Pfizer 2009 Annual Review

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Pfizer 2009 Annual Review

  1. 1. SCIENCE AnnuAl Review 2009
  2. 2. Jean Cui (center) and her la Jolla laboratories team are pioneering new approaches to non-small cell lung cancer. 3 find videos of JeAn Cui And otheR sCientists At pfizeR.Com/AnnuAl We bring the best scientific minds together to challenge the most feared diseases of our time…
  3. 3. lung cancer cells, as seen here and on the cover, are difficult to kill, and standard chemotherapy brings harsh side effects. one potential new approach appears to avoid those effects and has showed such promise that it has been expedited to phase iii trials.
  4. 4. martin Brenner and his team are working on an approach to treat diabetes by regrowing pancreatic cells. by charting a neW course in biomedical research…
  5. 5. a unique model our approach to discovering and developing new medicines and In terms of accountability, this approach distinctly clarifies who is for Scientific vaccines. Biomedical research at responsible for each sequence in the Pfizer is now organized into two multiyear, billion-dollar-plus march achievement collaborative, highly focused units, from scientific theory to approved, PharmaTherapeutics R&D and prescribed medicine or vaccine. BioTherapeutics R&D. Each of these The two research units each have units marshals the resources to the responsibility to bring forward pursue and prove theories about sufficient numbers of potential how either small-molecule chemical medicines and vaccines to sustain compounds or large-molecule, Pfizer’s growth. The customer-facing protein-based biologics might business units have the responsibility prevent or change the course of a for moving molecules that are disease. At the point of “proof of proven in concept through the It’s often said that humanity will concept,” the potential new medicine mid-to-late stages of clinical trials make more biomedical progress or vaccine is transferred to one to commercialization. Our new in the next 20 years than in the of Pfizer’s customer-facing business model to manage this sequence previous two thousand. Behind that groups for large-scale clinical trials, makes certain that there is strong statement is a complex question. registration and commercialization. agreement between research and With so much new science to The key words for this approach commercial groups on what to put pursue, how does a company like are focus and accountability. Chief into clinical trials. This approach Pfizer prioritize targets, manage risk Scientific Officers within our two also helps us glean valuable lessons and deliver sufficient numbers of R&D units lead discovery and early from each failure that may boost the medicines to expand the business? development teams precisely chances for future success. Pfizer took a large step toward focused on either a therapeutic answering that question in 2009 area or on a specific technology, 3 Learn more at pfizer.com/annuaL with the addition of Wyeth and such as Regenerative Medicine, the continued transformation of that cuts across therapeutic lines and provides a platform for advancing scientific inquiry.
  6. 6. collaborative, clinical trials. Research teams are built around specific disease areas, biotech companies that Pfizer has acquired and essentially left as Strongly focused including oncology, psychoses, focused units, while supporting them pain and cardiovascular/metabolic/ with the benefits of our scale and research units endocrine disorders. Scientists depth of scientific expertise. focusing on a specific disease area In addition, BioTherapeutics R&D are located together to improve the and PharmaTherapeutics R&D don’t chances for serendipitous discovery. try to “go it alone.” Both are partners PharmaTherapeutics R&D is also with some of the world’s best organized to leverage Pfizer’s scientific teams in other companies, substantial investments in capabilities in academia and in government such as medicinal chemistry, organizations. These partnerships high-throughput screening and include involvement in the fast- Pfizer’s two research units, pharmacokinetics. We also have a expanding scientific community in PharmaTherapeutics R&D and compound library that ranges into Asia, where Pfizer both executes BioTherapeutics R&D, work in close the billions of chemical entities, its own research and collaborates partnership toward the vision many of them already tested for with others. of leadership wherever we choose safety in humans. Overall, Pfizer’s lead in enabling to compete. We want to be first, Our BioTherapeutics R&D technologies, our culture of or in the front wave, in introducing organization expanded greatly innovating across boundaries, and new classes of therapies. If we are with the acquisition of Wyeth. our ability to back idea-rich scientists entering an established therapeutic BioTherapeutics R&D includes with global resources can help open class, we want to offer a best-in-class centers devoted to vaccines research; the door to a new era of biomedical medicine or vaccine that may research into inflammation, research achievement. change the course of a disease. immunology, biocorrection and PharmaTherapeutics R&D focuses tissue repair; and relationships with 3 Learn more at pfizer.com/annuaL on small-molecule chemicals to biotechnology organizations outside generate new candidates for Pfizer. In addition, BioTherapeutics R&D includes groups such as CovX and Rinat—highly specialized
  7. 7. insulin, represented in this molecular model, is one of the body’s miracle hormones, instructing liver, muscle and fat cells to absorb and store glucose. insufficient insulin production leads to diabetes. pfizer is investing substantially in potential new treatments for diabetes and its effects on organs such as kidneys and eyes.
  8. 8. Kathleen wood and her team have advanced the science on Alzheimer’s disease for two decades, contributing to the foundation of knowledge about this debilitating condition. …We are advancing health, Well-being and quality of life through top-flight science.
  9. 9. the synapse, where neurons meet, is one area of focus in our research. Alzheimer’s disease has proven very resistant to treatment, which is why pfizer is attacking it on multiple fronts, using both biological and small- molecule approaches.
  10. 10. darren wong is applying RnA therapy to liver cancer, striving to shut down its ability to spread. focused on unmet medical needs, We Work tirelessly to get more breakthroughs to more people, faster.
  11. 11. investing breadth of scientific talent and considerable resources, Pfizer is able bacterial, fungal and viral infections. We continue to challenge some of to Win, to bring together the experts, the the most feared diseases of our time, platforms, the technologies and the including what have traditionally for patients partnerships to make an impact been termed “neglected diseases” and pfizer across many therapeutic areas. —diseases like malaria that strike However, even Pfizer, strong as it millions of people, largely in is, must have focus. Our pipeline of developing nations. We are also about 500 projects is largely focused combating “orphan diseases”—often on six “Invest to Win” areas, where devastating conditions striking we believe that we have significant limited numbers of people. Our 2009 new opportunities for innovation and agreement with the Israeli company market leadership. These are: Protalix, for example, is focused on • Alzheimer’s disease developing a plant-based enzyme Developing a new vaccine or medicine • Oncology treatment for Gaucher’s disease, requires many kinds of scientific • Diabetes an inherited condition occurring just expertise, including deep knowledge • Inflammation once in every 20,000 live births. of diseases and their targets, as • Pain This compound is now in Phase III well as mastery of the science and • Psychoses trials and is already being made technology required to find the best available, with permission from approach to the disease target. While our portfolio of research regulatory authorities, to people Many companies in our industry are projects is centered on these areas, suffering from this disease. limited in their ability to assemble Pfizer can go where the science and manage all the expertise takes us. Our overall portfolio of 3 Learn more at pfizer.com/annuaL and knowledge required to bring a investigational medicines covers series of new therapies and vaccines many significant unmet medical to doctors. Blessed with depth and needs, from neurological conditions such as autism to agents that fight increasingly treatment-resistant
  12. 12. unraveling Pfizer is committed to the discovery, investigation and development to develop a companion diagnostic test kit to identify those patients cancer on of innovative treatment options who are most likely to benefit from to improve the outlook for cancer this proposed vaccine’s mechanism multiple patients worldwide. Our oncology of action. fronts pipeline currently has both Pfizer oncology research is also biologics and small molecules in pushing the frontiers of bioinnovation. development, including several Our CovX research unit is currently first-in-class compounds. We now in preclinical testing with a novel have hundreds of clinical trials under molecule, CVX-241, which aims to way in oncology, in some of the eliminate two factors that drive most prevalent and difficult-to-treat blood vessel growth in tumors. cancers, such as lung, prostate, CovX’s “scaffold” technology colorectal, breast, liver, renal cell and combines short-lived therapeutic various hematological cancers. peptides with longer-lived antibodies, Pfizer scientists, along with bringing both into a single agent. their colleagues in many alliances For cancer patients who must often and partnerships, are among the use combination therapies—multiple leaders in the global effort to infusions or injections—CVX-241 develop innovative “personalized could become an important medicine” approaches for patients. option in their treatment regimens One example can be seen in our and an addition to the overall proposed vaccine, now in Phase II anticancer arsenal. trials, to treat the most common malignant brain tumor in adults. 3 Learn more at pfizer.com/annuaL Toward that goal, Pfizer entered into an agreement with the German pharmaceutical company QIAGEN
  13. 13. typical cancer treatments aim to “lock the door” to try to keep the cancer from coming out of the cell. A novel approach is to use RnA to “take away the keyhole” so the cancer can never emerge.
