Segment, Geographic and Other Revenue Information

9 Months Ended

Oct. 01, 2023

Segment Reporting [Abstract]

Segment, Geographic and Other Revenue Information

Segment, Geographic and Other Revenue Information

A. Segment Information

We manage our commercial operations through two operating segments, each led by a single manager: Biopharma and Business Innovation, an operating segment established in the first quarter of 2023 that includes PC1, our contract development and manufacturing organization and a leading supplier of specialty active pharmaceutical ingredients, and Pfizer Ignite, a recently launched offering that provides strategic guidance and end-to-end R&D services to select innovative biotech companies that align with Pfizer’s R&D focus areas. Biopharma is the only reportable segment. Each operating segment has responsibility for its commercial activities. Regional commercial organizations market, distribute and sell our products and are supported by global platform functions that are responsible for the research, development, manufacturing and supply of our products and global corporate enabling functions. In consideration of planned future investments in oncology, including the proposed acquisition of Seagen, we are reorganizing our R&D operations. Beginning in July 2023, discovery to early- and late-phase clinical development for oncology is performed by a new end-to-end Oncology Research and Development (ORD) platform function and discovery to early- and late-phase clinical development for all remaining therapeutic areas is consolidated into the Pfizer Research and Development (PRD) platform function. ORD and PRD replace our former WRDM and Global Product Development (GPD) organizational design. Biopharma receives its R&D services from ORD and PRD. These services include IPR&D projects for new investigational products and additional indications for in-line products. Each operating segment 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.

Other Business Activities and Reconciling Items––Other business activities include the operating results of Business Innovation as well as certain pre-tax costs not allocated to our operating segment results, such as costs associated with: (i) R&D and medical expenses managed by our ORD and PRD organizations; (ii) corporate enabling functions and other corporate costs; (iii) overhead costs primarily associated with our manufacturing operations; and (iv) our share of earnings from Haleon/the Consumer Healthcare JV. Reconciling items include the following items, transactions and events that are not allocated to our operating segments: (i) all amortization of intangible assets; (ii) acquisition-related items; and (iii) certain significant items, representing substantive and/or unusual, and in some cases recurring, items 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.

Segment Assets––We manage our assets on a total company basis, not by operating segment, as our operating assets are shared or commingled. 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 $215 billion as of October 1, 2023 and $197 billion as of December 31, 2022.

Selected Statement of Operations Information

The following provides selected information by reportable segment:
	Three Months Ended								Nine Months Ended
	Revenues				Earnings(a)				Revenues				Earnings(a)
(MILLIONS)	October 1, 2023		October 2, 2022		October 1, 2023		October 2, 2022		October 1, 2023		October 2, 2022		October 1, 2023		October 2, 2022
Reportable Segment:
Biopharma	$	12,930	$	22,319	$	7,545	$	14,665	$	43,320	$	75,066	$	25,484	$	45,222
Other business activities(b)	302		319		(8,782)		(4,007)		928		974		(14,387)		(9,820)
Reconciling Items:
Amortization of intangible assets					(1,179)		(822)						(3,466)		(2,478)
Acquisition-related items					(227)		(62)						(778)		(331)
Certain significant items(c)					(708)		(773)						(1,666)		(3,095)
	$	13,232	$	22,638	$	(3,352)	$	9,001	$	44,247	$	76,040	$	5,187	$	29,498

(a)Income/(loss) from continuing operations before provision/(benefit) for taxes on income/(loss). Biopharma’s earnings include dividend income from our investment in ViiV of $30 million in the third quarter of 2023 and $112 million in the third quarter of 2022, and $213 million in the first nine months of 2023 and $237 million in the first nine months of 2022.

(b)Other business activities include revenues and costs associated with Business Innovation and costs that we do not allocate to our operating segments, per above, including acquired IPR&D expenses in the periods presented. Earnings in the third quarter and first nine months of 2023 include approximately $5.6 billion and $5.8 billion, respectively, of inventory write-offs and related charges to Cost of sales mainly due to lower-than-expected demand for our COVID-19 products. Earnings in the first nine months of 2022 included COVID-19-related charges of approximately $0.9 billion to Cost of sales, composed of (i) inventory write-offs of approximately $0.5 billion related to COVID-19 products that exceeded or were expected to exceed their approved shelf-lives prior to being used and (ii) charges of approximately $0.4 billion, primarily related to excess raw materials for Paxlovid recorded in the third quarter of 2022.

