HER2+ metastatic breast cancer
1st line HER2+ maintenance metastatic breast cancer
1st line HER2+ metastatic colorectal cancer
Nurtec (rimegepant)Menstrually-related migraine
Hympavzi (marstacimab-hncq)Hemophilia (pediatric)
Hemophilia (inhibitor cohort)
NEW DRUG CANDIDATES IN LATE-STAGE DEVELOPMENTPF-06425090 (vaccine)Immunization to prevent primary clostridioides difficile infection
sasanlimab (PF-06801591)Combination with Bacillus Calmette-Guerin for high-risk non-muscle-invasive bladder cancer
VLA15 (PF-07307405) vaccine(c)Immunization to prevent Lyme disease
vepdegestrant (PF-07850327)(d)Breast cancer metastatic - 2nd line ER+/HER2-
inclacumab (PF-07940370)Sickle cell disease
dazukibart (PF-06823859)Dermatomyositis, polymyositis
disitamab vedotin(e)1st line HER2 (≥IHC1+) metastatic urothelial cancer
sigvotatug vedotin (PF-08046047)2nd line+ metastatic non-small cell lung cancer
osivelotor (PF-07940367)Sickle cell disease
ibuzatrelvir (PF-07817883)COVID-19 infection
mevrometostat (PF-06821497) + enzalutamide1st line/2nd line metastatic castration resistant prostate cancer post-Abiraterone
mevrometostat (PF-06821497) + enzalutamide1st line metastatic castration resistant prostate cancer neoadjuvant hormonal therapy naïve
atirmociclib (PF-07220060)1st line HR+/HER2- metastatic breast cancer

(a)Ibrance for ER+/HER2+ metastatic breast cancer is being developed in collaboration with Alliance Foundation Trials, LLC.

(b)Padcev is being jointly developed and commercialized with Astellas.

(c)VLA15 is being developed in collaboration with Valneva SE.

(d)Vepdegestrant is being developed in collaboration with Arvinas, Inc.

(e)Disitamab vedotin is being developed in collaboration with RemeGen Co., Ltd.

In September 2024, Pfizer announced that it was voluntarily withdrawing all lots of Oxbryta (voxelotor) for the treatment of sickle cell disease in all markets where it is approved. Pfizer also discontinued all active voxelotor clinical trials and expanded access programs worldwide. Pfizer’s decision was based on the totality of clinical data that indicated at that time the overall benefit of Oxbryta no longer outweighed the risk in the approved sickle cell patient population. The data suggested an imbalance in vaso-occlusive crises and fatal events, which required further assessment. Pfizer has notified regulatory authorities about these findings and its decision to voluntarily withdraw Oxbryta from the market and discontinue distribution and clinical studies while further reviewing the available data and investigating the findings. In July 2024, the EMA initiated a referral procedure under Article 20 of Regulation (EC) No 726/2004 for Oxbryta (voxelotor) to review the product’s benefits and risks. In October 2024, the EC suspended the Oxbryta marketing authorization while the EMA’s review of data is ongoing. In addition, the FDA has initiated an evaluation of newly identified safety signals. The FDA also has placed the Oxbryta (voxelotor) investigational new drug application on clinical hold following Pfizer’s market withdrawal. Pfizer is continuing to work with the EMA, FDA, and other regulators globally in relation to this matter.

In December 2024, the FDA issued a partial clinical hold for osivelotor, which prohibits Pfizer from enrolling new participants into osivelotor clinical studies at this time. Study participants currently enrolled can continue on the study drug. Communication with the FDA is ongoing.

Pfizer modified the atirmociclib 2nd line HR+/HER2- metastatic breast cancer Phase 3 study to a Phase 2 non-registrational study. This has been removed from the table above.

Vepdegestrant + Ibrance for ER+/HER2- metastatic breast cancer has been removed from the table above.

For additional information about our R&D organization, see Note 13 and the Item 1. Business—Research and Development section of our 2024 Form 10-K. For additional information regarding certain collaboration arrangements see the Item 1. Business—Collaboration and Co-Promotion Agreements section of our 2024 Form 10-K.