  14. 14. Annaliesa Anderson (center) and her team are focused on developing a preventive vaccine for lethal staph infections. patients and their families and physicians knoW the value of our contributions.
  15. 15. Gram-positive bacteria that resist commonly prescribed treatment, such as methicillin- resistant Staphylococcus aureus (in purple) are a serious, growing danger. pfizer’s zyvox is effective against gram-positive bacteria and can be taken both intravenously and orally.
  16. 16. Kyri dunussi-Joannopoulos is facing down autoimmune diseases, seeking to change the landscape for patient treatment. We have the approach, scale and spirit to accelerate the march of medical advances…
  17. 17. now— Prevnar 13, approved in more than 40 countries for use by infants specific immune responses. In this field of therapeutic vaccines, we a global and young children, provides the have in-licensed an approach broadest serotype coverage of any from Celldex Therapeutics for an force in pneumococcal conjugate vaccine immunotherapy vaccine to treat Vaccines available and constitutes a new glioblastoma multiforme, the most platform for growth. common brain cancer in adults. Our pipeline is focused on the This vaccine, now in Phase II trials, discovery and development of targets a mutated form of the first-in-class and/or best-in-class epidermal growth factor receptor, novel vaccines. Our preventive which is found only in cancer cells. vaccine late-stage pipeline includes A successful vaccine in this area Prevnar 13, now in Phase III could help save, extend or improve clinical trials for the prevention of the lives of tens of thousands of pneumococcal disease in adults, and patients every year. A number of The combination of Wyeth and an investigational vaccine in Phase II additional therapeutic vaccine targets Pfizer has resulted in an organization clinical trials for the prevention are under active investigation. with broad capabilities, in preventive of meningococcal B disease (the With recent advances in science and therapeutic vaccines research, most common meningococcal and technology, we are optimistic development and technology. The strain in the U.S. and Europe) in about making important progress foundation of our vaccine success adolescents. Our preventive vaccine with our vaccine pipeline. Our is the Prevnar franchise, known as early-research pipeline includes world-class research facilities and Prevenar in most markets outside programs targeted to help protect abundance of scientific expertise put the U.S. Prevnar, the world’s against hospital-acquired infections, us among the leaders in this exciting top-selling vaccine, is associated with sexually transmitted diseases and area of research. significant public health benefits in meningococcal B disease in infants. regions where it is routinely used. We are also exploring whether 3 Learn more at pfizer.com/annuaL vaccines can do more than prevent diseases. We believe vaccines may be able to treat disease by stimulating
  18. 18. fighting Alzheimer’s disease is a growing global epidemic. The effects are monoclonal antibody to the beta- amyloid plaques that are theorized a Looming devastating for patients, families to contribute to Alzheimer’s disease. and communities as loved ones drift Bapineuzumab came to Pfizer as epidemic away. The current annual worldwide a result of the Wyeth acquisition. cost of Alzheimer’s disease is Pfizer’s pipeline includes other estimated at $315 billion and, with compounds designed to address aging populations, this social burden Alzheimer’s disease, across a range is only expected to increase. of mechanisms. In response, Pfizer has committed In our clinical trials, safety and itself to a collaborative global effort, efficacy of new approaches involving public and private interests, are being assessed across all stages to manage the effects of Alzheimer’s of Alzheimer’s disease, both as disease. In addition to our own single therapies and in combination substantial research program, we with currently available “standard aim both to raise awareness and of care” therapies. We are hoping provide a unified, global voice for that one or more of our advanced all those with a stake in Alzheimer’s programs will bear fruit, offering disease research, care and advocacy. new options for effective, safe At Pfizer, we are urgently working Alzheimer’s disease treatments. on multiple approaches to treating Alzheimer’s disease and are 3 Learn more at pfizer.com/annuaL optimistic that new solutions may be within our reach. One treatment in Phase III clinical trials is bapineuzumab, being developed by Pfizer and Janssen, a subsidiary of Johnson & Johnson. Bapineuzumab is a humanized
  19. 19. Rheumatoid arthritis, an autoimmune disease, can greatly affect quality of life. pfizer’s tasocinitib, a JAK-3 inhibitor now in phase iii trials, may offer physicians and patients a new alternative for managing it.
  20. 20. Knut niss (left) is doing basic research on adult stem cells with the ultimate goal of combating chronic inflammatory bowel disease. …and help bring about a healthier World. your World.
  21. 21. Bone marrow transplants of adult stem cells are a very effective but often poorly tolerated treatment for certain conditions. pfizer Regenerative medicine is investigating ways to refine adult stem cell treatments to spare patients from excessive pain.
  22. 22. pfiZer.
