Item 7. Management’s Discussion and Analysis
ITEM 7. 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 consolidated financial statements and related notes in Item 8. Financial Statements and Supplementary Data in this Form 10-K. Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found within MD&A in our 2023 Form 10-K.
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.
In the first quarter of 2024, we reclassified royalty income (substantially all of which is related to our Biopharma segment) from Other (income)/deductions––net and began presenting Royalty revenues as a separate line item within Total revenues in our consolidated statements of operations. Prior-period amounts have been recast to conform to the current presentation.
OVERVIEW OF OUR PERFORMANCE, OPERATING ENVIRONMENT, STRATEGY AND OUTLOOK
Financial Highlights –– The following is a summary of certain financial performance metrics (in billions, except per share data):
2024 Total Revenues––$63.6 billion 2024 Net Cash Flow from Operations––$12.7 billion
An increase of 7% compared to 2023 An increase of 46% compared to 2023
2024 Reported Diluted EPS––$1.41 2024 Adjusted Diluted EPS (Non-GAAP)––$3.11**
An increase of over 100% compared to 2023 An increase of 69% compared to 2023
** For additional information regarding Adjusted diluted EPS (which is a non-GAAP financial measure), including reconciliations of certain GAAP Reported to non- GAAP Adjusted information, see the Non-GAAP Financial Measure: Adjusted Income section within MD&A.
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. See the Item 1. Business ––About Pfizer section. As a science-driven global biopharmaceutical company, we remain focused on advancing our pipeline, supporting our marketed brands and deploying capital responsibly, with a focus on initiatives that can help contribute to our long-term revenue and future growth. Most of our revenues come from the manufacture and sale of biopharmaceutical products. We believe that our medicines and vaccines provide significant value for healthcare providers and patients, and we continuously evaluate how we can best collaborate with patients, physicians and payors to support and expand patient access to reliable, affordable healthcare around the world. In addition, we continually seek to expand and broaden our product portfolio offerings through prioritized development of our pipeline and business development opportunities targeted at critical unmet patient needs. As a result, our commercial organizational structure and R&D operations are critical to the successful execution of our business strategy. Our ability to fulfill our purpose, Breakthroughs that change patients’ lives , remains a core focus and underscores our commitment to addressing the needs of society to help sustain long-term value creation for all stakeholders.
Our 2025 key priorities are:
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.
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One way we believe we will be more efficient, effective and able to execute on these strategic priorities is through technology, including AI.
In 2024, we managed our commercial operations through a global structure consisting of three operating segments: Biopharma, PC1 and Pfizer Ignite. Biopharma was the only reportable segment. See Note 1 7 A and the Item 1. Business––Commercial Operations section. At the beginning of 2025, we made the following changes within our Biopharma reportable segment that went into effect on January 1, 2025 to support our continued focus on commercial execution and to further strengthen Pfizer’s capabilities and leadership in discovering and developing breakthrough medicines and vaccines:
• transitioned the Pfizer U.S. Oncology commercial organization and the global Oncology marketing organization, which were part of the former Pfizer Oncology Division, into the Pfizer U.S. Commercial Division, which now focuses on the commercialization of Pfizer’s entire product portfolio in the U.S. and is led by the Chief U.S. Commercial Officer, Executive Vice President; and
• combined our global ORD and PRD organizations to form a single Pfizer R&D organization that is responsible for all R&D activities across all therapeutic areas.
In the fourth quarter of 2023, we announced that we launched a multi-year, enterprise-wide cost realignment program (Realigning Our Cost Base Program) that aims to realign our costs with our longer-term revenue expectations. In the second quarter of 2024, we announced that we launched a multi-year, multi-phased program to reduce our costs of goods sold (Manufacturing Optimization Program), which is expected to include operational efficiencies, network structure changes, and product portfolio enhancements. See Note 3 . 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 .
R&D: We believe we have a strong pipeline and are well-positioned for future growth. R&D is at the heart of fulfilling our purpose to deliver breakthroughs that change patients’ lives as we work to translate advanced science and technologies into the medicines and vaccines that may be the most impactful for patients. Innovation, drug discovery and development are critical to our success. In addition to discovering and developing new products, our R&D efforts seek to add value to our existing products by improving their effectiveness and ease of dosing and by discovering potential new indications. See the Item 1. Business — Research and Development section for our R&D priorities and strategy.
We seek to leverage a strong pipeline, organize around expected operational growth drivers and capitalize on trends creating long-term growth opportunities, including:
• an aging global population that is generating increased demand for innovative medicines and vaccines that address patients’ unmet needs; and
• advances in both biological science and platform technologies that are enhancing the delivery of potential breakthrough new medicines and vaccines.
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. We view our business development activity as an enabler of our strategies and seek to generate growth by pursuing opportunities and transactions that have the potential to strengthen our business and our capabilities. We assess our business, assets and scientific capabilities/portfolio as part of our regular, ongoing portfolio review process and also continue to consider business development activities that will help advance our business strategy. See Note 2 for significant recent activities.
Our 2024 Performance
Total Revenues ––Total revenues increased $4.1 billion, or 7%, to $63.6 billion in 2024 from $59.6 billion in 2023, reflecting an operational increase of $4.4 billion, or 7%, partially offset by an unfavorable impact of foreign exchange of $349 million, or approximately 1%. The operational increase was primarily driven by Paxlovid, the addition of legacy Seagen revenues in full-year 2024 following the acquisition in December 2023, and growth from the Vyndaqel family and Eliquis, partially offset by declines in Comirnaty. The operational increase for Paxlovid was primarily due to: (i) a non-cash revenue reversal of $3.5 billion recorded in the fourth quarter of 2023 related to the expected return of an estimated 6.5 million treatment courses of EUA labeled U.S. government inventory and (ii) revenue in 2024 of $1.2 billion from two one-time items: a $771 million favorable final adjustment recorded in the first quarter of 2024 to the aforementioned $3.5 billion revenue reversal; and $442 million from the one-time contractual delivery of treatment courses to the U.S. SNS. See Note 17C . Excluding contributions from Comirnaty and Paxlovid, Total revenues increased 12% operationally.
The following chart outlines the components of the net change in Total revenues :
See the Total Revenues by Geography and Total Revenues––Selected Product Discussion sections within MD&A 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
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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 17C .
Income from Continuing Operations Before Provision/(Benefit) for Taxes on Income –– The increase in Income from continuing operations before provision/(benefit) for taxes on income of $7.0 billion, to $8.0 billion in 2024 from $1.1 billion in 2023, was primarily attributable to (i) a decrease in Cost of Sales, (ii) higher revenues and (iii) a decrease in Restructuring charges and certain acquisition-related costs, partially offset by (iv) higher net interest expense, (v) net periodic benefit costs associated with pension and other postretirement plans incurred in 2024 versus net periodic benefit credits in 2023, (vi) lower net gains on equity securities and (vii) an increase in Amortization of intangible assets.
See the Analysis of the 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.
Regulatory Environment––Pipeline Productivity –– Our product lines must be replenished over time to offset revenue losses when products lose exclusivity or market share or to respond to healthcare and innovation trends, as well as to provide for earnings growth, primarily through internal R&D or through collaborations, acquisitions, JVs, licensing or other arrangements. As a result, we devote considerable resources to our R&D activities which, while essential to our growth, incorporate a high degree of risk and cost, including whether a particular product candidate or new indication for an in-line product will achieve the desired clinical endpoint or safety profile, will be approved by regulators or will be successful commercially. Clinical trials are conducted to determine, among other things, whether an investigational drug, vaccine or device is safe and effective for a particular patient population. After a product has been approved or authorized and launched, we continue to monitor its safety as long as it is available to patients, including conducting postmarketing trials, voluntarily or pursuant to a regulatory request. For the entire life of the product, we collect safety data and report safety information to the FDA and other regulators. Regulatory authorities evaluate potential safety concerns and take any regulatory action deemed necessary and appropriate. Such action(s) may include: updating a product’s labeling, restricting its use, communicating new safety information or, in rare cases, seeking to suspend or remove a product from the market.
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. For a discussion of recent developments with respect to patent litigation involving certain of our products, see Note 16A1 .
