Segment, Geographic and Other Revenue Information

9 Months Ended

Sep. 29, 2019

Segment, Geographic and Other Revenue Information

A. Segment Information

At the beginning of our 2019 fiscal year, we began to manage our commercial operations through a new global structure consisting of three distinct business segments: Pfizer Biopharmaceuticals Group (Biopharma), Upjohn and through July 31, 2019, Pfizer’s Consumer Healthcare business (Consumer Healthcare), each led by a single manager. Each operating segment has responsibility for its commercial activities. Upjohn and Consumer Healthcare are responsible for their own R&D activities while Biopharma receives its R&D services from GPD and WRDM. These services include IPR&D projects for new investigational products and additional indications for in-line products. Each business has a geographic footprint across developed and emerging markets. Our chief operating decision maker uses the revenues and earnings of the operating segments, among other factors, for performance evaluation and resource allocation. Biopharma and Upjohn are the only reportable segments. We have revised prior-period information (Revenues and Earnings, as defined by management) to conform to the current management structure. As our operations were not managed under the new structure until the beginning of fiscal 2019, certain costs and expenses could not be directly attributed to one of the then new operating segments. As a result, our operating segment results for the third quarter and first nine months of 2018 include allocations, which management believes are reasonable. As described in Note 1A and Note 2B, acquisitions and the contribution of our Consumer Healthcare business to the GSK Consumer Healthcare joint venture have impacted our results of operations in 2019.

Operating Segments



Some additional information about our Biopharma and Upjohn business segments follows:
	Pfizer Biopharmaceuticals Group
Biopharma is a science-based innovative medicines business that includes six business units – Oncology, Inflammation & Immunology, Rare Disease, Hospital, Vaccines and Internal Medicine. The new Hospital unit commercializes our global portfolio of sterile injectable and anti-infective medicines and includes Pfizer’s contract manufacturing operation, Pfizer CentreOne. At the beginning of our 2019 fiscal year, we also incorporated our biosimilar portfolio into our Oncology and Inflammation & Immunology business units and certain legacy established products into the Internal Medicine business unit. Each business unit is committed to delivering breakthroughs that change patients’ lives.		Upjohn is a global, primarily off-patent branded and generic medicines business, which includes a portfolio of 20 globally recognized solid oral dose brands, as well as a U.S.-based generics platform, Greenstone.
Select products include: - Prevnar 13/Prevenar 13 - Ibrance - Eliquis - Xeljanz - Enbrel (outside the U.S. and Canada) - Chantix/Champix - Sutent - Xtandi		Select products include: - Lyrica - Lipitor - Norvasc - Celebrex - Viagra - Certain generic medicines

On July 29, 2019, we announced that we entered into a definitive agreement to combine Upjohn with Mylan, creating a new global pharmaceutical company. For additional information, see Note 1A.

On July 31, 2019, Pfizer’s Consumer Healthcare business, an over-the-counter medicines business, was combined with GSK’s consumer healthcare business to form a new consumer healthcare joint venture. See Note 1A and Note 2B for additional information.

Other Costs and Business Activities

Certain pre-tax costs are not allocated to our operating segment results, such as costs associated with the following:

•

WRDM––the R&D and Medical expenses managed by our WRDM organization, which is generally responsible for research projects for our Biopharma portfolio until proof-of-concept is achieved and then for transitioning those projects to the GPD organization for possible clinical and commercial development. R&D spending may include upfront and milestone payments for intellectual property rights. The WRDM organization also has responsibility for certain science-based and other platform-services organizations, which provide end-to-end technical expertise and other services to the various R&D projects, as well as the Worldwide Medical and Safety group, which ensures that Pfizer provides all stakeholders––including patients, healthcare providers, pharmacists, payers and health authorities––with complete and up-to-date information on the risks and benefits associated with Pfizer products so that they can make appropriate decisions on how and when to use Pfizer’s medicines.


•	GPD––the costs associated with our GPD organization, which is generally responsible for clinical trials from WRDM in the Biopharma portfolio, including late stage portfolio spend. GPD also provides technical support and other services to Pfizer R&D projects. GPD is responsible for facilitating all regulatory submissions and interactions with regulatory agencies.


•	Other––the operating results of our Consumer Healthcare business, through July 31, 2019, and costs associated with other commercial activities not managed as part of Biopharma or Upjohn, including all strategy, business development, portfolio management and valuation capabilities, which previously had been reported in various parts of the organization.