NON-GAAP FINANCIAL MEASURE: ADJUSTED INCOME

Adjusted income is an alternative measure of performance used by management to evaluate our overall performance as a supplement to our GAAP Reported performance measures. As such, we believe that investors’ understanding of our performance is enhanced by disclosing this measure. We use Adjusted income, certain components of Adjusted income and Adjusted diluted EPS to present the results of our major operations––the discovery, development, manufacture, marketing, sale and distribution of biopharmaceutical products worldwide––prior to considering certain income statement elements as follows:

MeasureDefinitionRelevance of Metrics to Our Business Performance
Adjusted incomeNet income attributable to Pfizer Inc. common shareholders(a) before the impact of amortization of intangible assets, certain acquisition-related items, discontinued operations and certain significant items•Provides investors useful information to: ◦evaluate the normal recurring operational activities, and their components, on a comparable year-over-year basis ◦assist in modeling expected future performance on a normalized basis •Provides investors insight into the way we manage our budgeting and forecasting, how we evaluate and manage our recurring operations and how we reward and compensate our senior management(b)
Adjusted cost of sales, Adjusted selling, informational and administrative expenses, Adjusted research and development expenses and Adjusted other (income)/deductions*––*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 measure
Adjusted diluted EPSEPS 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, beginning with the 2025 performance year, is Adjusted income (as defined for annual incentive compensation purposes) and accounts for 40% of the bonus pool funding tied to financial performance. Additionally, beginning with the 2025 performance year, the payout for performance share awards is determined in part by Adjusted diluted EPS, which is derived from Adjusted income. Any expenses for acquired IPR&D are included in our non-GAAP Adjusted results but we exclude certain of these expenses for our financial results for annual incentive compensation purposes. The bonus pool funding is largely based on financial performance, as measured by three metrics, modified by performance against certain of our non-financial pipeline metrics, and may be further modified by our Compensation Committee’s assessment of other factors.

Adjusted income and its components and Adjusted diluted EPS are non-GAAP financial measures that have no standardized meaning prescribed by GAAP and, therefore, are limited in their usefulness to investors. Because of their non-standardized definitions, they may not be comparable to the calculation of similar measures of other companies and are presented to permit investors to more fully understand how management assesses performance. A limitation of these measures is that they provide a view of our operations without including all events during a period, and do not provide a comparable view of our performance to peers. These measures are not, and should not be viewed as, substitutes for their most directly comparable GAAP measures of Net income attributable to Pfizer Inc. common shareholders, components of Net income attributable to Pfizer Inc. common shareholders and EPS attributable to Pfizer Inc. common shareholders—diluted, respectively.

We also recognize that, as internal measures of performance, these measures have limitations, and we do not restrict our performance-management process solely to these measures. We also use other tools designed to achieve the highest levels of performance. For example, our R&D organization has productivity targets, upon which its effectiveness is measured. In addition, total shareholder return, both on an absolute basis and relative to a publicly traded pharmaceutical index, plays a significant role in determining payouts under certain of our incentive compensation plans.

Adjusted Income and Adjusted Diluted EPS

Amortization of Intangible Assets—Adjusted income excludes all amortization of intangible assets.

Acquisition-Related Items—Adjusted income excludes certain acquisition-related items, which are 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 excludes the results of discontinued operations, as well as any related gains or losses on the disposal of such operations. We believe that this presentation is meaningful to investors because, while we review our product portfolio for strategic fit with our operations, we do not build or run our business with the intent to discontinue parts of our business. Restatements due to discontinued operations do not impact compensation or change the Adjusted income measure for the compensation in respect of the restated periods, but are presented for consistency across all periods.

Certain Significant Items—Adjusted income excludes certain significant items representing substantive and/or unusual items that are evaluated individually on a quantitative and qualitative basis. Certain significant items may be highly variable and difficult to predict. Furthermore, in some cases it is reasonably possible that they could reoccur in future periods. For example, although major non-acquisition-related cost-reduction programs are specific to an event or goal with a defined term, we may have subsequent programs based on reorganizations of the business, cost productivity or in response to generic or biosimilar entry 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 2024 Form 10-K.