Regulatory Environment/Pricing and Access––Government and Other Payor Group Pressures –– The pricing of medicines and vaccines by pharmaceutical manufacturers and the cost of healthcare, which includes medicines, vaccines, medical services and hospital services, continues to be important to payors, governments, patients, and other stakeholders. Federal and state governments and private third-party payors in the U.S. continue to take action to manage the utilization and cost of drugs, including increasingly employing formularies to control costs and encourage utilization of certain drugs, including through the use of deductibles, utilization management tools, cost sharing or formulary placement. We consider a number of factors impacting the pricing of our medicines and vaccines. Within the U.S., we often engage with patients, doctors and healthcare plans. We also often provide significant discounts from the list price to insurers, including PBMs and MCOs. The price that patients pay in the U.S. for prescribed medicines and vaccines is ultimately set by healthcare providers and insurers, including government healthcare programs. 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. 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 MDPNP, 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 MDPNP. 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 made significant changes to the Medicare Part D benefit design, which will impact Pfizer 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 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 MDRP or the 340B Program, including legal or legislative developments at the federal or state level with respect to the 340B Program, could
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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.
Impact of the July 2023 Tornado in Rocky Mount, North Carolina (NC) –– Our manufacturing facility in Rocky Mount, NC was damaged by a tornado in July 2023. The facility is a key producer of sterile injectables and is responsible for manufacturing nearly 25 percent of all our sterile injectables—including anesthesia, analgesia, and micronutrients. Supply of medicines has recovered from the impact of the tornado. We incurred losses in 2023 and 2024 that were partially offset by insurance recoveries received.
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 above certain levels in our products, this may lead to market action for such products. For example, in 2021, Pfizer recalled all lots of Chantix due to the presence of a nitrosamine, N-nitroso-varenicline, at or above acceptable intake limits communicated by various regulatory authorities. Regulatory authorities have since issued updated guidance on nitrosamine acceptable intake levels. With this guidance, which included an updated intake level for N-nitroso-varenicline, we have started making regulatory submissions to potentially enable Chantix to return to market in the U.S. and in certain international markets.
Except for the impact of the tornado in Rocky Mount, NC discussed above, we have not seen a significant disruption of our supply chain in 2024 and through the date of filing of this Form 10-K, 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.
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. Certain factors in the global economic environment that may impact our global operations include, among other things, currency and interest rate fluctuations, capital and exchange controls, local and global economic conditions including inflation, recession, volatility and/or lack of liquidity in capital markets, expropriation and other restrictive government actions, changes in intellectual property, legal protections and remedies, trade regulations, tariffs, tax laws and regulations and procedures and actions affecting approval, production, pricing, and marketing of, reimbursement for and access to our products, as well as impacts of political or civil unrest or military action, including the ongoing conflicts between Russia and Ukraine and in the Middle East and their economic consequences, geopolitical instability, terrorist activity, unstable governments and legal systems, inter-governmental disputes, public health outbreaks, epidemics, pandemics, natural disasters or disruptions related to climate change. Government pressures can lead to negative pricing pressure in various markets where governments take an active role in setting prices, access criteria or other means of cost control. In addition, 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 and financial guidance. The actual impact of the new tariffs on our business 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 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. For additional information on risks related to our global operations and changes in laws, see the Item 1A. Risk Factors—Global Operations and –– Changes in Laws and Accounting Standar ds sections.
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 2023, we principally sold Comirnaty globally under government contracts. In September 2023, Comirnaty transitioned to traditional commercial market sales in the U.S., triggered by the expiration of contracts and the COVID-19 vaccines from Pfizer and BioNTech purchased through them becoming either depleted or not used following the introduction of a new variant vaccine. Internationally, sales of Comirnaty in international developed markets were generally under government contracts in 2023 and 2024, and in emerging markets, under a combination of private channels and government contracts; in both cases, we started transitioning to commercial markets in 2024. Due to the commercial market transition as well as the seasonality of demand for COVID-19 vaccinations, the majority of our global revenues for Comirnaty were recorded in the fourth quarter of 2024. 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 Item 1A. Risk Factors—U.S. Healthcare Regulati on for a description of risks and uncertainties that could impact revenue from our portfolio of vaccines.
In 2023, we principally sold Paxlovid globally to government agencies. On October 13, 2023, we announced an amended agreement with the U.S. government, which facilitated the transition of Paxlovid to traditional commercial markets in the U.S. in November 2023, with minimal uptake of NDA-labeled commercial product before January 1, 2024 (see Note 17C ). Internationally, for Paxlovid, most markets have now transitioned to commercial markets, and we are expecting most revenue for Paxlovid to be generated through commercial channels. In 2025, we 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 information on risks associated with our COVID-19 products, as well as COVID-19 intellectual property disputes, see the Item 1A. Risk Factors — COVID-19 , — Intellectual Property Protectio n and –– Third-Party Intellectual Property Claims sections as well as Notes 16A1 and 17C .
Israel/Hamas Conflict ––Our local operations have been impacted by the armed conflict between Israel and Hamas that began on October 7, 2023. For the years ended December 31, 2024 and 2023, the business of our Israeli subsidiary represented less than 1% of our consolidated revenues and assets. We are closely monitoring developments in this conflict, including evaluating potential impacts to our business, customers, suppliers, employees, and operations in Israel and elsewhere in the Middle East that may impact global operations. At this time, longer term impacts from these events to the Company are uncertain and subject to change.
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Russia/Ukraine Conflict ––Our local operations have been impacted by the armed conflict between Russia and Ukraine. For the years ended December 31, 2024 and 2023, the business of our Russia and Ukraine subsidiaries represented less than 1% of our consolidated revenues and assets. While we are monitoring the effects of the conflict between Russia and Ukraine, the situation continues to evolve and the long-term implications, including the broader economic consequences of the conflict, potential additional sanctions, and actions by our customers or suppliers (including financial institutions) are difficult to predict at this time.
For information on risks associated with these conflicts, see the Item 1A. Risk Factors—Global Operations section.
SIGNIFICANT ACCOUNTING POLICIES AND APPLICATION OF CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
Following is a discussion about the critical accounting estimates and assumptions impacting our consolidated financial statements. Also, see Note 1C .
For a description of our significant accounting policies, see Note 1 . 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 ); Asset Impairments ( Note 1M ); 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 of recently adopted accounting standards, see Note 1B .
Acquisitions
We account for acquired businesses using the acquisition method of accounting, which requires, among other things, that most assets acquired and liabilities assumed be recognized at their estimated fair value as of the acquisition date. To estimate fair value, we utilize an exit price approach from the perspective of a market participant. For further detail on acquisition accounting, see Note 1D . For further detail on the techniques and methodologies that we use to estimate fair value, see Note 1E . Historically, intangible assets have been the most significant fair values within our business combinations. We utilize an income approach to estimate the acquisition date fair value of each identifiable intangible asset. Some of the more significant estimates and assumptions inherent in this approach include the amount and timing of projected net cash flows, the discount rate, the tax rate, and, for IPR&D assets, the probability of technical and regulatory success (PTRS). All of these judgments and estimates can materially impact our results of operations. For further information on our process to estimate the fair value of intangible assets, see Asset Impairments below.
We estimate the fair value of acquired inventory, including finished goods and work in process, by determining the estimated selling price when completed, less an estimate of costs to be incurred to complete and sell the inventory, and an estimate of a reasonable profit allowance for those manufacturing and selling efforts. The fair value of inventory is recognized in our results of operations as the inventory is sold. Some of the more significant estimates and assumptions inherent in the estimate of the fair value of inventory include stage of completion, costs to complete, costs to dispose and selling price.
We estimate the fair value of acquired PP&E using a combination of the cost and market approaches. Some of the more significant estimates and assumptions inherent in these approaches are the values of asset replacement costs, comparable assets and estimated remaining economic lives of the assets.