•	Corporate and Other Unallocated––the costs associated with platform functions (such as worldwide technology, global real estate operations, legal, finance, human resources, worldwide public affairs, compliance, and worldwide procurement), patient advocacy activities and certain compensation and other corporate costs, such as interest income and expense, and

gains and losses on investments, as well as overhead expenses associated with our manufacturing (which include manufacturing variances associated with production) and commercial operations that are not directly assessed to an operating segment, as business unit (segment) management does not manage these costs.

•

Certain transactions and events such as (i) purchase accounting adjustments, where we incur expenses associated with the amortization of fair value adjustments to inventory, intangible assets and PP&E; (ii) acquisition-related costs, where we incur costs for executing the transaction, integrating the acquired operations and restructuring the combined company; and (iii) certain significant items, representing substantive and/or unusual, and in some cases recurring, items (such as gains on the completion of joint venture transactions, restructuring charges, legal charges or net gains and losses on investments in equity securities) that are evaluated on an individual basis by management and that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis. Such items can include, but are not limited to, non-acquisition-related restructuring costs, as well as costs incurred for legal settlements, asset impairments and disposals of assets or businesses, including, as applicable, any associated transition activities.

Segment Assets

We manage our assets on a total company basis, not by operating segment, as many of our operating assets are shared or commingled (such as accounts receivable, as many of our customers are served by multiple operating segments). Therefore, our chief operating decision maker does not regularly review any asset information by operating segment and, accordingly, we do not report asset information by operating segment. Total assets were approximately $170 billion as of September 29, 2019 and $159 billion as of December 31, 2018.

Selected Income Statement Information

As described in Note 1A and Note 2B, acquisitions and the contribution of our Consumer Healthcare business to the GSK Consumer Healthcare joint venture have impacted our results of operations in 2019.



The following table provides selected income statement information by reportable segment:
	Three Months Ended
	Revenues				Earnings^(a)
(MILLIONS OF DOLLARS)	September 29, 2019		September 30, 2018		September 29, 2019			September 30, 2018
Reportable Segments:
Biopharma	$	10,108	$	9,422	$	6,503		$	6,206
Upjohn	2,195		3,036		1,353			2,051
Total reportable segments	12,303		12,458		7,856			8,257
Other business activities	—		—		(1,443		)	(1,298		)
Reconciling Items:
Corporate and other unallocated	377		839		(1,431		)	(1,658		)
Purchase accounting adjustments	—		—		(1,141		)	(1,309		)
Acquisition-related costs	—		—		(300		)	(112		)
Certain significant items^(b)	—		—		7,187			298
	$	12,680	$	13,298	$	10,727		$	4,177

	Nine Months Ended
	Revenues				Earnings^(a)
(MILLIONS OF DOLLARS)	September 29, 2019		September 30, 2018		September 29, 2019			September 30, 2018
Reportable Segments:
Biopharma	$	28,887	$	27,737	$	18,484		$	17,987
Upjohn	8,077		9,302		5,577			6,442
Total reportable segments	36,964		37,040		24,062			24,428
Other business activities	—		—		(3,750		)	(3,605		)
Reconciling Items:
Corporate and other unallocated	2,098		2,631		(4,108		)	(4,558		)
Purchase accounting adjustments	—		—		(3,357		)	(3,665		)
Acquisition-related costs	—		—		(152		)	(221		)
Certain significant items^(b)	—		—		6,495			452
	$	39,062	$	39,670	$	19,190		$	12,831


^(a)	Income from continuing operations before provision for taxes on income. Biopharma’s earnings include dividend income of $43 million in the third quarter of 2019 and $91 million in the third quarter of 2018, and $184 million in the first nine months of 2019 and $226 million in the first nine months of 2018 from our investment in ViiV. For additional information, see Note 4.


^(b)	Certain significant items are substantive and/or unusual, and in some cases recurring, items (as noted above) that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis.

For Earnings in the third quarter of 2019, certain significant items includes: (i) restructuring charges and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $110 million, (ii) charges for certain legal matters of $63 million, (iii) charges for business and legal entity alignment of $89 million, (iv) net gains recognized during the period on investments in equity securities of $3 million, (v) a pre-tax gain associated with the completion of the GSK Consumer Healthcare joint venture transaction of $8.1 billion and (vi) other charges of $641 million, which includes, among other things, a $337 million charge in Research and development expenses related to our acquisition of Therachon, a $127 million charge for rivipansel in Cost of sales, primarily for inventory manufactured for expected future sale and charges of $161 million for external incremental costs, such as transaction costs and costs to separate our Consumer Healthcare business into a separate legal entity associated with the formation of the GSK Consumer Healthcare joint venture. For additional information, see Note 1A, Note 2B, Note 3 and Note 4.

