10-KPeriod: FY2017

PFIZER INC Annual Report, Year Ended Dec 31, 2017

Filed February 22, 2018For Securities:PFE

Summary

Pfizer Inc.'s 2017 10-K filing highlights a global biopharmaceutical company focused on applying science and global resources to improve lives through the discovery, development, and manufacturing of healthcare products. The company operates through two primary segments: Pfizer Innovative Health (IH) and Pfizer Essential Health (EH). IH focuses on novel medicines and vaccines in areas like oncology, internal medicine, and rare diseases, while EH offers legacy brands, generics, and biosimilars to ensure access to effective, lower-cost treatments. The company actively pursues growth through pipeline advancement and strategic business development, including acquisitions like Medivation and Anacor to strengthen its oncology and inflammation portfolios. Pfizer also emphasizes operational efficiency and value maximization within its existing product lines. The filing also details significant R&D investments and a robust pipeline, with a focus on innovation across key therapeutic areas. However, it also acknowledges the inherent risks in drug development, patent expirations, and the competitive landscape.

Financial Highlights

56 data points
Beta

Revenue

$52.55B

78.6% Gross Margin

Net Income

$21.31B

40.6% Net Margin

EPS (Diluted)

$3.52

Total Assets

$171.80B

Cash & Equivalents

$1.34B

Free Cash Flow

$14.85B

Financial Statements
Beta
Revenue$52.55B
Cost of Revenue$11.24B
Gross Profit$41.31B
SG&A Expenses$14.80B
Operating Income$21.31B
Interest Expense$1.27B
Net Income$21.31B
EPS (Basic)$3.57
EPS (Diluted)$3.52
Shares Outstanding (Basic)5.97B
Shares Outstanding (Diluted)6.06B

Key Highlights

  • 1Pfizer operates with two distinct business segments: Innovative Health (IH) and Essential Health (EH), targeting different market needs from novel therapies to affordable generics.
  • 2The company completed significant acquisitions in 2016 and 2017, including Medivation for $14.3 billion and Anacor for $4.9 billion, to bolster its oncology and inflammation/immunology pipelines.
  • 3Pfizer is actively reviewing strategic alternatives for its Consumer Healthcare business, with a decision expected in 2018, indicating a potential divestiture or separation.
  • 4Key IH products driving revenue include Prevnar 13, Lyrica, Ibrance, Eliquis, and Enbrel, with some generating over $1 billion in annual revenue.
  • 5The Essential Health segment, while housing legacy brands like Lipitor, also includes growing areas like sterile injectables and biosimilars, aiming to provide consistent cash flow.
  • 6Pfizer's R&D efforts are focused on biosimilars, inflammation & immunology, oncology, rare diseases, and vaccines, though internal neuroscience discovery efforts were ended in early 2018 to reallocate resources.
  • 7International operations accounted for 50% of total revenues in 2017, demonstrating Pfizer's significant global presence and reliance on diverse markets.

Frequently Asked Questions

Pfizer operates through two main segments: Pfizer Innovative Health (IH) and Pfizer Essential Health (EH). IH focuses on developing and commercializing novel, value-creating medicines and vaccines in therapeutic areas like oncology, internal medicine, vaccines, inflammation & immunology, and rare diseases, as well as consumer healthcare products. EH includes legacy brands that have lost market exclusivity, branded generics, generic sterile injectable products, and biosimilars, aiming to provide patients with access to effective, lower-cost treatments and generate strong cash flow.

In the period leading up to and including 2017, Pfizer engaged in several significant business development activities. These included the sale of its global infusion systems net assets to ICU Medical in February 2017. Prior to that, in 2016, Pfizer acquired the development and commercialization rights to AstraZeneca’s small molecule anti-infectives business, acquired Medivation for approximately $14.3 billion (strengthening its oncology focus), and acquired Anacor for approximately $4.9 billion (bolstering its inflammation and immunology pipeline). In September 2015, Pfizer also acquired Hospira for approximately $16.1 billion.

Pfizer's R&D strategy is centered on discovering and developing innovative products that address significant unmet medical needs. Key R&D priorities include advancing a pipeline of differentiated therapies and vaccines, improving R&D capabilities for long-term leadership, and exploring new collaboration models to expedite innovation. The company focuses on areas such as biosimilars, inflammation and immunology, metabolic disease and cardiovascular risks, oncology, rare diseases, and vaccines. In early 2018, Pfizer announced its decision to end internal neuroscience discovery and early development efforts to reallocate funding to areas of stronger scientific leadership, while also planning to create a dedicated neuroscience venture fund.

Pfizer faces several key risks, including intense competition from generic and biosimilar drugs, particularly as patents on major products expire; managed care trends and pricing pressures from payers; the inherent risks and unpredictability of drug discovery and development, including regulatory approval delays and clinical trial failures; dependence on a few key in-line products for a significant portion of revenue; and the potential impact of government regulation, pricing controls, and healthcare reform initiatives in the U.S. and internationally.