Revenues
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. Such variable consideration represents chargebacks, rebates, sales allowances and sales returns. These deductions represent estimates of the related obligations and, as such, knowledge and judgment are required when estimating the impact of these 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. If any of our ratios, factors, assessments, experiences or judgments are not indicative or accurate estimates of our future experience, our results could be materially affected. The potential of our estimates to vary (sensitivity) differs by program, product, type of customer and geographic location. However, estimates associated with U.S. Medicare, Medicaid and performance-based contract rebates are most at risk for material adjustment because of the extensive time delay between the recording of the accrual and its ultimate settlement, an interval that can generally range up to one year. Because of this lag, our recording of adjustments to reflect actual amounts can incorporate revisions of several prior quarters. Rebate accruals are product specific and, therefore for any period, are impacted by the mix of products sold as well as the forecasted channel mix for each individual product. For further information, see the Product Revenue Deductions section within MD&A and Note 1G .
Asset Impairments
We review all of our long-lived assets for impairment indicators throughout the year. We perform impairment testing for indefinite-lived intangible assets and goodwill at least annually and for all other long-lived assets whenever impairment indicators are present. When necessary, we record charges for impairments of long-lived assets for the amount by which the fair value is less than the carrying value of these assets. Our impairment review processes are described in Note 1M .
Examples of events or circumstances that may be indicative of impairment include:
• A significant adverse change in legal factors or in the business climate that could affect the value of the asset. For example, a successful challenge of our patent rights would likely result in generic competition earlier than expected.
• A significant adverse change in the extent or manner in which an asset is used such as a restriction imposed by the FDA or other regulatory authorities, withdrawals or other unusual items that could affect our ability to manufacture or sell a product.
• An expectation of losses or reduced profits associated with an asset. This could result, for example, from a change in development plans or a change in a government reimbursement program that results in an inability to sustain projected product revenues and profitability. This also could result from the introduction of a competitor’s product that impacts projected revenue growth, as well as the lack of acceptance of a product by patients, physicians and payors. For IPR&D projects, this could result from, among other things, a change in outlook based on clinical trial data, a delay in the projected launch date or additional expenditures to commercialize the product.
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• Changes in development plans and/or de-prioritization of certain assets.
Identifiable Intangible Assets ––We use an income approach, specifically the discounted cash flow method to determine the fair value of intangible assets, other than goodwill. We start with a forecast of all the expected net cash flows associated with the asset, which incorporates the consideration of a terminal value for indefinite-lived assets, and then we apply an asset-specific discount rate to arrive at a net present value amount. Some of the more significant estimates and assumptions that impact our fair value estimates include: the amount and timing of the projected net cash flows, which includes the expected impact of competitive, legal and/or regulatory forces on the projections and the impact of technological advancements and risk associated with IPR&D assets, as well as the selection of a long-term growth rate; the discount rate, which seeks to reflect the various risks inherent in the projected cash flows; and the tax rate, which seeks to incorporate the jurisdictional mix of the projected cash flows.
While all intangible assets other than goodwill can face events and circumstances that can lead to impairment, those that are most at risk of impairment include IPR&D assets (approximately $18.9 billion as of December 31, 2024) and newly acquired or recently impaired indefinite-lived brand assets. IPR&D assets are high-risk assets, given the uncertain nature of R&D. Newly acquired and recently impaired indefinite-lived assets are more vulnerable to impairment as the assets are recorded at fair value and are then subsequently measured at the lower of fair value or carrying value at the end of each reporting period. As such, immediately after acquisition or impairment, even small declines in the outlook for these assets can negatively impact our ability to recover the carrying value and can result in an impairment charge.
Goodwill ––Our goodwill impairment review work as of December 31, 2024 concluded that none of our goodwill was impaired and we do not believe the risk of impairment is significant at this time, as the fair value of each of our reporting units is significantly higher than their respective net book values.
In our review, we first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Qualitative factors that we consider include, for example, macroeconomic and industry conditions, overall financial performance and other relevant entity-specific events. If we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we then perform a quantitative fair value test.
When we are required to determine the fair value of a reporting unit, we typically use the income approach. The income approach is a forward-looking approach to estimating fair value and relies primarily on internal forecasts. Within the income approach, we use the discounted cash flow method. We start with a forecast of all the expected net cash flows for the reporting unit, which includes the application of a terminal value, and then we apply a reporting unit-specific discount rate to arrive at a net present value amount. Some of the more significant estimates and assumptions inherent in this approach include: the amount and timing of the projected net cash flows, which includes the expected impact of technological risk and competitive, legal and/or regulatory forces on the projections, as well as the selection of a long-term growth rate; the discount rate, which seeks to reflect the various risks inherent in the projected cash flows; and the tax rate, which seeks to incorporate the geographic diversity of the projected cash flows.
For all of our reporting units, there are a number of future events and factors that may impact future results and that could potentially have an impact on the outcome of subsequent goodwill impairment testing. For a list of these factors, see the Forward-Looking Information and Factors That May Affect Future Result s and the Item 1A. Risk Factors sections.
Benefit Plans
For a description of our different benefit plans, see Note 11 .
Our assumptions reflect our historical experiences and our judgment regarding future expectations that have been deemed reasonable by management. The judgments made in determining the costs of our benefit plans can materially impact our results of operations.
The following provides (i) at the end of each year, the expected annual rate of return on plan assets for the following year, (ii) the actual annual rate of return on plan assets achieved in each year, and (iii) the weighted-average discount rate used to measure the benefit obligations at the end of each year for our U.S. pension plans and our international pension plans (a) :
2024 2023 2022
U.S. Pension Plans
Expected annual rate of return on plan assets 7.7 % 8.0 % 7.5 %
Actual annual rate of return on plan assets 1.3 10.4 (22.4)
Discount rate used to measure the plan obligations 5.7 5.4 5.4
International Pension Plans
Expected annual rate of return on plan assets 4.9 5.1 4.5
Actual annual rate of return on plan assets 6.4 (4.6) (26.0)
Discount rate used to measure the plan obligations 4.1 4.4 3.8
(a) For detailed assumptions associated with our benefit plans, see Note 11B .
Expected Annual Rate of Return on Plan Assets ––The assumptions for the expected annual rate of return on all of our plan assets reflect our actual historical return experience and our long-term assessment of forward-looking return expectations by asset classes, which is used to develop a weighted-average expected return based on the implementation of our targeted asset allocation in our respective plans.
The expected annual rate of return on plan assets for our U.S. plans and international plans is applied to the fair value of plan assets at each year-end and the resulting amount is reflected in our net periodic benefit costs in the following year. Differences between the actual rate of return on plan assets and the expected annual rate of return on plan assets are immediately recognized through earnings upon remeasurement.
Pfizer Inc. 2024 Form 10-K
33
The following illustrates the sensitivity of net periodic benefit costs to a 50 basis point decline in our assumption for the expected annual rate of return on plan assets, holding all other assumptions constant (in millions, pre-tax):
Assumption Change Increase in 2025
Net Periodic
Benefit Costs
Expected annual rate of return on plan assets (a)
50 basis point decline $86
(a) The estimate excludes any potential mark-to-market adjustments.
The actual return on plan assets was $652 million during 2024 .
Discount Rate Used to Measure Plan Obligations ––The weighted-average discount rate used to measure the plan obligations for our U.S. defined benefit plans is determined at least annually and evaluated and modified, as required, to reflect the prevailing market rate of a portfolio of high-quality fixed income investments, rated AA/Aa or better, that reflect the rates at which the pension benefits could be effectively settled. The discount rate used to measure the plan obligations for our significant international plans is determined at least annually by reference to investment grade corporate bonds, rated AA/Aa or better, including, when there is sufficient data, a yield-curve approach. These discount rate determinations are made in consideration of local requirements. The measurement of plan obligations at the end of the year will affect (i) the actuarial (gains)/losses recognized in our net periodic benefit cost for that year and (ii) the amount of service cost and interest cost reflected in our net periodic benefit costs in the following year.
The following illustrates the sensitivity of net periodic benefit costs and benefit obligations to a 10 basis point decline in our assumption for the discount rate, holding all other assumptions constant (in millions, pre-tax):
Assumption Change Decrease in 2025 Net Periodic Benefit Costs
Increase to 2024 Benefit Obligations
Discount rate 10 basis point decline $5 $208
The change in the discount rates used in measuring our plan obligations as of December 31, 2024 resulted in an increase in the measurement of our aggregate plan obligations by approximately $25 million.