For Earnings in the third quarter of 2018, certain significant items includes: (i) restructuring credits and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $35 million, (ii) net charges for certain legal matters of $37 million, (iii) charges for business and legal entity alignment of $1 million, (iv) net gains recognized during the period on investments in equity securities of $85 million and (v) other income of $286 million, which includes, among other things, a non-cash $343 million pre-tax gain in Other (income)/deductions––net associated with our transaction with Bain Capital to create a new biopharmaceutical company, Cerevel, to continue development of a portfolio of clinical and pre-clinical stage neuroscience assets primarily targeting disorders of the central nervous system. For additional information, see Note 3 and Note 4.

For Earnings in the first nine months of 2019, certain significant items includes: (i) restructuring charges and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $280 million, (ii) charges for certain legal matters of $72 million, (iii) certain asset impairment charges of $149 million, (iv) charges for business and legal entity alignment of $353 million, (v) net gains recognized during the period on investments in equity securities of $139 million, (vi) a pre-tax gain associated with the completion of the GSK Consumer Healthcare joint venture transaction of $8.1 billion, (vii) net losses on early retirement of debt of $138 million and (viii) other charges of $738 million, which includes, among other things, a $337 million charge in Research and development expenses related to our acquisition of Therachon, a $127 million charge for rivipansel in Cost of sales, primarily for inventory manufactured for expected future sale and charges of $223 million for external incremental costs, such as transaction costs and costs to separate our Consumer Healthcare business into a separate legal entity associated with the formation of the GSK Consumer Healthcare joint venture. For additional information, see Note 1A, Note 2B, Note 3 and Note 4.

For Earnings in the first nine months of 2018, certain significant items includes: (i) restructuring credits and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $127 million, (ii) net credits for certain legal matters of $70 million, (iii) certain asset impairment charges of $31 million, (iv) charges for business and legal entity alignment of $5 million, (v) net gains recognized during the period on investments in equity securities of $460 million, (vi) net losses on early retirement of debt of $3 million and (vii) other income of $89 million, which includes, among other things, a non-cash $343 million pre-tax gain in Other (income)/deductions––net associated with our transaction with Bain Capital to create a new biopharmaceutical company, Cerevel, to continue development of a portfolio of clinical and pre-clinical stage neuroscience assets primarily targeting disorders of the central nervous system, a $119 million charge, in the aggregate, in Selling, informational and administrative expenses for a special, one-time bonus paid to virtually all Pfizer colleagues, excluding executives, which was one of several actions taken by us after evaluating the expected positive net impact of the December 2017 enactment of the TCJA, and a non-cash $50 million pre-tax gain in Other (income)/deductions––net as a result of the contribution of our allogeneic CAR T cell therapy development program assets in connection with our contribution agreement entered into with Allogene. For additional information, see Note 3 and Note 4.

Equity in the net income of investees accounted for by the equity method is not significant for any of our operating segments.

The operating segment information does not purport to represent the revenues, costs and income from continuing operations before provision for taxes on income that each of our operating segments would have recorded had each segment operated as a standalone company during the periods presented.

B. Geographic Information



The following table provides revenues by geographic area:
	Three Months Ended						Nine Months Ended
(MILLIONS OF DOLLARS)	September 29, 2019		September 30, 2018		% Change		September 29, 2019		September 30, 2018		% Change
U.S.	$	5,850	$	6,361	(8	)	$	18,360	$	18,861	(3	)
Developed Europe^(a)	2,135		2,231		(4	)	6,450		6,657		(3	)
Developed Rest of World^(b)	1,585		1,640		(3	)	4,758		4,795		(1	)
Emerging Markets^(c)	3,110		3,066		1		9,493		9,358		1
Revenues	$	12,680	$	13,298	(5	)	$	39,062	$	39,670	(2	)


^(a)	Developed Europe region includes the following markets: Western Europe, Scandinavian countries and Finland. Revenues denominated in euros were $1.7 billion in the third quarter of 2019 and $1.8 billion in the third quarter of 2018, and were $5.2 billion in the first nine months of 2019 and $5.3 billion in the first nine months of 2018.


^(b)	Developed Rest of World region includes the following markets: Japan, Canada, South Korea, Australia and New Zealand.


^(c)	Emerging Markets region includes, but is not limited to, the following markets: Asia (excluding Japan and South Korea), Latin America, Eastern Europe, the Middle East, Africa, Central Europe and Turkey.