  23. 23. Where science comes to life. www.pfizer.com/annual
  24. 24. The rapid pace of the Wyeth integration reflects the most fundamental principle at Pfizer: We meet our commitments to our stakeholders, starting with our commitments to you, the owners of the company.” Jeff Kindler Chairman of the Board and Chief Executive Officer 16
  25. 25. Pfizer colleagues have stepped up to the challenge of executing one of the fastest integrations in recent business history. To Our Owners When I first wrote to you as Chairman three years ago, uniquely able to make those investments and, we had just made the necessary but painful decision to therefore, policymakers must continue to preserve end our late-stage development program for torcetrapib and enhance an environment that encourages due to safety concerns. That program offered a companies like ours to invest capital in the pursuit of potential new treatment for the millions of people medical innovation; living with cardiovascular disease—which still remains • Drug discovery and development is enormously the world’s number one killer, despite all the medical expensive and inherently risky—so those of us advances and increased knowledge about healthier who are stewards of your capital must invest it lifestyles over the last few decades. wisely. We must take prudent risks; rigorously apply Several months later, we made another difficult hurdle rates appropriate for the nature of the specific decision—this time to withdraw Exubera from the investment; recognize that not every investment market. The world’s first inhalable insulin, this novel will succeed in this business; carefully monitor our technology offered a medical advance to treat diabetes. investments; and, importantly, know when to stop But it was not accepted by the people we hoped would funding projects that are not meeting their goals. use it, prescribe it or pay for it. Our job, of course, is to achieve for you, over time, These two medical programs sought to address an appropriate return for those investments as a urgent challenges to global health, and they had strong whole; and scientific merit when they began years earlier. That’s • It is unwise to rely on one or two blockbuster why billions of dollars were invested in them over a long drugs (whether on the market or still in the period of time. pipeline) for a disproportionate amount of These two outcomes—disappointing for patients our future revenue and profit. We must take and our colleagues, and expensive for our shareholders— a balanced approach to the risks and rewards brought into sharp focus several truths about the represented by the different types of product biopharmaceutical business: and market opportunities presented by today’s biopharmaceutical business. • People around the world continue to suffer from unmet medical needs—so society must continue to make the significant but risky investments necessary to find cures and treatments to meet those needs. Biopharmaceutical companies are 17
  26. 26. Our Path Forward • We now have a portfolio of profitable, growing And so, as I reported in my letter to you after my first diversified businesses that closely complement full year as Chairman and CEO, we adopted a different our core biopharmaceutical businesses. The course than we had taken in the recent past. combination of Pfizer and Wyeth brought together leading animal health, consumer health, nutrition We called it Our Path Forward and it has five strategies: and capsule manufacturing businesses that produce • Refocus and optimize our patent-protected portfolio; profitable growth—and that together offer a range • Find and capitalize on new opportunities for of treatments and preventive measures for every established products; stage of life for people and animals; and • Grow in emerging markets; • We are continuously reducing our costs, • Grow our diversified businesses; and improving our productivity and making our cost • Instill a culture of innovation and continuous structure more flexible. During 2007 and 2008, improvement. we reduced our total cost base by $2.8 billion, We have pursued these strategies aggressively and on a constant-currency basis versus 2006. This was the Wyeth transaction accelerated our progress toward achieved in large part by reducing the workforce each one: from 98,000 to 81,900; and by decreasing the number of manufacturing and R&D sites by more • In our patent-protected portfolio, we narrowed than 40 percent—from 78 to 46 and from 15 to the focus of our research to those therapeutic nine, respectively. All told, the total real estate areas where we can invest to win. These are the footprint was reduced by more than 35 percent. We diseases where the medical needs are greatest, announced further cost reduction plans in January where the science is most promising, and where 2009 in conjunction with the Wyeth acquisition. We Pfizer’s capabilities are strongest. They include aim to achieve additional savings of approximately oncology, pain, inflammation, Alzheimer’s disease, $7 billion before making focused investments in psychoses and diabetes. In addition, thanks in growth opportunities, yielding net cost savings significant part to the Wyeth acquisition, we have of between $4 billion and $5 billion after those increased our emphasis on biotherapeutics and reinvestments by 2012, on a constant-currency basis. vaccines. When we updated our pipeline in late We will continue to improve every aspect of our January of this year, we announced that we had productivity and the efficiency with which we deploy 133 programs in development, including 27 biologics your capital. Our solid track record on this score and 6 vaccines, up from 16 biologics and one provides confidence in our ability to both return that vaccine when we updated the pipeline a year earlier; capital to shareholders as well as to make disciplined • We made Pfizer’s first significant investments in investments in the many growth opportunities generic medicines and are turning a historically before us—in marketed products as well as in new declining business—consisting of products that products and new markets. have lost their exclusivity—into a platform for future profitable growth. We did this by creating a focused, accountable, high-performing Established Pursuing Health Solutions in Diverse Ways Products unit with a culture all its own. This business Together, all of these changes have produced a very operates with the speed and agility demanded by different company today from what we were when I first its unique marketplace. We now have approximately wrote to you three years ago. 600 products in our Established Products portfolio. We remain, of course, a biopharmaceutical company While the results in this unit will vary, it generated driven by scientific innovation. But we now pursue year-over-year operational revenue growth for the health solutions in numerous and diverse ways: first time in the fourth quarter of 2009; • For people as well as animals; • Similarly, we created an Emerging Markets • Through research in small molecules, large molecules Business Unit to seize opportunities in the and vaccines; fastest-growing biopharmaceutical markets • Through prescription as well as over-the-counter in the world. We have made the right kinds of medicines; investments in the right markets—those in which we • Through patent-protected, generic and “branded are in a premier competitive position as a result of generic” medicines; our historical presence, the breadth of our portfolio, • Through human nutritional supplements and vitamins; and our strong relationships with local partners. As • Through primary care, specialty care, and oncology a result, this business produced double-digit revenue treatments and cures; and growth in many markets during 2009, led by China, • In the developed world as well as in the developing India, Brazil and Russia; world. 18
