I.

Company Profile In 1849, cousins Charles Pfizer and Charles Erhart founded Charles Pfizer & Company in a red brick building in Brooklyn, NY. Pfizer Inc. (Pfizer), incorporated on June 2, 1942, is a research-based, global biopharmaceutical company. The Company manages its operations through five segments: Primary Care; Specialty Care and Oncology; Established Products and Emerging Markets; Animal Health and Consumer Healthcare, and Nutrition. The Companys diversified global healthcare portfolio includes human and animal biologic and small molecule medicines and vaccines, as well as nutritional products and consumer healthcare products. The Company's Animal Health business unit discovers, develops and sells products for the prevention and treatment of diseases in livestock and companion animals. Primary Care operating segment includes revenues from human pharmaceutical products primarily prescribed by primary-care physicians, and may include products in the therapeutic and disease areas, such as Alzheimers disease, cardiovascular (excluding pulmonary arterial hypertension), erectile dysfunction, genitourinary, depressive disorder, pain, respiratory and smoking cessation. Examples of products in this segment include Celebrex,

Chantix/Champix, Lipitor, Lyrica, Premarin, Pristiq and Viagra. Revenues from biopharmaceutical products contributed approximately 86% of its total revenues during the year ended December 31, 2011. Established Products and Emerging Markets operating segment comprises the Established Products business unit and the Emerging Markets business unit. Established Products generally includes revenues from human prescription pharmaceutical products that have lost patent protection or marketing in certain countries and/or regions. This business unit also excludes revenues generated in emerging markets. Examples of products in this business unit include Arthrotec, Effexor, Medrol, Norvasc, Protonix, Relpax and Zosyn/Tazocin. Emerging Markets includes revenues from all human prescription pharmaceutical products sold in emerging markets, including Asia (excluding Japan and South Korea), Latin America, Middle East, Africa, Central and Eastern Europe and Turkey. Animal Health and Consumer Healthcare operating segment comprises the Animal Health business unit and the Consumer Healthcare business unit. Animal Health includes worldwide revenues from products and services to prevent and treat disease in livestock and companion

animals, including vaccines, parasiticides and anti-infectives. Consumer Healthcare includes worldwide revenues from non-prescription products in the therapeutic categories, such as dietary supplements, pain management, respiratory and personal care. Products marketed by Consumer Healthcare include Advil, Caltrate, Centrum, ChapStick, Preparation H and Robitussin. Nutrition operating segment includes revenues from a line of infant and toddler nutritional products sold outside the United States and Canada. Examples of products in this segment include the S-26 and SMA product lines, as well as formula for infants. Nutrition products include infant milk formula brands for newborns and toddlers: Gold line includes brands S-26 and/or SMA (brand names vary slightly from country to country), and in 2011, the Company launched its super-premium Illuma brand.

THE LEADERS

William C. Steere 1991-2001 199

Hank McKinnel 2001-2006

Jeff Kindler 2006-2010

Ian C. Read 2011-Now

PFIZERS TIMELINE

2000 Pfizer and Warner-Lambert merge to form the new Pfizer, creating the world's fastestgrowing major pharmaceutical company.

2001

William C. Steere, Jr. announces his retirement as CEO on January 1, 2001. Henry A. McKinnell, Jr., Ph.D. succeeds William C. Steere, Jr. as Chairman and Chief Executive Officer. In June 2001, Hank McKinnell announces a new mission for Pfizerto become the world's most valued company to patients, customers, colleagues, investors, business partners, and the communities where we work and live 2002 Pfizer becomes the first U.S. pharmaceutical company and first top-ten company on the New York Stock Exchange to join the U.N. Global Compact. Pfizer invests an industry leading $5.1 billion in research and development 2003 Pfizer invests more than $7.1 billion in research and development. 2004

On April 16, 2003 Pfizer Inc and Pharmacia Corporation combine operations, bringing together two of the worlds fastest-growing and most innovative companies.