(c)Certain significant items are substantive and/or unusual, and in some cases recurring, items (as noted above). Earnings in the first nine months of 2023 include, among other items, net losses on equity securities of $711 million recorded in Other (income)/deductions––net. Earnings in the first nine months of 2022 included, among other items: (i) net losses on equity securities of $1.3 billion recorded in Other (income)/deductions––net and (ii) restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring of $701 million ($344 million recorded in Selling, informational and administrative expenses and the remaining amount primarily recorded in Restructuring charges and certain acquisition-related costs). See Note 4.

B. Geographic Information

The following summarizes revenues by geographic area:
	Three Months Ended					Nine Months Ended
(MILLIONS)	October 1, 2023		October 2, 2022		% Change	October 1, 2023		October 2, 2022		% Change
United States	$	7,804	$	13,851	(44)	$	22,497	$	33,991	(34)
Developed Europe	1,981		3,136		(37)	7,217		14,705		(51)
Developed Rest of World	1,073		2,351		(54)	4,852		10,671		(55)
Emerging Markets	2,373		3,300		(28)	9,681		16,673		(42)
Revenues	$	13,232	$	22,638	(42)	$	44,247	$	76,040	(42)

In May 2023, we and our collaboration partner, BioNTech, amended our contract with the EC to deliver COVID-19 vaccines to the EU. The amended agreement includes rephasing of delivery of doses annually through 2026 and an aggregate volume reduction, providing additional flexibility for EU member states. The EC will maintain access to future adapted COVID-19 vaccines and the ability to donate doses, in alignment with the original agreement. See Note 13C.

C. Other Revenue Information

Significant Customers––For information on our significant wholesale customers, see Note 17C in our 2022 Form 10-K. Additionally, revenues from the U.S. government represented 7% of total revenues for the nine months ended October 1, 2023 and primarily represent sales of Paxlovid and Comirnaty. Revenues from the U.S. government represented 38% and 27% of total revenues for the three and nine months ended October 2, 2022, respectively, and primarily represented sales of Paxlovid and Comirnaty. Accounts receivable from the U.S. government represented 4% of total trade accounts receivable as of December 31, 2022 and primarily related to sales of Paxlovid and Comirnaty. Due to the transition of Comirnaty and the

expected transition of Paxlovid to commercial market sales in the second half of 2023, revenues from the U.S. government for the three months ended October 1, 2023 and accounts receivable from the U.S. government as of October 1, 2023 were not material.

Significant Product Revenues

The following provides detailed revenue information for several of our major products:

