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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549
_____________________________________________
FORM 10-K
_____________________________________________
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2012
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-3619
_____________________________________________
PFIZER INC.
(Exact name of regi strant as speci fi ed i n i ts charter)
_____________________________________________
Delaware 13-5315170
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)

235 East 42nd Street 10017-5755
New York, New York
(Address of principal executive offices)
(Zip Code)
(212) 733-2323
(Regi strants tel ephone number, i ncl udi ng area code)
_____________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Ti tl e of each cl ass
Name of each exchange
on whi ch regi stered
Common Stock, $.05 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
_____________________________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232-405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files.) Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Accelerated filer
Large accelerated filer Non-accelerated filer Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the closing price as of the
last business day of the registrants most recently completed second fiscal quarter, June 29, 2012, was approximately $172 billion. The registrant
has no non-voting common stock.
The number of shares outstanding of the registrants common stock as of February 21, 2013 was 7,189,061,853 shares of common stock, all
of one class.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 2012 Annual Report to Shareholders Parts I, II and IV
Portions of the Proxy Statement for the 2013 Annual Meeting of Shareholders Part III
TABLE OF CONTENTS


Page
PART I 1

ITEM 1. BUSINESS 1
General 1
Pfizer Website 2
Operating Segments 2
Biopharmaceutical Products 4
Other Products 5
Research and Development 6
International Operations 7
Marketing 8
Patents and Intellectual Property Rights 8
Competition 11
Raw Materials 13
Government Regulation and Price Constraints 13
Environmental Law Compliance 20
Tax Matters 20
Employees 20
Disclosure Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 20

ITEM 1A. RISK FACTORS 22
ITEM 1B. UNRESOLVED STAFF COMMENTS 32
ITEM 2. PROPERTIES 32
ITEM 3. LEGAL PROCEEDINGS 33
ITEM 4. MINE SAFETY DISCLOSURES 33
EXECUTIVE OFFICERS OF THE COMPANY 34

PART II 37

ITEM 5. MARKET FOR THE COMPANYS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES 37
ITEM 6. SELECTED FINANCIAL DATA 37
ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 37
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 37
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 38
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE 38
ITEM 9A. CONTROLS AND PROCEDURES 38
ITEM 9B. OTHER INFORMATION 38

PART III 39

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 39
ITEM 11. EXECUTIVE COMPENSATION 39
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS 39
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 39
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 39

PART IV 40

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 40
15(a)(1) Financial Statements 40
15(a)(2) Financial Statement Schedules 40
15(a)(3) Exhibits 40
PART I
ITEM 1. BUSINESS
General
Pfizer Inc. is a research-based, global biopharmaceutical company. We apply science and our global resources to improve
health and well-being at every stage of life. We strive to set the standard for quality, safety and value in the discovery, development
and manufacturing of medicines for people and animals. Our diversified global healthcare portfolio includes human and animal
biologic and small molecule medicines and vaccines, as well as many of the worlds best-known consumer products. Every day, we
work across developed and emerging markets to advance wellness, prevention, treatments and cures that challenge the most feared
diseases of our time. We also collaborate with healthcare providers, governments and local communities to support and expand
access to reliable, affordable healthcare around the world. Our revenues are derived from the sale of our products, as well as through
alliance agreements, under which we co-promote products discovered by other companies (Alliance revenues). The majority of our
revenues come from the manufacture and sale of biopharmaceutical products.
The Company was incorporated under the laws of the State of Delaware on June 2, 1942. Unless the context requires
otherwise, references to Pfizer, the Company, we, us or our in this Annual Report on Form 10-K for the fiscal year ended
December 31, 2012 (2012 Form 10-K) refer to Pfizer Inc. and its subsidiaries. References to developed markets in this 2012 Form 10-K
include the United States (U.S.), Western Europe, Japan, Canada, Australia, Scandinavia, South Korea, Finland and New Zealand;
and references to emerging markets in this 2012 Form 10-K include the rest of the world, including, among other countries, China,
Brazil, Mexico, Turkey, Russia and India.
In July 2011, we announced our decision to explore strategic alternatives for our Animal Health and Nutrition businesses.
On February 6, 2013, an initial public offering (IPO) of our subsidiary, Zoetis Inc. (Zoetis), was completed, pursuant to which
we sold 99.015 million shares of Zoetis in exchange for the retirement of approximately $2.5 billion of Pfizer commercial paper issued
on January 10, 2013. The IPO represented approximately 19.8% of the total outstanding Zoetis shares. On February 1, 2013, Zoetis
shares began trading on the New York Stock Exchange under the symbol ZTS. Prior to and in connection with the IPO, Zoetis
completed a $3.65 billion senior notes offering and we transferred to Zoetis substantially all of the assets and liabilities of our Animal
Health business. For additional details, see the Notes to Consolidated Financial Statements Note 19A. Subsequent Events: Zoetis
Debt Offering and Initial Public Offering in our 2012 Financial Report, as well as Other Products Animal Health below.
We may in the future make a tax-free distribution to our shareholders of all or a portion of our remaining equity interest in
Zoetis, which may include one or more distributions effected as a dividend to all Pfizer shareholders, one or more distributions in
exchange for Pfizer shares or other securities, or any combination thereof. We will consider all alternatives to maximize the after-tax
return for our shareholders, including a tax-free distribution to our shareholders. If pursued, any disposition would be subject to
various conditions, including receipt of any necessary regulatory or other approvals and the existence of satisfactory market
conditions.
On November 30, 2012, we completed the sale of our Nutrition business to Nestl for $11.85 billion in cash. For additional
information, see the Notes to Consolidated Financial Statements Note 2B. Acquisitions, Divestitures, Collaborative
Arrangements and Equity-Method Investments: Divestitures in our 2012 Financial Report, as well as Other Products Nutrition
below.
On August 1, 2011, we completed the sale of our Capsugel business for approximately $2.4 billion in cash. For additional
information, see the Notes to Consolidated Financial Statements Note 2B. Acquisitions, Divestitures, Collaborative
Arrangements and Equity-Method Investments: Divestitures in our 2012 Financial Report.
On January 31, 2011, we acquired King Pharmaceuticals, Inc. (King) and, in accordance with our domestic and international
reporting periods, our consolidated financial statements for the year ended December 31, 2011 reflect approximately 11 months of
Kings U.S. operations and approximately ten months of Kings international operations. For additional information, see the Notes to
Consolidated Financial Statements Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method
Investments: Acquisitions in our 2012 Financial Report.
If we decide to fully separate Zoetis, then, following such separation, we will be a global biopharmaceutical company with an
innovative core (our Primary Care, Specialty Care and Oncology business units) and a value core (our Established
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Products business unit) in developed markets, with different cost structures and operating drivers. Our Emerging Markets business
unit has a geographic focus that includes both the innovative and value cores in those markets. The innovative core includes a
portfolio of innovative, largely patent-protected, in-line products and an R&D organization focused on continuing to build a robust
pipeline of highly differentiated product candidates in areas of unmet medical needs. The value core includes a portfolio of products
that have lost exclusivity or are approaching the loss of exclusivity that help meet the global need for less expensive, quality
medicines. In addition, we have a complementary Consumer Healthcare business with several well-known brands.
For a further discussion of our strategy and our business development initiatives, see the Overview of Our Performance,
Operating Environment, Strategy and Outlook Our Strategy and Our Business Development Initiatives sections of the
Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) in our 2012 Financial Report.
Pfizer Website
This 2012 Form 10-K, our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to those reports
filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act), are
available on our website (www.pfizer.com) , in text format and, where applicable, in interactive data file format , as soon as
reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (SEC).
Throughout this 2012 Form 10-K, we incorporate by reference certain information from other documents filed or to be filed
with the SEC, including our Proxy Statement for the 2013 Annual Meeting of Shareholders (2013 Proxy Statement) and the 2012
Financial Report, portions of which are filed as Exhibit 13 to this 2012 Form 10-K, and which also will be contained in Appendix A to
our 2013 Proxy Statement (2012 Financial Report). The SEC allows us to disclose important information by referring to it in that
manner. Please refer to such information. Our 2012 Annual Report to Shareholders consists of the 2012 Financial Report and the
Corporate and Shareholder Information attached to the 2013 Proxy Statement. Our 2012 Financial Report will be available on our
website (www.pfizer.com) on or about February 28, 2013. Our 2013 Proxy Statement will be available on our website
(www.pfizer.com) on or about March 14, 2013.
Information relating to corporate governance at Pfizer, including our Corporate Governance Principles; Director Qualification
Standards; Pfizer Policies on Business Conduct (for all of our employees, including our Chief Executive Officer, Chief Financial
Officer and Principal Accounting Officer); Code of Business Conduct and Ethics for our Directors; information concerning our
Directors; ways to communicate by e-mail with our Directors; Board Committees; Committee Charters; the Lead Independent
Director Charter; and transactions in Pfizer securities by Directors and Officers; as well as Chief Executive Officer and Chief Financial
Officer certifications, are available on our website (www.pfizer.com) . We will provide any of the foregoing information without
charge upon written request to our Corporate Secretary, Pfizer Inc., 235 East 42nd Street, New York, NY 10017-5755. Information
relating to shareholder services, including the Computershare Investment Program, book-entry share ownership and direct deposit
of dividends, is also available on our website (www.pfizer.com) .
The information contained on our website does not constitute a part of this 2012 Form 10-K.
Operating Segments
We manage our operations through five operating segments Primary Care; Specialty Care and Oncology; Established
Products and Emerging Markets; Animal Health; and Consumer Healthcare. As of the third quarter of 2012, the Animal Health and
Consumer Healthcare business units are no longer managed as a single operating segment. Each operating segment has
responsibility for its commercial activities and for certain research and development activities related to in-line products and in-
process research and development (IPR&D) projects that generally have achieved proof-of-concept.
We regularly review our segments and the approach used by management to evaluate performance and allocate resources.
Generally, products are transferred to the Established Products business unit in the beginning of the fiscal year following loss of
patent protection or marketing exclusivity.
A description of each of our five operating segments follows:
Primary Care operating segment includes revenues from human prescription pharmaceutical products primarily
prescribed by primary-care physicians, and may include products in the following therapeutic and disease areas:
Alzheimers disease, cardiovascular (excluding pulmonary arterial hypertension), erectile dysfunction,
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genitourinary, major depressive disorder, pain, respiratory and smoking cessation. Examples of products in this
segment in 2012 include Celebrex , Chantix/Champix , Eliquis , Lipitor (in certain European Union (EU) countries and
in Australia and New Zealand), Lyrica , Premarin , Pristiq and Viagra . All revenues for these products are allocated
to the Primary Care business unit, except those generated in emerging markets and those that are managed by the
Established Products business unit.
Beginning in 2012, sales of Lipitor in the U.S., Canada, South Korea and Japan were reported in our Established Products
business unit and beginning in 2013, sales of Lipitor in Australia and most of developed Europe are being reported in our
Established Products business unit.
Specialty Care and Oncology operating segment comprises the Specialty Care business unit and the Oncology
business unit.
Specialty Care includes revenues from human prescription pharmaceutical products primarily prescribed by
physicians who are specialists, and may include products in the following therapeutic and disease areas: anti-
infectives, endocrine disorders, hemophilia, inflammation, ophthalmology, pulmonary arterial hypertension,
specialty neuroscience and vaccines. Examples of products in this business unit in 2012 include BeneFIX ,
Enbrel , Genotropin , Geodon (outside the U.S.), the Prevnar/Prevenar family, ReFacto AF , Revatio
(outside the U.S.), Tygacil , Vfend (outside the U.S. and South Korea), Vyndaqel (outside the U.S.), Xalatan
(outside the U.S., Canada and South Korea), Xeljanz (in the U.S.), Xyntha and Zyvox . All revenues for these
products are allocated to the Specialty Care business unit, except those generated in emerging markets and
those that are managed by the Established Products business unit.
Oncology includes revenues from human prescription pharmaceutical products addressing oncology and
oncology-related illnesses. The products in this business unit in 2012 include Inlyta , Sutent , Torisel ,
Xalkori , Mylotarg (in Japan) and Bosulif (in the U.S.). All revenues for these products are allocated to the
Oncology business unit, except those generated in emerging markets and those that are managed by the
Established Products business unit.
Established Products and Emerging Markets operating segment comprises the Established Products business unit
and the Emerging Markets business unit.
Established Products includes revenues from human prescription pharmaceutical products that have lost
patent protection or marketing exclusivity in certain countries and/or regions. Typically, products are
transferred to this business unit in the beginning of the fiscal year following loss of patent protection or
marketing exclusivity. However, in certain situations, products may be transferred to this business unit at a
different point than the beginning of the fiscal year following loss of patent protection or marketing
exclusivity in order to maximize their value. This business unit also excludes revenues generated in emerging
markets. Examples of products in this business unit in 2012 include Arthrotec , Effexor , Lipitor (in the U.S.,
Canada, South Korea and Japan), Medrol , Norvasc , Protonix , Relpax , Vfend (in the U.S. and South Korea),
Xalatan (in the U.S., Canada and South Korea) 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, the Middle East, Eastern Europe,
Africa, Turkey and Central Europe.
Animal Health operating segment includes worldwide revenues from products and services to prevent and treat
disease in livestock and companion animals, including anti-infectives, vaccines, parasiticides, medicinal feed additives,
other pharmaceutical products and other non-pharmaceutical products.
Consumer Healthcare operating segment includes worldwide revenues from non-prescription products in the
following therapeutic categories: dietary supplements, pain management, respiratory and personal care. Products
marketed by Consumer Healthcare include Advil , Caltrate , Centrum , ChapStick , Emergen-C , Preparation H and
Robitussin .
For a further discussion of our operating segments, including certain costs that are not allocated to our operating segment
results, as well as comparative segment information for 2012, 2011 and 2010, see the Notes to Consolidated Financial Statements
Note 18. Segment, Geographic and Other Revenue Information, including the tables therein captioned Selected income statement
information, Geographic Information and Significant Product Revenues in our 2012 Financial Report and the
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table captioned Revenues by Segment and Geographic Area in the MD&A in our 2012 Financial Report, which are incorporated by
reference.
Our businesses are heavily regulated in most of the countries in which we operate. In the U.S., the principal authority
regulating our operations is the U.S. Food and Drug Administration (FDA). The FDA regulates the safety and efficacy of the
products we offer and our research, quality, manufacturing processes, product promotion, advertising and product labeling. Similar
regulations exist in most other countries, and in many countries the government also regulates our prices. See Government
Regulation and Price Constraints below.
Biopharmaceutical Products
Our biopharmaceutical business is comprised of the following five business units: Primary Care, Specialty Care, Oncology,
Established Products and Emerging Markets. For further information regarding these business units, see Operating Segments
above, and for a discussion of certain of our key biopharmaceutical products, including Lyrica , Lipitor , Enbrel , Prevnar
13/Prevenar 13 , Celebrex , Viagra , Norvasc , Zyvox , Sutent , and the Premarin family, see the Analysis of the Consolidated
Statements of Income Biopharmaceutical Selected Product Descriptions section of the MD&A in our 2012 Financial Report.
Revenues from biopharmaceutical products contributed approximately 87% of our total revenues in 2012, 88% of our total
revenues in 2011 and 90% of our total revenues in 2010.
We recorded direct product sales of more than $1 billion for each of 10 biopharmaceutical products in 2012, each of 12
biopharmaceutical products in 2011 and each of 15 biopharmaceutical products in 2010. These products represented 49% of our
revenues from biopharmaceutical products in 2012, 56% of our revenues from biopharmaceutical products in 2011 and 60% of our
revenues from biopharmaceutical products in 2010. See Item 1A. Risk Factors Dependence on Key In-Line Products below.
Worldwide revenues from biopharmaceutical products in 2012 were $51.2 billion, a decrease of 11% compared to 2011,
primarily due to the decrease of $7.6 billion in operational revenues from Lipitor , Geodon , Xalatan , Caduet , Aromasin and Detrol
, and lower Alliance revenues for Aricept , all due to the loss of exclusivity in certain markets, and from lower Alliance revenues for
Spiriva due to the final-year terms of our collaboration agreements in certain European countries, Canada and Australia; lower
revenues for Effexor and Zosyn/Tazocin ; and the unfavorable impact of foreign exchange of $1.3 billion, or 2%. This decrease was
partially offset by an increase in operational revenues in developed markets for certain biopharmaceutical products, particularly
Lyrica , Celebrex , and Enbrel , and in revenues from emerging markets.
Geographically, in the U.S., revenues from biopharmaceutical products decreased 17% in 2012 compared to 2011, primarily
reflecting lower revenues from Lipitor , Geodon , Caduet , Xalatan and Aromasin , all due to the loss of exclusivity; lower Alliance
revenues due to loss of exclusivity of Aricept 5mg and 10mg tablets in November 2010; and lower revenues from Effexor , Zosyn and
Detrol/Detrol LA . The impact of these adverse factors was partially offset by the strong performance of certain other
biopharmaceutical products, lower reductions related to rebates and the lower reduction in revenues related to the Patient Protection
and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (commonly referred to as the Affordable
Care Act, or ACA).
For additional information regarding the impact of the ACA on our revenues, see the Overview of Our Performance, Operating
Environment, Strategy and Outlook Our Operating Environment U.S. Healthcare Legislation section of the MD&A in our
2012 Financial Report.
In our international markets, revenues from biopharmaceutical products decreased 7% in 2012 compared to 2011, primarily due
to the loss of exclusivity of Lipitor in most of developed Europe and the unfavorable impact of foreign exchange of 3%.
Operationally, revenues decreased 4% in 2012 compared to 2011. In addition to Lipitor , the decrease in operational revenues was
driven by Xalatan/Xalacom , Aricept and Aromasin , all due to the loss of exclusivity in certain markets, as well as lower Alliance
revenues, primarily due to the loss of exclusivity of Aricept in many major European markets and lower revenues for Spiriva in
certain European countries, Canada and Australia (reflecting the final-year terms of our Spiriva collaboration agreements relating to
those countries), as well as lower revenues for Norvasc and Effexor . The impact of these adverse factors was partially offset by the
strong operational growth of Lyrica , Prevnar 13/Prevenar 13 and Enbrel .
During 2012, international revenues from biopharmaceutical products represented 62% of total revenues from
biopharmaceutical products, compared to 59% in 2011.
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For additional information, see the Analysis of the Consolidated Statements of Income Biopharmaceutical Revenues
section of the MD&A in our 2012 Financial Report.
Other Products
Animal Health
Our Animal Health operating segment is a market leader in nearly all of the major regions in which it operates. It discovers,
develops, manufactures and commercializes animal health medicines and vaccines, with a focus on both livestock and companion
animals.
On February 6, 2013, an IPO of our subsidiary Zoetis was completed, pursuant to which we sold 99.015 million shares of Zoetis
in exchange for the retirement of approximately $2.5 billion of Pfizer commercial paper issued on January 10, 2013. The IPO
represented approximately 19.8% of the total outstanding Zoetis shares. On February 1, 2013, Zoetis shares began trading on the
New York Stock Exchange under the symbol ZTS. Prior to and in connection with the IPO, Zoetis completed a $3.65 billion senior
notes offering and we transferred to Zoetis substantially all of the assets and liabilities of our Animal Health business. For additional
details see the Notes to Consolidated Financial Statements Note 19A. Subsequent Events: Zoetis Debt Offering and Initial Public
Offering in our 2012 Financial Report.
We will continue to consolidate Zoetis as we have retained control over the entity, and we will reflect amounts attributable to
noncontrolling interests for the divested portion. The net assets, operations and cash flows that comprise Zoetis are not the same as
those of the Animal Health operating segment.
Revenues from Animal Health products were approximately $4.3 billion in 2012, an increase of 3% compared to 2011, reflecting
higher operational revenues of 6%, partially offset by the unfavorable impact of foreign exchange of 3%. Operational revenues from
Animal Health products were favorably impacted by the solid performance in both the livestock and companion animal portfolios.
Major categories and product lines in the Animal Health business include:
Anti-infectives: products that prevent, kill or slow the growth of bacteria, fungi or protozoa. Examples of products in this
category include Draxxin , Terramycin , Clavamox / Synulox , and the Ceftiofur line;
Vaccines: biological preparations that prevent diseases of the respiratory, gastrointestinal and reproductive tracts or
induce a specific immune response. Examples of products in this category include the Bovishield line, Improvac , and
Vanguard ;
Parasiticides: products that prevent or eliminate external and internal parasites, such as fleas, ticks and worms. Examples of
products in this category include Cydectin , Dectomax , and Revolution ;
Medicinal feed additives: products that provide medicines, nutrients and probiotics to livestock; and
Other pharmaceutical products and other non-pharmaceutical products: complementary products, such as pain and
sedation, oncology and antiemetic products. Examples of products in this category include Palladia and Rimadyl .
Consumer Healthcare
Based on 2012 revenues, our Consumer Healthcare operating segment is the fifth-largest branded multi-national, over-the-
counter (OTC), healthcare products business in the world and sells two of the ten largest selling OTC healthcare brands ( Centrum
and Advil ) in the world. Consumer Healthcare revenues totaled $3.2 billion for 2012, an increase of 6% compared to 2011, reflecting
higher operational revenues of 8%, partially offset by the unfavorable impact of foreign exchange of 2%. The operational revenue
increase was primarily due to the addition of products from the acquisitions of the consumer healthcare business of Ferrosan
Holding A/S (Ferrosan) in December 2011 and Alacer Corp. (Alacer) in February 2012, discussed below. The Consumer Healthcare
operating segment holds strong positions in various geographic markets, with its highest revenue volume in the U.S., Canada,
China, Germany, Italy, Brazil and Australia.
Major categories and product lines in our Consumer Healthcare business include:
Dietary supplements: Centrum brands (including Centrum , Centrum Silver , Centrum Mens and Womens , Centrum
Specialist , Centrum Flavor Burst , and Centrum Kids ), Caltrate , and Emergen-C ;
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Pain management: Advil brands (including Advil , Advil PM , Advil Liqui-Gels , Childrens Advil , Infants Advil , and
Advil Migraine) , and ThermaCare ;
Respiratory: Robitussin , Advil Cold & Sinus , Advil Congestion Relief , and Dimetapp ; and
Personal care: ChapStick and Preparation H.
On August 13, 2012, we announced that we entered into an agreement with AstraZeneca for the global OTC rights for Nexium
, a leading prescription drug currently approved to treat the symptoms of gastroesophageal reflux disease. Under the terms of the
agreement, we acquired the exclusive global rights to market Nexium for OTC indications, which are subject to regulatory approval.
In February 2012, we completed our acquisition of Alacer, a company that manufactures, markets and distributes Emergen-C , a line
of effervescent, powdered drink mix vitamin supplements that is the largest-selling branded vitamin C line in the U.S. In December
2011, we completed our acquisition of the consumer healthcare business of Ferrosan, a Danish company engaged in the sale of
science-based consumer healthcare products, including dietary supplements and lifestyle products, primarily in the Nordic region
and the emerging markets of Russia and Central and Eastern Europe. For additional information, see the Notes to Consolidated
Financial Statements Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:
Acquisitions in our 2012 Financial Report and the Overview of Our Performance, Operating Environment, Strategy and Outlook
Our Business Development Initiatives section of the MD&A in our 2012 Financial Report.
For additional information regarding the revenues of our Animal Health and Consumer Healthcare operating segments, see the
Analysis of the Consolidated Statements of Income Other Product Revenues section of the MD&A in our 2012 Financial Report.
Nutrition
On November 30, 2012, we completed the sale of our Nutrition business to Nestl for $11.85 billion in cash. Pfizer Nutrition was
a business that sold infant nutritionals, including infant milk formula brands for newborns and toddlers, in certain markets outside
the U.S. and Canada. For additional information, see the Notes to Consolidated Financial Statements Note 2B. Acquisitions,
Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures in our 2012 Financial Report.
Research and Development
Innovation by our research and development (R&D) operations is very important to our success. As a result, and also
because we are predominantly a human health company, the vast majority of our research and development spending is associated
with human health products, compounds and activities. Our goal is to discover, develop and bring to market innovative products
that address major unmet medical needs. We spent $7.9 billion in 2012, $9.1 billion in 2011 and $9.5 billion in 2010 on research and
development.
Biopharmaceutical R&D
We conduct research internally and also through contracts with third parties, through collaborations with universities and
biotechnology companies and in cooperation with other pharmaceutical firms. We also seek out promising compounds and
innovative technologies developed by third parties to incorporate into our discovery and development processes or projects, as
well as our product lines, through collaborations, alliance and license agreements, acquisitions and other arrangements.
Drug discovery and development is time-consuming, expensive and unpredictable. According to the Pharmaceutical Research
and Manufacturers of America (PhRMA), out of 5,000-10,000 screened compounds, only 250 enter preclinical testing, five enter
human clinical trials and one is approved by the FDA. The process from early discovery or design to development to regulatory
approval can take more than 10 years. Drug candidates can fail at any stage of the process, and candidates may not receive
regulatory approval even after many years of research.
As of year-end 2012, we had 276 projects in research and development, ranging from discovery through registration, of which
78 programs are in Phase 1 through registration, with the remainder of the projects in pre-clinical development. At year-end 2012, our
Phase 3 portfolio contained 17 programs. Development of a single compound is often pursued as part of multiple different programs.
While these new candidates may or may not eventually receive regulatory approval, new drug candidates entering clinical
development phases are the foundation for future products.
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In addition to discovering and developing new products, our research operations seek to add value to our existing products
by improving their effectiveness and by discovering new uses or indications for them.
Information concerning several of our drug candidates in development, as well as supplemental filings for existing products, is
set forth in the Analysis of the Consolidated Statements of Income Product Developments Biopharmaceutical section of the
MD&A in our 2012 Financial Report, which is incorporated by reference.
Our competitors also devote substantial funds and resources to research and development. We also compete against
numerous small biotechnology companies in developing potential drug candidates. The extent to which our competitors are
successful in their research could result in erosion of the sales of our existing products and potential sales of products in
development, as well as unanticipated product obsolescence. See Item 1A. Risk Factors Competitive Products below.
We continue to closely evaluate our global research and development function and pursue strategies intended to improve
innovation and overall productivity in R&D by prioritizing areas that we believe have the greatest scientific and commercial promise,
utilizing appropriate risk/return profiles, and focusing on areas that we believe have the highest potential to deliver value in the near
term and over time. To that end, our research primarily focuses on five high-priority areas that have a mix of small and large
molecules immunology and inflammation; oncology; cardiovascular and metabolic diseases; neuroscience and pain; and
vaccines. In addition to reducing the number of disease areas of focus, we have realigned and reduced our research and
development footprint, and outsourced certain functions that do not drive competitive advantage for Pfizer. For additional
information, see the Overview of Our Performance, Operating Environment, Strategy and Outlook Our Strategy section of the
MD&A in our 2012 Financial Report.
For additional information regarding our R&D operations, see the Analysis of the Consolidated Statements of Income
Research and Development section of the MD&A in our 2012 Financial Report.
International Operations
We have significant operations outside the United States. For the developed markets, these operations for human
pharmaceutical products are managed through the same business units as our U.S. operations (i.e., Primary Care, Specialty Care,
Oncology and Established Products). Our operations in emerging markets for human pharmaceutical products are managed through
the Emerging Markets business unit within the Established Products and Emerging Markets segment. Our Animal Health and
Consumer Healthcare operating segments manage their operations worldwide.
Revenues from operations outside the U.S. of $35.9 billion accounted for 61% of our total revenues in 2012. Revenues
exceeded $500 million in each of 16 countries outside the U.S. in 2012 and 2011, and in each of 17 countries outside the U.S. in 2010.
The U.S. is our largest national market, comprising 39% of total revenues in 2012, 41% of total revenues in 2011 and 44% of total
revenues in 2010. Japan is our second-largest national market, with 10% of total revenues in 2012, 9% of total revenues in 2011 and
8% of total revenues in 2010.
For a geographic breakdown of revenues, see the table captioned Geographic Information in the Notes to Consolidated
Financial Statements Note 18. Segment, Geographic and Other Revenue Information in our 2012 Financial Report, and the table
captioned Revenues by Segment and Geographic Area in the MD&A in our 2012 Financial Report. Those tables are incorporated by
reference.
Our international businesses are subject, in varying degrees, to a number of risks inherent in carrying on business in other
countries. These include, among other things, currency fluctuations, capital and exchange control regulations, expropriation and
other restrictive government actions. See Item 1A. Risk Factors Risks Affecting International Operations below. Our
international businesses are also subject to government-imposed constraints, including laws and regulations on pricing,
reimbursement, and access to our products. See Government Regulation and Price Constraints below for a discussion of these
matters.
Depending on the direction of change relative to the U.S. dollar, foreign currency values can increase or decrease the reported
dollar value of our net assets and results of operations. In 2012, both revenues and net income were unfavorably impacted by
foreign exchange in general, as foreign currency movements relative to the U.S. dollar decreased our revenues and net income in
many countries. While we cannot predict with certainty future changes in foreign exchange rates or the effect they will have on us,
we attempt to mitigate their impact through operational means and by using various financial instruments, depending upon market
conditions. For additional information, see the Notes to Consolidated Financial Statements Note 7E. Financial Instruments:
Derivative Financial Instruments and Hedging Activities in our 2012 Financial Report, as well as the
7
Forward-Looking Information and Factors That May Affect Future Results Financial Risk Management section of the MD&A
in our 2012 Financial Report. Those sections of our 2012 Financial Report are incorporated by reference.
Marketing
In our global biopharmaceutical businesses, we promote our products to healthcare providers and patients. Through our
marketing organizations, we explain the approved uses, benefits and risks of our products to healthcare providers, such as doctors,
nurse practitioners, physician assistants, pharmacists, hospitals, Pharmacy Benefit Managers (PBMs), Managed Care Organizations
(MCOs), employers and government agencies. We also market directly to consumers in the U.S. through direct-to-consumer
advertising that communicates the approved uses, benefits and risks of our products while motivating people to have meaningful
conversations with their doctors. In addition, we sponsor general advertising to educate the public on disease awareness,
prevention and wellness, important public health issues, and our patient assistance programs.
Our biopharmaceutical businesses include five human health, customer-focused business units: Primary Care, Specialty Care
(including vaccines), Oncology, Established Products and Emerging Markets. We operate in customer-focused business units
within our biopharmaceutical businesses to better meet the diverse needs of physicians, patients and our customers while seeking
to maximize value for our Company and our shareholders.
Our U.S. Primary Care operations are structured into regional units in order to create a more flexible organization to identify
and address local market dynamics and customer needs. Our structure is designed to align the sales, marketing, and medical
functions to work closely to meet the needs of key customer groups while seeking to ensure common coordination, focus and
accountability across the organizations.
Our prescription pharmaceutical products are sold principally to wholesalers, but we also sell directly to retailers, hospitals,
clinics, government agencies and pharmacies, and in the case of Prevnar 13 , directly to individual provider offices in the U.S. We
seek to gain access to healthcare authority, PBM and MCO formularies. Formularies are lists of approved medicines available to
members that are tiered according to co-pay amounts and reimbursed by the respective PBM or MCO. We also work with MCOs,
PBMs, employers and other healthcare providers to assist them with disease management, patient education and other tools that
help their medical treatment routines.
During 2012, Pfizer revenues from our three largest biopharmaceutical wholesalers were as follows:
McKesson, Inc. 12% of our total revenues (and 28% of our total U.S. revenues);
Cardinal Health, Inc. 9% of our total revenues (and 23% of our total U.S. revenues); and
AmerisourceBergen Corporation 7% of our total revenues (and 17% of our total U.S. revenues).
Sales to these wholesalers were concentrated in the biopharmaceutical businesses. In addition, our Consumer Healthcare
operating segment generates a significant portion of its sales from several large customers, the loss of any one or more of which
could have a material adverse effect on the Consumer Healthcare operating segment.
Each of our global Animal Health and Consumer Healthcare operating segments utilizes its own sales and marketing
organizations to promote its products, and each occasionally uses distributors in smaller markets.
Our Animal Health operating segments advertising and promotions are generally targeted to veterinary healthcare
professionals, livestock producers and pet owners. Animal Health products are sold directly to veterinarians and livestock
producers, as well as through distributors and retail outlets.
Our Consumer Healthcare operating segments advertising and promotions are generally disseminated to consumers through
television, print, digital and other media advertising, as well as through in-store promotion. Consumer Healthcare products are sold
through a wide variety of channels, including distributors, pharmacies, retail chains and grocery and convenience stores.
Patents and Intellectual Property Rights
Our products are sold around the world under brand-name, logo and certain product design trademarks that we consider, in
the aggregate, to be of material importance. Trademark protection continues in some countries for as long as the mark is used and, in
other countries, for as long as it is registered. Registrations generally are for fixed, but renewable, terms.
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We own or license a number of U.S. and foreign patents. These patents cover pharmaceutical and other products and their
uses, pharmaceutical formulations, product manufacturing processes and intermediate chemical compounds used in manufacturing.
Patents for individual products extend for varying periods according to the date of patent filing or grant and the legal term of
patents in the various countries where patent protection is obtained. The actual protection afforded by a patent, which can vary
from country to country, depends upon the type of patent, the scope of its coverage and the availability of legal remedies in the
country. Further, patent term extension may be available in many major countries to compensate for a regulatory delay in approval of
the product. For additional information, see Government Regulation and Price Constraints Intellectual Property below.
In the aggregate, our patent and related rights are of material importance to our businesses in the U.S. and most other
countries. Based on current product sales, and considering the vigorous competition with products sold by others, the patent rights
we consider most significant in relation to our business as a whole, together with the year in which the U.S. basic product patent
expires (including, where applicable, the additional six-month pediatric exclusivity period and/or the granted patent term extension),
are those for the drugs set forth in the table below. The basic patents for these products in other large markets may expire in the
same, earlier or later years.