2005 Pfizer Inc is selected by Dow Jones and Co. to be included in the Dow Jones Industrial Average, which is the best-known stock market barometer in the world. 2006

In July 2006, the Pfizer Board of Directors names Jeffrey B. Kindler Chief Executive Officer. Kindler succeeds Hank McKinnell, who will remain Chairman of the Board until his retirement in February, 2007. 2007 Pfizer launches an online site to provide up-to-date, user-friendly information on the status of its U.S. post-marketing commitments - studies conducted after a medicine receives regulatory approval and designed to provide additional information about the medicine's safety, efficacy or optimal use. This initiative is the first of its kind for a pharmaceutical company. 2008 Jeff Kindler, Chairman and CEO of Pfizer, announces the next step in the company's evolution and outlines the company's plan to establish smaller operating units designed to enhance innovation and accountability, while drawing upon the advantages of Pfizer's scale and resources. These customer-focused business units allow Pfizer to better anticipate and respond to customers' and patients' needs, as well responds to changes in the marketplace.

2009 On October 15, 2009, Pfizer acquires Wyeth, creating a company with a broad range of products and therapies that touch the lives of patients and consumers every day and at every stage of life. 2010 Pfizer announces a diversified R&D platform named Pfizer Worldwide Research and Development, supporting excellence in small molecules, large molecules and vaccine research and development. As apart of the acquisition of Wyeth in 2009, Pfizer initially implemented a two-division structure for research and development (BioTherapeutics and PharmaTherapeutics) to ensure the progress and steady integration of both legacy organizations. Due to the speed and effectiveness of that integration, Pfizer progresses to this new model while maintaining the same breadth and research programs. 2011

On January 31, the Company acquired a 92.5% interest in King Pharmaceuticals, Inc. (King). On February 28, Pfizer acquired the remaining interest in King. On August 1, 2011, the Company completed the sale of its Capsugel business. In October, it acquired Icagen, Inc. In December, the Company acquired the consumer healthcare business of Ferrosan Holding A/S. In December, the Company acquired Excaliard Pharmaceuticals, Inc.

COMPANY ADDRESS Pfizer Inc 235 East 42nd Street NEW YORK NY 10017-5755 P: +1212.7332323 F: +1302.6555049

OFFICERS AND EXECUTIVES Name Mr. Ian C. Read Title Chairman & Chief Executive Officer

Dr. Olivier Brandicourt

President & General Manager-Emerging Markets

Mr. Frank A. D'Amelio

Chief Financial Officer & EVP-Business Operations

Mr. Sarma Vadlamani

Senior Scientist-Research & Development

VP-Business Development, Research & Development Ms. Polly Murphy

OVERALL Beta: Market Cap (Mil.): Shares Outstanding (Mil.): Dividend: Yield (%): 0.74 $203,281.91 7,185.64 0.24 3.39

FINANCIALS PFE.N P/E (TTM): EPS (TTM): 22.46 1.26 Industry 27.99 -Sector 27.84 --

ROI: ROE:

6.04 11.62

5.89 7.57

5.73 7.22

COMPETITORS COMPETITORS The Procter & Gamble Company (PG.N) Johnson & Johnson (JNJ.N) GlaxoSmithKline plc (GSK.L) Novartis AG (NOVN.VX) Sanofi SA (SASY.PA) Merck & Co., Inc. (MRK.N) AstraZeneca plc (AZN.L) Abbott Laboratories (ABT.N) Eli Lilly & Co. (LLY.N) Bristol Myers Squibb Co. (BMY.N) Price $77.58 $79.45 1,507.00p CHF67.25 77.21 $44.12 3,048.50p $33.81 $55.30 $39.87 Change +0.47 +0.59 -11.50 0.00 -0.61 +0.42 +8.50 +0.27 +0.51 +0.53

II. Case Overview Four previous letters to shareholders are presented in this case study: In the 2000 annual report, former CEO Bill Steere discussed Pfizers rise to industry prominence with the acquisition of Warner-Lambert and his pending retirement. In the 2003 annual report, new CEO Hank McKinnell discussed Pfizers performance goals and its acquisition of Pharmacia, which gave it control of antiarthritis drug Celebrex. In the 2005 annual report, McKinnell discussed his decision to keep Celebrex on the market with black box health warnings. In the 2006 annual report, Kindler, who replaced McKinnell as Pfizers CEO in July that year, wrote his first letter to shareholders. This was a difficult letter. Notwithstanding Pfizers disappointing financial performance, McKinnell had retired with a compensation package of almost $200 million, triggering protests from the media, public interests groups, and shareholders. And In February 2009, Pfizer had agreed to acquire Wyeth for $68 billionan acquisition aimed at building both Pfizers pipeline and shareholder value.