  27. 27. “Thanks in significant part to the Wyeth acquisition, we have increased our emphasis on Acquired with Wyeth, Pfizer’s Andover, Massachusetts biotherapeutics facility is home to leading experts in recombinant DNA and other biotherapeutic technologies. and vaccines.” In short, we are a company whose mission is to At the same time, however, we will continue to apply science and our global resources to improve respond to unmet medical needs across our business in health and well-being at every stage of life. numerous other ways. We will drive profitable growth I believe the people, capabilities and assets that we from multiple additional sources—from new indications have brought together make Pfizer uniquely valuable for existing products; from medicines to treat diseases to people around the world. We now have more ways that afflict relatively smaller, but still large, segments than ever to help the tens of millions of people who live of the population; from opportunities across emerging with disease today—as well as the tens of millions of markets; from our established products portfolio; and people we can help by preventing illnesses and disease from our diversified businesses. in the future. Together with continuing improvements in For shareholders, this means enormous opportunities. productivity, and smart, disciplined capital allocation, And, it also means we will no longer be overly dependent we expect our strategy to produce, over time, modest on one or two in-line blockbuster drugs or potential top-line growth, stronger and consistent bottom-line blockbusters. In fact, no Pfizer product is expected to growth, and continued strong dividend payments—all account for more than 10 percent of our annual revenue of which, in turn, should enhance shareholder value. once Lipitor loses U.S. exclusivity. Clearly, we are still pursuing blockbusters—medicines 2009: Challenges and Progress that can individually prevent, treat or cure dreaded As I noted earlier, our acquisition of Wyeth, which we illnesses that afflict tens of millions of people. We are closed late in 2009, significantly advanced each of the bringing together the best scientific minds—inside and strategies in Our Path Forward. outside our company—to attack some of the most Thanks to the extraordinary work of thousands feared diseases of our time. In many therapeutic areas, of individuals at Pfizer and Wyeth, the transaction we believe our late-stage pipeline provides potential was closed on time. The integration has so far met new medicines and vaccines that will address enormous or exceeded our expectations in terms of speed, in unmet medical needs—like Alzheimer’s disease, chronic achievement of milestones, and, most importantly from pain and rheumatoid arthritis. my point of view, in advancing a culture through which we gain the best thinking and talent from both legacy companies and move forward together on behalf of our shareholders and other stakeholders. 19
  28. 28. “Over the past three years, we’ve substantially enhanced our leadership at all levels, through internal promotions and by hiring people from inside and outside the industry.” Pfizer’s Executive Leadership Team. You can learn more from each of these leaders on pages 26 –31 of this report. Our performance in 2009 clearly demonstrates The Spirit of Small…The Power of Scale the ability of our colleagues to remain focused and to Delivering commitments requires clear accountability. deliver solid operational performance, while also working But big companies often produce bureaucracy the to ensure a successful integration. From the moment way gardens produce weeds, and bureaucracy is the the acquisition received required legal approvals, our enemy of accountability. And, of course, it can suffocate colleagues moved quickly. The day after the acquisition the ability of leaders closest to their customers to closed, we announced the identity of all country leaders act quickly in a highly competitive and fast-moving and the location of all headquarters sites. Within six global marketplace. days, U.S. Primary Care field force members knew their At the same time, there are significant aspects status. Within 30 days, we announced an integrated of our business where size and scale are not only a plan for R&D site reductions. And within 90 days, we competitive advantage but, in some ways, essential. completed a scientifically complex prioritization and High-throughput screening; large, global clinical trials; announced Pfizer’s new combined R&D pipeline. extensive field forces in certain markets; economies of The rapid pace of the Wyeth integration reflects scale in manufacturing—these are just a few examples the most fundamental principle at Pfizer: We meet our of areas in which Pfizer can, when we do it right, use our commitments to our stakeholders, starting with our size and scale to our advantage. commitments to you, the owners of the company. So, at Pfizer, we follow a principle that I call “the spirit Since this management team has been fully in place, of small and the power of scale.” Whether competing we have consistently met or exceeded the adjusted in different geographies or different businesses, our financial guidance1 that we have provided—despite an general managers have clear accountability for business extremely dynamic operating and policy environment. units that are now small enough to focus on meeting We did so again in 2009, and our financial guidance for the very different needs of the unique customers they 2010 reflects our plan to continue delivering results and serve. Similarly, the Chief Scientific Officers of our meeting our commitments. research units lead small groups of scientists focused on specific therapeutic or technology areas. In each of these cases, accountability and authority are clear. At the same time they are backed by Pfizer’s global scale and resources—providing a level of efficiency and other advantages that they could not achieve on their own. 1 See note 3 on page 35. 20
  29. 29. In the last year, this approach produced results that Advancing Science are hard to imagine happening at Pfizer, even two or As I stated earlier, science remains at the center of three years ago. who we are at Pfizer. As we’ve been changing the • We joined forces with GlaxoSmithKline to create company, we’ve also reflected the changing science ViiV Healthcare, a separate company that brings of biopharmaceutical research, which is taking many together the industry’s best assets in combating promising directions. Historically, companies like ours HIV/AIDS. have primarily focused on new medicines based on • By empowering our Established Products business to chemical compounds, and we will continue to build move quickly, we beat out competitors to collaborate on our strengths in this critical area. But we are also with Protalix in developing an orphan drug to increasing our investment in research that seeks new treat Gaucher’s disease. The Protalix partnership medicines and vaccines that are made of protein-based represents Pfizer’s first entry in the biosimilar drug biological molecules. market. In order to do so, we charted a unique course in • We entered into major licensing agreements with 2009, by creating two distinct research organizations, three India-based pharmaceutical companies— PharmaTherapeutics R&D and BioTherapeutics R&D. Aurobindo Pharma Ltd., Claris Lifesciences Ltd. and Within these two groups, world-class Chief Scientific Strides Arcolab—that add new non-Pfizer products Officers—advised by specialized panels of independent to our portfolio, enhancing the availability of experts—lead highly targeted scientific teams focused medicines to underserved people around the world. on particular therapeutic areas or technologies. • We formed a partnership with Bausch & Lomb, These teams search for compounds that they believe a leading global supplier of eye care treatments, have the probability of scientific, clinical, technical and in which both companies will promote each regulatory success. other’s prescription ophthalmic products, allowing Conferring on these Chief Scientific Officers and each of us to extend our level of support to eye their teams the authority and resources to pursue this care professionals. kind of research matters today more than ever. Medical • We created the industry’s first Regenerative Medicine solutions are within reach for some of the most feared Unit to harness the potential of stem cells. This diseases of our time, especially those where the unmet scientific team is less than 2 years old and it already medical need is greatest. plans to start clinical studies this year—an achievement We are especially enthusiastic about our late-stage that would not be possible without combining our pipeline, which has 34 new molecular entities and new willingness to empower them to move at their own indications in Phase III. Among the most noteworthy speed with our experience and scale