Drug U.S. Basi c Product Patent Expi rati on Year
(1)(2)(3)
Detrol 2012
(2)
Viagra 2012
(3)
Celebrex 2014
Zyvox 2015
Lyrica 2018
Bosulif 2019
Chantix 2020
Inlyta 2020
Xeljanz 2020
Sutent 2021
Eliquis 2023
Xalkori 2029
(1)
With respect to the products in this table, the corresponding European and Japanese patent expiration dates are
generally within one year before or after the U.S. dates indicated, except as follows:
With respect to Japan, the patent expiration year for Celebrex is 2019, for Zyvox is 2019, for Lyrica is 2022, for
Champix is 2022, and for Sutent is 2024. For Detrol , post-marketing surveillance in Japan extends until 2014.
With respect to major European markets, the patent expiration year for Xalkori is 2025. For Lyrica , regulatory
exclusivity in Europe extends until 2014.
(2)
As a result of certain patent litigation settlements, we expect generic competition for Detrol LA to commence in the U.S.
no earlier than January 1, 2014, except in limited circumstances, and no later than March 1, 2014.
(3)
In some instances, there are later-expiring patents relating to our products directed to particular forms or compositions,
to methods of manufacturing, or to use of the drug in the treatment of particular diseases or conditions. For example, in
addition to the basic product patent covering Viagra , it is also covered by a U.S. method-of-treatment patent which,
including the six-month pediatric exclusivity period associated with Revatio which has the same active ingredient as
Viagra , expires in 2020. However, in some cases, such patents may not protect our drug from generic competition after the
expiration of the basic patent.
We co-promote Aricept with Eisai Co., Ltd. (Eisai). We lost exclusivity for Aricept 5mg and 10mg tablets in the U.S. in
November 2010, and in the majority of European markets in February 2012 and April 2012. We expect to lose exclusivity for the
Aricept 23mg tablet in the U.S. in July 2013. For additional information, including a description of certain of our other co-
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promotion agreements and their expiration dates, see the Analysis of the Consolidated Statements of Income Biopharmaceutical
Selected Product Descriptions and the Overview of Our Performance, Operating Environment, Strategy and Outlook The
Loss or Expiration of Intellectual Property Rights sections of the MD&A in our 2012 Financial Report and Item 1A. Risk Factors
Dependence on Key In-Line Products below.
We lost exclusivity for Lipitor in the U.S. in November 2011. Lipitor lost exclusivity in Japan in June 2011, Australia in April
2012 and most of developed Europe in March 2012 and May 2012. In the U.S., Europe, Japan and Australia, Lipitor now faces multi-
source generic competition. In other international markets, Lipitor has lost exclusivity in certain countries and will lose exclusivity at
various times in other countries.
We lost exclusivity for Xalatan in the U.S. in March 2011. We lost exclusivity for Xalatan and Xalacom in the majority of
European markets in January 2012. We lost exclusivity for Geodon in the U.S. in March 2012. We lost exclusivity in the U.S. in
September 2012 for Revatio tablet, and in June 2012 for Detrol immediate release ( Detrol IR ). We lost exclusivity for Detrol in most
European markets in September 2012. Aromasin , Effexor/Effexor XR (extended-release formulation of Effexor ), Zosyn , Protonix ,
Norvasc and Vfend tablets are examples of other Pfizer products that face generic competition in the U.S. We also lost exclusivity for
Caduet in the U.S. in November 2011, and in the majority of European markets in March and May 2012.
For additional information, see the Overview of Our Performance, Operating Environment, Strategy and Outlook The Loss
or Expiration of Intellectual Property Rights section of the MD&A in our 2012 Financial Report.
Companies have filed applications with the FDA seeking approval of products that we believe infringe our patents covering,
among other products, Viagra , Lyrica , Sutent , Rapamune , EpiPen , Torisel , Pristiq , and Embeda extended-release capsules .
The expiration of a basic product patent or loss of patent protection resulting from a legal challenge normally results in
significant competition from generic products against the originally patented product and can result in a significant reduction in
revenues for that product in a very short period of time. In some cases, however, we can continue to obtain commercial benefits from
product manufacturing trade secrets; patents on uses for products; patents on processes and intermediates for the economical
manufacture of the active ingredients; patents for special formulations of the product or delivery mechanisms; and conversion of the
active ingredient to OTC products.
Biotechnology Products
Our biotechnology products, including BeneFIX , ReFacto , Xyntha, Enbrel and the Prevnar/Prevenar family, may face
competition from biosimilars (also referred to as follow-on biologics). Such biosimilars would reference biotechnology products
approved under the U.S. Public Health Service Act. Additionally, the FDA has approved a biosimilar recombinant human growth
hormone that referenced our biotechnology product, Genotropin, which was approved under the U.S. Federal Food, Drug and
Cosmetic Act.
Abbreviated legal pathways for the approval of biosimilars exist in certain international markets and, since the passage of the
ACA, a framework for such approval exists in the U.S. The regulatory implementation of these ACA provisions is ongoing and
expected to take several years. However, the FDA has begun to clarify its expectations for approval via the biosimilar pathway with
the issuance of three draft guidance documents in February 2012. See Government Regulation and Price Constraints Biosimilars
for additional information on the ACAs approval framework for biosimilars.
In Europe, the European Commission has granted marketing authorizations for several biosimilars pursuant to a set of general
and product class-specific guidelines for biosimilar approvals issued over the past few years, and in Japan the regulatory authority
has granted marketing authorizations for certain biosimilars, including somatropin (the recombinant human growth hormone in our
Genotropin product), pursuant to a guideline for biosimilar approvals issued in 2009.
If competitors are able to obtain marketing approval for biosimilars referencing our biotechnology products, our
biotechnology products may become subject to competition from biosimilars, with attendant competitive pressure, and price
reductions could follow. Expiration or successful challenge of applicable patent rights could trigger this competition, assuming any
relevant exclusivity period has expired. However, unlike small molecule generics, biologics currently have additional barriers to entry
related to the manufacture of such products, and biosimilars are not necessarily identical to the reference products. Therefore,
generic competition with respect to biologics may not be as significant. As part of our business strategy, we are developing
biosimilar medicines using our expertise in biologics and our regulatory, commercial and manufacturing strengths. As such, a better-
defined biosimilars approval pathway will assist us in pursuing approval of our own biosimilar products in the U.S. See Item 1A. Risk
Factors Biotechnology Products below.
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We may face more litigation with respect to the validity and/or scope of patents relating to our biotechnology products with
substantial revenue. Likewise, as we enter the biosimilars area and seek to launch products, patents may be asserted against us.
International
One of the main limitations on our operations in some countries outside the U.S. is the lack of effective intellectual property
protection for our products. Under international and U.S. free trade agreements in recent years, global protection of intellectual
property rights has been improving. The World Trade Organization Agreement on Trade Related Aspects of Intellectual Property
(WTO-TRIPs) required participant countries to amend their intellectual property laws to provide patent protection for
pharmaceutical products by 2005, with an extension until 2016 for least-developed countries. A number of countries have made
improvements. We have experienced significant growth in our businesses in some of those countries. We include further patent
protection improvement among the factors we consider for continued business expansion in other participant countries. For
additional information, see Government Regulation and Price Constraints Intellectual Property below.
Competition
Our businesses are conducted in intensely competitive and often highly regulated markets. Many of our human prescription
pharmaceutical products face competition in the form of branded or generic drugs that treat similar diseases or indications. The
principal forms of competition include efficacy, safety, ease of use, and cost effectiveness. Though the means of competition vary
among product categories and business groups, demonstrating the value of our products is a critical factor for success in all of our
principal businesses.
Our competitors include other worldwide research-based drug companies, smaller research companies with more limited
therapeutic focus, and generic drug and consumer healthcare manufacturers. We compete with other companies that manufacture
and sell products that treat diseases or indications similar to those treated by our major products.
This competition affects our core product business, which is focused on applying innovative science to discover and market
products that satisfy unmet medical needs and provide therapeutic improvements. Our emphasis on innovation is underscored by
our multi-billion-dollar investment in research and development, as well as our business development transactions, both designed to
result in a strong product pipeline. Our investment in research does not stop with drug approval; we continue to invest in further
understanding the value of our products for the conditions they treat, as well as potential new applications. We seek to protect the
health and well-being of patients by striving to ensure that medically sound knowledge of the benefits and risks of our medicines is
understood and communicated to patients, physicians and global health authorities. We also seek to continually enhance the
organizational effectiveness of all of our biopharmaceutical functions, including coordinating support for our salespersons efforts
to accurately and ethically launch and promote our products to our customers.
Operating conditions have become more challenging under the mounting global pressures of competition, industry regulation
and cost containment. We continue to take measures to evaluate, adapt and improve our organization and business practices to
better meet customer and public needs. We have taken an industry-leading role in evolving our approaches to U.S. direct-to-
consumer advertising; interactions with, and payments to, healthcare professionals; and medical education grants. We also
continue to sponsor programs to address patient affordability and access barriers, as we strive to advance fundamental health
system change through support for better healthcare solutions.
While our Animal Health operating segment is a market leader in nearly all of the major regions and sectors in which it
operates, it faces competition from other animal health businesses, including those that are business units of other large
pharmaceutical companies. The principal drivers of competition vary depending on the particular region, species, product category
or individual product, and may include new product development, quality, price, service and effective promotion to veterinary
professionals, pet owners and livestock producers.
Our Consumer Healthcare operating segment faces competition from OTC business units in other major pharmaceutical and
consumer packaged goods companies, as well as retailers who carry their own private label brands. Our competitive position is
affected by several factors, including, among others, the amount and effectiveness of our and our competitors promotional
resources; customer acceptance; product quality; our and our competitors introduction of new products, ingredients, claims,
dosage forms, or other forms of innovation; and pricing, regulatory and legislative matters (such as product labeling, patient access
and prescription to OTC switches).
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Managed Care Organizations
The growth of MCOs in the U.S. has been a major factor in the competitive makeup of the healthcare marketplace.
Approximately 260 million people in the U.S. now participate in some form of managed care. Because of the size of the patient
population covered by MCOs, the marketing of prescription drugs to them and the PBMs that serve many of those organizations
continues to grow in importance.
MCOs can include medical insurance companies, medical plan administrators, health maintenance organizations, alliances of
hospitals and physicians and other physician organizations (e.g., staff or group model health maintenance organizations). The
purchasing power of MCOs has increased in recent years due to the growing numbers of patients enrolled in MCOs. At the same
time, those organizations have been consolidating into fewer, even larger entities. This consolidation enhances both their
purchasing strength and importance to us.
The growth of MCOs has increased pressure on drug prices. One objective of MCOs is to contain and, where possible, reduce
healthcare expenditures. MCOs typically use formularies, volume purchases and long-term contracts to negotiate discounts from
pharmaceutical providers. Also, MCOs use their purchasing power and their ability to influence market share and volume of
prescription drugs to negotiate for lower supplier prices. They also emphasize primary and preventive care, out-patient treatment
and procedures performed at doctors offices and clinics. Hospitalization and surgery, typically the most expensive forms of
treatment, are carefully managed. Since the use of certain drugs can reduce the need for hospitalization, professional therapy, or
even surgery, such drugs can become favored first-line treatments for certain diseases.
As discussed above under Marketing , MCOs and PBMs typically develop formularies, which are lists of approved medicines
available to members that are tiered according to co-pay amounts and reimbursed by the respective PBM or MCO. Formularies
typically are based on the prices and therapeutic benefits, or a combination of the two, of the available products. Due to their
generally lower cost, generic medicines typically are placed in lowest cost tiers. The breadth of the products covered by formularies
can vary considerably from one MCO to another, and many formularies include alternative and competitive products for treatment of
particular medical problems. MCOs use a variety of means to encourage patients use of products listed on their formularies.
Exclusion of a product from a formulary or other MCO-implemented restrictions can significantly impact drug usage in the
MCO patient population. Consequently, pharmaceutical companies compete to gain access to formularies for their products. Unique
product features, such as greater efficacy, better patient ease of use, or fewer side effects, are generally beneficial to achieving
access to formularies. However, lower overall cost of therapy is also an important factor. We have been generally, although not
universally, successful in having our major products included on MCO formularies.
The impact that MCOs have on drug prices and volumes has increased as a result of their role in negotiating on behalf of
Medicare beneficiaries in connection with the Medicare Outpatient Prescription Drug Benefit, Medicare Part D, which took effect
January 1, 2006. MCOs and PBMs negotiate directly with pharmaceutical manufacturers on behalf of the federal government for
product access on Medicare Prescription Drug Plans (PDPs) formularies. We have been generally, although not universally,
successful in having our major products that are used by the senior population included on the formularies of the Medicare PDPs.
Generic Products
One of the biggest competitive challenges that we face is from generic pharmaceutical manufacturers. Upon the expiration or
loss of patent protection for a product, especially a small molecule product, we can lose the major portion of revenues for that
product in a very short period of time. Several such competitors make a regular practice of challenging our product patents before
their expiration. Unlike us, generic competitors often operate without large research and development expenses, as well as without
costs of conveying medical information about products to the medical community. In addition, the FDA approval process exempts
generics from costly and time-consuming clinical trials to demonstrate their safety and efficacy, allowing generic manufacturers to
rely on the safety and efficacy data of the innovator product. Generic products need only demonstrate a level of availability in the
body equivalent to that of the innovator product. This means that generic competitors can market a competing version of our
product after the expiration or loss of our patent and often charge much less.
In addition, our patent-protected products can face competition in the form of generic versions of competitors branded
products that lose their market exclusivity.
As noted above, MCOs that focus primarily on the immediate cost of drugs often favor generics over brand-name drugs.
Many governments also encourage the use of generics as alternatives to brand-name drugs in their healthcare programs,
12
including Medicaid in the U.S. Laws in the U.S. generally allow, and in some cases require, pharmacists to substitute, for brand-name
drugs, generic drugs that have been rated under government procedures to be therapeutically equivalent to brand-name drugs. The
substitution must be made unless the prescribing physician expressly forbids it. In the U.S., Pfizers Greenstone subsidiary and
Pfizer Injectables sell generic versions of Pfizers, as well as certain competitors, solid oral dose and sterile injectable pharmaceutical
products, respectively, upon loss of exclusivity, as appropriate.
Raw Materials
Raw materials essential to our businesses are purchased worldwide in the ordinary course of business from numerous
suppliers. In general, these materials are available from multiple sources. No serious shortages or delays of raw materials were
encountered in 2012, and none are expected in 2013. However, select materials have, from time to time, increased in price due to
short-term imbalances between supply and demand. We have successfully secured the materials necessary to meet our requirements
in these circumstances, but generally at higher prices than those historically paid.
Government Regulation and Price Constraints
In the United States
General. Pharmaceutical companies are subject to extensive regulation by national, state and local agencies in the countries in
which they do business. Of particular importance in the U.S. is the FDA, which has jurisdiction over our biopharmaceutical products
and administers requirements covering the testing, safety, effectiveness, manufacturing, labeling, marketing, advertising and post-
marketing surveillance of these products. The FDA also regulates our Consumer Healthcare and Animal Health products. Other
federal agencies, including the U.S. Department of Agriculture and the U.S. Drug Enforcement Administration, also regulate some of
our products.
In addition, many of our activities are subject to the jurisdiction of other federal regulatory and enforcement departments and
agencies, such as the Department of Health and Human Services (HHS) Office of the Inspector General, the Federal Trade
Commission (FTC) (which also has the authority to regulate the advertising of consumer healthcare products, including OTC drugs
and dietary supplements), the Department of Justice (DOJ) and the SEC. Individual states, acting through their attorneys general,
have become active as well, seeking to regulate the marketing of prescription drugs under state consumer protection and false
advertising laws.
We are subject to possible administrative and legal proceedings and actions by these various governmental bodies. See the
Notes to Consolidated Financial Statements Note 17. Commitments and Contingencies in our 2012 Financial Report. Such actions
may involve product seizures and other civil and criminal sanctions.
Healthcare Reform. In March 2010, the ACA was enacted in the U.S. The provisions of the ACA are effective on various
dates. The principal provisions affecting the biopharmaceutical industry include:
an increase, from 15.1% to 23.1%, in the minimum rebate on branded prescription drugs sold to Medicaid beneficiaries
(effective January 1, 2010);
extension of Medicaid prescription drug rebates to drugs dispensed to enrollees in certain Medicaid managed care
organizations (effective March 23, 2010);
expansion of the types of institutions eligible for the Section 340B discounts for outpatient drugs provided to hospitals
serving a disproportionate share of low-income individuals and meeting the qualification criteria under Section 340B of the
Public Health Service Act of 1944 (effective January 1, 2010);
discounts on branded prescription drug sales to Medicare Part D participants who are in the Medicare coverage gap, also
known as the doughnut hole (effective January 1, 2011); and
a fee payable to the federal government (which is not deductible for U.S. income tax purposes) based on our prior-calendar-
year share relative to other companies of branded prescription drug sales to specified government programs (effective January
1, 2011, with the total fee to be paid each year by the pharmaceutical industry increasing annually through 2018).
As of February 2013, the Congressional Budget Office estimates that the ACA will result in the coverage of 27 million
previously uninsured individuals by 2017. Approximately half of this would occur through an expansion of the Medicaid program.
Effective in 2014, individuals with incomes below 133% of the federal poverty level (FPL) would be eligible for Medicaid. The
remainder would be covered with private sector coverage, either through their employers or new state-based Health Insurance
Exchanges (Health Insurance Exchanges). With limited exceptions, individuals who fail to purchase health
13
insurance will pay a penalty, which is an obligation commonly referred to as the individual mandate. Individuals with incomes
between 100%-400% of the FPL will be eligible for subsidies to help pay for coverage.
The U.S. Supreme Court reached a decision in June 2012 that upheld all provisions of the ACA with the exception of the
Medicaid expansion. Now, states can choose not to expand their Medicaid populations without losing federal funding for their
existing Medicaid populations. The Congressional Budget Office estimates that the new state flexibility is likely to result in six
million fewer new Medicaid enrollees than were initially expected to enroll as a result of the eligibility expansion and that half of
these people are expected to gain coverage through Health Insurance Exchanges, and the remaining three million are likely to remain
uninsured.
The ACA specifies certain benefits and services that must be covered for health insurers to qualify to participate in the Health
Insurance Exchanges. The general categories of benefits and services that must be covered include: ambulatory patient services;
emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including
behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive
and wellness services and chronic disease management; and pediatric services including oral and vision care. Regulators have
provided additional guidance to states on the types of benefits and services that must be covered.
Expanding insurance coverage and other costs are expected to result in a relatively modest gain in overall pharmaceutical
industry sales, as the newly insured are principally young and relatively healthy. At the same time, the rebates, discounts, taxes and
other costs associated with the ACA are a significant cost to the industry.
The ACA created the Independent Payment Advisory Board (IPAB), a 15-member panel appointed by the President, subject
to Senate confirmation. The IPAB is charged with developing proposals to reduce the per capita rate of growth in Medicare
spending in the event that the actual Medicare per capita growth rate exceeds a specified target. Unless Congress acts to alter the
proposals, the proposals will be automatically implemented. However, the IPAB cannot directly ration care, raise premiums, increase
cost sharing, or otherwise restrict benefits or modify eligibility. If the IPAB fails to act, the Secretary of HHS is directed to prepare
such proposals. The IPAB is prohibited by statute from making payment reductions to certain sectors such as hospitals and home
health agencies, which increases the risk that the IPAB will propose to limit access to pharmaceutical treatments or mandate price
controls for our products.
The ACA also established the Patient Centered Outcomes Research Institute (PCORI), a federally funded, private, non-profit
corporation empowered to fund and disseminate comparative effectiveness research (CER) and build infrastructure for improved
outcomes analysis. PCORI has no authority to impose formulary changes directly in government-funded health programs. However,
we expect that due to the PCORI, as well as the underlying market demand for data-driven differentiation, CER studies will have
growing influence on access. Overseeing and managing the PCORI is an advisory board drawn from multiple and varied stakeholder
organizations, including the pharmaceutical industry. Pfizers Chief Medical Officer currently serves as an industry representative on
the advisory board.
Changes in Marketing Activity Disclosure . The ACA expands the governments investigative and enforcement authority
and increases the penalties for fraud and abuse, including amendments to both the False Claims Act and the Anti-Kickback Statute
to make it easier to bring suit under these statutes. The ACA also allocates additional resources and tools for the government to
police healthcare fraud, with expanded subpoena power for HHS, additional funding to investigate fraud and abuse across the
healthcare system, and expanded use of Recovery Audit Contractors for enforcement.
After significant delays, starting in 2013, pharmaceutical manufacturers will be required to record any transfers of value made
to doctors and teaching hospitals and to disclose such data to HHS, with the initial disclosure to HHS due no later than March 31,
2013. Data collection and reporting will begin with the issuance of final guidance or regulations anticipated before the end of the first
quarter of 2013. In addition to civil penalties for failure to report transfers of value to physicians or teaching hospitals, there will be
criminal penalties if a manufacturer intentionally makes false statements in such reports. The payment data across biopharmaceutical
and medical device companies will be posted by HHS on a publicly available website. This increased access to such data by fraud
and abuse investigators, industry critics and media will draw attention to our collaborations with reported entities and will
importantly provide opportunities to underscore the critical nature of our collaborations for developing medicine and exchanging
scientific information. This national payment transparency effort, industry commitment to uphold voluntary codes of conduct (such
as the updated PhRMA Code on Interactions with Healthcare Professionals and PhRMA Guiding Principles Direct to Consumer
Advertisements About Prescription Medicines ) and rigorous internal training and compliance efforts will complement existing laws
and regulations to help ensure ethical collaboration and truthful product communications.
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Medicare. Medicare Part D went into effect on January 1, 2006. Elderly and disabled beneficiaries have access to the Medicare
drug benefit through private plans approved by the federal government. Beneficiaries with low incomes and modest assets are
eligible for assistance with Medicare Part D plan premiums and cost sharing. Nationally, the share of such beneficiaries with
comprehensive drug coverage increased from 59% in 2005 to over 90% in 2011. Medicare beneficiaries report high levels of
satisfaction, with an overwhelming majority saying the program works well. In addition, the program costs less than originally
expected.
The ACA made some important changes to the drug benefit, which include, in particular, phasing out the coverage gap by
2020. Prior to the ACA, beneficiaries who reached a certain level of spending on prescription medications (the Medicare Part D
coverage gap or doughnut hole) had to pay 100% of the cost of their drugs until personal out-of-pocket spending reached a level
qualifying them for catastrophic coverage. The Medicare Part D Coverage Gap Discount Program uses public and private funding to
relieve the financial burden facing beneficiaries who fall into this coverage gap. Beginning in 2011, branded pharmaceutical
companies paid 50% of the cost of the branded drugs in the gap and the government paid 7% of the cost of the generic drugs in the
gap. As a result, rather than paying 100% of the total cost of their drugs when they reached the coverage gap, enrollees paid 50% of
the total cost of branded drugs and 93% of the total cost of generic drugs. The contribution from the government for generic drugs
grew to 14% in 2012, and will grow steadily over time until reaching 75% in 2020. In addition, starting in 2013, the 50% discount from
branded pharmaceutical companies will be supplemented by a contribution from the government, which will also grow steadily over
time until reaching 25% in 2020. That means that by 2020, enrollees will pay only 25% of the cost of their branded and generic drugs
in the gap.
Biosimilars. The ACA also created a framework for the approval of biosimilars (also known as follow-on biologics) following
the expiration of 12 years of exclusivity for the innovator biologic, with a potential six-month pediatric extension. Under the ACA,
biosimilar applications may not be submitted until four years after the approval of the reference, innovator biologic. The FDA is
responsible for implementation of the legislation, which will require the FDA to address such key topics as the type and extent of
data needed to establish biosimilarity; the data required to achieve interchangeability compared to biosimilarity; the naming
convention for biosimilars; the tracking and tracing of adverse events; and the acceptability of data using a non-U.S. licensed
comparator to demonstrate biosimilarity and/or interchangeability with a U.S.-licensed reference product. The FDA has begun to
address some of these issues with the February 2012 release of three draft guidance documents. Specifically, the FDA has clarified
that biosimilar applicants may use a non-U.S. licensed comparator in certain studies to support a demonstration of biosimilarity to a
U.S.-licensed reference product.
Medicaid and Related Matters. Federal law requires branded pharmaceutical companies to provide rebates to state Medicaid
agencies. The ACA brought about major changes in the Medicaid program. Collectively, the measures (i) increased federal rebates
paid by manufacturers on branded drugs within the traditional Medicaid program from 15.1% to 23.1%, and for generic drugs from
11% to 13% of Average Manufacturer Price (AMP); (ii) expanded Medicaid drug rebates to cover drugs provided through managed
Medicaid plans; and (iii) changed the rebate rates for line extensions or new formulations of solid oral dosage form drugs. Post-
implementation of ACA, the Centers for Medicare and Medicaid Services (CMS) withdrew its former, detailed AMP-calculation
rules, and new CMS AMP guidance was published in proposed rule form in January 2012. A final rule is expected in mid-2013. The
law also creates a federal upper limit under the Medicaid program for generic drugs at 175% of AMP. In addition, the law expanded
the types of entities eligible for the Section 340B discounts for outpatient drugs that began in 2010.
The majority of states use preferred drug lists to restrict access to certain medicines to Medicaid beneficiaries. Restrictions
exist for some Pfizer products in certain states. Access in the Medicaid managed care program is typically determined by the health
plans providing coverage for Medicaid recipients contracting for the provision of services in the state. Given states current and
potential ongoing fiscal crises, a growing number of states are considering a variety of cost-control strategies, including capitated
managed care plans that typically contain cost by restricting access to certain treatments.
The ACA expands Medicaid coverage in 2014. The Congressional Budget Office estimates between seven and 13 million
additional people will be enrolled in Medicaid by 2014.
We also must give discounts or rebates on purchases or reimbursements of pharmaceutical products by certain other federal
and state agencies and programs. See the discussion regarding rebates in the Analysis of the Consolidated Statements of Income
Revenues Overview section of the MD&A in our 2012 Financial Report and in the Notes to Consolidated Financial Statements
Note 1G. Basis of Presentation and Significant Accounting Policies: Revenues in our 2012 Financial Report, which are incorporated
by reference.
PDUFA Reauthorization. The Prescription Drug User Fee Act (PDUFA) was first enacted in 1992 to provide the FDA with
additional resources to speed the review of important new medicines. Prior to PDUFA, inadequate funding of the FDA drug review
process led to a backlog of application reviews and lengthy review times. PDUFA revolutionized the review
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process for new drugs and biologics without compromising high approval standards for demonstration of product safety, quality
and efficacy. PDUFA expires every five years and must be reauthorized by Congress. PDUFA IV expired on September 30, 2012, and
was renewed as Title I of the FDA Safety and Innovation Act (FDASIA). In addition to PDUFA V, FDASIA included a range of
provisions important to the industry, including new user fee requirements for biosimilar products and generics. The PDUFA V
reauthorization reflected months of discussion between the FDA, industry and other stakeholders such as patient groups and
consumers. The current PDUFA V agreement focuses on improving the efficiency and predictability of the review process,
strengthening the agency regulatory science base and enhancing benefit-risk assessment and post-approval safety surveillance.
Budget Control Act of 2011 . In August 2011, the federal Budget Control Act of 2011 (the Budget Control Act) was enacted in
the U.S. The Budget Control Act includes provisions to raise the U.S. Treasury Departments borrowing limit, known as the debt
ceiling, and provisions to reduce the federal deficit by $2.4 trillion between 2012 and 2021. Deficit-reduction targets include $900
billion of discretionary spending reductions associated with HHS and various agencies charged with national security, but those
discretionary spending reductions do not include programs such as Medicare and Medicaid or direct changes to pharmaceutical
pricing, rebates or discounts. The Office of Management and Budget (OMB) is responsible for identifying the remaining $1.5 trillion
of deficit reductions, which will be divided evenly between defense and non-defense spending. Under this OMB review process,
Social Security, Medicaid, Veteran Benefits and certain other spending categories are excluded from consideration, but reductions in
payments to Medicare providers may be made, although any such reductions are prohibited by law from exceeding 2% of the
originally budgeted amount. Additionally, certain payments to Medicare Part D plans, such as low-income subsidy payments, are
exempt from reduction. While we do not know the specific nature of the spending reductions under the Budget Control Act that will
affect Medicare, we do not expect that those reductions will have a material adverse impact on our results of operations. However,
any significant spending reductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs that may
be implemented, and/or any significant additional taxes or fees that may be imposed on us, as part of any broader deficit-reduction
effort or legislative replacement for the Budget Control Act, could have an adverse impact on our results of operations.
Federal Debt Ceiling. Enforcement of the U.S. federal debt ceiling has been suspended through May 18, 2013. If the U.S.
federal government fails to suspend enforcement of the debt ceiling beyond May 18, 2013 or to increase the debt ceiling and, as a
result, is unable to satisfy its financial obligations, including under Medicare, Medicaid and other publicly funded or subsidized
health programs, our results of operations could be adversely impacted.
Outside the United States
We encounter similar regulatory and legislative issues in most other countries. In Europe, Canada, Japan, China, South Korea
and some other international markets, governments provide healthcare at low direct cost to consumers and regulate pharmaceutical
prices or patient reimbursement levels to control costs for the government-sponsored healthcare system. This international
patchwork of price regulation has led to different prices and some third-party trade in our products between countries.
Europe. The approval of new drugs across the EU may be achieved using the Mutual Recognition Procedure/Decentralized
Procedure or EU Commission/European Medicines Agency (EMA) Centralized Procedure. These procedures apply in the EU
member states, plus the European Economic Area countries, Norway and Iceland. The use of these procedures generally provides a
more rapid and consistent approval process across the member states than was the case when the approval processes were
operating independently within each country.
Since the EU does not have jurisdiction over patient reimbursement or pricing matters in its member states, we continue to
work with individual countries on such matters across the region.
The world economy in 2012 faced ongoing challenges and, in particular, continuing uncertainty around the solvency of
governments. As a result, global growth has remained low, with many EU countries experiencing a second recession in recent years.
One of the consequences of the economic challenges for almost all world economies has been an increase in public debt as a
proportion of gross domestic product, arising from increased government spending and reduced tax receipts. For many developed
economies, particularly in Europe, this has exacerbated existing fiscal imbalances and has created doubt in investment markets about
the sustainability of public debt levels in a number of European countries, further raising the cost of borrowing, with the result that
financial support has been necessary from the EU to Greece, Portugal, Ireland and Spain and from the International Monetary Fund
in the cases of Greece, Portugal and Ireland. Stringent austerity measures have been implemented in many European countries with
the aim of closing the fiscal gap, in particular in Spain and Italy.
Under these macroeconomic conditions, Pfizer continues to face widespread downward pressures on international pricing and
reimbursement, particularly in developed European markets, Japan and in certain emerging markets. all of which have a
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large government share of pharmaceutical spending and are facing a difficult fiscal environment. Specific pricing pressures in 2012
included measures to reduce pharmaceutical prices and expenditures in Spain, Italy, France, Greece, Ireland, Portugal and Japan.
Formal processes of international reference pricing (IRP) between EU countries add to the regional impact of price cuts in
individual countries. Price variations also have arisen from exchange rate fluctuations between the euro and other European
currencies, and these also are exacerbated by international reference pricing systems. The downward pricing pressure resulting from
this dynamic can be expected to continue as a result of reforms to IRP policies, emergency measures targeting pharmaceuticals in
some European countries and ongoing exchange rate turbulence.
In January 2007, a new EU Regulation on Medicines for Pediatric Use became effective. This introduced obligations on
pharmaceutical companies to conduct research on their medicines for children and, subject to various conditions, offered the
possibility of incentives for so doing, including exclusivity extensions. The aim of this regulation is to improve the health of children
in the EU through high-quality research, stimulating the development of new medicines, creating infrastructure to enable authorized
use and improving the information on medicines for children. A Pediatric Committee was created within the EMA to provide
scientific opinions and input on development plans for medicines for use with children. In line with this regulation, Pfizer is
conducting a number of pediatric research programs for its in-line and development products.
In July 2012, new pharmacovigilance legislation came into force in the EU, which included many new and revised requirements
that impact Pfizers global safety system. Key changes include the establishment of a new Pharmacovigilance Risk Assessment
Committee within the EMA, with wide responsibility for reviewing and making recommendations on product safety issues for the EU
authorities. Accordingly, it will be possible for regulators in the EU to require pharmaceutical companies to conduct post-
authorization efficacy studies, both at the time of approval and at any time afterwards in light of scientific developments. There are
also additional requirements to include statements in product labeling with regard to adverse drug reaction reporting and additional
monitoring of products. The new legislation also introduces significantly greater transparency of the safety review process.
The new legislation forms part of a three-part pharmaceutical package to amend the existing EU pharmaceutical legislation.
The second part, the Falsified Medicines Directive, is a Directive aimed at preventing falsified medicines from entering into the legal
supply chain. Notably, the Directive imposes new obligations on all parties in the distribution chain, including importers, traders,
manufacturers, distributors, and any operator who repackages a product. Member states must transpose the Directive into national
law and apply its provisions from January 2013 onwards. The Directive also provides the legal basis of a number of implementation
measures to be adopted by the European Commission. Most of these implementation measures are expected to be adopted between
2013 and 2014 and will not be applicable until three years after the date of publication. The third part of the package concerned the
provision of information on prescription medicines to patients, which proved controversial and has been discontinued.
Transparency is a key theme and priority for the European Commission and EMA in the pharmaceutical area, particularly with
regard to clinical trial results and data submitted for marketing authorization in the EU. Recently, the EMA has disclosed
significantly more of such data, upon request, than in previous years, and the EMA announced its intention to publish additional
data in the future.
At the end of the third quarter of 2010, the Commissioner for Industry and Entrepreneurship of the European Commission
announced the launch of a process on corporate responsibility in the pharmaceutical industry. The process, which is expected to
officially conclude in mid-April 2013, included three independent platforms: (i) transparency and ethics in the sector; (ii) access to
medicines in Africa; and (iii) access to medicines in Europe in the context of pricing and reimbursement. No specific outcomes have
yet been determined following the work undertaken by the platforms, but these discussions are likely to drive requests for future
change, for example, on transparency and ethics in the pharmaceutical area.
Canada . Health Canada (HC) is the government agency that provides regulatory and marketing approval for drugs and
therapeutic products in Canada. In October 2012, the Federal Minister of Health announced the governments intention to (i) re-
introduce the Legislative and Regulatory Modernization (LRM) regulatory framework (which was originally presented to Parliament
in October 2010) and (ii) introduce Orphanet to Canada. Orphanet is an international consortium of countries that seeks to improve
the diagnosis, care and treatment of patients with rare disorders. The upcoming LRM regulatory framework is the most significant
drug regulatory system reform in Canada in over 50 years and is expected to overhaul Canadas Food and Drugs Act and
Regulations. The LRM supports a lifecycle regulatory approach and is focused on strengthening evidence-based decision-
making, good regulatory planning, licensing, post-licensing, accountability, authority and enforcement. Through this framework, HC
intends to improve the market authorization process and implement necessary regulatory frameworks.
Introductory non-excessive prices and price increases are controlled by the federal Patented Medicines Prices Review
Board. However, reimbursement is under provincial jurisdiction. As provinces continue to face budget pressure from growing
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healthcare expenditures, many provincial governments have developed pricing and purchasing strategies (including product listing
agreements and a pan-Canadian purchasing alliance initiative) to obtain better drug prices. The private sector is also attempting to
exert its negotiating power on drug manufacturers.
The 2004 Federal Provincial Territorial (FPT) Health Accord that sets out the Canada Health Transfers payment (a
budgetary mechanism, that provides for funding to provincial governments by the federal government), plus commitments on health
policy initiatives expires on March 31, 2014. In advance of the 2014 expiration of the FPT Health Accord, the federal government
announced, in December 2011, a new funding framework that confirms its health transfer funding policy until 2024, and, assuming
Canada achieves its projected gross domestic product growth target of 3%, provides for funding growth of 6% annually through
2016-2017.
Asia. The regulatory environment in Asia presents multiple issues for companies trying to achieve simultaneous global
development and registration (i.e., marketing products at the same time as in the U.S., Europe, Canada and elsewhere). While each
country in Asia has its unique regulatory concerns, there are a number of regulatory issues that are common among the majority of
countries in Asia. For example, with the exception of Japan, health authorities in Asia generally require marketing approval by a
recognized regulatory authority (e.g., the U.S. FDA) before they begin to conduct their application review process and/or issue their
final approval. Proof of reference country approval is usually satisfied by submitting a Certificate of Pharmaceutical Product, a legal
document that is issued by the competent health authority certifying that the companys product has satisfied its countrys
registration requirements and manufacturing standards. Often, this requirement delays marketing authorization in Asia by 12-15
months following marketing authorization in the U.S. and Europe.
Another common regulatory issue in Asia is the requirement for local clinical data in the countrys population in order to
receive final marketing approval. Each of Japan, China, South Korea, Taiwan, India and Vietnam has regulations that in some form
require clinical studies in the country (e.g., China requires a prescribed number of Chinese patients regardless of the product,
therapeutic area or disease population). Although some agencies have shown flexibility based on scientific rationale related to
ethnicity assessments, it is not uncommon for companies to be required to duplicate costly clinical trials in Asia pursuant to these
regulations. This can further add to marketing approval delays compared to the U.S. and Europe. Additionally, similar requirements
for local clinical data exist outside of Asia in countries such as Mexico and Russia, where we try to ensure their inclusion in global
clinical studies, where feasible, or conduct additional studies there, which further delays marketing authorization in those countries.
In Japan, the government is aiming to reduce the drug lag (i.e., drugs are often launched in Japan years after the EU and U.S.
markets) in a two-pronged approach: reducing regulatory agency review times and establishing a new pilot pricing premium. The
pilot pricing premium provides a financial incentive for drug development in Japan. While economic conditions and government
debt levels continue to put pressure on healthcare costs resulting in cost containment (particularly in the off-patent sector), the
recent extension of the pilot pricing premium for innovative products is encouraging.
In South Korea, the national health insurance deficit prompted the government to make significant price cuts in the off-patent
sector, effective April 2012. We continue to work with a committee established by the government to improve the pricing system for
innovative new drugs.
The controlling regulatory agency in China is the State Food and Drug Administration (SFDA). SFDAs scope of
responsibilities is similar to that of the FDA and EMA. Two key agencies within SFDA are the Center for Drug Evaluation (CDE) and
the National Institutes for Food and Drug Control (NIFDC). The CDE, which is analogous to the FDAs Center for Drug Evaluation
and Research, is primarily responsible for the technical review of product applications, including clinical trial applications and new
drug applications, and drafting technical guidance documents. NIFDC is the quality testing arm of SFDA, responsible for the testing
of pharmaceuticals, biologics and medical devices nationwide.
Chinas regulatory system is unique in many ways, and its drug development and registration requirements are not always
consistent with international standards. As a result, it is not uncommon to see treatments entering the market in China two to five
years after first marketing in the U.S. and Europe. There are three main contributing elements for this delay: (i) clinical trial
authorization approval times that are five to 10 times longer than international standards and add greater than 12 months to
development time; (ii) significant local Chinese patient number requirements for biologic products, regardless of product
characteristics or disease prevalence; and (iii) although the SFDA has improved its framework for more transparency, a formal
agency consultation structure, which would enable manufacturers to better align with the agency on the complexities of its drug
development requirements and policies, has not been established.
Intellectual Property . While the global intellectual property environment has improved following WTO-TRIPS, our future
business growth depends on further progress in intellectual property protection (see Patents and Intellectual Property Rights
above). In emerging market countries in particular, governments have used intellectual property policies as a tool for
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reducing the price of imported medicines, as well as to protect their national pharmaceutical industries. There is considerable
political pressure to weaken existing intellectual property protection and resist implementation of any further protection, which has
led to policies such as more restrictive standards and more difficult procedures for patenting biopharmaceutical inventions,
restrictions on patenting certain types of inventions (e.g., new medical treatment methods) and failure to implement effective
regulatory data protection. Our industry advocacy efforts focus on seeking a more balanced business environment for foreign
manufacturers.
In December 2012, the EU approved an EU Patent Package, which was agreed to by 25 out of 27 EU member states (excluding
Italy and Spain, which opted out but which are free to opt back in). This will create a Unitary EU patent, i.e., a uniform patent with
equal effect that will be granted, transferred, and enforced in a unitary way through participating member states. Patent grants will
continue to be granted through the existing European Patent Office, but a new court system will be set up to enforce such patents
and hear revocation actions. The central Division of the new court will be in Paris, although a section based in London will hear
chemical and pharmaceutical cases. The new regime reduces the translation requirement, should allow patentees to obtain pan-
European injunctions and damages, and should reduce forum-shopping in Europe for patent holders seeking to enforce their
patents, as well as generic manufacturers alleging patent invalidity or non-infringement. The EU Patent Package will enter into force
on January 1, 2014 or, after 13 European countries have ratified it, whichever is later.
Canadas intellectual property regime for drugs provides some level of patent protection and data exclusivity, but is generally
perceived to be less predictable than the intellectual property regimes of comparable countries. Through intense negotiations as part
of the Canada/EU Comprehensive Economic & Trade Agreement (CETA), the Canadian intellectual property regime may be further
enhanced by EU demands to align their respective intellectual property regimes. Canada recently joined the Trans-Pacific Trade
Partnership (TPP), and it is expected that more pressure to improve its intellectual property regime will arise if nothing results from
the CETA agreement.
In China, the intellectual property environment has improved, although effective enforcement and adequate legal remedies
remain areas of concern. The government has taken steps to protect intellectual property rights in conformity with World Trade
Organization (WTO) provisions, and several companies, including Pfizer, have established research and development centers in
China due to increased confidence in Chinas intellectual property environment. Despite this, China remained on the U.S.
Department of Commerce Priority Watch List for 2012. Further, the standards for patentability in China remain more restrictive than
in other major markets, including the U.S., Europe and Japan. Also, while a framework exists for protecting patents for 20 years,
enforcement mechanisms are often lacking or inconsistent, such as the absence of effective patent linkage mechanisms and
preliminary injunctions, impractical evidentiary burdens, and heightened sufficiency standards used to invalidate patents at the
enforcement stage.
Additionally, true regulatory data protection remains elusive in China. The Center for Drug Evaluation provides protection
against reliance on data by generic applicants for a fixed period of time. Following its WTO accession in 2001, China revised its laws
to incorporate concepts from the WTO-TRIPS, and Chinas relevant laws establish a six-year period of protection against unfair
commercial use of undisclosed test and other data of products containing a new chemical ingredient. However, the current
regulations are ambiguous as to how data protection is implemented in practice in China. For example, certain key concepts such as
new chemical ingredient and unfair commercial use are undefined.
In Brazil and other Latin American countries, backlogs at patent agencies have presented challenges for the protection of
certain products. The lack of regulatory data protection and difficulties in protecting certain types of inventions, such as new
medical uses of drug products, may limit the commercial lifespan of some pharmaceutical products.
In India, policies favoring compulsory licensing of patents, the increasing tendency of the Indian Patent Office to revoke
pharmaceutical patents in opposition proceedings, and restrictive standards for patentability of pharmaceutical products have made
it difficult to protect many of our inventions. India and other countries such as Israel maintain a system of pre-grant patent
oppositions that delay the granting of patents and add an additional challenge in our ability to protect our products through
patents.
In South Korea, the laws and regulations for the patent-regulatory approval linkage system were finalized and implemented as
part of the United States-Korea Free Trade Agreement in 2012. The Korean patent-regulatory approval linkage system includes
biologics.
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Environmental Law Compliance
Most of our operations are affected by national, state and/or local environmental laws. We have made, and intend to continue
to make, the expenditures necessary for compliance with applicable laws. We also are cleaning up environmental contamination from
past industrial activity at certain sites. See the Notes to Consolidated Financial Statements Note 17. Commitments and
Contingencies in our 2012 Financial Report. As a result, we incurred capital and operational expenditures in 2012 for environmental
compliance purposes and for the clean-up of certain past industrial activity as follows:
environment-related capital expenditures $27 million; and
other environment-related expenses $157 million.
While capital expenditures or operating costs for environmental compliance, including compliance with potential legislation
and potential regulation related to climate change, cannot be predicted with certainty, we have no reason to believe they will have a
material effect on our capital expenditures or competitive position.
While there can be no assurance that physical risks to our facilities and supply chain due to climate change will not occur in
the future, we have reviewed the potential for these risks and have concluded that, because of our facility locations and our existing
distribution networks, we do not believe these risks are material in the near term.
Tax Matters
The discussion of tax-related matters in the Notes to Consolidated Financial Statements Note 5. Tax Matters in our 2012
Financial Report, is incorporated by reference.
Employees
In our innovation-intensive business, our employees are vital to our success. We believe we have good relationships with our
employees. As of December 31, 2012, we employed approximately 91,500 people in our operations throughout the world, including
approximately 9,300 people in our Animal Health operations.
Disclosure Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012
Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (ITRSHRA) requires disclosure by public
companies of certain transactions involving the Government of Iran or other entities and individuals targeted by certain U.S.
sanctions administered by the U.S. Department of the Treasurys Office of Foreign Assets Control (OFAC). In some instances,
ITRSHRA requires companies to disclose these types of transactions, even if they were permissible under U.S. law or were
conducted by a non-U.S. affiliate in accordance with the local law under which such entity operates.
As a global biopharmaceutical company, we conduct business in multiple jurisdictions throughout the world. During 2012, our
activities included supplying life-saving medicines, nutritional supplements and other medical products (Pfizer products) for patient
and consumer use in Iran and Syria. U.S. law allows us to seek and rely on licenses issued by OFAC to supply Pfizer products to
customers in these countries, for both human and animal use. We ship these Pfizer products pursuant to such licenses, and we
conduct our activities in accordance with our internal policies, which follow requirements set forth in the laws of the U.S. and other
applicable jurisdictions. We will continue our global activities to improve the health and well-being of humans and animals in a
manner consistent with applicable laws and our internal policies.
To our knowledge, none of our activities during 2012 are required to be disclosed pursuant to ITRSHRA, with the following
possible exceptions:
(1) Pursuant to U.S. government authorizations, during 2012, our Animal Health business unit, through a non-U.S. affiliate,
shipped Pfizer products to authorized customers in Iran. These shipments were backed by letters of credit issued by Bank
Tejarat to a non-U.S. company acquired by Pfizer in 2011. The letters of credit were issued by Bank Tejarat and the Pfizer
products were shipped to customers in Iran prior to the Banks designation as a Specially Designated National (SDN) under
Executive Order 13382. After Bank Tejarats designation, Pfizers non-U.S. affiliate sought payment from Bank Tejarat by
presenting shipping documentation to the non-U.S. affiliates bank in Europe
20
and, as a result, subsequently received certain payments. Not all funds related to these transactions have been received
from Bank Tejarat. Where required, we have requested U.S. government authorization to process the funds received and to
be received. For funds received in 2012, our estimated gross revenues associated with these transactions were euro
222,962. Other than as set forth in the Notes to Consolidated Financial Statements Note 18. Segment, Geographic and
Other Revenue Information , including the tables therein captioned Selected income statement information, Geographic
Information and Significant Product Revenues in our 2012 Financial Report and in the table captioned Revenues by
Segment and Geographic Area in the MD&A in our 2012 Financial Report, we do not allocate net profit on a country-by-
country or activity-by-activity basis and, thus, cannot provide specific net profits ascribable to this activity. Pfizers net
profits attributable to these transactions in 2012 were a fraction of the gross revenues.
(2) Pursuant to U.S. government authorizations, during 2012, our Emerging Markets business unit, through a non-U.S. affiliate,
shipped Pfizer products to authorized customers in Iran. The shipments were backed by letters of credit issued by Bank
Tejarat prior to its designation as an SDN under Executive Order 13382. As a result of the shipments, which also occurred
prior to Bank Tejarats designation, Pfizers non-U.S. affiliate sought payment from Bank Tejarat by presenting shipping
documentation to the non-U.S. affiliates bank in Europe. In some cases, the presentation of documents occurred before
Bank Tejarats designation, and in other cases after such designation. Not all funds related to these transactions have been
received from Bank Tejarat. We have received U.S. government authorization for several of the foregoing transactions with
Bank Tejarat and, where required, have requested U.S. government authorization for the other transactions with Bank
Tejarat. For funds received in 2012, our estimated gross revenues associated with these transactions were euro 397,071. As
noted above, we do not allocate net profits on a country-by-country or activity-by-activity basis and, thus, cannot provide
specific net profits ascribable to this activity. Pfizers net profits attributable to these transactions in 2012 were a fraction of
the gross revenues.
(3) Pursuant to U.S. government authorizations, during 2012, our Emerging Markets business unit, through a non-U.S. affiliate,
shipped Pfizer products to an authorized customer in Syria. These shipments were backed by a letter of credit issued by
Syria International Islamic Bank (SIIB) prior to SIIBs designation as an SDN under Executive Order 13382. As a result of
the shipment, which occurred prior to SIIBs designation as an SDN, Pfizers non-U.S. affiliate sought payment from SIIB
by presenting shipping documentation to the non-U.S. affiliates bank in Europe. Both the presentation of documents and
the resulting payment occurred after SIIB was designated as an SDN. Where required, we have requested U.S. government
authorization to process the funds received. Our estimated gross revenues in 2012 associated with this transaction were
euro 315,960. As noted above, we do not allocate net profits on a country-by-country or activity-by-activity basis and,
thus, cannot provide specific net profits ascribable to this activity. Pfizers net profits attributable to this transaction in
2012 were a fraction of the gross revenues.
We have informed our customers that, in connection with future transactions with Pfizer, Bank Tejarat, SIIB and any other
banks designated as SDNs under Executive Order 13382 are not to be used.
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ITEM 1A. RISK FACTORS
The statements in this Section describe the major risks to our business and should be considered carefully. In addition, these
statements constitute our cautionary statements under the Private Securities Litigation Reform Act of 1995.
Our disclosure and analysis in this 2012 Form 10-K and in our 2012 Annual Report to Shareholders contain forward-
looking statements that set forth anticipated results based on managements plans and assumptions. From time to time, we also
provide forward-looking statements in other materials we release to the public, as well as oral forward-looking statements. Such
forward-looking statements involve substantial risks and uncertainties. We have tried, wherever possible, to identify such
statements by using words such as will, anticipate, estimate, expect, project, intend, plan, believe, target,
forecast, goal, objective and other words and terms of similar meaning, or by using future dates in connection with any
discussion of, among other things, our anticipated future operating or financial performance, business plans and prospects, in-
line products and product candidates, strategic reviews, capital allocation, business-development plans and plans relating to
share repurchases and dividends. In particular, these include statements relating to future actions, business plans and prospects,
prospective products or product approvals, future performance or results of current and anticipated products, sales efforts,
expenses, interest rates, foreign exchange rates, the outcome of contingencies, such as legal proceedings, plans relating to share
repurchases and dividends, government regulation and financial results, including, in particular, the financial guidance set forth
in the Overview of Our Performance, Operating Environment, Strategy and Outlook Our Financial Guidance for 2013 section
of the MD&A in our 2012 Financial Report and the anticipated costs and cost reductions set forth in the Analysis of the
Consolidated Statements of Income Restructuring Charges and Other Costs Associated with Acquisitions and Cost-
Reduction/Productivity Initiatives section of the MD&A in our 2012 Financial Report.
We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in
our plans and assumptions. Achievement of anticipated results is subject to substantial risks, uncertainties and inaccurate
assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate,
actual results could vary materially from past results and those anticipated, estimated or projected. You should bear this in mind
as you consider forward-looking statements, and you are cautioned not to put undue reliance on forward-looking statements.
We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future
events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Form 10-Q
and 8-K reports and our other filings with the SEC. Also note that we provide the following cautionary discussion of risks,
uncertainties and possibly inaccurate assumptions relevant to our businesses. These are factors that, individually or in the
aggregate, may cause our actual results to differ materially from expected and historical results. We note these factors for
investors as permitted by the Private Securities Litigation Reform Act of 1995. You should understand that it is not possible to
predict or identify all such factors. Consequently, you should not consider the following to be a complete discussion of all
potential risks or uncertainties.
U.S. Healthcare Reform/Healthcare Legislation
As mentioned above under Government Regulation and Price Constraints , the ACA was enacted by Congress in March
2010 and its provisions become effective on various dates. We expect that the rebates, discounts, taxes and other costs resulting
from the ACA over time will have a significant effect on our expenses and profitability in the future. See the discussion under the
Overview of Our Performance, Operating Environment, Strategy and Outlook Our Operating Environment U.S. Healthcare
Legislation section of the MD&A in our 2012 Financial Report and in Item 1. Business under the caption Government Regulation
and Price Constraints . Furthermore, the IPAB created by the ACA to reduce the per capita rate of growth in Medicare spending,
could potentially limit access to certain treatments or mandate price controls for our products. Moreover, expanded government
investigative authority may increase the costs of compliance with new regulations and programs. We also face the uncertainties that
might result from any modification, repeal or invalidation of any of the provisions of the ACA.
U.S. Deficit Reduction and Debt Ceiling Actions
As discussed above under Government Regulation and Price Constraints Budget Control Act of 2011 , while we do not
know the specific nature of the spending reductions under the Budget Control Act that will affect Medicare, we do not expect that
those reductions will have a material adverse impact on our results of operations. However, any significant spending reductions
affecting Medicare, Medicaid or other publicly funded or subsidized health programs that may be implemented,
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and/or any significant additional taxes or fees that may be imposed on us, as part of any broader deficit-reduction effort or
legislative replacement to the Budget Control Act, could have an adverse impact on our results of operations.
Similarly, as discussed above under Government Regulation and Price Constraints Federal Debt Ceiling , the possible
failure of the U.S. federal government to suspend enforcement of the federal debt ceiling beyond May 18, 2013 or to increase the
federal debt ceiling, and any resulting inability of the federal government to satisfy its financial obligations, including making
payments under Medicare, Medicaid and other publicly funded or subsidized health programs could have an adverse impact on our
results of operations.
Pricing Pressures and Government Regulation
U.S. and foreign governmental regulations mandating price controls and limitations on patient access to our products impact
our business, and our future results could be adversely affected by changes in such regulations or policies. In the U.S., many of our
biopharmaceutical products are subject to increasing pricing pressures. Such pressures have increased as a result of the 2003
Medicare Modernization Act (2003 MMA) due to the enhanced purchasing power of the private sector plans that negotiate on
behalf of Medicare beneficiaries. In addition, if the 2003 MMA or the ACA were amended to impose direct governmental price
controls and access restrictions, it would have a significant adverse impact on our business. Furthermore, MCOs, as well as
Medicaid and other government agencies, continue to seek price discounts. Some states have implemented, and other states are
considering, price controls or patient access constraints under the Medicaid program, and some states are considering price-control
regimes that would apply to broader segments of their populations that are not Medicaid-eligible. Other matters also could be the
subject of U.S. federal or state legislative or regulatory action that could adversely affect our business, including, among others,
changes in patent laws, restrictions on U.S. direct-to-consumer advertising, limitations on interactions with healthcare professionals,
or the use of comparative effectiveness methodologies that could be implemented in a manner that focuses primarily on cost
differences and minimizes the therapeutic differences among pharmaceutical products and restricts access to innovative medicines.
Further, there continue to be legislative proposals to amend U.S. laws to allow the importation into the U.S. of prescription drugs,
which can be sold at prices that are regulated by the governments of various foreign countries. In addition to well-documented
safety concerns, such as the increased risk of counterfeit products entering the supply chain, such importation could impact
pharmaceutical prices in the U.S.
The prohibition against the use of federal funds for reimbursement of erectile dysfunction medications by the Medicaid
program, which became effective January 1, 2006, and the similar federal funding prohibition for the Medicare Part D program, which
became effective January 1, 2007, has had an adverse effect on our business. Any prohibitions on the use of federal funds for
reimbursement of other classes of drugs in the future may also have an adverse effect.
We encounter similar regulatory and legislative issues in most other countries. In Europe, Canada, China, South Korea and
some other international markets, governments provide healthcare at low direct cost to consumers and regulate pharmaceutical
prices or patient reimbursement levels to control costs for government-sponsored healthcare systems. In particular, there were
government-mandated price reductions for certain biopharmaceutical products in Japan and certain European and emerging market
countries in 2012, and we anticipate continuing pricing pressures in Japan, Europe and emerging markets in 2013. This international
patchwork of price regulation has led to different prices and some third-party trade in our products between countries. As a result, it
is expected that pressures on the pricing component of operating results will continue. The adoption of restrictive price controls in
new jurisdictions or more restrictive ones in existing jurisdictions, failure to obtain timely or adequate government-approved pricing
or formulary placement where required for our products or obtaining such pricing or placement at unfavorable pricing could also
adversely impact revenue. In our vaccines business, we participate in a tender process in many countries for participation in national
immunization programs. Failure to secure participation in national immunization programs or to obtain acceptable pricing in the
tender process could adversely affect our business.
Managed Care Trends
MCOs and other private insurers frequently adopt their own payment or reimbursement reductions. Consolidation among
MCOs has increased the negotiating power of these entities. Private third-party payers, as well as governments, increasingly employ
formularies to control costs by negotiating discounted prices in exchange for formulary inclusion. Failure to obtain timely or
adequate pricing or formulary placement for our products or obtaining such pricing or placement at unfavorable pricing could
adversely impact revenue. In addition to formulary tier co-pay differentials, private health insurance companies and self-insured
employers have been raising co-payments required from beneficiaries, particularly for branded pharmaceuticals and biotechnology
products. Private health insurance companies also are increasingly imposing utilization management tools, such as requiring prior
authorization for a branded product if a generic product is available or requiring the patient to first fail on one or more generic
products before permitting access to a branded medicine. As the U.S. payer market
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concentrates further and as more drugs become available in generic form, biopharmaceutical companies may face greater pricing
pressure from private third-party payers, who will continue to drive more of their patients to use lower cost generic alternatives.
Generic Competition
Competition from manufacturers of generic drugs is a major challenge for us around the world, and the loss or expiration of
intellectual property rights can have a significant adverse effect on our revenues. Upon the expiration or loss of patent protection
for one of our products, or upon the at-risk launch (despite pending patent infringement litigation against the generic product) by
a generic manufacturer of a generic version of one of our patented products, we can lose the major portion of revenues for that
product in a very short period of time, which can adversely affect our business. As discussed above, a number of our current
products are expected to face significantly increased generic competition over the next few years.
Also, the patents covering several of our medicines, including Viagra , Lyrica , Sutent , Rapamune , EpiPen , Torisel , Pristiq
and Embeda extended-release capsules are being challenged by generic manufacturers. In addition, our patent-protected products
may face competition in the form of generic versions of competitors branded products that lose their market exclusivity.
Competitive Products
We cannot predict with accuracy the timing or impact of the introduction of competitive products or their possible effect on
our sales. Products that compete with ours, including some of our best-selling medicines, are launched from time to time.
Competitive product launches have occurred in recent years, and certain potentially competitive products are in various stages of
development, some of which have been filed for approval with the FDA and with regulatory authorities in other countries.
Dependence on Key In-Line Products
We recorded direct product revenues of more than $1 billion for each of 10 biopharmaceutical products in 2012: Lyrica ,
Lipitor , Enbrel , Prevnar 13/Prevenar 13 , Celebrex , Viagra , Norvasc , Zyvox , Sutent , and the Premarin family. Those products
accounted for 49% of our total biopharmaceutical revenues in 2012. If these products or any of our other major products were to
become subject to problems such as loss of patent protection, changes in prescription growth rates, material product liability
litigation, unexpected side effects, regulatory proceedings, publicity affecting doctor or patient confidence, pressure from existing
competitive products, changes in labeling or, if a new, more effective treatment should be introduced, the adverse impact on our
revenues could be significant. As noted, patents covering several of our best-selling medicines have recently expired or will expire in
the next few years (including some of our billion-dollar and previously billion-dollar products such as Lipitor and Xalatan/Xalacom
), and patents covering a number of our best-selling medicines are the subject of pending legal challenges. In addition, our revenues
could be significantly impacted by the timing and rate of commercial acceptance of key new products.
Further, our Alliance revenues will be adversely affected by the termination or expiration of collaboration agreements that we
have entered into and that we may enter into from time to time. For example, our rights to Aricept in Japan returned to Eisai in
December 2012; our collaboration with Boehringer Ingelheim for Spiriva expires on a country-by-country basis between 2012 and
2016, including the expiration in certain EU markets, Canada and Australia in 2012; our U.S. and Canada collaboration agreement with
Amgen Inc. (Amgen) for Enbrel will expire in October 2013 (our exclusive rights to Enbrel outside the U.S. and Canada will not be
affected by the expiration of the co-promotion agreement with Amgen); and our collaboration agreement with EMD Serono Inc.
(Serono) to co-promote Rebif in the U.S. will expire either at the end of 2013 or the end of 2015, depending on the outcome of
pending litigation between us and Serono concerning the interpretation of the agreement. See the Analysis of the Consolidated
Statements of Income Biopharmaceutical Selected Product Descriptions and Overview of Our Performance, Operating
Environment, Strategy and Outlook The Loss or Expiration of Intellectual Property Rights sections of the MD&A in our 2012
Financial Report for additional information on the expirations of these agreements.
Research and Development Investment
The discovery and development of safe, effective new products, and the development of additional uses for existing products,
are necessary for the continued strength of our business. Our product lines must be replenished over time in order to offset revenue
losses when products lose their exclusivity, as well as to provide for revenue and earnings growth. Our growth potential depends in
large part on our ability to identify and develop new products or new indications for existing products
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that address unmet medical needs and receive reimbursement from payers, either through internal research and development or
through collaborations, acquisitions, joint ventures or licensing or other arrangements with third parties. However, balancing current
growth and investment for the future remains a major challenge. Our ongoing investments in new product introductions and in
research and development for new products and existing product extensions could exceed corresponding sales growth. This could
produce higher costs without a proportional increase in revenues.
Additionally, our research and development investment plans and resources may not be correctly matched between science
and markets, and failure to invest in the right technology platforms, therapeutic segments, product classes, geographic markets
and/or in-licensing and out-licensing opportunities in order to deliver a robust pipeline could adversely impact the productivity of
our pipeline. Further, even if the areas with the greatest market attractiveness are identified, the science may not work for any given
program despite the significant investment required for research and development.
In 2011, we announced a focus on fewer disease areas where we believe we can deliver the greatest medical and commercial
success, as well as the implementation of our R&D footprint reduction by moving forward on our productivity initiatives. There can
be no assurance that this strategy will deliver the desired result in the targeted timeframe or at all, which could affect profitability in
the future.
Development, Regulatory Approval and Marketing of Products
The outcome of the lengthy and complex process of identifying new compounds and developing new products is inherently
uncertain and involves a high degree of risk. Drug discovery and development is time-consuming, expensive and unpredictable. The
process from early discovery or design to development to regulatory approval can take many years. Drug candidates can fail at any
stage of the process. There can be no assurance as to whether or when we will receive regulatory approval for new products or for
new indications or dosage forms for existing products. Decisions by regulatory authorities regarding labeling, ingredients and other
matters could adversely affect the availability or commercial potential of our products, and there is no assurance that any of our late
stage pipeline products will receive regulatory approval and/or be commercially successful or that recently approved products will
be approved in other markets and/or be commercially successful. There is also a risk that we may not adequately address existing
regulatory agency findings concerning the adequacy of our regulatory compliance processes and systems or implement sustainable
processes and procedures to maintain regulatory compliance and to address future regulatory agency findings, should they occur.
There are many considerations that can affect the marketing of our products around the world. Regulatory delays, the inability
to successfully complete or adequately design and implement clinical trials within the anticipated quality, time and cost guidelines or
in compliance with applicable regulatory expectations, claims and concerns about safety and efficacy, new discoveries, patent
disputes and claims about adverse side effects are a few of the factors that can adversely affect the realization of research and
development and product-related, forward-looking statements. Further, claims and concerns about safety and efficacy can result in a
negative impact on product sales, product recalls or withdrawals, and/or consumer fraud, product liability and other litigation and
claims. Also, increasing regulatory scrutiny of drug safety and efficacy, with regulatory authorities increasingly focused on product
safety and the risk/benefit profile of products as they relate to already-approved products, has resulted in a more challenging,
expensive and lengthy regulatory approval process due to requests for, among other things, additional clinical trials prior to
granting approval or increased post-approval requirements, such as risk evaluation and mitigation strategies (see Post-Approval
Data below).
In addition, failure to put in place adequate controls and/or resources for effective collection, reporting and management of
adverse events from clinical trials and post-marketing surveillance (see Post-Approval Data below), in compliance with current and
evolving regulatory requirements could result in risks to patient safety, regulatory actions and risks to product sales.
Post-Approval Data
As a condition to granting marketing approval of a product, the FDA may require a company to conduct additional clinical
trials. The results generated in these Phase IV trials could result in loss of marketing approval, changes in product labeling, and/or
new or increased concerns about the side effects or efficacy of a product. The Food and Drug Administration Amendments Act of
2007 (the FDAAA) gave the FDA enhanced post-market authority, including the explicit authority to require post-market studies
and clinical trials, labeling changes based on new safety information, and compliance with FDA-approved risk evaluation and
mitigation strategies. The FDAs exercise of its authority under the FDAAA has in some cases resulted, and in the future could
result, in delays or increased costs during product development, clinical trials and regulatory review, increased costs to comply with
additional post-approval regulatory requirements and potential restrictions on sales of approved products. Non-U.S. regulatory
agencies often have similar authority and may impose comparable costs. For
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example, a post-marketing study as part of a post-approval commitment to marketing authorization is becoming more common in
China, where the SFDA requires additional clinical data in the Chinese population in order to further assess the safety and efficacy
of a product, sometimes independent of the level of global clinical data available. Post-marketing studies, whether conducted by us
or by others and whether mandated by regulatory agencies or voluntary, and other emerging data about marketed products, such as
adverse event reports, may also adversely affect sales of our products. Further, the discovery of significant problems with a product
similar to one of our products that implicate (or are perceived to implicate) an entire class of products could have an adverse effect
on sales of the affected products. Accordingly, new data about our products, or products similar to our products, could negatively
impact demand for our products due to real or perceived side effects or uncertainty regarding efficacy and, in some cases, could
result in updated labeling, restrictions on use, product withdrawal or recall. Furthermore, new data and information, including
information about product misuse, may lead government agencies, professional societies, practice management groups or
organizations involved with various diseases to publish guidelines or recommendations related to the use of our products or the use
of related therapies or place restrictions on sales. Such guidelines or recommendations may lead to lower sales of our products.
Patent Protection
Our long-term success largely depends on our ability to market technologically competitive products. We rely and expect to
continue to rely on a combination of intellectual property, including patent, trademark, trade dress, copyright, trade secret and
domain name protection laws, as well as confidentiality and license agreements with our employees and others, to protect our
intellectual property and proprietary rights. If we fail to obtain and maintain adequate intellectual property protection, we may not be
able to prevent third parties from launching generic versions of our products, using our proprietary technologies or from marketing
products that are very similar or identical to ours. Our currently pending or future patent applications may not result in issued
patents, or be granted on a timely basis. Similarly, any term extensions that we seek may not be granted on a timely basis, if at all. In
addition, our issued patents may not contain claims sufficiently broad to protect us against third parties with similar technologies or
products or provide us with any competitive advantage, including exclusivity in a particular product area. The scope of our patent
claims also may vary between countries, as individual countries have distinctive patent laws. We may be subject to challenges by
third parties regarding our intellectual property, including, among others, claims regarding validity, enforceability, scope and
effective term.
Our ability to enforce our patents also depends on the laws of individual countries and each countrys practice with respect to
enforcement of intellectual property rights, and the extent to which certain sovereigns may seek to engage in a policy of routine
compulsory licensing of pharmaceutical intellectual property as a result of local political pressure or in the case of national
emergencies. In addition, mechanisms exist in much of the world permitting some form of challenge by competitors or generic drug
marketers to our patents prior to, or immediately following, the expiration of any regulatory exclusivity, and generic companies are
increasingly employing aggressive strategies, such as at risk launches to challenge our patent rights. Further, if we are unable to
maintain our existing license agreements or other agreements pursuant to which third parties grant us rights to intellectual property,
including because such agreements expire or are terminated, our operating results and financial condition could be materially
adversely affected.
Likewise, in the U.S. and other countries, we currently hold issued trademark registrations and have trademark applications
pending, any of which may be the subject of a governmental or third party objection, which could prevent the maintenance or
issuance of the same. As our products mature, our reliance on our trademarks to differentiate us from our competitors increases and
as a result, if we are unable to prevent third parties from adopting, registering or using trademarks and trade dress that infringe,
dilute or otherwise violate our trademark rights, our business could be materially adversely affected. We actively seek to protect our
proprietary information, including our trade secrets and proprietary know-how, by requiring our employees, consultants, other
advisors and other third parties to execute proprietary information and confidentiality agreements upon the commencement of their
employment, engagement or other relationship. Despite these efforts and precautions, we may be unable to prevent a third party
from copying or otherwise obtaining and using our trade secrets or our other intellectual property without authorization, and legal
remedies in some countries may not adequately compensate us for the damages caused by such unauthorized use. Further, others
may independently and lawfully develop substantially similar or identical products that circumvent our intellectual property by
means of alternative designs or processes or otherwise.
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Biotechnology Products
As discussed above in Patents and Intellectual Property and Government Regulation and Price Constraints Biosimilars ,
abbreviated legal pathways for the approval of biosimilars exist in certain international markets and, since the passage of the ACA, a
framework for such approval exists in the U.S. If competitors are able to obtain marketing approval for biosimilars referencing our
biotechnology products, our biotechnology products may become subject to competition from biosimilars, with attendant
competitive pressure. The expiration or successful challenge of applicable patent rights could trigger this competition, assuming any
relevant exclusivity period has expired. We may face more litigation with respect to the validity and/or scope of patents relating to
our biotechnology products with substantial revenue.
We are developing biosimilar medicines. The developing pathway for registration and approval of biosimilar products in the
U.S. could diminish the value of our past and future investments in biosimilars. Other risks related to our development of biosimilars
include the potential for steeper than anticipated price erosion due to increased competitive intensity, coupled with high costs
associated with clinical development or intellectual property challenges that may preclude timely commercialization of our potential
biosimilar products. There is also a risk of lower prescriptions of biosimilars due to potential concerns over comparability with
innovator medicines.
Research Studies
Decisions about research studies made early in the development process of a drug candidate can have a substantial impact on
the marketing strategy and payer reimbursement possibilities once the drug receives approval. For example, more detailed studies
can lead to approval for a broader set of indications that may impact the marketing and payer reimbursement process, but each
additional indication must be balanced against the time and resources required to demonstrate benefit and the potential delays to
approval of the primary indication. We try to plan clinical trials prudently and to reasonably foresee challenges, but there is no
guarantee that an optimal balance between speed, trial conduct and desired outcome will be achieved each time. The quality of our
decisions in this area could affect our future results.
Foreign Exchange and Interest Rate Risk
Significant portions of our revenues and earnings, as well as our substantial international net assets, are exposed to changes
in foreign exchange rates. 61% of our total 2012 revenues were derived from international operations, including 26% from the Europe
region and 21% from the Japan and the rest of Asia region. As we operate in multiple foreign currencies, including the euro, the
Japanese yen, the U.K. pound, the Chinese renminbi, the Canadian dollar and approximately 100 other currencies, changes in those
currencies relative to the U.S. dollar will impact our revenues and expenses. If the U.S. dollar weakens against a specific foreign
currency, our revenues will increase, having a positive impact, and our overall expenses will increase, having a negative impact, on
net income. Likewise, if the U.S. dollar strengthens against a specific foreign currency, our revenues will decrease, having a negative
impact, and our overall expenses will decrease, having a positive impact, on net income. Therefore, significant changes in foreign
exchange rates, including the impact of possible currency devaluations in countries experiencing high inflation rates, can impact our
results and our financial guidance.
In addition, our interest-bearing investments and borrowings are subject to risk from changes in interest rates and foreign
exchange rates. These risks and the measures we have taken to help contain them are discussed in the Forward-Looking
Information and Factors That May Affect Future Results Financial Risk Management section of the MD&A in our 2012
Financial Report. For additional details, see the Notes to Consolidated Financial Statements Note 7E. Financial Instruments:
Derivative Financial Instruments and Hedging Activities in our 2012 Financial Report. Those sections of our 2012 Financial Report
are incorporated by reference.
Notwithstanding our efforts to foresee and mitigate the effects of changes in fiscal circumstances, we cannot predict with
certainty changes in currency and interest rates, inflation or other related factors affecting our businesses.
Risks Affecting International Operations
Our international operations also could be affected by currency fluctuations, capital and exchange controls, expropriation and
other restrictive government actions, changes in intellectual property legal protections and remedies, trade regulations and
procedures and actions affecting approval, production, pricing, and marketing of, reimbursement for and access to our products, as
well as by political unrest, unstable governments and legal systems and inter-governmental disputes. Any of these changes could
adversely affect our business.
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Many emerging markets have experienced growth rates in excess of the worlds largest markets, leading to an increased
contribution to the industrys global performance. As a result, we have been employing strategies to grow in emerging markets.
However, there is no assurance that our strategies in emerging markets will be successful or that these countries will continue to
sustain these growth rates. In addition, some emerging market countries may be particularly vulnerable to periods of financial
instability or significant currency fluctuations or may have limited resources for healthcare spending, which, as discussed above,
can adversely affect our results.
Specialty Pharmaceuticals
Specialty pharmaceuticals are medicines that treat rare or life-threatening conditions that typically have smaller patient
populations. The growing availability and use of innovative specialty pharmaceuticals, combined with their relative higher cost as
compared to other types of pharmaceutical products, has generated payer interest in developing cost-containment strategies
targeted to this sector. While the impact on us of payers efforts to control access to and pricing of specialty pharmaceuticals has
been limited to date, our growing portfolio of specialty products, combined with the increasing use of health technology assessment
in markets around the world, and the deteriorating finances of certain governments, may lead to a more significant adverse business
impact in the future.
Animal Health
The Animal Health operating segment may be impacted by, among other things, emerging restrictions and bans on the use of
antibacterials in food-producing animals; perceived adverse effects on human health linked to the consumption of food derived from
animals that utilize our products; increased regulation or decreased governmental support relating to the raising, processing or
consumption of food-producing animals; an outbreak of infectious disease carried by animals; adverse weather conditions and the
availability of natural resources; adverse global economic conditions; and failure of the R&D, acquisition and licensing efforts to
generate new products. See Global Economic Conditions below.
Consumer Healthcare
The Consumer Healthcare operating segment may be impacted by economic volatility, the timing and severity of the cough,
cold and flu season, generic or store brand competition affecting consumer spending patterns and market share gains of
competitors branded products or generic store brands. In addition, regulatory and legislative outcomes regarding the safety,
efficacy or unintended uses of specific ingredients in our Consumer Healthcare products may require withdrawal and/or
reformulation of certain products (e.g., cough/cold products). See Global Economic Conditions below.
Global Economic Conditions
In addition to industry-specific factors, we, like other businesses, continue to face the effects of the challenging economic
environment, which have impacted our biopharmaceutical operations in the U.S. and Europe, including the countries that use the
euro, affecting the performance of products such as Lyrica , Enbrel , Prevnar 13/Prevenar 13 and Celebrex , and in a number of
emerging markets. We believe that patients, experiencing the effects of the challenging economic environment, including high
unemployment levels, and increases in co-pays, sometimes switch to generic products, delay treatments, skip doses or use less
effective treatments to reduce their costs. Challenging economic conditions in the U.S. also have increased the number of patients in
the Medicaid program, under which sales of pharmaceuticals are subject to substantial rebates and, in many states, to formulary
restrictions limiting access to brand-name drugs, including ours. In addition, we continue to experience pricing pressure in various
markets around the world, including in developed European markets, Japan and in a number of emerging markets, with government-
mandated reductions in prices for certain biopharmaceutical products and government-imposed access restrictions in certain
countries.
The challenging global economic environment has not had, nor do we anticipate it will have, a material impact on our liquidity
or capital resources. Due to our significant operating cash flows, financial assets, access to capital markets and available lines of
credit and revolving credit agreements, we continue to believe that we have the ability to meet our liquidity needs for the foreseeable
future. As market conditions change, we continue to monitor our liquidity position. However, there can be no assurance that our
liquidity or capital resources will not be affected by possible future changes in global financial markets and global economic
conditions.
Other potential impacts of these challenging economic conditions include declining sales; increased costs; changes in foreign
exchange rates; a decline in the value of, or a lower rate of return on, our financial assets and pension plan investments, which may
require us to increase our pension funding obligations; adverse government actions; delays or failures
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in the performance of customers, suppliers, and other third parties on whom we may depend for the performance of our business;
and the risk that our allowance for doubtful accounts may not be adequate.
Outsourcing
We outsource certain services to third parties in areas including transaction processing, accounting, information technology,
manufacturing, clinical trial execution, non-clinical research, safety services and other areas. For example, during 2012, we
implemented the transfer of approximately 200 on-going clinical trials to two strategic partners (clinical research organizations or
CROs), and any issues with either or both of these CROs may adversely impact the progression of our clinical trial programs.
Outsourcing of services to third parties could also expose us to sub-optimal quality of service delivery, which may result in missed
deadlines, supply disruptions, non-compliance or reputational harm, all with potential negative implications for our results.
We continue to pursue a multi-year initiative to outsource some transaction-processing activities within certain accounting
processes and are migrating to a consistent enterprise resource planning system across the organization. These are enhancements
of ongoing activities to support the growth of our financial shared service capabilities and standardize our financial systems. If any
difficulties in the migration to or in the operation of the new system were to occur, they could adversely affect our operations,
including, among other ways, through a failure to meet demand for our products, or adversely affect our ability to meet our financial
reporting obligations.
Interactions with Healthcare Professionals and Government Officials
Risks and uncertainties apply where we provide something of value to a healthcare professional and/or government official,
which, if found to be improper, could potentially result in government enforcement actions and penalties. These risks may increase
as non-U.S. jurisdictions adopt new anti-bribery laws and regulations.
Difficulties of Our Wholesale Distributors
In 2012, our largest wholesale distributor accounted for approximately 12% of our total revenue (and 28% of our total U.S.
revenue), and our top three wholesale distributors accounted for approximately 28% of our total revenue (and 68% of our total U.S.
revenue). If one of our significant wholesale distributors should encounter financial or other difficulties, such distributor might
decrease the amount of business that it does with us, and we might be unable to collect all the amounts that the distributor owes us
on a timely basis or at all, which could negatively impact our results of operations.
Product Manufacturing and Marketing Risks
Difficulties or delays in product manufacturing or marketing could affect future results through regulatory actions, shut-
downs, approval delays, withdrawals, recalls, penalties, supply disruptions or shortages, reputational harm, product liability,
unanticipated costs or otherwise. Examples of such difficulties or delays include, but are not limited to, the inability to increase
production capacity commensurate with demand; the failure to predict market demand for, or to gain market acceptance of, approved
products; the possibility that the supply of incoming materials may be delayed or become unavailable and that the quality of
incoming materials may be substandard and not detected; the possibility that we may fail to maintain appropriate quality standards
throughout the internal and external supply network and/or comply with current Good Manufacturing Practices and other applicable
regulations; or risk to supply chain continuity as a result of natural or man-made disasters at our facilities or at a supplier or vendor.
Counterfeit Products
A counterfeit medicine is one that has been deliberately and fraudulently mislabeled as to its identity and source. A
counterfeit Pfizer medicine, therefore, is one manufactured by someone other than Pfizer, but which appears to be the same as an
authentic Pfizer medicine. Counterfeit medicines pose a risk to patient health and safety because of the conditions under which they
are manufactured in unregulated, unlicensed, uninspected and often unsanitary sites as well as the lack of regulation of their
contents. Failure to mitigate the threat of counterfeit medicines, which is exacerbated by the complexity of our supply chain, could
adversely impact our business, by, among other things, causing the loss of patient confidence in the Pfizer name and in the integrity
of our medicines.
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Cost and Expense Control/Unusual Events/Intangible Assets and Goodwill
Growth in costs and expenses, changes in product, segment and geographic mix and the impact of acquisitions, divestitures,
restructurings, product withdrawals, recalls and other unusual events that could result from evolving business strategies, evaluation
of asset realization and organizational restructuring could adversely affect future results. Such risks and uncertainties include, in
particular, our ability to realize the projected benefits of our cost-reduction and productivity initiatives, including those related to
our research and development function.
In addition, our consolidated balance sheet contains significant amounts of intangible assets, including goodwill. For IPR&D
assets, the risk of failure is significant, and there can be no certainty that these assets will ultimately yield successful products. The
nature of the biopharmaceutical business is high-risk and requires that we invest in a large number of projects in an effort to achieve
a successful portfolio of approved products. Our ability to realize value on these significant investments is often contingent upon,
among other things, regulatory approvals and market acceptance. As such, we expect that many of these IPR&D assets will become
impaired and be written off at some time in the future. For goodwill, we have seven reporting units with associated goodwill balances
and, while we do not believe that the risk of goodwill impairment for any of our reporting units is significant at this time, all reporting
units can confront events and circumstances that can lead to a goodwill impairment charge (such as, among other things,
unanticipated competition, an adverse action or assessment by a regulator, a significant adverse change in legal matters or in the
business climate and/or a failure to replace the contributions of products that lose exclusivity).
Changes in Laws and Accounting Standards
Our future results could be adversely affected by changes in laws and regulations, including, among others, changes in
accounting standards, taxation requirements (including tax rate changes, new tax laws and revised tax law and regulatory
interpretations, including changes affecting the taxation by the U.S. of income earned outside the U.S. that may result from pending
and possible future proposals), competition laws, privacy laws and environmental laws in the U.S. and other countries.
Terrorist Activity
Our future results could be adversely affected by changes in business, political and economic conditions, including the cost
and availability of insurance, due to the threat of terrorist activity in the U.S. and other parts of the world and related U.S. military
action overseas.
Legal Proceedings
We and certain of our subsidiaries are involved in various patent, product liability, consumer, commercial, securities, antitrust,
environmental, employment and tax litigations and claims, government investigations and other legal proceedings that arise from
time to time in the ordinary course of our business. Litigation is inherently unpredictable, and excessive verdicts do occur. Although
we believe we have substantial defenses in these matters, we could in the future incur judgments, enter into settlements of claims or
revise our expectations regarding the outcomes of certain matters, and such developments could have a material adverse effect on
our results of operations in the period in which the amounts are accrued and/or our cash flows in the period in which the amounts
are paid.
Our activities relating to the sale and marketing and the pricing of our products are subject to extensive regulation under the
U.S. Federal Food, Drug, and Cosmetic Act, the Medicaid Drug Rebate Program, the U.S. Foreign Corrupt Practices Act (FCPA) and
other federal and state statutes, including those discussed elsewhere in this 2012 Form 10-K, as well as anti-kickback and false
claims laws, and similar laws in foreign jurisdictions. Like many companies in our industry, we have from time to time received
inquiries and subpoenas and other types of information demands from government authorities, and been subject to claims and other
actions related to our business activities brought by governmental authorities, as well as by consumers and private payers. In some
instances, we have incurred significant expense, civil payments, fines and other adverse consequences as a result of these claims,
actions and inquiries. For example, these claims, actions and inquiries may relate to alleged failures to accurately interpret or identify
or prevent non-compliance with the laws and regulations associated with the dissemination of product information (approved and
unapproved), potentially resulting in government enforcement and damage to our reputation. This risk may be heightened by digital
marketing, including social media, mobile applications and blogger outreach.
30
In connection with the resolution of certain U.S. government investigations concerning various products in September 2009,
we entered into a Corporate Integrity Agreement (CIA) with the Office of the Inspector General of the U.S. Department of Health and
Human Services, which is effective through December 31, 2014. In connection with the resolution of our FCPA matters in August
2012, one of our subsidiaries entered into a Deferred Prosecution Agreement (DPA) with the U.S. Department of Justice, which has a
term of approximately two years. In the CIA and DPA, we agreed to implement and/or maintain certain compliance program elements
to promote compliance with federal healthcare program and FDA requirements, and anti-bribery and anti-corruption and other
applicable laws. A material failure to comply with the CIA or DPA could result in severe sanctions against us.
Patent claims include challenges to the coverage and/or validity of our patents on various products or processes. Although
we believe we have substantial defenses to these challenges with respect to all our material patents, there can be no assurance as to
the outcome of these matters, and a loss in any of these cases could result in a loss of patent protection for the drug at issue, which
could lead to a significant loss of sales of that drug and could materially affect future results of operations.
Business Development Activities
We expect to continue to enhance our in-line products and product pipeline through acquisitions, licensing and alliances. See
the Overview of Our Performance, Operating Environment, Strategy and Outlook Our Business Development Initiatives section
of the MD&A in our 2012 Financial Report, which is incorporated by reference. However, these enhancement plans are subject to
the availability and cost of appropriate opportunities and competition from other pharmaceutical companies that are seeking similar
opportunities and our ability to successfully identify, structure and execute transactions.
Information Technology and Security
Significant disruptions of information technology systems or breaches of information security could adversely affect our
business. We rely to a large extent upon sophisticated information technology systems to operate our business. In the ordinary
course of business, we collect, store and transmit large amounts of confidential information, and it is critical that we do so in a
secure manner to maintain the confidentiality and integrity of such confidential information. We also have outsourced significant
elements of our operations to third parties, including significant elements of our information technology infrastructure, and as a
result we are managing many independent vendor relationships with third parties who may or could have access to our confidential
information. The size and complexity of our information technology systems, and those of our third party vendors with whom we
contract, make such systems potentially vulnerable to service interruptions. The size and complexity of our and our vendors
systems and the large amounts of confidential information that is present on them also makes them potentially vulnerable to security
breaches from inadvertent or intentional actions by our employees or vendors, or from attacks by malicious third parties. We and
our vendors could be susceptible to third party attacks on our information security systems, which attacks are of ever increasing
levels of sophistication and are made by groups and individuals with a wide range of motives and expertise, including criminal
groups, hactivists, and others. While we have invested heavily in the protection of data and information technology, there can be
no assurance that our efforts will prevent service interruptions or security breaches in our systems that could adversely affect our
business operations and/or result in the loss of critical or sensitive information, and any such interruption or breach could result in
financial, legal, business and reputational harm to us.
Failure to Realize the Anticipated Benefits of Strategic Initiatives and Acquisitions
Our future results may be affected by (i) the impact of, and our ability to successfully execute, any strategic alternative we may
decide to pursue with regard to our remaining ownership stake in Zoetis, as well as any other corporate strategic initiatives we may
pursue in the future, and (ii) our ability to realize the projected benefits of any acquisitions, divestitures or other initiatives we may
pursue in the future.
31
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
In 2012, we continued to consolidate our operations to achieve efficiencies and to dispose of excess space. Presently, we have
654 owned and leased properties, amounting to approximately 51 million square feet, down from a total of approximately 59 million
square feet at the end of 2011. Our goal is to continue with further consolidation in 2013.
In addition to our 654 properties, there are approximately 170 properties that relate to our Animal Health operating segment,
amounting to approximately 2 million square feet, including properties relating to veterinary medicine research and development
operations (which have been transferred to our subsidiary Zoetis in connection with the IPO) in Kalamazoo, MI, San Diego, CA,
Charles City, IA, College Park, MD, Lincoln, NE, and Durham, NC in the U.S.; Victoria, British Columbia in Canada; Louvain-la-
Neuve and Zaventem, Belgium; Olot, Spain; Sao Paulo and Guarulhos, Brazil; Melbourne, Australia; Mumbai and New Delhi, India;
and Jilin, China.
Pfizers corporate headquarters are in New York City. With the exception of the Specialty Care business unit (which is
headquartered in Collegeville, Pennsylvania), our biopharmaceutical units also are headquartered in New York City. Our other
business units are headquartered in Madison, New Jersey.
In 2012, we successfully disposed of surplus space, exiting or reducing our real estate space in certain locations in the U.S.,
Europe, and Asia. Further, active marketing of properties for sale is continuing in a number of locations.
Our biopharmaceutical and other businesses expect to continue to own and lease space around the world for sales and
marketing, customer service and administrative support functions. In many locations, these businesses will be co-located to achieve
synergies and operational efficiencies.
Our Worldwide R&D facilities support our R&D organizations around the world, with heavy concentration in North America.
In 2012, we continued with the implementation of our previously announced R&D facility changes, including the sale of our
Sandwich, U.K. site with a lease back of space for Clinical Supplies Research and Manufacturing, and completion of the moves of
our Cardiovascular, Metabolic and Endocrine Disease (CVMED) and Neuroscience research units from our research campus in
Groton, CT to Cambridge, MA.
Our Pfizer Global Supply (PGS) Division is headquartered in various locations, with leadership teams primarily in New York, NY
and in Peapack, NJ. PGS operates 84 plants around the world (25 of which relate to our Animal Health operating segment), which
manufacture products for our commercial divisions. Locations with major manufacturing facilities include Belgium, China, Germany,
Ireland, Italy, Japan, Puerto Rico, Singapore and the U.S. Our Global Supply Divisions plant network strategy is expected to result in
the exit of eight of these sites over the next several years. PGS also operates multiple distribution facilities around the world.
In general, we believe that our properties are well-maintained, adequate and suitable for their current requirements and for our
operations in the foreseeable future. See the Notes to Consolidated Financial Statements Note 9. Property, Plant and Equipment
in our 2012 Financial Report, which provides amounts invested in land, buildings and equipment and which is incorporated by
reference. See also the discussion in the Notes to Consolidated Financial Statements Note 15. Lease Commitments in our 2012
Financial Report, which is also incorporated by reference.
32
ITEM 3. LEGAL PROCEEDINGS
Certain legal proceedings in which we are involved are discussed in the Notes to Consolidated Financial Statements Note
17. Commitments and Contingencies in our 2012 Financial Report, which is incorporated by reference.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
33
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are set forth in this table. Each holds the office or offices indicated until his or her
successor is chosen and qualified at the regular meeting of the Board of Directors to be held on the date of the 2013 Annual Meeting
of Shareholders. Each of the executive officers is a member of the Pfizer Executive Leadership Team.
Name

Age

Posi ti on
Ian C. Read

59

Chairman and Chief Executive Officer since December 2011. President and Chief Executive
Officer from December 2010 until December 2011. Senior Vice President, Group President of
the Worldwide Biopharmaceutical Businesses (Primary Care, Specialty Care, Oncology,
Established Products and Emerging Markets), from 2006 through December 2010. Since
joining Pfizer in 1978 as an operational auditor, Mr. Read has held various positions of
increasing responsibility in pharmaceutical operations. He worked in Latin America
through 1995, holding positions including Chief Financial Officer, Pfizer Mexico, and
Country Manager, Pfizer Brazil. In 1996, Mr. Read was appointed President of Pfizers
International Pharmaceuticals Group, with responsibility for Latin America and Canada. He
became Executive Vice President, Europe in 2000, was named a Corporate Vice President in
2001, and assumed responsibility for Canada, in addition to Europe, in 2002. Mr. Read later
became accountable for operations in both the Africa/Middle East region and Latin
America as well. Currently a Director of Kimberly-Clark Corporation. Serves on the Boards
of Pharmaceutical Research and Manufacturers of America (PhRMA), and the Partnership
for New York City. Our Director since December 2010.

Olivier Brandicourt

57

President and General Manager, Pfizer Emerging Markets and Established Products since
June 2012. President and General Manager of Pfizer Primary Care from 2009 until June 2012.
In early 2009, served as President and General Manager of Pfizer Specialty Care. Senior
Vice President and General Manager of U.S. Pratt Business Unit from 2007 until 2008.
Managing Director of the United Kingdom/Ireland Pfizer subsidiary from 2004 to 2007.

Frank A. DAmelio

55

Executive Vice President, Business Operations and Chief Financial Officer since December
2010. Senior Vice President and Chief Financial Officer from September 2007 until
December 2010. Prior to joining Pfizer he was Senior Executive Vice President of
Integration and Chief Administrative Officer of Alcatel-Lucent from November 2006 until
August 2007. Chief Operating Officer of Lucent Technologies from January 2006 until
November 2006. Chairman and Director of Zoetis. Director of Humana, Inc. and Chair of
the Humana Audit Committee. He is a Director of the Independent College Fund of New
Jersey.

Mikael Dolsten

54

President of Worldwide Research and Development since December 2010. Senior Vice
President; President of Worldwide Research and Development from May 2010 until
December 2010. Senior Vice President; President of Pfizer BioTherapeutics Research &
Development Group from October 2009 until May 2010. He was Senior Vice President of
Wyeth and President, Wyeth Research from June 2008 until October 2009. He was a
Private Equity Partner at Orbimed Advisors, LLC from January 2008 until June 2008. Dr.
Dolsten was Global Head, Corporate Division Pharma Research and Discovery, of
Boehringer Ingelheim Corporation from 2003 to 2007.
34
Name

Age

Posi ti on

Geno J. Germano

52

President and General Manager, Pfizer Specialty Care and Oncology since December 2010.
President and General Manager, Specialty Care from October 2009 until December 2010.
President, U.S. Pharmaceuticals and Womens Health Care Unit, Wyeth Pharmaceuticals
from 2008 through October 2009. President and General Manager, U.S. Pharmaceutical
Business Unit, Wyeth Pharmaceuticals from 2007 through 2008. Executive Vice President
and General Manager, Pharmaceutical Business Unit, Wyeth Pharmaceuticals from 2004
through 2007. Currently a Director of Zoetis, Member of the Board of Trustees for Albany
College of Pharmacy and Health Sciences and Member of the Board of Directors of BIO
Biotechnology Industry Organization.