III. Analysis of 2000 Annual Report Several years earlier, Pfizer made a deal to co-market Lipitor, a blockbuster new anticholesterol drug developed by Warner-Lambert. Lipitor played a crucial role in Pfizers progression from a small chemicals company to a global pharmaceutical powerhouse. Pfizer reaped 40% of Lipitor profits and Lipitors sales estimated would pass $10 billion. In November 1999, American Home Products announced $72 billion merger with WarnerLambert. Pfizer immediately countered with a higher offer and after months of intense negotiation Pfizer prevailed with an acquisition price of $90 billion. The New York Times called it one of the drug industrys nastiest takeover battles.

Why did Pfizer acquire Warner-Lambert?

When American Home Products announced $72 billion merger with Warner-Lambert, Pfizers revenue from Lipitor was threatened. According to analysts statements Pfizer immediately acquired Warner-Lambert mainly for the cholesterol-lowering drug Lipitor, which went on to become the world's best-selling drug. But according to Pfizers judgment, the acqusition will accelerate Pfizers growth and pfizers post-merger pipeline not only benefited from full control of Lipitor, but also from Warner-Lamberts chest of successful consumer products, including well-known brands such as Benadryl, Halls, Listerine, Lubriderm, Schick, Sudafed, and Visine. Pfizer accounted for the Warner-Lambert acquisition using the pooling-of-interests method. But on April 21, 1999, the Financial Accounting Standards Board banned the pooling-of-interests method.

Pfizer achieved total reported revenues of $29.6 billion, representing 8% growth over 1999. Revenue increases becase of sales volume growth of Pfizer in-line products and revenue generated from product alliances. Net income grew 25% to $6.5 billion, excluding certain significant items and merger-related costs.

Pfizers 2000 human pharmaceuticals revenues increased 10% to $24.027 billion, inluding the effects of foreign exchange and the withdrawals. And Pfizers 2000 consumen products increased 1% to $5.547 billion.

Eight of Pfizer products achieved global revenues of at least $1 billion each. The eight billion- dollar productsLipitor, Norvasc, Celebrex, Zoloft, Zithromax, Neurontin, Viagra, and Diflucanrepresent 74% of Pfizers human pharmaceutical revenues. Celebrex, one discovered and developed by Pharmacia and copromoted by Pfizer, remained the number one branded antiarthritic medicine in the world. But still, Lipitor remained the largest-selling medication in the world for cholesterol reduction with 2000 sales exceeding $5 billion.

In 2000, Pfizer invested $4.4 billion in research and development, and this year Pfizer expected to boost that total to approximately $5 billionmore than any other company in any industry.

Eventhough 2000 was the worst year for stocks since 1981, Pfizer ended the year with a market capitalization of $290 billion, representing a 44% increase over 1999.

Pfizer accounted for the Warner-Lambert acquisition using the pooling-of-interests method. It would be much different with the more common purchase method. Pfizer would have been required to record the full purchase price of $90 billion as an asset and charge the excess of purchase price over assets acquired (goodwill) as an expense in future accounting periods. By avoiding goodwill write-downs, the pooling method would allow Pfizer to show higher profits in future years. In addition, return-on-asset and return-on-equity ratios would be calculated with a deflated denominator. Net Income/Shareholders Equity $3.726 billion/$16.076 billion 24,8% Net Income/Total Asset $3.726 billion/$33.150 billion 11,11%

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Some analysts expressed concern on Pfizers Warner-Lambert acqusition. They said while the merger will allow Pfizer to extend its high-growth period, adding Warner-Lambert has done little to address the underlying pipeline concerns.