Reconciliations of GAAP Reported to Non-GAAP Adjusted Information––Certain Line Items

Three Months Ended March 30, 2025
Data presented will not (in all cases) aggregate to totals. (MILLIONS, EXCEPT PER SHARE DATA)Cost of sales(a)Selling, informational and administrative expenses(a)Other (income)/deductions––net(a)Net income attributable to Pfizer Inc. common shareholders(a), (b)Earnings per common share attributable to Pfizer Inc. common shareholders––diluted
GAAP Reported$2,845$3,031$953$2,967$0.52
Amortization of intangible assets———1,211
Acquisition-related items(206)(1)(7)282
Certain significant items:
Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(c)(24)(6)—666
Certain asset impairments(d)——(224)224
(Gains)/losses on equity securities(d)——(370)370
Actuarial valuation and other pension and postretirement plan (gains)/losses——59(59)
Other(e)(23)(15)(166)207
Income tax provision—non-GAAP items(630)
Non-GAAP Adjusted$2,593$3,010$246$5,237$0.92
Three Months Ended March 31, 2024
Data presented will not (in all cases) aggregate to totals. (MILLIONS, EXCEPT PER SHARE DATA)Cost of sales(a)Selling, informational and administrative expenses(a)Other (income)/deductions––net(a)Net income attributable to Pfizer Inc. common shareholders(a), (b)Earnings per common share attributable to Pfizer Inc. common shareholders––diluted
GAAP Reported$3,379$3,495$680$3,115$0.55
Amortization of intangible assets———1,308
Acquisition-related items(317)(7)(3)508
Certain significant items:
Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(c)(20)(29)—(17)
Certain asset impairments(d)——(109)109
(Gains)/losses on equity securities——25(25)
Actuarial valuation and other pension and postretirement plan (gains)/losses——(3)3
Other(e)(6)(5)(294)307
Income tax provision—non-GAAP items(636)
Non-GAAP Adjusted$3,036$3,454$296$4,674$0.82

(a)Items that reconcile GAAP Reported to non-GAAP Adjusted balances are shown pre-tax. Our effective tax rates for GAAP Reported income from continuing operations were (6.8)% for the three months ended March 30, 2025 and 8.6% for the three months ended March 31, 2024. See Note 5. Our effective tax rates for non-GAAP Adjusted income were 7.8% for the three months ended March 30, 2025 and 16.6% for the three months ended March 31, 2024.

(b)The amounts for the three months ended March 30, 2025 and March 31, 2024 include reconciling amounts for Research and development expenses that are not material to our non-GAAP consolidated results of operations.

(c)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**.

(d)See Note 4.

(e)For the three months ended March 30, 2025, the total Other (income)/deductions––net adjustment of $166 million primarily includes charges of $142 million for certain legal matters, primarily representing certain product liability and other legal expenses related to products discontinued and/or divested by Pfizer. For the three months ended March 31, 2024, the total Other (income)/deductions––net adjustment of $294 million primarily included charges of (i) $246 million mostly related to our equity-method accounting pro-rata share of intangible asset amortization, impairments and restructuring costs recorded by Haleon, as well as adjustments to our equity-method basis differences associated with the impact of Haleon’s brand sales and intangible asset impairments and changes in Haleon’s tax rates on intangible asset-related deferred tax liabilities and (ii) $208 million for certain legal matters, primarily representing certain product liability expenses related to products discontinued and/or divested by Pfizer, partially offset by (iii) a $150 million realized gain on the partial sale of our investment in Haleon.

ANALYSIS OF THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended
(MILLIONS)March 30, 2025March 31, 2024Drivers of change
Cash provided by/(used in):
Operating activities$2,335$1,090The change was primarily driven by the timing of receipts and payments in the ordinary course of business, partially offset by a decrease from net income adjusted for non-cash items.
Investing activities$3,274$1,732The change was driven mainly by a $2.8 billion increase in proceeds from the sale of the remaining portion of our investment in Haleon, partially offset by a $1.4 billion increase in net purchases of short-term investments.
Financing activities$(5,227)$(4,931)The change was driven mainly by a $1.5 billion increase in net repayments of short-term borrowings, partially offset by a $1.3 billion decrease in repayments on long-term debt.

ANALYSIS OF FINANCIAL CONDITION, LIQUIDITY, CAPITAL RESOURCES AND MARKET RISK

Our historically robust operating cash flows, which we expect to continue over time, is a key strength of our liquidity and capital resources and our primary funding source. We continue to believe that with our ongoing operating cash flows, together with our financial assets, access to capital markets, revolving credit agreement, 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 and market risk, see the Analysis of Financial Condition, Liquidity, Capital Resources and Market Risk section within MD&A of our 2024 Form 10-K. For more information on guarantees and indemnifications, see Note 12B.

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.