Charles H. Hill III

57

Executive Vice President, Worldwide Human Resources since December 2010. Senior Vice
President, Human Resources for Worldwide Biopharmaceuticals Businesses from 2008
through December 2010. Vice President, Human Resources, Worldwide Pharmaceutical
Operations from 2004 through 2008. Currently a Director of Zoetis and Chair of the Zoetis
Compensation Committee.

Douglas M. Lankler

47

Executive Vice President, Chief Compliance and Risk Officer since February 2011.
Executive Vice President, Chief Compliance Officer from December 2010 until February
2011. Senior Vice President and Chief Compliance Officer from January 2010 until
December 2010. Senior Vice President, Deputy General Counsel and Chief Compliance
Officer from August 2009 until January 2010. Senior Vice President, Associate General
Counsel and Chief Compliance Officer from October 2006 until August 2009. Prior to
October 2006, Mr. Lankler held various positions of increasing responsibility within the
Pfizer Legal Division.

Freda C. Lewis-Hall

58

Executive Vice President, Chief Medical Officer since December 2010. Senior Vice
President, Chief Medical Officer from May 2009 until December 2010. Previously, she was
Chief Medical Officer and Executive Vice President, Medicines Development at Vertex
Pharmaceuticals from June 2008 until May 2009. Dr. Lewis-Hall was Senior Vice President,
U.S. Pharmaceuticals, Medical Affairs for Bristol-Myers Squibb Company from 2003 until
May 2008.

Anthony J. Maddaluna

60

Executive Vice President; President, Pfizer Global Supply since January 2013. President,
Pfizer Global Supply from 2011 until December 2012. Senior Vice President, Strategy &
Supply Network Transformation from 2009 until December 2010. Vice President, Strategy &
Supply Network Transformation from 2008 until 2009. Vice President and Team Leader,
Europe from 1998 until 2008 including responsibility for global logistics and strategic
planning from 2005 through 2008. Mr. Maddaluna held a number of positions of
increasing responsibility in manufacturing before being named General Manager of Pfizer
Pharmaceuticals Inc. in Puerto Rico from 1994 until 1998. Mr. Maddaluna represents Pfizer
on the National Association of Manufacturers (NAM) and is a member of the NAM
Executive Committee. Mr. Maddaluna joined Pfizer in 1975.

Laurie J. Olson

49

Executive Vice President, Strategy, Portfolio and Commercial Operations since July 2012.
Senior Vice President - Strategy and Portfolio Management from 2011 until July 2012.
Senior Vice President - Portfolio Management and Analytics from 2008 until 2010. Since
joining Pfizer in 1987 as an Analyst in the Company's marketing research organization, Ms.
Olson has served in a variety of marketing leadership positions with increasing
responsibility in both the Companys U.S. and global commercial organizations.
35
Name

Age

Posi ti on

Amy W. Schulman

52

Executive Vice President and General Counsel since December 2010 and Business Unit
Lead, Consumer Healthcare for Pfizer since August 2012. Executive Vice President and
General Counsel; President and General Manager, Nutrition from December 2010 until
November 2012. Senior Vice President and General Counsel from June 2008 until December
2010. Ms. Schulman was a partner at the law firm of DLA Piper from 1997 until joining
Pfizer in June 2008. Currently a Director of Zoetis and Chair of the Zoetis Corporate
Governance Committee, Member of the Board of Directors of Wesleyan University and the
Brooklyn Academy of Music.

Sally Susman

51

Executive Vice President, Policy, External Affairs and Communications of Pfizer since
December 2010. Senior Vice President, Policy, External Affairs and Communications from
December 2009 until December 2010. Senior Vice President and Chief Communications
Officer from February 2008 until December 2009. Prior to joining Pfizer, Ms. Susman held
senior level positions at The Estee Lauder Companies, including Executive Vice President
from 2004 to January 2008.

John D. Young

48

President and General Manager, Pfizer Primary Care since June 2012. Primary Care
Business Units Regional President for Europe and Canada from 2009 until June 2012. UK
Country Manager from 2007 until 2009. Since joining Pfizer in 1987, Mr. Young has held a
number of positions of increasing responsibility in sales and marketing management
before being appointed Country Manager for Australia/New Zealand in 2004.
36
PART II

ITEM 5. MARKET FOR THE COMPANYS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
The principal market for our Common Stock is the New York Stock Exchange (NYSE). Our stock is also listed on the NYSE
Euronext Brussels Exchange, the London Stock Exchange and the SIX Swiss Stock Exchange, as well as various United States
regional stock exchanges. Additional information required by this item is incorporated by reference from the table captioned
Quarterly Consolidated Financial Data (Unaudited) in our 2012 Financial Report.
The following table provides certain information with respect to our purchases of shares of the Companys Common Stock
during the fourth fiscal quarter of 2012:
Issuer Purchases of Equity Securities
(a)

Peri od
Total Number of
Shares Purchased
(b)


Average
Pri ce
Pai d per
Share
(b)


Total Number of
Shares Purchased as
Part of Publ i cl y
Announced Pl an
(a)


Approxi mate
Dol l ar Val ue of
Shares that May
Yet Be Purchased
Under the Pl an
(a)

October 1, 2012
Through
October 28, 2012 36,961,538 $ 25.33 36,902,797 $ 14,264,821,207
October 29, 2012
Through
November 30, 2012 52,404,279 $ 24.39 51,587,525 $ 13,007,534,929
December 1, 2012
Through
December 31, 2012 47,745,688 $ 25.30 47,491,654 $ 11,805,897,162
Total 137,111,505 $ 24.96 135,981,976
_____________________
(a) On December 12, 2011, we announced that the Board of Directors had authorized a $10 billion share-purchase plan (the
December 2011 Stock Purchase Plan). On November 1, 2012, we announced that the Board of Directors had authorized an
additional $10 billion share-purchase plan, which became effective on November 30, 2012.
(b) In addition to amounts purchased under the December 2011 Stock Purchase Plan, these columns reflect the following
transactions during the fourth fiscal quarter of 2012: (i) the surrender to Pfizer of 1,078,047 shares of common stock to satisfy
tax withholding obligations in connection with the vesting of restricted stock and restricted stock units issued to employees;
(ii) the open market purchase by the trustee of 32,674 shares of common stock in connection with the reinvestment of
dividends paid on common stock held in trust for employees who were granted performance share awards and who deferred
receipt of such awards; and (iii) the surrender to Pfizer of 18,808 shares of common stock to satisfy tax withholding
obligations in connection with the vesting of performance share awards issued to employees.
ITEM 6. SELECTED FINANCIAL DATA
Information required by this item is incorporated by reference from the discussion under the heading Financial Summary in
our 2012 Financial Report.
ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Information required by this item is incorporated by reference from the discussion under the heading Financial Review in our
2012 Financial Report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information required by this item is incorporated by reference from the discussion under the Forward-Looking Information
and Factors That May Affect Future Results Financial Risk Management section of the MD&A in our 2012 Financial Report.
37
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item is incorporated by reference from the Report of Independent Registered Public Accounting
Firm on the Consolidated Financial Statements in our 2012 Financial Report and from the consolidated financial statements, related
notes and supplementary data in our 2012 Financial Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls
As of the end of the period covered by this 2012 Form 10-K, we carried out an evaluation, under the supervision and with the
participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our
disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this
evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are
effective in alerting them in a timely manner to material information required to be disclosed in our periodic reports filed with the SEC.
Internal Control over Financial Reporting
Managements report on the Companys internal control over financial reporting (as such term is defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act), and the related report of our independent registered public accounting firm, are included in
our 2012 Financial Report under the headings Managements Report on Internal Control Over Financial Reporting and Report of
Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting , respectively, and are
incorporated by reference.
Changes in Internal Controls
During our most recent fiscal quarter, there has not been any change in our internal control over financial reporting (as such
term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting. However, we do wish to highlight some changes which, taken together,
are expected to have a favorable impact on our controls over a multi-year period. We continue to pursue a multi-year initiative to
outsource some transaction-processing activities within certain accounting processes and are migrating to a consistent enterprise
resource planning system across the organization. These are enhancements of ongoing activities to support the growth of our
financial shared service capabilities and standardize our financial systems. None of these initiatives is in response to any identified
deficiency or weakness in our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
Not applicable.
38
PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information about our Directors is incorporated by reference from the discussion under the heading Proposals Requiring
Your Vote Item 1 Election of Directors in our 2013 Proxy Statement. Information about compliance with Section 16(a) of the
Exchange Act is incorporated by reference from the discussion under the heading Securities Ownership Section 16(a) Beneficial
Ownership Reporting Compliance in our 2013 Proxy Statement. Information about the Pfizer Policies on Business Conduct
governing our employees, including our Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer, and the
Code of Business Conduct and Ethics governing our Directors, is incorporated by reference from the discussions under the
headings Governance of the Company Governance Information Pfizer Policies on Business Ethics and Conduct and Code
of Conduct for Directors in our 2013 Proxy Statement. Information regarding the procedures by which our stockholders may
recommend nominees to our Board of Directors is incorporated by reference from the discussion under the headings Governance of
the Company Governance Information Criteria for Board Membership and Requirements for Submitting Proxy Proposals
and Nominating Directors in our 2013 Proxy Statement. Information about our Audit Committee, including the members of the
Committee, and our Audit Committee financial experts, is incorporated by reference from the discussion under the heading
Governance of the Company Board and Committee Information The Audit Committee in our 2013 Proxy Statement. The
balance of the information required by this item is contained in the discussion entitled Executive Officers of the Company in Part I of
this 2012 Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
Information about Director and executive compensation is incorporated by reference from the discussion under the headings
Governance of the Company Compensation of Non-Employee Directors ; Executive Compensation ; and Governance of the
Company Board and Committee Information Compensation Committee Compensation Committee Interlocks and Insider
Participation in our 2013 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
Information required by this item is incorporated by reference from the discussion under the headings Executive
Compensation Equity Compensation Plan Information and Securities Ownership in our 2013 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information about certain relationships and transactions with related parties is incorporated by reference from the discussion
under the headings Related Person Transactions; Indemnification Transactions with Related Persons in our 2013 Proxy
Statement. Information about director independence is incorporated by reference from the discussion under the heading
Governance of the Company Governance Information Director Independence in our 2013 Proxy Statement.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Information about the fees for professional services rendered by our independent registered public accounting firm in 2012
and 2011 is incorporated by reference from the discussion under the heading Proposals Requiring Your Vote Item 2
Ratification of Independent Registered Public Accounting Firm Audit and Non-Audit Fees in our 2013 Proxy Statement. Our
Audit Committees policy on pre-approval of audit and permissible non-audit services of our independent registered public
accounting firm is incorporated by reference from the discussion under the heading Proposals Requiring Your Vote Item 2
Ratification of Independent Registered Public Accounting Firm Policy on Audit Committee Pre-Approval of Audit and
Permissible Non-Audit Services of Independent Registered Public Accounting Firm in our 2013 Proxy Statement.
39
PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
15(a)(1) Financial Statements. The following consolidated financial statements, related notes, report of independent
registered public accounting firm and supplementary data from our 2012 Financial Report are incorporated by reference into Item 8 of
Part II of this 2012 Form 10-K:
Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Quarterly Consolidated Financial Data (Unaudited)
15(a)(2) Financial Statement Schedules. Schedules are omitted because they are not required or because the information is
provided elsewhere in the financial statements. The financial statements of unconsolidated subsidiaries are omitted because,
considered in the aggregate, they would not constitute a significant subsidiary.
15(a)(3) Exhibits. These exhibits are available upon request. Requests should be directed to our Corporate Secretary, Pfizer
Inc., 235 East 42nd Street, New York, NY 10017-5755. The exhibit numbers preceded by an asterisk (*) indicate exhibits filed with this
2012 Form 10-K. All other exhibit numbers indicate exhibits filed by incorporation by reference. Exhibit numbers 10.1 through 10.24
are management contracts or compensatory plans or arrangements.
3.1

Our Restated Certificate of Incorporation dated April 12, 2004, is incorporated by reference from our 10-Q report for
the period ended March 28, 2004 (File No. 001-03619).

3.2

Amendment dated May 1, 2006 to Restated Certificate of Incorporation dated April 12, 2004, is incorporated by
reference from our 10-Q report for the period ended July 2, 2006 (File No. 001-03619).

3.3

Our By-laws, as amended April 22, 2010, are incorporated by reference from our 10-Q report for the period ended
April 4, 2010 (File No. 001-03619).

4.1

Indenture, dated as of January 30, 2001, between us and The Chase Manhattan Bank, is incorporated by reference
from our 8-K report filed on January 30, 2001 (File No. 001-03619).

4.2

First Supplemental Indenture, dated as of March 24, 2009, between us and The Bank of New York Mellon
(successor to JPMorgan Chase Bank, N.A. (formerly JPMorgan Chase Bank, formerly The Chase Manhattan Bank)),
as Trustee, to Indenture dated as of January 30, 2001, is incorporated by reference from our 10-Q report for the
period ended June 28, 2009 (File No. 001-03619).

4.3

Second Supplemental Indenture, dated as of June 2, 2009, between us and The Bank of New York Mellon
(successor to JPMorgan Chase Bank, N.A. (formerly JPMorgan Chase Bank, formerly The Chase Manhattan Bank)),
as Trustee, to Indenture dated as of January 30, 2001, is incorporated by reference from our 8-K report filed on June
3, 2009 (File No. 001-03619).

4.4

Indenture, dated as of April 10, 1992, between Wyeth and The Bank of New York Mellon (as successor to
JPMorgan Chase Bank, N.A.), as Trustee, is incorporated by reference from Wyeths Registration Statement on
Form S-3 (File No. 33-57339), filed on January 18, 1995.

4.5

Supplemental Indenture, dated as of October 13, 1992, between Wyeth and The Bank of New York Mellon (as
successor to JPMorgan Chase Bank, N.A.), as Trustee, is incorporated by reference from Wyeths Registration
Statement on Form S-3 (File No. 33-57339), filed on January 18, 1995.

4.6

Fifth Supplemental Indenture, dated as of December 16, 2003, between Wyeth and The Bank of New York Mellon
(as successor to JPMorgan Chase Bank, N.A.), as Trustee, is incorporated by reference from Wyeths 2003 10-K
report (File No. 001-01225).
40
4.7

Sixth Supplemental Indenture, dated as of November 14, 2005, between Wyeth and The Bank of New York Mellon
(as successor to JPMorgan Chase Bank, N.A.), as Trustee, is incorporated by reference from Wyeths 8-K report
filed on November 15, 2005 (File No. 001-01225).

4.8

Seventh Supplemental Indenture, dated as of March 27, 2007, between Wyeth and The Bank of New York Mellon
(as successor to JPMorgan Chase Bank, N.A.), as Trustee, is incorporated by reference from Wyeths 8-K report
filed on March 28, 2007 (File No. 001-01225).

4.9

Eighth Supplemental Indenture, dated as of October 30, 2009, between Wyeth, us and The Bank of New York
Mellon (as successor to JPMorgan Chase Bank, formerly The Chase Manhattan Bank), as Trustee, to Indenture
dated as of April 10, 1992 (as amended on October 13, 1992), is incorporated by reference from our 8-K report filed
on November 3, 2009 (File No. 001-03619).

4.10

Except as set forth in Exhibits 4.1-9 above, the instruments defining the rights of holders of long-term debt
securities of the Company and its subsidiaries have been omitted.
1


10.1

2001 Stock and Incentive Plan is incorporated by reference from our Proxy Statement for the 2001 Annual Meeting
of Shareholders (File No. 001-03619).

10.2

Pfizer Inc. 2004 Stock Plan, as Amended and Restated is incorporated by reference from our 2011 10-K Report (File
No. 001-03619).

10.3

Form of Stock Option Grant Notice and Summary of Key Terms is incorporated by reference from our 10-Q report for
the period ended September 26, 2004 (File No. 001-03619).

10.4

Form of Performance-Contingent Share Award Grant Notice is incorporated by reference from our 10-Q report for
the period ended September 26, 2004 (File No. 001-03619).

*10.5 Form of Executive Grant Letter.

10.6

Amended and Restated Nonfunded Supplemental Retirement Plan, together with all material Amendments is
incorporated by reference from our 2011 10-K Report (File No. 001-03619).

*10.7 Amended and Restated Nonfunded Deferred Compensation and Supplemental Savings Plan.

*10.8 Executive Annual Incentive Plan.

*10.9 Amended and Restated Deferred Compensation Plan.

10.10

Non-Employee Directors Retirement Plan (frozen as of October 1996) is incorporated by reference from our 1996 10-
K report (File No. 001-03619).

10.11

Restricted Stock Plan for Non-Employee Directors is incorporated by reference from our 1996 10-K report (File No.
001-03619).

10.12

Amended and Restated Wyeth Supplemental Employee Savings Plan (effective as of January 1, 2005), together with
all material Amendments is incorporated by reference from our 2011 10-K Report (File No. 001-03619).

10.13

Amended and Restated Wyeth Supplemental Executive Retirement Plan (effective as of January 1, 2005), together
with all material Amendments is incorporated by reference from our 2011 10-K Report (File No. 001-03619).

10.14

Wyeth Directors Deferral Plan (as amended through December 15, 2007) is incorporated by reference from Wyeths
2007 10-K report (File No. 001-01225).

10.15

The form of Indemnification Agreement with each of our non-employee Directors is incorporated by reference from
our 1996 10-K report (File No. 001-03619).

1
We agree to furnish to the SEC, upon request, a copy of each instrument with respect to issuances of long-term debt of the
Company and its subsidiaries.
41
10.16

The form of Indemnification Agreement with each of the Named Executive Officers identified in our 2013 Proxy
Statement is incorporated by reference from our 1997 10-K report (File No. 001-03619).

10.17

Letter to Frank A. DAmelio regarding replacement pension benefit dated August 22, 2007 is incorporated by
reference from our 8-K report filed on August 22, 2007 (File No. 001-03619).

10.18

Executive Severance Plan is incorporated by referenced from our 8-K report filed on February 20, 2009 (File No. 001-
03619).

10.19

Annual Retainer Unit Award Plan (for Non-Employee Directors) (frozen as of March 1, 2006) as amended, is
incorporated by reference from our 2008 10-K report (File No. 001-03619).

10.20

Nonfunded Deferred Compensation and Unit Award Plan for Non-Employee Directors, as amended, is incorporated
by reference from our 10-Q report for the period ended July 3, 2011 (File No. 001-03619).

10.21

Form of Special Award Letter Agreement is incorporated by reference from our 8-K report filed on October 28, 2009
(File No. 001-03619).

10.22

Offer Letter to G. Mikael Dolsten, dated April 6, 2009, is incorporated by reference from our 10-Q report for the
period ended April 3, 2011 (File No. 001-03619).

10.23

Offer Letter to Geno J. Germano, dated April 6, 2009, is incorporated by reference from our 10-Q report for the period
ended April 3, 2011 (File No. 001-03619).

10.24

Warner-Lambert Company 1996 Stock Plan, as amended, is incorporated by reference from Warner-Lambert's 1999
10-K report (File No. 001-03608).

*12 Computation of Ratio of Earnings to Fixed Charges.

*13

Portions of the 2012 Financial Report, which, except for those sections incorporated by reference, are furnished
solely for the information of the SEC and are not to be deemed filed.

*21 Subsidiaries of the Company.

*23 Consent of KPMG LLP, Independent Registered Public Accounting Firm.

*24 Power of Attorney (included as part of signature page).

*31.1 Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2 Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*32.1

Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.

*32.2

Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.

*101.INS XBRL Instance Document

*101.SCH XBRL Taxonomy Extension Schema

*101.CAL XBRL Taxonomy Extension Calculation Linkbase

*101.LAB XBRL Taxonomy Extension Label Linkbase

*101.PRE XBRL Taxonomy Extension Presentation Linkbase

*101.DEF XBRL Taxonomy Extension Definition Document
42
SIGNATURES
Under the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report was signed on behalf of the
Registrant by the authorized person named below.
Pfizer Inc.

Dated: February 28, 2013 By: /s/ M ATTHEW L EPORE

Matthew Lepore
Vi ce Presi dent and Corporate Secretary,
Chi ef Counsel Corporate Governance
We, the undersigned directors and officers of Pfizer Inc., hereby severally constitute Amy W. Schulman and Matthew Lepore,
and each of them singly, our true and lawful attorneys with full power to them and each of them to sign for us, in our names in the
capacities indicated below, any and all amendments to this Annual Report on Form 10-K filed with the Securities and Exchange
Commission.
Under the requirements of the Securities Exchange Act of 1934, this report was signed by the following persons on behalf of
the Registrant and in the capacities and on the date indicated.
Si gnature Ti tl e

Date

/ S / I AN C. R EAD
Ian C. Read

Chairman, Chief Executive Officer and Director
(Principal Executive Officer)
February 28, 2013

/ S / F RANK A. DA MELIO
Frank A. DAmel i o

Executive Vice President, Business Operations and
Chief Financial Officer (Principal Financial Officer)
February 28, 2013

/ S / L ORETTA V. C ANGIALOSI
Loretta V. Cangi al osi

Senior Vice PresidentController
(Principal Accounting Officer)
February 28, 2013

/ S / D ENNIS A. A USIELLO
Denni s A. Ausi el l o
Director

February 28, 2013

/ S / M. A NTHONY B URNS
M. Anthony Burns
Director

February 28, 2013

/ S / W. D ON C ORNWELL
W. Don Cornwel l
Director

February 28, 2013

/ S / F RANCES D. F ERGUSSON
Frances D. Fergusson
Director

February 28, 2013

/ S / W ILLIAM H. G RAY, III
Wi l l i am H. Gray, III
Director

February 28, 2013

/ S / H ELEN H. H OBBS
Hel en H. Hobbs
Director

February 28, 2013
43
Si gnature Ti tl e

Date

/ S / C ONSTANCE J. H ORNER
Constance J. Horner
Director

February 28, 2013

/ S / S UZANNE N ORA J
OHNSON
Suzanne Nora Johnson
Director

February 28, 2013

/ S / J AMES M. K ILTS
James M. Ki l ts
Director

February 28, 2013

/ S / G EORGE A. L ORCH
George A. Lorch
Director

February 28, 2013

/ S / J OHN P. M ASCOTTE
John P. Mascotte
Director

February 28, 2013

/ S / S TEPHEN W. S ANGER
Stephen W. Sanger
Director

February 28, 2013

/ S / M ARC T ESSIER -L AVIGNE
Marc Tessi er-Lavi gne
Director

February 28, 2013
44
Exhibit 10.5
PFIZER LOGO
May 2012
FIRST_NAME LAST_NAME
ADDRESS1
ADDRESS2
ADDRESS3
ADDRESS4
CITY, STATE POSTAL
COUNTRY
Dear FIRST_NAME:
On behalf of all our stakeholders, I want to thank you for the important role you play in Pfizers continued success. I am pleased to
inform you that on February 23, 2012, Pfizers Compensation Committee of the Board of Directors approved the following grant
under Pfizers Executive Long-Term Incentive Program (Program).
Award Type
Grant
Price

Shares (#) Dates
5-Year Total Shareholder Return Units
(5-YR TSRUs)
$21.03 M_5Yr_TSRU Grant Date February 23, 2012
Vesting Date* February 23, 2015
Settlement Date February 23, 2017
7-Year Total Shareholder Return Units
(7-YR TSRUs)
$21.03 M_7Yr_TSRU Grant Date February 23, 2012
Vesting Date* February 23, 2015
Settlement Date February 23, 2019
Performance Share Awards (PSAs) N/A PFE_PS Grant Date February 23, 2012
Vesting Date* February 23, 2015
Performance Period: January 1, 2012 through
December 31, 2014
Restricted Stock Units (RSUs) N/A RSU Grant Date February 23, 2012
Vesting Date* February 23, 2015
*This is also referred to as the date the restrictions lapse.
The enclosed Points of Interest document provides you with more detailed information about your grant and contains general
information about the Program, applicable income tax consequences, and points of contact. This long-term incentive grant is
governed by the terms and conditions set forth in this letter, the Points of Interest document and the Pfizer Inc 2004 Stock Plan, as
amended and restated. It is important for you to read these materials, and it is recommended that you consult a qualified financial or
tax advisor before making any decisions regarding the disposition of the stock resulting from the vesting of these awards.
These awards help you build ownership in Pfizer and a greater stake in the Companys future success. I have great confidence in
Pfizers future, and I look forward to working with you toward that future.
Sincerely,
Ian C. Read
Chairman and
Chief Executive Officer
Exhibit 10.7
PFIZER INC NONFUNDED DEFERRED COMPENSATION AND SUPPLEMENTAL SAVINGS PLAN
Amended and Restated as of January 1, 2012
SECTION 1 . CONTINUATION AND PURPOSE OF THE PLAN .
1.1 Continuation . There is hereby continued for the benefit of Members an unfunded plan of deferred compensation
known as the Pfizer Inc Nonfunded Deferred Compensation and Supplemental Savings Plan.
1.2 Purpose . The purpose of this Plan is to provide a means by which an Eligible Employee may, in certain
circumstances, elect to defer receipt of a portion of his Regular Earnings, and such other deferrals as determined by the Company
in accordance with Section 4.2.
1.3 Description of the Plan . The Plan became effective July 1, 1983, was amended and restated effective February 1, 2002,
and was again amended and restated effective January 1, 2008, except as otherwise provided herein, to reflect: (i) the merger of
Pharmacia Savings Plus Plan into the Plan, and (ii) the enactment of Code Section 409A and corresponding regulations, and (iii)
certain other administrative design changes. The provisions of this restated and amended Plan shall govern Accounts on and after
January 1, 2008 except with respect to Grandfathered Amounts. Except as specifically otherwise provided herein, the Grandfathered
Amounts for Members who were Participants in the Pharmacia Savings Plus Plan on December 31, 2004 shall be governed by the
provisions of the Pharmacia Savings Plus Plan as amended and restated effective July 1, 2002; the Grandfathered Amounts with
respect to Members in this Plan on December 31, 2004, shall be governed by the provisions of this Plan as amended and restated
effective February 1, 2002; and, for the period from January 1, 2005 through December 31, 2007 the provisions of this amended and
restated Plan shall govern, except to the extent the provisions of this Plan are inconsistent with the administrative practices, policies,
election forms and participant communications designed for reasonable good faith compliance with Code Section 409A during that
interim period, which are incorporated herein by reference. The Plan was further amended and restated effective January 1, 2012
(except where provided otherwise) (i) to reflect the implementation of the Retirement Savings Contribution under the Pfizer Savings
Plan that is eligible to be contributed to the Plan for a Member, effective January 1, 2011, and (ii) to provide that Members in the
Pfizer Savings Plan for Residents of Puerto Rico are eligible to participate in the Plan as a result of the enactment of the Internal
Revenue Code for a New Puerto Rico and certain other clarifying amendments.
For purposes of the Employee Retirement Income Security Act of 1974 (ERISA), as amended, the Plan shall be treated as two
separate, unfunded plans. One plan shall be an excess benefit plan within the meaning of Section 3(36) of ERISA, and shall be
comprised of accruals under the Plan that are made solely because of the applicable limitations under Section 415 of the Code, plus
earnings thereon. All other accruals under the Plan, plus earnings thereon, shall be treated as made under a separate top-hat plan
maintained by the Company primarily for the purpose of providing deferred compensation to a select group of management or highly
compensated employees, within the meanings of Sections 201(a)(2), 301(a)(3) and 401(a)(1) of ERISA. The Company shall be able to
separately account for excess benefit plan accruals and earnings thereon, top-hat plan accruals and earnings thereon, and Special
Accruals and earnings thereon.
SECTION 2 . DEFINITIONS .
The following words and phrases as used in this Plan have the following means:
2.1 Account . The term Account shall mean a Members individual account(s), as described in Section 5.1 of the Plan.
2.2 Annual Enrollment . The term Annual Enrollment shall mean the time period, as determined by the Committee in its
sole and absolute discretion, prior to the beginning of a Plan Year in which Eligible Employees can elect to enroll or change their
deferral elections under the Plan with respect to Regular Earnings expected to be earned in the next succeeding Plan Year.
Notwithstanding the foregoing, the Annual Enrollment period for any Plan Year shall not extend beyond December 31
st
of the Plan
Year immediately preceding the Plan Year that the election is with respect to.
2.3 Beneficiary . The term Beneficiary means the beneficiary on file for this Plan, or if none is on file, the person or
entity who is the Beneficiary under the Qualified Plan, and with respect to Grandfathered Amounts under the Pharmacia Savings
Plus Plan, the person or entity who is the beneficiary under the rules of that plan.
2.4 Board of Directors . The term Board of Directors means the Board of Directors of the Company.
2.5 Code . The term Code means the Internal Revenue Service Code of 1986, as amended.
2.6 Committee . The term Committee means the Committee, as described in the Qualified Plan, or any other person or
entity that the Committee has authorized to act on its behalf under the Plan.
2.7 Company . The term Company means Pfizer Inc, a Delaware corporation, and any successor corporation.
2.8 Controlled Group. The term Controlled Group means the Company and any other entity with which the Company
would be considered a single employer under Code section 414 (b) or (c), provided that, in applying Code sections 1563(a)(1), (2)
and (3) and for purposes of determining a controlled group of corporations under section 414(b), "50 percent " shall be used instead
of "80 percent", and in applying Treas. Reg. section 1.414(c)-2 for purposes of determining trades or businesses that are under
common control for purposes of Code section 414(c), "50 percent" shall be used instead of "80 percent" each place it appears in
Treas. Reg. section 1.414(c)-2. In addition, solely for purposes of determining a Separation from Service, the foregoing sentence shall
be applied by using 30 percent instead of 50 percent.
2.9 Disability . Prior to January 1, 2012, the term Disability means a disability where the Employee is unable to engage in
any substantial gainful activity by reason of any medically determinable physical or mental impairment that (i) can be expected to
result in death or can be expected to last for a continuous period of not less than twelve (12) months or is receiving income
replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the
Company by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, and (ii) also satisfies the requirements of a "Disability" as
defined under the Qualified Plan.
Effective as of January 1, 2012, a Member will be considered to have incurred a Disability for all purposes under the Plan
if the Members Disability as set forth in the preceding paragraph relates to an illness, injury or impairment for which the Member
was on an approved leave of absence in accordance with a Company short-term disability program and such leave commenced prior
to January 1, 2012 (including if such Member subsequently returns to work and then goes out on another approved leave relating to
the same illness, injury or impairment as of or after January 1, 2012).
2.10 Eligible Employee . The term Eligible Employee means any Member as defined under a Qualified Plan who:
(i) (a) in the year he or she first becomes eligible to participate in the Plan (as determined in accordance with consistent
rules established by the Committee in its sole and absolute discretion and in accordance with Section 409A) in any month of that
year: (1) is projected to receive Compensation (as defined in the Qualified Plan) for that Plan Year in excess of the limitation of
Section 401(a)(17) of the Code or Section 1081.01(a)(12) of the PR Code or whose account under the Qualified Plan is projected to be
credited during that Plan Year with annual additions, as defined in Section 415(c)(2) of the Code or Section 1081.01(a)(11) of the PR
Code equal to the maximum permitted under Section 415(c)(1)(A) of the Code or Section 1081.01(a)(11) of the PR Code, respectively;
and (2) who is an employee of an Employer who: (A) has reached the point in time when he or she has been projected to have
Compensation (as defined in the Qualified Plan) in excess of the Limitation under Section 401(a)(17) of the Code or Section 1081.01(a)
(12) of the PR Code, or (B) has reached the point in time when he or she has Compensation (as defined in the Qualified Plan) equal to
the amount of Compensation at which point he or she was projected to reach the Section 415(c)(2) or Section 1081.01(a)(11) of the
PR Code Limitation on annual additions under the Qualified Plan; or (b) in any subsequent year an Eligible Employee who in any
prior year was an Eligible Employee under the Plan and who the Company determines in an Annual Enrollment (based on elections in
effect and salary projections on the last business day of the calendar year of the Annual Enrollment (or as otherwise determined
based on consistent rules established by the Committee in its sole and absolute discretion and in accordance with Section 409A) is
expected to have annualized Compensation for the subsequent Plan Year in excess of the limitation of Section 401(a)(17) of the Code
or Section 1081.01(a)(12) of the PR Code, or is expected in the next succeeding Plan Year to have his or her Account under the
Qualified Plan credited with annual additions in excess of the maximum amount permitted under Section 415(c)(1)(A) of the Code or
Section 1081.01(a)(11) of the PR Code and who is an Employee and has an election to defer Excess Regular Earnings under the Plan
in effect at the time he or she had been projected to reach the limitation under Section 401(a)(17) or Section 1081.01(a)(12) of the PR
Code or Section 415(c)(1)(A) of the Code or Section 1081.01(a)(11) of the PR Code;
(ii) who receives a Retirement Savings Contribution under a Qualified Plan for that Plan Year and (A) is projected to receive
Compensation in excess of the Limitations of Section 401(a)(17) of the Code or Section 1081.01(a)(12) of the PR Code, or (B) whose
Account under a Qualified Plan is projected to be credited during that Plan Year with annual additions in excess of the maximum
amount permitted under Section 415(c)(1)(A) of the Code or Section 1081.01(a)(11) of the PR Code, or
(iii) any other person who is a member of a select group of management or highly compensated employees of the Company
and who is designated by the Committee or an authorized officer of the Company (or his or her delegate) as an Eligible Employee to
receive accruals under the Plan in accordance with Article 4.
2.11 ELT . The term ELT means the Chief Executive Officer of the Company and the team composed of his or her direct
reports or any of their properly authorized delegates.
2.12 Employer . The term Employer means the Company and any other member of the Controlled Group which is also an
Associate Company under the Qualified Plan.
2.13 Employer Accrual . The term Employer Accrual means the amounts described in Section 4.1.
2.14 Excess Regular Earnings . The term Excess Regular Earnings means:
(i) with respect to the first year that an Eligible Employee is eligible to participate in the Plan (as determined in accordance
with consistent rules established by the Committee in its sole and absolute discretion and in accordance with Section 409A), (a) the
portion of an Eligible Employees Regular Earnings
earned after the point in time when the Eligible Employee was projected to exceed the Limitation on compensation taken into account
under Section 401(a)(17) of the Code or Section 1081.01(12) of the PR Code, (b) all Regular Earnings that the Eligible Employee
receives after the point in time that the Eligible Employee was projected to exceed the Limitation on contributions to defined
contribution plans under Section 415(c)(1)(A) of the Code or Section 1081.01(11) of the PR Code, to the extent not included in (a)
above, (c) any bonus elected to be deferred under the Pfizer Inc Deferred Compensation Plan, in accordance with the rules under
that Plan and Section 409A, or (d) any other compensation determined by the Committee to be Excess Regular Earnings for purposes
of this Plan; and,
(ii) for an Eligible Employee who was an Eligible Employee in the immediately preceding prior Plan Year or who is not in his
or her first year of eligibility to participate in the Plan, (a) the portion of Regular Earnings earned during a Plan Year that based on the
Eligible Employees Qualified Plan elections and Compensation (as defined in the Qualified Plan) in effect during the last business
day of the calendar year of the Annual Enrollment (or as otherwise determined based on consistent rules established by the
Committee in its sole and absolute discretion and in accordance with Section 409A) were projected to exceed the Limitation on
compensation taken into account under Section 401(a)(17) of the Code or Section 1081.01(a)(12) of the PR Code, (b) all Regular
Earnings that the Member has received after the point in time that the Member was projected to become subject to the Limitation on
contributions to defined contribution plans under Section 415(c)(1)(A) of the Code or Section 1081.01(a)(11) of the PR Code, to the
extent not included in (a) above, (c) any bonus eligible to be deferred under the Pfizer Inc Deferred Compensation Plan, in
accordance with the rules under that Plan and Section 409A, or (d) any other compensation determined by the Committee to be
Excess Regular Earnings for purposes of this Plan.
2.15 Excess Regular Earnings Deferrals . The term Excess Regular Earnings Deferrals means the portion of a Members
Excess Regular Earnings that the Member elects to defer under the terms of the Plan.
2.16 Grandfathered Amounts . The term Grandfathered Amounts shall mean the portion of the Members Account that
reflects the amount that was earned and vested (within the meaning of Section 409A of the Code and regulations thereunder) under
the Plan prior to 2005 (and earnings thereon), or with respect to Accounts transferred from the Pharmacia Savings Plus Plan, the
portion of the Members Account that reflects the amount that was earned and vested (within the meaning of Section 409A of the
Code and regulations thereunder) under the Pharmacia Savings Plus Plan prior to 2005 (and earnings thereon).
2.17 Key Employee . The term Key Employee means an Employee treated as a specified employee as of his or her
Separation from Service under Section 409A(a)(2)(B)(i) of the Code, i.e. , a key employee (as defined in Section 416(i) of the Code
without regard to paragraph (5) thereof) of the Company or its affiliates. Key Employees shall be determined in accordance with
Section 409A using an identification date of February 28
th
in any year . A listing of Key Employees as of an identification date shall
be effective for the 12-month period beginning on the March 1 following the identification date ..
2.18 Limitation(s) . The term Limitation(s) means the limitation on contributions to defined contribution plans under
Section 415(c)(1)(A) of the Code or Section 1081.01(a)(11) of the PR Code, and on compensation taken into account under Section
401(a)(17) of the Code or Section 1081.01(a)(12) of the PR Code, and with respect to Eligible Employees who are a select group of
management or highly compensated employees, within the meanings of Sections 201(a)(2) and 401(a)(1) of ERISA and are eligible to
defer their bonuses under the Pfizer Deferred Compensation Plan, such other Code or Qualified Plan limits that prevent the deferred
bonuses as being recognized as Regular Earnings under the Qualified Plan.
2.19 Member . The term Member means an Eligible Employee who has Excess Regular Earnings Deferrals or a Retirement
Savings Contribution made to the Plan or is otherwise credited with an Employer Accrual.
2.20 Payment Option . The term Payment Option means the following forms of payment under which an Eligible
Employee may elect to receive amounts credited to his Account upon his Separation from Service with the Controlled Group: (i)
single sum payable in the January following the Members Separation from Service with the Controlled Group, or (ii) substantially
equal annual installment payments over a period of two (2) to twenty (20) years, with the first installment to be paid the January
following the Members Separation from Service. Where payment of the Account is made in installment payments, the first
installment shall be a fraction of the value of the Members Account as of the applicable valuation date, the numerator of which is
one (1) and the denominator of which is the total number of installments remaining to be paid at that time. Each subsequent
installment shall be calculated in the same manner, except that the denominator shall be reduced by the number of installments that
have been paid previously. Unless otherwise provided under this Plan, including in the event of death, Disability and or a payment
due to Unforeseeable Emergency, if a payment election is not timely made in accordance with the requirements of Section 409A the
Member shall be deemed to have elected to receive payment of his or her Account in a single lump sum payment to be paid in the
January following the Members Separation from Service. Notwithstanding anything in this Section 2.20 or the Pharmacia Savings
Plus Plan to the contrary, effective January 1, 2007, the Account of any Member who has Separated from Service and is no longer
living at the time his benefits commence shall be paid in a single lump sum the January following the Members death, provided,
however, that payment of Grandfathered Amounts to Beneficiaries under the Pharmacia Savings Plus Plan shall be governed under
the terms of that plan.
2.21 Pfizer Deferred Compensation Plan . The term Pfizer Deferred Compensation Plan shall mean the Pfizer Inc Deferred
Compensation Plan, a bonus deferral program, or its successor.
2.22 Pfizer Match Fund . The term Pfizer Match Fund shall mean the investment fund known as the Pfizer Match Fund
under a Qualified Plan, or its successor.
2.23 Pharmacia Savings Plus Plan . The term Pharmacia Savings Plus Plan means the Pharmacia Savings Plus + Plan,
effective July 1, 1999, as subsequently amended and restated effective July 1, 2002 which was merged into this Plan effective
January 1, 2008.
2.24 Plan . The term Plan means this Pfizer Inc Nonfunded Deferred Compensation and Supplemental Savings Plan,
as set forth herein and as amended from time to time.
2.25 Plan Year . The term Plan Year means the calendar year.
2.26 Prior Plan . The term Prior Plan means: (i) with respect to Grandfathered Amounts attributable to the Plan, the Plan
as in effect on October 3, 2004, which has not been materially modified (attached hereto as Exhibit A), and (ii) with respect to
Grandfathered Amounts attributable to the Pharmacia Savings Plus Plan, the Pharmacia Savings Plus Plan as in effect on October 3,
2004, which has not been materially modified (attached hereto as Exhibit B).
2.27 PR Code . The term PR Code means the Internal Revenue Code for a New Puerto Rico , (also known as the New
Puerto Rico Tax Code of 2011) as may be amended from time to time.
2.28 Qualified Military Service . The term Qualified Military Service means any service in the uniformed services (as
defined in chapter 43 of title 38, United States Code) where the Eligible Employees right to reemployment is protected by law.
2.29 Qualified Plan . The term Qualified Plan means the Pfizer Savings Plan, the Pfizer Savings Plan for Residents of
Puerto Rico, and the Searle Puerto Rico Savings Plan 1165(e) as each may be amended from time to time.
2.30 Regular Earnings . The term Regular Earnings shall have the meaning given such term under a Qualified Plan. For
Eligible Employees who are eligible to defer their bonus under the Pfizer
Deferred Compensation Plan, the term Regular Earnings shall also include such deferred amounts as determined by the Committee.
2.31 Retirement . The term Retirement means a termination of employment with an Employer after the Eligible Employee
has attained either (i) age 65, or (ii) age 55 with at least 10 Years of Service (as determined in accordance with the Qualified Plan
pursuant to which the Member received his or her Retirement Savings Contributions).
2.32 Retirement Savings Contribution. The term Retirement Savings Contribution means the automatic Company
contribution made to a Retirement Savings Eligible Employees Account under a Qualified Plan in accordance therewith.
2.33 Retirement Savings Eligible Employee. The term Retirement Savings Eligible Employee means an Eligible Employee
eligible in accordance with a Qualified Plan for a Retirement Savings Contribution.
2.34 Section 409A . The term Section 409A shall mean Section 409A of the Code and the regulations and other
guidance issued thereunder by the U.S. Treasury or Internal Revenue Service.
2.35 Separation from Service . The term Separation from Service or Separates from Service means a separation from
service within the meaning of Section 409A.
2.36 Special Accrual . The term Special Accrual means a special lump sum accrual amount made pursuant to a Written
Agreement as provided for in Section 4.2 of the Plan.
2.37 Unforeseeable Emergency . The term Unforeseeable Emergency means a severe financial hardship to the Member
resulting from an illness or accident of the Member, the Members spouse, or dependent (as defined in Section 152(a) of the Code);
the Members loss of property due to casualty; or other similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the Members control, within the meaning of Section 409A. Withdrawals for Unforseeable Emergencies are only
available to Members who were Participants in, and with respect to the portion of a Members Account that was credited under, the
Pharmacia Savings Plus Plan (as adjusted for earnings and losses) on December 31, 2007 and other than Grandfathered Amounts
that are governed under the distribution rules of that Prior Plan.
2.38 Written Agreement . The term Written Agreement shall have the meaning ascribed to it in Section 4.2.
SECTION 3 . PARTICIPATION .
3.1 Designation of Eligible Employees . The Committee in its sole and absolute discretion will designate as Eligible
Employees those employees who satisfy the terms of Section 2.10 and are eligible to participate in the Plan.
3.2 Election to Make Excess Regular Earnings Deferrals .
(a) Initial Election . An Eligible Employee may elect to begin making Excess Regular Earnings Deferrals by filing an
election with the Committee or its authorized designee in accordance with this Section 3.2 and the requirements of Section 409A and
any rules established by the Committee. Deferral elections for Excess Regular Earnings Deferrals in the year in which an employee
first becomes eligible to participate in the Plan (as determined in accordance with consistent rules established by the Committee in
its sole and absolute discretion and in accordance with Section 409A) may be made within 30 days of his or her first becoming
eligible to participate in the Plan or another account balance plan required to be aggregated with this Plan under Section 409A,
provided that such elections shall apply only with respect to Regular Earnings received subsequent to the date of receipt of election
by the Committee and with such paycheck as
determined administratively practicable by the Committee. If no such election is made, an Eligible Employee may not make Excess
Regular Earnings Deferrals to the Plan in the year he or she first becomes eligible to participate in the Plan (as determined in
accordance with consistent rules established by the Committee in its sole and absolute discretion and in accordance with Section
409A) but may make Excess Regular Earnings Deferrals in subsequent Plan Years to the extent he/or she submits a proper and timely
election to do so under the Plan during a subsequent Annual Enrollment and consistent with rules established by the Committee in
its sole and absolute discretion and in accordance with Section 409A.
(b) Subsequent Elections . For Plan Years after the first Plan Year in which the Eligible Employee participates in the Plan,
an Eligible Employee may make Excess Regular Earnings Deferrals to the Plan to the extent he/or she submits a proper and timely
election to do so under the Plan during an Annual Enrollment ending prior to such Plan Year (or at such other time as the Committee
shall permit for Employees who are treated (and eligible to be treated) as in their first year of eligibility under uniform rules
established by the Committee in accordance with Section 409A).
3.3 Amendment or Suspension of Election . Except as otherwise provided in this Section 3.3, once made, a Member may
not change his or her existing Excess Regular Earnings Deferrals election under this Plan during the Plan Year until the next Annual
Enrollment. Notwithstanding the foregoing, if a Member receives a hardship withdrawal under the Qualified Plan, incurs a Disability
or obtains a distribution under Section 6.4 on account of an Unforeseeable Emergency during a year, his or her Excess Regular
Earnings Deferral election shall be cancelled.
3.4 Amount of Elections . Each election for Excess Regular Earnings Deferrals to the Plan filed by an Eligible Employee
must specify the amount of Excess Regular Earnings Deferrals in a whole percentage from 1% to 20% of the Members Excess
Regular Earnings (from 1% to 15% for Members located in Puerto Rico) unless the Committee establishes a lesser percentage for the
Plan Year.
3.5 Retirement Savings Contributions . Effective for Plan Years beginning on or after January 1, 2011, any Retirement
Savings Eligible Employee who receives a Retirement Savings Contribution under a Qualified Plan that is projected to be in excess of
any applicable Limitations, shall become a Member under the Plan and such excess Retirement Savings Contributions shall be
credited to his or her Account under the Plan.
Retirement Savings Contributions shall be subject to a vesting schedule as set forth below:
(a) General . A Member shall become 100% vested in his Retirement Savings Contributions upon the attainment of
3 Years of Service (as determined in accordance with the Qualified Plan pursuant to which such Members Retirement Savings
Contributions were made).
Notwithstanding the foregoing, a Member shall become 100% vested in his Retirement Savings Contributions in the event of
his or her Retirement, Disability or death (including death while serving Qualified Military Service); provided that effective
January 1, 2012, Disability shall also include for purposes of this Section 3.5(a) only, a Members Separation from Service
due to the failure to return to work after the expiration of short term disability benefits, or because his position is filled while
he is on an approved leave of absence while receiving short term disability benefits.
(b) Forfeiture of Nonvested Contributions . The nonvested portion of a Members Account shall be forfeited upon
the occurrence of the earlier of: (i) the date upon which the Member takes a complete distribution of his or her Account, or (ii)
the date upon which the Member incurs five consecutive One-Year Periods of Severance (as determined in accordance with
the Qualified Plan pursuant to which such Members Retirement Savings Contributions were made).
(c) Vesting for Zoetis and Nutritionals Employees . Notwithstanding the foregoing, (i) effective as of the Zoetis
Benefits Date (as such term is defined in Appendix B hereto), any Member
employed by Zoetis Inc, shall become 100% vested in his Retirement Savings Contributions Account, and (ii) effective as of
the Nestle Closing Date (as such term is defined in Appendix A hereto) any Nestle Employee who is not vested in his or her
Retirement Savings Account shall become 100% vested.
SECTION 4 . EMPLOYER ACCRUALS .
4.1 General Rule .
An Employer Accrual will be credited to a Members Account with respect to the eligible portion of Excess Regular
Earnings Deferrals of such Member at the Members applicable percentage rate of Matching Contributions with respect to After-
Tax Contributions, Before-Tax Contributions, and Roth 401(k) Contributions under the Qualified Plan. The Employer Accrual
shall be credited as soon as practicable following the payroll period for which the Excess Regular Earnings Deferrals are made. An
Employer Accrual (based on the Members matching contribution formula under the Qualified Plan) also will be credited to the
Account of a Member who elects to defer a percent of his or her bonus that otherwise would have been deferred under the Pfizer
Deferred Compensation Plan, subject to the requirements of Section 409A. Such Employer Accrual shall be credited as soon as
practical following the payroll period in which the bonus is deferred. In no event shall a Special Accrual be subject to Employer
Accruals under this Section 4.1. Notwithstanding anything in this Section 4.1 to the contrary, for purposes of any distribution or
withdrawal under the Plan, except as otherwise provided under Section 5.4, the amounts distributed or withdrawn shall be valued as
of the last business day of the calendar quarter preceding the calendar quarter of the distribution or withdrawal.
4.2 Special Accrual for Recruitment Purposes
Effective September 1, 2007, the Company may, in its sole and absolute discretion, credit an amount to the Account of an
Eligible Employee, provided that a member of the ELT approves such credit (but such ELT member cannot approve such credit for
him or herself).
(a) This credit to the Eligible Employee's Account shall be made at the time, and subject to any restrictions, specified in
the written agreement or agreement that is evidenced in a writing from the ELT member (the Written Agreement), with the Eligible
Employee. At such time, the Eligible Employee shall become a Member if he is not already a Member. Such Written Agreement
cannot include any election on the part of the Eligible Employee unless such election satisfies the requirements of Code section
409A and the election provisions have been approved by the ELT member or a member of the Committee.

(b) Such credit shall be invested as specified in the Written Agreement, or, if no such investment election is specified, as
provided in accordance with Section 5.4 of the Plan except that no portion of this credit shall be considered Employer Accruals that
are subject to a deemed investment in the Pfizer Match Fund. No portion of this credit is eligible for an Employer Accrual under the
Plan unless an Employer Accrual for such credit is expressly provided for under the terms of the Written Agreement.