in regulatory of our ongoing late-stage clinical trials are studies strategy, policy and pharmaceutical sciences. of potential treatments for rheumatoid arthritis, for • We joined forces with Eli Lilly and Merck to establish Alzheimer’s disease, for the prevention of venous the Asian Cancer Research Group, an independent, thromboembolism, for lung and breast cancer, for not-for-profit company. Its goal is to improve the chronic pain indications, for renal cell carcinoma, for knowledge of cancers prevalent in Asia and to chronic myelogenous leukemia and for the use of the accelerate drug discovery efforts by sharing the breakthrough Prevnar 13 vaccine for adults. resulting data with the scientific community. Not every trial will produce the exact results for which • We joined with Private Access, an innovator in we all hope—that’s the nature of drug discovery and privacy-enhanced search technology, to increase development, which is inherently risky. But we are more recruitment into clinical trials by creating the first enthusiastic about our late-stage pipeline than we have online community to address privacy concerns, by been in years. giving participants full control over the amount and type of information they share with researchers. Reforming Health Care • We developed CUE, an integrated, multichannel, As I stated earlier, for drug discovery and development closed loop marketing system designed to provide to continue, society must sustain and enhance the customized information to physicians and health policy environment that provides incentives for investors care providers based on their unique needs. Pfizer’s like you to support the innovation that our scientists scale allowed us to make this important investment bring to the laboratory every day. across business units and ensure a consistent That presents, of course, an increasingly difficult experience for U.S. physicians and other health care challenge for policymakers as countries around the providers, while tailoring content to ensure those world struggle with the need to improve the ability important customers have the information they need of their citizens to obtain quality, affordable health to make important prescribing decisions. 21
  30. 30. OUr PUrPOSE 1 Working together for a healthier world OUr MISSIOn 2 3 (see page 19) OUr cOMMITMEnTS Pfizer’s five-element strategic (See page 38) course, Our Path Forward, integrates the company’s OUr STraTEgIES 4 5 Purpose, Mission, Commitments, (See page 18) Strategies and Values and guides all our decision making. You OUr valUES can learn more about Our Path Integrity Forward on www.pfizer.com. Collaboration Community Customer Focus Leadership Innovation Performance Quality Respect for People care—while they deal with escalating deficits which, But, from my point of view, two things were true in turn, are often substantially affected by increasing when this debate started and they remain true now. health care costs. This challenge will grow even more First, the U.S. health care system cannot continue acute in many parts of the world as fewer active workers on a course in which too many Americans lack access generate the revenue to pay for health care and other to quality health care at an affordable cost and in social benefits that larger numbers of retired people will which our lack of investment in innovation, prevention need and demand. and wellness will continue to burden our society with At Pfizer, we know we must participate constructively growing and unsustainable costs. in addressing this critical societal challenge. In Second, as a major participant in the U.S. health care particular, we have a responsibility to be a leading system, Pfizer has a responsibility to play a leading and voice in support of improving everyone’s ability to have constructive role in the ongoing reform of that system. reliable and affordable health care while maintaining I can assure you that we will continue to do so. a policy structure in which the search for new cures and treatments can continue. Leadership Brings Responsibility So, as we promote policies that advance innovation, Of course, the responsibility that comes with leadership we work actively in partnership with governments takes many forms. Last year, we resolved allegations and nongovernmental organizations to expand of past off-label promotional practices and paid a access to quality care in every part of the world. And significant fine as a result. This was a blow to all of we’ve redoubled our efforts in the face of the weak us at Pfizer because it didn’t reflect the company that global economy. we know. In the U.S., Pfizer has been a consistent advocate To move forward, we have taken substantial for the right kind of health care reform from the measures that further strengthen our internal controls beginning of the current debate. We’ve been clear and and that pioneer new procedures designed to prevent, consistent about our principles—improve access to detect and correct any future problems. These include quality, affordable care; preserve the doctor/patient requiring additional training for our colleagues and relationship; invest in prevention and wellness; and leaders, instituting new and advanced monitoring promote medical innovation. systems and giving greater authority to our Chief The debate in the U.S. over the last year was difficult Compliance Officer. for the country in many ways, and the outcome remains controversial. 22
  31. 31. People expect us to respect and support their We are fortunate to have a Board of Directors that communities, to act ethically, to practice environmental is deeply committed to integrity and ethical leadership. stewardship and to support responsible public policies. Two distinguished members joined us late in 2009, after That’s why we have committed to using our global serving on Wyeth’s Board. Dr. Frances D. Fergusson presence and scale to make a difference in local served as President of Vassar College for 20 years, and communities and the world around us. Throughout this John P. Mascotte served as CEO of Blue Cross and Blue report, you can see many examples—from the Global Shield of Kansas City. Health Fellows, to MAINTAIN, our program that helps I want to thank Dr. Dana G. Mead, who is retiring in people in the U.S. keep getting the Pfizer medicines they April after 12 years on our Board. Dana’s keen insight need even after losing their jobs and health insurance, and broad experience have been tremendous assets to our long-term agreement to supply Prevenar 13 to to Pfizer. He entered business after a long career in the the world’s poorest countries—of how Pfizer is striving military, where he was the youngest colonel in the to meet our responsibilities as a global leader. U.S. Army. He was an executive at International Paper In everything we do, we are committed to earning before becoming Chairman and CEO of Tenneco in the trust of the people we serve. Every employee, every the 1990s. Since 2003, he has served as Chairman of leader and every Director of Pfizer is responsible for the MIT Corporation. I am grateful to Dana and to all helping us do this. One way we work to earn trust is by of our Board members for their strong oversight and attracting leaders known for their integrity. wise counsel. Over the past three years, we’ve substantially enhanced our leadership at all levels, through internal Our Path Forward: The Next Step promotions and by hiring people from inside and As I discussed earlier in this letter, we launched Our Path outside the industry. We added two outstanding Wyeth Forward at the beginning of 2008 to describe where executives to our Executive Leadership Team (ELT): Pfizer stood, where we wanted to go, and our plans for Cavan Redmond, who leads Pfizer Diversified Businesses, getting there. Since then, Our Path Forward has guided and Mikael Dolsten, who leads the BioTherapeutics the way Pfizer operates. Research and Development Group. We also added Now, Pfizer takes the next step on Our Path Forward. Freda Lewis-Hall, a premier physician, researcher and We do so as a much more diversified company, uniquely biopharmaceutical executive, as Chief Medical Officer. positioned to apply science and our global reach to In addition, we brought in other leaders from outside improve health and well-being at every stage of life. Pfizer. Some have joined from competitor companies, Having built a track record of keeping our