C. Other Revenue Information

Significant Product Revenues



The following table provides detailed revenue information:
(MILLIONS OF DOLLARS)		Three Months Ended				Nine Months Ended
PRODUCT	PRIMARY INDICATIONS OR CLASS	September 29, 2019		September 30, 2018		September 29, 2019		September 30, 2018
TOTAL REVENUES		$	12,680	$	13,298	$	39,062	$	39,670
PFIZER BIOPHARMACEUTICALS GROUP (BIOPHARMA)^(a)		$	10,108	$	9,422	$	28,887	$	27,737
Internal Medicine^(b)		$	2,207	$	2,182	$	6,754	$	6,529
Eliquis alliance revenues and direct sales	Atrial fibrillation, deep vein thrombosis, pulmonary embolism	1,025		870		3,121		2,524
Chantix/Champix	An aid to smoking cessation treatment in adults 18 years of age or older	276		261		825		789
Premarin family	Symptoms of menopause	182		204		542		605
BMP2	Development of bone and cartilage	66		54		212		206
Toviaz	Overactive bladder	61		67		186		197
All other Internal Medicine	Various	597		727		1,867		2,208
Oncology^(c)		$	2,350	$	1,840	$	6,547	$	5,487
Ibrance	Advanced breast cancer	1,283		1,025		3,677		2,985
Sutent	Advanced and/or metastatic RCC, adjuvant RCC, refractory GIST (after disease progression on, or intolerance to, imatinib mesylate) and advanced pancreatic neuroendocrine tumor	224		248		704		785
Xtandi alliance revenues	Castration-resistant prostate cancer	225		180		594		510
Xalkori	ALK-positive and ROS1-positive advanced NSCLC	130		127		385		417
Inlyta	Advanced RCC	139		71		316		226
Bosulif	Philadelphia chromosome–positive chronic myelogenous leukemia	90		69		267		206
Retacrit^(j)	Anemia	64		19		147		55
All other Oncology	Various	194		101		456		302
Hospital^(d)		$	1,917	$	1,841	$	5,717	$	5,944
Sulperazon	Treatment of infections	163		145		505		464
Medrol^(e)	Steroid anti-inflammatory	109		110		348		369
Vfend	Fungal infections	87		87		265		294
Zithromax^(e)	Bacterial infections	77		61		254		243
EpiPen	Epinephrine injection used in treatment of life-threatening allergic reactions	92		68		238		215
Zyvox	Bacterial infections	61		50		195		184
Fragmin	Slows blood clotting	62		76		185		221
Zosyn/Tazocin	Antibiotic	49		56		153		176
Tygacil	Tetracycline class antibiotic	50		60		146		186
Pfizer CentreOne^(f)	Various	176		159		556		539
All other Anti-infectives	Various	335		300		961		929
All other Hospital^(d)	Various	656		669		1,910		2,124
Vaccines		$	1,808	$	1,845	$	4,795	$	4,708
Prevnar 13/Prevenar 13	Pneumococcal disease	1,603		1,660		4,268		4,290
FSME/IMMUN-TicoVac	Tick-borne encephalitis disease	64		57		197		162
Nimenrix	Meningococcal disease	52		46		159		95
Trumenba	Meningococcal disease	73		61		117		95
All other Vaccines	Various	16		21		54		65
Inflammation & Immunology (I&I)^(g)		$	1,226	$	1,184	$	3,482	$	3,419
Xeljanz	RA, PsA, UC	599		432		1,634		1,221
Enbrel (Outside the U.S. and Canada)	RA, juvenile idiopathic arthritis, PsA, plaque psoriasis, pediatric plaque psoriasis, ankylosing spondylitis and nonradiographic axial spondyloarthritis	415		531		1,285		1,589
Inflectra/Remsima^{(g), (j)}	Inflammatory diseases	155		166		446		469
Eucrisa	Mild-to-moderate atopic dermatitis (eczema)	43		40		92		104
All other I&I	Various	15		14		24		36