(c) Such credit, as adjusted for any investment gains or losses, shall be paid in accordance with Sections 5.2, 6.1 and 6.2
of the Plan or as otherwise determined under the Written Agreement; provided that nothing herein (other than if the Written
Agreement specifies to the contrary) shall be interpreted so not as to afford the opportunity for the Member to change his time and
form of payment election in accordance with Section 409A if such right has been so provided by the ELT member and approved by
the Committee.
SECTION 5 . INDIVIDUAL ACCOUNT .
5.1 Creation of Accounts . The Company will maintain an Account under the Plan in the name of each Member. Each
Members Account will be credited with the amount of the Members Excess Regular
Earnings Deferrals, Employer Accruals, Retirement Savings Contributions, Special Accruals and will be adjusted for earnings and
losses thereon.
5.2 Payment Option Election . Except with respect to a Special Accrual and to the extent otherwise provided: (a) in a
Written Agreement or (b) in this Section 5.2, at the time a Member is first eligible to elect to make Excess Regular Earnings Deferrals
under the Plan or has a Retirement Savings Contribution credited to his or her Account under the Plan, the Member shall elect the
particular Payment Option that is to apply to amounts credited to the Members Account (other than Grandfathered Amounts). For a
Payment Option election to be effective, it must be made (i) within 30 days of the date the Employee is first eligible to participate in
the Plan (as determined in accordance with consistent rules established by the Committee in its sole and absolute discretion and in
accordance with Section 409A). Notwithstanding the foregoing: (1) any Member who has a Special Accrual under the Plan who has
a right to elect a form of payment pursuant to the Written Agreement and as approved by an ELT member and the Committee shall
only have 30 days from the date of initial eligibility (whether that date is with respect to the Special Accrual or with respect to the
Excess Regular Earnings Deferrals, whichever is earlier) to elect his or her Payment Option for all non-Grandfathered amounts which
he or she has the right to elect a Payment Option for under the Plan; and (2) any Eligible Employee who becomes eligible to
participate in an account balance plan that must be aggregated with the Plan under Section 409A of the Code before he or she
otherwise would become eligible to participate in this Plan has 30 days from the date he or she first becomes eligible to participate in
such other plan to elect his or her Payment Option under the Plan. In the absence of a timely election (except as otherwise may be
required pursuant to a Written Agreement), the Member shall be deemed to have made a Payment Option to receive his or her
Account under the Plan in a single lump sum payment in the January after his or her Separation from Service (other than with respect
to Grandfathered Amounts). In addition, unless otherwise provided pursuant to a Written Agreement (and as approved by an ELT
member and the Committee) a Member shall be deemed to have made a Payment Option election to receive the portion of his or her
Account attributable to his or her Special Accrual under the Plan in a single lump sum payment in the January after his or her
Separation from Service. Except as provided in Section 5.3 below, or if payment is subsequently re-deferred in accordance with
Section 6.8 and subject to the rules on Key Employee payments as provided in Section 6.5, any Payment Option election made or
deemed made under the Plan shall apply with respect to a Members entire Account under the Plan (except with respect to
Grandfathered Amounts).
5.3 Exceptions to Binding Payment Option Election . Notwithstanding any Payment Option elected (or deemed elected):
(i) if the value of a Members account on the last business day of the calendar year of the Members Separation from Service
(excluding Grandfathered Amounts credited to the Members Account) is $10,000 or less the Members Payment Option election
shall be paid in a lump sum in the January following the Members termination; (ii) if a Member incurs a Disability, the Members
Account (except with respect to Grandfathered Amounts which shall be payable under the terms of that Prior Plan) shall be paid in
accordance with the Payment Option the January after the Member has been determined to have incurred a Disability; (iii) if a
Member who was a Participant in the Pharmacia Savings Plus Plan requests a distribution on account of an Unforeseeable
Emergency the portion of the Members Account attributable to amounts accrued under the Pharmacia Savings Plus Plan (as
adjusted for earnings and losses and other than Grandfathered amounts, which shall be paid in accordance with the terms of that
Prior Plan) to the extent requested on account of the Unforeseeable Emergency shall be paid in a lump sum the next business day
after the Unforeseeable Emergency (in accordance with uniform rules established by the Committee and in accordance with 409A);
(iv) if a Member ceases to be an Eligible Employee and subsequently becomes eligible to participate in the Plan, he or she may elect
a new Payment Option that shall apply with respect to any amounts credited to his or her Accounts under the Plan after the date of
his or her re-eligibility (provided the Employee becomes an Eligible Employee in a different calendar year than the year in which he or
she ceased to be an Eligible Employee), and if no such election the portion of the Account accrued with respect to the new eligibility
period shall be paid in a single lump sum in the January after Separation from Service (or as otherwise required in this Section 5.3);
(v) if a Member has a Special Accrual under the Plan any Payment Option election made or deemed made by the Member in
accordance with Section 5.2, the exceptions to the Payment Option elected as provided for in this Section 5.3 (or Section 6.8) shall
not apply to amounts attributable to the Special Accrual unless otherwise provided in the terms of the
Written Agreement as approved by an ELT member and the Committee; and (vi) if a Member dies before distribution of his or her
entire Account, the Payment Option election shall be cancelled and the entire account (except with respect to Grandfathered
Amounts under the Pharmacia Savings Plus Plan which shall be paid pursuant to the terms of that plan) shall be paid in a single
lump sum distribution the January following the Members death. Effective January 1, 2007, the immediately preceding sentence
shall also apply with respect to amounts accrued under the Pharmacia Savings Plus Plan (as adjusted for earnings and losses) other
than Grandfathered Amounts under that plan.
5.4 Investments . All Excess Regular Earnings Deferrals and Retirement Savings Contributions will be credited with an
amount equal to the amount which would have been earned had such amounts been actually invested in one or more of the Funds
(other than the Pfizer Match Fund available for investment under the Qualified Plan, as the Member may be defaulted into or elect
from time to time, in one percent (1%) increments. To the extent no investment election is provided with respect to a Special Accrual
when such Special Accrual is credited to the Plan or otherwise, the Special Accrual shall be deemed to be invested in the default
fund under the Plan. The portion of the Members Account attributable to Employer Accruals shall be deemed to be invested in the
Pfizer Match Fund. Rules similar to those which govern the Qualified Plan shall apply for purposes of determining the value of the
deemed investments (but based on this Plans valuation dates) and the timing, frequency and permissibility of investment transfers.
No provision of this Plan shall require the Company or any other Employer to actually invest any amount in any Fund or in any
other investment vehicle. The Plan is an unfunded plan that is not subject to the funding requirements of ERISA, meaning that there
are no actual investments held in a trust. The Accounts represent unsecured obligations of the Company, and no funds are set aside
from the Companys general assets to cover such Accounts. The Plan is subject to the full faith and credit of the Company, and
Members would be general creditors in the event of the Companys insolvency. Except as otherwise provided in this Section,
distributions and withdrawals from the Plan are valued as of the last business day of the calendar quarter preceding the calendar
quarter of the distribution. Withdrawals on account of an Unforeseeable Emergency are valued as of the last business day of the
month preceding the day that the withdrawal request is received. Payments that would otherwise be made but are delayed on
account of a Member being a Key Employee are valued on the distribution date.
With respect to a Member subject to Section 16 of the Securities Exchange Act of 1934, an election to transfer a portion of
his Account into, or out of, the Pfizer company stock funds, shall be permitted only if the Member has not elected during the
immediately preceding six (6) months to transfer out of, or into, such funds within this Plan, any Pfizer company stock funds under
the Qualified Plan or the unit account within any compensation plan maintained by the Company for the benefit of its non-employee
directors.
SECTION 6 . DISTRIBUTION OF ACCOUNTS .
6.1 Distribution of Benefits . Unless otherwise specifically provided for in the Plan, distribution of a Members
Grandfathered Amounts shall be paid in accordance with the distribution provisions of the Prior Plans. Except as otherwise provided
in this Section and the Plan, a Member shall be paid the balance of his Account following his or her Separation of Service in
accordance with the Payment Option or Payment Options elected (or deemed elected by the Member) by the Member as permitted
under the Plan. A Member may have different Payment Option elections with respect to the portions of his or her Account, for
example, for a Special Accrual or for a Member who was ineligible or a period of time and subsequently became eligible and was
permitted or deemed to have made a new Payment Option election under the Plan with respect to future accruals under the Plan and
in accordance with Section 409A.
6.2. Benefits Subject to Withholding . The benefits payable under this Plan shall be subject to the deduction of any
federal, state, or local income taxes, employment taxes or other taxes which are required to be withheld from such payments by
applicable laws and regulations. Any employment taxes owed by the Member with respect to any deferral, accrual or benefit payable
under this Plan may be withheld from other compensation of the Member in the year in which such tax liability accrues.
6.3 Disability . Notwithstanding any elected Payment Option or deemed elected Payment Option (made or deemed made),
if the Member incurs a Disability under the Plan, the balance of the Members Account shall be paid in accordance with the Payment
Option elected the January following the Disability, except with respect to Grandfathered Amounts shall be payable in accordance
with the terms of that Prior Plan.
6.4 Distributions on Account of Unforeseeable Emergency . Notwithstanding any elected Payment Option or deemed
elected Payment Option made (or deemed made) by a Member who was a Participant in the Pharmacia Savings Plus Plan, upon the
occurrence of an Unforeseeable Emergency, a Member may withdraw all or any portion of his or her Account balance attributable to
amounts accrued under the Pharmacia Savings Plus Plan (as adjusted for earnings and losses) provided that the amounts distributed
with respect to an Unforeseeable Emergency (including any Grandfathered Amounts distributed under the rules of the Pharmacia
Savings Plus Plan) may not exceed the amounts necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay
taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be
relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Members assets (to the extent
the liquidation of such assets would not itself cause severe financial hardship) or by cessation of deferrals under the Plan.
Distributions of Grandfathered Amounts for a hardship or unforeseeable emergency shall be governed by the terms of the Prior Plan.
6.5 Delay for Key Employees . Notwithstanding anything in the Plan to the contrary, distributions (other than
distributions of Grandfathered Amounts) may not be made to a Key Employee upon a Separation from Service before the date which
is six (6) months after the date of the Key Employee's Separation from Service (or, if earlier, the date of death of the Key Employee).
Any payments that would otherwise be made during this period of delay shall be accumulated and paid on the day that is six (6)
months following the Members Separation from Service (or, if earlier, the January following the Members death).
6.6 Distributions upon Death . Notwithstanding any elected Payment Option or deemed elected Payment Option made (or
deemed made) by the Member, if a Member dies before distribution of his or her Account balance has begun any remaining balance
shall be distributed in a lump sum payment to the Members Beneficiary the January following the calendar year in which the
Members death occurs. Effective January 1, 2007, the immediately preceding sentence also applies with respect to amounts accrued
under the Pharmacia Savings Plus Plan (as adjusted for earnings and losses) other than Grandfathered Amounts under that plan.
6.7 Change in Control . Notwithstanding any provision in the Plan or the Pharmacia Savings Plus Plan to the contrary, a
Members Payment Option election or a Members deemed Payment Option election, for Members who were Participants in the
Pharmacia Savings Plus Plan and with respect to amounts accrued under the Pharmacia Savings Plus Plan on or after January 1, 2005
(as adjusted for earnings and losses) only, such portion of the Members Account under the Plan shall be distributed in an
immediate lump sum payment upon the occurrence of a Change in Control that is a Change in Control Event. For these amounts a
Change in Control Event means an event described in Code section 409A(a)(2)(A)(v) or otherwise under Section 409A. With
respect to Grandfathered amounts under the Pharmacia Savings Plus Plan, Change in Control shall have the meaning defined in that
Prior Plan and such Grandfathered Amounts distributed in accordance with the terms of that Prior Plan.
6.8 Redeferrals . Notwithstanding any elected Payment Option or deemed elected Payment Option made (or deemed
made), except with respect to Special Accruals for which the Member was not provided with a redeferral option under the Written
Agreement, a Member may make one or more subsequent elections to change form of a distribution for a deferred amount, provided
that such an election shall be effective only if the following conditions are satisfied:
(a) The election may not take effect for at least twelve (12) months;
(b) The election must be made at least twelve (12) months before payments would have otherwise begun;
and
(c) In the case of an election to change the form of a distribution upon a Members Separation from
Service, a distribution may not be made earlier than at least five (5) years from the date the distribution (or, with respect to
installments, the first scheduled installment) would have otherwise been made.
Members who have elected to receive their distribution (or portion thereof) in installments may not change the corresponding
election once their installment distributions have begun.
Members who pursuant to a Written Agreement are permitted to specify a Payment Option with respect to a Special Accrual shall
also have the redeferral rights provided in this Section 6.8 except as otherwise provided in the Written Agreement.
6.9 Effect of Taxation . If a portion of the Members Account balance is includible in income under Section 409A, such
portion shall be distributed immediately to the Member.
6.10 Permitted Delays . Notwithstanding the foregoing, any payment on account of a Member under the Plan shall be
delayed upon the Committee's reasonable anticipation of one or more of the following events:
(a) The Company's deduction with respect to such payment would be eliminated by application of Code section
162(m); or
(b) The making of the payment would violate federal securities laws or other applicable law;
provided, that any payment delayed pursuant to this Section 6.10 shall be paid in accordance with Section 409A.
SECTION 7 . NATURE OF INTEREST OF MEMBER .
Participation in this Plan will not create, in favor of any Member, any rights or lien in or against any of the assets of the
Company or any Employer, and all amounts of Excess Regular Earnings, Retirement Savings Contributions, Special Accruals and
Employer Accruals deferred hereunder shall at all times remain an unrestricted asset of the Company or the Employer. A Members
rights to benefits payable under the Plan are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
or encumbrance. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship, between any Employer and a Member or any person, and the Companys and
each Employers promise to pay benefits hereunder shall at all times remain unfunded as to the Member.
SECTION 8 . BENEFICIARY DESIGNATION .
A Members beneficiary under this Plan will automatically be the same as such Members beneficiary under the Qualified
Plan unless a separate designation of beneficiary form for this Plan has been properly filed with the Committee or its authorized
designee in accordance with any rule established by the Committee and received prior to the death of the Member. In the absence of
a designation of specific beneficiary under either the Qualified Plan or this Plan, which beneficiary survives the Member, upon the
Members death, except to the extend as may otherwise be provided with respect to amounts attributable to accruals made under the
Pharmacia Savings Plus Plan prior to January 1, 2007 (including Grandfathered Amounts) which shall be governed by the terms of
that Plan, payment of his Account shall be made to the Members estate in a lump sum in the January following the Members death.
SECTION 9 . ADMINISTRATION .
9.1 Committee . This Plan will be administered by the Committee.
9.2 Powers of the Committee . The Committees powers under this Plan are the same as are described in the Qualified Plan
and include, but are not limited to, the power:
(a) to determine who are Eligible Employees for purposes of participation in the Plan;
(b) to interpret the terms and provisions of the Plan and the Prior Plans and to determine any and all questions
arising under the Plan or Prior Plans, including without limitation, the right to remedy possible ambiguities, inconsistencies,
or omissions by a general rule or particular decision; and
(c) to adopt rules consistent with the Plan or Prior Plans.
9.3 Claims Procedure . Effective January 1, 2008, this Section 9.3 and Section 9.4 shall apply with respect to a Members
entire Account under the Plan including Grandfathered Amounts under this Plan and the Pharmacia Savings Plus Plan. Any request
by a Member or any other person for any benefit alleged to be due under the Plan shall be known as a Claim and the Member or
other person making a Claim, or the authorized representative of either, shall be known as a Claimant. The Committee has sole
discretion to determine whether a communication from an individual shall be a Claim for purposes of this Section 9.3 and Section 9.4.
To the extent of their responsibility to review benefit claims or to review the denial of benefit claims, the Committee and the reviewer
shall have full authority to interpret and apply, in their discretion, the provisions of the Plan. The decisions of the Committee and
reviewer shall be final and binding upon any and all Claimants, including, but not limited to, Members and their Beneficiaries, and
any other individuals making a Claim or requesting review of a Claim through or under them, and shall be afforded the maximum
deference permitted by law. A Member may not maintain a court action over a disputed claim until he or she has exhausted the
Plans claims procedures.
Claimant may submit a written application to the Committee for payment of any benefit that he believes may be due him
under the Plan, in accordance with Plan procedures. Such application shall include a general description of the benefit which the
Claimant believes is due, the reasons the Claimant believes such benefit is due and any information as the Committee may
reasonably request. The Committee will process the Claimants application within ninety (90) days of the receipt of the Claim by the
Committee unless special circumstances require an extension of time for processing the Claim. In such event, written notice of the
extension shall be furnished to the Claimant prior to the termination of the initial ninety (90) day period but in no event shall the
extension exceed a period of ninety (90) days from the end of such initial period. The notice shall indicate the special circumstances
requiring an extension of time and the date by which the Plan expects to render the final decision. If the Committee has not
determined the Claimants eligibility for a Plan benefit within this ninety (90) day period (one hundred eighty (180) day period if
circumstances require an extension of time), the Claim is deemed denied. A Claim is considered approved only if such approval is
memorialized by the Committee in writing.
If a Claim is denied in whole or in part, the notice of denial shall set forth (i) the specific reason or reasons for the denial, (ii)
specific reference to the pertinent Plan provisions on which the denial is based, (iii) a description of any additional material or
information necessary for the Claimant to perfect the Claim and an explanation of why such material or information is necessary, (iv)
an explanation of the Plans claim review procedure, and (v) an explanation that, if an adverse determination is made on review, the
Claimant may have a right to bring civil action under Section 502(a) of ERISA. Within sixty (60) days of the receipt of a notice of
denial of a Claim in whole or in part or a deemed denial, a Claimant (i) may request a review upon written application to the
Committee, (ii) may review documents pertinent to the Claim, and (iii) may submit issues and comments in writing to the Committee.
The Claimant shall be provided upon request and free of charge, reasonable access to all documents, records and other information
relevant to the Claimants Claim for benefits.
The Committee will review a Claim for which a request for review has been made and render a decision not later
than sixty (60) days after receipt of a request for review; provided, however, that if special circumstances require extension of a time
for processing, a decision shall be rendered no later than one hundred and twenty (120) days after receipt of the request for review.
Written notice of any such extension shall be furnished to the Claimant within sixty (60) days after receipt of request for review. The
Committees decision shall be in writing and shall set forth (i) the specific reason or reasons for the denial on review, (ii) specific
reference to the pertinent Plan provisions on which the denial on review is based, (iii) an explanation that the Claimant is entitled to
receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant
to the Claimants Claim for benefits, and (iv) an explanation that if an adverse determination is made on review, the Claimant may
have the right to bring a civil action under Section 502(a) of ERISA. If the decision on review is not furnished within the applicable
time, the Claim shall be deemed denied on review.
9.4 Limitation on Period for Filing Claims . No claim for benefits based upon a claim that contributions were not properly
made under this Plan shall be approved under this Plan, and no action may be brought for benefits under this Plan pursuant to the
denial of such a claim pursuant to Section 9.3 of this Plan, unless such claim for benefits is duly filed under Section 9.3 of this Plan
no later than the last day of the second Plan Year beginning after the Plan Year in which the claim alleges that the contributions
should have been credited.
SECTION 10 . NO EMPLOYMENT RIGHTS .
No provisions of the Plan or any action taken by the Company, the Board of Directors, the Committee, or any of their
properly authorized representatives shall give any person any right to be retained in the employ of any Employer, and the right and
power of the Company or any Employer to dismiss or discharge any Member is specifically reserved.
SECTION 11 . AMENDMENT, SUSPENSION, AND TERMINATION .
The Board of Directors or its authorized designee shall have the rights to amend, suspend, or terminate the Plan at any time,
except that the Committee may make non-substantive administrative changes to this Plan so as to conform with or take advantage of
governmental requirements, statutes or regulations. Except as provide in the next sentence, no amendment, modification or
termination shall, without the consent of a Member, adversely affect the amount of the Members benefits in his or her Account as
of the date of such amendment, modification or termination. Upon termination of the Plan, distribution of the balances in Accounts
shall be made to Members and Beneficiaries in the manner and at the time described in the Plan (or the Prior Plan) unless the Board
of Directors of the Company or its designee determines in its sole and absolute discretion that all such amounts shall be distributed
upon termination and in accordance with the requirements under Section 409A. Upon termination of the Plan, no further deferrals of
eligible compensation shall be permitted; however, earnings, gains and losses shall continue to be credited to Account balances in
accordance with the Plan until the Account balances are fully distributed.
In the event the Plan is terminated, the Committee shall continue to administer the Plan in accordance with the relevant
provisions thereof until the Members benefits have been paid hereunder. Notwithstanding the foregoing, no amendment of the Plan
shall apply to Grandfathered Amounts, unless the amendment specifically provides that it applies to such amounts. The purpose of
this restriction is to prevent a Plan amendment from resulting in an inadvertent material modification to Grandfathered Amounts.
SECTION 12 . PROVISIONS GOVERNED BY CODE SECTION 409A
Notwithstanding anything herein to the contrary, the terms of the Plan are intended to, and shall be interpreted and applied
so as to, comply in all respects with the provisions of Section 409A. Any provision of this Plan governing the timing or form of
payment of benefits hereunder may be modified by the Plan Administrator if, and to the extent deemed necessary or advisable, to
comply with Section 409A including, but not limited to, a 6-month delay in payment to a Key Employee, which shall be paid as
provided in Section 6.5. Nothing in this Section shall be construed as an admission that any of the benefits payable under this Plan
(or any predecessor Plan) constitutes deferred compensation subject to the provisions of Section 409A.
Pfizer Supplemental Savings Plan as in effect on 12/31/04. Except as otherwise specifically provided for in the Plan, the provisions of
this Plan shall apply to Grandfathered Amounts covered under the Pfizer Supplemental Savings Plan on 12/31/2004.
PFIZER INC
NONFUNDED DEFERRED COMPENSATION AND SUPPLEMENTAL SAVINGS PLAN
Amended and Restated as of February 1, 2002
SECTION 1 CONTINUATION AND PURPOSE OF THE PLAN .
1.1 Continuation . There is hereby continued for the benefit of Members an unfunded plan of deferred compensation
known as the Pfizer Inc Nonfunded Deferred Compensation and Supplemental Savings Plan.
1.2 Purpose . The purpose of this Plan is to provide a means by which an Eligible Employee may, in certain
circumstances, elect to defer receipt of a portion of his Regular Earnings. The Plan also provides that the Company will, in certain
instances, credit the Account of a Member with Employer Accruals.
1.3 Description of the Plan . The Plan became effective July 1, 1983 and is amended and restated effective February 1,
2002, except as otherwise provided herein. For purposes of the Employee Retirement Income Security Act of 1974 (ERISA), as
amended, the Plan shall be treated as two separate, unfunded plans. One plan shall be an excess benefit plan within the meaning
of Section 3(36) of ERISA, and shall be comprised of accruals under the Plan that are made solely because of the applicable
limitations under Section 415 of the Code, plus earnings thereon. All other accruals under the Plan, plus earnings thereon, shall be
treated as made under a separate top-hat plan maintained by the Company primarily for the purpose of providing deferred
compensation to a select group of management or highly compensated employees, within the meanings of Sections 201(a)(2) and
401(a)(1) of ERISA. Separate accounts shall be maintained under the Plan for each Member, as applicable, to account for excess
benefit plan accruals and earnings, and top-hat plan accruals and earnings.
SECTION 2 . DEFINITIONS .
The following words and phrases as used in this Plan have the following means:
2.1 Account . The term Account shall mean a Members individual account(s), as described in Section 5 of the Plan.
2.2 Board of Directors . The term Board of Directors means the Board of Directors of the Company.
2.3 Code . The term Code means the Internal Revenue Service Code of 1986, as amended.
2.4 Committee . The term Committee means the Committee, as described in the Qualified Plan, or any other person or
entity that the Committee has authorized to act on its behalf under the Plan.
2.5 Company . The term Company means Pfizer Inc, a Delaware corporation, and any successor corporation.
2.6 Controlled Group . The term Controlled Group means the Company and any other entity in which the Company
owns directly or indirectly 30 percent or more of the value or voting power.
2.7 Eligible Employee . The term Eligible Employee means any Member under the Qualified Plan (i) who receives
Regular Earnings for any Plan Year in excess of the limitation of Section
401(a)(17) of the Code, (ii) whose account under the Qualified Plan is credited with annual additions, as defined in Section 415(c)
(2) of the Code, during any Plan Year equal to the maximum permitted under Section 415(c)(1)(A) of the Code, (iii) who is otherwise
credited with Employer Accruals, or (iv) who is a member of a select group of management or highly compensated employees and is
designated as an Eligible Employee by the Committee.
2.8 Employer . The term Employer means the Company and any other member of the Controlled Group which is also an
Associate Company under the Qualified Plan.
2.9 Employer Accrual . The term Employer Accrual means the amounts described in Section 4.
2.10 Excess Regular Earnings . The term Excess Regular Earnings means (i) the portion of a Members Regular Earnings
earned during a Plan Year that exceeds the Limitation on compensation taken into account under Section 401(a)(17) of the Code, (ii)
all Regular Earnings earned after the Member becomes subject to the Limitation on contributions to defined contribution plans
under Section 415(c)(1)(A) of the Code, to the extent not included in (i) above, (iii) a bonus deferred under the Pfizer Inc Deferred
Compensation Plan, or (iv) any other compensation determined by the Committee to be compensation for purposes of this Plan .
2.11 Excess Regular Earnings Deferrals . The term Excess Regular Earnings Deferrals means the portion of a Members
Excess Regular Earnings that the Member elects to defer under the terms of the Plan.
2.12 Limitation(s) . The term Limitation(s) means the limitation on contributions to defined contribution plans under
Section 415(c)(1)(A) of the Code, and on compensation taken into account under Section 401(a)(17) of the Code.
2.13 Member . The term Member means an Eligible Employee who elects to have Excess Regular Earnings Deferrals made
to the Plan or is otherwise credited with an Employer Accrual.
2.14 Payment Options . The term Payment Option means the following forms of payment under which a Member may
elect to receive amounts credited to his Account upon his termination of employment with the Controlled Group: (i) single sum
payable as soon as practicable following the end of the Plan Year in which the Member terminates employment with the Controlled
Group, or (ii) substantially equal annual installment payments over a period of two to twenty years commencing as soon as
practicable following the end of the Plan Year in which the Member terminates employment with the Controlled Group. Where
payment of the Account is made in installment payments, the first installment shall be a fraction of the value of the Members
Account as of the applicable valuation date, the numerator of which is one (1) and the denominator of which is the total number of
installments remaining to be paid at that time. Each subsequent installment shall be calculated in the same manner, except that the
denominator shall be reduced by the number of installments that have been paid previously.
2.15 Plan . The term Plan means the Pfizer Inc Nonfunded Deferred Compensation and Supplemental Savings Plan, as
set forth herein and as amended from time to time.
2.16 Plan Year . The term Plan Year means the calendar year.
2.17 Qualified Plan . The term Qualified Plan means the Pfizer Savings Plan, as amended from time to time.
2.18 Regular Earnings . The term Regular Earnings shall have the meaning given such term under the Qualified Plan.
SECTION 3 . PARTICIPATION .
3.1 Designation of Eligible Employees . The Committee in its sole and absolute discretion will designate as Eligible
Employees those employees who satisfy the terms of Section 2.7 and are eligible to participate in the Plan. The Committee in its sole
and absolute discretion may terminate the designation of an employee as an Eligible Employee at any time.
3.2 Election to Make Excess Regular Earnings Deferrals . An Eligible Employee may elect at any time after becoming
eligible to begin making Excess Regular Earnings Deferrals by filing an election with the Committee or its authorized designee in
accordance with this Section 3 and any rules established by the Committee. Such election will be effective on a prospective basis
beginning with the payroll period that occurs as soon as administratively practicable following receipt of the election by the
Committee or its authorized designee.
3.3 Amendment or Suspension of Election . Members may change (including, suspend) their existing Excess Regular
Earnings Deferrals election under this Plan during the Plan Year by filing a new election in accordance with the prescribed
administrative guidelines. Such new election will be effective on a prospective basis beginning with the payroll period that occurs as
soon as administratively practicable following receipt of the election by the Committee or its authorized designee. A Member shall
not be permitted to make up suspended Excess Regular Earnings Deferrals, and during any period in which a Members Excess
Regular Earnings Deferrals are suspended, the Employer Accruals under the Plan with respect to Excess Regular Earnings Deferrals
shall also be suspended. A Member who receives a hardship withdrawal under the Qualified Plan shall be suspended from making
Excess Regular Earnings Deferrals hereunder for a period of six (6) months from the date of such withdrawal.
3.4 Amount of Elections . Each election filed by an Eligible Employee must specify the amount of Excess Regular
Earnings Deferrals in a whole percentage from 1% to 20% of the Members Excess Regular Earnings unless the Committee
establishes a lesser percentage for the Plan Year; provided, however, that, with respect to an Eligible Employee who is also eligible
to participate in the Qualified Plan, the rate of Excess Regular Earnings Deferrals hereunder for any payroll period shall not exceed
the rate at which the Member was contributing to the Qualified Plan on a combined pre-tax and post-tax basis for the current year.
SECTION 4 . EMPLOYER ACCRUALS .
4.1 General Rule .
An Employer Accrual will be credited to a Members Account with respect to the eligible portion of Excess Regular
Earnings Deferrals of such Member at the applicable rate of Matching Contributions with respect to After-Tax Contributions
and Before-Tax Contributions under the Qualified Plan. The Employer Accrual shall be credited as soon as practicable following
the payroll period for which the Excess Regular Earnings Deferrals are made. The eligible portion of a Members Excess Regular
Earnings Deferrals shall be limited to six percent (6%) of such Excess Regular Earnings for each payroll period. In addition, an
Employer Accrual will be credited as of the end of each Plan Year to a Members Account equal to the difference between (i) the
amount that would have been credited to the Members account under the Qualified Plan as a Matching Contribution, including
Additional Contribution, if any, if the Limitations were not applicable to the Member under the Qualified Plan during such Plan Year
and (ii) the Matching Contributions, including Additional Contributions, if any, actually credited to the Members account under
the Qualified Plan during such Plan Year. Lastly, an Employer Accrual will be credited to the Account of a Member who elects to
defer his bonus under the Warner-Lambert Company Incentive Compensation Plan (ICP). The amount of such Employer Accrual
will be equal to the product of: (i) six percent (6%) of the bonus deferred under the ICP, and (ii) the applicable rate of Matching
Contributions with respect to After-Tax Contributions and Before-Tax Contributions under the Qualified Plan. The Employer
Accrual shall be credited as soon as practical following the payroll period in which the bonus is deferred.
4.2 Special Employer Accrual for Certain Former Warner-Lambert Employees .
In the case of any Eligible Employee who (i) was an Eligible Participant under the Warner-Lambert Savings and Stock
Plan as in effect on January 31, 2002 (the Warner-Lambert Plan), (ii) is a participant under the Warner-Lambert Enhanced
Severance Plan on May 15, 2003, (iii) has completed at least three years of Plan membership (including Warner-Lambert Plan
membership) under the Qualified Plan as of May 15, 2003, and (iv) was an Eligible Employee on May 15, 2003, an Employer Accrual
shall be credited to such Eligible Employees Account in an amount equal to the difference between (a) and (b) below:
(a) the Matching Contribution which would have been made to the Eligible Employees account under the
Qualified Plan with respect to the period June 1, 2002 through May 15, 2003 if such Matching Contribution had been based on the
terms of Article 5 of the Warner-Lambert Plan, assuming an additional matching contribution rate of 65%; and
(b) the Matching Contribution actually made to the Eligible Employees account under the Qualified Plan with
respect to the period June 1, 2002 through May 15, 2003.
This Employer Accrual shall be credited as soon as practicable following the payroll period which includes May 15, 2003.
4.3 Special Employer Accrual for Certain Former Agouron Employees .
In the case of any Eligible Employee who (i) was an Eligible Employee under the Agouron Pharmaceuticals, Inc. 401(k)
Plan as in effect on January 31, 2002 (the Agouron Plan), (ii) was a participant under the Warner-Lambert Enhanced Severance
Plan on May 15, 2003, and (iii) was an Eligible Employee on May 15, 2003, an Employer Accrual shall be credited to such Eligible
Employees Account in an amount equal to the difference between (a) and (b) below:
(a) the Matching Contribution which would have been made to the Eligible Employees account under the
Qualified Plan with respect to the period June 1, 2002 through May 15, 2003 if such Matching Contribution had been based on the
terms of Article 6.4 of the Agouron Plan, assuming an additional matching contribution rate of 35%; and
(b) the Matching Contribution actually made to the Eligible Employees Account under the Qualified Plan with
respect to the period June 1, 2002 through May 15, 2003.
This Employer Accrual shall be credited as soon as practicable following the payroll period which includes May 15, 2003.
SECTION 5 . INDIVIDUAL ACCOUNT .
5.1 Creation of Accounts . The Company will maintain an Account under the Plan in the name of each Member. Each
Members Account will be credited with the amount of the Members Excess Regular Earnings Deferrals, Employer Accruals, and
will be adjusted for earnings and losses thereon. In the case of Members covered under both the excess benefit and top-hat
portions of the Plan, separate accounts will be maintained to reflect the Members interest in each such portion of the Plan.
5.2 Payment Account Option Election . Each Member shall elect the particular Payment Option that is to apply to
amounts credited to the Members Account. In order for a Payment Option election to be effective, it must be made (i) no later than
ninety (90) days (one hundred and eighty (180) days for employment terminations on or after January 1, 2003) prior to the date the
Member terminates employment with the Controlled Group, and (ii) in a taxable year preceding the taxable year in which payment
would otherwise be made or commence. In the absence of a timely election, payment of the Members Account will be made in
accordance with the most recent Payment Option election which satisfies the requirements of the immediately preceding sentence or,
in the absence of any such Payment Option election, in five (5) substantially equal annual installments commencing as soon as
practicable
following the end of the Plan Year in which the Member terminates employment with the Controlled Group. The foregoing
notwithstanding, in any case where the value of the Members Plan Account is less than ten percent (10%) of the value of the
Members interest in both the Plan and the Qualified Plan, payment of the Members Account shall be made in a lump sum as soon
as practicable following the end of the Plan Year in which the Member terminates employment with the Controlled Group. Upon a
Member becoming Disabled, as determined under the Qualified Plan, the balance of the Members Account shall be paid in a lump
sum as soon as practicable after such determination is made.
5.3 Investments . All Excess Regular Earnings Deferrals will be credited with an amount equal to the amount which would
have been earned had such amounts been actually invested in one or more of the Funds (other than the Pfizer Match Fund)
available for investment under the Qualified Plan, as the Member may elect from time to time, in one percent (1%) increments. The
portion of the Members Account attributable to Employer Accruals shall be deemed to be invested in the Pfizer Match Fund. Rules
similar to those which govern the Qualified Plan shall apply for purposes of determining the value of the deemed investments and
the timing, frequency and permissibility of investment transfers, except that no diversification of Employer Accruals which are
deemed to be invested in the Pfizer Match Fund shall be permitted. No provision of this Plan shall require the Company or any other
Employer to actually invest any amount in any Fund or in any other investment vehicle. The Plan is an unfunded plan that is not
subject to the funding requirements of ERISA, meaning that there are no actual investments held in a trust. The Accounts represent
unsecured obligations of the Company, and no funds are set aside from the Companys general assets to cover such Accounts. The
Plan is subject to the full faith and credit of the Company, and Members would be general creditors in the event of the Companys
insolvency.
With respect to a Member subject to Section 16 of the Securities Exchange Act of 1934, an election to transfer a portion of
his Account into, or out of, the Pfizer Company Stock Fund shall be permitted only if the Member has not elected during the
immediately preceding six months to transfer out of, or into, such Fund within this Plan, the Pfizer Company Stock Fund under the
Qualified Plan or the unit account within the Pfizer Inc Nonfunded Deferred Compensation and Unit Award Plan for Non-Employee
Directors, the Pfizer Inc Retainer Units Award Plan for Non-Employee Directors, or the Pfizer Inc Deferred Compensation Plan.
SECTION 6 . PAYMENT .
6.1 Payment of Benefits . A Member shall be paid the balance of his Account following termination of employment in
accordance with the Payment Option elected by the Member. Upon the death of a Member, the Members beneficiary shall be paid
the balance of the Members Account in a lump sum as soon as practicable after the death of the Member.
6.2. Benefits Subject to Withholding . The benefits payable under this Plan shall be subject to the deduction of any
federal, state, or local income taxes, employment taxes or other taxes which are required to be withheld from such payments by
applicable laws and regulations. Any employment taxes owed by the Member with respect to any deferral, accrual or benefit payable
under this Plan may be withheld from other compensation of the Member in the year in which such tax liability accrues.
SECTION 7 . NATURE OF INTEREST OF MEMBER .
Participation in this Plan will not create, in favor of any Member, any rights or lien in or against any of the assets of the
Company or any Employer, and all amounts of Excess Regular Earnings deferred hereunder shall at all times remain an unrestricted
asset of the Company or the Employer. A Members rights to benefits payable under the Plan are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, or encumbrance. Nothing contained in this Plan, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship, between any
Employer and a Member or any person, and the Companys and each Employers promise to pay benefits hereunder shall at all times
remain unfunded as to the Member.
SECTION 8 . BENEFICIARY DESIGNATION .
A Members beneficiary under this Plan will automatically be the same as such Members beneficiary under the Qualified
Plan unless a separate designation of beneficiary form for this Plan has been properly filed with the Committee or its authorized
designee in accordance with any rule established by the Committee. In the absence of a designation of specific beneficiary under
either the Qualified Plan or this Plan, which beneficiary survives the Member, upon the Members death, payment of his Account
shall be made to his estate in a lump sum as soon as practicable.
SECTION 9 . ADMINISTRATION .
9.1 Committee . This Plan will be administered by the Committee.
9.2 Powers of the Committee . The Committees powers under this Plan are the same as are described in the Qualified Plan
and include, but are not limited to, the power:
(i) to determine who are Eligible Employees for purposes of participation in the Plan;
(ii) to interpret the terms and provisions of the Plan and to determine any and all questions arising under the
Plan, including without limitation, the right to remedy possible ambiguities, inconsistencies, or omissions
by a general rule or particular decision; and
(iii) to adopt rules consistent with the Plan.
9.3 Claims Procedure . The Committee shall make, in its sole discretion, all determinations arising in the administration,
construction or interpretation of the Plan including the right to construe disputed or doubtful Plan terms and provisions, and any
such determination shall be conclusive and binding on all persons, except as otherwise provided by law. Any claim by a Member or
any other person for any benefit alleged to be due under the Plan shall be made in writing to the Committee. Within 90 days of the
filing of such claim, unless special circumstances require an extension of such period, such person will be given notice in writing of
the approval or denial of the claims. If the claim is denied, the notice will set forth the reason for the denial, the Plan provisions on
which the denial is based, an explanation of what other material or information, if any, is needed to perfect the claim, and an
explanation of the claims review procedure. The claimant may request a review of such denial within 60 days of the date of receipt of
such denial by filing notice in writing with the Committee. The claimant will have the right to review pertinent Plan documents and to
submit issues and comments in writing. The Committee will respond in writing to a request for review within 60 days of receiving it,
unless special circumstances require an extension of such period. The Committee, in its discretion, may request a meeting to clarify
any matters deemed appropriate.
9.4 Limitation on Period for Filing Claims . No claim for benefits based upon a claim that contributions were not properly
made under this Plan shall be approved under this Plan, and no action may be brought for benefits under this Plan pursuant to the
denial of such a claim pursuant to Section 9.3 of this Plan, unless such claim for benefits is duly filed under Section 9.3 of this Plan
no later than the last day of the second Plan Year beginning after the Plan Year in which the claim alleges that the contributions
should have been credited.
SECTION 10 . NO EMPLOYMENT RIGHTS .
No provisions of the Plan or any action taken by the Company, the Board of Directors, the Committee, or any of their
properly authorized representatives shall give any person any right to be retained in the employ of any Employer, and the right and
power of the Company or any Employer to dismiss or discharge any Member is specifically reserved.
SECTION 11 . AMENDMENT, SUSPENSION, AND TERMINATION .
The Board of Directors or its authorized designee shall have the rights to amend, suspend, or terminate the Plan at any time,
except that the Committee may make non-substantive administrative changes to this Plan so as to conform with or take advantage of
governmental requirements, statutes or regulations. No amendment, modification or termination shall, without the consent of a
Member, adversely affect the amount of the Members benefits in his or her Account as of the date of such amendment,
modification or termination. Any modification, amendment or termination may accelerate the time at which any Member is entitled to
a distribution. In the event the Plan is terminated, the Committee shall continue to administer the Plan in accordance with the
relevant provisions thereof until the Members benefits have been paid hereunder.
Pharmacia Savings Plus Plan as in effect on 12/31/04. Except as otherwise specifically provided for in the Plan, the provisions of this
Plan shall apply to Grandfathered Amounts transferred from the Pharmacia Savings Plus Plan
Pharmacia Savings Plus+Plan
Amended & Restated Effective as of July 1, 2002
PURPOSE
In recognition of the services provided by certain key employees, the Board of Directors of Pharmacia & Upjohn, Inc.
(P&U) adopted a deferred compensation plan (the Plan) to make additional retirement benefits and increased financial security,
on a tax-deferred basis, available to those individuals, effective July 1, 1999. Under the Plan, P&U provided a vehicle that will allow
additional future compensation to be paid to key employees so that such employees may be retained and their productive efforts
encouraged.
Effective September 22, 1999, the Board of Directors of P&U amended and restated the Plan to permit a new Affiliate,
Sugen, Inc., to join the Plan as a Company and permit its Eligible Employees, as defined below, to make an Incentive Deferral, as
defined below, as well as other forms of Compensation Deferrals, as defined below, when and if eligible.
On March 31, 2000, the Board of Directors of P&U amended and restated the Plan to reflect the transaction by which P&U
became a wholly-owned subsidiary of Pharmacia Corporation (Pharmacia). On December 7, 2000, the Board of Directors of
Pharmacia amended the Plan to (i) require deferral under this Plan of any incentive compensation earned under the Pharmacia
Corporation Cash Long-Term Incentive Plan and (ii) permit deferral under this Plan of benefits payable under the Pharmacia
Corporation Key Executive Pension Plan or payment under any other individual contractual pension arrangements for key
executives at the Participants election. The Plan was subsequently amended to reflect the Companys adoption of the Pharmacia
Corporation Long-Term Performance Share Unit Incentive Plan, effective January 1, 2002.
Effective July 1, 2002, the Plan was amended to conform to Pharmacias Retirement Choice Program by including a
restoration arrangement and a bonus deferral arrangement. Also effective July 1, 2002, the Plan was amended to assume the
obligations of the Pharmacia Corporation ERISA Parity Savings and Investment Plan and to make certain other changes relating to a
Change in Control of Pharmacia. Accordingly, the Plan, as amended and restated as of the Amendment Effective Date, as defined
below, now reads as follows:
DEFINITIONS
Account . Account means, with respect to a Participant, the account established on the books of the Company pursuant
to Section 5.1 and recording the benefit due to the Participant under the Plan.
Affiliate . Affiliate means any firm, partnership, or corporation that directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with Pharmacia. Affiliate also includes any other
organization similarly related to Pharmacia that is designated as such by the Board.
Base Salary . Base Salary means the sum of an Eligible Employees W-2 compensation paid by the Company to the
Eligible Employee including any pre-tax deferrals and benefits deducted from gross income including, but not limited to, any
amounts that are excluded from gross income under section 125, 402(e)(3), or 132(f) of the Code and any deferrals under this Plan.
Base Salary shall exclude any one-time or other special bonuses, moving and relocation expenses, stock options, or severance
payments.
Base Salary Deferral . Base Salary Deferral means the portion of a Participants Base Salary that the Participant has
elected to defer pursuant to Article 4.
Bonus . Bonus means any bonus or other incentive compensation awarded by the Company to the Eligible Employee
under such plans as specifically refer to this Plan and under such other plans as Pharmacias Senior Vice President Human
Resources may from time to time designate.
Bonus Deferral . Bonus Deferral means the portion of a Participants Bonus that the Participant has elected to defer
pursuant to Article 4.
Beneficiary . Beneficiary means the person or persons designated as such in accordance with Section 10.3.
Board . Board means the Board of Directors of Pharmacia.
Cause . Cause means, if applicable to the Participant, the definition of that term used in the written employment
agreement between the Participant and the Company or an Affiliate as in effect on the date of the Participants termination of
employment or in the Companys Change in Control Severance Benefit Plan. Otherwise, the term Cause shall mean (i) a material
breach by the Participant of the Participants duties and responsibilities (other than as a result of incapacity due to physical or
mental illness) which is demonstrably willful and deliberate on the part of the Participant, which is committed in bad faith or without
reasonable belief that such breach is in the best interests of the Company or an Affiliate, and which is not remedied within 30 days
after receipt of written notice from the Company or an Affiliate specifying such breach; or (ii) the Participants conviction of a felony
which is materially and demonstrably injurious to the Company or an Affiliate.
Change in Control . Change in Control means:
(1) the acquisition by any individual, entity, or group (a Person), including any person within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the Exchange Act), of beneficiary ownership within the
meaning of Rule 13d-3 promulgated under the Exchange Act, of 33% or more of either (i) the then outstanding shares of Common
Stock of Pharmacia (the Outstanding Company Common Stock) or (ii) the combined voting power of the then outstanding
securities of Pharmacia entitled to vote generally in the election of directors (the Outstanding Company Voting Securities):
provided, however, that the following acquisitions of Outstanding Company Common Stock or Outstanding Company Voting
Securities shall not constitute a Change in Control: (A) any acquisition by Pharmacia, (B) any acquisition by an employee benefit
plan (or related trust) sponsored or maintained by Pharmacia or any corporation controlled by Pharmacia, or (C) any acquisition by
any corporation pursuant to a reorganization, merger, or consolidation involving Pharmacia, if, immediately after such reorganization,
merger, or consolidation, each of the conditions described in clauses (i), (ii), and (iii) of subsection (3) of this Section shall be
satisfied; and provided further that, for purposes of clause (A), if any Person (other than Pharmacia or any employee benefit plan (or
related trust) sponsored or maintained by Pharmacia or any corporation controlled by Pharmacia) shall become the beneficial owner
of 33% or more of the Outstanding Company Common Stock or 33% or more of the Outstanding Company Voting Securities by
reason of any acquisition of Outstanding Company Common Stock or Outstanding Company Voting Securities by Pharmacia and
such Person shall, after such acquisition by Pharmacia, becomes the beneficial owner of any additional shares of the Outstanding
Company Stock or any additional Outstanding Voting Securities and such beneficial ownership is publicly announced, such
additional beneficial ownership shall constitute Change in Control;
(2) individuals who, as of the date hereof, constitute the Board (the Incumbent Board) cease for any reason to
constitute at least a majority of such Board; provided, however, that any individual who becomes a director of Pharmacia
subsequent to the date hereof whose election, or nomination for election by Pharmacias stockholders, was approved by the vote of
at least three-quarters of the directors then comprising
the Incumbent Board (either by a specific vote or by approval of the proxy statement of Pharmacia in which such person is named as
a nominee for director, without objection to such nomination) shall be deemed to have been a member of the Incumbent Board; and
provided further, that no individual who was initially elected as a director of Pharmacia as a result of an actual or threatened election
contest, as such terms are used in Rule 14a11 of Regulation 14A promulgated under the Exchange Act, or any other actual or
threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall be deemed to have been a
member of the Incumbent Board;
(3) approval by the stockholders of Pharmacia of a reorganization, merger, or consolidation involving Pharmacia unless, in
any such case, immediately after such reorganization, merger, or consolidation, (i) more than 50% of the then outstanding shares of
common stock of the corporation resulting from such reorganization, merger, or consolidation and more than 50% of the combined
voting power of the then outstanding securities of such corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the individuals or entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to
such reorganization, merger, or consolidation and in substantially the same proportions relative to each other as their ownership,
immediately prior to such reorganization, merger, or consolidation, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be, (ii) no Person (other than Pharmacia, any employee benefit plan (or
related trust) sponsored or maintained by Pharmacia or the corporation resulting from such reorganization, merger, or consolidation
(or any corporation controlled by Pharmacia), or any Person which beneficially owned, immediately prior to such reorganization,
merger, or consolidation, directly or indirectly, 33% or more of the Outstanding Company Common Stock or the Outstanding
Company Voting Securities, as the case may be) beneficially owns, directly or indirectly, 33% or more of the then outstanding shares
of common stock of such corporation or 33% or more of the combined voting power of the then outstanding securities of such
corporation entitled to vote generally in the election of directors, and (iii) at least a majority of the members of the board of directors
of the corporation resulting from such reorganization, merger, or consolidation were members of the Incumbent Board at the time of
the execution of the initial agreement or action of the Board providing for such reorganization, merger, or consolidation; or
(4) (i) approval by the stockholders of Pharmacia of a plan of complete liquidation or dissolution of Pharmacia or (ii) the
sale or other disposition of all or substantially all of the assets of Pharmacia other than to a corporation with respect to which,
immediately after such sale or other disposition, (A) more than 50% of the then outstanding shares of common stock thereof and
more than 50% of the combined voting power of the then outstanding securities thereof entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities
immediately prior to such sale or other disposition and in substantially the same proportions relative to each other as their
ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities, as the case may be, (B) no Person (other than Pharmacia, any employee benefit plan (or related trust)
sponsored or maintained by Pharmacia or such corporation (or any corporation controlled by Pharmacia), or any Person which
beneficially owned, immediately prior to such sale or other disposition, directly or indirectly, 33% or more of the Outstanding
Company Common Stock or the Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 33% or more of the then outstanding shares of common stock thereof entitled to vote generally in the election of
directors, and (C) at least a majority of the members of the board of directors thereof were members of the Incumbent Board at the
time of the execution of the initial agreement or action of the Board providing for such sale or other disposition (or were approved
directly or indirectly by the Incumbent Board).
CIC Consummation . CIC Consummation means the consummation of a transaction approved by stockholders as
described in paragraphs (3) or (4) of the definition of Change in Control.
Code . Code means the Internal Revenue Code of 1986, as amended from time to time.
Committee . Committee means the Compensation Committee appointed by the Board which shall administer the Plan and
which also may act for the Company or the Board in making decisions and performing specified duties under the Plan. The
Committee may delegate any or all of its duties under the Plan in which case the term Committee shall apply to the Committees
delegate to the same extent as it would have applied to the Committee.
Company . Company means Pharmacia and any Affiliate that is authorized by the Board to adopt the Plan and to cover its
Eligible Employees and whose designation as such has become effective upon acceptance of such status by the board of directors
of the Affiliate. An Affiliate may revoke its acceptance of such designation at any time, but until such acceptance has been revoked,
all the provisions of the Plan and amendments thereto shall apply to the Eligible Employees of the Affiliate. In the event the
designation is revoked by the board of directors of an Affiliate, the Plan shall be deemed terminated only with respect to such
Affiliate.
Company Contributions . Company Contributions means those matching contributions credited to the Participants
Account by the Company at a rate equal to the matching contribution rate under the Savings Plan applicable to the Participant.
Company Contributions shall be deemed to have been made in phantom shares of the Voting Securities valued on the basis of the
closing price of the Voting Securities on the principal exchange on which the Voting Securities are traded on the day the Company
Contribution is credited to the Participants Account.
Compensation Deferral . Compensation Deferral means that portion of Base Salary and/or Bonus as to which a Participant
has made an irrevocable election to defer receipt until the Plan Year following the Participants Termination Date, except as otherwise
specifically provided herein.
Disabled . Disabled means a mental or physical condition that qualifies a Participant for total and permanent disability
benefits under a Company sponsored long term disability plan.
Earnings Crediting Options . Earnings Crediting Options means the deemed investment options selected by the
Participant from time to time pursuant to which deemed earnings are credited to the Participants Account.
Effective Date . Effective Date means the effective date of the Plan which is July 1, 1999. Amendment Effective Date
means July 1, 2002.
Eligible Employee . Eligible Employee means, with respect to the bonus deferral portion of the Plan, an Employee who
is eligible to participate in the Savings Plan and whose annualized rate of Base Salary, determined at the time of enrollment, exceeds
the compensation limit of section 401(a)(17) of the Code, as in effect from time to time. Eligible Employee means, with respect to
the restoration portion of the Plan, either an Employee who meets the definition of Eligible Employee in the preceding sentence or
an Employee whose annualized rate of Base Salary, determined at the time of enrollment, exceeds the compensation limit of section
401(a)(17) of the Code, as in effect from time to time, when combined with the Employees most recently paid Bonus. Eligible
Employee means with respect to the rollover portion of the Plan, an Employee who meets the definition in the preceding sentence
and who is eligible for a rollover as described in Section 6.3.
Employee . Employee means any individual employed by the Company on a regular, full-time basis (in accordance with
the personnel policies and practices of the Employer), including citizens of the United States employed outside of their home
country and resident aliens employed in the United States; provided, however, that to qualify as an Employee for purposes of the
Plan, the individual must be a member of a group of key management or other highly compensated employees within the meaning
of Sections 201, 301, and 401 of the Employee Retirement Income Security Act of 1974, as amended.
Enrollment Agreement . Enrollment Agreement means the authorization form, which an Eligible Employee files with the
Committee to participate under Article 4 of the Plan.
Participant . Participant means an Eligible Employee who has filed a completed and executed Enrollment Agreement with
the Committee or its designee or is otherwise automatically participating in the Plan in accordance with the provisions of Article 4 or
by reason of a rollover pursuant to Section 6.3. In the event of the death or incompetency of a Participant, the term shall mean his
personal representative or guardian. An individual shall remain a Participant until that individual has received full distribution of all
amounts credited to the Participants Account.
Pharmacia . Pharmacia means Pharmacia Corporation and any successor by merger or otherwise.
Plan . Plan means this plan, called the Pharmacia Savings Plus+Plan, as amended from time to time.
Plan Year . Plan Year means the 12 month period beginning on each January 1 and ending on the following December 31
except that the first Plan Year of this amended and restated Plan shall begin on the Amended Effective Date and end on the
following December 31.
Retirement Date . Retirement Date means the date that the Participant attains age 50.
Rollover Deferral . Rollover Deferral means the amount credited to the Participant under this Plan pursuant to Section 6.3.
Savings Plan . Savings Plan means the Pharmacia Savings Plan, as it may be amended from time to time, and any
successor thereof.
Termination Date . Termination Date means the date of termination of a Participants service with the Company and its
Affiliates and shall be determined without reference to any compensation continuation arrangement or severance benefit
arrangement that may be applicable.
Voting Securities . Voting Securities means the common securities of Pharmacia, which carry the right to vote generally in
the election of directors.
ADMINISTRATION OF THE PLAN AND DISCRETION
3.1 Subject to the terms of the Plan, the Committee shall have full power and authority to interpret the Plan, to prescribe,
amend, and rescind any rules, forms, and procedures as it deems necessary or appropriate for the proper administration of the Plan
and to make any other determinations and to take any other such actions as it deems necessary or advisable in carrying out its
duties under the Plan. All action taken by the Committee arising out of, or in connection with, the administration of the Plan or any
rules adopted thereunder, shall, in each case, lie within its sole discretion, and shall be final, conclusive, and binding upon the
Company, the Board, all Employees, all Beneficiaries of Employees, and all persons and entities having an interest therein.
3.2 The Committee may adjust the phantom shares of Voting Securities to reflect a change in corporate capitalization
(such as a stock split or stock dividend), or a corporate transaction (such as a merger, consolidation, separation, reorganization, or
partial or complete liquidation), or to reflect equitably the occurrence of any extraordinary event, any change in applicable
accounting rules or principles, any change in Pharmacias method of accounting, any change in applicable law, any change due to a
merger, consolidation, acquisition, reorganization, combination of shares, or other changes in Pharmacias corporate structure or
share, or any other change of similar nature.
3.3 The Company shall indemnify and hold harmless each member of the Committee from any and all claims, losses,
damages, expenses (including counsel fees), and liability (including any amounts paid in settlement of any claim or any other matter
with the consent of the Board) arising from any act or omission of such member, except when the same is due to gross negligence or
willful misconduct.
3.4 Any decisions, actions, or interpretations to be made under the Plan by the Company, the Board, or the Committee
shall be made in its respective sole discretion, not as a fiduciary and need not be uniformly applied to similarly situated individuals
and shall be final, binding, and conclusive on all persons interested in the Plan.
PARTICIPATION
4.1 Election to Participate . Each Eligible Employee shall be offered the opportunity to participate in the portion or
portions of the Plan for which he is eligible on an annual basis or as otherwise determined by the Committee. An Eligible Employee
may enroll in the Plan for a Plan Year by filing a completed and fully executed Enrollment Agreement with the Committee or its
designee by the last day of November of the preceding year for which the election is to be effective or such other time as the
Committee determines (for the Plan Year beginning on the Amendment Effective Date, the executed Enrollment Agreement shall be
due no later than June 20, 2002 or such other time as the Committee determines). For an Eligible Employee who begins employment
with the Company after the end of the enrollment period, such Eligible Employee shall have 31 days after being hired to file a
completed and fully executed Enrollment Agreement with the Committee or its designee. Participation in this Plan shall be automatic
for any Eligible Employee with a Rollover Deferral.
(a) Restoration Portion . With respect to the restoration portion of the Plan, each active Participant shall
irrevocably elect on an Enrollment Agreement (i) whether to convert his or her pre-tax deferrals under the Savings Plan to after-tax
deferrals under the Savings Plan upon reaching the annual elective deferral limit under section 402(g) of the Code; (ii) if the
Participant does elect to convert pre-tax deferrals under the Savings Plan to after-tax deferrals under the Savings Plan, whether to
convert the after-tax deferrals under the Savings Plan to pre-tax deferrals under the Plan upon reaching either the annual addition
limit under section 415 of the Code or the annual compensation limit under section 401(a)(17) of the Code; and (iii) if the Participant
has otherwise elected to make after-tax deferrals under the Savings Plan, whether to convert these after-tax deferrals to pre-tax
deferrals under the Plan upon reaching either the annual elective deferral limit under section 402(g) of the Code, the annual addition
limit under section 415 of the Code, or the annual compensation limit under section 401(a)(17) of the Code.
(b) Bonus Deferral Portion . With respect to the bonus deferral portion of the Plan, an active Participant shall
irrevocably elect on an Enrollment Agreement (i) whether to defer all or a percentage of his or her Bonus under the Plan, and (ii)
whether to defer an additional percentage of his or her Base Salary under the Plan over and above the amount deferred under the
restoration portion of the Plan. Any amount elected to be deferred under the Plan shall be made in whole percentages.
(c) Rollover Portion . With respect to the rollover portion of the Plan each Participant shall elect on an
Enrollment Agreement the Earnings Crediting Options for his or her Account if the Participant does not already have an election in
effect. Until such election is provided, the Committee shall determine the Earnings Crediting Options applicable to the Participants
Account.
The Committee may establish minimum or maximum amounts that may be deferred under this Section and may change such
standards from time to time. Any such limits shall be communicated by the Committee to the Participants prior to the commencement
of a Plan Year. Each Eligible Employee shall also provide in the Enrollment Agreement such other information as the Committee shall
require.
4.2 Company Contributions . The Company shall credit to each Participants Account a Company Contribution based
upon the amount of the Participants Base Salary Deferral and/or Bonus Deferral. Company Contributions shall be credited as
frequently as determined by the Committee acting on behalf of the Company. Unless otherwise determined by the Committee,
Participants who participate in Option 1 under Pharmacias Retirement Choice Program shall receive a dollar for dollar matching
contribution on a payroll period basis for each dollar that they defer under the Plan up to 5% of their Compensation and Participants
who participate in Option 2 under Pharmacias Retirement Choice Program shall receive an age-weighted matching contribution
identical to the matching contribution offered under the Savings Plan up to 5% of their Compensation.
ACCOUNTS
5.1 Creation of Accounts . The Committee shall establish and maintain separate Accounts with respect to each
Participant. The amount of the Participants Compensation Deferral and Rollover Deferral shall be credited by the Company to the
Participants Account no later than the first day of the month following the month in which such Compensation would otherwise
have been paid and immediately upon rollover pursuant to Section 6.3. The Participants Account shall be reduced by the amount of
payments made by the Company to the Participant or the Participants Beneficiary pursuant to this Plan.
5.2 Compensation Deferrals . A Participants Account shall be credited with Compensation Deferrals in the following
amount and manner:
(a) Restoration Portion . If a Participant elects to convert his or her pre-tax deferrals under the Savings Plan
directly to pre-tax deferrals under the Plan upon reaching the annual elective deferral limit under section 402(g) of the Code, the
Participants Base Salary Deferrals shall commence on the date on which the attainment of the annual elective deferral limit under
section 402(g) of the Code would have been reached if the Participants before-tax contribution rate under the Savings Plan that was
in effect on the last day of the applicable enrollment period remained in effect throughout the remainder of the Plan Year. The
amount of such Base Salary Deferrals shall be equal to the total percentage of Compensation that the Participant has elected to defer
as pre-tax and after-tax deferrals under the Savings Plan. If a Participant elects to convert his or her pre-tax deferrals under the
Savings Plan to after-tax deferrals under the Savings Plan upon reaching the annual elective deferral limit under section 402(g) of the
Code, the Participants Base Salary Deferrals shall commence on the date on which the attainment of the annual addition limit under
section 415 of the Code or the annual compensation limit under section 401(a)(17) of the Code would have been reached if the
Participants before and after-tax contribution rates under the Savings Plan that were in effect on the last day of the applicable
enrollment period remained in effect throughout the remainder of the Plan Year. The amount of such Base Salary Deferrals shall be
equal to the percentage that the Participant has elected to defer as before-tax and after-tax deferrals under the Savings Plan.
(b) Bonus Deferral Portion . If a Participant has elected to defer all or a portion of his or her Bonus, the
Participants Bonus Deferral shall commence on the date that the Participant would otherwise have received such Bonus in an
amount equal to the percentage elected by the Participant. If a Participant has elected to make additional Base Salary Deferrals under
the bonus deferral portion of the Plan, the Participants additional Base Salary Deferrals shall commence on the date on which the
attainment of the annual elective deferral limit under section 402(g) of the Code, the annual addition limit under section 415 of the
Code, or the annual compensation limit under section 401(a)(17) of the Code would have been reached if the Participants before and
after-tax contribution rates under the Savings Plan that were in effect on the last day of the applicable enrollment period remained in
effect throughout the remainder of the Plan Year in an amount equal to the percentage that the Participant has elected to defer under
the bonus deferral portion of the Plan. The combined maximum amount that a Participant may defer under the Plan and the Savings
Plan shall be 80% of the Participants Base Salary.
5.3 Earnings on Accounts . A Participants Account shall be credited with earnings in accordance with the Earnings
Crediting Options elected by the Participant from time to time. Participants may allocate the sums credited to their Account among
the Earnings Crediting Options available under the Plan only in whole percentages; provided, however, that the Company
Contribution shall be deemed to be invested, and shall remain, in phantom shares of Voting Securities until the Participant reaches
age 50. No Rollover Deferral shall be required to be deemed invested in phantom shares of Voting Securities. The deemed rate of
return, positive or negative, credited under each Earnings Crediting Option is based upon the actual investment performance of the
corresponding investment portfolios of the Savings Plan, or such other investment fund(s) as the Committee may designate from
time to time, and shall equal the total return of such investment fund net of asset based charges, including, without limitation, money
management fees, fund expenses, mortality and expense risk insurance contract charges, and such other administrative expenses as
the Committee determines should be charged to the Participants Accounts. The Committee reserves the right, on a prospective
basis, to add or delete Earnings Crediting Options; provided, however, that, following a CIC Consummation, the Committee (a) may
not alter the Earnings Crediting Options (except to the extent that a change is made to the corresponding investment portfolios of
the Savings Plan or, if such Plan is terminated, the comparable plan in which Employees of the Company are eligible to participate)
and (b) may not increase any of the expenses charged to a Participants Account except to the extent such expenses apply to the
corresponding investment portfolio maintained under the Savings Plan and are charged to Participants in that plan.
5.4 Earnings Crediting Options . Notwithstanding that the rates of return credited to Participants Account under the
Earnings Crediting Options are based upon the actual performance of the corresponding portfolios of Savings Plan, or such other
investment funds as the Committee may designate, the Company shall not be obligated to invest any Compensation deferred by
Participants under this Plan, Company Contributions, or any other amounts, in such portfolios or in any other investment funds.
5.5 Changes in Earnings Crediting Options . A Participant may change the Earnings Crediting Options to which the
Participants Account is deemed to be allocated with whatever frequency is determined by the Committee which shall not be less
than four times per Plan Year. Each such change may include (a) reallocation of the Participants existing Account in whole
percentages and/or (b) change in investment allocation of amounts to be credited to the Participants Account in the future, as the
Participant may elect. Following a CIC Consummation, the Committee shall not reduce the frequency of permitted changes.
5.6 Valuation of Accounts . The value of a Participants Account as of any date shall equal the amounts theretofore
credited to such Account, including any earnings (positive or negative) deemed to be earned on such Account in accordance with
Section 5.3 through the day preceding such date, less the amounts deducted from such Account.
5.7 Statement of Account . The Committee shall provide to each Participant, not less frequently than quarterly, a
statement setting forth in reasonable detail the balance standing to the credit of each Participant in the Participants Account and
the amount credited to and debited from such Account since the prior statement.
DISTRIBUTION OF ACCOUNTS
6.1 Distribution . Benefits shall be distributed in the Plan Year following (i) the Participants Retirement or (ii) the Plan
Year in which occurs the Participants Termination Date, other than on account of death or becoming Disabled, as follows:
(a) Benefits Upon Retirement . In the case of a Participant whose Service with the Employer terminates on or
after his Retirement Date, the Participants Account shall be distributed in one of the following methods, as elected by the
Participant in writing either in the Enrollment Agreement or in a separate election made at least three months prior to the beginning
of the Plan Year in which distribution is to
occur: (i) in a lump sum; or (ii) in annual installments not in excess of 15, as elected by the Participant. Any lump-sum benefit payable
in accordance with this paragraph shall be paid in, but not later than January 31 of the Plan Year following the Plan Year in which
occurs the Participants Retirement Date valued as of the last business day of the Plan Year preceding the date of payment. Annual
installment payments, if any, shall commence not later than January 31 of the Plan Year following the Plan Year in which occurs the
Participants Retirement and each remaining installment shall be paid no later than each January 31 thereafter. Each such installment
shall be in an amount equal to (i) the value of the Participants Account as of the last business day of the Plan Year preceding the
date of payment, divided by (ii) the number of annual installment payments elected by the Participant in the Enrollment Agreement
or election form that remain to be paid. A Participant may change the election regarding the manner of payment of the Participants
Account at any time prior to the October 1 preceding the Plan Year in which occurs the later of the Participants Retirement Date and
his or her Termination Date. If a Participant has made a timely election but his Termination Date occurs prior to the end of the Plan
Year in which the election was made, then payment will be made pursuant to his or her prior election unless the Participants
Termination Date is after a CIC Consummation (in which case the Participants most recent election shall be given effect). Such
election may also specify that payment shall be made or commence as of the beginning of any later Plan Year (but not beyond the
Plan Year in which the Participant attains age 65) in the event of a CIC Consummation prior to the Participants Termination Date.
(b) Benefits Upon Termination of Employment . In the case of a Participant whose Termination Date occurs prior
to the Participants Retirement Date, other than on account of becoming Disabled or by reason of death, the Participants Account
shall be distributed in a lump sum by January 31 of the Plan Year following the Participants Termination Date valued as of the last
business day of the Plan Year preceding the date of payment; provided, however, that, following a CIC Consummation, if the
Participants termination is not for Cause the Participants Account shall be distributed in (i) a lump sum or (ii) annual installments
not in excess of 15, as elected by the Participant and such lump sum shall be paid or such installments shall commence as of the
beginning of any later Plan Year (but not later than January 31 of such year) selected by the Participant (but not beyond the Plan
Year in which the Participant attains age 65). Any such election as to method and timing of payments following a CIC Consummation
shall be made at least twelve (12) months prior to the date payment is to be made or commence, otherwise payments shall be made in
one lump sum as specified in the first sentence of this paragraph (b); provided, however, that any such election made before
October 1, 2002, shall be given effect if the Participants Termination Date is after a CIC Consummation.
(c) Benefits Upon Change in Control . Within six months after a Change in Control, or if the Committee
determines that a Change in Control is imminent, but in no event after a CIC Consummation, the Committee may determine to
distribute a Participants Account in a lump sum by January 31 of the Plan Year following the Change in Control or the date of the
Committees decision regarding the imminency of the Change in Control valued as of the last business day of the Plan Year
preceding the date of payment.
(d) Post Change in Control Elections . Any election as to the time of payment made by a Participant pursuant to
paragraphs 6.3(a) or (b) above that would take effect after a CIC Consummation may be changed by the Participant subject to the
following limitations: (1) the election must be made at least twelve (12) months prior to the date that payment was scheduled to be
made, (2) the election can be made only to further defer payment to the beginning of a Plan Year that is at least two (2) years later.
After a Participants Termination Date, he shall be entitled to no more than three (3) such elections to defer payment.
6.2 Form of Distributions . Any distribution made to or on behalf of a Participant from the Participants Account shall be
in cash except that, to the extent the Account is deemed invested in phantom shares of Voting Securities, a Participant may elect, in
the manner prescribed by the Committee, to receive Voting Securities. Where a distribution will be in an amount that is less than the
entire balance of any such Account, the distribution shall be made pro rata from each of the Earnings Crediting Options to which
such Account is then allocated.
6.3 Rollovers . Any distribution that is payable from or amount credited to any Eligible Employee under the Pharmacia
Supplemental Pension Plan, the Pharmacia Key Executive Pension Plan, the Pharmacia Annual Incentive Plan, the Pharmacia Cash
Long-Term Incentive Plan, the Pharmacia Long-Term Performance Share Unit Incentive Plan, any individual contractual pension
arrangements, any arrangement or plans that expressly provide for deferral pursuant to this Plan and such other plans as may be
from time to time designated by Pharmacias Senior Vice President Human Resources may be or shall be further deferred under this
Plan in the manner set forth in such plans and in accordance with procedures established from time to time by the Committee or its
delegate. All such amounts shall be credited to the Participants Account as Rollover Deferrals.
6.4 Pharmacia Corporation ERISA Parity Savings and Investment Plan . Effective July 1, 2002, this Plan shall assume all
rights and obligations of the Pharmacia Corporation ERISA Parity Savings and Investment Plan (the Parity Plan). Any amount
accrued under the Parity Plan shall be payable exclusively under this Plan in accordance with this Plans terms and provisions. The
amount credited to a Participants account under the Parity Plan as of July 1, 2002 shall be the opening balance of a Participants
Account under this Plan on such date. Any participants under the Parity Plan who have commenced receiving distributions under
the Parity Plan prior to July 1, 2002 shall be entitled to continue receiving the same form of distribution that they have been receiving
under the Parity Plan.
DISABILITY
In the event a Participant becomes Disabled, the Participants right to make any further deferrals under this Plan shall
terminate as of the date for which the Participant first receives long-term disability benefits from the Company. A Participant who
becomes Disabled shall be entitled to elect, within 90 days after receiving the first long-term disability benefit, but in any event prior
to the end of the current Plan Year, to be treated as a Participant who has attained his or her Retirement Date, in which case the
provisions of Section 6.1(a) shall be applicable, or else shall be treated as not having incurred a Termination Date until the
Participant would otherwise have attained his or her Retirement Date in which case the provisions of Section 6.1(a) shall be
applicable when the Participant would otherwise have actually been eligible under that provision. The Participants Account shall
continue to be credited with earnings in accordance with Section 5.3 until such Account is fully distributed.
OTHER WITHDRAWALS
A Participant may, by written request on a form provided by the Committee, withdraw all or any portion of any of his
Accounts as of the end of any calendar quarter, provided that the Participant shall forfeit 10% of the amount withdrawn as a penalty.
Such penalty shall not apply if (a) the Participant provides the Company with written notice of withdrawal (which shall be
irrevocable) at least one year prior to the year in which payment to the Participant is to be made, (b) such payment is for the
Participants entire Account and (c) the Participants Base Salary Deferrals and Bonus Deferrals shall be suspended for one calendar
year.
SURVIVOR BENEFITS
9.1 Death of Participant Prior to the Commencement of Benefits . In the event of a Participants death prior to the
commencement of benefits in accordance with Article 6, benefits shall be paid to the Participants Beneficiary, as determined under
Section 10.3, as provided in Section 8.2 in lieu of any benefits otherwise payable under the Plan to or on behalf of such Participant.
9.2 Survivor Benefits . In the case of a Participant who dies prior to the commencement of benefits pursuant to Section
6.1, distribution of such Account shall be made, as elected by the Participant in
the Enrollment Agreement or as may have been changed by the Participant, (a) in a lump sum as soon as practicable following the
Participants death (subject to the Beneficiarys rights to obtain payment in accordance with Articles 8 and 10), or (b) in the manner
and at such time as such Account would otherwise have been distributed in accordance with Section 6.1(a) had the Participant lived
and retired on the earliest possible date. The amount of any lump sum benefit payable in accordance with this Section shall equal the
value of such Account as of the last business day of the calendar month immediately preceding the date on which such benefit is
paid. The amount of any annual installment benefit payable in accordance with this Section shall equal (a) the value of such
Account as of the last business day of the calendar month immediately preceding the date on which such installment is paid,
divided by (b) the number of annual installments remaining to be paid pursuant to the election of the Participant in the Enrollment
Agreement or as may have been changed by the Participant.
9.3 Death of Participant After Benefits Have Commenced . In the event a Participant dies after annual installment benefits
payable under Section 6.1 from the Participants Account has commenced, but before the entire balance of such Account has been
paid, any remaining installments shall continue to be paid to the Participants Beneficiary, as determined under Section 10.3, at such
times and in such amounts as they would have been paid to the Participant had he survived, subject to such Beneficiarys rights to
obtain payment in accordance with Articles 8 and 10.
EMERGENCY BENEFIT
In the event that the Committee, upon written request of a Participant, determines that the Participant has suffered an
unforeseeable emergency (or any similar circumstance under which a payment would be permitted, without causing the imposition
of federal income taxes on Participant Accounts that have not been paid, pursuant to Revenue Procedure 92-65 or any successor
Revenue Procedure, Revenue Ruling, regulation or other applicable administrative determination issued by the Internal Revenue
Service), the Company shall pay to the Participant from the Participants Account, as soon as practicable following such
determination, an amount necessary to meet the emergency, after deduction of any and all taxes as may be required pursuant to
Section 11.8 (the Emergency Benefit), based on the value of the Participants Account as of the last business day of the month
preceding the date of the distribution.
MISCELLANEOUS
11.1 Amendment and Termination . The Plan may be amended, suspended, discontinued, or terminated at any time by
action of the Board or its delegate; provided, however, that no such amendment, suspension, discontinuance, or termination shall
reduce or in any manner adversely affect the rights of any Participant or Beneficiary with respect to benefits that are payable or may
become payable under the Plan based upon the balance of the Participants Accounts as of the effective date of such amendment,
suspension, discontinuance, or termination. After a CIC Consummation, no amendment to the Plan may be made to this Section,
Sections 5.3, 5.5, 5.7, 6.1, 6.2, 6.3 or 11.11, or Articles 8, 9 or 10; provided, however, that changes may be made to Section 6.1 but only
to the extent such changes are necessary, in the Committees reasonable judgment, upon the advice of nationally recognized legal
counsel, to fulfill the intent of this Plan to defer federal income taxation of Participants with respect to their Accounts until such
Accounts are paid in accordance with the terms of the Plan.
11.2 Claims Procedure .
(a) Claim . A person who believes that he is being denied a benefit to which he is entitled under the Plan
(hereinafter referred to as a Claimant) may file a written request for such benefit with the Committee, setting forth the claim.
(b) Claim Decision . Upon receipt of a claim, the Committee shall advise the Claimant that a reply will be
forthcoming within ninety days and shall, in fact, deliver such reply within such period. The Committee may, however, extend the
reply period for an additional ninety days for reasonable cause.
If the claim is denied in whole or in part, the Claimant shall be provided a written opinion, using language calculated to be
understood by the Claimant, setting forth:
(i) The specific reason or reasons for such denial;
(ii) The specific reference to pertinent provisions of this Agreement on which such denial is based;
(iii) A description of any additional material or information necessary for the Claimant to perfect his
claim and an explanation why such material or such information is necessary;
(iv) Appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for
review; and
(v) The time limits for requesting a review under subsection (c) and for review under subsection (d)
hereof, including a statement of the Claimants right to bring a civil action under section 502(a) of the Employee
Retirement Income Security Act of 1974, as amended (ERISA) following an adverse benefit determination on
review.
(c) Request for Review . Within sixty days after the receipt by the Claimant of the written opinion described
above, the Claimant may request in writing that the Committee review the determination of the Committee. The Claimant or his duly
authorized representative may, but need not, review the pertinent documents and submit written documents, records, comments and
other information related to the claim for consideration by the Committee and shall be entitled to review, upon request without
charge, copies of documents, records and all other information relevant to his claim. If the Claimant does not request a review of the
initial determination within such sixty-day period, the Claimant shall be barred and estopped from challenging the determination.
(d) Review of Decision . ithin sixty days after the Committees receipt of a request for review, the Committee
shall review the initial determination. After considering all materials presented by the Claimant, the Committee shall render a written
opinion, written in a manner calculated to be understood by the Claimant, setting forth the specific reasons for the decision, specific
references to the pertinent provisions of this Agreement on which the decision is based, informing the Claimant of his right to
receive, upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant
to his benefits, and informing the Claimant of his right to bring a civil action under section 502(a) of ERISA. If special circumstances
require that the sixty day time period be extended, the Committee shall so notify the Claimant and shall render the decision as soon
as possible, but no later than one hundred twenty days after receipt of the request for review.
11.3 Designation of Beneficiary . Each Participant may designate a Beneficiary or Beneficiaries (which Beneficiary may be
an entity other than a natural person) to receive any payments which may be made following the Participants death. Such
designation may be changed or canceled at any time without the consent of any such Beneficiary. Any such designation, change or
cancellation must be made in a form approved by the Committee and shall not be effective until received by the Committee, or its
designee. If no Beneficiary has been named, or the designated Beneficiary or Beneficiaries shall have predeceased the Participant,
the Beneficiary shall be the Participants estate. If a Participant designates more than one Beneficiary, the interests of such
Beneficiaries shall be paid in equal shares, unless the Participant has specifically designated otherwise.
11.4 Limitation of Participants Right . Nothing in this Plan shall be construed as conferring upon any Participant any
right to continue in the employment of the Company, nor shall it interfere with the rights of the Company to terminate the
employment of any Participant and/or to take any personnel action affecting any Participant without regard to the effect which such
action may have upon such Participant as a recipient or prospective recipient of benefits under the Plan. Any amounts payable
hereunder shall not be deemed salary or other compensation to a Participant for the purposes of computing benefits to which the
Participant may be entitled under any other arrangement established by the Employer for the benefit of its employees.
11.5 Obligations to Company . If a Participant becomes entitled to a distribution of benefits under the Plan, and if at such
time the Participant has outstanding any debt, obligation, or other liability representing an amount owing to the Employer, then the
Employer may offset such amount owed to it against the amount of benefits otherwise distributable. Such determination shall be
made by the Committee.
11.6 Nonalienation of Benefits . Except as expressly provided herein, no Participant or Beneficiary shall have the power or
right to transfer (otherwise than by will or the laws of descent and distribution), alienate, or otherwise encumber the Participants
interest under the Plan. The Companys obligations under this Plan are not assignable or transferable except to (a) any corporation
or partnership which acquires all or substantially all of the Companys assets or (b) any corporation or partnership into which the
Company may be merged or consolidated. The provisions of the Plan shall inure to the benefit of each Participant and the
Participants Beneficiaries, heirs, executors, administrators, or successors in interest.
11.7 Protective Provisions . Each Participant shall cooperate with the Employer by furnishing any and all information
reasonably requested by the Employer in order to facilitate the payment of benefits hereunder. If a Participant refuses to cooperate,
the Employer shall have no further obligation to the Participant under the Plan, other than payment to such Participant of the then
current balance of the Participants Account in accordance with his prior elections.
11.8 Withholding Taxes . The Company may make such provisions and take such action as it may deem necessary or
appropriate for the withholding of any taxes which the Company is required by any law or regulation of any governmental authority,
whether federal, state or local, to withhold in connection with any benefits under the Plan, including, but not limited to, the
withholding of appropriate sums from any amount otherwise payable to the Participant (or his Beneficiary). Each Participant,
however, shall be responsible for the payment of all individual tax liabilities relating to any such benefits.
11.9 Unfunded Status of Plan . The Plan is intended to constitute an unfunded plan of deferred compensation for
Participants. Benefits payable hereunder shall be payable out of the general assets of the Company, and no segregation of any
assets whatsoever for such benefits shall be made. Notwithstanding any segregation of assets or transfer to a grantor trust, with
respect to any payments not yet made to a Participant, nothing contained herein shall give any such Participant any rights to assets
that are greater than those of a general creditor of the Company. In the event that the Committee determines that a Change in Control
is imminent, the Committee shall cause the Company to create and fund a grantor trust of the Company that shall serve as the
vehicle for paying all benefits due under the Plan and the amount contributed by the Company shall be the amount the Committee
determines would then be due if the Plan were to terminate and all benefits were then to be paid in lump sum. If a Change in Control
shall not have occurred within six months of such contribution by the Company, the Board may adopt a resolution to the effect that
a Change in Control is not imminent and, in that event, up to all amounts contributed to the Trust and all earnings thereon, shall be
repaid to the Company at the direction of the Board.
11.10 Severability . If any provision of this Plan is held unenforceable, the remainder of the Plan shall continue in full
force and effect without regard to such unenforceable provision and shall be applied as though the unenforceable provision were
not contained in the Plan.
11.11 Governing Law . The Plan shall be construed in accordance with and governed by the laws of the state of New
Jersey, without reference to the principles of conflict of laws, to the extent not preempted
by ERISA; provided, however, that upon a CIC Consummation any court or tribunal that adjudicates any dispute, controversy or
claim arising between a Participant and the Committee, its delegate, the Company or an Affiliate (or any successor to either), relating
to or concerning the provisions of this Plan, will apply a de novo standard of review to any determinations made by such person.
Such de novo standard shall apply notwithstanding the grant of full discretion hereunder to any such person or characterization of
any decision as final, binding or conclusive on any party.
11.12 Headings . Headings are inserted in this Plan for convenience of reference only and are to be ignored in the
construction of the provisions of the Plan.
11.13 Gender, Singular, and Plural . All pronouns and any variations thereof shall be deemed to refer to the masculine,
feminine, or neuter, as the identity of the person or persons may require. As the context may require, the singular may read as the
plural and the plural as the singular.
11.14 Notice . Any notice or filing required or permitted to be given to the Committee under the Plan shall be sufficient if
in writing and hand delivered, or sent by registered or certified mail, to the Human Resources Department, or to such other entity as
the Committee may designate from time to time. Such notice shall be deemed given as to the date of delivery, or, if delivery is made
by mail, as of the date shown on the postmark on the receipt for registration or certification.
Exhibit 10.8
Pfizer Inc. Executive Annual Incentive Plan
I PURPOSE
The purpose of the Pfizer Inc. Executive Annual Incentive Plan (the "Plan") is to attract and retain highly qualified individuals; to
obtain from each the best possible performance; to establish performance goals based on objective criteria; to further underscore
the importance of achieving business objectives for the short and long term; and to include in such individuals compensation
package an annual incentive component which is tied directly to the achievement of those objectives. Such component is intended
to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), and would be deductible by the Company. In addition, each annual incentive award earned under the Plan on or after
January 1, 2005, the receipt of which is not otherwise deferred under an eligible Plan of the Company in accordance with Section
409A of the Code, is intended to be exempt from Section 409A as a short-term deferral of compensation.
II DEFINITIONS
For the purposes of the Plan, the following terms shall have the following meanings:
ADJUSTED NET INCOME: Income before cumulative effect of accounting changes as shown on the audited Consolidated
Statement of Income of the Company; provided, however, that if income before cumulative effect of accounting changes is
not shown on such Statement, then Adjusted Net Income shall mean net income as shown on such Statement.
AWARDS: The annual incentive awards made pursuant to the Plan.
BOARD OF DIRECTORS: The Board of Directors of Pfizer Inc.
COMMITTEE: The Executive Compensation Committee of the Board of Directors or any successor thereto. The Committee
shall consist solely of two or more "outside directors" within the meaning of Section 162(m) of the Code.
COMPANY: Pfizer Inc. and its subsidiary Companies.
ELIGIBLE EMPLOYEE: An employee who is a member of the Companys Corporate Management Committee.
Grandfathered Benefits: Plan benefits that were earned and vested as of December 31, 2004 within the meaning of Section
409A. Grandfathered Benefits are subject to the distribution rules in effect prior to the amendment of the Plan Effective on
January 1, 2008.
SECTION 409A: Section 409A of the Code and the regulations and other guidance issued thereunder by the U.S. Treasury
or Internal Revenue Service.
III EFFECTIVE DATE; TERM
The Plan is effective as of January 1, 1997, subject to approval by the affirmative vote of a majority of shares voting at the
Companys 1997 Annual Meeting of Shareholders, and shall remain in effect until such time as it shall be terminated by the
Committee.
IV AMOUNTS AVAILABLE FOR AWARDS
Awards with respect to any taxable year of the Company shall not exceed the limitations specified in Section VI of the Plan.
V ELIGIBILITY FOR AWARDS
The Committee may grant an award to an Eligible Employee if there is positive Adjusted Net Income.
The Committee shall give consideration to the contribution made by the Eligible Employee to achievement of the Company's
established objectives and such other matters as it shall deem relevant.
In the discretion of the Committee, Awards may be made to Eligible Employees who have retired or whose employment has
terminated after the beginning of the year for which an Award is made, subject to Section VIII regarding the timing of payment and
the Committees certification as to the achievement of the established objectives for such performance period, or to the designee or
estate of an Eligible Employee who died during such period.
VI DETERMINATION OF AMOUNTS OF AWARDS
The Committee has sole authority to determine the amount of any Award. The maximum Award payable to an individual is .30%
(three tenths of one percent) of Adjusted Net Income for such year. The Committee has authority to exercise discretion within the
above maximum in determining the amount of individual Awards.
VII FORM OF AWARDS
Awards under the Plan shall be made in cash subject to the limitations set forth in Section VI.
VIII PAYMENT OF AWARDS
Awards may be made at any time following the end of the Companys taxable year; provided, however, that no Awards shall be
made until the Committee receives a report from the Companys independent auditors stating the amount of Adjusted Net Income
for the year. The Committee shall certify, in writing, that the amount of any such Award does not exceed the limitation under Section
VI. Notwithstanding the foregoing, any Award earned during the taxable year commencing January 1, 2005 or later, the receipt of
which is not otherwise deferred under an eligible Plan of the Company in accordance with Section 409A, shall be paid prior to the 15
th
day of the 3
rd
month of the taxable year immediately following the taxable year in which the Award was earned, and as such shall
be exempt from Section 409A as a short-term deferral of compensation.
IX SPECIAL AWARDS AND OTHER PLANS
Nothing contained in the Plan shall prohibit the Company from establishing other special awards or incentive compensation plans
providing for the payment of incentive compensation to employees (including Eligible Employees).
X ADMINISTRATION, AMENDMENT AND INTERPRETATION OF THE PLAN
The Committee shall administer the Plan. The Committee shall have full power to construe and interpret the Plan, establish and
amend rules and regulations for its administration, and perform all other acts relating to the Plan, including the delegation of
administrative responsibilities, that it believes reasonable and proper and in conformity with the purposes of the Plan.
The Committee shall have the right to amend the Plan from time to time or to repeal it entirely or to direct the discontinuance of
Awards either temporarily or permanently; provided, however, that (i) no amendment of the Plan shall operate to annul, without the
consent of the Eligible Employee, an Award already made hereunder, and (ii) no amendment of the Plan that changes the maximum
Award determined payable to any Eligible Employee, as set forth in Section VI, or materially amends the definition of Adjusted Net
Income shall be effective before approval by the affirmative vote of a majority of shares voting at a meeting of the shareholders of
the Company.
Any decision made, or action taken, by the Committee arising out of or in connection with the interpretation and/or administration of
the Plan shall be final, conclusive and binding on all persons affected thereby.
Notwithstanding the foregoing, no amendment of the Plan shall apply to Awards that were earned and vested (within the meaning of
Section 409A) under the Plan prior to January 1, 2005, unless the amendment specifically provides that it applies to such amounts.
The purpose of this restriction is to prevent a Plan amendment from resulting in an inadvertent "material modification" to amounts
that are Grandfathered Benefits.
XI RIGHTS OF ELIGIBLE EMPLOYEES
Neither the Plan, nor the adoption or operation of the Plan, nor any documents describing or referring to the Plan (or any part hereof)
shall confer upon any employee any right to continue in the employ of the Company.
No individual to whom an Award has been made or any other party shall have any interest in the cash or any other asset of the
Company prior to such amount being paid.
No right or interest of any Eligible Employee in the Plan shall be assignable or transferable, or subject to any claims of any creditor
or subject to any lien.
XII MISCELLANEOUS
All Awards under the Plan are subject to withholding, where applicable, for federal, state and local taxes.
Any provision of the Plan that is prohibited or unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of the Plan.
The Plan and the rights and obligations of the parties to the Plan shall be governed by, and construed and interpreted in accordance
with, the law of the St ate of Delaware (without regard to principles of conflicts of law). Notwithstanding anything herein to the
contrary, the terms of the Plan are intended to, and shall be interpreted and applied so as to ensure that the Plan provides only for
the short-term deferral of compensation and as such shall be exempt from 409A. Any provision of this Plan governing the timing
or form of payment of benefits hereunder may be modified by the Committee if, and to the extent deemed necessary or advisable, to
ensure such exemption from Section 409A. Nothing in this Section XII shall be construed as an admission that any of the benefits
payable under this Plan constitute deferred compensation subject to the provisions of Section 409A.
Exhibit 10.9
Pfizer Inc Deferred Compensation Plan,
as Amended and Restated, effective January 1, 2008
Article 1. Purpose
1.1 Pfizer Inc, a Delaware corporation (the Company), established, effective as of December 1, 1997, a deferred
compensation plan for key employees as described herein, which shall be known as the Pfizer Deferred Compensation Plan (the
Plan). The Plan is hereby amended and restated as of January 1, 2008 to continue to permit eligible Employees to defer receipt of
certain compensation pursuant to the terms and provisions set forth below. The Plan is intended (1) to comply with Section 409A (as
defined below) (except with respect to amounts covered by Appendix A), and (2) to be a plan which is unfunded and is maintained
by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly
compensated employees within the meaning of sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. Notwithstanding any other
provision of this Plan, this Plan shall be interpreted, operated and administered in a manner consistent with these intentions.
1.2 Purpose. The purpose of the Plan is to provide certain key employees of the Company with the opportunity to
voluntarily defer a portion of their compensation, subject to the terms of the Plan. By adopting the Plan, the Company desires to
enhance its ability to attract and retain key employees.
Article 2. Definitions
Whenever used herein, the following terms when capitalized shall have the meaning set forth below:
Account means a bookkeeping account established by the Company for each Participant electing to defer eligible
Compensation under the Plan.
Affiliate means any corporation or other entity that is treated as a single employer with the Company under section 414
of the Code.
Award means the Annual Incentive Plan Award or the Global Performance Plan Award based on an assessment of
performance, payable by the Company to a Participant for the Participants services during a given calendar year of the Company
under the Pfizer Inc Executive Annual Incentive Plan, Pfizer Inc Annual Incentive Plan or the Pfizer Inc Global Performance Plan, as
may be in effect from time to time or the Short-Term Shift Award payable by the Company pursuant to the Companys Executive
Long-term Incentive Program. Awards shall be deemed earned only upon formal announcement thereof by the Company.
Board or Board of Directors means the Board of Directors of the Company
Change in Control shall mean the occurrence of any of the following events:
i at any time during a two-year period, at least a majority of the Companys Board of Directors shall cease to consist
of Continuing Directors (meaning directors of the Company who either were directors at the beginning of such
two-year period or who subsequently became directors and whose election, or nomination for election by the
Companys stockholders, was approved by a majority of the then Continuing Directors); or
ii any person or group (as determined for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934),
except any majority-owned subsidiary of the Company or any employee benefit plan of the Company or any trust
or investment manager thereunder, shall have acquired beneficial ownership (as determined for purposes of
Securities and Exchange Commission (SEC) Regulation 13d-3) of shares of Common Stock of the Company
having 15% or more of the voting power of all outstanding shares of capital stock of the Company, unless such
acquisition
is approved by a majority of the directors of the Company in office immediately preceding such acquisition; or
iii a merger or consolidation occurs to which the Company is a party, whether or not the Company is the surviving
corporation, in which outstanding shares of Common Stock of the Company are converted into shares of another
company (other than a conversion into shares of voting common stock of the successor corporation or a holding
company thereof representing 80% of the voting power or all capital stock thereof outstanding immediately after
the merger or consolidation) or other securities (of either the Company or another company) or cash or other
property; or (iv) the sale of all, or substantially all, of the Companys assets occurs; or (v) the stockholders of the
Company approve a plan of complete liquidation of the Company.
Code means the Internal Revenue Code of 1986, as amended.
Committee means the Compensation Committee of the Board or the Executive Leadership Team , as appropriate, and any
successor thereto or properly authorized delegee thereof.
Company means Pfizer Inc, a Delaware corporation (including any and all subsidiaries), and any successor thereto.
Compensation means the gross Salary, Awards, Long-Term Incentive Awards, and other payments which may be eligible
for deferral under the Plan, which are payable to a Participant with respect to services performed while working during a specified
period, not including compensation earned for services outside of the U.S. (unless on temporary assignment of 30 days or less) and
remaining on a U.S. payroll.
Deferral Election Form means a written form provided by the Committee pursuant to which an eligible Employee may elect
to defer amounts under the Plan.
Disability means when a Participant (1) is unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, (2) is, by reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under an accident and health plan that covers Employees.
Employee means a salaried employee of the Company . who has been selected for participation under Section 4.1.
ERISA means the Employee Retirement Income Security Act of 1974.
Federal Long-term Rate means the 30-year constant maturity U.S. Treasury Rate from the Federal Reserve Bank for the
previous month.
Grandfathered Benefits means Plan benefits that were earned and vested as of December 31, 2004 within the meaning of
Section 409A. Grandfathered Benefits are subject to the distribution rules in effect prior to this amendment and restatement that are
summarized on Exhibit A.
Key Employee means an Employee treated as a specified employee as of his or her Separation from Service under Code
Section 409A(a)(2)(B)(i), i.e., a key employee (as defined in Code section 416(i) without regard to paragraph (5) thereof) of the
Company or its Affiliates if the Companys stock is publicly traded on an established securities market or otherwise. Key Employees
shall be determined in accordance with Section 409A and applicable guidance thereunder. Key Employees shall also include those
key employees who are eligible for the Companys Executive Long-Term Incentive Program as specified employees for the 12
month period following the specified employee effective date, if not already included pursuant to the foregoing. Key Employees
shall be determined in
accordance with Section 409A using a December 31 identification date and the listing of Key Employees as of any such
identification date shall be effective for the 12-month period beginning on the effective date following the identification date.
Notwithstanding the foregoing, the Committee may, under the alternative permissible methods allowable under Section 409A, adopt
an alternative identification and effective date for purposes of determining which employees are Key Employees.
Long-Term Incentive Award Payouts means payouts of any Performance-Contingent Share Awards, Performance Share
Awards, or Restricted Stock Units in cash or shares of Company stock.
Participant means an eligible Employee who has elected to participate in the Plan and make deferrals under Article IV.
Salary means all regular, basic wages, before reduction for amounts deferred pursuant to the Plan or any other plan of the
Company, payable in cash to a Participant for services to be rendered during the calendar year, exclusive of any Awards, Long-Term
Incentive Awards, other special fees, awards, or incentive compensation, allowance, or amounts designated by the Company as
payment toward or reimbursement of expenses.
Section 409A means Section 409A of the Code and the regulations and other guidance issued thereunder by the U.S.
Treasury or Internal Revenue Service.
Separation from Service means a separation from service within the meaning of Section 409A.
Unforeseeable Emergency means a severe financial hardship to a Participant resulting from an illness or accident of the
Participant, the Participants spouse, or a dependent (as defined in Code section 152(a)) of the Participant, loss of the Participants
property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the
control of the Participant.
Article 3. Administration
3.1 Authority of the Committee . The Plan shall initially be administered by the Committee. Subject to the terms of this
Plan, the Committee may appoint a successor committee to administer the Plan.
Subject to the provisions herein, the Committee shall have the exclusive discretion to select Employees for participation in
the Plan; to determine the terms and conditions of each Employees participation in the Plan; to make, in its sole discretion, all
determinations arising in the administration, construction or interpretation of the Plan including the right to construe disputed or
doubtful Plan terms and provisions, and any such determination shall be conclusive and binding on all persons, except as otherwise
provided by law; to construe and interpret any agreement or instrument entered into under the Plan; to establish, amend, or waive
rules and regulations for the Plans administration; to amend (subject to the provisions of Article 9 herein) the terms and conditions
of the Plan and any agreement entered into under the Plan; and to make other determinations which may be necessary or advisable
for the administration of the Plan. Subject to the terms of the Plan, the Committee may delegate any or all of its authority granted
under the Plan to one or more executives of the Company.
3.2 Claims Procedure . If a request for benefits by a Participant or beneficiary is wholly or partially denied, the
Committee will provide such claimant written notice setting forth the denial. A review procedure is available upon written notice of
the denial of the claim, and includes the right to examine pertinent documents and submit issues and comments in writing to the
Committee. The decision on review will be made within 90 days after receipt of the request for review, unless circumstances warrant
an extension of time not to exceed an additional 90 days, and shall be in writing. If a decision on review is not made within such
period, the Participants claim shall be deemed denied.
3.3 Decisions Binding . All determinations and decisions of the Committee as to any disputed question arising under
the Plan shall be final, conclusive and binding on all parties.
Article 4. Eligibility and Participation
4.1 Eligibility . Employees eligible to participate in the Plan include solely those executives selected by the Committee in
its sole discretion who comprise a select group of management or highly compensated employees, such that the Plan will qualify
for treatment as a Top hat plan within the meaning of Sections 201, 301 and 401 of ERISA.
In the event a Participant no longer meets the requirements for participation in the Plan, such Participant shall become an
inactive Participant, retaining all the rights described under the Plan, except the right to make any further deferrals, until such time as
the Participant again becomes an active Participant.
4.2 Participation . Participation in the Plan shall be determined annually by the Committee based upon the criteria set
forth in Section 4.1 herein. Subject to Section 4.3, Employees who are chosen to participate in the Plan with respect to any given year
shall be so notified in writing in advance of any required time to properly elect deferral for such year.
4.3 Partial Year Eligibility . In the event that an Employee first becomes eligible to participate in the Plan or another
account balance plan required to be aggregated with this Plan under Section 409A during a calendar year, in the sole discretion of
the Committee, such Employee may be notified as soon as practicable in writing by the Company and provided with a Deferral
Election Form, (or such other form approved by the Committee from time to time in accordance with Section 409A for the purpose of
making elections to defer Compensation under the Plan) which must be completed by the Employee as set forth in Section 5.2 herein.
4.4 No Right to Participate . No Employee shall have the right to be selected as a Participant, or, having been so selected
for any given year, to be selected again as a Participant for any other year.
Article 5. Deferral Opportunity and Distributions
5.1 Amount Which May Be Deferred . A Participant may elect to defer up to one hundred percent (100%) of eligible
components of Compensation, including but not limited to Salary, Awards and Long-Term Incentive Award Payouts, in any given
year; provided, that the Committee shall have sole discretion to designate which components of Compensation are eligible for
deferral elections under the Plan in any such year, and such Compensation shall not include any stock, stock option, stock
appreciation right or other equity-based compensation which is not treated as deferred compensation pursuant to Treas. Reg.
1.409A-1(a)(5) or other applicable authority. The minimum amount of any single eligible component of Compensation (other than
Performance Share Awards) which may be deferred in any given year is ten percent (10%) of each such component; provided that
the minimum amount of Performance Share Awards that can be deferred in any year is twenty five percent (25%). In addition, an
election to defer Compensation in any given year must be expressed by each Participant in increments of ten percent (10%) of the
applicable component of Compensation, except that Performance Share Awards must be deferred in 25% increments.
5.2 Deferral Election In order to elect to defer Compensation earned during a year, an eligible Employee shall file an
irrevocable Deferral Election Form with the Committee before the beginning of such year. Notwithstanding the foregoing, (1) if the
Committee determines that any component of Compensation qualifies as performance-based compensation under Section 409A,
an eligible Employee may elect to defer a portion of such Compensation by filing a Deferral Election Form at such later time up until
the date six months before the end of the performance period as permitted by the Committee, and (2) in the first year in which an
Employee becomes eligible to participate in this Plan or any other account balance plan required to be aggregated with this Plan
under Section 409A, a deferral election may be made with respect to services to be performed subsequent to the election and within
the same year only if such election is made within 30 days after the date the Employee first becomes eligible to participate in this or
any other account balance plan required to be aggregated with this Plan under Section 409A.
Participants shall make the following irrevocable elections on each Deferral Election Form:
(a) The amount to be deferred with respect to each eligible component of Compensation for the specified year;
(b) The length of the deferral period with respect to each eligible component of Compensation or the date or
event upon which the Compensation is to be paid in the future, pursuant to the terms of Section 5.3 and
5.4 herein;
(c) The form or method for payment of the Compensation; and
(d) The form or method for payment of the Compensation to a beneficiary in the event of the death of the
Participant as designated in Section 6.4.
5.3 Length of Deferral. Subject to the remaining Sections of this Article 5, the deferral period elected by each Participant
with respect to deferrals of Compensation for any given year will begin upon deferral and end as selected by the Participant on a
Deferral Election Form from among the following choices as specified by the Committee from time to time:
(a) upon the Participants Separation from Service;
(b) upon on a specific date identified by the Participant; or
(c) the earlier of (a) or (b).
If a Participant elected to defer Compensation but fails to select a length of deferral, the Participant shall be deemed to have
elected (a), to be payable on January 31 of the year following (a). Notwithstanding anything in this Section 5.3 to the contrary, a
specified date for a deferral period must be at least one (1) year following the end of the calendar year in which the Compensation is
earned and no later than five (5) years following the Participants retirement.
5.4. Form or Method for Payment of the Compensation . A Participant shall elect on a Deferral Election Form to have the
portion of his or her Account related to amounts deferred under the Deferral Election Form (and earnings thereon) distributed in a
lump sum or in annual installments over a period of no less than 2, and no more than 15, years with payments commencing upon the
Participants Separation from Service or specified date as elected by the Participant on the Deferral Election Form. If the Participant
fails to elect the form and method of payment on the Deferral Election Form, the form and method shall be a single lump sum.
5.5 Cancellation of Election for Disability or Distribution for Unforeseeable Emergency . If a Participant incurs a
Disability or obtains a distribution under Section 5.3 on account of an Unforeseeable Emergency during a year, his or her deferral
election for such year shall be cancelled.
5.6 Distribution upon Separation from Service or upon a Specified Date. If a Participant has elected on a Deferral
Election Form to have the portion of his or her Account related to amounts deferred under the Deferral Election Form (and earnings
thereon) paid to the Participant upon a Separation from Service, upon a specified date, or upon the earlier of the specified date or
Separation from Service, then the Distribution shall commence upon such Separation from Service or the specified date, as
applicable, and be made in the manner specified in Section 5.4.
5.7 Delay for Key Employees. Notwithstanding the foregoing, distributions may not be made to a Key Employee upon a
Separation from Service before the date which is 6 months after the date of the Key Employee's Separation from Service (or, if earlier,
the date of death of the Key Employee). Any payments that would otherwise be made during this period of delay shall be
accumulated and paid as of the date that is six months after the Participants Separation from Service (or, if earlier, the first day of the
month after the Participants death).
5.8 Distribution upon Disability . Notwithstanding the election made by a Participant on a Deferral Election Form under
Sections 5.2, 5.3 and 5.4, if a Participant incurs a Disability while in payment status, but before full distribution of his or her Account
balance, any remaining Account balance shall continue to be distributed in
accordance with the Particpants election made on the Deferral Election Form under Sections 5.2, 5.3 and 5.4 hereof. If a Participant
incurs a Disability prior to commencing receipt of any portion of his or her Account balance, the Participants Account balance shall
be distributed in accordance with the Particpants election made on the Deferral Election Form under Sections 5.2, 5.3 and 5.4 hereof.