commitments, while others have joined us from groups ranging we can now ask ourselves: How can we serve the world’s from major research universities, to FasterCures, to health needs like no other company? the Fred Hutchinson Cancer Center, to world-class This report sets out for you some of the ways we are companies outside our industry. doing that and will do that. As you will see, Pfizer is now We also have a member of the ELT retiring this much more than the sum of its parts. April—Bill Ringo, who leads our Worldwide Business All of us at your company are moving forward with Development, Strategy and Innovation teams. After clear goals, meaningful accountability and a passion retiring from Eli Lilly, Bill joined Pfizer two years ago and for our work. We know we have much to do in the years has helped diversify our portfolio through the Wyeth ahead, and we know you have significant expectations acquisition. He has also connected the company more of us. We will deliver. closely with expanding opportunities in biotechnology. I would like to thank Bill for his wise counsel and his important contributions to the changes that we have Sincerely, made in the last two years. The Board of Directors has elected Kristin Peck to take over Bill’s responsibilities and join the ELT. She has been a Pfizer colleague for several years, and most recently helped lead Worldwide Strategy and Innovation. The Board has also elected Doug Lankler, our Chief Compliance Officer, to the ELT. Doug leads our Corporate Compliance functions. His election Jeff Kindler reflects Pfizer’s continued commitment to integrity Chairman of the Board and and the seriousness with which the Board and I take all Chief Executive Officer issues of compliance. March 25, 2010 23
  32. 32. FInancIal HIgHlIgHTS THrEE-YEar SUMMarY AS OF AND FOR ThE YEAR ENDED DECEMBER 31, % ChANgE (MILLIONS, ExCEPT PER COMMON ShARE DATA) 2009 2008 2007 09/08 08/07 Revenues(a) $ 50,009 $ 48,296 $ 48,418 4 — Research and development expenses (a) $ 7,845 $ 7,945 $ 8,089 (1) (2) Acquisition-related in-process research and development charges(a,b) $ 68 $ 633 $ 283 (89) 123 Restructuring charges and certain acquisition-related costs(a) $ 4,337 $ 2,675 $ 2,534 62 6 Income from continuing operations before provision for taxes on income and noncontrolling interests(a) $ 10,827 $ 9,694 $ 9,278 12 4 Net income attributable to Pfizer Inc. (a) $ 8,635 $ 8,104 $ 8,144 7 — Diluted earnings per common share attributable to Pfizer Inc. shareholders(a) $ 1.23 $ 1.20 $ 1.17 3 3 Weighted average shares —diluted 7,045 6,750 6,939 4 (3) Number of common shares outstanding 8,051 6,722 6,737 20 — Working capital $ 24,445 $ 16,067 $ 25,014 52 (36) goodwill & other identifiable intangible assets, net $ 110,391 $ 39,185 $ 41,880 182 (6) Total assets $ 212,949 $ 111,148 $ 115,268 92 (4) Total debt(c) $ 48,662 $ 17,283 $ 13,139 182 32 Total Pfizer Inc. shareholders’ equity $ 90,014 $ 57,556 $ 65,010 56 (11) Shareholders’ equity per common share $ 11.19 $ 8.56 $ 9.65 31 (11) Cash provided by continuing operating activities $ 16,587 $ 18,238 $ 13,353 (9) 37 Property, plant and equipment additions $ 1,205 $ 1,701 $ 1,880 (29) (9) Purchases of common stock $ — $ 500 $ 9,994 (100) (95) Cash dividends paid $ 5,548 $ 8,541 $ 7,975 (35) 7 (a) Our 2009 results of operations include approximately two-and-a-half also related to Animal Health; and in 2007 BioRexis Pharmaceutical months of the fourth calendar quarter of 2009 in the case of Wyeth’s Corporation and Embrex, Inc. For acquisitions completed after U.S. operations and approximately one-and-a-half months of the fourth January 1, 2009, we record acquired IPR&D on our consolidated calendar quarter of 2009 in the case of Wyeth’s international operations. balance sheet as indefinite-lived intangible assets. (b) cquisition-related in-process research and development (IPR&D) A (c) ur short-term borrowings are rated P-1 by Moody’s Investors Service O charges in 2009 related to the resolution of a contingency associated (Moody’s) and A1+ by Standard & Poors (S&P). Our long-term debt with our 2008 acquisition of CovX; in 2008 primarily related to our is rated A1 by Moody’s and AA by S&P. Moody’s and S&P are major acquisitions of Serenex, Inc., Encysive Pharmaceuticals, Inc., CovX, corporate debt-rating organizations. Coley Pharmaceuticals, Inc., a number of animal health product lines Detailed information on our financial and operational performance can be from Schering-Plough Corporation, as well as two smaller acquisitions found in the 2009 Financial Report. 24
  33. 33. BOarD OF DIrEcTOrS Dennis a. ausiello, M.D.(2, 4, 5) Michael S. Brown, M.D.(4, 5) Physician-in-Chief, Massachusetts Distinguished Chair, Biomedical General Hospital Sciences, Regental Professor, University of Texas Southwestern Medical Center M. anthony Burns (1, 2, 4) robert n. Burt (3, 5) Chairman Emeritus, Ryder System, Inc. Retired Chairman and CEO, FMC Corporation W. Don cornwell (2, 3) Frances D. Fergusson, Ph.D.(3, 5) Retired Founder, Chairman and CEO, President Emeritus, Vassar College Granite Broadcasting Corporation William H. gray III(4, 5) constance J. Horner (1, 4, 6) Co-Chairman, GrayLoeffler, LLC Former Assistant to the President of the United States and Director of Presidential Personnel James M. Kilts (3, 5) Jeffrey B. Kindler (1) Founding Partner, Chairman of the Board and Centerview Partners Chief Executive Officer, Pfizer Inc. Management, LLC george a. lorch(3, 5) John P. Mascotte(4, 5) Chairman Emeritus, Armstrong Retired President and CEO, Holdings, Inc. Blue Cross and Blue Shield of Kansas City, Inc. Dana g. Mead, Ph.D.(3, 5) Suzanne nora Johnson(2, 3, 5) Chairman, MIT Corporation Retired Vice Chairman, Will retire as a Board member effective The Goldman Sachs Group, Inc. as of the 2010 Annual Meeting Stephen W. Sanger (2, 4,) William c. Steere, Jr.(5) Retired Chairman and CEO, Chairman of the Board Emeritus, General Mills Pfizer Inc. (1) Executive Committee (2) Audit Committee (3) Compensation Committee (4) Corporate Governance Committee (5) Science and Technology Committee (6) Lead Independent Director 25
  34. 34. lEaDIng aT THE InTErSEcTIOn OF lIFE anD ScIEncE EXEcUTIvE lEaDErSHIP TEaM Pfizer’s Executive Leadership Team includes the Chairman and CEO, Jeff Kindler, and the heads of the company’s commercial, research and manufacturing units, as well Martin Mackay as the leaders of staff groups. Senior Vice President and President, PharmaTherapeutics Research and Development The team, most of whom came to Pfizer after 2006, reflects the “ t comes down to this: we are out I company’s increased diversity to conquer disease. That’s an of thought and experience, and amazing, driving aspiration. We’re working to make real inroads includes two senior leaders joining against conditions that affect the from Wyeth, Mikael Dolsten lives of countless people around the world. We’ve done just that against and Cavan Redmond. Executive conditions like heart disease. Now Leadership Team members whose we’re seeing strategies take shape quotes are in large type joined the that may make a disease like Alzheimer’s a manageable one in team in 2009. a decade or two—just in time to help the greatest age wave the world has ever seen. But it’s more than Alzheimer’s—it’s diabetes, it’s cancer, it’s pain, it’s inflammation, it’s malaria and infection. That’s our passion. And that’s what drives our scientists and all the stunning talent we have here. We’re applying what we know about science to crack some of the biggest mysteries in the world—and in doing that, change the course of life for the better for billions of people.” 26
  35. 35. Frank D’Amelio Mikael Dolsten Senior Vice President and Senior Vice President and President, Chief Financial Officer BioTherapeutics Research and Development “ he addition of Wyeth advances T every one of Pfizer’s stated “ fizer is focused on becoming P strategies for generating sustainable growth. We have tremendous a world leader in biotherapeutics. potential to create value through a company that operates globally, So what does that mean? is more diverse than at any other time in our recent history, and is It means we can attack conditions strong in our financial foundations, the capabilities of our people and such as Alzheimer’s disease our ability to operate efficiently. We understand that the more and pain from more than one we manage our costs and make disciplined financial decisions, the angle — using our expertise more options we have to prudently deploy our capital with the ultimate in both small molecules and goal of increasing total return for our shareholders.” biotherapeutics — and greatly improving our chances for success.” 27