Income Tax Assets and Liabilities
Income tax assets and liabilities include income tax valuation allowances and accruals for uncertain tax positions. See Notes 1Q and 5 , as well as the Analysis of Financial Condition, Liquidity, Capital Resources and Market Risk section within MD&A .
Contingencies
We and certain of our subsidiaries are subject to numerous contingencies arising in the ordinary course of business, including tax and legal contingencies, guarantees and indemnifications. See Notes 1Q , 1S , 5D and 16 .
ANALYSIS OF THE CONSOLIDATED STATEMENTS OF OPERATIONS
Total Revenues by Geography
The following presents worldwide Total revenues by geography:
Year Ended December 31, % Change
Worldwide U.S. International Worldwide U.S. International
(MILLIONS) 2024 2023 2022 2024 2023 2022 2024 2023 2022 24/23 23/22 24/23 23/22 24/23 23/22
Operating segments:
Biopharma
$ 62,400 $ 58,237 $ 99,826 $ 38,332 $ 27,749 $ 42,920 $ 24,068 $ 30,488 $ 56,905 7 (42) 38 (35) (21) (46)
Pfizer CentreOne
1,146 1,272 1,342 278 352 390 868 920 952 (10) (5) (21) (10) (6) (3)
Pfizer Ignite
82 44 7 82 44 7 — — — 85 * 85 * — —
Total revenues $ 63,627 $ 59,553 $ 101,175 $ 38,691 $ 28,145 $ 43,317 $ 24,936 $ 31,408 $ 57,858 7 (41) 37 (35) (21) (46)
2024 v. 2023
The following provides an analysis of the worldwide change in Total revenues by geographic areas from 2023 to 2024:
(MILLIONS) Worldwide U.S. International
Operational growth/(decline):
Worldwide growth from Paxlovid
$ 4,452 $ 5,905 $ (1,453)
Increase in revenues from legacy Seagen, which was acquired in December 2023
3,223 3,071 153
Worldwide growth from the Vyndaqel family, Eliquis, Xtandi and Nurtec ODT/Vydura, partially offset by declines from Xeljanz, Ibrance, Abrysvo, Inlyta and the Prevnar family
2,403 1,770 633
Worldwide declines from Comirnaty
(5,907) (400) (5,507)
Decline in oncology biosimilars, largely due to lower net price in the U.S. (362) (338) (24)
Other operational factors, net 614 538 76
Operational growth/(decline), net
4,423 10,546 (6,123)
Unfavorable impact of foreign exchange (349) — (349)
Total revenues increase/(decrease)
$ 4,074 $ 10,546 $ (6,472)
Pfizer Inc. 2024 Form 10-K
34
2023 v. 2022
The following provides an analysis of the worldwide change in Total revenues by geographic areas from 2022 to 2023:
(MILLIONS) Worldwide U.S. International
Operational growth/(decline):
Worldwide declines from Comirnaty
$ (26,427) $ (6,374) $ (20,053)
Worldwide declines from Paxlovid
(17,506) (11,803) (5,703)
Worldwide growth from the Vyndaqel family, Eliquis, the Prevnar family and Inlyta, partially offset by worldwide declines from Ibrance and Xeljanz
1,079 1,081 (2)
Increase in revenues from Nurtec ODT/Vydura and Oxbryta, which were acquired in the fourth quarter of 2022
972 949 23
Revenues from Abrysvo, primarily driven by launch of the older adult indication in the U.S. in July 2023
890 888 2
Revenues from legacy Seagen products subsequent to the acquisition on December 14, 2023
132 132 —
Other operational factors, net
260 (45) 305
Operational growth/(decline), net
(40,600) (15,172) (25,428)
Unfavorable impact of foreign exchange (1,022) — (1,022)
Total revenues increase/(decrease)
$ (41,621) $ (15,172) $ (26,450)
See the Total Revenues––Selected Product Discussion section within MD&A for additional analysis and Note 17C .
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:
Year Ended December 31,
(MILLIONS) 2024 2023 2022
Medicare rebates $ 4,145 $ 997 $ 838
Medicaid and related state program rebates 2,252 1,655 973
Performance-based contract rebates 6,497 5,159 3,575
Chargebacks 12,698 9,828 7,560
Sales allowances 6,444 6,790 5,460
Sales returns and cash discounts
1,852 5,619 1,290
Total (a)
$ 33,888 $ 30,048 $ 19,697
(a) The increase in revenue deductions in 2024 was primarily driven by the transition of Paxlovid and Comirnaty to commercial markets, an increase in sales from legacy Seagen products acquired in December 2023, sales growth from the Vyndaqel family, and higher sales of acquired products, partially offset by a $771 million favorable final adjustment recorded in the first quarter of 2024 to the estimated non-cash Paxlovid revenue reversal of $3.5 billion recorded in the fourth quarter of 2023 (see Note 17C ).
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 1G .
Total Revenues—Selected Product Discussion
Biopharma
Revenue
(MILLIONS) Year Ended Dec. 31, % Change
Product Global
Revenues Region 2024 2023 Total Oper. Operational Results Commentary
Eliquis $7,366
Up 10%
(operationally)
U.S. $ 4,803 $ 4,228 14 Growth driven primarily by continued oral anti-coagulant adoption and market share gains in the non-valvular atrial fibrillation indication in the U.S. and certain markets in Europe, partially offset by declines due to loss of patent-based exclusivity and generic competition in certain international markets.
Int’l. 2,563 2,519 2 3
Worldwide $ 7,366 $ 6,747 9 10
Prevnar family $6,411
Down 1%
(operationally)
U.S. $ 4,233 $ 4,265 (1) Declines driven by fewer adult vaccinations in the U.S. and lower pediatric indication sales in most international developed markets and certain emerging markets, partially offset by growth in the pediatric indication in the U.S. reflecting recovered market share as a result of the Prevnar 20 launch in 2023, as well as strong uptake of the adult indication in certain international markets.
Int’l. 2,178 2,236 (3) (1)
Worldwide $ 6,411 $ 6,501 (1) (1)
Pfizer Inc. 2024 Form 10-K
35
Revenue
(MILLIONS) Year Ended Dec. 31, % Change
Product Global
Revenues Region 2024 2023 Total Oper. Operational Results Commentary
Paxlovid $5,716
Up *
(operationally)
U.S. $ 4,616 $ (1,289) * Growth primarily driven by:
• a non-cash revenue reversal of $3.5 billion recorded in the fourth quarter of 2023 (see Note 17C );
• a $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
• $442 million from the one-time contractual delivery of treatment courses to the U.S. SNS in the third quarter of 2024,
partially offset by:
• lower contractual deliveries in most international markets as a result of the transition to traditional commercial market sales; and
• lower demand globally, largely in China due to the non-recurrent surge in COVID-19 infection during the first quarter of 2023 and transition to the out-of-pocket market in the second quarter of 2023.
Int’l. 1,100 2,568 (57) (57)
Worldwide $ 5,716 $ 1,279 * *
Vyndaqel family $5,451
Up 65%
(operationally)
U.S. $ 3,547 $ 1,863 90 Growth largely driven by strong demand with continuing uptake in patient diagnosis, primarily in the U.S. and international developed markets, as well as increased affordability in the U.S.
Int’l. 1,904 1,458 31 32
Worldwide $ 5,451 $ 3,321 64 65
Comirnaty
$5,353
Down 53%
(operationally)
U.S. $ 2,004 $ 2,404 (17) Declines largely driven by lower contractual deliveries in international markets as well as a decrease in vaccinations globally.
Int’l. 3,349 8,816 (62) (62)
Worldwide $ 5,353 $ 11,220 (52) (53)
Ibrance $4,367
Down 8%
(operationally)
U.S. $ 2,849 $ 3,151 (10) Declines primarily driven by lower demand due to competitive pressures mainly in the U.S., price decreases in certain international developed markets and generic penetration in certain emerging markets.