As of the date of the filing of this Form 10-Q, the following ratings have been assigned to our commercial paper and senior unsecured long-term debt:
NAME OF RATING AGENCYPfizer Short-Term RatingPfizer Long-Term RatingOutlook/Watch
Moody’sP-1A2Stable Outlook
S&PA-1AStable 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 $7.0 billion committed U.S. revolving credit facility maturing in October 2029, which may be used for general corporate purposes including to support our global commercial paper borrowings. In addition to the U.S. revolving credit facility, our lenders have provided us an additional $274 million in lines of credit, of which $252 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 designed to enhance long-term shareholder value and is based on three core pillars: maintaining and growing our dividend over time, reinvesting in the business and making share repurchases after de-levering our balance sheet. We have actively de-levered and as of March 30, 2025 are below our previously stated gross leverage target.

Dividends––In April 2025, our BOD declared a dividend of $0.43 per share, payable on June 13, 2025, to shareholders of record at the close of business on May 9, 2025.

Common Stock Purchases—As of March 30, 2025, our remaining share-purchase authorization was $3.3 billion, with no repurchases in the first three months of 2025. See Note 12 in our 2024 Form 10-K for more information on our publicly announced share-purchase plans.

Haleon— In the first quarter of 2025, we sold the remaining portion of our investment in Haleon for $6.3 billion. Pfizer intends to use the proceeds to support its capital allocation priorities.

NEW ACCOUNTING STANDARDS

Recently Issued Accounting Standards, Not Adopted as of March 30, 2025
Standard/DescriptionEffective DateEffect on the Financial Statements
In December 2023, the FASB issued final guidance to improve income tax disclosures. The final guidance requires enhanced disclosures primarily related to existing rate reconciliation and income taxes paid information.2025 for annual reports. Early adoption is permitted.This new guidance will result in increased disclosures in the notes to our financial statements.
In November 2024, the FASB issued final guidance which requires disaggregated disclosures of certain categories of expenses that are included in expense line items on the face of the income statement. The disclosures are required on an annual and interim basis. The guidance also requires the total amount of selling expenses to be disclosed and, on an annual basis, the definition of selling expenses.2027 for annual reports and 2028 for interim reports. Early adoption is permitted.This new guidance will result in increased disclosures in the notes to our 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, goals and prospects;

  • expectations for our product pipeline, in-line products and product candidates, including anticipated regulatory submissions, data read-outs, study starts, approvals, launches, discontinuations, clinical trial results and other developing data; revenue contribution and projections; potential pricing and reimbursement; potential market dynamics, including demand, market size and utilization rates; and growth, performance, timing of exclusivity and potential benefits;

  • strategic reviews, leverage and 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 regarding the impact of or changes to existing or new government regulations or laws;

  • our ability to anticipate and respond to and our expectations regarding the impact of 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, the expected benefits of the organizational changes to our operations; our anticipated operating and financial performance; our ongoing efforts to respond to COVID-19; our expectations regarding the impact of COVID-19 on our business, operations and financial results; the expected revenue, seasonality of demand and phasing for certain of our products; expected patent terms; the expected impact of patent expiries and generic and biosimilar competition; the expected pricing pressures on our products and the anticipated impact to our business; the expected impact of the IRA Medicare Part D Redesign; the benefits expected from our business development transactions, including our December 2023 acquisition of Seagen; the availability of raw materials; our efforts to develop plans to help mitigate the potential impact of tariffs on our business and operations; our anticipated cash flows and liquidity position; the anticipated costs, savings and potential benefits from certain of our initiatives, including our enterprise-wide Realigning Our Cost Base Program and our Manufacturing Optimization Program to reduce our cost of goods sold; our expectations regarding product supply; our planned capital spending; and our capital allocation framework.

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 2024 Form 10-K.