  36. 36. Sally Susman Ian C. Read Mary McLeod Senior Vice President, Senior Vice President and Senior Vice President, Policy, External Affairs and Group President, Pfizer Worldwide Worldwide Human Resources Communications Biopharmaceutical Businesses “ y mission at Pfizer is to do all M “ f you are not innovative in today’s “ hree years ago, Pfizer began I T I can to close the perception gap economy, you don’t succeed. the process of fundamentally between the important, noble So by definition, Pfizer has to be reinventing itself. Our efforts focus and often groundbreaking work innovative. We’ve brought new on our patients and our customers that we do, and the cynicism and thinking to just about all of the ways and other stakeholders, and they misinformation that exists about we operate, from our marketing are created and executed by our the industry and sometimes the practices to the organization of our colleagues. At all levels of the company. There’s no question that commercial operations. We’ve been organization, people are taking we live in a noisy world, and it’s innovative in our business model accountability for implementing tempting to think that the way to and in how we focus our resources, Our Path Forward, which provides be heard is to turn up the volume. almost relentlessly, around our direction for achieving our We are thinking differently. We customers, in developed markets like strategies, commitments and believe that the route to being the U.S. and Europe, and emerging values. We have organized into heard starts with listening. We’re markets such as China, India, Brazil smaller, more agile teams that doing that, changing where we need and Russia. We now have the ability, have responsibility for applying to change, speaking out when we nearly unmatched in our industry, those strategies to accomplish our must, and letting our positive action, to focus on a particular market ambitious performance goals. We day after day, be the best response or target, and marshal resources are building a more diverse and to those who question whether we quickly to achieve our goals. We’re inclusive culture that drives results can both do well—and do good.” increasingly able to bring whole throughout the company. Working solutions, not just products, to together to transform Pfizer is how physicians, payers and patients.” we achieve our success in becoming a more diversified health care company.” 28
  37. 37. Cavan M. Redmond Senior Vice President and Group President, Pfizer Diversified Businesses “ fizer provides both the initial P lines of defense against disease and many of the most important treatment options for when people get sick. Our animal health products keep pets healthy and the food supply safe. Even more exciting, our array of products, technologies and capabilities opens up nearly endless opportunities for us to work across our businesses to create new health solutions that help people get well and stay well today— and tomorrow.” 29
  38. 38. Amy W. Schulman Freda C. Lewis-Hall Senior Vice President and Senior Vice President and General Counsel Chief Medical Officer “ hen I joined Pfizer in 2008, a lot W of people asked me, ‘Why this?’ “ fizer can bring unmatched P ‘Why now?’ The answer, most fundamentally, is that I believe brainpower and resources to in Pfizer. What we are doing is mission-critical. The opportunity being the best in patient safety to be more intimately involved in sorting out health care solutions is and care. We know that the compelling. The collaborative work we do is a big draw. We are direct decision to take a medicine is and, most important, unafraid to see things as they are, and not as never routine. When you see our we wish that they were. That is the only way we will be able to deliver name on a product, you can be on our commitments to the people who depend on us.” assured that your safety and good health are our highest priorities. That’s true from the moment a potential new medicine is used by the first patient in a clinical trial, until the last day that medicine is offered for sale, anywhere in the world.” 30
  39. 39. William R. Ringo Natale S. Ricciardi Senior Vice President, Senior Vice President and President, Worldwide Business Development, Pfizer Global Manufacturing Strategy & Innovation “ any people think about innovation “ quiet but highly effective M A through the lens of “products” and revolution is taking place at Pfizer— many of the products that Pfizer that of continuous improvement. has launched are truly innovative In just a few years, we’ve trained and have helped treat and cure thousands of colleagues to take patients with a variety of diseases. apart processes—some of them in Innovation, though, goes far beyond place for decades—analyze them, the pill to the minds and skills of and put them back together in our colleagues and partners, all of ways that yield better results, whom are working to understand often at higher levels of quality and what new businesses we can create. less expensively. This movement has Opportunities abound. Business spread beyond manufacturing innovation arises from the to just about every dimension unmet needs of our customers— of our company. No process is it can be enabled by cutting-edge beyond further improvement. technology, new processes The blossoming of this movement is or business models. At Pfizer, making Pfizer not just more efficient, innovation knows no boundaries.” but also more environmentally conscious, more in tune with our customers and a more satisfying place to work.” 31
  40. 40. SHarPlY FOcUSED On cUSTOMEr nEEDS Biomedical Discovery and Early Development clinical Development and life cycle Management WOrlDWIDE BIOPHarMacEUTIcal BUSInESSES PHarMaTHEraPEUTIcS rESEarcH & DEvElOPMEnT 1 2 3 4 5 PrIMarY SPEcIalTY OncOlOgY ESTaBlISHED EMErgIng carE carE PrODUcTS MarKETS Chantix1 Enbrel Aromasin Effexor Prevenar BIOTHEraPEUTIcS Lipitor geodon Camptosar Norvasc Enbrel rESEarcH & DEvElOPMEnT Lyrica Prevnar2 Mylotarg Fragmin Lipitor Pristiq xalatan Sutent Tazosyn Lyrica Viagra Zyvox Torisel Cardura Sutent EnaBlIng FUncTIOnS anD PFIzEr glOBal ManUFacTUrIng Enabling Functions Medical, Legal, Finance, human Resources, Strategic Planning/Business Development and Policy/External Affairs/Communications services for PFIzEr DIvErSIFIED BUSInESSES Pfizer businesses and Pfizer Inc. Pfizer global Manufacturing 1 2 3 4 Manufacturing, Quality Assurance and Secure Distribution services to support research, clinical and commercial operations. anIMal caPSUgEl cOnSUMEr nUTrITIOn HEalTH HEalTHcarE Convenia Coni-Snap Centrum S26 gold Pre Term Excede Licaps Advil Feeding System Improvac Vcaps Caltrate S26 gold Revolution PressFit Robitussin Promil gold Zulvac xcelodose ChapStick Progress gold Promise gold 1 Known as Champix outside the U.S. 2 Known as Prevenar outside the U.S., Canada and Thailand research, Development and Product Management 32
  41. 41. Pfizer is firmly focused on the Biopharmaceutical Businesses, which Pfizer global Manufacturing needs of customers, starting with works to prove the new product anchors all our groups with state- patients and extending to all key in the clinic, obtain regulatory of-the-art production services and stakeholders. Two Research and approvals, launch it and manage it a secure, efficient supply chain. Development groups discover through its life cycle. Enabling Functions advance a range prescription medicines and vaccines Pfizer Diversified Businesses serves of business goals, including strong and develop them until “proof of those who use our consumer health financial controls, strict compliance, concept.” A promising product care products, nutritionals, animal and wide-ranging engagement is then transferred to one of five health products, and capsules for with colleagues, business partners groups within Pfizer Worldwide medicines and dietary supplements. and the public. KEY cUSTOMErS HEalTH carE PaTIEnTS PHarMacISTS PrOFESSIOnalS WHOlESalErS PaYErS gOvErnMEnTS KEY cUSTOMErS anIMal cOnSUMErS nEW ParEnTS OWnErS vETErInarIanS ManUFacTUrErS rETaIlErS 33 33