Int’l. 1,518 1,602 (5) (4)
Worldwide $ 4,367 $ 4,753 (8) (8)
Xtandi $2,039
Up 23%
(operationally)
U.S. $ 2,039 $ 1,659 23 Growth largely driven by strong demand due to uptake of the nmCSPC indication following approval in the fourth quarter of 2023 and increased affordability in the U.S.
Int’l. — — — —
Worldwide $ 2,039 $ 1,659 23 23
Padcev
$1,588
Up *
(operationally)
U.S. $ 1,561 $ 53 * Growth driven by the acquisition of Seagen in the fourth quarter of 2023 as well as strong demand.
Int’l. 27 — * *
Worldwide $ 1,588 $ 53 * *
Nurtec ODT/Vydura $1,263
Up 36%
(operationally)
U.S. $ 1,193 $ 908 31 Growth primarily driven by strong demand in the U.S. and, to a much lesser extent, recent launches in international markets, partially offset by lower net price in the U.S. due to unfavorable changes in channel mix.
Int’l. 69 20 * *
Worldwide $ 1,263 $ 928 36 36
Xeljanz $1,168
Down 31%
(operationally)
U.S. $ 680 $ 1,154 (41) Declines primarily driven by lower demand globally resulting from ongoing shifts in prescribing patterns related to label changes, as well as lower net price in the U.S. and the impact of regulatory exclusivity expiry in Canada.
Int’l. 488 549 (11) (9)
Worldwide $ 1,168 $ 1,703 (31) (31)
Adcetris $1,089
Up *
(operationally)
U.S. $ 1,059 $ 56 * Growth driven by the acquisition of Seagen in the fourth quarter of 2023.
Int’l. 30 — * *
Worldwide $ 1,089 $ 56 * *
Pfizer Inc. 2024 Form 10-K
36
Revenue
(MILLIONS) Year Ended Dec. 31, % Change
Product Global
Revenues Region 2024 2023 Total Oper. Operational Results Commentary
Inlyta $978
Down 5%
(operationally)
U.S. $ 588 $ 642 (8) Declines primarily driven by lower demand in the U.S. as well as lower volumes and lower net price in international markets, partially offset by strong growth in China.
Int’l. 391 394 (1) 1
Worldwide $ 978 $ 1,036 (6) (5)
Abrysvo
$755
Down 15%
(operationally)
U.S. $ 594 $ 888 (33) Decline primarily driven by a significant reduction in vaccination rates in the U.S. for the older adult indication, partially offset by strong demand for the maternal indication in the U.S. (launched in December 2023), and launch uptake for both indications in certain international markets.
Int’l. 160 2 * *
Worldwide $ 755 $ 890 (15) (15)
Pfizer CentreOne
Revenue
(MILLIONS) Year Ended Dec. 31, % Change
Operating Segment Global
Revenues Region 2024 2023 Total Oper. Operational Results Commentary
PC1
$1,146
Down 10%
(operationally)
U.S. $ 278 $ 352 (21) Declines primarily driven by lower manufacturing of divested and other third-party products under manufacturing and supply agreements, partially offset by growth in manufacturing-related services.
Int’l. 868 920 (6) (5)
Worldwide $ 1,146 $ 1,272 (10) (10)
See the Item 1. Business — Patents and Other Intellectual Property Rights section for information regarding the expiration of various patent rights, Note 16 for a discussion of recent developments concerning patent and product litigation relating to certain of the products discussed above and Note 17C for the primary indications or class of the selected products discussed above.
Costs and Expenses
Costs and expenses follow:
Year Ended December 31, % Change
(MILLIONS) 2024 2023 2022 24/23 23/22
Cost of sales
$ 17,851 $ 24,954 $ 34,344 (28) (27)
Percentage of Total revenues
28.1 % 41.9 % 33.9 %
Selling, informational and administrative expenses
14,730 14,771 13,677 — 8
Research and development expenses
10,822 10,679 11,428 1 (7)
Acquired in-process research and development expenses
108 194 953 (44) (80)
Amortization of intangible assets
5,286 4,733 3,609 12 31
Restructuring charges and certain acquisition-related
costs
2,419 2,943 1,375 (18) *
Other (income)/deductions—net
4,388 222 1,062 * (79)
2024 v. 2023
Cost of Sales
Cost of sales decreased $7.1 billion, primarily due to:
• the non-recurrence of a non-cash charge of $6.2 billion in 2023 related to Paxlovid and Comirnaty recorded for inventory write-offs and related charges ($5.0 billion for Paxlovid and $1.2 billion for Comirnaty); and
• a favorable change in sales mix of $2.6 billion, primarily driven by lower sales of Comirnaty,
partially offset by:
• an impact of $1.9 billion from our Seagen acquisition, inclusive of the amortization of the fair value step-up of inventory.
The decrease in Cost of sales as a percentage of revenues reflects the non-recurrence of the aforementioned non-cash charge of $6.2 billion, as well as significantly lower sales of Comirnaty.
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 Overview of Our Performance, Operating Environment, Strategy and Outlook —The Global Economic Environment––COVID-19 section for information about our COVID-19 products.
Pfizer Inc. 2024 Form 10-K
37
Selling, Informational and Administrative Expenses
Selling, informational and administrative expenses decreased $41 million, mostly due to:
• a decrease of $790 million due to lower promotional and marketing spend for various products, including Comirnaty and Paxlovid,
partially offset by:
• higher compensation-related expenses of $630 million; and
• an increase of $140 million for corporate enabling functions primarily driven by our acquisition of Seagen.
Research and Development Expenses
Research and development expenses increased $143 million, primarily due to:
• a net increase in spending of $1.1 billion mainly to develop certain product candidates acquired from Seagen; and
• an increase of $680 million in compensation-related expenses,
partially offset by:
• lower spending of $1.6 billion as a result of our cost realignment program and on various product candidates, primarily ongoing vaccine programs.
Amortization of Intangible Assets
Amortization of intangible assets increased $553 million, primarily due to:
• an increase of $570 million from our December 2023 acquisition of Seagen; and
• an increase of $470 million related to assets reclassified in 2023 from IPR&D to developed technology rights and from indefinite-lived to finite-lived brands,
partially offset by:
• a decrease of $570 million related to changes in asset lives and fully amortized assets.
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 $4.5 billion by the end of 2025, most of which was achieved by year-end 2024.
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 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 3A . 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 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
2024 v. 2023
The unfavorable period-over-period change of $4.2 billion was primarily driven by (i) higher net interest expense of $2.0 billion, (ii) an unfavorable impact of $760 million due to net periodic benefit costs associated with pension and postretirement plans in 2024 versus net periodic benefit credits in 2023, (iii) lower net gains on equity securities of $580 million, (iv) a charge of $420 million in 2024 related to the expected sale of one of our facilities resulting from the discontinuation of our DMD program and (v) lower Haleon equity method income of $400 million, partially offset by (vi) gains of $945 million in 2024 on the partial sales of our investment in Haleon.
2023 v. 2022
The favorable period-over period change of $840 million was mainly driven by a favorable impact of $2.9 billion due to net gains on equity securities in 2023 versus net losses recognized on equity securities in 2022 and lower net interest expense of $400 million, partially offset by higher intangible asset impairment charges of $2.6 billion.
See Note 4 .
Provision/(Benefit) for Taxes on Income
Year Ended December 31, % Change
(MILLIONS) 2024 2023 2022 24/23 23/22
Provision/(benefit) for taxes on income $ (28) $ (1,115) $ 3,328 (97) *
Effective tax rate on continuing operations
(0.4) % * 9.6 %
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, and cash paid for income taxes, net of refunds, see Note 5 .
Pfizer Inc. 2024 Form 10-K
38
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 in 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 February 4, 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 do 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).
Pfizer Inc. 2024 Form 10-K
39
Products
PRODUCT INDICATION OR PROPOSED INDICATION APPROVED/FILED^
U.S. EU JAPAN
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
2021
Approved
February
2022
Approved
August
2024
Active immunization to prevent invasive pneumococcal disease caused by the 20 Streptococcus pneumoniae (pneumococcal) serotypes contained in the vaccine in infants and children six weeks through 17 years of age, and for the prevention of otitis media in infants six weeks through five years of age caused by the original seven serotypes contained in Prevnar (a) .