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 2024 Form 10-K 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 2024 Form 10-K 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; 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; and uncertainties regarding the future development of our

product candidates, including whether or when our product candidates will advance to future studies or phases of development or whether or when regulatory applications may be filed for any of our product candidates;

  • 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, approval or authorization, 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 or maintain, 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 conduct or outcome of post-approval clinical trials, pharmacovigilance or Risk Evaluation and Mitigation Strategies, which could impact marketing approval, product labeling, and/or availability or commercial potential;

  • 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 has in the past and could in the future result in increased leverage and/or a downgrade of our credit ratings and could limit our ability to obtain future financing; challenges integrating the businesses and operations; disruption to business or operations relationships; risks related to growing revenues for certain acquired or partnered products; significant transaction costs; and unknown liabilities;

  • 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 Comirnaty and Paxlovid or any potential future COVID-19 vaccines, treatments or combinations, including, among others, the risk that as the market for COVID-19 products remains endemic and seasonal, demand for our COVID-19 products has and may continue to be reduced or not meet expectations, which has in the past and may continue to lead to reduced revenues, excess inventory or other unanticipated charges; risks related to our ability to develop and commercialize variant adapted vaccines, combinations and/or treatments; uncertainties related to recommendations and coverage for, and the public’s adherence to, vaccines, boosters, treatments or combinations; and potential third-party royalties or other claims related to Comirnaty and Paxlovid;

  • 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 global trade tensions, as well as currency devaluations and monetary policy actions in countries experiencing high inflation or deflation rates;

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

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

  • any significant issues related to the outsourcing of certain operational and staff functions to third parties;

  • any significant issues related to our JVs and other third-party business arrangements, including modifications or disputes related to supply agreements or other contracts with customers including governments or other payors;

  • 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 or interest rate fluctuations, 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, sanctions, tariffs and/or other restrictive government actions, changes in intellectual property legal protections and remedies, unstable governments and legal systems and inter-governmental disputes;

  • risks and uncertainties related to issued or future executive orders or other new, or changes in, laws, regulations or policy regarding tariffs;

  • the risk and impact of tariffs on our business, which is subject to a number of factors including, but not limited to, restrictions on trade, the effective date and duration of such tariffs, countries included in the scope of tariffs, changes to amounts of tariffs, and potential retaliatory tariffs or other retaliatory actions imposed by other countries;

  • the impact of disruptions related to climate change and natural disasters;

  • 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 the resulting economic or other consequences;

  • the impact of product recalls, withdrawals and other unusual items, including uncertainties related to regulator-directed risk evaluations and assessments, such as our ongoing evaluation of our product portfolio for the potential presence or formation of nitrosamines, and our voluntary withdrawal of all lots of Oxbryta in all markets where it is approved and any regulatory or other impact on Oxbryta and other sickle cell disease assets;

  • 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, including any potential future phases, each of which requires upfront costs but may fail to yield anticipated benefits and may result in unexpected costs, organizational disruption, adverse effects on employee morale, retention issues or other unintended consequences;

  • the ability to successfully achieve our climate-related goals and progress our environmental sustainability and other priorities;

Risks Related to Government Regulation and Legal Proceedings

  • the impact of any U.S. healthcare reform or legislation, including executive orders or other change in laws, regulations or policy, or any significant spending reduction or cost control efforts affecting Medicare, Medicaid, the 340B Drug Pricing Program or other publicly funded or subsidized health programs, including the Inflation Reduction Act of 2022 (IRA) and the IRA Medicare Part D Redesign, 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, including the potential for international reference pricing, intellectual property, reimbursement or access to or recommendations for our medicines and vaccines, taxes or other 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 biopharmaceutical markets;

  • risks and uncertainties related to potential changes to vaccine or other healthcare policy in the U.S.;

  • 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, medical regulation, environmental protections, reimbursement or access, including, in particular, continued government-mandated reductions in prices and access restrictions for certain products to control costs in those markets;

  • legal defense costs, insurance expenses, settlement costs and contingencies, including without limitation, those related to legal proceedings and actual or alleged environmental contamination;

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

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

  • governmental laws, regulations and policies affecting our operations, including, without limitation, the IRA, as well as changes in such laws, regulations or policies or their interpretation, including, among others, changes in tariffs, 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 since January 1, 2024, government cost-cutting measures and related impacts on, among other matters, government staffing, resources and ability to timely review and process regulatory or other submissions, and potential changes to existing tax laws, tariffs, or changes to other laws, regulations or policies in the U.S., including by the U.S. Presidential administration and Congress, as well as in other countries;

Risks Related to Intellectual Property, Technology and Cybersecurity

  • 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;

  • risks to our products, patents and other intellectual property, such as: (i) claims of invalidity that could result in loss of patent coverage; (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 from, 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;

  • 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, which may include those using adversarial AI techniques, or other malfeasance by, but not limited to, nation states, employees, business partners or others; and

  • risks and challenges related to the use of software and services that include AI-based functionality and other emerging technologies.

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