  42. 42. WHErE 2009 rEvEnUES caME FrOM 8.4% 0.7% DIVERSIFIED OThER BUSINESSES 43.5% 56.5% 90.9% UNITED STATES REST OF WORLD BIOPhARMACEUTICAL BUSINESSES SOUrcE OF rEvEnUE U.S. vs. rEST OF WOrlD Though still predominantly a biopharmaceutical company, Pfizer is No. 1 in the top three global markets Pfizer diversified into consumer health care products and for biopharmaceuticals—the U.S., the nutritionals with the acquisition of Wyeth. European Union and Japan. 14.2% EMERgINg MARKETS 23%LIPITOR 85.8% DEVELOPED MARKETS 77% ALL OThER DEvElOPED vs. lIPITOr vs. all OTHEr EMErgIng MarKETS MarKETED PrODUcTS (BIOPHarMacEUTIcal BUSInESSES) The acquisition of Wyeth is reducing Pfizer’s Pfizer has a remarkable opportunity in emerging reliance on Lipitor and, in 2012, it is projected that markets, and is already the top U.S.-headquartered no single Pfizer product will account for more biopharmaceutical company in these markets. than 10% of revenues. 34
  43. 43. 2010 gUIDancE1 $67-$69 $9.1-$9.6 billion billion rEPOrTED rEvEnUES aDJUSTED r&D EXPEnSES3 $0.95- $2.10- $1.10 $2.20 rEPOrTED DIlUTED EarnIngS aDJUSTED DIlUTED EarnIngS PEr SHarE2 PEr SHarE3 1 Our 2010 guidance does not assume the completion of any business-development transactions not completed as of December 31, 2009. It excludes the potential effects of the resolution of litigation-related matters not substantially resolved as of December 31, 2009, as well as the potential impact of health care reform in the U.S. In addition, this guidance is based on approximate foreign currency exchange rates in effect in late January 2010. 2 “Reported net income” is defined as net income attributable to Pfizer Inc. in accordance with U.S. generally accepted accounting principles (gAAP). “Reported diluted earnings per share” is defined as reported diluted earnings per share attributable to Pfizer Inc. common shareholders in accordance with U.S. gAAP. 3 “Adjusted income” and its components and “Adjusted diluted earnings per share” are defined as “reported net income”2 and its components and “reported diluted earnings per share”2 excluding purchase-accounting adjustments, acquisition-related costs, discontinued operations and certain significant items. “Adjusted R&D Expenses” is an income statement line item prepared on the same basis and, therefore, a component of the overall adjusted income measure. As described in our Form 10-K for the fiscal year ended December 31, 2009, we use adjusted income, among other factors, to set performance goals and to measure the performance of the overall company. A reconciliation of 2009 adjusted income and its components and adjusted diluted earnings per share to “reported net income”2 and its components and “reported diluted earnings per share”2 is provided in our Form 8-K filed on February 3, 2010. Additional information regarding our 2009 financial performance can be found in our Form 10-K for the fiscal year ended December 31, 2009. The adjusted income and its components and adjusted diluted earnings per share measures are not, and should not be viewed as, substitutes for U.S. gAAP net income and its components and diluted earnings per share. 35
  44. 44. OUr PIPElInE aS OF JanUarY 27, 2010 PrOgraMS In clInIcal PHaSE I PHaSE II DIScOvErY PrOJEcTS 49 44 A new medicine or vaccine takes In Phase I, an experimental effectiveness and safety. (All clinical years to discover and fully develop. compound is tested in a small studies are done by independent Only a miniscule number of small- number of human volunteers to investigators.) Registration means molecule or biological compounds assess safety and tolerability. Phase that Pfizer has filed an application tested in the laboratory emerge II clinical trials focus on effectiveness with a health regulatory authority to as promising enough to justify in treating or preventing a disease. obtain marketing approval for a new investment in a series of highly Phase III trials test the results of medicine or vaccine. regulated controlled trials for safety earlier trials in larger populations and and efficacy. gather additional information about 36
  45. 45. TrIal Or rEgISTraTIOn PHaSE III In rEgISTraTIOn TOTal 34 6 133 Since our last update— Visit pfizer.com/pipeline, Pfizer’s March 31, 2009 online database, where you can • 63 Programs Advanced learn more about our portfolio of • 13 Programs Discontinued new medicines and vaccines, and • 4 Programs Transferred to ViiV find out more about our biomedical healthcare (see p. 39) research and development efforts • 1 Program Out-Licensed around the world. (dalbavancin) 37
  46. 46. HOW WE DO BUSInESS In Serving Our Stakeholders OUr cOMMITMEnTS more than 170 cities. In our research, supply network. Recognizing that risks In 2009 Pfizer adopted a series of we are targeting diseases of the increase with a greater dependence commitments that are both aspirational developing world and working with many on outside vendors, Pfizer has put into and achievable. These commitments partners to develop socially responsible, place a comprehensive supplier oversight demonstrate how we can serve the sustainable and commercially viable system to ensure quality, as well as good world’s health needs in ways that health care solutions. environmental, health and safety (EHS) are unique to our company. Our systems and practices. Assessments of commitments are to: EHS conditions at our suppliers help us manage business continuity, liability and • dvance wellness, prevention, A reputational risks and ensure that supply treatments and cures; decisions align with Pfizer’s values. • ring the best scientific minds B During the last five years of our EHS together to challenge the most assessment program, we have conducted feared diseases of our time; on-site inspections at more than • et the standard for quality, safety S 400 new or existing supplier facilities. and value of medicines; MEETIng SPEcIalIzED nEEDS Pfizer is also committed to helping • se our global presence and scale to U Capsugel, part of Pfizer Diversified suppliers improve EHS competencies make a difference in local Businesses, is the world leader in through training workshops and communities and the world around us; providing empty hard capsules to coaching sessions. • romote curiosity, inclusion and a P makers of medicines, vitamins and passion for our work; dietary supplements. An innovator • e a leading voice for improving B in new drug delivery technologies, cOUnTErFEIT rIngS STOPPED everyone’s ability to have reliable Capsugel faced a market need: aT THE SOUrcE and affordable health care; and capsules to satisfy everyone’s dietary Protecting the integrity of our medicines • aximize our financial performance M and cultural requirements. Enter is of paramount importance to us. so that we can meet our Vcaps capsules—two-piece capsules That’s why we’ve taken a leadership commitments to all who rely on us. formulated from plant matter and position among pharmaceutical suitable for vegetarians. Starch-free, companies to protect consumers of our On its own, each commitment can gluten-free, preservative-free, and kosher medicines from the dangers posed by advance the world’s health and wellness. and halal certified, Vcaps run smoothly counterfeits. During 2009, authorities Taken together, these commitments give on high-speed and semi-automatic from 45 countries reported seizing us the framework for transforming health filling machines and are produced to almost 11.1 million counterfeit dosages care as we know it today. the same standards that have made of Pfizer medicines. Many of these seizures the Capsugel name synonymous with were the result of evidence obtained by exceptional quality. Pfizer Global Security colleagues and EMErgIng MarKETS In FOcUS The rapid integration of operations then referred to authorities for their following the Wyeth acquisition is action. The seizures were the result of putting Pfizer’s greater diversity and 285 raids, a 37.7 percent increase scale to work. This includes additional over 2008, and resulted in 625 arrests, expansion into emerging markets, the a 30.9 percent increase. fastest-growing segment of the global pharmaceutical business. The addition of Wyeth assets has solidified our leadership in Asia and Latin America and OPTIMIzIng THE ManUFacTUrIng enhanced our presence in China, where anD SUPPlY cHaIn we have now expanded operations into To optimize Pfizer’s manufacturing and supply chain, we are continuing to develop a competitive “make or buy” 38

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