5.9 Distributions upon Death . A Participant shall elect on a Deferral Election Form to have the portion of his or her
Account remaining in the Account at his or her death (and earnings thereon), distributed in either a lump sum or in a continuation of
the installment election made on the Deferral Election Form as filed under Section 5.4, commencing upon the Participants death to
the Participants beneficiary in accordance with Section 6.4. If the Participant fails to elect the form and method of payment, the form
and method shall be a continuation of the installments.
5.10 Withdrawals for Unforeseeable Emergency. Notwithstanding the election made by a Participant on a Deferral
Election Form under Sections 5.2, 5.3 and 5.4, upon the occurrence of an Unforeseeable Emergency, a Participant may withdraw all or
any portion of his or her Account balance provided that the amounts distributed with respect to an Unforeseeable Emergency may
not exceed the amounts necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably
anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through
reimbursement or compensation by insurance or otherwise or by liquidation of the Participants assets (to the extent the liquidation
of such assets would not itself cause severe financial hardship) or by cessation of deferrals under the Plan. Unforeseeable
Emergency means for this purpose a severe financial hardship to a Participant resulting from an illness or accident of the
Participant, the Participants spouse, or a dependent (as defined in Code section 152(a)) of the Participant, loss of the Participants
property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the
control of the Participant.
5.11 Change in Control . Notwithstanding any provision in the Plan to the contrary or the election made by a Participant
on a Deferral Election Form under Sections 5.2, 5.3 and 5.4, a Participant's Account balance under the Plan shall be distributed in an
immediate lump sum payment upon the occurrence of a Change in Control that is a Change in Control Event. A Change in
Control Event means an event described in Code section 409A(a)(2)(A)(v) or otherwise under Section 409A.
5.12 Timing of Payments . For purposes of Section 5.6, 5.8 and 5.9, payment will be deemed to be made upon a Separation
from Service, Disability or death, as applicable if payment is made upon the date on which the event occurs or upon a date that is
within 90 days of such event and the Participant does not have any control over when the payment is actually paid. For purposes of
a payment on a specified date under Section 5.6, a payment will be deemed to be made upon a specified date if payment is made on
such date, later in the calendar year containing such specified date, or, if later, the 15
th
day of the 3
rd
month following such specified
date. The Participant will have no control over when the payment is actually paid.
5.13 Changes in Time or Form of Distribution. Notwithstanding the election made by a Participant on a Deferral Election
Form under Sections 5.2, 5.3 and 5.4, a Participant may make one or more subsequent elections to change the time or form of a
distribution for a deferred amount, provided that such an election shall be effective only if the following conditions are satisfied:
(a) The election may not take effect until at least twelve (12) months after the date on which the
election is made;
(b) In the case of an election to change the time or form of a distribution under Sections 5.6, a
distribution may not be made earlier than at least five (5) years from the date the distribution
would have otherwise been made; and
(c) In the case of an election to change the time or form of a distribution under Section 5.6, the
election must be made at least twelve (12) months before the date the distribution is scheduled
to be paid.
5.14 Effect of Taxation . If a portion of the Participant's Account balance is includible in income under Section 409A, such
portion shall be distributed immediately to the Participant.
5.15 Permitted Delays . Notwithstanding the foregoing, any payment to a Participant under the Plan may be delayed
upon the Committee's reasonable anticipation of one or more of the following events:
(a) The Company's deduction with respect to such payment would be eliminated by application of
Code section 162(m); or
(b) The making of the payment would violate Federal securities laws or other applicable law;
provided, that (i) the Company treats any such delays to similarly situated Participants on a reasonably consistent basis, (ii) no
election may be provided to a Participant with respect to the timing of such delayed payment, and (iii) any payment delayed
pursuant to this Section 5.15 shall otherwise be paid in accordance with Section 409A.
5.16 Pre-2005 Deferrals . Notwithstanding the foregoing, Appendix A governs the distribution of amounts that were
earned and vested (within the meaning of Section 409A and regulations thereunder) under the Plan prior to 2005 (and earnings
thereon) and are exempt from the requirements of Section 409A.
5.17 Rehires. If a Participant ceases to be eligible to participate and subsequently again becomes eligible to participate,
he or she may, in the sole discretion of the Committee, make an election in accordance with Sections 5.2, 5.3 and 5.4 on a Deferral
Election Form that shall apply with respect to any amounts credited to his or her Account under the Plan after the date of his or her
re-eligibility (provided the Employee becomes so eligible in a different calendar year than the year in which he or she ceased to be
eligible), and if no such payment election is made, the portion of the Account accrued with respect to the new eligibility period shall
be paid in accordance with the election on the Deferral Election Form for those amounts deferred prior to the Participant ceasing to
be eligible to participate.
Article 6. Deferred Compensation Accounts
6.1 Participants Accounts. The Company shall establish and maintain an individual bookkeeping Account for deferrals
made by each Participant under Article 5 herein. Each Account shall be credited as of the date the amount deferred otherwise would
have become due and payable to the Participant.
6.2 Interest on Deferred Amounts . Compensation deferred under Article 5 shall accrue, in the sole discretion of the
Committee, either (i) interest on a basis to be specified by the Committee, at a rate equal to the return choice(s) selected by the
Participant from among the alternatives specified by the Committee from time to time, or (2) dividends or dividend equivalents as
determined by the Committee. Interest or dividends, as applicable, credited on deferred amounts (less the amount of any debits for
any losses) shall be credited to the Participant's Account and paid out to Participants at the same time and in the same manner as the
underlying deferred amounts from such Account.
6.3 Charges against Accounts . There shall be charged against each Participants Account any payments made to the
Participant or to his or her beneficiary.
6.4 Designation of Beneficiary . Each Participant may designate a beneficiary or beneficiaries (who may be named
contingently or successively) who, upon the Participants death, will receive the amounts that otherwise would have been paid to
the Participant under the Plan. All designations shall be signed by the Participant, and shall be in such form as prescribed by the
Committee. Each designation shall be effective as of the date received from the Participant by the Global Long-Term Incentive
Compensation group of the Company or its designee.
Participants may change their beneficiary designations on a form prescribed by the Committee. The payment of amounts
deferred under the Plan shall be in accordance with the last unrevoked written designation of beneficiary that has been signed by
the Participant and delivered by the Participant to the Global Long-Term Incentive Compensation group or its designee prior to the
Participants death.
In the event that all the beneficiaries named by a Participant pursuant to this Section 6.4 predecease the Participant, the
deferred amounts that would have been paid to the Participant or the Participants beneficiaries shall be paid to the Participants
estate in a lump sum.
In the event a Participant does not designate a beneficiary, or for any reason such designation is ineffective, in whole or in
part, the amounts that otherwise would have been paid to the Participant or the Participants beneficiaries under the Plan shall be
paid to the Participants estate in a lump sum.
In the event the beneficiary of a Participant should die prior to the final payment of the deferred amounts, the amounts that
otherwise would have ben paid to such beneficiary under the Plan shall be paid to the beneficiarys estate in a lump sum.
Article 7. Rights of Participants
7.1 Contractual Obligation. The Plan shall create a contractual obligation on the part of the Company to make payments
from the Participants accounts when due. Payment of account balances shall be made out of the general funds of the Company.
7.2 Unsecured Interest. No Participant or party claiming an interest in deferred amounts or contributions through a
Participant shall have any interest whatsoever in any specific asset of the Company. To the extent that any party acquires a right to
receive payments under the Plan, such right shall be equivalent to that of an unsecured general creditor of the Company.
7.3 Employment. Nothing in the Plan shall interfere with nor limit in any way the right of the Company to terminate any
Participants employment at any time, nor confer upon any Participant any right to continue in the employ of the Company.
Article 8. Withholding of Taxes
The Company shall withhold from an employees regular compensation from the Company an amount sufficient to satisfy
foreign, Federal, state, and local income or other withholding tax requirements with regard to amounts deferred under the Plan.
However, the Company reserves the right to institute alternative methods for satisfying the applicable income and withholding tax
requirements.
Article 9. Amendment and Termination
9.1 Amendment or Termination . The Company reserves the right to amend or terminate the Plan when, in the sole
discretion of the Company, such amendment or termination is advisable, pursuant to a resolution or other action taken by the
Committee. The Plan may also be amended to the extent such amendment is required under applicable law or is required to avoid
having amounts deferred under the Plan included in the income of Participants or beneficiaries for federal income tax purposes prior
to distribution.
Notwithstanding the foregoing, no amendment of the Plan shall apply to amounts that were earned and vested (within the
meaning of Section 409A) under the Plan prior to 2005, unless the amendment specifically provides that it applies to such amounts.
The purpose of this restriction is to prevent a Plan amendment from resulting in an inadvertent "material modification" to amounts
that are Grandfathered Benefits.
9.2 Effect of Amendment or Termination . Except as provided in the next sentence, no amendment or termination of the
Plan shall adversely affect the rights of any Participant to amounts credited to his or her
Account as of the effective date of such amendment or termination, without such Participants consent. Upon termination of the
Plan, distribution of balances in Accounts shall be made to Participants and beneficiaries in the manner and at the time described in
Article V, unless the Company determines in its sole discretion that all such amounts shall be distributed upon termination in
accordance with the requirements under Section 409A. Upon termination of the Plan, no further deferrals of eligible Compensation
shall be permitted; however, earnings, gains and losses shall continue to be credited to Account balances in accordance with the
Plan until the Account balances are fully distributed.
Article 10. Miscellaneous
10.1 Notice. Any notice or filing required or permitted to be given to the Company under the Plan shall be sufficient if in
writing and hand delivered, or sent by registered or certified mail to the Global Long-Term Incentive Compensation group of the
Company. Notice to the Global Long-Term Incentive Compensation group , if mailed, shall be addressed to the principal executive
offices of the Company. Notices shall be deemed given as of the date of delivery, or if delivery is made by mail, as of the date shown
on the postmark on the receipt for registration or certification.
10.2 Nontransferability. articipants rights to deferred amounts and interest earned thereon under the Plan may not be
sold, transferred, assigned, or otherwise alienated or hypothecated other than by will or by will or by the laws of descent and
distribution. In no event shall the Company make any payment under the Plan to any assignee or creditor of a Participant.
10.3 Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid
provision had not been included.
10.4 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall
include the feminine; the plural shall include the singular, and the singular shall include the plural.
10.5 Costs of the Plan. All costs of implementing and administering the Plan shall be borne by the Company.
10.6 Applicable Law. The plan shall be construed and enforced in accordance with the laws of the State of New York.
Notwithstanding anything herein to the contrary, the terms of the Plan are intended to, and shall be interpreted and applied so as to,
comply in all respects with Section 409A. Any provision of this Plan governing the timing or form of payment of benefits hereunder
may be modified by the Committee if, and to the extent deemed necessary or advisable, to comply with Section. Nothing in this
Section 10.6 shall be construed as an admission that any of the benefits payable under this Plan constitutes deferred
compensation subject to the provisions of Section 409A.
10. 7 Successors. All obligation of the Company under the Plan shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the Company.
APPENDIX A
GRANDFATHERED BENEFITS
Distribution of amounts that were earned and vested (within the meaning of Section 409A) under the Plan prior to 2005 (and
earnings thereon) and are exempt from the requirements of Section 409A shall be made in accordance with the Plan terms as in effect
on December 31, 2004 as set forth in this Appendix A.
Pfizer Inc Deferred Compensation Plan
Article 1. Purpose
1.1 Pfizer Inc, a Delaware corporation (the Company), hereby establishes, effective as of December 1, 1997, a deferred
compensation plan for key employees as described herein, which shall be known as the Pfizer Deferred Compensation Plan ( the
Plan).
1.2 Purpose. The purpose of the Plan is to provide certain key employees of the Company with the opportunity to
voluntarily defer a portion of their compensation, subject to the terms of the Plan. By adopting the Plan, the Company desires to
enhance its ability to attract and retain key employees.
Article 2. Definitions
Whenever used herein, the following terms when capitalized shall have the meaning set forth below:
a Award means the Annual Incentive Award based on an assessment of performance, payable by the Company to a
Participant for the Participants services during a given calendar year of the Company. Awards shall be deemed earned only
upon formal announcement thereof by the Company.
b Board or Board of Directors means the Board of Directors of the Company
c Change in Control shall mean the occurance of any of the following events:
i at any time during a two-year period, at least a majority of the Companys Board of Directors shall cease to consist
of Continuing Directors (meaning directors of the Company who either were directors at the beginning of such
two-year period or who subsequently became directors and whose election, or nomination for election by the
Companys stockholders, was approved by a majority of the then Continuing Directors); or
ii any person or group (as determined for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934),
except any majority-owned subsidiary of the Company or any employee benefit plan of the Company or any trust
or investment manager thereunder, shall have acquired beneficial ownership (as determined for purposes of
Securities and Exchange Commission (SEC) Regulation 13d-3) of shares of Common Stock of the Company
having 15% or more of the voting power of all outstanding shares of capital stock of the Company, unless such
acquisition is approved by a majority of the directors of the Company in office immediately preceding such
acquisition; or
iii a merger or consolidation occurs to which the Company is a party, whether or not the Company is the surviving
corporation, in which outstanding shares of Common Stock of the Company are converted into shares of another
company (other than a conversion into shares of voting common stock of the successor corporation or a holding
company thereof representing 80% of the voting power or all capital stock thereof outstanding immediately after
the merger or consolidation) or other securities (of either the Company or another company) or cash or other
property; or (iv) the
sale of all, or substantially all, of the Companys assets occurs; or (v) the stockholders of the Company approve a
plan of complete liquidation of the Company.
d Code means the Internal Revenue Code of 1986, as amended.
e Committee means the Executive Compensation Committee of the Board or the Employee Compensation and Management
Development Committee, as appropriate, and any successor thereto.
f Company means Pfizer Inc, a Delaware corporation (including any and all subsidiaries), and any successor thereto.
g Compensation means the gross Salary, Award, Long-Term Incentive Awards, and other payments which may be eligible
for deferral under the Plan, which are payable to a Participant with respect to services performed during a specified period.
h Disability means a disability which would qualify the Participant for Long-Term Disability benefits under the Pfizer Long
Term Disability Plan and, as such plan may be amended from time to time.
i Employee means a salaried employee of the Company.
j ERISA means the Employee Retirement Income Security Act of 1974.
k Federal Long-term Rate means the 30-year constant maturity U.S. Treasury Rate from the Federal Reserve Bank for the
previous month.
l Long-Term Incentive Awards means Performance-Contingent Share Awards or earnings from stock option exercises.
m Participant means an Employee who has elected to participate in the Plan.
n Salary means all regular, basic wages, before reduction for amounts deferred pursuant to the Plan or any other plan of the
Company, payable in cash to a Participant for services to be rendered during the calendar year, exclusive of any Bonus,
Long-Term Awards, other special fees, awards, or incentive compensation, allowance, or amounts designated by the
Company as payment toward or reimbursement of expenses.
Article 3. Administration
3.1 Authority of the Committee. The Plan shall initially be administered by the Committee. Subject to the terms of this
Plan, the Committee may appoint a successor committee to administer the Plan.
Subject to the provisions herein, the Committee shall have the exclusive discretion to select Employees for participation in
the Plan; to determine the terms and conditions of each Employees participation in the Plan; to make, in its sole discretion, all
determinations arising in the administration, construction or interpretation of the Plan including the right to construe disputed or
doubtful Plan terms and provisions, and any such determination shall be conclusive and binding on all persons, except as otherwise
provided by law; to construe and interpret any agreement or instrument entered into under the Plan; to establish, amend, or waive
rules and regulations for the Plans administration; to amend (subject to the provisions of Article 9 herein) the terms and conditions
of the Plan and any agreement entered into under the Plan; and to make other determinations which may be necessary or advisable
for the administration of the Plan. Subject to the terms of the Plan, the Committee may delegate any or all of its authority granted
under the Plan to one or more executives of the Company.
3.2 Claims Procedure. If a request for benefits by a Participant or beneficiary is wholly or partially denied, the Committee
will provide such claimant written notice setting forth the denial. A review procedure is available upon written notice of the denial of
the claim, and includes the right to examine pertinent documents and
submit issues and comments in writing to the Committee. The decision on review will be made within 90 days after receipt of the
request for review, unless circumstances warrant an extension of time not to exceed an additional 90 days, and shall be in writing. If a
decision on review is not made within such period, the Participants claim shall be deemed denied.
3.3 Decisions Binding. All determinations and decisions of the Committee as to any disputed question arising under the
Plan shall be final, conclusive and binding on all parties.
Article 4. Eligibility and Participation
4.1 Eligibility. Employees eligible to participate in the Plan include key policy and decision makers of the Company, as
selected by the Committee in its sole discretion. It is the intent of the Company to extend eligibility only to those executives who
comprise a select group of management or highly compensated employees, such that the Plan will qualify for treatment as a Top
hat plan within the meaning of Sections 201, 301 and 401 of ERISA.
In the event a Participant no longer meets the requirements for participation in the Plan, such Participant shall become an
inactive Participant, retaining all the rights described under the Plan, except the right to make any further deferrals, until such time as
the Participant again becomes an active Participant.
4.2 Participation. Participation in the Plan shall be determined annually by the Committee based upon the criteria set forth
in Section 4.1 herein. Employees who are chosen to participate in the Plan in any given year shall be so notified in writing.
4.3 Partial Year Eligibility. In the event than an Employee first becomes eligible to participate in the Plan during any given
year, such Employee shall as soon as practicable be so notified in writing by the Company and provided with an Election to Defer
Form, which must be completed by the Employee as set forth in Section 5.2 herein; provided, however, that such Employee may
make an election to defer with respect to only that portion of his or her Compensation for such year which is to be paid after the date
of filing of the deferral election.
4.4 No Right to Participate. No Employee shall have the right to be selected as a Participant, or, having been so selected
for any given year, to be selected again as a Participant for any other year.
Article 5. Deferral Opportunity
5.1 Amount Which May Be Deferred. A Participant may elect to defer up to one hundred percent (100%) of eligible
components of Compensation, including but not limited to Salary, Award and Long-Term Awards, in any given year; provided, that
the Committee shall have sole discretion to designate which components of Compensation are eligible for deferral elections under
the Plan in any such year. The minimum amount of any single eligible component of Compensation which may be deferred in any
given year is ten percent (10%) of each such component. In addition, an election to defer Compensation in any given year must be
expressed by each Participant in increments of ten percent (10%) of the applicable component of Compensation.
5.2 Deferral Election. Participants shall make their elections to defer Compensation under the Plan for a given calendar
year not later than (a) thirty (30) days prior to the beginning of such calendar year or (b) if Participants are notified after the
beginning of the calendar year of their selection to participate in the plan for such calendar year or a partial calendar year, within
thirty (30) days of receipt of such notice. All deferral elections shall be irrevocable; shall relate solely to amounts earned after the
filing of a deferral election with the Committee; and shall be made on an Election to Defer Form, as described herein.
Participants shall make the following irrevocable elections on each Election to Defer Form.
(a) The amount to be deferred with respect to each eligible component of Compensation for the specified year;
(b) The length of the deferral period with respect to each eligible component of Compensation, pursuant to the terms of
Section 5.3 herein;
5.3 Length of Deferral. The deferral periods elected by each Participant with respect to deferrals of Compensation for any
given year shall be selected from among the choices specified by the Committee. The Committee shall specify one or more deferral
periods which are at least one (1) year following the end of the calendar year in which the Compensation is earned, and no greater
than five (5) years following retirement.
5.4 Payment of Deferred Amounts. Subject to the provisions of Section 5.5 and Section 9 of the Plan, Participants shall
receive payment of deferred amounts, together with interest earned thereon, at the end of the deferred period in a single lump-sum
cash payment, unless otherwise elected. If alternative methods for receiving payments are approved by the Committee, election of
the method of payment shall be made by the Participant within the same time periods as required in Section 5.2 of the Plan.
(a) Lump-Sum Payment. A lump sum payment shall be made in cash within sixty (60) days of the end of the deferral period
by the Participant, as described in Sections 5.2 and 5.3 herein.
(b) Installment Payments. If approved by the Committee, Participants may elect payout in annual installments, with a
minimum number of installments of two (2), and a maximum of fifteen (15). The initial payment shall be made in cash within sixty (60)
days after the commencement date selected by the Participant pursuant to Sections 5.2 and 5.3 herein. The remaining installment
payments shall be made in cash each year thereafter, until the Participants entire deferred compensation account has been paid.
Interest shall accrue on the deferred amounts in the Participants deferred compensation account immediately prior each such
payment, multiplied by a fraction, the numerator of which is one (1), and the denominator of which is the number of installment
payments remaining.
(c) Alternative Payment Schedule. If approved by the Committee, a Participant may elect an alternate payment schedule.

5.5 Change in Control. Notwithstanding any provision contained in the Plan, in the event of a Change in Control, all
participants shall be entitled to an immediate lump sum payment of their deferred amounts, together with interest earned thereon.
Article 6. Deferred Compensation Accounts
6.1 Participants Accounts. The Company shall establish and maintain an individual bookkeeping account for deferrals
made by each Participant under Article 5 herein. Each account shall be credited as of the date the amount deferred otherwise would
have become due and payable to the Participant.
6.2 Interest on Deferred Amounts. Compensation deferred under Article 5 shall accrue interest on a basis to be specified
by the Committee, at a rate equal to the return choice(s) selected by the Participant from among the alternatives specified by the
Committee from time to time. Interest credited on deferred amounts (less the amount of any debits for any losses) shall be paid out to
Participants at the same time and in the same manner as the underlying deferred amounts.
6.3 Charges Against Accounts. There shall be charged against each Participants deferred compensation account any
payments made to the Participant or to his or her beneficiary.
6.4 Designation of Beneficiary. Each Participant may designate a beneficiary or beneficiaries (who may be named
contingently or successively) who, upon the Participants death, will receive the amounts that otherwise would have been paid to
the Participant under the Plan. All designations shall be signed by the Participant, and shall be in such form as prescribed by the
Committee. Each designation shall be effective as of the date received from the Participant by the Senior Vice President - Employee
Resources of the Company.
Participants may change their beneficiary designations on a form prescribed by the Committee. The payment of amounts
deferred under the Plan shall be in accordance with the last unrevoked written designation of beneficiary that has been signed by
the Participant and delivered by the Participant to the Senior Vice President - Employee Resources prior to the Participants death.
In the event that all the beneficiaries named by a Participant pursuant to this Section 6.4 predecease the Participant, the
deferred amounts that would have been paid to the Participant or the Participants beneficiaries shall be paid to the Participants
estate.
In the event a Participant does not designate a beneficiary, or for any reason such designation is ineffective, in whole or in
part, the amounts that otherwise would have been paid to the Participant or the Participants beneficiaries under the Plan shall be
paid to the Participants estate.
Article 7. Rights of Participants
7.1 Contractual Obligation. The Plan shall create a contractual obligation on the part of the Company to make payments
from the Participants accounts when due. Payment of account balances shall be made out of the general funds of the Company.
7.2 Unsecured Interest. No Participant, or party claiming an interest in deferred amounts or contributions through a
Participant, shall have any interest whatsoever in any specific asset of the Company. To the extent that any party acquires a right to
receive payments under the Plan, such right shall be equivalent to that of an unsecured general creditor of the Company.
7.3 Employment. Nothing in the Plan shall interfere with nor limit in any way the right of the Company to terminate any
Participants employment at any time, nor confer upon any Participant any right to continue in the employ of the Company.
Article 8. Withholding of Taxes
The Company shall withhold from an employees regular compensation from the Company an amount sufficient to satisfy
foreign, Federal, state, and local income or other withholding tax requirements with regard to amounts deferred under the Plan.
However, the Company reserves the right to institute alternative methods for satisfying the applicable income and withholding tax
requirements.
Article 9. Amendment and Termination
The Company hereby reserves the right to amend, modify or terminate the Plan at any time by action of the Committee.
Except as described below in this Article 9, no such amendment, modification or termination shall in any material manner adversely
effect any Participants rights to deferred amounts, contributions or interest earned thereon, without the consent of the Participant.
The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for a select
group of management or highly compensated employees within the meaning of Sections 201, 301 and 401 of ERISA, and therefore
to be exempt from the provisions of Parts 2,3 and 4 of Title I of ERISA. Accordingly, the Committee may terminate the Plan and
commence termination payout for all or certain Participants, or remove certain employees as Participants, if it is determined by the
United States Department of Labor or a court of competent jurisdiction that the Plan constitutes an employee pension benefit plan
within the meaning of Section 3(2) of ERISA which is not so exempt. If payout is commenced pursuant to the operation of this
Article 9, the payment of such amounts shall be made in a lump sum regardless of the manner selected by each Participant under
Section 5.4 herein as applicable.
Article 10. Miscellaneous
10.1 Notice. Any notice or filing required or permitted to be given to the Company under the Plan shall be sufficient if in
writing and hand delivered, or sent by registered or certified mail to the Senior Vice President - Employee Resources of the Company.
Notice to the Senior Vice President - Employee Resources, if mailed, shall be addressed to the principal executive offices of the
Company. Notices shall be deemed given as of the date of delivery, or if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification.
10.2 Nontransferability. Participants rights to deferred amounts and interest earned thereon under the Plan may not be
sold, transferred, assigned, or otherwise alienated or hypothecated other than by will or by will or by the laws of descent and
distribution. In no event shall the Company make any payment under the Plan to any assignee or creditor of a Participant.
10.3 Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid
provision had not been included.
10.4 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall
include the feminine; the plural shall include the singular, and the singular shall include the plural.
10.5 Costs of the Plan. All costs of implementing and administering the Plan shall be borne by the Company.
10.6 Applicable Law. The plan shall be construed and enforced in accordance with the laws of the State of New York.
10.7 Successors. All obligation of the Company under the Plan shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the Company.
Exhi bi t 12
PFIZER INC. AND SUBSIDIARY COMPANIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Year Ended December 31,
(IN MILLIONS, EXCEPT RATIOS) 2012 2011 2010 2009 2008

Det erminat ion of earnings:
Income from cont inuing operat ions before provision for t axes on
income, noncont rolling int erest s and cumulat ive effect of a
change in account ing principles $ 12,080 $ 12,304 $ 9,471 $ 10,723 $ 9,520
Less:
Net income at t ribut able t o noncont rolling int erest s 28 40 31 9 22
Income at t ribut able t o Pfizer Inc. 12,052 12,264 9,440 10,714 9,498
Add:
Fixed charges 1,640 1,813 1,930 1,358 647
Tot al earnings as defined $ 13,692 $ 14,077 $ 11,370 $ 12,072 $ 10,145

Fixed charges:
Int erest expense
(a)
$ 1,524 $ 1,681 $ 1,797 $ 1,232 $ 516
Preferred st ock dividends
(b)
4 5 6 7 8
Rent s
(c)
112 127 127 119 123
Fixed charges 1,640 1,813 1,930 1,358 647
Capit alized int erest 41 50 36 34 46

Tot al fixed charges $ 1,681 $ 1,863 $ 1,966 $ 1,392 $ 693

Rat io of earnings t o fixed charges 8.1 7.6 5.8 8.7 14.6
(a)

Int erest expense includes amort izat ion of debt premium, discount and expenses. Int erest expense does not include int erest relat ed t o uncert ain t ax
posit ions of $268 million for 2012; $343 million for 2011; $389 million for 2010; $337 million for 2009; and $333 million for 2008.
(b)
Preferred st ock dividends relat ed t o our Series A convert ible perpet ual preferred st ock held by an Employee St ock Ownership Plan Trust .
(c)
Rent s included in t he comput at ion consist of one-t hird of rent al expense, which we believe t o be a conservat ive est imat e of an int erest fact or in
our leases, which are not mat erial.
All financial informat ion before 2012 reflect s Capsugel (t he sale of which closed on August 1, 2011) as a discont inued operat ion. The financial
informat ion for t he years ended December 31, 2012, 2011, 2010 and 2009 reflect s t he Nut rit ion business, which was acquired in 2009 and which t he
Company sold on November 30, 2012, as a discont inued operat ion.
Financial Review
Pf izer Inc. and Subsidiary Companies


EXHIBIT 13


Pfizer Inc. 2012 Financial Report


Financial Review
Pf izer Inc. and Subsidiary Companies


INTRODUCTION
Our Financial Review is provided to assist readers in understanding the results of operations, f inancial condition and cash f lows of Pf izer Inc.
(the Company). It should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements. The
discussion in this Financial Review contains f orward-looking statements that involve substantial risks and uncertainties. Our actual results could
dif f er materially f rom those anticipated in these f orward-looking statements as a result of various f actors, such as those discussed in Part 1,
Item 1A, Risk Factors of our 2012 Annual Report on Form 10-K and in the Forward-Looking Inf ormation and Factors That May Af f ect Future
Results, Our Operating Environment and Our Strategy sections of this Financial Review.
The Financial Review is organized as f ollows:
Overview of Our Performance, Operating Environment, Strategy and Outlook . This section, beginning on page 2, provides inf ormation about
the f ollowing: our business; our 2012 perf ormance; our operating environment; our strategy; our business development initiatives, such as
acquisitions, dispositions, licensing and collaborations; and our f inancial guidance f or 2013.
Significant Accounting Policies and Application of Critical Accounting Estimates . This section, beginning on page 10, discusses those
accounting policies and estimates that we consider important in understanding Pf izers consolidated f inancial statements. For additional
discussion of our accounting policies, see Notes to Consolidated Financial Statements Note 1. Basis of Presentation and Significant
Accounting Policies .
Analysis of the Consolidated Statements of Income. This section begins on page 15, and consists of the f ollowing sections:
Revenues. This sub-section, beginning on page 15, provides an analysis of our revenues and products f or the three years ended
December 31, 2012, including an overview of research and development expenses and important biopharmaceutical product
developments.
Costs and Expenses . This sub-section, beginning on page 28, provides a discussion about our costs and expenses.
Provision for Taxes on Income. This sub-section, beginning on page 33, provides a discussion of items impacting our tax provisions.
Discontinued Operations. This sub-section, on page 34, provides an analysis of the f inancial statement impact of our discontinued
operations.
Adjusted Income . This sub-section, beginning on page 34, provides a discussion of an alternative view of perf ormance used by
management.
Analysis of the Consolidated Statements of Comprehensive Income. This section, on page 38, provides a discussion of changes in certain
components of other comprehensive income.
Analysis of the Consolidated Balance Sheets. This section, beginning on page 38, provides a discussion of changes in certain balance sheet
accounts.
Analysis of the Consolidated Statements of Cash Flows. This section, beginning on page 39, provides an analysis of our consolidated cash
f lows f or the three years ended December 31, 2012.
Analysis of Financial Condition, Liquidity and Capital Resources . This section, beginning on page 40, provides an analysis of selected
measures of our liquidity and of our capital resources as of December 31, 2012 and December 31, 2011, as well as a discussion of our
outstanding debt and other commitments that existed as of December 31, 2012. Included in the discussion of outstanding debt is a discussion
of the amount of f inancial capacity available to help f und Pf izers f uture activities.
New Accounting Standards . This section, on page 44, discusses accounting standards that we have recently adopted, as well as those that
recently have been issued, but not yet adopted.
Forward-Looking Information and Factors That May Affect Future Results . This section, beginning on page 44, provides a description of the
risks and uncertainties that could cause actual results to dif f er materially f rom those discussed in f orward-looking statements presented in
this Financial Review relating to, among other things, our anticipated f inancial and operating perf ormance, business plans and prospects, in-
line products and product candidates, strategic reviews, capital allocation, business-development plans, and plans relating to share
repurchases and dividends. Such f orward-looking statements are based on managements current expectations about f uture events, which
are inherently susceptible to uncertainty and changes in circumstances. Also included in this section are discussions of Financial Risk
Management and Legal Proceedings and Contingencies.
2012 Financial Report

1
Financial Review
Pf izer Inc. and Subsidiary Companies


OVERVIEW OF OUR PERFORMANCE, OPERATING ENVIRONMENT, STRATEGY AND OUTLOOK
Our Business
Our mission is to apply science and our global resources to improve health and well-being at every stage of lif e. We strive to set the standard f or
quality, saf ety and value in the discovery, development and manuf acturing of medicines f or people and animals. Our diversif ied global healthcare
portf olio includes human and animal biologic and small molecule medicines and vaccines, as well as many of the worlds best-known consumer
products. Every day, we work across developed and emerging markets to advance wellness, prevention, treatments and cures that challenge
the most f eared diseases of our time. We also collaborate with healthcare providers, governments and local communities to support and expand
access to reliable, af f ordable healthcare around the world. Our revenues are derived f rom the sale of our products, as well as through alliance
agreements, under which we co-promote products discovered by other companies (Alliance revenues).
The majority of our revenues come f rom the manuf acture and sale of biopharmaceutical products. The biopharmaceutical industry is highly
competitive and we f ace a number of industry-specif ic challenges, which can signif icantly impact our results. These f actors include, among
others: the loss or expiration of intellectual property rights, the regulatory environment and pipeline productivity, pricing and access pressures,
and increasing competition among branded products. (For more inf ormation about these challenges, see the Our Operating Environment section
of this Financial Review.)
The f inancial inf ormation included in our consolidated f inancial statements f or our subsidiaries operating outside the United States (U.S.) is as of
and f or the year ended November 30 f or each year presented.
Ref erences to developed markets include the U.S., Western Europe, Japan, Canada, Australia, Scandinavia, South Korea, Finland and New
Zealand; and ref erences to Emerging Markets include the rest of the world, including, among other countries, China, Brazil, Mexico, Turkey,
Russia and India.
On February 6, 2013, an initial public of f ering (IPO) of our subsidiary, Zoetis Inc. (Zoetis), was completed, pursuant to which we sold 99.015
million shares of Zoetis in exchange f or the retirement of approximately $2.5 billion of Pf izer commercial paper issued on January 10, 2013. The
IPO represented approximately 19.8% of the total outstanding Zoetis shares. On February 1, 2013, Zoetis shares began trading on the New York
Stock Exchange under the symbol "ZTS." Prior to and in connection with the IPO, Zoetis completed a $3.65 billion senior notes of f ering and we
transf erred to Zoetis substantially all of the assets and liabilities of our Animal Health business. (For additional inf ormation, see Notes to
Consolidated Financial Statements Note 19A. Subsequent Events: Zoetis Debt Offering and Initial Public Offering. )
On November 30, 2012, we completed the sale of our Nutrition business to Nestl f or $11.85 billion in cash and recognized a gain of
approximately $4.8 billion, net of tax, in Gain/(loss) on sale of discontinued operationsnet of tax . The operating results of this business are
reported as Income/(loss) from discontinued operationsnet of tax in our consolidated statements of income f or all periods presented. In
addition, in our consolidated balance sheet as of December 31, 2011, the assets and liabilities associated with this discontinued operation are
classif ied as Assets of discontinued operations and other assets held for sale and Liabilities of discontinued operations , as appropriate. (For
additional inf ormation, see Notes to Consolidated Financial Statements Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and
Equity-Method Investments: Divestitures and see the Our Business Development Initiatives and Discontinued Operations sections of this
Financial Review.)
On August 1, 2011, we completed the sale of our Capsugel business f or approximately $2.4 billion in cash and recognized a gain of approximately
$1.3 billion, net of tax, in G ain/(loss) on sale of discontinued operationsnet of tax . The operating results of this business are reported as
Income/(loss) from discontinued operationsnet of tax in our consolidated statements of income f or the years ended December 31, 2011 and
December 31, 2010. (For additional inf ormation, see Notes to Consolidated Financial Statements Note 2B. Acquisitions, Divestitures,
Collaborative Arrangements and Equity-Method Investments: Divestitures and see the Our Business Development Initiatives and Discontinued
Operations sections of this Financial Review.)
The assets, liabilities, operating results and cash f lows of acquired businesses, such as King Pharmaceuticals, Inc. (King) (acquired on
January 31, 2011), are included in our results on a prospective basis only commencing f rom the acquisition date. As such, our consolidated
f inancial statements f or the year ended December 31, 2011 ref lect approximately 11 months of Kings U.S. operations and approximately 10
months of Kings international operations. (For additional inf ormation about these acquisitions, see Notes to Consolidated Financial Statements
Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions and see the Our Business
Development Initiatives section of this Financial Review.)
Our 2012 Performance
Revenues decreased 10% in 2012 to $59.0 billion , compared to $65.3 billion in 2011 , which ref lects an operational decline of $4.8 billion or 8%,
primarily the result of the loss of exclusivity of Lipitor in most major markets, including the U.S. on November 30, 2011 and most of developed
Europe in March and May 2012, and the unf avorable impact of f oreign exchange of $1.5 billion, or 2%. Lipitor and other product losses of
exclusivity, as well as the f inal-year terms of our collaboration agreements in certain markets f or Spiriva, negatively impacted revenues by
approximately $7.7 billion, or 12%, in 2012 compared to 2011.
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2012 Financial Report
Financial Review
Pf izer Inc. and Subsidiary Companies