Approved
April
2023
Approved
March
2024
Approved
March
2024
TicoVac
(Vaccine) Active immunization to prevent tick-borne encephalitis in individuals 1 year of age and older Approved
August
2021
Approved
March
2024
Nurtec ODT/Vydura
(rimegepant)
Acute treatment of migraine with or without aura in adults Approved
February
2020
Approved
April
2022
Filed November 2024
Prevention of episodic migraine in adults Approved
May
2021
Approved
April
2022
Filed November 2024
Abrysvo
(Vaccine) Active immunization for the prevention of lower respiratory tract disease caused by RSV in individuals 60 years and older Approved
May
2023
Approved
August
2023
Approved
March
2024
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 RSV
Approved
October
2024
Filed
June
2024
Velsipity (etrasimod) Moderately to severely active ulcerative colitis in adults Approved
October
2023
Approved
February
2024
Filed
June
2024
Braftovi (encorafenib) and Mektovi (binimetinib) (b)
BRAF V600E -mutant metastatic non-small cell lung cancer in adult patients
Approved
October
2023
Approved
August
2024
Braftovi (encorafenib),
Erbitux (cetuximab) (c) and mFOLFOX6
First-line BRAF V600E -mutant mCRC
Approved
December 2024
Elrexfio (elranatamab) Triple-class relapsed/refractory multiple myeloma in adult patients
Approved
August
2023
Approved
December
2023
Approved
March
2024
Xtandi (enzalutamide) (d)
nmCSPC with biochemical recurrence at high risk for metastasis (high-risk BCR) Approved
November
2023
Approved
April
2024
Hympavzi
(marstacimab-hncq) Hemophilia A and B without inhibitors
Approved
October
2024
Approved
November
2024
Approved
December
2024
Emblaveo
(aztreonam-avibactam) (e)
Treatment of infections in adult patients caused by Gram-negative bacteria with limited or no treatment options Approved February 2025
Approved
April
2024
Padcev
(enfortumab vedotin-ejfv) (f)
In combination with Keytruda ®(g) (pembrolizumab) for locally advanced or metastatic urothelial cancer in adults
Approved
December
2023
Approved
August
2024
Approved
September
2024
Tivdak
(tisotumab vedotin-tftv) (h)
Recurrent or metastatic cervical cancer with disease progression on or after chemotherapy
Approved
April
2024
Filed
February
2024
Filed
April
2024
Comirnaty (COVID-19 Vaccine, mRNA) 2024-2025 Formula, Omicron KP.2-adapted (i)
Active immunization to prevent COVID-19 caused by SARS-CoV-2 for individuals 12 years of age and older Approved
August
2024
Approved September 2024
Comirnaty (COVID-19 Vaccine, mRNA) 2024-2025 Formula, Omicron JN.1-adapted Active immunization to prevent COVID-19 caused by SARS-CoV-2 for individuals 6 months of age and older Approved
July
2024
Approved
August
2024
Adcetris
(brentuximab vedotin) (j)
Relapsed/refractory diffuse large B-cell lymphoma Approved
February
2025
Paxlovid (nirmatrelvir; ritonavir)
COVID-19 infection in high-risk children (6-11 years of age: >88 lbs.)
Filed February 2025
Filed January 2025
^ 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) Listed indication applies to U.S. only. For the EU, approved indications are pneumococcal invasive disease pneumonia and otitis media. For Japan, approved indication is invasive pneumococcal disease.
Pfizer Inc. 2024 Form 10-K
40
(b) 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.
(c) 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.
(d) Being jointly developed and commercialized with Astellas.
(e) 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.
(f) Being jointly developed and commercialized with Astellas.
(g) Keytruda ® is a registered trademark of Merck Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc.
(h) Being developed in collaboration with Genmab A/S. The April 2024 approval date in the U.S. refers to the conversion of a prior accelerated approval to full approval.
(i) In September 2024, the 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.
(j) Being developed in collaboration with Takeda. Takeda has ex-U.S./Canada rights.
Pfizer submitted its intent to withdraw Penbraya from the EU market. The EC has confirmed the withdrawal of the Penbraya EU Marketing Authorisation Application with an effective date of February 20, 2025.
In February 2025, Pfizer decided to terminate development and commercialization of Beqvez (fidanacogene elaparvovec) and elected to terminate the license agreement between Pfizer and Spark Therapeutics, Inc. effective as of August 6, 2025.
In December 2024, Pfizer submitted a withdrawal of the Ngenla (somatrogon) filing for adult human growth hormone deficiency in the EU.
The following provides information about additional indications and new drug candidates in late-stage development:
PRODUCT/CANDIDATE PROPOSED DISEASE AREA
LATE-STAGE CLINICAL PROGRAMS FOR ADDITIONAL USES AND DOSAGE FORMS
FOR IN-LINE AND IN-REGISTRATION PRODUCTS Ibrance (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
Eliquis (apixaban) (b)
Venous thromboembolism (pediatric)
Padcev (enfortumab vedotin) (c)
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
Hympavzi
(marstacimab-hncq)
Hemophilia (pediatric)
Hemophilia (inhibitor cohort)
NEW DRUG CANDIDATES IN LATE-STAGE DEVELOPMENT PF-06425090 (vaccine) Immunization to prevent primary clostridioides difficile infection
sasanlimab (PF-06801591) Combination with Bacillus Calmette-Guerin for non-muscle-invasive bladder cancer
VLA15 (PF-07307405) vaccine (d)
Immunization to prevent Lyme disease
vepdegestrant (PF-07850327) (e)
Breast cancer metastatic - 2nd line ER+/HER2-
inclacumab (PF-07940370) Sickle cell disease
Ibrance + vepdegestrant (e)
ER+/HER2- metastatic breast cancer
dazukibart (PF-06823859) Dermatomyositis, polymyositis
disitamab vedotin (f)
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
atirmociclib (PF-07220060) 2nd line metastatic breast cancer
ibuzatrelvir (PF-07817883)
COVID-19 infection
mevrometostat (PF-06821497) + enzalutamide
1st line/2nd line metastatic castration resistant prostate cancer post-Abiraterone
mevrometostat (PF-06821497) + enzalutamide
1st line metastatic castration resistant prostate cancer neoadjuvant hormonal therapy naïve
atirmociclib (PF-07220060)
1st line metastatic breast cancer
(a) Ibrance for ER+/HER2+ metastatic breast cancer is being developed in collaboration with Alliance Foundation Trials, LLC.
(b) Eliquis is being developed in collaboration with BMS.
(c) Padcev is being jointly developed and commercialized with Astellas.
(d) VLA15 is being developed in collaboration with Valneva SE.
(e) Vepdegestrant is being developed in collaboration with Arvinas.
(f) Disitamab vedotin is being developed in collaboration with RemeGen Co., Ltd .
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In December 2024, Pfizer decided to terminate development of giroctocogene fitelparvovec (PF-07055480) and elected to terminate the collaboration and license agreement between Pfizer and Sangamo Therapeutics, Inc. effective as of April 21, 2025.
In August 2024, Pfizer announced Phase 3 top-line results for Pfizer and BioNTech’s combination mRNA vaccine candidate against influenza and COVID-19 in healthy individuals 18-64 years of age. The trial did not meet one of its primary immunogenicity objectives of non-inferiority against the influenza B strain despite obtaining higher influenza A responses and comparable COVID-19 responses versus the comparator vaccines. In November 2024, PF-07926307 (COVID-19/mRNA flu combo vaccine) reverted from Phase 3 to Phase 1 clinical trials and has been removed from the table above.
I n 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 outweighs the risk in the approved sickle cell patient population. The data suggested an imbalance in vaso-occlusive crises and fatal events, which requires further assessment that remains ongoing. 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. We are working with the FDA, EMA and other global regulatory authorities and expect the assessment to be completed in the first half of 2025.
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 working with the EMA, FDA, and other regulators globally in relation to this matter.
The FDA has recently 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.
In October 2024, Pfizer stopped two clinical trials with sisunatovir (PF-07923568) following observed drug-drug interactions. Since then Pfizer has decided to terminate development of sisunatovir.