(MILLIONS)		Three Months Ended				Nine Months Ended
PRODUCT	PRIMARY INDICATION OR CLASS	Oct. 1, 2023		Oct. 2, 2022		Oct. 1, 2023		Oct. 2, 2022
TOTAL REVENUES		$	13,232	$	22,638	$	44,247	$	76,040
GLOBAL BIOPHARMACEUTICALS BUSINESS (BIOPHARMA)		$	12,930	$	22,319	$	43,320	$	75,066
Primary Care		$	6,287	$	15,846	$	23,602	$	55,676
Comirnaty direct sales and alliance revenues(a)	Active immunization to prevent COVID-19	1,307		4,402		5,859		26,477
Eliquis alliance revenues and direct sales	Nonvalvular atrial fibrillation, deep vein thrombosis, pulmonary embolism	1,498		1,464		5,135		5,001
Prevnar family	Active immunization to prevent pneumonia, invasive disease and otitis media caused by Streptococcus pneumoniae	1,854		1,607		4,835		4,601
Paxlovid	COVID-19 in certain high-risk patients	202		7,514		4,414		17,099
Nurtec ODT/Vydura	Acute treatment of migraine and prevention of episodic migraine	233		—		646		1
Abrysvo	Active immunization to prevent RSV infection	375		—		375		—
Premarin family	Symptoms of menopause	92		110		299		327
BMP2	Bone graft for spinal fusion	82		58		252		201
FSME-IMMUN/TicoVac	Active immunization to prevent tick-borne encephalitis disease	91		67		237		177
Nimenrix	Active immunization against invasive meningococcal ACWY disease	43		79		121		221
Trumenba	Active immunization to prevent invasive disease caused by Neisseria meningitidis group B	58		60		108		108
All other Primary Care	Various	452		485		1,321		1,463
Specialty Care		$	3,757	$	3,404	$	11,021	$	10,267
Vyndaqel family	ATTR-CM and polyneuropathy	892		602		2,360		1,766
Xeljanz	RA, PsA, UC, active polyarticular course juvenile idiopathic arthritis, ankylosing spondylitis	503		502		1,210		1,304
Enbrel (Outside the U.S. and Canada)	RA, juvenile idiopathic arthritis, PsA, plaque psoriasis, pediatric plaque psoriasis, ankylosing spondylitis and nonradiographic axial spondyloarthritis	208		230		627		767
Sulperazon	Bacterial infections	122		178		619		598
Ig Portfolio(b)	Various	140		124		428		356
Genotropin	Replacement of human growth hormone	158		90		379		261
Zavicefta	Bacterial infections	130		98		378		302
Inflectra	Crohn’s disease, pediatric Crohn’s disease, UC, pediatric UC, RA in combination with methotrexate, ankylosing spondylitis, PsA and plaque psoriasis	121		131		373		403
BeneFIX	Hemophilia B	107		99		321		325
Medrol	Anti-inflammatory glucocorticoid	89		79		263		235
Zithromax	Bacterial infections	60		71		254		250
Oxbryta	Sickle cell disease	85		—		232		—
Somavert	Acromegaly	69		70		200		202
Refacto AF/Xyntha	Hemophilia A	61		58		177		188
Fragmin	Treatment/prevention of venous thromboembolism	57		60		175		202
Vfend	Fungal infections	46		51		153		171
Cresemba	Fungal infections	40		41		141		114
Bicillin	Bacterial infections	37		36		134		108
Cibinqo	Atopic dermatitis	37		11		91		17
All other Anti-infectives	Various	270		298		820		900
All other Specialty Care	Various	527		575		1,687		1,799
Oncology		$	2,885	$	3,070	$	8,696	$	9,124
Ibrance	HR-positive/HER2-negative metastatic breast cancer	1,244		1,283		3,635		3,841
Xtandi alliance revenues	mCRPC, nmCRPC, mCSPC	313		320		877		878
Inlyta	Advanced RCC	252		252		773		760

(MILLIONS)		Three Months Ended				Nine Months Ended
PRODUCT	PRIMARY INDICATION OR CLASS	Oct. 1, 2023		Oct. 2, 2022		Oct. 1, 2023		Oct. 2, 2022
Bosulif	Philadelphia chromosome–positive chronic myelogenous leukemia	160		141		463		425
Lorbrena	ALK-positive metastatic NSCLC	159		99		393		247
Zirabev	Treatment of mCRC; unresectable, locally advanced, recurrent or metastatic NSCLC; recurrent glioblastoma; metastatic RCC; and persistent, recurrent or metastatic cervical cancer	100		146		335		432
Ruxience	Non-hodgkin’s lymphoma, chronic lymphocytic leukemia, granulomatosis with polyangiitis (Wegener’s Granulomatosis) and microscopic polyangiitis	88		120		302		357
Xalkori	ALK-positive and Proto-Oncogene 1, Receptor Tyrosine Kinase-positive advanced NSCLC	86		118		283		362
Retacrit	Anemia	82		87		262		308
Aromasin	Post-menopausal early and advanced breast cancer	76		66		225		187
Bavencio alliance revenues(c)	Locally advanced or metastatic urothelial carcinoma; metastatic Merkel cell carcinoma; immunotherapy and tyrosine kinase inhibitor combination for patients with advanced RCC	18		73		186		198
Besponsa	Relapsed or refractory B-cell acute lymphoblastic leukemia	54		55		171		164
Braftovi	In combination with Mektovi for metastatic melanoma in patients with a BRAFV600E/K mutation and, in combination with Erbitux® (cetuximab)(d), for the treatment of BRAFV600E -mutant mCRC after prior therapy	56		58		156		156
Sutent	Advanced and/or metastatic RCC, adjuvant RCC, refractory gastrointestinal stromal tumors (after disease progression on, or intolerance to, imatinib mesylate) and advanced pancreatic neuroendocrine tumor	42		75		136		287
Mektovi	In combination with Braftovi for metastatic melanoma in patients with a BRAFV600E/K mutation	45		45		127		129
Trazimera	HER2-positive breast cancer and metastatic stomach cancers	—		51		67		149
All other Oncology	Various	110		80		304		243
BUSINESS INNOVATION(e)		$	302	$	319	$	928	$	974
Pfizer CentreOne(f)	Various	291		318		903		972
Pfizer Ignite	Various	10		1		25		1
Total Alliance revenues included above		$	1,645	$	1,689	$	5,672	$	6,320