The f ollowing table provides the signif icant impacts on revenues f or 2012 as compared to 2011 :
2012 v. 2011
(MILLIONS OF DOLLARS)

Increase/
(Decrease)
%
Change
Lipitor
(a)
$ (5,629) (59)
Geodon/Zeldox
(a)
(669) (65)
Xalatan/Xalacom
(a)
(444) (36)
Caduet
(a)
(280) (52)
Ef f exor (253) (37)
Zosyn/Tazocin (152) (24)
Aromasin
(a)
(151) (42)
Aricept
(b)
(124) (28)
Detrol/Detrol LA
(a)
(122) (14)
Celebrex 196 8
Lyrica 465 13
Alliance revenues
(a)
(138) (4)
All other biopharmaceutical products
(c)
525 7
Animal Health products 115 3
Consumer Healthcare products 184 6
(a)

Lipitor and Caduet lost exclusiv ity in the U.S. in Nov ember 2011 and v arious other major markets in 2011 and 2012. Xalatan lost exclusiv ity in the U.S. in March 2011
and in the majority of European markets in January 2012. Aromasin lost exclusiv ity in the U.S. in April 2011, in the majority of European markets in July 2011 and in
Japan in Nov ember 2011. Geodon lost exclusiv ity in the U.S. in March 2012. Detrol immediate release (Detrol IR) lost exclusiv ity in the U.S. in June 2012. Detrol lost
exclusiv ity in most European markets in September 2012. We lost exclusiv ity f or Aricept 5mg and 10mg tablets, which are included in Alliance rev enues, in the U.S.
in Nov ember 2010 and in the majority of European markets in February 2012 and April 2012. Lower rev enues f or Spiriv a in certain European countries, Canada and
Australia ref lect f inal-y ear terms of our collaboration agreements in those markets.
(b)
Represents direct sales under license agreement with Eisai Co., Ltd.
(c)

Includes the All other category included in the Revenues Major Biopharmaceutical Products table presented in this Financial Rev iew, which includes sales of
generic atorv astatin.
Income from continuing operations was $9.5 billion in 2012 compared to $8.4 billion in 2011 , primarily ref lecting, among other items:
a settlement with the U.S. Internal Revenue Service and the resolution of certain f oreign tax audits in 2012, all of which related to
multiple tax years, which resulted in a tax benef it of approximately $1.1 billion and $310 million, respectively, representing tax and
interest (see f urther discussion in Notes to Consolidated Financial Statements Note 5A. Tax Matters: Taxes on Income from
Continuing Operations );
purchase accounting charges that were approximately $1.8 billion (pre-tax) lower in 2012 than 2011;
acquisition-related costs that were approximately $1.0 billion (pre-tax) lower in 2012 than 2011; and
charges related to our non-acquisition related cost-reduction and productivity initiatives that were approximately $645 million (pre-tax)
lower in 2012 than 2011,
partially of f set by:
the loss of exclusivity of Lipitor, as well as certain other products, resulting in lower revenues and associated expenses (see also "The
Loss or Expiration of Intellectual Property Rights" section of this Financial Review);
charges f or certain legal matters that were approximately $1.4 billion (pre-tax) higher in 2012 than 2011 (see f urther discussion in the
Costs and ExpensesOther DeductionsNet section of this Financial Review and Notes to Consolidated Financial Statements
Note 4. Other DeductionsNet ); and
charges in 2012 associated with the separation of Zoetis of $325 million (pre-tax) (see f urther discussion in the Costs and
ExpensesSelling, Inf ormational and Administrative (SI&A) Expenses" and "Other DeductionsNet sections of this Financial Review
and Notes to Consolidated Financial Statements Note 4. Other DeductionsNet ).
Also, see the Discontinued Operations section of this Financial Review.
2012 Financial Report

3
Financial Review
Pf izer Inc. and Subsidiary Companies


Our Operating Environment
U.S. Healthcare Legislation
Principal Provisions Affecting Us
In March 2010, the Patient Protection and Af f ordable Care Act, as amended by the Health Care and Education Reconciliation Act (together, the
U.S. Healthcare Legislation, and also known as the Af f ordable Care Act), was enacted in the U.S. In June 2012, the U.S. Supreme Court upheld
the constitutionality of the requirement in the U.S. Healthcare Legislation f or Americans to have insurance (called the individual mandate) (f or
additional inf ormation, see the Government Regulation and Price Constraints section of our 2012 Annual Report on
Form 10-K). This legislation has resulted in both current and longer-term impacts on us, as discussed below.
Certain provisions of the U.S. Healthcare Legislation became ef f ective in 2010 or in 2011, while other provisions will become ef f ective on various
dates. The principal provisions af f ecting us provide f or the f ollowing:
an increase, f rom 15.1% to 23.1%, in the minimum rebate on branded prescription drugs sold to Medicaid benef iciaries (ef f ective January 1,
2010);
extension of Medicaid prescription drug rebates to drugs dispensed to enrollees in certain Medicaid managed care organizations (ef f ective
March 23, 2010);
expansion of the types of institutions eligible f or the Section 340B discounts f or outpatient drugs provided to hospitals serving a
disproportionate share of low-income individuals and meeting the qualif ication criteria under Section 340B of the Public Health Service Act of
1944 (ef f ective January 1, 2010);
discounts on branded prescription drug sales to Medicare Part D participants who are in the Medicare coverage gap, also known as the
doughnut hole (ef f ective January 1, 2011); and
a f ee payable to the f ederal government (which is not deductible f or U.S. income tax purposes) based on our prior-calendar-year share
relative to other companies of branded prescription drug sales to specif ied government programs (ef f ective January 1, 2011, with the total
f ee to be paid each year by the pharmaceutical industry increasing annually through 2018).
Impacts to our 2012 Results
We recorded the f ollowing amounts in 2012 as a result of the U.S. Healthcare Legislation:
$593 million recorded as a reduction to Revenues, related to the higher, extended and expanded rebate provisions and the Medicare
coverage gap discount provision; and
$336 million recorded in Selling, informational and administrative expenses , related to the f ee payable to the f ederal government ref erred to
above.
Impacts to our 2011 Results
We recorded the f ollowing amounts in 2011 as a result of the U.S. Healthcare Legislation:
$648 million recorded as a reduction to Revenues, related to the higher, extended and expanded rebate provisions and the Medicare
coverage gap discount provision; and
$248 million recorded in Selling, informational and administrative expenses , related to the f ee payable to the f ederal government ref erred to
above.
Other Impacts
Individual Mandate The f inancial impact of U.S. healthcare ref orm may be af f ected by certain additional developments over the next f ew
years, including pending implementation guidance relating to the U.S. Healthcare Legislation and certain healthcare ref orm proposals. In
addition, the U.S. Healthcare Legislation requires that, except in certain circumstances, individuals obtain health insurance beginning in 2014,
and it also provides f or an expansion of Medicaid coverage in 2014. It is expected that, as a result of these provisions, there will be a
substantial increase in the number of Americans with health insurance beginning in 2014, a signif icant portion of whom will be eligible f or
Medicaid. We anticipate that this will increase demand f or pharmaceutical products overall. However, because of the substantial mandatory
rebates we pay under the Medicaid program and because a signif icant percentage of the Americans who will be included in the coverage
expansion are expected to be young, we do not anticipate that implementation of the coverage expansion will generate signif icant additional
revenues f or Pf izer. In June 2012, the U.S. Supreme Court upheld the constitutionality of all provisions of the U.S. Healthcare Legislation, with
the exception of the provisions concerning Medicaid expansion; as a result of the Court's ruling regarding Medicaid, states can choose not to
expand their Medicaid populations without losing f ederal f unding f or their existing Medicaid populations. The Congressional Budget Of f ice
estimates that the new state f lexibility is likely to result in six million f ewer new Medicaid enrollees than were initially expected to enroll as a
result of the eligibility expansion and that half of these people are expected to gain coverage through Health Insurance Exchanges, and the
remaining three million are likely to remain uninsured.
Biotechnology Products The U.S. Healthcare Legislation also created a f ramework f or the approval of biosimilars (also known as f ollow-
on biologics) f ollowing the expiration of 12 years of exclusivity f or the innovator biologic, with a potential six-month pediatric extension.
Under the U.S. Healthcare Legislation, biosimilars applications may not be submitted until f our years af ter the approval of the ref erence,
4

2012 Financial Report
Financial Review
Pf izer Inc. and Subsidiary Companies


innovator biologic. The U.S. Food and Drug Administration (FDA) is responsible f or implementation of the legislation, which will require the
FDA to address such key topics as the type and extent of data needed to establish biosimilarity; the data required to achieve
interchangeability compared to biosimilarity; the naming convention f or biosimilars; the tracking and tracing of adverse events; and the
acceptability of data using a non-U.S. licensed comparator to demonstrate biosimilarity and/or interchangeability with a U.S.-licensed
ref erence product. The FDA has begun to address some of these issues with the February 2012 release of three draf t guidance documents.
Specif ically, the FDA has clarif ied that biosimilar applicants may use a non-U.S. licensed comparator in certain studies to support a
demonstration of biosimilarity to a U.S.-licensed ref erence product. If competitors are able to obtain marketing approval f or biosimilars
ref erencing our biotechnology products, our biotechnology products may become subject to competition f rom biosimilars, with attendant
competitive pressure, and price reductions could f ollow. Expiration or successf ul challenge of applicable patent rights could trigger this
competition, assuming any relevant exclusivity period has expired. As part of our business strategy, we are developing biosimilar medicines
using our expertise in biologics and our regulatory, commercial and manuf acturing strengths. As such, a better-def ined biosimilars approval
pathway will assist us in pursuing approval of our own biosimilar products in the U.S.
The Loss or Expiration of Intellectual Property Rights
As is inherent in the biopharmaceutical industry, the loss or expiration of intellectual property rights can have a signif icant adverse ef f ect on our
revenues. Many of our products have multiple patents that expire at varying dates, thereby strengthening our overall patent protection. However,
once patent protection has expired or has been lost prior to the expiration date as a result of a legal challenge, we lose exclusivity on these
products, and generic pharmaceutical manuf acturers generally produce similar products and sell them f or a lower price. This price competition
can substantially decrease our revenues f or products that lose exclusivity, of ten in a very short period of time. While small molecule products are
impacted in such a manner, biologics currently have additional barriers to entry related to the manuf acture of such products and, unlike small
molecule generics, biosimilars are not necessarily identical to the ref erence products. Theref ore, generic competition with respect to biologics
may not be as signif icant. A number of our current products are expected to f ace signif icantly increased generic competition over the next f ew
years.
Our f inancial results in 2012 and our f inancial guidance f or 2013, as applicable, ref lect the impact of the loss of exclusivity of various products
and the expiration of certain alliance product contract rights discussed below (see the Our Financial Guidance f or 2013 section of this Financial
Review). Specif ically:
Lipitor in the U.S. We lost exclusivity f or Lipitor in the U.S. in November 2011. The entry of multi-source generic competition in the U.S.
began in May 2012, with attendant increased competitive pressures. Through the end of 2011, sales of Lipitor in the U.S. were reported in
our Primary Care business unit. Beginning in 2012, sales of Lipitor in the U.S. were reported in our Established Products business unit.
Lipitor in international marketsLipitor lost exclusivity in Japan in June 2011 (with generic competition occurring in November 2011), Australia
in April 2012 and most of developed Europe in March 2012 and May 2012. In Europe, Japan and Australia, Lipitor now f aces multi-source
generic competition. In other international markets, Lipitor has lost exclusivity in certain countries and will lose exclusivity at various times in
other countries.
Prior to loss of exclusivity, sales of Lipitor in each market except f or those in Emerging Markets, are reported in our Primary Care business
unit. Typically, as of the beginning of the f iscal year f ollowing loss of exclusivity in a market, sales of Lipitor in that market, except f or those
in Emerging Markets, are reported in our Established Products business unit. Sales of Lipitor in the U.S. and Japan have been reported in our
Established Products business unit since January 1, 2012, and sales of Lipitor in developed Europe began to be reported in our Established
Products business unit on January 1, 2013.
Other recent loss of exclusivity impactsIn the U.S., we lost exclusivity f or Vf end tablets in February 2011, f or Xalatan in March 2011 and
f or Geodon in March 2012. The basic U.S. patent (including the six-month pediatric exclusivity period) f or Protonix expired in January 2011.
The basic patent f or Vf end tablets in Brazil expired in January 2011. We lost exclusivity f or Aromasin in the U.S. in April 2011, in the majority
of European markets in July 2011 and in Japan in November 2011. We lost exclusivity f or Xalatan and Xalacom in the majority of European
markets in January 2012. We lost exclusivity f or Aricept in the majority of European markets in February 2012 and April 2012. Caduet lost
exclusivity in the U.S. in November 2011 and in the majority of European markets in March and May 2012. We lost exclusivity in the U.S. in
September 2012 f or Revatio tablet, and in June 2012 f or Detrol IR. Detrol lost exclusivity in most European markets in September 2012.
In addition, we expect to lose exclusivity f or various other products in various markets over the next f ew years. For additional inf ormation,
including with regard to the expiration of the patents f or various products in the U.S., European Union (EU) and Japan, see the Patents and
Intellectual Property Rights section of our 2012 Annual Report on Form 10-K.
We will continue to aggressively def end our patent rights whenever we deem appropriate. For a discussion of certain recent developments with
respect to patent litigation, see Notes to Consolidated Financial Statements Note 17. Commitments and Contingencies .
In Alliance revenues, we expect to be negatively impacted by the f ollowing over the next f ew years:
AriceptOur rights to Aricept in Japan returned to Eisai Co., Ltd. in December 2012. We expect to lose exclusivity f or the Aricept 23mg tablet
in the U.S. in July 2013.
SpirivaOur collaboration with Boehringer Ingelheim (BI) f or Spiriva expires on a country-by-country basis between 2012 and 2016,
including the expiration in certain EU markets and Canada and Australia in 2012, which adversely impacted our 2012 results. We expect to
experience a graduated decline in revenues f rom Spiriva through 2016.
EnbrelOur U.S. and Canada collaboration agreement with Amgen Inc. f or Enbrel will expire in October 2013. While we are entitled to
royalties f or 36 months thereaf ter, we expect that those royalties will be signif icantly less than our current share of Enbrel prof its f rom U.S.
and Canada sales. Outside the U.S. and Canada, our exclusive rights to Enbrel continue in perpetuity.
2012 Financial Report

5
Financial Review
Pf izer Inc. and Subsidiary Companies


Rebif Our collaboration agreement with EMD Serono Inc. (Serono) to co-promote Rebif in the U.S. will expire either at the end of 2013 or the
end of 2015, depending on the outcome of pending litigation between Pf izer and Serono concerning the interpretation of the agreement. We
believe that we are entitled to a 24-month extension of the agreement to the end of 2015. Serono believes that we are not entitled to the
extension and that the agreement will expire at the end of 2013. In October 2011, the Philadelphia Court of Common Pleas sustained our
preliminary objections and dismissed Seronos complaint, and Serono has appealed the decision to the Superior Court of Pennsylvania. For
additional inf ormation, see Notes to Consolidated Financial Statements Note 17. Commitments and Contingencies .
Pipeline Productivity and Regulatory Environment
The discovery and development of saf e, ef f ective new products, as well as the development of additional uses f or existing products, are
necessary f or the continued strength of our businesses. We are conf ronted by increasing regulatory scrutiny of drug saf ety and ef f icacy, even
as we continue to gather saf ety and other data on our products, bef ore and af ter the products have been launched. Our product lines must be
replenished over time in order to of f set revenue losses when products lose their exclusivity, as well as to provide f or revenue and earnings
growth. We devote considerable resources to research and development (R&D) activities. These activities involve a high degree of risk and may
take many years, and with respect to any specif ic research and development project, there can be no assurance that the development of any
particular product candidate or new indication f or an in-line product will achieve desired clinical endpoints and saf ety prof ile, will be approved by
regulators or will be successf ul commercially. We continue to closely evaluate our global research and development f unction and pursue
strategies intended to improve innovation and overall productivity in R&D by prioritizing areas that we believe have the greatest scientif ic and
commercial promise, utilizing appropriate risk/return prof iles and f ocusing on areas that we believe have the highest potential to deliver value in
the near term and over time.
During the development of a product, we conduct clinical trials to provide data on the drugs saf ety and ef f icacy to support the evaluation of its
overall benef it-risk prof ile f or a particular patient population. In addition, af ter a product has been approved and launched, we continue to monitor
its saf ety as long as it is available to patients, and post-marketing trials may be conducted, including trials requested by regulators and trials that
we do voluntarily to gain additional medical knowledge. For the entire lif e of the product, we collect saf ety data and report potential problems to
the FDA. The FDA and regulatory authorities in other jurisdictions may evaluate potential saf ety concerns and take regulatory actions in response,
such as updating a products labeling, restricting the use of a product, communicating new saf ety inf ormation to the public, or, in rare cases,
removing a product f rom the market.
Pricing and Access Pressures
Governments, managed care organizations and other payer groups continue to seek increasing discounts on our products through a variety of
means, such as leveraging their purchasing power, implementing price controls, and demanding price cuts (directly or by rebate actions). In
particular, we continue to f ace widespread downward pressures on international pricing and reimbursement, particularly in developed European
markets, Japan and in certain emerging markets, all of which have a large government share of pharmaceutical spending and are f acing a dif f icult
f iscal environment. Specif ic pricing pressures in 2012 included measures to reduce pharmaceutical prices and expenditures in Spain, Italy,
France, Greece, Ireland, Portugal and Japan. Also, health insurers and benef it plans continue to limit access to certain of our medicines by
imposing f ormulary restrictions in f avor of the increased use of generics. In prior years, Presidential advisory groups tasked with reducing
healthcare spending have recommended and legislative changes have been proposed that would allow the U.S. government to directly negotiate
prices with pharmaceutical manuf acturers on behalf of Medicare benef iciaries, which we expect would restrict access to and reimbursement f or
our products. There also continue to be legislative proposals to amend U.S. laws to allow the importation into the U.S. of prescription drugs f rom
outside the U.S., which can be sold at prices that are regulated by the governments of various f oreign countries. If importation of medicines is
allowed, an increase in cross-border trade in medicines subject to f oreign price controls in other countries could occur and negatively impact our
revenues.
In August 2011, the f ederal Budget Control Act of 2011 (the Budget Control Act) was enacted in the U.S. The Budget Control Act includes
provisions to raise the U.S. Treasury Departments borrowing limit, known as the debt ceiling, and provisions to reduce the f ederal def icit by $2.4
trillion between 2012 and 2021. Def icit-reduction targets include $900 billion of discretionary spending reductions associated with the Department
of Health and Human Services and various agencies charged with national security, but those discretionary spending reductions do not include
programs such as Medicare and Medicaid or direct changes to pharmaceutical pricing, rebates or discounts. The Of f ice of Management and
Budget (OMB) is responsible f or identif ying the remaining $1.5 trillion of def icit reductions, which will be divided evenly between def ense and non-
def ense spending. Under this OMB review process, Social Security, Medicaid, Veteran Benef its and certain other spending categories are
excluded f rom consideration, but reductions in payments to Medicare providers may be made, although any such reductions are prohibited by law
f rom exceeding 2% of the originally budgeted amount. Additionally, certain payments to Medicare Part D plans, such as low-income subsidy
payments, are exempt f rom reduction. While we do not know the specif ic nature of the spending reductions under the Budget Control Act that will
af f ect Medicare, we do not expect that those reductions will have a material adverse impact on our results of operations. However, any
signif icant spending reductions af f ecting Medicare, Medicaid or other publicly f unded or subsidized health programs that may be implemented,
and/or any signif icant additional taxes or f ees that may be imposed on us, as part of any broader def icit-reduction ef f ort or legislative replacement
f or the Budget Control Act, could have an adverse impact on our results of operations.
Enf orcement of the U.S. f ederal debt ceiling has been suspended through May 18, 2013. If the U.S. f ederal government f ails to suspend
enf orcement of the debt ceiling beyond May 18, 2013 or to increase the debt ceiling and, as a result, is unable to satisf y its f inancial obligations,
including under Medicare, Medicaid and other publicly f unded or subsidized health programs, our results of operations could be adversely
impacted.
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Competition Among Branded Products
Many of our products f ace competition in the f orm of branded products, which treat similar diseases or indications. These competitive pressures
can have an adverse impact on our results of operations.
The Global Economic Environment
In addition to the industry-specif ic f actors discussed above, we, like other businesses, continue to f ace the ef f ects of the challenging economic
environment, which have impacted our biopharmaceutical operations in the U.S. and Europe, including the countries that use the euro, af f ecting
the perf ormance of products such as Lyrica, Enbrel, Prevnar 13/Prevenar 13 and Celebrex, and in a number of emerging markets. We believe that
patients, experiencing the ef f ects of the challenging economic environment, including high unemployment levels, and increases in co-pays,
sometimes switch to generic products, delay treatments, skip doses or use less ef f ective treatments to reduce their costs. Challenging economic
conditions in the U.S. also have increased the number of patients in the Medicaid program, under which sales of pharmaceuticals are subject to
substantial rebates and, in many states, to f ormulary restrictions limiting access to brand-name drugs, including ours. In addition, we continue to
experience pricing pressure in various markets around the world, including in developed European markets, Japan and in a number of emerging
markets, with government-mandated reductions in prices f or certain biopharmaceutical products and government-imposed access restrictions in
certain countries.
Signif icant portions of our revenues and earnings are exposed to changes in f oreign exchange rates. We seek to manage our f oreign exchange
risk in part through operational means, including managing same-currency revenues in relation to same-currency costs and same-currency
assets in relation to same-currency liabilities. Depending on market conditions, f oreign exchange risk also is managed through the use of
derivative f inancial instruments and f oreign currency debt. As we operate in multiple f oreign currencies, including the euro, the Japanese yen, the
U.K. pound, the Chinese renminbi, the Canadian dollar and approximately 100 other currencies, changes in those currencies relative to the U.S.
dollar will impact our revenues and expenses. If the U.S. dollar weakens against a specif ic f oreign currency, our revenues will increase, having a
positive impact, and our overall expenses will increase, having a negative impact, on net income. Likewise, if the U.S. dollar strengthens against a
specif ic f oreign currency, our revenues will decrease, having a negative impact, and our overall expenses will decrease, having a positive impact
on net income. Theref ore, signif icant changes in f oreign exchange rates can impact our results and our f inancial guidance.
Despite the challenging f inancial markets, Pf izer maintains a strong f inancial position. Due to our signif icant operating cash f lows, f inancial assets,
access to capital markets and available lines of credit and revolving credit agreements, we continue to believe that we have the ability to meet our
liquidity needs f or the f oreseeable f uture. Our long-term debt is rated investment grade by both Standard & Poors (S&P) and Moodys Investors
Service. As market conditions change, we continue to monitor our liquidity position. We have taken and will continue to take a conservative
approach to our f inancial investments. Both short-term and long-term investments consist primarily of high-quality, highly liquid, well-diversif ied,
available-f or-sale debt securities. For f urther discussion of our f inancial condition, see the Analysis of Financial Condition, Liquidity and Capital
Resources section of this Financial Review.
Our Strategy
We believe that our medicines provide signif icant value f or both healthcare providers and patients, not only f rom the improved treatment of
diseases but also f rom a reduction in other healthcare costs, such as emergency room or hospitalization costs, as well as improvements in
health, wellness and productivity. We continue to actively engage in dialogues about the value of our products and how we can best work with
patients, physicians and payers to prevent and treat disease and improve outcomes. We will work within the current legal and pricing structures,
as well as continue to review our pricing arrangements and contracting methods with payers, to maximize access to patients and minimize any
adverse impact on our revenues.
On November 30, 2012, we completed the sale of our Nutrition business to Nestl. On February 6, 2013, we completed the sale of approximately
19.8% of our ownership stake in Zoetis through an initial public of f ering. We may in the f uture make a tax-f ree distribution to our shareholders of
all or a portion of our remaining equity interest in Zoetis, which may include one or more distributions ef f ected as a dividend to all Pf izer
shareholders, one or more distributions in exchange f or Pf izer shares or other securities, or any combination thereof . We will consider all
alternatives to maximize the af ter-tax return f or our shareholders, including a tax-f ree distribution to our shareholders. If pursued, any disposition
would be subject to various conditions, including receipt of any necessary regulatory or other approvals and the existence of satisf actory market
conditions.
If we decide to f ully separate Zoetis, then, f ollowing such separation, Pf izer will be a global biopharmaceutical company with an innovative core
(our Primary Care, Specialty Care and Oncology units) and a value core (our Established Products unit) in developed markets, with dif f erent cost
structures and operating drivers. Our Emerging Markets unit has a geographic f ocus that includes both the innovative and value cores in those
markets. The innovative core includes a portf olio of innovative, largely patent-protected, in-line products and an R&D organization f ocused on
continuing to build a robust pipeline of highly dif f erentiated product candidates in areas of unmet medical needs. The value core includes a
portf olio of products that have lost exclusivity or are approaching the loss of exclusivity that help meet the global need f or less expensive, quality
medicines. In addition, we have a complementary Consumer Healthcare business with several well-known brands.
In response to the challenging operating environment, we have taken and continue to take many steps to strengthen our Company and better
position ourselves f or the f uture. We believe in a comprehensive approach to our challengesorganizing our business to maximize research,
development and commercial opportunities, improving the perf ormance of our innovative core, making the right capital allocation decisions, and
protecting our intellectual property.
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We continue to closely evaluate our global research and development f unction and pursue strategies intended to improve innovation and overall
productivity in R&D by prioritizing areas that we believe have the greatest scientif ic and commercial promise, utilizing appropriate risk/return
prof iles and f ocusing on areas that we believe have the highest potential to deliver value in the near term and over time. To that end, our research
primarily f ocuses on f ive high-priority areas that have a mix of small and large moleculesimmunology and inf lammation; oncology; cardiovascular
and metabolic diseases; neuroscience and pain; and vaccines. In addition to reducing the number of disease areas of f ocus, we have realigned
and reduced our research and development f ootprint and outsourced certain f unctions that do not drive competitive advantage f or Pf izer. For
additional inf ormation, see the Our Financial Guidance f or 2013 and Costs and ExpensesRestructuring Charges and Other Costs Associated
with Acquisitions and Cost-Reduction/Productivity Initiatives sections of this Financial Review.
While a signif icant portion of R&D is done internally, we continue to seek to expand our pipeline by entering into agreements with other companies
to develop, license or acquire promising compounds, technologies or capabilities. Collaboration, alliance and license agreements and acquisitions
allow us to capitalize on these compounds to expand our pipeline of potential f uture products. In addition, collaborations and alliances allow us to
share risk and to access external scientif ic and technological expertise.
For inf ormation about our pending new drug applications (NDA) and supplemental f ilings, see the RevenuesProduct Developments
Biopharmaceutical section of this Financial Review.
We continue to build on our broad portf olio of businesses through various business development transactions. See the Our Business
Development Initiatives section of this Financial Review f or inf ormation on our recent transactions and strategic investments that we believe
complement our businesses.
We continue to aggressively def end our patent rights against increasingly aggressive inf ringement whenever appropriate (see Notes to
Consolidated Financial Statements Note 17. Commitments and Contingencies ), and we will continue to support ef f orts that strengthen
worldwide recognition of patent rights while taking necessary steps to ensure appropriate patient access. In addition, we will continue to employ
innovative approaches to prevent counterf eit pharmaceuticals f rom entering the supply chain and to achieve greater control over the distribution
of our products, and we will continue to participate in the generics market f or our products, whenever appropriate, once they lose exclusivity.
We remain f ocused on achieving an appropriate cost structure f or the Company. For inf ormation regarding our cost-reduction and productivity
initiatives, see the Costs and ExpensesRestructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity
Initiatives section of this Financial Review.
Our strategy also includes directly enhancing shareholder value through dividends and share repurchases. On December 17, 2012, our Board of
Directors declared a f irst-quarter 2013 dividend of $0.24 per share, an increase f rom the $0.22 per-share quarterly dividend paid during 2012.
Also, on November 30, 2012, a new $10 billion share repurchase plan, to be utilized over time, became ef f ective.
Our Business Development Initiatives
We are committed to capitalizing on growth opportunities by advancing our own pipeline and maximizing the value of our in-line products, as well
as through various f orms of business development, which can include alliances, licenses, joint ventures, dispositions and acquisitions. We view
our business development activity as an enabler of our strategies, and we seek to generate prof itable revenue growth and enhance shareholder
value by pursuing a disciplined, strategic and f inancial approach to evaluating business development opportunities. We are especially interested in
opportunities in our f ive high-priority therapeutic areasimmunology and inf lammation; oncology; cardiovascular and metabolic diseases;
neuroscience and pain; and vaccinesand in emerging markets and established products. We assess our businesses and assets as part of our
regular, ongoing portf olio review process and also continue to consider business development activities f or our businesses.
The most signif icant recent transactions and events are described below.
On February 6, 2013, an initial public of f ering of Zoetis was completed, pursuant to which we sold 99.015 million shares of Zoetis in
exchange f or the retirement of approximately $2.5 billion of Pf izer commercial paper issued on January 10, 2013. The IPO represented
approximately 19.8% of the total outstanding Zoetis shares. For additional inf ormation, see Notes to Consolidated Financial Statements
Note 19A. Subsequent Events: Zoetis Debt Offering and Initial Public Offering.
On November 30, 2012, we completed the sale of our Nutrition business to Nestl f or $11.85 billion in cash. For additional inf ormation, see
Notes to Consolidated Financial Statements Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method
Investments: Divestitures .
On November 27, 2012, we completed our acquisition of NextWave Pharmaceuticals Incorporated (NextWave), a privately held, specialty
pharmaceutical company. As a result of the acquisition, Pf izer now holds exclusive North American rights to Quillivant XR (methylphenidate
hydrochloride), the f irst once-daily liquid medication approved in the U.S. f or the treatment of ADHD. The total consideration f or the acquisition
was approximately $442 million. For additional inf ormation, see Notes to Consolidated Financial Statements Note 2A. Acquisitions,
Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions .
On October 31, 2012, our equity-method investee, ViiV Healthcare Limited (ViiV), acquired the remaining 50% of Shionogi-ViiV Healthcare
LLC, its equity-method investee, f rom Shionogi & Co., Ltd. (Shionogi) in consideration f or a 10% interest in ViiV (newly issued shares) and
contingent consideration in the f orm of f uture royalties. For additional inf ormation, see Notes to Consolidated Financial Statements Note 2D.
Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Equity-Method Investments .
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On September 6, 2012, Pf izer and Zhejiang Hisun Pharmaceuticals Co., Ltd., a leading Chinese pharmaceutical company, created a new
company, Hisun Pf izer Pharmaceuticals Company Limited (HPP), to develop, manuf acture and commercialize of f -patent pharmaceutical
products in China and global markets. HPP was established with registered capital of $250 million. For additional inf ormation, see Notes to
Consolidated Financial Statements Note 2D. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:
Equity-Method Investments.
On August 13, 2012, we announced that we entered into an agreement with AstraZeneca f or the global over-the-counter (OTC) rights f or
Nexium, a leading prescription drug currently approved to treat the symptoms of gastroesophageal ref lux disease. We made an upf ront
payment of $250 million to AstraZeneca, and AstraZeneca is eligible to receive milestone payments of up to $550 million based on product
launches and level of sales as well as royalty payments based on sales. A marketing authorization application f or OTC Nexium in a 20mg
tablet f orm was f iled with the European Medicines Agency in June 2012. A new drug application f iling f or OTC Nexium in the U.S. in a 20mg
delayed-release capsule is targeted f or the f irst half of 2013. For additional inf ormation, see Notes to Consolidated Financial Statements
Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions .
On March 12, 2012, Biocon and Pf izer announced the conclusion of their October 18, 2010 alliance to commercialize Biocons biosimilar
versions of insulin and insulin analog products. The companies agreed that, due to the individual priorities f or their respective biosimilars
businesses, each company would move f orward independently.
On February 26, 2012, we completed our acquisition of Alacer Corp. (Alacer), a company that manuf actures, markets and distributes
Emergen-C, a line of ef f ervescent, powdered drink mix vitamin supplements that is the largest-selling branded vitamin C line in the U.S. For
additional inf ormation, see Notes to Consolidated Financial Statements Note 2A. Acquisitions, Divestitures, Collaborative Arrangements
and Equity-Method Investments: Acquisitions.
On December 1, 2011, we completed our acquisition of the consumer healthcare business of Ferrosan Holding A/S (Ferrosan), a Danish
company engaged in the sale of science-based consumer healthcare products, including dietary supplements and lif estyle products,
primarily in the Nordic region and the emerging markets of Russia and Central and Eastern Europe. Our acquisition of Ferrosans consumer
healthcare business strengthens our presence in dietary supplements with a new set of brands and pipeline products. For additional
inf ormation, see Notes to Consolidated Financial Statements Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-
Method Investments: Acquisitions.
On November 30, 2011, we completed our acquisition of Excaliard Pharmaceuticals, Inc. (Excaliard), a privately owned biopharmaceutical
company. Excaliards lead compound, EXC-001, a Phase 2 compound, is an antisense oligonucleotide designed to interrupt the process of
skin f ibrosis by inhibiting expression of connective tissue growth f actor (CTGF). The total consideration f or the acquisition was
approximately $174 million. For additional inf ormation, see Notes to Consolidated Financial Statements Note 2A. Acquisitions, Divestitures,
Collaborative Arrangements and Equity-Method Investments: Acquisitions .
In October 2011, we entered into an agreement with GlycoMimetics, Inc. f or their investigational compound GMI-1070. GMI-1070 is a pan-
selectin antagonist currently in Phase 2 development f or the treatment of vaso-occlusive crisis associated with sickle cell disease. GMI-1070
has received Orphan Drug and Fast Track status f rom the FDA. Under the terms of the agreement, Pf izer received an exclusive worldwide
license to GMI-1070 f or vaso-occlusive crisis associated with sickle cell disease and f or other diseases f or which the drug candidate may
be developed. GlycoMimetics is responsible f or completion of the ongoing Phase 2 trial under Pf izers oversight, and Pf izer is responsible f or
all f urther development and commercialization. GlycoMimetics is entitled to payments up to approximately $340 million, including an upf ront
payment as well as development, regulatory and commercial milestones. GlycoMimetics is also eligible f or royalties on any sales.
On September 20, 2011, we completed our cash tender of f er f or the outstanding shares of Icagen, Inc. (Icagen), resulting in an approximate
70% ownership of the outstanding shares of Icagen, a biopharmaceutical company f ocused on discovery, development and
commercialization of novel, orally-administered small molecule drugs that modulate ion channel targets. On October 27, 2011, we acquired all
of the remaining shares of Icagen. For additional inf ormation, see Notes to Consolidated Financial Statements Note 2A. Acquisitions,
Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions .
On August 1, 2011, we sold our Capsugel business f or approximately $2.4 billion in cash. For additional inf ormation, see Notes to
Consolidated Financial Statements Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:
Divestitures .
On January 31, 2011 (the acquisition date), we completed a tender of f er f or the outstanding shares of common stock of King and acquired
approximately 92.5% of the outstanding shares f or approximately $3.3 billion in cash. On February 28, 2011, we acquired the remaining
shares of King f or approximately $300 million in cash. As a result, the total f air value of consideration transf erred f or King was approximately
$3.6 billion in cash ($3.2 billion, net of cash acquired). For additional inf ormation, see Notes to Consolidated Financial Statements Note 2A.
Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions.
On November 8, 2010, we consummated our partnership to develop and commercialize generic medicines with Laboratrio Teuto Brasileiro
S.A. (Teuto) a leading generics company in Brazil. As part of the transaction, we acquired a 40% equity stake in Teuto, and entered into a
series of commercial agreements. The partnership is enhancing our position in Brazil, a key emerging market, by providing access to Teutos
portf olio of products. Through this partnership, we have access to signif icant distribution networks in rural and suburban areas in Brazil and
the opportunity to register and commercialize Teutos products in various markets outside Brazil. For additional inf ormation, see also Notes to
Consolidated Financial Statements Note 2D. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:
Equity-Method Investments .
On October 6, 2010, we completed our acquisition of FoldRx Pharmaceuticals, Inc. (FoldRx), a privately held drug discovery and clinical
development company. FoldRxs lead product candidate, Vyndaqel (taf amidis meglumine), was approved in the EU in November 2011 and our
new drug application was accepted f or review in the U.S. in February 2012. This product is a f irst-in-class oral therapy f or the treatment of
transthyretin f amilial amyloid polyneuropathy (TTR-FAP), a progressively f atal genetic neurodegenerative disease, f or which
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liver transplant is the only treatment option currently available. Our acquisition of FoldRx has increased our presence in the growing rare
medical disease market, which complements our Specialty Care unit. For additional inf ormation regarding Vyndaqel (taf amidis meglumine),
see the Product DevelopmentsBiopharmaceutical section of this Financial Review. The total consideration f or the acquisition was
approximately $400 million. For additional inf ormation about the acquisition, see Notes to Consolidated Financial Statements Note 2A.
Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions .
Our Financial Guidance for 2013
We f orecast 2013 revenues of $56.2 billion to $58.2 billion, Reported diluted earnings per common share (EPS) of $1.50 to $1.65 and Adjusted
diluted EPS of $2.20 to $2.30. The exchange rates assumed in connection with the 2013 f inancial guidance are as of mid-January 2013. For an
understanding of Adjusted income and Adjusted diluted EPS (both non-GAAP f inancial measures), see the Adjusted Income section of this
Financial Review.
The 2013 f inancial guidance ref lects the benef it of a f ull-year contribution f rom Zoetis. We plan to update this guidance in April 2013 to ref lect the
impact of the recent initial public of f ering (IPO) of an approximate 19.8% ownership interest in Zoetis. For additional inf ormation on the IPO, see
Notes to Consolidated Financial Statements Note 19A. Subsequent Events: Zoetis Debt Offering and Initial Public Offering .
The f ollowing table provides a reconciliation of 2013 Adjusted income and Adjusted diluted EPS guidance to 2013 Reported net income attributable
to Pf izer Inc. and Reported diluted EPS attributable to Pf izer Inc. common shareholders guidance:
Full-Year 2013 Guidance
(BILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
Net Income
(a)
Diluted EPS
(a)
Adjusted income/adjusted diluted EPS
(b)
guidance ~$15.4 - $16.1 ~$2.20 - $2.30
Purchase accounting impacts of transactions completed as of December 31, 2012 (3.4) (0.49)
Acquisition-related costs (0.4 - 0.5) (0.06 - 0.07)
Non-acquisition-related restructuring costs
(c)
(0.5 - 0.8) (0.8 - 0.12)
Costs associated with the separation of Zoetis
(d)
(0.2) (0.2)
Reported net income attributable to Pf izer Inc./diluted EPS guidance
(d)
~$10.5 - $11.6 ~$1.50 - $1.65
(a)

Does not assume the completion of any business dev elopment transactions not completed as of December 31, 2012, including any one-time upf ront pay ments
associated with such transactions, and excludes the potential ef f ects of the resolution of litigation-related matters not substantially resolv ed as of December 31,
2012 .
(b)
For an understanding of Adjusted income and Adjusted diluted EPS, see the Adjusted Income section of this Financial Rev iew.
(c)

Includes amounts related to our initiativ es to reduce R&D spending, including our realigned R&D f ootprint, and amounts related to other cost-reduction and
productiv ity initiativ es. In our reconciliation between Net income attributable to Pfizer Inc. , as reported under principles generally accepted in the United States of
America (U.S. GAAP), and Adjusted income, and in our reconciliation between diluted EPS, as reported under U.S. GAAP, and Adjusted diluted EPS, these amounts
are categorized as Certain Signif icant Items (see the Adjusted IncomeReconciliation section of this Financial Rev iew).
(d)

Reported Diluted EPS guidance includes a $0.02 unf av orable impact f or certain non-recurring costs that we expect to incur related to the separation of Zoetis,
including new branding, the creation of a standalone inf rastructure, site separation and certain legal registration and patent assignment costs.
Our 2013 f inancial guidance is subject to a number of f actors and uncertaintiesas described in the Forward-Looking Inf ormation and Factors
That May Af f ect Future Results, Our Operating Environment and Our Strategy sections of this Financial Review and in Part I, Item 1A, Risk
Factors, of our 2012 Annual Report on Form 10-K.
SIGNIFICANT ACCOUNTING POLICIES AND APPLICATION OF CRITICAL ACCOUNTING
ESTIMATES
For a description of our signif icant accounting policies, see Notes to Consolidated Financial Statements Note 1. Basis of Presentation and
Significant Accounting Policies .
Of these policies, the f ollowing are considered critical to an understanding of Pf izers Consolidated Financial Statements as they require the
application of the most dif f icult, subjective and complex judgments: (i) Acquisitions (Note 1D); (ii) Fair Value (Note 1E); (iii) Revenues (Note 1G);
(iv) Asset Impairment Reviews (Note 1K); (v) Benef it Plans (Note 1P); and (vi) Contingencies, including Tax Contingencies (Note 1O) and Legal
and Environmental Contingencies (Note 1Q).
Below are some of our critical accounting estimates. See also Estimates and Assumptions (Note 1C) f or a discussion about the risks associated
with estimates and assumptions.
Acquisitions and Fair Value
For a discussion about the application of Fair Value to our recent acquisitions, see Notes to Consolidated Financial Statements Note 2A.
Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions .
For a discussion about the application of Fair Value to our investments, see Notes to Consolidated Financial Statements Note 7A. Financial
Instruments: Selected Financial Assets and Liabilities .
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For a discussion about the application of Fair Value to our benef it plan assets, see Notes to Consolidated Financial Statements Note 11D.
Pension and Postretirement Benefit Plans and Defined Contribution Plans: Plan Assets .
For a discussion about the application of Fair Value to our asset impairment reviews, see Asset Impairment Reviews below.
Revenues
As is typical in the biopharmaceutical industry, our gross product sales are subject to a variety of deductions that are generally estimated and
recorded in the same period that the revenues are recognized and primarily represent rebates and discounts to government agencies,
wholesalers, distributors and managed care organizations with respect to our biopharmaceutical products. See also Notes to Consolidated
Financial Statements Note 1G. Basis of Presentation and Significant Accounting Policies: Revenues f or a detailed description of the nature of
our sales deductions and our procedures f or estimating our obligations. For example,
For Medicaid, Medicare and perf ormance-based contract rebates, we use experience ratios, which may be adjusted to better match our
current experience or our expected f uture experience.
For contractual or legislatively mandated deductions outside the U.S., we use estimated allocation f actors, based on historical payments and
some third-party reports, to project the expected level of reimbursement.
For chargebacks, we closely approximate actual as we settle these deductions generally within two to f ive weeks af ter incurring the liability.
For sales returns, we perf orm calculations in each market that incorporate the f ollowing, as appropriate: local returns policies and practices;
returns as a percentage of sales; an understanding of the reasons f or past returns; estimated shelf lif e by product; an estimate of the
amount of time between shipment and return or lag time; and any other f actors that could impact the estimate of f uture returns, such as loss
of exclusivity, product recalls or a changing competitive environment.
For sales incentives, we use our historical experience with similar incentives programs to predict customer behavior.
If any of our ratios, f actors, assessments, experiences or judgments are not indicative or accurate predictors of our f uture experience, our
results could be materially af f ected. Although the amounts recorded f or these sales deductions are heavily dependent on estimates and
assumptions, historically, our adjustments to actual have not been material; on a quarterly basis, they generally have been less than 1.0% of
biopharmaceutical net sales and can result in a net increase to income or a net decrease to income. The sensitivity of our estimates can vary by
program, type of customer and geographic location. However, estimates associated with U.S. Medicaid and perf ormance-based contract rebates
are most at-risk f or 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 time lag, in any given quarter, our adjustments to actual can incorporate revisions
of several prior quarters.
Asset Impairment Reviews
We review all of our long-lived assets, including goodwill and other intangible assets, f or impairment indicators throughout the year and we
perf orm impairment testing f or goodwill and indef inite-lived assets annually and f or all other long-lived assets whenever impairment indicators are
present. When necessary, we record charges f or impairments of long-lived assets f or the amount by which the f air value is less than the
carrying value of these assets. Our impairment review processes are described in the Notes to Consolidated Financial Statements Note 1K.
Basis of Presentation and Significant Accounting Policies: Amortization of Intangible Assets, Depreciation and Certain Long-Lived Assets .
Examples of events or circumstances that may be indicative of impairment include:
A signif icant adverse change in legal f actors or in the business climate that could af f ect the value of the asset. For example, a successf ul
challenge of our patent rights would likely result in generic competition earlier than expected.
A signif icant adverse change in the extent or manner in which an asset is used. For example, restrictions imposed by the FDA or other
regulatory authorities could af f ect our ability to manuf acture or sell a product.
A projection or f orecast that demonstrates losses or reduced prof its associated with an asset. This could result, f or example, f rom a change
in a government reimbursement program that results in an inability to sustain projected product revenues and prof itability. This also could
result f rom the introduction of a competitors product that results in a signif icant loss of market share or the inability to achieve the previously
projected revenue growth, as well as the lack of acceptance of a product by patients, physicians and payers. For in-process research and
development (IPR&D) projects, this could result f rom, 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.
Intangible Assets Other than Goodwill
As a result of our intangible asset impairment review work, we recognized a number of impairments of intangible assets other than goodwill.
We recorded the f ollowing intangible asset impairment charges in Other deductionsnet:
In 2012 , $872 million , ref lecting (i) $393 million of IPR&D assets, primarily related to compounds that targeted autoimmune and inf lammatory
diseases (f ull write-of f ) and, to a lesser extent, compounds related to pain treatment; (ii) $175 million related to our Consumer Healthcare
indef inite-lived brand assets, primarily Robitussin, a cough suppressant; (iii) $279 million related to Developed Technology Rights, a charge
comprised of impairments of various products, none of which individually exceeded $45 million ; and (iv) $25 million of f inite-lived brands. The
intangible asset impairment charges f or 2012 ref lect, among other things, the impact of new scientif ic
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f indings, updated commercial f orecasts, changes in pricing, an increased competitive environment, litigation uncertainties regarding
intellectual property and declining gross margins. The impairment charges in 2012 are associated with the f ollowing: Worldwide Research
and Development ( $303 million ); Consumer Healthcare ( $200 million ); Primary Care ( $135 million ); Established Products ( $83 million );
Specialty Care ( $56 million ); Emerging Markets ( $56 million ) and Animal Health ( $39 million ).
In 2011 , $851 million , the majority of which relates to intangible assets that were acquired as part of our acquisition of Wyeth. These
impairment charges ref lect (i) $475 million of IPR&D assets, primarily related to two compounds f or the treatment of certain autoimmune and
inf lammatory diseases; (ii) $193 million related to our biopharmaceutical indef inite-lived brand, Xanax; and (iii) $183 million related to
Developed Technology Rights comprising the impairment of f ive assets. The intangible asset impairment charges f or 2011 ref lect, among
other things, the impact of new scientif ic f indings and an increased competitive environment. The impairment charges in 2011 are associated
with the f ollowing: Worldwide Research and Development ( $394 million ); Established Products ( $193 million ); Specialty Care ( $135 million
); Primary Care ( $56 million ); Oncology ( $56 million ) and Animal Health ( $17 million ).
In 2010, $1.8 billion, the majority of which relates to intangible assets that were acquired as part of our acquisition of Wyeth. These
impairment charges ref lect (i) $945 million of IPR&D assets, primarily Prevnar 13/Prevenar 13 Adult, a compound f or the prevention of
pneumococcal disease in adults age 50 and older, and Neratinib, a compound f or the treatment of breast cancer; (ii) $292 million of indef inite-
lived Brands, primarily related to Robitussin, a cough suppressant; and (iii) $540 million of Developed Technology Rights, primarily Thelin, a
product that treated pulmonary hypertension, and Protonix, a product that treats erosive gastroesophageal ref lux disease. These impairment
charges, most of which occurred in the third quarter of 2010, ref lect, among other things, the f ollowing: f or IPR&D assets, the impact of
changes to the development programs, the projected development and regulatory time-f rames and the risk associated with these assets; f or
Brand assets, the current competitive environment and planned investment support; and, f or Developed Technology Rights, in the case of
Thelin, we voluntarily withdrew the product in regions where it was approved and discontinued all clinical studies worldwide, and f or the
others, an increased competitive environment. The impairment charges in 2010 are generally associated with the f ollowing: Specialty Care
($708 million); Oncology ($396 million); Consumer Healthcare ($292 million); Established Products ($182 million); Primary Care ($145 million);
and Worldwide Research and Development ($54 million).
For a description of our accounting policy, see Notes to Consolidated Financial Statements Note 1K. Basis of Presentation and Significant
Accounting Policies: Amortization of Intangible Assets, Depreciation and Certain Long-Lived Assets .
When we are required to determine the f air value of intangible assets other than goodwill, we use an income approach, specif ically the multi-
period excess earnings method, also known as the discounted cash f low method. We start with a f orecast of all the expected net cash f lows
associated with the asset, which includes the application of a terminal value f or indef inite-lived assets, and then we apply an asset-specif ic
discount rate to arrive at a net present value amount. Some of the more signif icant estimates and assumptions inherent in this approach include:
the amount and timing of the projected net cash f lows, which includes the expected impact of competitive, legal and/or regulatory f orces on the
projections and the impact of technological risk associated with in-process research and development assets, as well as the selection of a long-
term growth rate; the discount rate, which seeks to ref lect the various risks inherent in the projected cash f lows; and the tax rate, which seeks to
incorporate the geographic diversity of the projected cash f lows.
While all intangible assets other than goodwill can conf ront events and circumstances that can lead to impairment, in general, intangible assets
other than goodwill that are most at risk of impairment include in-process research and development assets (approximately $700 million as of
December 31, 2012 ) and newly acquired or recently impaired indef inite-lived brand assets (approximately $2.3 billion as of December 31, 2012 ).
In-process research and development assets are high-risk assets, as research and development is an inherently risky activity. Newly acquired
and recently impaired indef inite-lived assets are more vulnerable to impairment as the assets are recorded at f air value and are then subsequently
measured at the lower of f air value or carrying value at the end of each reporting period. As such, immediately af ter acquisition or impairment,
even small declines in the outlook f or these assets can negatively impact our ability to recover the carrying value and can result in an impairment
charge.
Some of our indef inite-lived Consumer Healthcare brands, mainly Robitussin and Chapstick, have f air values that approximate their combined
carrying value of about $900 million, which ref lects impairment charges that were taken in the f ourth quarter and f irst quarter of 2012. These
assets continue to be at risk f or f uture impairment. Any negative change in the undiscounted cash f lows, discount rate and/or tax rate could
result in an impairment charge. We re-considered and conf irmed the classif ication of these assets as indef inite-lived. We will continue to
closely monitor these assets.
One of our indef inite-lived biopharmaceutical brands, Xanax, was written down to its f air value of $1.2 billion at the end of 2011. This asset
continues to be at risk f or f uture impairment. Any negative change in the undiscounted cash f lows, discount rate and/or tax rate could result
in an impairment charge. Xanax, which was launched in the mid-1980s and acquired in 2003, must continue to remain competitive against its
generic challengers or the associated asset may become impaired again. We re-considered and conf irmed the classif ication of this asset as
indef inite-lived. We will continue to closely monitor this asset.
Goodwill
As a result of our goodwill impairment review work, we concluded that none of our goodwill is impaired as of December 31, 2012 , and we do not
believe the risk of impairment is signif icant at this time.
For a description of our accounting policy, see Notes to Consolidated Financial Statements Note 1K. Basis of Presentation and Significant
Accounting Policies: Amortization of Intangible Assets, Depreciation and Certain Long-Lived Assets .
When we are required to determine the f air value of a reporting unit, as appropriate f or the individual reporting unit, we may use the market
approach, the income approach or a weighted-average combination of both approaches.
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The market approach is a historical approach to estimating f air value and relies primarily on external inf ormation. Within the market approach
are two methods that we may use:
Guideline public company methodthis method employs market multiples derived f rom market prices of stocks of companies that are
engaged in the same or similar lines of business and that are actively traded on a f ree and open market and the application of the
identif ied multiples to the corresponding measure of our reporting units f inancial perf ormance.
Guideline transaction methodthis method relies on pricing multiples derived f rom transactions of signif icant interests in companies
engaged in the same or similar lines of business and the application of the identif ied multiples to the corresponding measure of our
reporting units f inancial perf ormance.
The market approach is only appropriate when the available external inf ormation is robust and deemed to be a reliable proxy f or the specif ic
reporting unit being valued; however, these assessments may prove to be incomplete or inaccurate. Some of the more signif icant estimates
and assumptions inherent in this approach include: the selection of appropriate guideline companies and transactions and the determination
of applicable premiums and discounts based on any dif f erences in ownership percentages, ownership rights, business ownership f orms or
marketability between the reporting unit and the guideline companies and transactions.
The income approach is a f orward-looking approach to estimating f air value and relies primarily on internal f orecasts. Within the income
approach, the method that we use is the discounted cash f low method. We start with a f orecast of all the expected net cash f lows
associated with the reporting unit, which includes the application of a terminal value, and then we apply a reporting unit-specif ic discount
rate to arrive at a net present value amount. Some of the more signif icant estimates and assumptions inherent in this approach include: the
amount and timing of the projected net cash f lows, which includes the expected impact of technological risk and competitive, legal and/or
regulatory f orces on the projections, as well as the selection of a long-term growth rate; the discount rate, which seeks to ref lect the
various risks inherent in the projected cash f lows; and the tax rate, which seeks to incorporate the geographic diversity of the projected
cash f lows.
Specif ically:
When we estimate the f air value of our f ive biopharmaceutical reporting units, we rely solely on the income approach. We use the income
approach exclusively as many of our products are sold in multiple reporting units and as one reporting unit is geographic-based while the
others are product and/or customer-based. Further, the projected cash f lows f rom a single product may reside in up to three reporting units
at dif f erent points in f uture years and the discounted cash f low method would ref lect the movement of products among reporting units. As
such, the use of the comparable guideline company method was not practical or reliable. However, on a limited basis and as deemed
reasonable, we attempt to corroborate our outcomes with the market approach. For the income approach, we use the discounted cash f low
method.
When we estimate the f air value of our Consumer Healthcare reporting unit, we use a combination of approaches and methods. We use the
income approach and the market approach, which we weight equally in our analysis. We weight them equally as we have equal conf idence
in the appropriateness of the approaches f or this reporting unit. For the income approach, we use the discounted cash f low method and f or
the market approach, we use both the guideline public company method and the guideline transaction method, which we weight equally to
arrive at our market approach value.
When we estimate the f air value of our Animal Health reporting unit, we use the income approach, relying exclusively on the discounted cash
f low method. We rely exclusively on the income approach as the discounted cash f low method provides a more reliable outlook of the
business. However, on a limited basis and as deemed reasonable, we attempt to corroborate our outcomes with the market approach. (See
also Notes to Consolidated Financial Statements Note 19A. Subsequent Events: Zoetis Debt Offering and Initial Public Offering. )
While all reporting units can conf ront events and circumstances that can lead to impairment, we do not believe that the risk of goodwill impairment
f or any of our reporting units is signif icant at this time.
Our Consumer Healthcare reporting unit has the narrowest dif f erence between f air value and book value. However, we estimate that it would
take a signif icant negative change in the undiscounted cash f lows, the discount rate and/or the market multiples in the consumer industry f or the
Consumer Healthcare reporting unit goodwill to be impaired. Our Consumer Healthcare reporting unit perf ormance and consumer healthcare
industry market multiples are highly correlated with the overall economy and our specif ic perf ormance is also dependent on our and our
competitors innovation and marketing ef f ectiveness, and on regulatory developments af f ecting claims, f ormulations and ingredients of our
products.
For all of our reporting units, there are a number of f uture events and f actors that may impact f uture results and that could potentially have an
impact on the outcome of subsequent goodwill impairment testing. For a list of these f actors, see the Forward-Looking Inf ormation and Factors
That May Af f ect Future Results section of this Financial Review.
Benefit Plans
The majority of our employees worldwide are covered by def ined benef it pension plans, def ined contribution plans or both. In the U.S., we have
both qualif ied and supplemental (non-qualif ied) def ined benef it plans, as well as other postretirement benef it plans, consisting primarily of
healthcare and lif e insurance f or retirees (see Notes to Consolidated Financial Statements Note 1P. Basis of Presentation and Significant
Accounting Policies: Pension and Postretirement Benefit Plans and Note 11. Pension and Postretirement Benefit Plans and Defined
Contribution Plans ). Beginning on January 1, 2011, f or employees hired in the U.S. and Puerto Rico af ter December 31, 2010, we no longer of f er
a def ined benef it plan and, instead, of f er an enhanced benef it under our def ined contribution plan. In addition to the standard matching contribution
by the Company, the enhanced benef it provides an automatic Company contribution f or such eligible employees based on age
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Pf izer Inc. and Subsidiary Companies


and years of service. Also, on May 8, 2012, we announced to employees that as of January 1, 2018, Pf izer will transition its U.S. and Puerto Rico
employees f rom its def ined benef it plans to an enhanced def ined contribution savings plan.
The accounting f or benef it plans is highly dependent on actuarial estimates, assumptions and calculations, which result f rom a complex series of
judgments about f uture events and uncertainties. The assumptions and actuarial estimates required to estimate the employee benef it obligations
f or the def ined benef it and postretirement plans may include the discount rate; expected salary increases; certain employee-related f actors, such
as turnover, retirement age and mortality (lif e expectancy); expected return on assets; and healthcare cost trend rates.

Our assumptions ref lect our historical experiences and our best judgment regarding f uture expectations that have been deemed reasonable by
management. The judgments made in determining the costs of our benef it plans can materially impact our results of operations.
The f ollowing table provides the expected versus actual rate of return on plan assets and the discount rate used to determine the benef it
obligations f or the U.S. qualif ied pension plans:
2012 2011 2010
Expected annual rate of return 8.5% 8.5% 8.5%
Actual annual rate of return 12.7 3.4 10.8
Discount rate 4.3 5.1 5.9
The assumption f or the expected rate of return on assets f or our U.S. and international plans ref lects our actual historical return experience and
our long-term assessment of f orward-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 (see Notes to Consolidated Financial Statements
Note 11D. Pension and Postretirement Benefit Plans and Defined Contribution Plans: Plan Assets f or asset allocation ranges and actual asset
allocations f or 2012 and 2011). The expected return f or our U.S. plans and the majority of our international plans is applied to the f air market value
of plan assets at each year end. Holding all other assumptions constant, the ef f ect of a 0.5 percentage-point decline in the return-on-assets
assumption would increase our 2013 U.S. qualif ied pension plans pre-tax expense by approximately $60 million.
The discount rate used in calculating our U.S. def ined benef it plan obligations as of December 31, 2012 is 4.3%, which represents a 0.8
percentage-point decrease f rom our December 31, 2011 rate of 5.1%. The discount rate f or our U.S. def ined benef it plans is determined annually
and evaluated and modif ied to ref lect at year-end the prevailing market rate of a portf olio of high-quality corporate bond investments rated AA or
better that would provide the f uture cash f lows needed to settle benef it obligations as they come due. For our international plans, the discount
rates are set by benchmarking against investment grade corporate bonds rated AA or better, including where there is suf f icient data, a yield
curve approach. These rate determinations are made consistent with local requirements. Holding all other assumptions constant, the ef f ect of a
0.1 percentage-point decrease in the discount rate assumption would increase our 2013 U.S. qualif ied pension plans pre-tax expense by
approximately $26 million and increase the U.S. qualif ied pension plans projected benef it obligations as of December 31, 2012 by approximately
$266 million.
Contingencies
For a discussion about income tax contingencies, see Notes to Consolidated Financial Statements Note 5D. Tax Matters: Tax Contingencies.
For a discussion about legal and environmental contingencies, guarantees and indemnif ications, see Notes to Consolidated Financial Statements
Note 17. Commitments and Contingencies .
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2012 Financial Report
Financial Review
Pf izer Inc. and Subsidiary Companies


ANALYSIS OF THE CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31, % Change
(MILLIONS OF DOLLARS)
2012 2011 2010 12/11 11/10
Revenues $ 58,986 $ 65,259 $ 65,165 (10)% %
Cost of sales 11,334 14,076 14,788 (19)% (5)%
% of revenues 19.2% 21.6% 22.7%
Selling, inf ormational and administrative expenses 16,616 18,832 18,973 (12)% (1)%
% of revenues 28.2% 28.9% 29.1%
Research and development expenses 7,870 9,074 9,483 (13)% (4)%
% of revenues 13.3% 13.9% 14.6%
Amortization of intangible assets 5,175 5,544 5,364 (7)% 3 %
% of revenues 8.8% 8.5% 8.2%
Restructuring charges and certain acquisition-related
costs 1,880 2,930 3,145 (36)% (7)%
% of revenues 3.2% 4.5% 4.8%
Other deductionsnet 4,031 2,499 3,941 61 % (37)%
Income f rom continuing operations bef ore provision
f or taxes on income 12,080 12,304 9,471 (2)% 30 %
% of revenues 20.5% 18.9% 14.5%
Provision f or taxes on income 2,562 3,909 1,153 (34)% 239 %
Ef f ective tax rate 21.2% 31.8% 12.2%
Plus: Discontinued operationsnet of tax 5,080 1,654 (30) 207 % *
Less: Net income attributable to noncontrolling
interests 28 40 31 (30)% 29 %
Net income attributable to Pf izer Inc. $ 14,570 $ 10,009 $ 8,257 46 % 21 %
% of revenues 24.7% 15.3% 12.7%
Percentages may ref lect rounding adjustments.
* Calculation not meaningf ul.
Revenues-Overview
Total revenues were $59.0 billion in 2012 , a decrease of 10% compared to 2011 , due to:
an operational decline of $4.8 billion, or 8%, primarily due to the loss of exclusivity of certain products, including Lipitor, in most major
markets; and
the unf avorable impact of f oreign exchange, which decreased revenues by approximately $1.5 billion, or 2%.
Total revenues were $65.3 billion in 2011 , relatively f lat compared to 2010 . Revenues were impacted by:
the f avorable impact of f oreign exchange, which increased revenues by approximately $1.9 billion, or 3%; and
the inclusion of revenues of $1.3 billion, or 2%, f rom our acquisition of King,
largely of f set by:
an operational decline of $2.9 billion, or 4%, primarily due to the loss of exclusivity of certain products.
Revenues in 2012 in comparison with 2011 were negatively impacted by product losses of exclusivity, most notably Lipitor in most major markets,
as well as the f inal-year terms of our collaboration agreements in certain markets f or Spiriva. Collectively, these f actors negatively impacted
revenues by approximately $7.7 billion, or 12%.
In 2012, Lyrica, Lipitor, Enbrel, Prevnar 13/Prevenar 13, Celebrex and Viagra each delivered at least $2 billion in revenues, while Norvasc, Zyvox,
Sutent and the Premarin f amily each surpassed $1 billion in revenues. Lipitor lost exclusivity in Japan in June 2011 (with generic competition
occurring in November 2011), the U.S. in November 2011 (with multi-source generic entry occurring in May 2012), Australia in April 2012 and most
of developed Europe in March 2012 and May 2012.
In 2011, Lipitor, Lyrica, Enbrel, Prevnar 13/Prevenar 13 and Celebrex each delivered at least $2 billion in revenues, while Viagra, Norvasc, Zyvox,
Xalatan/Xalacom (Xalatan lost exclusivity in the U.S. in March 2011), Sutent, Geodon/Zeldox, and the Premarin f amily each surpassed $1 billion in
revenues.
In 2010, Lipitor, Enbrel, Lyrica, Prevnar 13/Prevenar 13 and Celebrex each delivered at least $2 billion in revenues, while Viagra, Xalatan/Xalacom,
Ef f exor (Ef f exor XR lost exclusivity in the U.S. in July 2010), Norvasc, Prevnar/Prevenar (7-valent), Zyvox, Sutent, the Premarin f amily,
Geodon/Zeldox and Detrol/Detrol LA each surpassed $1 billion in revenues.
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Revenues exceeded $500 million in each of 16 countries outside the U.S. in 2012 and 2011, and in each of 17 countries outside the U.S. in 2010.
The U.S. and Japan were the only countries to contribute more than 10% of total revenue in 2012. The U.S. was the only country to contribute
more than 10% of total revenues in 2011 and 2010.
Our policy relating to the supply of pharmaceutical inventory at domestic wholesalers, and in major international markets, is to generally maintain
stocking levels under one month on average and to keep monthly levels consistent f rom year to year based on patterns of utilization. We
historically have been able to closely monitor these customer stocking levels by purchasing inf ormation f rom our customers directly or by
obtaining other third-party inf ormation. We believe our data sources to be directionally reliable but cannot verif y their accuracy. Further, as we do
not control this third-party data, we cannot be assured of continuing access. Unusual buying patterns and utilization are promptly investigated.