(MILLIONS OF DOLLARS)		Three Months Ended				Nine Months Ended
PRODUCT	PRIMARY INDICATIONS OR CLASS	September 29, 2019		September 30, 2018		September 29, 2019		September 30, 2018
Rare Disease		$	601	$	531	$	1,592	$	1,651
BeneFIX	Hemophilia	125		132		372		420
Genotropin	Replacement of human growth hormone	124		143		357		416
Refacto AF/Xyntha	Hemophilia	104		117		319		388
Vyndaqel	ATTR-Cardiomyopathy and Polyneuropathy	156		37		259		108
Somavert	Acromegaly	64		64		192		195
All other Rare Disease	Various	28		38		94		123
UPJOHN^(b)^,^(h)		$	2,195	$	3,036	$	8,077	$	9,302
Lyrica	Epilepsy, post-herpetic neuralgia and diabetic peripheral neuropathy, fibromyalgia, neuropathic pain due to spinal cord injury	527		1,213		2,888		3,649
Lipitor	Reduction of LDL cholesterol	476		507		1,506		1,539
Norvasc	Hypertension	219		248		735		777
Celebrex	Arthritis pain and inflammation, acute pain	179		188		526		494
Viagra	Erectile dysfunction	120		137		379		509
Effexor	Depression and certain anxiety disorders	80		78		242		228
Zoloft	Depression and certain anxiety disorders	74		72		217		223
Xalatan/Xalacom	Glaucoma and ocular hypertension	68		76		201		233
Xanax	Anxiety disorders	50		52		147		163
Revatio	Pulmonary arterial hypertension	24		53		122		163
All other Upjohn	Various	379		411		1,114		1,325
CONSUMER HEALTHCARE BUSINESS⁽ⁱ⁾		$	377	$	839	$	2,098	$	2,631

Total Alliance revenues	Various	$	1,141	$	977	$	3,418	$	2,820
Total Biosimilars^(j)	Various	$	236	$	197	$	632	$	558
Total Sterile Injectable Pharmaceuticals^(k)		$	1,248	$	1,239	$	3,703	$	3,928


^(a)	The Pfizer Biopharmaceuticals Group encompasses Internal Medicine, Oncology, Hospital, Vaccines, Inflammation & Immunology and Rare Disease. The new Hospital business unit commercializes our global portfolio of sterile injectable and anti-infective medicines, and also includes Pfizer CentreOne^(f).


^(b)	We reclassified certain products from the LEP category, including Premarin family products, and certain other products from the legacy Peri-LOE category, including Pristiq, to the Internal Medicine category and reclassified Lyrica from the Internal Medicine category to the Upjohn business to conform 2018 product revenues to the current presentation.


^(c)	We performed certain reclassifications in the All other Oncology category to conform 2018 product revenues to the current presentation.

^(d)

Hospital is a new business unit that commercializes our global portfolio of sterile injectable and anti-infective medicines. We performed certain reclassifications, primarily from the legacy Sterile Injectables Pharmaceuticals (SIP) category (Sulperazon, Medrol, Fragmin, Tygacil, Zosyn/Tazocin and Precedex, among other products), the LEP category (Epipen and Zithromax), and the legacy Peri-LOE category (Vfend and Zyvox) to the Hospital category to conform 2018 product revenues to the current presentation. Hospital also includes Pfizer CentreOne^(f). All other Hospital primarily includes revenues from legacy SIP products (that are not anti-infective products) and, to a much lesser extent, solid oral dose products (that are not anti-infective products). SIP anti-infective products that are not individually listed above are recorded in “All other Anti-infectives”.


^(e)	2018 revenues for Medrol and Zithromax may not agree to previously disclosed revenues because revenues for those products were previously split between LEP and the legacy SIP categories. All revenues for these products are currently reported in the Hospital category.

^(f)

Pfizer CentreOne includes revenues from our contract manufacturing and active pharmaceutical ingredient sales operation, including sterile injectables contract manufacturing, and revenues related to our manufacturing and supply agreements, including with Zoetis Inc. In the fourth quarter of 2017, we sold our equity share in Hisun Pfizer. As a result, effective in the first quarter of 2018, Hisun Pfizer-related revenues, previously reported in emerging markets within legacy All Other LEP and legacy All Other SIP, are reported in emerging markets within Pfizer CentreOne.


^(g)	We reclassified Inflectra/Remsima from the legacy Biosimilars category to the Inflammation & Immunology category to conform 2018 product revenues to the current presentation.


^(h)	Pfizer’s Upjohn business encompasses primarily off-patent branded and generic medicines that includes a portfolio of 20 globally recognized solid oral dose brands including Lyrica, Lipitor, Norvasc, Celebrex and Viagra, as well as a U.S.-based generics platform, Greenstone.


⁽ⁱ⁾	On July 31, 2019, Pfizer’s Consumer Healthcare business, an over-the-counter medicines business, was combined with GSK’s consumer healthcare business to form a new consumer healthcare joint venture. For additional information, see Note 1A and Note 2B.


^(j)	Biosimilars are highly similar versions of approved and authorized biological medicines and primarily include revenues from Inflectra/Remsima and Retacrit.

^(k)

Sterile Injectable Pharmaceuticals represents the total of all branded and generic injectable products in the Hospital business, including anti-infective sterile injectable pharmaceuticals.