(a)Excludes revenues for certain Comirnaty-related manufacturing activities performed on behalf of BioNTech, which are included in the PC1 contract development and manufacturing organization. See footnote (f) below.

(b)Immunoglobulin (Ig) portfolio includes the revenues from Panzyga, Octagam and Cutaquig.

(c)In March 2023, it was announced that our alliance with Merck KGaA to co-develop and co-commercialize Bavencio (avelumab) would terminate. Effective June 30, 2023, Merck KGaA took full control of the global commercialization of Bavencio. Beginning in the third quarter of 2023, the related profit share was replaced by a 15% royalty to Pfizer on net sales of Bavencio, which is recorded in Other (income)/deductions––net. We and Merck KGaA will continue to operationalize our respective ongoing clinical trials for Bavencio; and Merck KGaA will control all future R&D activities.

(d)Erbitux® is a registered trademark of ImClone LLC.

(e)See Note 13A above for information about Business Innovation. Prior-period financial information has been revised to reflect the current period presentation.

(f)PC1 includes revenues from our contract manufacturing, including certain Comirnaty-related manufacturing activities performed on behalf of BioNTech ($11 million for the first nine months of 2023 and $108 million for the first nine months of 2022, respectively), and revenues from our active pharmaceutical ingredient sales operation, as well as revenues related to our manufacturing and supply agreements with former legacy Pfizer businesses/partnerships.

Remaining Performance Obligations––Contracted revenue expected to be recognized from remaining performance obligations for firm orders in long-term contracts to supply Comirnaty to our customers totaled approximately $9 billion as of October 1, 2023, which includes amounts received in advance and deferred, as well as amounts that will be invoiced as we deliver these products to our customers in future periods. Of this amount, current contract terms provide for expected delivery of product with contracted revenue from 2023 through 2026, the timing of which may be renegotiated. Remaining performance obligations are based on foreign exchange rates as of the end of our fiscal third quarter of 2023 and exclude arrangements with an original expected contract duration of less than one year.

Deferred Revenues––Our deferred revenues primarily relate to advance payments received or receivable from various government or government sponsored customers in international markets for supply of Comirnaty. The deferred revenues related to Comirnaty totaled $3.2 billion as of October 1, 2023, with $2.1 billion and $1.0 billion recorded in current liabilities and noncurrent liabilities, respectively. The deferred revenues related to Comirnaty totaled $2.5 billion as of December 31, 2022, with $2.4 billion and $77 million recorded in current liabilities and noncurrent liabilities, respectively. The increase in Comirnaty deferred revenues during the first nine months of 2023 was primarily the result of additional advance payments received as we entered into amended contracts and the impact of foreign exchange, partially offset by amounts recognized in Revenues as we delivered the products to our customers. During the third quarter and first nine months of 2023, we recognized

revenue of approximately $140 million and $2.1 billion, respectively, that was included in the balance of Comirnaty deferred revenues as of December 31, 2022. The Comirnaty deferred revenues as of October 1, 2023 will be recognized in Revenues proportionately as we transfer control of the product to our customers and satisfy our performance obligation under the contracts, with the amounts included in current liabilities expected to be recognized in Revenues within the next 12 months, and the amounts included in noncurrent liabilities expected to be recognized in Revenues from 2024 through 2026. Deferred revenues associated with contracts for other products were not significant as of October 1, 2023 or December 31, 2022.