As is typical in the biopharmaceutical industry, our gross product sales are subject to a variety of deductions, that generally are estimated and
recorded in the same period that the revenues are recognized and primarily represent rebates and discounts to government agencies,
wholesalers, distributors and managed care organizations with respect to our pharmaceutical products. These deductions represent estimates of
the related obligations and, as such, judgment and knowledge of market conditions and practice are required when estimating the impact of these
sales deductions on gross sales f or a reporting period. Historically, our adjustments to actual results have not been material to our overall
business. On a quarterly basis, our adjustments to actual results generally have been less than 1% of biopharmaceutical net sales and can result
in either a net increase or a net decrease in income. Product-specif ic rebate charges, however, can have a signif icant impact on year-over-year
individual product growth trends.
The f ollowing table provides inf ormation about certain deductions f rom revenues:
Year Ended December 31,
(BILLIONS OF DOLLARS)
2012 2011 2010
Medicaid and related state program rebates
(a)
$ 0.9 $ 1.2 $ 1.3
Medicare rebates
(a)
0.7 1.4 1.3
Perf ormance-based contract rebates
(a), (b)
2.2 3.5 2.6
Chargebacks
(c)
3.6 3.2 3.0
Sales allowances
(d)
4.7 4.9 4.5
Total $ 12.1 $ 14.2 $ 12.7
(a)
Rebates are product-specif ic and, theref ore, f or any giv en y ear are impacted by the mix of products sold.
(b)

Perf ormance-based contract rebates include contract rebates with managed care customers within the U.S., including health maintenance organizations and pharmacy
benef it managers, who receiv e rebates based on the achiev ement of contracted perf ormance terms and claims under these contracts.
(c)
Chargebacks primarily represent reimbursements to wholesalers f or honoring contracted prices to third parties.
(d)
Sales allowances primarily represent pharmaceutical rebates, discounts and price reductions that are contractual or legislativ ely mandated outside the U.S.
The total rebates, chargebacks and sales allowances f or 2012 were lower than 2011, primarily as a result of :
the impact of decreased Medicaid, Medicare and perf ormance-based contract rebates contracted f or Lipitor and certain other products
that have lost exclusivity;
changes in product mix; and
the impact on chargebacks of decreased sales f or certain products that have lost exclusivity,
partially of f set by, among other f actors:
an increase in chargebacks f or our branded products as a result of increasing competitive pressures.
Our accruals f or Medicaid rebates, Medicare rebates, perf ormance-based contract rebates, sales allowances and chargebacks were $3.8 billion
as of December 31, 2012 and $4.8 billion as of December 31, 2011, and substantially all are included in Other current liabilities in our
Consolidated Balance Sheets.
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2012 Financial Report
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Pf izer Inc. and Subsidiary Companies


Revenues by Segment and Geographic Area
The f ollowing table provides Worldwide revenues by operating segment, business unit and geographic area:
Year Ended December 31, % Change
Worldwide U.S. International Worldwide U.S. International
(MILLIONS OF
DOLLARS)
2012 2011
(a)
2010 2012 2011
(a)
2010 2012 2011
(a)
2010 12/11 11/10 12/11 11/10 12/11 11/10
Biopharmaceutical
rev enues:
Primary Care
Operating Segment $ 15,558 $22,670 $23,328 $ 8,191 $12,819 $13,536 $ 7,367 $ 9,851 $ 9,792 (31) (3) (36) (5) (25) 1
Specialty Care 14,151 15,245 15,021 6,206 6,870 7,419 7,945 8,375 7,602 (7) 1 (10) (7) (5) 10
Oncology 1,310 1,323 1,414 573 391 506 737 932 908 (1) (6) 47 (23) (21) 3
SC&O Operating
Segment 15,461 16,568 16,435 6,779 7,261 7,925 8,682 9,307 8,510 (7) 1 (7) (8) (7) 9
Emerging Markets 9,960 9,295 8,662 9,960 9,295 8,662 7 7 7 7
Established
Products 10,235 9,214 10,098 4,738 3,627 4,501 5,497 5,587 5,597 11 (9) 31 (19) (2)
EP&EM Operating
Segment 20,195 18,509 18,760 4,738 3,627 4,501 15,457 14,882 14,259 9 (1) 31 (19) 4 4
51,214 57,747 58,523 19,708 23,707 25,962 31,506 34,040 32,561 (11) (1) (17) (9) (7) 5
Other product
rev enues:
Animal Health 4,299 4,184 3,575 1,771 1,648 1,382 2,528 2,536 2,193 3 17 7 19 16
Consumer
Healthcare 3,212 3,028 2,748 1,526 1,490 1,408 1,686 1,538 1,340 6 10 2 6 10 15
Other operating
segments 7,511 7,212 6,323 3,297 3,138 2,790 4,214 4,074 3,533 4 14 5 12 3 15
Other
(b)
261 300 319 81 88 103 180 212 216 (13) (6) (8) (15) (15) (2)
Total Rev enues $ 58,986 $65,259 $65,165 $23,086 $26,933 $28,855 $35,900 $38,326 $36,310 (10) (14) (7) (6) 6
(a)
For 2011, includes King commencing on the acquisition date of January 31, 2011.
(b)
Includes rev enues generated primarily f rom Pf izer CentreSource, our contract manuf acturing and bulk pharmaceutical chemical sales organization.
Biopharmaceutical Revenues
Revenues f rom biopharmaceutical products contributed approximately 87% of our total revenues in 2012 , 88% of our total revenues in 2011 and
90% of our total revenues in 2010 .
We recorded direct product sales of more than $1 billion f or each of 10 biopharmaceutical products in 2012 , each of 12 biopharmaceutical
products in 2011 and each of 15 biopharmaceutical products in 2010 . These products represent 49% of our revenues f rom biopharmaceutical
products in 2012 , 56% of our revenues f rom biopharmaceutical products in 2011 and 60% of our revenues f rom biopharmaceutical products in
2010 .
2012 v. 2011
Worldwide revenues f rom biopharmaceutical products in 2012 were $51.2 billion , a decrease of 11% compared to 2011 , primarily due to:
the decrease of $7.6 billion in operational revenues f rom Lipitor, Geodon, Xalatan, Caduet, Aromasin and Detrol, and lower Alliance revenues
f or Aricept, all due to loss of exclusivity in certain markets, and f rom lower Alliance revenues f or Spiriva due to the f inal-year terms of our
collaboration agreements in certain European countries, Canada and Australia; lower revenues f or Ef f exor and Zosyn/Tazocin; and
the unf avorable impact of f oreign exchange of $1.3 billion, or 2%,
partially of f set by:
an increase in operational revenues in developed markets f or certain biopharmaceutical products, particularly Lyrica, Celebrex, and Enbrel,
and in revenues f rom emerging markets.
Geographically,
in the U.S., revenues f rom biopharmaceutical products decreased 17% in 2012, compared to 2011, primarily ref lecting lower revenues f rom
Lipitor, Geodon, Caduet, Xalatan and Aromasin, all due to loss of exclusivity; lower Alliance revenues due to loss of exclusivity of Aricept
5mg and 10mg tablets in November 2010; and lower revenues f rom Ef f exor, Zosyn and Detrol/Detrol LA. The impact of these adverse
f actors was partially of f set by the strong perf ormance of certain other biopharmaceutical products, lower reductions related to rebates and
the lower reduction in revenues related to the U.S. Healthcare Legislation.
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in our international markets, revenues f rom biopharmaceutical products decreased 7% in 2012, compared to 2011, primarily due to the loss of
exclusivity of Lipitor in most of developed Europe and the unf avorable impact of f oreign exchange of 3%. Operationally, revenues decreased
4% in 2012, compared to 2011. In addition to Lipitor, the decrease in operational revenues was driven by Xalatan/Xalacom, Aricept and
Aromasin, all due to loss of exclusivity in certain markets, as well as lower Alliance revenues, primarily due to the loss of exclusivity of
Aricept in many major European markets, and lower revenues f or Spiriva in certain European countries, Canada and Australia (ref lecting the
f inal-year terms of our Spiriva collaboration agreements relating to those countries), as well as lower revenues f or Norvasc and Ef f exor.
The impact of these adverse f actors was partially of f set by the strong operational growth of Lyrica, Prevnar 13/Prevenar 13 and Enbrel.
During 2012, international revenues f rom biopharmaceutical products represented 62% of total revenues f rom biopharmaceutical products,
compared to 59% in 2011.
Primary Care Operating Segment
Primary Care unit revenues decreased 31% in 2012 compared to 2011, ref lecting lower operational revenues of 30%, primarily due to the
losses of exclusivity of Lipitor in most major markets, as well as the resulting shif t in the reporting of U.S. and Japan Lipitor revenues to the
Established Products unit beginning January 1, 2012. These f actors impacted Primary Care operational revenues by approximately $5.6
billion, or 25%, in 2012.
Collectively, the decline in worldwide revenues f or Lipitor and f or certain other Primary Care unit products that lost exclusivity in various
markets in 2012 and 2011, as well as the resulting shif t in the reporting of certain product revenues to the Established Products unit, reduced
Primary Care unit revenues by $7.9 billion, or 35%, in comparison with 2011.
The impact of these declines was slightly of f set by the strong operational growth of Lyrica in developed markets and Celebrex and Viagra in
the U.S.
Specialty Care and Oncology Operating Segment
Specialty Care unit revenues decreased 7% compared to 2011, due to lower operational revenues of 5%, as well as the adverse impact of
f oreign exchange. Operational revenues were negatively impacted by the decline in the Prevnar/Prevenar f amily in the U.S. and developed
Europe, as the pediatric catch-up dose opportunity declined signif icantly in 2012 compared to 2011, with f ewer children eligible to receive the
catch-up dose. Additionally, utilization of Prevnar/Prevenar in older adults remains modest at this time.
Specialty Care unit revenues were also unf avorably impacted by the losses of exclusivity of Vf end and Xalatan in the U.S. in February and
March 2011, respectively, and the resulting shif t in the reporting of Vf end and Xalatan U.S. revenues to the Established Products unit
beginning January 1, 2012, as well as the loss of exclusivity of Xalatan and Xalacom in the majority of European markets in January 2012,
and Geodon in the U.S. in March 2012. Collectively, these developments reduced Specialty Care unit revenues by $1.1 billion, or 7%, in
comparison with 2011.
Operational revenues were f avorably impacted by the growth of Benef ix, Rebif , ReFacto/Xyntha, Enbrel and Zyvox.
Oncology unit revenues decreased 1%, compared to 2011, primarily due to the unf avorable impact of f oreign exchange of 3%. Operational
revenues were positively impacted by the launches of Inlyta and Xalkori in the U.S. and certain other developed markets, partially of f set by
the unf avorable impact of the loss of exclusivity of Aromasin in the majority of European markets in the second half of 2011 and the resulting
shif t in the reporting of such revenues to the Established Products unit beginning January 1, 2012. This loss of exclusivity reduced Oncology
unit revenues by $229 million, or 17%, in comparison with 2011.
Operational revenues were also f avorably impacted by the growth of Sutent, primarily in the U.S. and emerging markets.
Established Products and Emerging Markets Operating Segment
Established Products unit revenues increased 11% compared to 2011, due to higher operational revenues of 13%, partially of f set by a 2%
unf avorable impact of f oreign exchange. The increase in Established Products unit operational revenues in 2012 was mainly due to the shif t
in the reporting of branded Lipitor revenues in the U.S. and Japan f rom the Primary Care unit, totaling $1.4 billion, to the Established Products
unit beginning January 1, 2012, as well as recent launches of generic versions of certain Pf izer branded primary care and specialty care
products, and by contributions f rom the sales of the authorized generic version of Lipitor in the U.S. by Watson Pharmaceuticals, Inc.
(Watson). The agreement with Watson was terminated by mutual consent in January 2013.
Operational revenues were unf avorably impacted by the entry of multi-source generic competition in the U.S. f or donepezil (Aricept) in May
2011, as well as the continuing decline of revenues of certain products that previously lost exclusivity and the impact of ongoing pricing
pressures, primarily in South Korea and developed Europe.
Emerging Markets unit revenues increased 7% compared to 2011, due to higher operational revenues of 12%, partially of f set by a 5%
unf avorable impact of f oreign exchange. The increase in Emerging Markets unit operational revenues in 2012 was primarily due to volume
growth in China, Brazil and Russia, as a result of more targeted promotional ef f orts f or key innovative and established products, including
Lipitor, Norvasc and Lyrica.
Total revenues f rom established products in both the Established Products and Emerging Markets units were $14.4 billion, with $4.2 billion
generated in emerging markets in 2012.
18

2012 Financial Report
Financial Review
Pf izer Inc. and Subsidiary Companies


2011 v. 2010
Worldwide revenues f rom biopharmaceutical products in 2011 were $57.7 billion , a decrease of 1% compared to 2010 , primarily due to:
the decrease of $4.7 billion in operational revenues f rom Lipitor, Ef f exor, Protonix, Xalatan, Caduet, Vf end, Aromasin and Zosyn/Tazocin, and
lower Alliance revenues f or Aricept, all due to loss of exclusivity in certain markets; and
a reduction in revenues due to the U.S. Healthcare Legislation that was $359 million larger in 2011 than in 2010,
partially of f set by:
the solid perf ormance of Lyrica, the Prevnar/Prevenar f amily and Enbrel;
the inclusion of operational revenues f rom legacy King products of approximately $950 million, which f avorably impacted biopharmaceutical
revenues by 2%; and
the f avorable impact of f oreign exchange of $1.7 billion, or 3%.
Geographically,
in the U.S., revenues f rom biopharmaceutical products decreased 9% in 2011, compared to 2010, ref lecting lower revenues f rom Lipitor,
Protonix, Ef f exor, Zosyn, Xalatan, Vf end, Caduet and Aromasin, all due to loss of exclusivity, lower Alliance revenues due to loss of
exclusivity of Aricept 5mg and 10mg tablets in November 2010 and lower revenues f rom Detrol/Detrol LA, as well as the reduction in
revenues due to the U.S. Healthcare Legislation that was $359 million larger in 2011 than in 2010. The impact of these adverse f actors
was partially of f set by the strong perf ormance of certain other biopharmaceutical products and the addition of U.S. revenues f rom
legacy King products of approximately $904 million in 2011.
in our international markets, revenues f rom biopharmaceutical products increased 5% in 2011, compared to 2010, ref lecting the f avorable
impact of f oreign exchange of 6% in 2011, partially of f set by a net operational decrease. Operationally, revenues were f avorably impacted
by increases in the Prevenar f amily, Lyrica, Enbrel, Celebrex and Alliance revenues and unf avorably impacted by declines in Lipitor, Ef f exor,
Norvasc and Xalatan/Xalacom. International revenues f rom legacy King products were not signif icant to our international revenues in 2011.
During 2011, international revenues f rom biopharmaceutical products represented 59% of total revenues f rom biopharmaceutical products,
compared to 56% in 2010.
Primary Care Operating Segment
Primary Care unit revenues decreased 3% in 2011 compared to 2010, due to lower operational revenues of 6%, partially of f set by the
f avorable impact of f oreign exchange of 3%. Primary Care unit revenues were f avorably impacted by higher revenues f rom certain patent-
protected products, including Lyrica, Celebrex, Pristiq and Spiriva (in Alliance revenues), among others, as well as the addition of revenues
f rom legacy King products of $404 million, or 2%, in 2011. Operational revenues in 2011 were negatively impacted by the loss of exclusivity
of Lipitor and Caduet in the U.S. in November 2011, Lipitor in various other developed markets during 2010, as well as Aricept 5mg and 10mg
tablets in the U.S. in November 2010. Taken together, these losses of exclusivity reduced Primary Care unit revenues by approximately $2.1
billion, or 9%, in comparison with 2010.
Specialty Care and Oncology Operating Segment
Specialty Care unit revenues increased 1% compared to 2010, due to the f avorable impact of f oreign exchange of 3%, partially of f set by
lower operational revenues of 2%. Operational revenues were f avorably impacted by strong growth in the Prevnar/Prevenar f amily and
Enbrel, and unf avorably impacted by the loss of exclusivity of Vf end and Xalatan in the U.S. in February and March 2011, respectively.
Collectively, these losses of exclusivity reduced Specialty Care unit revenues by $624 million, or 4%, in comparison with 2010.
Oncology unit revenues decreased 6% compared to 2010, due to lower operational revenues of 10%, partially of f set by the f avorable impact
of f oreign exchange of 4%. The decrease in the Oncology unit operational revenues in 2011 was primarily due to the transf er of Aromasins
U.S. business to the Established Products unit ef f ective January 1, 2011, as a result of its loss of exclusivity in April 2011. This loss of
exclusivity reduced Oncology unit revenues by $160 million, or 11%, in comparison with 2010.
Established Products and Emerging Markets Operating Segment
Established Products unit revenues decreased 9% in 2011 compared to 2010, due to lower operational revenues of 13%, partially of f set by
a 4% f avorable impact of f oreign exchange. The decrease in Established Products unit operational revenues in 2011 was mainly due to the
loss of exclusivity of Ef f exor XR, Protonix and Zosyn in the U.S. Taken together, these losses of exclusivity decreased Established Products
unit revenues by $1.7 billion, or 17%, in comparison with 2010. These declines were partially of f set by the addition of revenues f rom legacy
King products of $546 million, or 5%, in 2011.
Emerging Markets unit revenues increased 7% compared to 2010, due to higher operational revenues of 5%, as well as a 2% f avorable
impact of f oreign exchange. The increase in Emerging Markets unit operational revenues in 2011 was due to growth in certain key innovative
brands, primarily the Prevenar f amily, Lyrica, Enbrel, Celebrex, Vf end and Zyvox. These increases were partially of f set by lower revenues
f rom Lipitor, which lost exclusivity in Brazil in August 2010 and Mexico in December 2010, as well as the impact of price reductions f or
certain products in certain emerging market countries. These losses of exclusivity reduced Emerging Market unit revenues by $118 million, or
1%, in comparison with 2010.
Total revenues f rom established products in both the Established Products and Emerging Markets units were $13.0 billion, with $3.8 billion
generated in emerging markets in 2011.
2012 Financial Report

19
Financial Review
Pf izer Inc. and Subsidiary Companies


Other Product Revenues
2012 v. 2011
Animal Health Operating Segment
Animal Health unit revenues increased 3% in 2012, compared to 2011, ref lecting higher operational revenues of 6%, partially of f set by the
unf avorable impact of f oreign exchange of 3%. Operational revenues f rom Animal Health products were f avorably impacted by the solid
perf ormance in both the livestock and companion animal portf olios.
Consumer Healthcare Operating Segment
Consumer Healthcare unit revenues increased 6% in 2012, compared to 2011, ref lecting higher operational revenues of 8%, partially of f set
by the unf avorable impact of f oreign exchange of 2%. The operational revenue increase was primarily due to the addition of products f rom
the acquisitions of the consumer healthcare business of Ferrosan in December 2011 and Alacer Corp. in February 2012.
2011 v. 2010
Animal Health Operating Segment
Animal Health unit revenues increased 17% in 2011, compared to 2010, ref lecting higher operational revenues of 14% and the f avorable
impact of f oreign exchange of 3%. Operational revenues f rom Animal Health products were f avorably impacted by approximately $329
million, or 9%, due to the addition of revenues f rom legacy King animal health products. Legacy Pf izer products grew 7% primarily driven by
improving market conditions and resulting increased demand f or products across the livestock business, as well as deeper market
penetration in emerging markets. This was partially of f set by the adverse impact of required product divestitures in 2010 related to the
acquisition of Wyeth.
Consumer Healthcare Operating Segment
Consumer Healthcare unit revenues increased 10% in 2011, compared to 2010, ref lecting higher operational revenues of 8% and the
f avorable impact of f oreign exchange of 2%. The operational revenue increase in 2011 was primarily driven by increased sales of core
brands including Advil, Caltrate and Robitussin, as well as the temporary voluntary withdrawal of Centrum in Europe in the third quarter of
2010, which had an adverse impact on 2010 revenues.
RevenuesMajor Biopharmaceutical Products
The f ollowing table provides revenue inf ormation f or several of our major biopharmaceutical products:
(MILLIONS OF DOLLARS)
PRIMARY INDICATIONS
Year Ended December 31, % Change
PRODUCT 2012 2011 2010 12/11 11/10
Lyrica

Epilepsy, post-herpetic neuralgia
and diabetic peripheral
neuropathy, f ibromyalgia,
neuropathic pain due to spinal
cord injury
$ 4,158

$ 3,693

$ 3,063

13

21
Lipitor Reduction of LDL cholesterol 3,948 9,577 10,733 (59) (11)
Enbrel (Outside the U.S. and
Canada)

Rheumatoid, juvenile rheumatoid
and psoriatic arthritis, plaque
psoriasis and ankylosing
spondylitis
3,737

3,666

3,274

2

12
Prevnar 13/Prevenar 13

Vaccine f or prevention of
pneumococcal disease
3,718

3,657

2,416

2

51
Celebrex

Arthritis pain and inf lammation,
acute pain
2,719

2,523

2,374

8

6
Viagra Erectile dysf unction 2,051 1,981 1,928 4 3
Norvasc Hypertension 1,349 1,445 1,506 (7) (4)
Zyvox Bacterial inf ections 1,345 1,283 1,176 5 9
Sutent

Advanced and/or metastatic renal
cell carcinoma (mRCC), ref ractory
gastrointestinal stromal tumors
(GIST) and advanced pancreatic
neuroendocrine tumor

1,236

1,187

1,066

4

11
Premarin f amily Menopause 1,073 1,013 1,040 6 (3)
Genotropin

Replacement of human growth
hormone
832

889

885

(6)

Xalatan/Xalacom

Glaucoma and ocular
hypertension
806

1,250

1,749

(36)

(29)
BeneFIX Hemophilia 775 693 643 12 8
Detrol/Detrol LA Overactive bladder 761 883 1,013 (14) (13)
Vf end Fungal inf ections 754 747 825 1 (9)
20

2012 Financial Report
Financial Review
Pf izer Inc. and Subsidiary Companies


Chantix/Champix

An aid to smoking cessation
treatment
670

720

755

(7)

(5)
Pristiq Depression 630 577 466 9 24
ReFacto AF/Xyntha Hemophilia 584 506 404 15 25
Zolof t

Depression and certain anxiety
disorders
541

573

532

(6)

8
Revatio

Pulmonary arterial hypertension
(PAH)
534

535

481


11
Medrol Inf lammation 523 510 455 3 12
Zosyn/Tazocin Antibiotic 484 636 952 (24) (33)
Zithromax/Zmax Bacterial inf ections 435 453 415 (4) 9
Ef f exor

Depression and certain anxiety
disorders
425

678

1,718

(37)

(61)
Prevnar/Prevenar (7-valent)

Vaccine f or prevention of
pneumococcal disease
399

488

1,253

(18)

(61)
Fragmin Anticoagulant 381 382 341 12
Relpax

Treat the symptoms of migraine
headache
368

341

323

8

6
Rapamune Immunosuppressant 346 372 388 (7) (4)
Cardura

Hypertension/Benign prostatic
hyperplasia
338

380

413

(11)

(8)
Tygacil Antibiotic 335 298 324 12 (8)
Aricept
(a)
Alzheimer's disease 326 450 454 (28) (1)
Xanax XR Anxiety disorders 274 306 307 (10)
BMP2

Development of bone and
cartilage
263

340

400

(23)
(15)
Sulperazon Antibiotic 262 218 213 20 2
Dif lucan Fungal inf ections 259 265 278 (2) (5)
Caduet

Reduction of LDL cholesterol and
hypertension
258

538

527

(52)

2
Neurontin Seizures 235 289 322 (19) (10)
Dalacin/Cleocin Antibiotic f or bacterial inf ections 232 192 214 21 (10)
Unasyn Injectable antibacterial 228 231 244 (1) (5)
Metaxalone/Skelaxin
(b)
Muscle relaxant 223 203 10 *
Inspra High blood pressure 214 195 157 10 24
Toviaz Overactive bladder 207 187 137 11 36
Somavert Acromegaly 197 183 157 8 17
Alliance revenues
(c)
Various 3,492 3,630 4,084 (4) (11)
All other
(d)
Various 8,289 8,584 8,118 (3) 6
(a)
Represents direct sales under license agreement with Eisai Co., Ltd.
(b)

Legacy King product. Kings operations are included in our f inancial statements commencing f rom the acquisition date of January 31, 2011. Theref ore, our results f or
2010 do not include Kings results of operations.
(c)
Enbrel (in the U.S. and Canada), Spiriv a, Rebif , Aricept and Exf orge.
(d)

Includes sales of generic atorv astatin.
* Calculation not meaningf ul.
Certain amounts and percentages may ref lect rounding adjustments.
BiopharmaceuticalSelected Product Descriptions
Lyrica is indicated f or the management of post-herpetic neuralgia, neuropathic pain associated with diabetic peripheral neuropathy, the
management of f ibromyalgia, neuropathic pain due to spinal cord injury, and as adjunctive therapy f or adult patients with partial onset
seizures in the U.S. For certain countries outside the U.S., Lyrica is indicated f or neuropathic pain (peripheral and central), the management
of f ibromyalgia, adjunctive treatment of epilepsy and general anxiety disorder. Lyrica recorded increases in worldwide revenues of 13% in
2012, compared to 2011. There was strong operational perf ormance in international markets in 2012, including Japan, where Lyrica was
launched in 2010 as the f irst product approved f or the peripheral neuropathic pain (NeP) indication. Internationally, Lyrica revenues
increased 14% in 2012, compared to 2011, with the growth due to a f ocus on enhancing the neuropathic pain diagnosis and treatment rates,
the successf ul re-launch of the general anxiety disorder indication in the EU and physician education regarding neuropathic pain in Japan.
Foreign exchange had an unf avorable impact on international revenues of 5% in 2012, compared to 2011. In the U.S., revenues increased
10% in 2012, compared to 2011. Notwithstanding these increases, U.S. revenues continue to be af f ected by increased competition f rom
generic versions of competitive medicines, as well as managed care pricing and f ormulary pressures.
2012 Financial Report

21
Financial Review
Pf izer Inc. and Subsidiary Companies


Lipitor , f or the treatment of elevated LDL-cholesterol levels in the blood, recorded worldwide revenues of $3.9 billion, a decrease of 59%,
in 2012, compared to 2011 due to:
the impact of loss of exclusivity in Japan in June 2011 (with generic competition occurring in November 2011), the U.S. (with generic
competition occurring in November 2011 and multi-source generic competition occurring in May 2012), Australia in April 2012 and most
of developed Europe in March 2012 and May 2012;
the continuing impact of an intensely competitive lipid-lowering market with competition f rom generics and branded products worldwide;
and
increased payer pressure worldwide, including the need f or f lexible rebate policies.
Geographically,
in the U.S., branded Lipitor revenues were $932 million, a decrease of 81% in 2012, compared to 2011; and
in our international markets, branded Lipitor revenues were $3.0 billion, a decrease of 34% in 2012, compared to 2011. Foreign
exchange had an unf avorable impact on international revenues of $70 million in 2012, compared to 2011.
See the Our Operating Environment section of this Financial Review f or a discussion concerning losses of exclusivity f or Lipitor in various
markets.
Enbrel , f or the treatment of moderate-to-severe rheumatoid arthritis, polyarticular juvenile rheumatoid arthritis, psoriatic arthritis, plaque
psoriasis and ankylosing spondylitis, a type of arthritis af f ecting the spine, recorded increases in worldwide revenues, excluding the U.S.
and Canada, of 2% in 2012, compared to 2011, primarily due to the overall growth in the anti-tumor necrosis f actor (TNF) biologic market,
partially of f set by the unf avorable impact of f oreign exchange.
Under our co-promotion agreement with Amgen Inc. (Amgen), we co-promote Enbrel in the U.S. and Canada and share in the prof its f rom
Enbrel sales in those countries, which we include in Alliance revenues. Our co-promotion agreement with Amgen will expire in October
2013, and, subject to the terms of the agreement, we are entitled to a royalty stream f or 36 months thereaf ter, which we expect will be
signif icantly less than our current share of Enbrel prof its f rom U.S. and Canadian sales. Following the end of the royalty period, we will not
be entitled to any f urther revenues f rom Enbrel sales in the U.S. and Canada. Our exclusive rights to Enbrel outside the U.S. and Canada will
not be af f ected by the expiration of the co-promotion agreement with Amgen.
Prevnar 13/Prevenar 13 is our 13-valent pneumococcal conjugate vaccine f or the prevention of various syndromes of pneumococcal
disease in inf ants and young children and in adults 50 years of age and older. Prevnar 13/Prevenar 13 f or use in inf ants and young children
is marketed in the U.S. f or the prevention of invasive pneumococcal disease caused by the 13 serotypes in Prevnar 13 and otitis media
caused by the seven serotypes in Prevnar, and in the EU and many other international markets f or the prevention of invasive pneumococcal
disease, otitis media and pneumococcal pneumonia caused by the vaccine serotypes. In 2011, we received approval of Prevnar 13/Prevenar
13 f or use in adults 50 years of age and older in the U.S. f or the prevention of pneumococcal pneumonia and invasive pneumococcal
disease caused by the 13 serotypes in Prevnar 13, and in the EU f or the prevention of invasive pneumococcal disease caused by the
vaccine serotypes. To date, Prevenar 13 f or use in adults 50 years of age and older has been approved in over 55 countries. On January
25, 2013, the U.S. FDA granted approval f or the expansion of Prevnar 13 f or use in children ages 6 through 17 years f or active immunization
f or the prevention of invasive disease caused by the 13 vaccine serotypes. EU approval f or use in children 6 through 17 years of age was
received on January 7, 2013. Worldwide revenues f or Prevnar 13/Prevenar 13 increased 2% in 2012, compared to 2011. In the U.S.,
revenues f or Prevnar 13 decreased 2% in 2012, compared to 2011. Developed Europe Prevenar 13 revenues also were lower in 2012,
compared to 2011. Revenues in the U.S. and developed Europe declined as the pediatric catch-up dose commercial opportunity declined
signif icantly in 2012 compared to 2011, with f ewer children eligible to receive the catch-up dose. In addition, utilization in older adults is
modest at this time.
We currently are conducting the Community-Acquired Pneumonia Immunization Trial in Adults (CAPiTA) to f ulf ill requirements in connection
with the FDAs approval of the Prevnar 13 adult indication under its accelerated approval program. CAPiTA is an ef f icacy trial involving
subjects 65 years of age and older that is designed to evaluate whether Prevnar 13 is ef f ective in preventing the f irst episode of community-
acquired pneumonia caused by the serotypes contained in the vaccine. We estimate that this event-driven trial will be completed in 2013. At
its regular meeting held on February 22, 2012, the U.S. Centers f or Disease Control and Preventions Advisory Committee on Immunization
Practices (ACIP) indicated that it will def er voting on a recommendation f or the routine use of Prevnar 13 in adults 50 years of age and older
until the results of CAPiTA, as well as data on the impact of pediatric use of Prevnar 13 on the disease burden and serotype distribution
among adults, are available. The rate of uptake f or the use of Prevnar 13 in adults 50 years of age and older has been impacted by ACIPs
decision to def er voting on a recommendation f or the routine use of Prevnar 13 in that population. At its regular meeting held on June 20,
2012, ACIP voted to recommend the use of Prevnar 13 f or adults 19 years of age and older with immuno-compromising conditions such as
HIV inf ections, cancer, advanced kidney disease and other immuno-compromising conditions. This recommendation is based on the
disproportionate burden of invasive pneumococcal disease in this patient population.
Celebrex , indicated f or the treatment of the signs and symptoms of osteoarthritis and rheumatoid arthritis worldwide and f or the
management of acute pain in adults in the U.S., Japan and certain markets in the EU, recorded an increase in worldwide revenues of 8% in
2012, compared to 2011. Strong operational perf ormance in the U.S. was primarily driven by price increases, as well as strong market
growth, partially of f set by continued share erosion due to ongoing generic pressures and higher rebates. However, Celebrex continued to
slow the volume erosion due to strong Direct to Customer investment and f ield f orce promotion. Strong operational perf ormance in
international markets was driven by volume and share growth in Japan and emerging markets in the low back pain indication, partially of f set
by lower developed Europe revenues in 2012 compared to 2011. Celebrex is supported by continued educational and promotional ef f orts
highlighting its ef f icacy and saf ety prof ile f or appropriate patients.
22

2012 Financial Report
Financial Review
Pf izer Inc. and Subsidiary Companies


Viagra is indicated f or the treatment f or erectile dysf unction. Viagra worldwide revenues increased 4% in 2012, compared to 2011, primarily
due to the increase in U.S. revenues, partially of f set by branded and generic competitive pressure in developed Europe, other developed
markets and emerging markets. The increase in the U.S. more than of f set the decrease in international markets due to operational f actors and
the adverse impact of f oreign exchange.
Norvasc , f or treating hypertension, lost exclusivity in the U.S. and other major markets in 2007 and in Canada in 2009. Norvasc worldwide
revenues decreased 7% in 2012, compared to 2011.
Zyvox is the worlds best-selling branded agent among those used to treat serious Gram-positive pathogens, including methicillin-resistant
staphylococcus-aureus. Zyvox worldwide revenues increased 5% in 2012, compared to 2011, primarily due to growth in both developed
and emerging markets.
Sutent is indicated f or the treatment of advanced renal cell carcinoma, including metastatic renal cell carcinoma (mRCC); gastrointestinal
stromal tumors af ter disease progression on, or intolerance to, imatinib mesylate; and advanced pancreatic neuroendocrine tumor. Sutent
worldwide revenues increased 4% in 2012, compared to 2011, due to strong operational perf ormance driven in the U.S. by price increases
and in other, non-European developed markets by volume growth due to targeted marketing ef f orts, and in emerging markets, by increased
market share, partially of f set by the unf avorable impact of f oreign exchange. We continue to seek to drive operational revenue and
prescription growth, supported by cost-ef f ectiveness, ef f icacy and therapy management data. As of December 31, 2012, Sutent was the
most prescribed oral mRCC therapy in the U.S.
Our Premarin f amily of products helps women address moderate-to-severe menopausal symptoms. It recorded an increase in worldwide
revenues of 6% in 2012, compared to 2011. U.S. revenues increased 7% in 2012, compared to 2011, primarily due to f avorable wholesaler
inventory levels, price increases in January and July 2012, f avorable rebates and the launch of multichannel marketing support in 2012.
Internationally, revenues decreased 2% compared to 2011. The decline was attributable to the unf avorable impact of f oreign exchange of
7% of f set by the increase in operational revenues of 5%.
Genotropin , one of the worlds leading human growth hormones, is used in children f or the treatment of short stature with growth
hormone def iciency, Prader-Willi Syndrome, Turner Syndrome, Small f or Gestational Age Syndrome, Idiopathic Short Stature (in the U.S. only)
and Chronic Renal Insuf f iciency (outside the U.S. only), as well as in adults with growth hormone def iciency. Genotropin is supported by a
broad platf orm of innovative injection-delivery devices and patient-support programs. Genotropin worldwide revenues decreased 6%
compared to 2011.
Xalabrands consists of Xalatan , a prostaglandin, which is a branded agent used to reduce elevated eye pressure in patients with open-
angle glaucoma or ocular hypertension, and Xalacom, a f ixed combination prostaglandin (Xalatan) and beta blocker (timolol) available outside
the U.S. Xalatan/Xalacom worldwide revenues decreased 36% in 2012, compared to 2011. Lower revenues were due primarily to the loss
of exclusivity in the U.S. in March 2011 and in the majority of European markets in January 2012.
BeneFIX and ReFacto AF/Xyntha are hemophilia products using state-of -the-art manuf acturing that assist patients with their lif elong
bleeding disorders. BeneFIX is the only available recombinant f actor IX product f or the treatment of hemophilia B, while ReFacto AF/Xyntha is
a recombinant f actor VIII product f or the treatment of hemophilia A. Both products are indicated f or the control and prevention of bleeding in
patients with these disorders and in some countries are also indicated f or prophylaxis in certain situations, such as surgery. BeneFIX
recorded an increase in worldwide revenues of 12% in 2012, compared to 2011, primarily as a result of increases in the U.S. due to a
launch of the new 3000 International Unit vial and price increases. ReFacto AF/Xyntha recorded an increase in worldwide revenues of 15%
in 2012, compared to 2011, driven by the successf ul transition of patients to Xyntha as a result of securing a government contract in
Australia, continued patient conversion to Xyntha in the U.S., as well as the successf ul launch of the ReFacto AF dual chamber syringe in
several European countries.
Detrol/Detrol LA, a muscarinic receptor antagonist, is one of the leading branded medicines worldwide f or overactive bladder. Detrol LA is
an extended-release f ormulation taken once a day. Detrol/Detrol LA worldwide revenues decreased 14% in 2012, compared to 2011,
primarily due to increased branded competition, a shif t in promotional f ocus to our Toviaz product in most major markets and the loss of
exclusivity f or Detrol IR in the U.S. in June 2012. Generic competition f or Detrol LA in the U.S. is expected in the f irst quarter of 2014.
Vfend is a broad-spectrum agent f or treating yeast and molds. Vf end worldwide revenues increased 1% in 2012, compared to 2011
primarily due to U.S. market growth attributable to a f ungal meningitis outbreak and double-digit growth in Latin America and China, largely
of f set by the unf avorable impact of f oreign exchange and supply constraints. International revenues increased 1% in 2012, compared to
2011. Revenues in the U.S. in 2012 increased 3% compared to the same period in 2011, primarily due to the af orementioned meningitis
outbreak and lower Medicaid rebates in 2012 compared to 2011, partially of f set by the loss of exclusivity of Vf end tablets and the launch of
generic voriconazole (generic Vf end) in February 2011.
Chantix/Champix is an aid to smoking-cessation treatment in adults 18 years of age and older. Chantix/Champix worldwide revenues
decreased 7% in 2012, compared to 2011, primarily due to negative media exposure across several key markets and macro-economic
decline, which decreased patient willingness to pay out of pocket. We are continuing our educational and promotional ef f orts, which are
f ocused on addressing the signif icant health consequences of smoking highlighting the Chantix/Champix benef it-risk proposition, emphasizing
the importance of the physician-patient dialogue in helping patients quit smoking and identif ying alternative treatment-f unding models.
Pristiq is approved f or the treatment of major depressive disorder in the U.S. and in various other countries. Pristiq has also been approved
f or treatment of moderate-to-severe vasomotor symptoms (VMS) associated with menopause in Thailand, Mexico, the Philippines and
Ecuador. Pristiq recorded an increase in worldwide revenues of 9% in 2012, compared to 2011, primarily due to price increases, as well as
market growth, partially of f set by lower prescription share in the U.S.
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Revatio is f or the treatment of pulmonary arterial hypertension (PAH). Worldwide revenues remained relatively f lat in 2012, compared to
2011. 2012 revenues were impacted by the unf avorable impact of f oreign exchange, partially of f set by an increased PAH awareness
driving earlier diagnosis in the U.S. and EU. In the U.S., Revatio tablet lost exclusivity in September 2012, and Revatio intravenous injection will
lose exclusivity in May 2013.
Zosyn / Tazocin , our broad-spectrum intravenous antibiotic, f aces generic global competition. U.S. exclusivity was lost in September 2009.
Zosyn/Tazocin recorded a decrease in worldwide revenues of 24% in 2012, compared to 2011.
Effexor , an antidepressant f or treating adult patients with major depressive disorder, generalized anxiety disorder, social anxiety disorder
and panic disorder, f aces generic competition in most markets. It recorded a decrease in worldwide revenues of 37% in 2012, compared to
2011.
Prevnar/Prevenar (7-valent), our 7-valent pneumococcal conjugate vaccine f or preventing invasive, and, in certain international markets,
non-invasive pneumococcal disease in inf ants and young children, recorded a decrease in worldwide revenues of 18% in 2012, compared
to 2011. Many markets have transitioned f rom the use of Prevnar/Prevenar (7-valent) to Prevnar 13/Prevenar 13, resulting in lower revenues
f or Prevnar/Prevenar (7-valent). We expect this trend to continue.
Caduet is a single-pill therapy combining Lipitor and Norvasc f or the prevention of cardiovascular events. Caduet worldwide revenues
decreased 52% in 2012, compared to 2011, primarily due to the loss of U.S. exclusivity in November 2011.
Xalkori, f or the treatment of patients with locally advanced or metastatic non-small cell lung cancer (NSCLC) that is anaplastic lymphoma
kinase (ALK)-positive as detected by an FDA-approved test, was approved by the FDA in August 2011. In developed markets, Xalkori has
also been approved in Japan, South Korea, Canada and Switzerland, and it received conditional marketing authorization in the EU in October
2012. In addition, it has been f iled or approved in more than 25 emerging markets, including China. Xalkori recorded worldwide revenues of
$123 million in 2012, with 66% of those revenues generated in the U.S. market.
Inlyta, f or the treatment of patients with advanced renal cell carcinoma af ter f ailure of a prior systemic treatment, has been approved in the
U.S., Switzerland, Japan, Canada, Australia, South Korea and the EU (exact indications vary by region). Inlyta recorded worldwide revenues
of $100 million in 2012.
Xeljanz (in the U.S.) was approved by the FDA in November 2012 f or the treatment of adult patients with moderately to severely active
rheumatoid arthritis who have had an inadequate response or intolerance to methotrexate, to be used as monotherapy or in combination with
methotrexate or other nonbiologic disease-modif ying antirheumatic drugs.
Alliance revenues worldwide decreased 4% in 2012, compared to 2011, mainly due to the loss of exclusivity f or Aricept 5mg and 10mg
tablets in the U.S. in November 2010 and the entry of multi-source generic competition in the U.S. in May 2011, as well as the loss of
exclusivity in many major European markets in February 2012, and lower revenues f or Spiriva in certain European countries, Canada and
Australia due to the expiration of our collaboration with BI in those countries, partially of f set by the strong perf ormance of Enbrel and Rebif in
the U.S. We expect that the Aricept 23mg tablet will have exclusivity in the U.S. until July 2013. See the The Loss or Expiration of Intellectual
Property Rights section of this Financial Review f or a discussion regarding the expiration of various contract rights relating to Aricept,
Spiriva, Enbrel and Rebif . Eliquis (apixaban) has been jointly developed and commercialized by Pf izer and Bristol-Myers Squibb (BMS). In
2012, Eliquis (apixaban) was approved to reduce the risk of stroke and systemic embolism in patients with nonvalvular atrial f ibrillation in the
27 countries of the EU, plus Iceland and Norway, Canada, Japan and the U.S., and it was launched f or that indication in the U.S. in January
2013. The two companies share commercialization expenses and prof it/losses equally on a global basis.
Embeda We met with the FDA in May 2012 to discuss our proposal f or reintroduction of Embeda to the market. The required stability
programs are underway, and we are working toward a submission with the FDA in the f irst half of 2013.
See Notes to Consolidated Financial Statements Note 17. Commitments and Contingencies f or a discussion of recent developments
concerning patent and product litigation relating to certain of the products discussed above.
Research and Development
Research and Development Operations
Innovation is critical to the success of our company and drug discovery and development is time-consuming, expensive and unpredictable,
particularly f or human health products. As a result, and also because we are predominately a human health company, the vast majority of our
R&D spending is associated with human health products, compounds and activities.
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The f ollowing table provides additional inf ormation by operating segment about our research and development expenses (see also Notes to
Consolidated Financial Statements Note 18. Segment, Geographic and Other Revenue Information ):
Research and Development Expenses
Year Ended December 31, % Change
(MILLIONS OF DOLLARS)
2012 2011 2010 12/11 11/10
Primary Care
(a)
$ 1,009 $ 1,307 $ 1,473 (23) (11)
Specialty Care and Oncology
(a)
1,401 1,561 1,624 (10) (4)
Established Products and Emerging Markets
(a)
403 441 452 (9) (2)
Other
(a), (b)
693 425 428 63 (1)
Worldwide Research and Development/Pf izer Medical
(c)
2,835 3,337 3,709 (15) (10)
Corporate and Other
(d)
1,529 2,003 1,797 (24) 11
Total Research and Development Expenses $ 7,870 $ 9,074 $ 9,483 (13) (4)
(a)

Our operating segments, in addition to their sales and marketing responsibilities, are responsible f or certain dev elopment activ ities. Generally , these responsibilities
relate to additional indications f or in-line products and IPR&D projects that hav e achiev ed proof -of -concept. R&D spending may include upf ront and milestone
pay ments f or intellectual property rights.
(b)

Includes the Animal Health operating segment and the Consumer Healthcare operating segment. The increase in 2012 primarily relates to a $250 million pay ment to
AstraZeneca to obtain the exclusiv e global ov er-the-counter rights to Nexium.
(c)

Worldwide Research and Dev elopment is generally responsible f or human health research projects until proof -of -concept is achiev ed, and then f or transitioning those
projects to the appropriate business unit f or possible clinical and commercial dev elopment. R&D spending may include upf ront and milestone pay ments f or
intellectual property rights. This organization also has responsibility f or certain science-based and other platf orm-serv ices organizations, which prov ide technical
expertise and other serv ices to the v arious R&D projects. Worldwide Research and Dev elopment is also responsible f or all human-health-related regulatory
submissions and interactions with regulatory agencies, including all saf ety ev ent activ ities. Pf izer Medical is responsible f or external af f airs relating to all therapeutic
areas, prov iding Pf izer-related medical inf ormation to healthcare prov iders, patients and other parties, and quality assurance and regulatory compliance activ ities,
which include conducting clinical trial audits and readiness rev iews. The decreases in 2012 compared to 2011 and in 2011 compared to 2010 result f rom cost sav ings
associated with the R&D productiv ity initiativ e announced on February 1, 2011 (see the Restructuring Charges and Other Costs Associated with Acquisitions and
Cost-Reduction/Productiv ity Initiativ es section of this Financial Rev iew).
(d)

Corporate and other includes unallocated costs, primarily f acility costs, inf ormation technology , share-based compensation, and restructuring related costs. The
decrease in 2012 primarily results f rom cost sav ings associated with the R&D productiv ity initiativ e announced on February 1, 2011 and to a lesser extent f rom lower
charges relating to implementing our cost-reduction and productiv ity initiativ es (see the Restructuring Charges and Other Costs Associated with Acquisitions and
Cost-Reduction/Productiv ity Initiativ es section of this Financial Rev iew).
Our human health R&D spending is conducted through a number of matrix organizationsResearch Units, within our Worldwide Research and
Development organization, are generally responsible f or research assets (assets that have not yet achieved proof -of -concept); Business Units
are generally responsible f or development assets (assets that have achieved proof -of -concept); and science-based and other platf orm-services
organizations.
We take a holistic approach to our human health R&D operations and manage the operations on a total-company basis through our matrix
organizations described above. Specif ically, a single committee, co-chaired by members of our R&D and commercial organizations, is accountable
f or aligning resources among all of our human health R&D projects and f or ensuring that our company is f ocusing its R&D resources in the areas
where we believe that we can be most successf ul and maximize our return on investment. We believe that this approach also serves to maximize
accountability and f lexibility.
Our Research Units are organized in a variety of ways (by therapeutic area or combinations of therapeutic areas, by discipline, by location, etc.)
to enhance f lexibility, cohesiveness and f ocus. Because of our structure, we can rapidly redeploy resources, within a Research Unit, between
various projects as necessary because the workf orce shares similar skills, expertise and/or f ocus.
Our platf orm-services organizations, where a signif icant portion of our R&D spending occurs, provide technical expertise and other services to
the various R&D projects, and are organized into science-based f unctions such as Pharmaceutical Sciences, Chemistry, Drug Saf ety, and
Development Operations, and non-science-based f unctions, such as Facilities, Business Technology and Finance. As a result, within each of
these f unctions, we are able to migrate resources among projects, candidates and/or targets in any therapeutic area and in most phases of
development, allowing us to react quickly in response to evolving needs.
Generally, we do not disaggregate total R&D expense by development phase or by therapeutic area since, as described above, we do not
manage a signif icant portion of our R&D operations by development phase or by therapeutic area. Further, as we are able to adjust a signif icant
portion of our spending quickly, as conditions change, also as described above, we believe that any prior-period inf ormation about R&D expense
by development phase or by therapeutic area would not necessarily be representative of f uture spending.
Product DevelopmentsBiopharmaceutical
We continue to invest in R&D to provide potential f uture sources of revenues through the development of new products, as well as through
additional uses f or in-line and alliance products. Notwithstanding our ef f orts, there are no assurances as to when, or if , we will receive
regulatory approval f or additional indications f or existing products or any of our other products in development.
We continue to closely evaluate our global research and development f unction and pursue strategies intended to improve innovation and overall
productivity in R&D by prioritizing areas that we believe have the greatest scientif ic and commercial promise, utilizing appropriate risk/return
prof iles and f ocusing on areas that we believe have the highest potential to deliver value in the near term and over time. To that end, our
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research primarily f ocuses on f ive high-priority areas that have a mix of small and large moleculesimmunology and inf lammation; oncology;
cardiovascular and metabolic diseases; neuroscience and pain; and vaccines. In addition to reducing the number of disease areas of f ocus, we
have realigned and reduced our research and development f ootprint and outsourced certain f unctions that do not drive competitive advantage f or
Pf izer.
Our development pipeline, which is updated quarterly, can be f ound at www.pf izer.com/pipeline. It includes an overview of our research and a
list of compounds in development with targeted indication, phase of development and, f or late-stage programs, mechanism of action. The
inf ormation currently in our development pipeline is accurate as of February 28, 2013.
The f ollowing series of tables provides inf ormation about signif icant regulatory actions by, and f ilings pending with, the FDA and regulatory
authorities in the EU and Japan, as well as additional indications and new drug candidates in late-stage development.
RECENT FDA APPROVALS
PRODUCT INDICATION DATE APPROVED
Eliquis (Apixaban)
(a)
Prevention of stroke and systemic embolism in patients with nonvalvular atrial
f ibrillation
December 2012
Xeljanz (Tof acitinib) Treatment of moderate-to-severe active rheumatoid arthritis November 2012
Bosulif (Bosutinib) Treatment of previously treated chronic myelogenous leukemia September 2012
Lyrica (Pregabalin) Capsules CV Treatment of neuropathic pain due to spinal cord injury June 2012
Elelyso (Taliglucerase Alf a)
(b)
Treatment of adults with a conf irmed diagnosis of type 1 Gaucher disease May 2012
Inlyta (Axitinib) Treatment of advanced renal cell carcinoma af ter f ailure of one prior systemic
therapy
January 2012
(a)
This indication f or Eliquis (apixaban) was dev eloped and is being commercialized in collaboration with BMS.
(b)

In Nov ember 2009, we entered into a license and supply agreement with Protalix BioTherapeutics, which prov ides us exclusiv e worldwide rights, except in Israel, to
dev elop and commercialize Elely so (taliglucerase alpha) f or the treatment of Gaucher disease.
PENDING U.S. NEW DRUG APPLICATIONS (NDA) AND SUPPLEMENTAL FILINGS
PRODUCT INDICATION DATE FILED*
Bazedoxif ene-conjugated
estrogens
Treatment of symptoms associated with menopause and osteoporosis December 2012
Taf amidis meglumine
(a)
Treatment of transthyretin f amilial amyloid polyneuropathy (TTR-FAP) February 2012
Genotropin
(b)
Replacement of human growth hormone def iciency (Mark VII multidose disposable
device)
December 2009
Celebrex
(c)
Chronic pain October 2009
Remoxy
(d)
Management of moderate-to-severe pain when a continuous, around-the-clock opioid
analgesic is needed f or an extended period of time
August 2008
Spiriva
(e)
Respimat device f or chronic obstructive pulmonary disease January 2008
Viviant
(f)
Osteoporosis treatment and prevention August 2006
* The dates set f orth in this column are the dates on which the FDA accepted our submissions.
(a)

In May 2012, the FDA's Peripheral and Central Nerv ous Sy stem Drugs Adv isory Committee v oted that the taf amidis meglumine data prov ide substantial ev idence of
ef f icacy f or a surrogate endpoint that is reasonably likely to predict a clinical benef it. In June 2012, the FDA issued a complete response letter with respect to the
taf amidis NDA. The FDA has requested the completion of a second ef f icacy study and also has asked f or additional inf ormation on the data within the current
taf amidis NDA. We are continuing to work with the FDA to def ine a path f orward.
(b)

In April 2010, we receiv ed a complete response letter f rom the FDA f or the Genotropin Mark VII multidose disposable dev ice submission. In August 2010, we
submitted our response to address the requests and recommendations included in the FDA letter. In April 2011, we receiv ed a second complete response letter f rom
the FDA, requesting additional inf ormation. We are working to address the FDA's requests f or additional inf ormation.
(c)

In June 2010, we receiv ed a complete response letter f rom the FDA f or the Celebrex chronic pain supplemental NDA. The supplemental NDA remains pending while
we await the completion of ongoing studies to determine next steps.
(d)

In 2005, King entered into an agreement with Pain Therapeutics, Inc. (PT) to dev elop and commercialize Remoxy . In August 2008, the FDA accepted the NDA f or
Remoxy that had been submitted by King and PT. In December 2008, the FDA issued a complete response letter. In March 2009, King exercised its right under the
agreement with PT to assume sole control and responsibility f or the dev elopment of Remoxy . In December 2010, King resubmitted the NDA f or Remoxy with the
FDA. In June 2011, we and PT announced that a complete response letter was receiv ed f rom the FDA with regard to the resubmission of the NDA. We hav e been
working to address the issues raised in the letter, which primarily relate to manuf acturing. We hav e analy zed the results f rom two, recently completed bioav ailability
studies, as well as data f rom other experiments that were conducted to optimize the f ormulation composition and analy tical methods f or Remoxy . While we hav e
gained important insights f rom this work, in the f ourth quarter of 2012 we initiated a conf irmatory bioav ailability study to assess the pharmacokinetic prof ile of
modif ied Remoxy f ormulation compositions. Preliminary results f rom the initial phase of this study are undergoing analy sis. We believ e the results of this study will
prov ide us with greater clarity as to whether or not we will be able to adequately address the questions raised in the complete response letter receiv ed f rom the FDA.
We continue to target a late-March 2013 meeting with the FDA to discuss our plan to address the June 2011 complete response" letter.
(e)

Boehringer Ingelheim (BI), our alliance partner, holds the NDAs f or Spiriv a Handihaler and Spiriv a Respimat. In September 2008, BI receiv ed a complete response
letter f rom the FDA f or the Spiriv a Respimat submission. The FDA is seeking additional data, and we are coordinating with BI, which is working with the FDA to
prov ide the additional inf ormation. A f ull response will be submitted to the FDA upon the completion of planned and ongoing studies.
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(f)
Two approv able letters were receiv ed by Wy eth in April and December 2007 f rom the FDA f or Viv iant (bazedoxif ene), f or the prev ention of post-menopausal
osteoporosis, that set f orth the additional requirements f or approv al. In May 2008, Wy eth receiv ed an approv able letter f rom the FDA f or the treatment of post-
menopausal osteoporosis. The FDA is seeking additional data, and we hav e been sy stematically working through these requirements and seeking to address the
FDA's concerns. A f ull response will be prov ided to the FDA. In February 2008, the FDA adv ised Wy eth that it expects to conv ene an adv isory committee to rev iew
the pending NDAs f or both the treatment and prev ention indications af ter we submit our response to the approv able letters. In April 2009, Wy eth receiv ed approv al
in the EU f or CONBRIZA (the EU trade name f or Viv iant) f or the treatment of post-menopausal osteoporosis in women at increased risk of f racture. Viv iant was
also approv ed in Japan in July 2010 f or the treatment of post-menopausal osteoporosis and in South Korea in Nov ember 2011 f or the treatment and prev ention of
post-menopausal osteoporosis.
REGULATORY APPROVALS AND FILINGS IN THE EU AND JAPAN
PRODUCT DESCRIPTION OF EVENT DATE APPROVED DATE FILED*
Eliquis (Apixaban)
(a)
Approval in Japan f or prevention of ischemic stroke and systemic
embolism in patients with nonvalvular atrial f ibrillation
December 2012
Toviaz Approval in Japan f or treatment of overactive bladder December 2012
Eliquis (Apixaban)
(a)
Approval in the EU f or prevention of stroke and systemic embolism
in patients with nonvalvular atrial f ibrillation
November 2012
Xalkori (Crizotinib) Conditional marketing authorization in the EU f or treatment of
previously treated ALK-positive advanced non-small cell lung
cancer
October 2012
Inlyta (Axitinib) Approval in the EU f or treatment of advanced renal cell carcinoma
af ter f ailure of prior systemic treatment
September 2012
Sutent Approval in Japan f or treatment of pancreatic neuroendocrine
tumor
August 2012
Bazedoxif ene-conjugated
estrogens
Application f iled in the EU f or treatment of symptoms associated
with menopause and osteoporosis
July 2012
Prevenar 13 Inf ant Application f iled in Japan f or prevention of invasive pneumococcal
disease in inf ants and young children
July 2012
Lyrica (Pregabalin) Approval in Japan f or treatment of f ibromyalgia June 2012
Inlyta (Axitinib) Approval in Japan f or treatment of renal cell carcinoma not
indicated f or curative resection, metastatic renal cell carcinoma
June 2012
Xalkori (Crizotinib) Approval in Japan f or treatment of ALK-positive advanced non-
small cell lung cancer
March 2012
Lyrica (Pregabalin) Application f iled in Japan f or treatment of neuropathic pain:
peripheral neuropathic pain, central neuropathic pain
March 2012
Tof acitinib Application f iled in Japan f or treatment of rheumatoid arthritis December 2011
Tof acitinib Application f iled in the EU f or treatment of moderate-to-severe
active rheumatoid arthritis
November 2011
Bosutinib
(b)
Application f iled in the EU f or treatment of previously treated
chronic myelogenous leukemia
August 2011
* For applications in the EU, the dates set f orth in this column are the dates on which the European Medicines Agency (EMA) v alidated our submissions.
(a)
This indication f or Eliquis (apixaban) was dev eloped and is being commercialized in collaboration with BMS.
(b)

In January 2013, the EMA's Committee f or Medicinal Products f or Human Use (CHMP) issued an opinion recommending that bosutinib be granted conditional approv al
f or treatment of prev iously treated chronic my elogenous leukemia. The initial application was f or the treatment of newly diagnosed chronic my elogenous leukemia.
LATE-STAGE CLINICAL PROGRAMS FOR ADDITIONAL USES AND DOSAGE FORMS
FOR IN-LINE AND IN-REGISTRATION PRODUCTS
PRODUCT INDICATION
Eliquis (Apixaban) For the prevention and treatment of venous thromboembolism, which is being developed in collaboration
with BMS
Inlyta (Axitinib) Oral and selective inhibitor of vascular endothelial growth f actor (VEGF) receptor 1, 2 & 3 f or the treatment
of adjuvant renal cell carcinoma (Asia only)
Lyrica (Pregabalin) Peripheral neuropathic pain; CR (once-a-day) dosing
Sutent Adjuvant renal cell carcinoma
Tof acitinib A JAK kinase inhibitor f or the treatment of psoriasis and ulcerative colitis
Xalkori (Crizotinib) An oral ALK and c-Met inhibitor f or the treatment of ALK-positive 1st and 2nd line (supports potential f ull
approval in the U.S.) non-small cell lung cancer
Zithromax/chloroquine Malaria
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NEW DRUG CANDIDATES IN LATE-STAGE DEVELOPMENT
CANDIDATE INDICATION
ALO-02 A Mu-type opioid receptor agonist f or the management of moderate-to-severe pain when a continuous,
around-the-clock opioid analgesic is needed f or an extended period of time
Dacomitinib A pan-HER tyrosine kinase inhibitor f or the treatment of previously treated advanced non-small cell lung
cancer
Inotuzumab ozogamicin An antibody drug conjugate, consisting of an anti-CD22 monotherapy antibody linked to a cytotoxic agent,
calicheamycin, f or the treatment of aggressive Non-Hodgkin's Lymphoma and acute lymphoblastic leukemia
MnB rLP2086
(PF-05212366)
A prophylactic vaccine f or prevention of Neisseria meningitidis serogroup B invasive disease in
adolescents and young adults (ages 11 - 25)
Palbociclib (PD-0332991) An oral and selective reversible inhibitor of the CDK 4 and 6 kinases f or the treatment of patients with ER
positive, HER2 negative advanced breast cancer
Tanezumab
(a)
An anti-nerve growth f actor monoclonal antibody f or the treatment of pain (on clinical hold)
(a)