For additional information about our R&D organization, see Note 17 and the Item 1. Business — Research and Development section. For additional information regarding certain collaboration arrangements, see Item 1. Business — Collaboration and Co-Promotion Agreements .
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:
Measure Definition Relevance of Metrics to Our Business Performance
Adjusted income Net 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 –– net
Cost 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 EPS EPS 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, for the 2024 performance year, was Adjusted diluted EPS (as defined for annual incentive compensation purposes), which is derived from Adjusted income and accounted for 40% of the bonus pool funding tied to financial performance. Additionally, for the 2024 performance year, the payout for performance share awards was determined in part by Adjusted net income, which is derived from Adjusted income. Since 2022, we no longer exclude any expenses for acquired IPR&D from our non-GAAP Adjusted results but we continue to 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 metrics, and may be further modified by our Compensation Committee’s assessment of other factors.
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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.
The significant costs incurred in connection with a business combination result primarily from the need to eliminate duplicate assets, activities or employees––a natural result of acquiring a fully integrated set of activities. For this reason, we believe that such costs incurred can be viewed differently in the context of an acquisition from those costs incurred in other, more normal, business contexts. The integration and restructuring costs for a business combination may occur over several years, with the more significant impacts typically ending within three years of the relevant transaction. Because of the need for certain external approvals for some actions, the span of time needed to achieve certain restructuring and integration activities can be lengthy.
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.
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Reconciliations of GAAP Reported to Non-GAAP Adjusted Information––Certain Line Items
Year Ended December 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), (c)
Earnings per common share attributable to Pfizer Inc. common shareholders––diluted
GAAP Reported $ 17,851 $ 14,730 $ 4,388 $ 8,031 $ 1.41
Amortization of intangible assets — — — 5,286
Acquisition-related items (1,341) (10) (45) 1,938
Discontinued operations
— — — (14)
Certain significant items:
Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring (d)
(134) (90) — 2,213
Certain asset impairments (e)
— — (3,295) 3,295
(Gains)/losses on equity securities (e)
— — 1,008 (1,008)
Actuarial valuation and other pension and postretirement plan (gains)/losses — — (579) 579
Other 44
(13) (445) (f)
430
Income tax provision—non-GAAP items
(3,035)
Non-GAAP Adjusted $ 16,420 $ 14,617 $ 1,031 $ 17,716 $ 3.11
Year Ended December 31, 2023
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), (c)
Earnings per common share attributable to Pfizer Inc. common shareholders––diluted
GAAP Reported $ 24,954 $ 14,771 $ 222 $ 2,119 $ 0.37
Amortization of intangible assets — — — 4,733
Acquisition-related items (629) (11) (28) 1,874
Discontinued operations
— — — (11)
Certain significant items:
Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring (d)
(98) (290) — 2,227
Certain asset impairments (e)
— — (3,024) 3,024
(Gains)/losses on equity securities (e)
— — 1,588 (1,588)
Actuarial valuation and other pension and postretirement plan (gains)/losses — — 265 (265)
Other (238) (g)
(24) (246) (f)
518
Income tax provision—non-GAAP items
(2,131)
Non-GAAP Adjusted $ 23,988 $ 14,446 $ (1,224) $ 10,501 $ 1.84
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Year Ended December 31, 2022
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), (c)
Earnings per common share attributable to Pfizer Inc. common shareholders––diluted
GAAP Reported $ 34,344 $ 13,677 $ 1,062 $ 31,372 $ 5.47
Amortization of intangible assets — — — 3,609
Acquisition-related items (119) (7) (74) 832
Discontinued operations
— — — (21)
Certain significant items:
Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring (d)
(88) (562) — 1,396
Certain asset impairments (e)
— — (421) 421
(Gains)/losses on equity securities (e)
— — (1,270) 1,270
Actuarial valuation and other pension and postretirement plan (gains)/losses — — 230 (230)
Other (40) (59) (636) (f)
752
Income tax provision—non-GAAP items
(1,683)
Non-GAAP Adjusted $ 34,096 $ 13,049 $ (1,109) $ 37,717 $ 6.58
(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: (0.4)% in 2024, (105.4)% in 2023 and 9.6% in 2022. See Note 5 . Our effective tax rates for non-GAAP Adjusted income were: 14.5% in 2024, 9.0% in 2023 and 11.7% in 2022.
(b) Includes reconciling amounts for Research and development expenses that are not material to our non-GAAP consolidated results of operations.
(c) For 2024, the total acquisition-related items of $1.9 billion include reconciling amounts for Restructuring charges and certain acquisition-related costs of $514 million, mainly composed of $427 million of integration costs and other charges. For 2023, the total acquisition-related items of $1.9 billion included reconciling amounts for Restructuring charges and certain acquisition-related costs of $1.2 billion , mainly composed of $785 million of integration costs and other charges, $190 million of transaction costs and $125 million of employee termination-related charges. For 2022, the total acquisition-related items of $832 million included reconciling amounts for Restructuring charges and certain acquisition-related costs of $631 million , composed of $348 million of integration costs and other charges, $144 million of transaction costs and $138 million of employee termination-related charges. See Note 3 .
(d) 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 .
(e) See Note 4 .
(f) For 2024, the total adjustment of $445 million includes (i) net gains of $825 million on the partial sales of our investment in Haleon in March and October 2024, which are comprised of (a) total gains on the sales of $945 million less (b) $120 million recognized in our adjusted income in the fourth quarter representing our pro-rata share of Haleon’s third quarter 2024 adjusted income recorded on a one quarter lag and implicitly included in the gain on the sale of those shares, (ii) charges of $567 million for certain legal matters, primarily representing certain product liability expenses related to products discontinued and/or divested by Pfizer, (iii) a charge of $420 million related to the expected sale of one of our facilities resulting from the discontinuation of our DMD program and (iv) charges of $312 million mostly related to (a) our equity-method accounting pro-rata share of intangible asset amortization, impairments and restructuring costs recorded by Haleon, as well as (b) adjustments to our equity-method basis differences and (c) Pfizer's share of investee capital transactions recognized by Haleon. For 2023, the total adjustments of $246 million included charges of (i) $474 million for certain legal matters, primarily representing certain product liability and other legal expenses related to products discontinued and/or divested by Pfizer, and to a lesser extent, legal obligations related to pre-acquisition matters and (ii) $127 million mostly related to our equity-method accounting pro-rata share of intangible asset amortization and impairments, costs of separating from GSK and restructuring costs recorded by Haleon, partially offset by: (i) a $222 million gain on the divestiture of our early-stage rare disease gene therapy portfolio to Alexion and (ii) dividend income of $211 million from our investment in Nimbus resulting from Takeda’s acquisition of Nimbus’s oral, selective allosteric tyrosine kinase 2 (TYK2) inhibitor program subsidiary. For 2022, the total adjustments of $636 million included charges of (i) $307 million mostly representing our equity-method accounting pro rata share of restructuring charges and costs of separating from GSK recorded by Haleon/the Consumer Healthcare JV and adjustments to our equity-method basis differences which are also related to the separation of Haleon/the Consumer Healthcare JV from GSK and (ii) $230 million for certain legal matters, primarily representing c ertain product liability and other legal expenses related to products discontinued and/or divested by Pfizer.
(g) For 2023, the total adjustment of $238 million mainly includes $286 million in inventory losses, overhead costs related to the period in which the facility could not operate, and incremental costs resulting from tornado damage to our manufacturing facility in Rocky Mount, NC, partially offset by insurance recoveries.
Pfizer Inc. 2024 Form 10-K
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ANALYSIS OF THE CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
(MILLIONS) 2024 2023 2022 Drivers of change 2024 v. 2023
Cash provided by/(used in):
Operating activities
$ 12,744 $ 8,700 $ 29,267 The change was driven primarily by an increase in net income adjusted for non-cash items partially offset by the timing of receipts and payments in the ordinary course of business, including a decrease in advance payments for Comirnaty and Paxlovid and net changes in inventory greater than one year (see Note 8A ).
Investing activities
$ 2,652 $ (32,278) $ (15,783) The change was driven mainly by $43.4 billion cash paid in 2023 for the acquisition of Seagen, net of cash acquired (see Note 2A ) and $7.0 billion of proceeds from the partial sales of our investment in Haleon in 2024, partially offset by $16.3 billion greater net purchases of short-term investments in 2024.
