10-KPeriod: FY2016

PFIZER INC Annual Report, Year Ended Dec 31, 2016

Filed February 23, 2017For Securities:PFE

Summary

Pfizer Inc.'s 2016 10-K filing highlights a dynamic year of strategic acquisitions and divestitures aimed at reshaping its business portfolio. The company completed significant acquisitions, including Medivation for approximately $14.3 billion and Anacor for $4.9 billion, bolstering its oncology and dermatology offerings, respectively. Concurrently, Pfizer divested its global infusion therapy business to ICU Medical. These moves underscore Pfizer's commitment to focusing on its Innovative Health (IH) segment, which develops novel medicines and vaccines, while the Essential Health (EH) segment continues to provide cash flow from established brands and generics. The company operates under two main segments: Innovative Health (IH) and Essential Health (EH). IH focuses on developing and commercializing innovative medicines and vaccines, with key therapeutic areas including internal medicine, oncology, inflammation & immunology, rare diseases, vaccines, and consumer healthcare. EH comprises legacy brands, branded generics, sterile injectables, and biosimilars, aiming to generate consistent cash flow. Pfizer emphasizes its robust R&D pipeline as crucial for future growth, with ongoing investments in areas like oncology, inflammation & immunology, rare diseases, and vaccines. The company also acknowledges the increasing competitive pressures from generic and biosimilar products, alongside evolving regulatory landscapes and pricing challenges globally.

Financial Highlights

56 data points
Beta

Revenue

$52.82B

76.7% Gross Margin

Net Income

$7.21B

13.7% Net Margin

EPS (Diluted)

$1.17

Total Assets

$171.62B

Cash & Equivalents

$2.60B

Free Cash Flow

$14.37B

Financial Statements
Beta
Revenue$52.82B
Cost of Revenue$12.33B
Gross Profit$40.49B
SG&A Expenses$14.84B
Operating Income$7.20B
Interest Expense$1.19B
Net Income$7.21B
EPS (Basic)$1.18
EPS (Diluted)$1.17
Shares Outstanding (Basic)6.09B
Shares Outstanding (Diluted)6.16B

Key Highlights

  • 1Significant M&A activity in 2016: Acquisitions of Medivation ($14.3B) and Anacor ($4.9B) to strengthen oncology and dermatology portfolios, respectively.
  • 2Divestiture of Global Infusion Therapy business (HIS) to ICU Medical for up to $900M.
  • 3Reorganization of operating segments into Pfizer Innovative Health (IH) and Pfizer Essential Health (EH) to better align with strategic focus.
  • 4Strong performance in key IH products like Prevnar 13, Lyrica (ex-Europe), Enbrel (ex-US/Canada), Ibrance, Viagra (US/Canada), and Sutent.
  • 5Essential Health segment continues to generate strong cash flow from established brands like Lipitor and Premarin family.
  • 6Ongoing investment in R&D with a focus on key therapeutic areas including Oncology, Inflammation & Immunology, Rare Diseases, and Vaccines.
  • 7Acknowledges increasing competition from generic and biosimilar products and the associated revenue risks upon patent expiries.

Frequently Asked Questions

In 2016, Pfizer engaged in significant portfolio management. Key strategic moves included the acquisitions of Medivation for approximately $14.3 billion to enhance its oncology pipeline, and Anacor for approximately $4.9 billion to strengthen its dermatology offerings. Additionally, Pfizer divested its global infusion therapy business (HIS) to ICU Medical for up to $900 million.

Pfizer organizes its operations into two primary business segments: Pfizer Innovative Health (IH) and Pfizer Essential Health (EH). The IH segment focuses on developing and commercializing innovative medicines, vaccines, and consumer healthcare products. The EH segment includes legacy brands that have lost market exclusivity, branded generics, sterile injectables, and biosimilars, aimed at generating consistent cash flow.

Pfizer identified several key risks, including increasing generic and biosimilar competition which can significantly impact revenues upon patent expiration. Other risks include managed care trends and pricing pressures from payers, regulatory hurdles in drug development and approval, potential product manufacturing and marketing disruptions, and risks associated with international operations such as currency fluctuations and varying regulatory environments. The company also noted risks related to its significant R&D investments and the inherent uncertainty in drug development.

Pfizer's R&D efforts are central to its strategy, aiming to discover, develop, and bring to market innovative products that address unmet medical needs. The company invests heavily in R&D, focusing on key therapeutic areas like oncology, inflammation & immunology, rare diseases, and vaccines. They also actively pursue external innovation through collaborations, licenses, acquisitions, and investments to supplement their internal pipeline.