Financing activities
$ (17,140) $ 26,066 $ (14,834) The change was driven mostly by $30.8 billion of proceeds from the issuance of long-term debt in May of 2023 for the acquisition of Seagen and $12.6 billion greater net repayments of short-term borrowings in 2024.
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.
We focus efforts to optimize operating cash flows through achieving working capital efficiencies that target accounts receivable, inventories, accounts payable, and other working capital. Excess cash from operating cash flows is invested in money market funds and available-for-sale debt securities which consist of primarily high-quality, highly liquid, well-diversified debt securities. We have taken, and will continue to take, a conservative approach to our financial investments and monitoring of our liquidity position in response to market changes. We typically maintain cash and cash equivalent balances and short-term investments which, together with our available revolving credit facilities, are in excess of our commercial paper and other short-term borrowings.
Additionally, we may obtain funding through short-term or long-term sources from our access to the capital markets, banking relationships and relationships with other financial intermediaries to meet our liquidity needs.
Diverse sources of funds: Related disclosure presented in this Form 10-K
Internal sources:
• Operating cash flows
Consolidated Statements of Cash Flows – Operating Activities and the Analysis of the Consolidated Statements of Cash Flows section within MD&A
• Cash and cash equivalents
Consolidated Balance Sheets
• Money market funds
Note 7A
• Available-for-sale debt securities
Note 7A , 7B
• Equity investments
Note 7A , 7B
External sources:
Short-term funding:
• Commercial paper
Note 7C
• Revolving credit facilities
Note 7C
• Lines of credit
Note 7C
Long-term funding:
• Long-term debt
Note 7D
• Equity
Consolidated Statements of Equity and Note 12
For additional information about the sources and uses of our funds and capital resources, see the Analysis of the Consolidated Statements of Cash Flows section within MD&A.
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-K, the following ratings have been assigned to our commercial paper and senior unsecured long-term debt:
NAME OF RATING AGENCY Pfizer Short-Term Rating Pfizer Long-Term Rating Outlook/Watch
Moody’s P-1 A2
Stable Outlook
S&P A-1
A
Stable Outlook
These ratings are not a recommendation to buy, sell or hold securities and the ratings are subject to revision or withdrawal at any time by the rating organization. Each rating should be evaluated independently of any other rating.
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Capital Allocation Framework ––Our capital allocation framework is primarily devised to enhance 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. See the Overview of Our Performance, Operating Environment, Strategy and Outlook — O ur Business and Strategy section within MD&A.
Dividends —Our current and projected dividends provide a return to shareholders while maintaining sufficient capital to invest in growing our business. Our dividends are not restricted by debt covenants. While the dividend level remains a decision of Pfizer’s BOD and will continue to be evaluated in the context of future business performance, we currently believe that we can support future annual dividend increases, barring significant unforeseen events. On December 12, 2024, our BOD declared a first-quarter dividend of $0.43 per share, payable on March 7, 2025, to shareholders of record at the close of business on January 24, 2025. The first-quarter 2025 cash dividend will be our 345th consecutive quarterly dividend.
Common Stock Purchases —As of December 31, 2024, our remaining share-purchase authorization was $3.3 billion with no repurchases in 2024. See Note 12 .
Haleon —After our sales of a portion of our Haleon shares in March and October 2024, we owned approximately 15% of the outstanding voting shares of Haleon as of December 31, 2024. See Note 2C . With the reduction in our Haleon ownership percentage and board representation after the October 2024 sale, we discontinued the application of the equity method to our Haleon investment, and in the fourth quarter of 2024 began to account for the investment as an equity security with a readily determinable fair value, which is carried at fair value, with changes in fair value reported in Other (income)/deductions––net. In the first quarter of 2025, we sold an additional portion of our investment in Haleon for $3.0 billion further reducing our ownership interest to approximately 7%. Pfizer intends to use the proceeds to support its capital allocation priorities. We intend to monetize our remaining Haleon investment in a prudent fashion during 2025.
Off-Balance Sheet Arrangements, Contractual, and Other Obligations ––In the ordinary course of business, (i) we enter into off-balance sheet arrangements that may result in contractual and other obligations and (ii) in connection with the sale of assets and businesses and other transactions, we often indemnify our counterparties against certain liabilities that may arise in connection with the transaction or that are related to events and activities. For more information on guarantees and indemnifications, see Note 16B .
Additionally, certain of our co-promotion or license agreements give our licensors or partners the rights to negotiate for, or in some cases to obtain under certain financial conditions, co-promotion or other rights in specified countries with respect to certain of our products. Furthermore, collaboration, licensing or other R&D arrangements may give rise to potential milestone payments. Payments under these agreements generally become due and payable only upon the achievement of certain development, regulatory and/or commercialization milestones, which may span several years and which may never occur.
Our significant contractual and other obligations as of December 31, 2024 consisted of:
• Long-term debt, including current portion (see Note 7D ) and related interest payments;
• Estimated cash payments related to the TCJA repatriation estimated tax liability (see Note 5 ). Estimated future payments related to the TCJA repatriation tax liability that will occur after December 31, 2024 total $4.7 billion, of which an estimated $2.1 billion is to be paid in the next twelve months and an estimated $2.6 billion is to be paid in periods thereafter. Our obligations may vary as a result of changes in our uncertain tax positions and/or availability of attributes such as foreign tax and other credit carryforwards;
• Certain commitments totaling $4.1 billion, of which an estimated $1.0 billion is to be paid in the next twelve months, and $3.1 billion in periods thereafter (see Note 16C );
• Purchases of PP&E (see Note 9 ). In 2025, we expect to spend approximately $2.8 billion on PP&E; and
• Future minimum rental commitments under non-cancelable operating leases (see Note 15 ).
Global Economic Conditions ––We have operations in countries that have hyperinflationary economies. The impact to Pfizer is not considered material. See the Item 1A. Risk Factors––Global Operations section.
Market Risk ––We are subject to foreign exchange risk, interest rate risk, and equity price risk. The objective of our financial risk management program is to minimize the impact of foreign exchange rate and interest rate movements on our earnings. We address such exposures through a combination of operational means and financial instruments. For more information on how we manage our foreign exchange and interest rate risks, see Notes 1F and 7E , as well as the Item 1A. Risk Factors—Global Operations section for key currencies in which we operate. Our sensitivity analyses of such risks are discussed below.
Foreign Exchange Risk —The fair values of our financial instrument holdings are analyzed at year-end to determine their sensitivity to foreign exchange rate changes. In this analysis, holding all other assumptions constant and assuming that a change in one currency’s rate relative to the U.S. dollar would not have any effect on another currency’s rates relative to the U.S. dollar, if the dollar were to move against all other currencies by 10%, as of December 31, 2024, the expected impact on our net income would not be significant.
Interest Rate Risk —The fair values of our financial instrument holdings are analyzed at year-end to determine their sensitivity to interest rate changes. In this analysis, holding all other assumptions constant and assuming a parallel shift in the interest rate curve for all maturities and for all instruments, if there were a one hundred basis point change in interest rates as of December 31, 2024, the expected impact on our net income would not be significant.
Equity Price Risk ––We hold long-term investments in equity securities with readily determinable fair values in life science companies as a result of certain business development transactions. While we are holding such securities, we are subject to equity price risk, and this may increase the volatility of our income in future periods due to changes in the fair value of equity investments. From time to time, we will sell such equity securities based on our business considerations, which may include limiting our price risk. Our equity securities with readily determinable fair values are analyzed at year-end to determine their sensitivity to equity price rate changes. In this sensitivity analysis, the expected impact on our net income would not be significant.
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NEW ACCOUNTING STANDARDS
Recently Adopted Accounting Standards
See Note 1B .
Recently Issued Accounting Standards, Not Adopted as of December 31, 2024
Standard/Description Effective Date Effect 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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this Item is incorporated by reference to the discussion in the Analysis of Financial Condition, Liquidity, Capital Resources and Market Risk section within MD&A.
Pfizer Inc. 2024 Form 10-K
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