Following requests by the FDA in 2010, we suspended and subsequently terminated worldwide the osteoarthritis, chronic low back pain and painf ul diabetic peripheral
neuropathy studies of tanezumab. The FDA's requests f ollowed a small number of reports of osteoarthritis patients treated with tanezumab who experienced the
worsening of osteoarthritis leading to total joint replacement and also ref lected the FDA's concerns regarding the potential f or such ev ents in other patient populations.
In December 2010, the FDA placed a clinical hold on all other anti-nerv e growth f actor therapies under clinical inv estigation in the U.S. Studies of tanezumab in cancer
pain were allowed to continue. Extensiv e analy ses were undertaken of all total joint replacements reported in studies of tanezumab. The results of these analy ses and
the conclusions drawn were prov ided to the FDA. On March 12, 2012, the FDA's Arthritis Adv isory Committee met to discuss the f uture dev elopment of nerv e growth
f actor inhibitors, including tanezumab. The Committee v oted that there is a role f or the ongoing dev elopment of nerv e growth f actor inhibitors in conditions such as
osteoarthritis and f or the management of pain associated with conditions other than osteoarthritis f or which there are no agents with demonstrated analgesic ef f ect.
We submitted a Clinical Hold Complete Response to the FDA on July 31, 2012. On August 28, 2012, the FDA remov ed the clinical hold completely f rom the
tanezumab program f or all indications. On December 14, 2012, the FDA placed a new partial clinical hold on the dev elopment of nerv e growth f actor inhibitors,
including tanezumab. The partial clinical hold was based on peripheral nerv ous sy stem ef f ects observ ed in animal studies conducted with nerv e growth f actor
inhibitors by other companies. Current and f uture studies of tanezumab in cancer pain are not af f ected by this partial clinical hold. We intend to work with the FDA to
determine the appropriate path f orward.
Additional product-related programs are in various stages of discovery and development. Also, see the discussion in the Our Business
Development Initiatives section of this Financial Review.
COSTS AND EXPENSES
Cost of Sales
Year Ended December 31, % Change
(MILLIONS OF DOLLARS)
2012 2011 2010 12/11 11/10
Cost of sales $ 11,334 $ 14,076 $ 14,788 (19) (5)
2012 v. 2011
Cost of sales decreased 19% in 2012 , compared to 2011 , primarily due to:
lower purchase accounting charges, primarily ref lecting the f air value adjustments to acquired inventory f rom Wyeth and King that was
subsequently sold;
lower costs related to our cost-reduction and productivity initiatives and acquisition-related costs, as well as the benef its generated f rom the
ongoing productivity initiatives to streamline the manuf acturing network;
reduced manuf acturing volumes related to products that lost exclusivity in various markets; and
the f avorable impact of f oreign exchange of 3%,
partially of f set by:
an unf avorable shif t in geographic, product and business mix due to products that lost exclusivity in various markets.
2011 v. 2010
Cost of sales decreased 5% in 2011 , compared to 2010 , primarily due to:
lower purchase accounting charges, primarily ref lecting the f air value adjustments to acquired inventory f rom Wyeth that was subsequently
sold; and
savings associated with our cost-reduction and productivity initiatives,
partially of f set by:
the addition of costs f rom legacy Kings operations;
the Puerto Rico excise tax (f or additional inf ormation, see the Provision f or Taxes on Income section of this Financial Review);
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a shif t in geographic and business mix; and
the unf avorable impact of f oreign exchange of 2% in 2011.
Selling, Informational and Administrative (SI&A) Expenses
Year Ended December 31, % Change
(MILLIONS OF DOLLARS)
2012 2011 2010 12/11 11/10
Selling, inf ormational and administrative expenses $ 16,616 $ 18,832 $ 18,973 (12) (1)
2012 v. 2011
SI&A expenses decreased 12% in 2012 , compared to 2011 , primarily due to:
savings generated f rom a reduction in the f ield f orce and a decrease in promotional spending, both partly in response to product losses of
exclusivity;
more streamlined corporate support f unctions; and
the f avorable impact of f oreign exchange of 2%,
partially of f set by:
costs associated with the separation of Zoetis employees, net assets and operations f rom Pf izer.
2011 v. 2010
SI&A expenses were largely unchanged in 2011 , compared to 2010 , primarily due to:
the f ee provided f or under the U.S. Healthcare Legislation beginning in 2011;
the addition of legacy King operating costs; and
the unf avorable impact of f oreign exchange of 2%,
of f set by:
savings associated with our cost-reduction and productivity initiatives.
Research and Development (R&D) Expenses
Year Ended December 31, % Change
(MILLIONS OF DOLLARS)
2012 2011 2010 12/11 11/10
Research and development expenses $ 7,870 $ 9,074 $ 9,483 (13) (4)
2012 v. 2011
R&D expenses decreased 13% in 2012 , compared to 2011 , primarily due to:
savings generated by the discontinuation of certain therapeutic areas and R&D programs in connection with our previously announced cost-
reduction and productivity initiatives; and
lower charges related to implementing our cost-reduction and productivity initiatives,
partially of f set by:
a $250 million payment to AstraZeneca to obtain the exclusive global over-the-counter rights to Nexium.
2011 v. 2010
R&D expenses decreased 4% in 2011 , compared to 2010 , primarily due to:
savings associated with our cost-reduction and productivity initiatives,
partially of f set by:
higher charges related to implementing our cost-reduction and productivity initiatives;
the addition of legacy King expenses; and
the unf avorable impact of f oreign exchange of 1%.
R&D expenses also include payments f or intellectual property rights of $371 million in 2012 , $306 million in 2011 and $393 million in 2010 (f or
f urther discussion, see the Our Business Development Initiatives section of this Financial Review).
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Restructuring Charges and Other Costs Associated with Acquisitions and Cost-
Reduction/Productivity Initiatives
Year Ended December 31, % Change
(MILLIONS OF DOLLARS)
2012 2011 2010 12/11 11/10
Costs associated with acquisitions and cost-
reduction/productivity initiatives $ 2,855 $ 4,512 $ 3,926 (37) 15
We incur signif icant costs in connection with acquiring, integrating and restructuring businesses and in connection with our global cost-reduction
and productivity initiatives. For example:
In connection with acquisition activity, we typically incur costs associated with executing the transactions, integrating the acquired
operations (which may include expenditures f or consulting and the integration of systems and processes), and restructuring the combined
company (which may include charges related to employees, assets and activities that will not continue in the combined company); and
In connection with our cost-reduction and productivity initiatives, we typically incur costs and charges associated with site closings and
other f acility rationalization actions, workf orce reductions and the expansion of shared services, including the development of global
systems.
All of our businesses and f unctions may be impacted by these actions, including sales and marketing, manuf acturing and research and
development, as well as groups such as inf ormation technology, shared services and corporate operations. Since the acquisition of Wyeth on
October 15, 2009, our cost-reduction initiatives announced on January 26, 2009, but not completed as of December 31, 2009, were incorporated
into a comprehensive plan to integrate Wyeths operations to generate cost savings and to capture synergies across the combined company. In
addition, on February 1, 2011, among our ongoing cost reduction/productivity initiatives, we announced a new research and productivity initiative
to accelerate our strategies to improve innovation and productivity in R&D by prioritizing areas that we believe have the greatest scientif ic and
commercial promise, utilizing appropriate risk/return prof iles and f ocusing on areas that we believe have the highest potential to deliver value in
the near term and over time.
Cost-Reduction Goals
With respect to the January 26, 2009 announcements, and our acquisition of Wyeth on October 15, 2009, in the aggregate, we achieved our cost-
reduction goal by the end of 2011, a year earlier than expected, and are continuing to generate cost reductions.
With respect to the R&D productivity initiative announced on February 1, 2011, we met our goal to achieve signif icant reductions in our annual
research and development expenses by the end of 2012. Adjusted R&D expenses were $7.3 billion in 2012, and we expect adjusted R&D
expenses to be approximately $6.5 billion to $7.0 billion in 2013. For an understanding of adjusted research and development expenses, see the
Adjusted Income section of this Financial Review.
In addition to these major initiatives, we continuously monitor our organizations f or cost reduction and/or productivity opportunities.
Total Costs
Through December 31, 2012, we incurred approximately $14.8 billion (pre-tax) in cost-reduction and acquisition-related costs (excluding
transaction costs) in connection with the af orementioned initiatives. This $14.8 billion is a component of the $15.6 (pre-tax) billion in total
restructuring charges incurred f rom the beginning of our cost-reduction and productivity initiatives in 2005 through December 31, 2012. See Notes
to Consolidated Financial Statements Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-
Reduction/Productivity Initiatives f or more inf ormation. In 2013, we expect to incur approximately $500-$800 million (af ter tax) in costs in
connection with our ongoing cost-reduction/productivity initiatives and have ref lected those costs, as well as the related expected cost
reductions of approximately $1.0 billion (pre-tax), in our 2013 f inancial guidance. See also the Our Financial Guidance f or 2013 section of this
Financial Review.
Key Activities
The targeted cost reductions were achieved through the f ollowing actions and we continue to generate cost reductions through similar actions:
The closing of duplicative f acilities and other site rationalization actions Company-wide, including research and development f acilities,
manuf acturing plants, sales of f ices and other corporate f acilities. Among the more signif icant actions are the f ollowing:
Manuf acturing: Af ter the acquisition of Wyeth, our manuf acturing sites totaled 75. Other acquisitions have added 21 manuf acturing sites
and we have subsequently exited 12 sites, resulting in 84 sites supporting continuing operations as of December 31, 2012 . Our plant
network strategy will result in the exit of a f urther eight sites over the next several years. These site counts exclude f ive Nutrition
business-related manuf acturing sites as the Nutrition business was sold in 2012. See Notes to Consolidated Financial Statements Note
2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures f or more inf ormation.
Research and Development: Af ter the acquisition of Wyeth, we operated in 20 R&D sites and announced that we would close a number of
sites. We have completed a number of site closures, including our Sandwich, U.K. research and development f acility, except f or a small
presence. In addition, in 2011, we rationalized several other sites to reduce and optimize the overall R&D f ootprint. We disposed of our
toxicology site in Catania, Italy; exited our R&D sites in Aberdeen and Gosport, U.K.; and disposed of a vacant site in
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Financial Review
Pf izer Inc. and Subsidiary Companies


St. Louis, MO. We still maintain laboratories in St. Louis, MO, that f ocus on the areas of biologics and indications discovery. We are
presently marketing f or sale, lease or sale/lease-back, either a portion of or all of certain of our R&D campuses. Locations with R&D
operations are in the U.S., Europe, Canada and China, with f ive major research sites in addition to a number of specialized units. We also
re-prioritized our commitments to disease areas and have discontinued certain therapeutic areas and R&D programs as part of our R&D
productivity initiative. In 2011 and 2012 our research has primarily f ocused on f ive high-priority areas that have a mix of small and large
moleculesimmunology and inf lammation; oncology; cardiovascular and metabolic diseases; neuroscience and pain; and vaccines.
Workf orce reductions across all areas of our business and other organizational changes, primarily in the U.S. f ield f orce, manuf acturing,
R&D and corporate f unctions. We identif ied areas f or a reduction in workf orce across all of our businesses. In January 2009, when
Pf izer and Wyeth entered into the merger agreement, the workf orce of the two companies totaled approximately 130,000. We have
exceeded our original target to reduce the combined Pf izer/Wyeth workf orce 15%, or 19,500, within three years. By the end of 2011,
we achieved a reduction of 26,300, and by the end of 2012, we achieved a reduction of 38,500. In 2012, the workf orce declined by
12,200, f rom 103,700 to 91,500, primarily in manuf acturing, R&D and corporate f unctions. The af orementioned workf orce reductions
include the impact of acquisitions and divestitures subsequent to the Wyeth acquisition.
The increased use of shared services and centers of excellence.
Procurement savings.
The f ollowing table provides the components of costs associated with acquisitions and cost-reduction/productivity initiatives:
Year Ended December 31,
(MILLIONS OF DOLLARS)
2012 2011 2010
Transaction costs
(a)
$ 1 $ 30 $ 22
Integration costs
(b)
405 725 1,001
Restructuring charges
(c)
:
Employee termination costs 997 1,794 1,062
Asset impairments 328 256 869
Exit costs 149 125 191
Restructuring charges and certain acquisition-related costs 1,880 2,930 3,145
Additional depreciationasset restructuring, recorded in our consolidated
statements of income as f ollows
(d)
:
Cost of sales 267 555 520
Selling, informational and administrative expenses 20 75 227
Research and development expenses 296 605 34
Total additional depreciationasset restructuring 583 1,235 781
Implementation costs, recorded in our consolidated
statements of income as f ollows
(e)
:
Cost of sales 31 250
Selling, informational and administrative expenses 129 25
Research and development expenses 232 72
Total implementation costs 392 347
Total costs associated with acquisitions and cost-reduction/productivity initiatives $ 2,855 $ 4,512 $ 3,926
(a)

Transaction costs represent external costs directly related to acquired businesses and primarily include expenditures f or banking, legal, accounting and other similar
serv ices.
(b)

Integration costs represent external, incremental costs directly related to integrating acquired businesses, and primarily include expenditures f or consulting and the
integration of sy stems and processes.
(c)

From the beginning of our cost-reduction and transf ormation initiativ es in 2005 through December 31, 2012 , Employee termination costs represent the expected
reduction of the workf orce by approximately 62,200 employ ees, mainly in manuf acturing, sales and research, of which approximately 51,700 employ ees hav e been
terminated as of December 31, 2012 . In 2012 , substantially all employ ee termination costs represent additional costs with respect to approximately 4,800
employ ees.
The restructuring charges in 2012 are associated with the f ollowing:
Primary Care operating segment ( $295 million ), Specialty Care and Oncology operating segment ( $175 million ), Established Products and Emerging
Markets operating segment ( $125 million ), Animal Health operating segment ( $59 million ), Consumer Healthcare operating segment ( $45 million ),
research and dev elopment operations ( $6 million income), manuf acturing operations ( $265 million ) and Corporate ( $516 million ).
The restructuring charges in 2011 are associated with the f ollowing:
Primary Care operating segment ( $593 million ), Specialty Care and Oncology operating segment ( $220 million ), Established Products and Emerging
Markets operating segment ( $110 million ), Animal Health operating segment ( $45 million ), Consumer Healthcare operating segment ( $8 million ), research
and dev elopment operations ( $490 million ), manuf acturing operations ( $287 million ) and Corporate ( $422 million ).
The restructuring charges in 2010 are associated with the f ollowing:
Primary Care operating segment ( $71 million ), Specialty Care and Oncology operating segment ( $197 million ), Established Products and Emerging
Markets operating segment ( $43 million ), Animal Health operating segment ( $34 million ), Consumer Healthcare operating segment ( $12 million ), research
and dev elopment operations ( $297 million ), manuf acturing operations ( $1.1 billion ) and Corporate ( $350 million ).
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(d)
Additional depreciationasset restructuring represents the impact of changes in the estimated usef ul liv es of assets inv olv ed in restructuring actions.
(e)
Implementation costs represent external, incremental costs directly related to implementing our non-acquisition-related cost-reduction and productiv ity initiativ es.
The f ollowing table provides the components of and changes in our restructuring accruals:
(MILLIONS OF DOLLARS)

Employee
Termination
Costs
Asset
Impairment
Charges Exit Costs Accrual
Balance, January 1, 2011 $ 2,149 $ $ 101 $ 2,250
Provision 1,794 256 125 2,175
Utilization and other
(a)
(1,518) (256) (134) (1,908)
Balance, December 31, 2011
(b)
2,425 92 2,517
Provision 997 328 149 1,474
Utilization and other
(a)
(1,629) (328) (84) (2,041)
Balance, December 31, 2012
(c)
$ 1,793 $ $ 157 $ 1,950
(a)
Includes adjustments f or f oreign currency translation.
(b)
Included in Other current liabilities ($ 1.6 billion ) and Other noncurrent liabilities ($ 930 million ).
(c)
Included in Other current liabilities ( $1.2 billion ) and Other noncurrent liabilities ( $731 million ).
Other DeductionsNet
Year Ended December 31, % Change
(MILLIONS OF DOLLARS)
2012 2011 2010 12/11 11/10
Other deductionsnet $ 4,031 $ 2,499 $ 3,941 61 (37)
2012 v. 2011
Other deductionsnet changed unf avorably by 61% in 2012 , compared to 2011 , which primarily ref lects:
charges f or litigation-related matters that were approximately $1.4 billion higher in 2012 than in 2011, primarily due to a $491 million charge
resulting f rom an agreement-in-principle with the U.S. Department of Justice to resolve an investigation into Wyeth's historical promotional
practices in connection with Rapamune, a $450 million settlement of a lawsuit by Brigham Young University related to Celebrex, and charges
related to Chantix litigation (f or additional inf ormation, see Notes to Consolidated Financial Statements Note 17. Commitments and
Contingencies ); and
royalty-related income that was approximately $100 million lower in 2012 than in 2011.
2011 v. 2010
Other deductionsnet changed f avorably by 37% in 2011 , compared to 2010 , which primarily ref lects:
asset impairment charges that were approximately $888 million higher in 2010 than in 2011, (see below); and
charges f or litigation-related matters that were $939 million higher in 2010 than in 2011, which ref lects charges recorded in 2010 f or
asbestos litigation related to our wholly owned subsidiary, Quigley Company, Inc. (f or additional inf ormation, see Notes to Consolidated
Financial Statements Note 17. Commitments and Contingencies ),
partially of f set by:
a lower net gain on asset disposals in 2011 than in 2010.
For inf ormation about the asset impairment charges, see the Signif icant Accounting Policies and Application of Critical Accounting Estimates
Asset Impairment Reviews section of this Financial Review, as well as Notes to Consolidated Financial Statements Note 4. Other Deductions
Net and Note 10B. Goodwill and Other Intangible Assets: Other Intangible Assets.
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PROVISION FOR TAXES ON INCOME
Year Ended December 31, % Change
(MILLIONS OF DOLLARS)
2012 2011 2010 12/11 11/10
Provision f or taxes on income $ 2,562 $ 3,909 $ 1,153 (34) 239
Ef f ective tax rate on continuing operations 21.2% 31.8% 12.2%
During the third quarter of 2012, we reached a multi-year settlement with the U.S. Internal Revenue Service (IRS) with respect to the audits of the
Pf izer Inc. tax returns f or the years 2006 through 2008. The IRS concluded the examination of the af orementioned tax years and issued a f inal
Revenue Agent's Report (RAR). We agreed with all the adjustments and computations contained in the RAR. As a result of settling these audit
years, we recorded a tax benef it of approximately $1.1 billion, representing tax and interest (see Notes to Consolidated Financial Statements
Note 5A. Tax Matters: Taxes on Income from Continuing Operations ).
During the f ourth quarter of 2010, we reached a multi-year settlement with the IRS related to issues we had appealed with respect to the audits
of the Pf izer Inc. tax returns f or the years 2002 through 2005, as well as the Pharmacia audit f or the year 2003 through the date of merger with
Pf izer (April 16, 2003). The IRS concluded its examination of the af orementioned tax years and issued a f inal RAR. We agreed with all of the
adjustments and computations contained in the RAR. As a result of settling these audit years, we recorded a tax benef it of approximately $2.0
billion, representing tax and interest (see Notes to Consolidated Financial Statements Note 5A. Tax Matters: Taxes on Income from Continuing
Operations ).
2012 v. 2011
The lower ef f ective tax rate in 2012 compared to 2011 is primarily the result of :
a multi-year settlement with the IRS in 2012 that resulted in a tax benef it of approximately $1.1 billion, representing tax and interest; and
the resolution of certain prior-period tax positions in 2012 with various f oreign tax authorities, and f rom the expiration of certain statutes of
limitations that resulted in tax benef its of approximately $310 million, representing tax and interest,
partially of f set by:
the impact of the expiration of the U.S. research and development tax credit on December 31, 2011; and
the non-deductibility of the 2012 legal charge related to Rapamune (see the "Other DeductionsNet" section of this Financial Review).
For additional details about the resolution of certain tax positions, see Notes to Consolidated Financial Statements Note 5A. Tax Matters: Taxes
on Income from Continuing Operations .
2011 v. 2010
The higher ef f ective tax rate in 2011 compared to 2010 is primarily the result of :
the non-recurrence of a multi-year settlement with the IRS that resulted in a tax benef it in 2010 of approximately $2.0 billion, representing tax
and interest; and
the non-recurrence of a $460 million tax benef it, representing tax and interest, related to the resolution of certain prior-period tax positions in
2010 with various f oreign tax authorities, as well as f rom the expiration of the statutes of limitations,
partially of f set by:
the decrease and jurisdictional mix of certain impairment charges related to assets acquired in connection with the Wyeth acquisition; and
the change in the jurisdictional mix of earnings.
For additional details about the resolution of certain tax positions, see Notes to Consolidated Financial Statements Note 5A. Tax Matters: Taxes
on Income from Continuing Operations .
Changes in Tax Laws and Tax Rulings
We have been granted an incentive tax ruling in Belgium, ef f ective December 1, 2012, that provides f or incentive tax rates on certain of our
Belgium earnings through 2017. The expected impact in 2013 is not signif icant and is ref lected in our f inancial guidance f or 2013.
On January 3, 2013, the President of the United States signed into law the American Taxpayer Relief Act of 2012 (the 2012 Act), which extends
the U.S. research and development tax credit f or tax years 2012 and 2013, as well as other provisions. Given the enactment date of the 2012
Act, the 2012 Act had no impact on our 2012 results. The expected impact in 2013 is not signif icant and is ref lected in our f inancial guidance f or
2013.
On August 10, 2010, the President of the United States signed into law the Education Jobs and Medicaid Assistance Act of 2010 (the 2010 Act),
which includes education and Medicaid f unding provisions, the cost of which is of f set with revenues that result f rom changes to certain aspects
of the tax treatment of the f oreign-source income of U.S.-based companies. Given the ef f ective dates of the various provisions of the 2010 Act, it
had no impact on our 2010 results. The 2010 Act did not have a signif icant negative impact on our results in 2011 or 2012 and is
2012 Financial Report

33
Financial Review
Pf izer Inc. and Subsidiary Companies


not expected to have a signif icant negative impact on our results in 2013. The impact of the 2010 Act is recorded in Provision for taxes on
income. The expected impact in 2013 is ref lected in our f inancial guidance f or 2013.
On October 25, 2010, the Governor of Puerto Rico signed into law Act 154 to modif y the Puerto Rico source-of -income rules and implement an
excise tax on the purchase of products by multinational corporations and their subsidiaries f rom their Puerto Rico af f iliates that is ef f ective f rom
2011 through 2016. Act 154 had no impact on our results in 2010, since it did not become ef f ective until 2011. Act 154 had a negative impact on
our results in 2011 and 2012. Act 154 will continue to negatively impact our results through 2016. The impact of Act 154 is recorded in Cost of
sales and Provision for taxes on income. The expected impact in 2013 is ref lected in our f inancial guidance f or 2013.
DISCONTINUED OPERATIONS
For additional inf ormation about our discontinued operations, see Notes to Consolidated Financial Statements Note 2B. Acquisitions,
Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures .
The f ollowing table provides the components of Discontinued operations net of tax :
Year Ended December 31,
(a)

(MILLIONS OF DOLLARS)
2012 2011 2010
Revenues $ 2,258 $ 2,673 $ 2,643
Pre-tax income/(loss) f rom discontinued operations 414 487 (50)
Provision/(benef it) f or taxes on income
(b)
117 137 (31)
Income/(loss) from discontinued operationsnet of tax 297 350 (19)
Pre-tax gain/(loss) on sale of discontinued operations 7,123 1,688 (11)
Provision f or taxes on income
(c)
2,340 384
Gain/(loss) on sale of discontinued operationsnet of tax 4,783 1,304 (11)
Discontinued operationsnet of tax $ 5,080 $ 1,654 $ (30)
(a)

Includes the Nutrition business f or all periods presented (through Nov ember 30, 2012) and the Capsugel business f or 2011 (through August 1, 2011) and 2010 only .
The net loss in 2010 includes the impairment of an indef inite-liv ed Brand intangible asset in the Nutrition business of approximately $385 million.
(b)

Includes a def erred tax expense of $24 million f or 2012 , a def erred tax benef it of $43 million f or 2011 , and a def erred tax benef it of $156 million f or 2010 . These
def erred tax prov isions include def erred income taxes related to inv estments in certain f oreign subsidiaries, resulting f rom our intention not to hold these subsidiaries
indef initely .
(c)

Includes a def erred tax expense of $1.4 billion f or 2012 and $190 million f or 2011 . These def erred tax prov isions include def erred tax expense of $2.2 billion f or 2012
and $190 million f or 2011 on certain current-y ear f unds earned outside the U.S. that will not be indef initely reinv ested ov erseas.
ADJUSTED INCOME
General Description of Adjusted Income Measure
Adjusted income is an alternative view of perf ormance used by management, and we believe that investors understanding of our perf ormance is
enhanced by disclosing this perf ormance measure. We report Adjusted income in order to portray the results of our major operationsthe
discovery, development, manuf acture, marketing and sale of prescription medicines f or humans and animals, consumer healthcare (over-the-
counter) products, and vaccinesprior to considering certain income statement elements. We have def ined Adjusted income as Net income
attributable to Pf izer Inc. bef ore the impact of purchase accounting f or acquisitions, acquisition-related costs, discontinued operations and certain
signif icant items. The Adjusted income measure is not, and should not be viewed as, a substitute f or U.S. GAAP net income.
The Adjusted income measure is an important internal measurement f or Pf izer. We measure the perf ormance of the overall Company on this basis
in conjunction with other perf ormance metrics. The f ollowing are examples of how the Adjusted income measure is utilized:
senior management receives a monthly analysis of our operating results that is prepared on an Adjusted income basis;
our annual budgets are prepared on an Adjusted income basis; and
senior managements annual compensation is derived, in part, using this Adjusted income measure. Adjusted income is one of the
perf ormance metrics utilized in the determination of bonuses under the Pf izer Inc. Executive Annual Incentive Plan that is designed to limit the
bonuses payable to the Executive Leadership Team (ELT) f or purposes of Internal Revenue Code Section 162(m). Subject to the
Section 162(m) limitation, the bonuses are f unded f rom a pool based on the achievement of three f inancial metrics, including adjusted diluted
earnings per share, which is derived f rom Adjusted income. Since 2011, this metric accounts f or 40% of the bonus pool made available to
ELT members and other members of senior management and will constitute a f actor in determining each of these individuals bonus.
Despite the importance of this measure to management in goal setting and perf ormance measurement, Adjusted income is a non-GAAP f inancial
measure that has no standardized meaning prescribed by U.S. GAAP and, theref ore, has limits in its usef ulness to investors. Because of its non-
standardized def inition, Adjusted income (unlike U.S. GAAP net income) may not be comparable to the calculation of similar measures of other
companies. Adjusted income is presented solely to permit investors to more f ully understand how management assesses perf ormance.
34

2012 Financial Report
Financial Review
Pf izer Inc. and Subsidiary Companies


We also recognize that, as an internal measure of perf ormance, the Adjusted income measure has limitations, and we do not restrict our
perf ormance-management process solely to this metric. A limitation of the Adjusted income measure is that it provides a view of our operations
without including all events during a period, such as the ef f ects of an acquisition or amortization of purchased intangibles, and does not provide a
comparable view of our perf ormance to other companies in the biopharmaceutical industry. We also use other specif ically tailored tools designed
to achieve the highest levels of perf ormance. For example, our R&D organization has productivity targets, upon which its ef f ectiveness is
measured. In addition, the earn-out of Perf ormance Share Award grants is determined based on a f ormula that measures our perf ormance using
relative total shareholder return.
Purchase Accounting Adjustments
Adjusted income is calculated prior to considering certain signif icant purchase accounting impacts resulting f rom business combinations and net
asset acquisitions. These impacts, primarily associated with Pharmacia (acquired in 2003), Wyeth (acquired in 2009) and King (acquired in 2011),
can include the incremental charge to cost of sales f rom the sale of acquired inventory that was written up to f air value, amortization related to
the increase in f air value of the acquired f inite-lived intangible assets, depreciation related to the increase/decrease in f air value of the acquired
f ixed assets, amortization related to the increase in f air value of acquired debt, and the f air value changes associated with contingent
consideration. Theref ore, the Adjusted income measure includes the revenues earned upon the sale of the acquired products without considering
the acquisition cost of those products.
Certain of the purchase accounting adjustments can occur through 20 or more years, but this presentation provides an alternative view of our
perf ormance that is used by management to internally assess business perf ormance. We believe the elimination of amortization attributable to
acquired intangible assets provides management and investors an alternative view of our business results by trying to provide a degree of parity
to internally developed intangible assets f or which research and development costs previously have been expensed.
However, a completely accurate comparison of internally developed intangible assets and acquired intangible assets cannot be achieved through
Adjusted income. This component of Adjusted income is derived solely f rom the impacts of the items listed in the f irst paragraph of this section.
We have not f actored in the impacts of any other dif f erences in experience that might have occurred if we had discovered and developed those
intangible assets on our own, and this approach does not intend to be representative of the results that would have occurred in those
circumstances. For example, our research and development costs in total, and in the periods presented, may have been dif f erent; our speed to
commercialization and resulting sales, if any, may have been dif f erent; or our costs to manuf acture may have been dif f erent. In addition, our
marketing ef f orts may have been received dif f erently by our customers. As such, in total, there can be no assurance that our Adjusted income
amounts would have been the same as presented had we discovered and developed the acquired intangible assets.
Acquisition-Related Costs
Adjusted income is calculated prior to considering transaction, integration, restructuring and additional depreciation costs associated with
business combinations because these costs are unique to each transaction and represent costs that were incurred to restructure and integrate
two businesses as a result of the acquisition decision. For additional clarity, only transaction costs, additional depreciation and restructuring and
integration activities that are associated with a business combination or a net-asset acquisition are included in acquisition-related costs. We have
made no adjustments f or the resulting synergies.
We believe that viewing income prior to considering these charges provides investors with a usef ul additional perspective because the signif icant
costs incurred in connection with a business combination result primarily f rom the need to eliminate duplicate assets, activities or employeesa
natural result of acquiring a f ully integrated set of activities. For this reason, we believe that the costs incurred to convert disparate systems, to
close duplicative f acilities or to eliminate duplicate positions (f or example, in the context of a business combination) can be viewed dif f erently f rom
those costs incurred in other, more normal, business contexts.
The integration and restructuring costs associated with a business combination may occur over several years, with the more signif icant impacts
ending within three years of the transaction. Because of the need f or certain external approvals f or some actions, the span of time needed to
achieve certain restructuring and integration activities can be lengthy. For example, due to the highly regulated nature of the pharmaceutical
business, the closure of excess f acilities can take several years, as all manuf acturing changes are subject to extensive validation and testing and
must be approved by the FDA and/or other global regulatory authorities.
Discontinued Operations
Adjusted income is calculated prior to considering the results of operations included in discontinued operations, as well as any related gains or
losses on the sale of such operations such as the sale of our Capsugel business, which we sold in August 2011, and the sale of our Nutrition
business, which we sold in November 2012. We believe that this presentation is meaningf ul to investors because, while we review our
businesses and product lines f or strategic f it with our operations, we do not build or run our businesses with the intent to sell them.
(Restatements due to discontinued operations do not impact compensation or change the Adjusted income measure f or the compensation of the
restated periods but are presented here on a restated basis f or consistency across all periods.)
Certain Significant Items
Adjusted income is calculated prior to considering certain signif icant items. Certain signif icant items represent substantive, unusual items that are
evaluated on an individual basis. Such evaluation considers both the quantitative and the qualitative aspect of their unusual nature. Unusual, in this
context, may 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
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35
Financial Review
Pf izer Inc. and Subsidiary Companies


we no longer sell. While not all-inclusive, examples of items that could be included as certain signif icant items would be a major non-acquisition-
related restructuring charge and associated implementation costs f or a program that is specif ic in nature with a def ined term, such as those
related to our non-acquisition-related cost-reduction and productivity initiatives; amounts related to certain disposals of businesses, products or
f acilities that do not qualif y as discontinued operations under U.S. GAAP; amounts associated with transition service agreements in support of
discontinued operations af ter sale; certain intangible asset impairments; adjustments related to the resolution of certain tax positions; the impact of
adopting certain signif icant, event-driven tax legislation; or charges related to certain legal matters, such as certain of those discussed in Notes to
Consolidated Financial Statements Note 17. Commitments and Contingencies and in Part IIOther Information; Item 1. Legal Proceedings in
our Quarterly Reports on Form 10-Q f ilings. Normal, ongoing def ense costs of the Company or settlements of and accruals f or legal matters made
in the normal course of our business would not be considered certain signif icant items.
Reconciliation
The f ollowing table provides a reconciliation of Net income attributable to Pfizer Inc. , as reported under U.S. GAAP, and Non-GAAP Adjusted
income:
Year Ended December 31, % Change
(MILLIONS OF DOLLARS)
2012 2011 2010 12/11 11/10
GAAP Reported net income attributable to Pf izer Inc. $ 14,570 $ 10,009 $ 8,257 46 21
Purchase accounting adjustmentsnet of tax 3,598 5,000 6,011 (28) (17)
Acquisition-related costsnet of tax 756 1,457 2,844 (48) (49)
Discontinued operationsnet of tax (5,080) (1,654) 30 (207) *
Certain signif icant itemsnet of tax 2,632 3,027 420 (13) *
Non-GAAP Adjusted income
(a)
$ 16,476 $ 17,839 $ 17,562 (8) 2
(a)

The ef f ectiv e tax rate on Non-GAAP Adjusted income was 29.3% in 2012 , 29.6% in 2011 and 29.9% in 2010 . The ef f ectiv e tax rate f or 2012 compared with the prior-
y ear ref lects the impact of the change in the jurisdictional mix of earnings and the expiration of the U.S. research and dev elopment tax credit, and the f av orable
impact of the resolution of certain prior-period tax positions in 2012 with v arious f oreign tax authorities, and f rom the expiration of certain statutes of limitations.
* Calculation not meaningf ul.
Certain amounts and percentages may ref lect rounding adjustments.
The f ollowing table provides a reconciliation of Reported diluted EPS, as reported under U.S. GAAP, and Non-GAAP Adjusted diluted EPS:
Year Ended December 31, % Change
2012 2011 2010 12/11 11/10
Earnings per common sharediluted
(a)

GAAP Reported income f rom continuing operations
attributable to Pf izer Inc. common shareholders $ 1.26 $ 1.06 $ 1.03 19 3
Income f rom discontinued operationsnet of tax 0.68 0.21 224 *
GAAP Reported net income attributable to Pf izer Inc.
common shareholders 1.94 1.27 1.02 53 25
Purchase accounting adjustmentsnet of tax 0.48 0.64 0.74 (25) (14)
Acquisition-related costsnet of tax 0.10 0.19 0.35 (47) (46)
Discontinued operationsnet of tax (0.68) (0.21) (224) *
Certain signif icant itemsnet of tax 0.35 0.38 0.05 (8) *
Non-GAAP Adjusted income attributable to Pf izer Inc.
common shareholders
(b)
$ 2.19 $ 2.27 $ 2.18 (4) 4
(a)
EPS amounts may not add due to rounding.
(b)

Reported and Adjusted diluted earnings per share in 2012 and 2011 were signif icantly impacted by the decrease in the number of shares outstanding, primarily due to
the Company 's ongoing share repurchase program.
* Calculation not meaningf ul.
Certain amounts and percentages may ref lect rounding adjustments.
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2012 Financial Report
Financial Review
Pf izer Inc. and Subsidiary Companies


Adjusted income, as shown above, excludes the f ollowing items:
Year Ended December 31,
(MILLIONS OF DOLLARS)
2012 2011 2010
Purchase accounting adjustments
Amortization, depreciation and other
(a)
$ 4,952 $ 5,523 $ 5,314
Cost of sales, primarily related to f air value adjustments of acquired inventory 5 1,230 2,822
Total purchase accounting adjustments, pre-tax 4,957 6,753 8,136
Income taxes
(b)
(1,359) (1,753) (2,125)
Total purchase accounting adjustmentsnet of tax 3,598 5,000 6,011

Acquisition-related costs
Transaction costs
(c)
1 30 22
Integration costs
(c)
405 725 1,001
Restructuring charges
(c)
279 601 2,122
Additional depreciationasset restructuring
(d)
282 623 781
Total acquisition-related costs, pre-tax 967 1,979 3,926
Income taxes
(b)
(211) (522) (1,082)
Total acquisition-related costsnet of tax 756 1,457 2,844

Discontinued operations
(Income)/loss f rom operationsnet of tax (297) (350) 19
(Gain)/loss on sale of discontinued operations (4,783) (1,304) 11
Total discontinued operationsnet of tax (5,080) (1,654) 30

Certain signif icant items
Restructuring charges
(e)
1,195 1,574
Implementation costs and additional depreciationasset restructuring
(f)
693 959
Certain legal matters
(g)
2,191 822 1,703
Certain asset impairment charges
(h)
884 856 1,752
Inventory write-of f
(i)
28 8 212
Costs associated with the separation of Zoetis
(j)
325 35
Other 8 93 (102)
Total certain signif icant items, pre-tax 5,324 4,347 3,565
Income taxes
(b)
(2,692) (1,320) (3,145)
Total certain signif icant itemsnet of tax 2,632 3,027 420
Total purchase accounting adjustments, acquisition-related costs, discontinued
operations and certain signif icant itemsnet of tax $ 1,906 $ 7,830 $ 9,305
(a)
Included primarily in Amortization of intangible assets (see Notes to Consolidated Financial Statements Note 10. Goodwill and Other Intangible Assets ).
(b)

Included in Provision for taxes on income. Income taxes includes the tax ef f ect of the associated pre-tax amounts, calculated by determining the jurisdictional location
of the pre-tax amounts and apply ing that jurisdictions applicable tax rate. In addition, income taxes f or Certain signif icant items in 2012 includes a $1.1 billion tax
benef it, representing tax and interest, as a result of a settlement with the IRS related to audits f or tax y ears 2006-2008. Amounts in 2010 include a $2.0 billion tax
benef it, representing tax and interest, as a result of a settlement with the IRS of certain audits cov ering tax y ears 2002-2005. See Notes to Consolidated Financial
Statements Note 5A. Tax Matters: Taxes on Income fromContinuing Operations .
(c)

Included in Restructuring charges and certain acquisition-related costs (see Notes to Consolidated Financial Statements Note 3. Restructuring Charges and Other
Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives ).
(d)

Represents the impact of changes in the estimated usef ul liv es of assets inv olv ed in restructuring actions related to acquisitions. For 2012, included in Cost of sales
($267 million), Selling informational and administrative expenses ($9 million) and Research and development expenses ($6 million). For 2011, included in Cost of sales
($555 million), Selling, informational and administrative expenses ($45 million) and Research and development expenses ($23 million). For 2010, included in Cost of
sales ($520 million), Selling, informational and administrative expenses ($227 million) and Research and development expenses ($34 million).
(e)

Represents restructuring charges incurred f or our cost-reduction and productiv ity initiativ es. Included in Restructuring charges and certain acquisition-related costs
(see Notes to Consolidated Financial Statements Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity
Initiatives ).
(f)
Amounts primarily relate to our cost-reduction and productiv ity initiativ es (see Notes to Consolidated Financial Statements Note 3. Restructuring Charges and
Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives ). For 2012, included in Cost of sales ($31 million), Selling, informational and
administrative expenses ($140 million) and Research and development expenses ($522 million). For 2011, included in Cost of sales ($250 million), Selling, informational
and administrative expenses ($55 million) and Research and development expenses ($654 million).
(g)

Included in Other deductionsnet (see the Other DeductionsNet section of this Financial Rev iew and Notes to Consolidated Financial Statements Note 4.
Other DeductionsNet ) .
2012 Financial Report

37
Financial Review
Pf izer Inc. and Subsidiary Companies


(h)

Substantially all included in Other deductionsnet (see the Other DeductionsNet section of this Financial Rev iew and Notes to Consolidated Financial Statements
Note 4. Other DeductionsNet ) .
(i)
Included in Cost of sales (see also the Costs and ExpensesCost of Sales section of this Financial Rev iew) .
(j)
Costs incurred in connection with the initial public of f ering of a 19.8% ownership stake in Zoetis. Includes expenditures f or banking, legal, accounting and similar
serv ices, as well as costs associated with the separation of Zoetis employ ees, net assets and operations f rom Pf izer, such as consulting and sy stems costs. For
2012, included in Costs of sales ($6 million), Selling, informational and administrative expenses ($194 million) and Other deductionsnet ($125 million). For 2011,
substantially all included in Other deductionsnet .
ANALYSIS OF THE CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Changes in the components of Accumulated other comprehensive loss ref lect the f ollowing:
2012
For Foreign currency translation adjustments , ref lects the weakening of several f oreign currencies against the U.S. dollar, primarily the euro, the
Japanese yen, the Australian dollar and the Brazilian real.
For Unrealized holding gains/(losses) on derivative financial instruments , ref lects the impact of f air value adjustments. See also Notes to
Consolidated Financial Statements Note 7A. Financial Instruments: Selected Financial Assets and Liabilities .
For Benefit plans: Actuarial losses , ref lects the impact of changes in actuarial assumptions and the dif f erence between actual return on plan
assets and expected return on plan assets. See also Notes to Consolidated Financial Statements Note 11. Pension and Postretirement Benefit
Plans and Defined Contribution Plans .
2011
For Foreign currency translation adjustments , ref lects the strengthening of several f oreign currencies against the U.S. dollar, primarily the euro,
the Japanese yen, the British pound, and the Australian dollar .
For Unrealized holding gains/(losses) on derivative financial instruments , ref lects the impact of f air value adjustments. See also Notes to
Consolidated Financial Statements Note 7A. Financial Instruments: Selected Financial Assets and Liabilities .
For Benefit plans: Actuarial losses , ref lects the impact of changes in actuarial assumptions and the dif f erence between actual return on plan
assets and expected return on plan assets. See also Notes to Consolidated Financial Statements Note 11. Pension and Postretirement Benefit
Plans and Defined Contribution Plans .
2010
For Foreign currency translation adjustments , ref lects the weakening of several f oreign currencies against the U.S. dollar, primarily the euro and
the British pound .
For Unrealized holding gains/(losses) on derivative financial instruments , ref lects the impact of f air value adjustments. See also Notes to
Consolidated Financial Statements Note 7A. Financial Instruments: Selected Financial Assets and Liabilities .
For Benefit plans: Actuarial losses , ref lects the impact of changes in actuarial assumptions and the dif f erence between actual return on plan
assets and expected return on plan assets. See also Notes to Consolidated Financial Statements Note 11. Pension and Postretirement Benefit
Plans and Defined Contribution Plans .
ANALYSIS OF THE CONSOLIDATED BALANCE SHEETS
For inf ormation about certain of our f inancial assets and liabilities, including Cash and cash equivalents, Short-term investments, Long-term
investments, Short-term borrowings, including current portion of long-term debt , and Long-term debt , see Analysis of Financial Condition,
Liquidity and Capital Resources below.
For Assets of discontinued operations and other assets held for sale , the decrease ref lects the sale of our Nutrition business (see Notes to
Consolidated Financial Statements Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:
Divestitures ).
Many changes in our asset and liability accounts as of December 31, 2012 , compared to December 31, 2011 , ref lect, among other things,
increases associated with our acquisitions of Alacer Corp., Ferrosan Holding A/S and NextWave Pharmaceuticals, Inc. (see Notes to
Consolidated Financial Statements Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:
Acquisitions ) and decreases due to the impact of f oreign exchange.
For Accounts Receivable, net , see Selected Measures of Liquidity and Capital Resources: Accounts Receivable below.
For Property, plant and equipment, less accumulated depreciation , the change also ref lects depreciation in excess of capital additions.
For Identifiable intangible assets, less accumulated amortization, the change also ref lects amortization and asset impairments (see Notes to
Consolidated Financial Statements Note 4. Other DeductionsNet ).
For Accounts payable , the change also ref lects an increase in Value Added Tax (VAT) payables.
For Other current liabilities and Other noncurrent liabilities , the changes also ref lect a decrease in restructuring-related liabilities and the impact
of lower revenues on expense levels. Other noncurrent liabilities also ref lects the impact of f air value adjustments on derivative f inancial
instruments.
38

2012 Financial Report
Financial Review
Pf izer Inc. and Subsidiary Companies


For Pension benefit obligations and Postretirement benefit obligations , the changes also ref lect the lowering of the discount rate, partially
of f set by the impact of $938 million of company contributions (see Notes to Consolidated Financial Statements Note 11. Pension and
Postretirement Benefit Plans and Defined Contribution Plans ).
For Other taxes payable, the change also ref lects the impact of a number of audit settlements (see Notes to Consolidated Financial Statements
Note 5A. Tax Matters: Taxes on Income from Continuing Operations ).
ANALYSIS OF THE CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31, % Change
(MILLIONS OF DOLLARS)
2012 2011 2010 12/11 11/10
Cash provided by/(used in):
Operating activities $ 17,054 $ 20,240 $ 11,454 (16) 77
Investing activities 6,154 1,843 (492) 234 *
Financing activities (15,999) (20,607) (11,174) (22) 84
Ef f ect of exchange-rate changes on cash and cash equivalents (2) (29) (31) (93) (6)
Net increase/(decrease) in Cash and cash equivalents 7,207 1,447 (243) * *
* Calculation not meaningf ul.
Operating Activities
2012 v. 2011
Our net cash provided by operating activities was $17.1 billion in 2012 , compared to $20.2 billion in 2011 . The decrease in net cash provided by
operating activities was primarily attributable to:
the loss of exclusivity of Lipitor, as well as certain other products, resulting in lower revenues and associated expenses (see also The
Loss or Expiration of Intellectual Property Rights section of this Financial Review), partially of f set by spending reductions resulting f rom
our company-wide cost-reduction initiatives;
payments made in connection with certain legal matters; and
the timing of receipts and payments in the ordinary course of business.
2011 v. 2010
Our net cash provided by operating activities was $20.2 billion in 2011 , compared to $11.5 billion in 2010 . The increase in net cash provided by
operating activities was primarily attributable to:
income tax payments made in 2010 of approximately $11.8 billion, primarily associated with certain business decisions executed to
f inance the Wyeth acquisition, including the decision to repatriate certain f unds earned outside the U.S., compared with $2.9 billion in
2011; and
the timing of receipts and payments in the ordinary course of business.
In 2010, the cash f low line item called Other tax accounts, net, ref lects the $11.8 billion tax payment described above.
Investing Activities
2012 v. 2011
Our net cash provided by investing activities was $6.2 billion in 2012 , compared to $1.8 billion in 2011 . The increase in net cash provided by
investing activities was primarily attributable to:
net proceeds f rom the sale of our Nutrition business of $11.85 billion in 2012 compared to net proceeds f rom the sale of our Capsugel
business of $2.4 billion in 2011 (see Notes to Consolidated Financial Statements Note 2B. Acquisitions, Divestitures, Collaborative
Arrangements and Equity-Method Investments: Divestitures ); and
cash paid of $1.1 billion, net of cash acquired, f or our acquisitions of Alacer, Ferrosan and NextWave in 2012 (see Notes to
Consolidated Financial Statements Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:
Acquisitions ), compared to $3.3 billion cash paid, net of cash acquired, in 2011, f or our acquisitions of King, Icagen and Excaliard,
partially of f set by:
net purchases of investments of $3.4 billion in 2012, compared to net proceeds f rom redemptions and sales of investments of $4.1
billion in 2011, which were primarily used to f inance our acquisition of King.
2012 Financial Report

39
Financial Review
Pf izer Inc. and Subsidiary Companies


2011 v. 2010
Our net cash provided by investing activities was $1.8 billion in 2011 , compared to $492 million net cash used in 2010 . The increase in net cash
provided by investing activities was primarily attributable to:
net proceeds f rom redemptions, purchases and sales of investments of $4.1 billion in 2011, which were primarily used to f inance our
acquisition of King, compared to net proceeds f rom redemptions, purchases and sales of investments of $1.2 billion in 2010; and
net proceeds of $2.4 billion received f rom the sale of Capsugel in 2011 (see Notes to Consolidated Financial Statements Note 2B.
Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures),
partially of f set by:
cash paid of $3.3 billion, net of cash acquired, f or our acquisitions of King, Icagen and Excaliard in 2011, compared to $273 million paid
f or our acquisitions of FoldRx, Vetnex and Synbiotics in 2010.
Financing Activities
2012 v. 2011
Our net cash used in f inancing activities was $16.0 billion in 2012 , compared to $20.6 billion in 2011 . The decrease in net cash used in f inancing
activities was primarily attributable to:
net repayments of borrowings of $1.7 billion in 2012, compared to net repayments of borrowings of $5.5 billion in 2011;
purchases of our common stock of $8.2 billion in 2012, compared to $9.0 billion in 2011; and
increased proceeds f rom the exercise of stock options,
slightly of f set by:
higher cash dividends paid.
2011 v. 2010
Our net cash used in f inancing activities was $20.6 billion in 2011 , compared to $11.2 billion in 2010 . The increase in net cash used in f inancing
activities was primarily attributable to:
net repayments of borrowings of $5.5 billion in 2011, compared to net repayments of borrowings of $4.2 billion in 2010; and
purchases of our common stock of $9.0 billion in 2011, compared to $1.0 billion in 2010.
ANALYSIS OF FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
We rely largely on operating cash f lows, short-term investments, short-term commercial paper borrowings and long-term debt to provide f or our
liquidity requirements. We believe that we have the ability to obtain both short-term and long-term debt to meet our f inancing needs f or the
f oreseeable f uture. Due to our signif icant operating cash f lows as well as our f inancial assets, access to capital markets and available lines of
credit and revolving credit agreements, we f urther believe that we have the ability to meet our liquidity needs f or the f oreseeable f uture, which
include:
the working capital requirements of our operations, including our research and development activities;
investments in our business;
dividend payments and potential increases in the dividend rate;
share repurchases;
the cash requirements associated with our cost-reduction/productivity initiatives;
paying down outstanding debt;
contributions to our pension and postretirement plans; and
business-development activities.
With regard to share repurchases, the Company's new $10 billion share-purchase plan became ef f ective on November 30, 2012. (For additional
inf ormation about the new share-purchase plan, see the Share-Purchase Plans section of this Financial Review.)
Our long-term debt is rated investment grade by both Standard & Poors (S&P) and Moodys Investors Service (Moody's). See the Credit Ratings
section below. As market conditions change, we continue to monitor our liquidity position. We have taken and will continue to take a conservative
approach to our f inancial investments. Both short-term and long-term investments consist primarily of high-quality, highly liquid, well-diversif ied,
available-f or-sale debt securities.
40

2012 Financial Report
Financial Review
Pf izer Inc. and Subsidiary Companies


Selected Measures of Liquidity and Capital Resources
The f ollowing table provides certain relevant measures of our liquidity and capital resources:
As of December 31,
(MILLIONS OF DOLLARS, EXCEPT RATIOS AND PER COMMON SHARE DATA)
2012 2011
Selected f inancial assets:
Cash and cash equivalents
(a)
$ 10,389 $ 3,182
Short-term investments
(a)
22,319 23,270
Long-term investments 14,149 9,814
46,857 36,266
Debt:
Short-term borrowings, including current portion of long-term debt 6,424 4,016
Long-term debt 31,036 34,926
37,460 38,942
Net f inancial assets (liabilities)
(b)
$ 9,397 $ (2,676)

Working capital
(c)
$ 32,796 $ 31,908
Ratio of current assets to current liabilities 2.15:1 2.10:1
Total Pf izer Inc. shareholders' equity per common share
(d)
$ 11.17 $ 10.85
(a)

See Notes to Consolidated Financial Statements Note 7. Financial Instruments f or a description of assets held and f or a description of credit risk related to our
f inancial instruments held.
(b)

Net f inancial assets increased during 2012 primarily related to the $11.85 billion proceeds receiv ed f rom the sale of the Nutrition business. For additional inf ormation,
see the Analy sis of the Consolidated Statements of Cash Flows section of this Financial Rev iew.
(c)
Working capital includes net assets held f or sale of $70 million as of December 31, 2012 and $4.1 billion as of December 31, 2011 .
(d)

Represents total Pf izer Inc. shareholders equity div ided by the actual number of common shares outstanding (which excludes treasury shares and shares held by
our employ ee benef it trust).
For additional inf ormation about the sources and uses of our f unds, see the Analysis of the Consolidated Balance Sheets and Analysis of the
Consolidated Statements of Cash Flows sections of this Financial Review.
Subsequent Events
On January 28, 2013, our then wholly owned subsidiary, Zoetis, issued $3.65 billion aggregate principal amount of senior notes, net of an original
issue debt discount of $10 million. The notes have a weighted-average ef f ective interest rate of 3.30%, and mature at various dates as f ollows:
1.15% Notes due 2016 ($400 million); 1.875% Notes due 2018 ($749 million); 3.25% Notes due 2023 ($1.349 billion); and 4.7% Notes due 2043
($1.142 billion). On February 6, 2013, Zoetis also entered into a commercial paper program with a capacity of up to $1.0 billion. No amounts are
currently outstanding under this program.
Also on January 28, 2013, we transf erred to Zoetis substantially all of the assets and liabilities of our Animal Health business in exchange f or all
of the Class A and Class B common stock of Zoetis, $1.0 billion of the $3.65 billion senior notes and an amount of cash equal to substantially all of
the cash proceeds received by Zoetis f rom the remaining $2.65 billion senior notes issued. The $1.0 billion of senior notes received by Pf izer
were exchanged by Pf izer f or the retirement of Pf izer commercial paper issued in December 2012, and the cash proceeds received by Pf izer of
approximately $2.5 billion are restricted to debt repayment, dividends and/or stock buybacks, in all cases to be completed by mid-2014.
On February 6, 2013, an initial public of f ering (IPO) of Zoetis was completed, pursuant to which we sold 99.015 million shares of Zoetis in
exchange f or the retirement of approximately $2.5 billion of Pf izer commercial paper issued on January 10, 2013.
In summary, as a result of the above transactions, we received approximately $6.1 billion of cash (of which approximately $2.5 billion is restricted
to debt repayment, dividends and/or stock buybacks, in all cases to be completed by mid-2014) and incurred approximately $3.65 billion in Zoetis
long-term debt. For additional inf ormation, see Notes to Consolidated Financial Statements Note 19A. Subsequent Events: Zoetis Debt Offering
and Initial Public Offering.
Two major corporate debt-rating organizations, Moodys and S&P, assign ratings to the Zoetis short-term and long-term debt. A security rating is
not a recommendation to buy, sell or hold securities and the rating is subject to revision or withdrawal at any time by the rating organization. Each
rating should be evaluated independently of any other rating.
2012 Financial Report

41
Financial Review
Pf izer Inc. and Subsidiary Companies


The f ollowing table provides the current ratings assigned by these rating agencies to the Zoetis commercial paper and senior unsecured non-
credit-enhanced long-term debt:
NAME OF RATING AGENCY
Zoetis
Commercial Paper
Zoetis
Long-term Debt
Date of Action Rating Rating Outlook
Moodys P-2 Baa2 Stable January 2013
S&P A-3 BBB- Stable January 2013
Domestic and International Short-Term Funds

Many of our operations are conducted outside the U.S., and signif icant portions of our cash, cash equivalents and short-term investments are
held internationally. We generally hold approximately 10%-30% of these short-term f unds in U.S. tax jurisdictions. The amount of f unds held in U.S.
tax jurisdictions can f luctuate due to the timing of receipts and payments in the ordinary course of business and due to other reasons, such as
business-development activities. As part of our ongoing liquidity assessments, we regularly monitor the mix of domestic and international cash
f lows (both inf lows and outf lows). Repatriation of overseas f unds can result in additional U.S. f ederal, state and local income tax payments. We
record U.S. def erred tax liabilities f or certain unremitted earnings, but when amounts earned overseas are expected to be indef initely reinvested
outside the U.S., no accrual f or U.S. taxes is provided.
A substantial portion of the proceeds related to the sale of our Nutrition business to Nestl is located outside the U.S. We have provided def erred
taxes on certain current-year f unds earned outside the U.S. that will not be indef initely reinvested. We expect that the proceeds f rom the sale will
primarily be used f or share repurchases, as well as other value-creating opportunities. For additional inf ormation regarding our sale of the
Nutrition business to Nestl, see Notes to Consolidated Financial Statements Note 2B. Acquisitions, Divestitures, Collaborative Arrangements
and Equity-Method Investments: Divestitures .
Accounts Receivable
We continue to monitor developments regarding government and government agency receivables in several European markets where economic
conditions remain challenging and uncertain. Historically, payments f rom a number of these European governments and government agencies
extend beyond the contractual terms of sale and the year-over-year trend is worsening.
We believe that our allowance f or doubtf ul accounts is appropriate. Our assessment is based on an analysis of the f ollowing: (i) payments
received to date; (ii) the consistency of payments f rom customers; (iii) direct and observed interactions with the governments (including court
petitions) and with market participants (f or example, the f actoring industry); and (iv) various third-party assessments of repayment risk (f or
example, rating agency publications and the movement of rates f or credit def ault swap instruments).
As of December 31, 2012 , we had about $1.2 billion in aggregate gross accounts receivable f rom governments and/or government agencies in
Italy, Spain, Greece, Portugal and Ireland, where economic conditions remain challenging and uncertain. Such receivables in excess of one year
f rom the invoice date, totaling $274 million, were as f ollows: $128 million in Italy; $105 million in Greece; $25 million in Portugal; $10 million in Spain;
and $6 million in Ireland.
Although certain European governments and government agencies sometimes delay payments beyond the contractual terms of sale, we seek to
appropriately balance repayment risk with the desire to maintain good relationships with our customers and to ensure a humanitarian approach to
local patient needs.
We will continue to closely monitor repayment risk and, when necessary, we will continue to adjust our allowance f or doubtf ul accounts.
Our assessments about the recoverability of accounts receivables can result f rom a complex series of judgments about f uture events and
uncertainties and can rely heavily on estimates and assumptions. For inf ormation about the risks associated with estimates and assumptions, see
Notes to Consolidated Financial Statements Note 1C. Basis of Presentation and Significant Accounting Policies: Estimates and Assumptions .
Credit Ratings
Two major corporate debt-rating organizations, Moodys and S&P, assign ratings to Pf izer short-term and long-term debt. A security rating is not a
recommendation to buy, sell or hold securities and the rating is subject to revision or withdrawal at any time by the rating organization. Each rating
should be evaluated independently of any other rating.
42

2012 Financial Report
Financial Review
Pf izer Inc. and Subsidiary Companies


The f ollowing table provides the current ratings assigned by these rating agencies to Pf izer commercial paper and senior unsecured non-credit-
enhanced long-term debt:
NAME OF RATING AGENCY
Pf izer
Commercial Paper
Pf izer
Long-term Debt
Date of Last Action Rating Rating Outlook
Moodys P-1 A1 Stable October 2009
S&P A1+ AA Stable October 2009
See "Subsequent Events" above f or inf ormation about a January 2013 Zoetis debt of f ering and the Zoetis commercial paper program.
Debt Capacity
We have available lines of credit and revolving credit agreements with a group of banks and other f inancial intermediaries. We maintain cash and
cash equivalent balances and short-term investments in excess of our commercial paper and other short-term borrowings. As of December 31,
2012 , we had access to $9.1 billion of lines of credit, of which $2.0 billion expire within one year. Of these lines of credit, $8.4 billion are unused,
of which our lenders have committed to loan us $7.1 billion at our request. Also, $7.0 billion of our unused lines of credit, all of which expire in
2016, may be used to support our commercial paper borrowings.
In December 2012, Zoetis entered into a revolving credit agreement providing f or a f ive-year $1.0 billion senior unsecured revolving credit f acility,
which became ef f ective in February 2013 and expires in December 2017.
See "Subsequent Events" above f or inf ormation about a January 2013 Zoetis debt of f ering and the Zoetis commercial paper program.
Global Economic Conditions
The challenging economic environment has not had, nor do we anticipate it will have, a signif icant impact on our liquidity. Due to our signif icant
operating cash f lows, f inancial assets, access to capital markets and available lines of credit and revolving credit agreements, we continue to
believe that we have the ability to meet our liquidity needs f or the f oreseeable f uture. As markets change, we continue to monitor our liquidity
position. There can be no assurance that the challenging economic environment or a f urther economic downturn would not impact our ability to
obtain f inancing in the f uture.
Contractual Obligations
Payments due under contractual obligations as of December 31, 2012, mature as f ollows:
Years
(MILLIONS OF DOLLARS)
Total 2013 2014-2015 2016-2017 Thereaf ter
Long-term debt, including current portion
(a)
$ 33,485 $ 2,449 $ 6,987 $ 6,356 $ 17,693
Interest payments on long-term debt obligations
(b)
17,980 1,494 2,675 2,137 11,674
Other long-term liabilities ref lected on our consolidated balance
sheet under U.S. GAAP
(c)
5,034 474 899 892 2,769
Lease commitments
(d)
1,288 190 304 164 630
Purchase obligations and other
(e)
3,534 1,500 1,439 277 318
Uncertain tax positions
(f)
80 80
(a)
Long-term debt consists of senior unsecured notes, including f ixed and f loating rate, f oreign currency denominated, and other notes.
(b)

Our calculations of expected interest pay ments incorporate only current period assumptions f or interest rates, f oreign currency translation rates and hedging
strategies (see Notes to Consolidated Financial Statements Note 7. Financial Instruments ), and assume that interest is accrued through the maturity date or
expiration of the related instrument.
(c)

Includes expected pay ments relating to our unf unded U.S. supplemental (non-qualif ied) pension plans, postretirement plans and def erred compensation plans.
Excludes amounts relating to our U.S. qualif ied pension plans and international pension plans, all of which hav e a substantial amount of plan assets, because the
required f unding obligations are not expected to be material and/or because such liabilities do not necessarily ref lect f uture cash pay ments, as the impact of changes
in economic conditions on the f air v alue of the pension plan assets and/or liabilities can be signif icant; howev er, we currently anticipate contributing approximately
$343 million to these plans in 2013. Also excludes $3.9 billion of liabilities related to the f air v alue of deriv ativ e f inancial instruments, legal matters, employ ee
terminations, env ironmental matters and other, most of which do not represent contractual obligations. See also our liquidity discussion abov e in this "Analy sis of
Financial Condition, Liquidity and Capital Resources" section, as well as the Notes to Consolidated Financial Statements Note 3. Restructuring Charges and Other
Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives, Note 7A. Financial Instruments: Selected Financial Assets and Liabilities, Note 11E.
Pension and Postretirement Benefit Plans and Defined Contribution Plans: Cash Flows, and Note 17. Commitments and Contingencies.
(d)
Includes operating and capital lease obligations.
(e)

Includes agreements to purchase goods and serv ices that are enf orceable and legally binding and includes amounts relating to adv ertising, inf ormation technology
serv ices, employ ee benef it administration serv ices, and potential milestone pay ments deemed reasonably likely to occur.
(f)
Includes amounts ref lected in Income taxes payable only . We are unable to predict the timing of tax settlements related to our noncurrent obligations f or uncertain
tax positions as tax audits can inv olv e complex issues and the resolution of those issues may span multiple y ears, particularly if subject to negotiation or litigation.
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The above table excludes amounts f or potential milestone payments under collaboration, licensing or other arrangements, unless the payments
are deemed reasonably likely to occur. 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.
In 2013, we expect to spend approximately $1.5 billion on property, plant and equipment. Planned capital spending mostly represents investment to
maintain existing f acilities and capacity. We rely largely on operating cash f lows to f und our capital investment needs. Due to our signif icant
operating cash f lows, we believe we have the ability to meet our capital investment needs and anticipate no delays to planned capital
expenditures.
See "Subsequent Events" above f or inf ormation about a January 2013 Zoetis debt of f ering. If we were to incorporate the 2013 Zoetis debt
of f ering into our contractual obligations table above, total payments due would increase by $5.8 billion, representing expected principal and
interest obligations of $223 million in 2013 through 2014, $629 million in 2015 through 2016 and $4.9 billion thereaf ter.
Off-Balance Sheet Arrangements
In the ordinary course of business and in connection with the sale of assets and businesses, we of ten indemnif y our counterparties against
certain liabilities that may arise in connection with a transaction or that are related to activities prior to a transaction. These indemnif ications
typically pertain to environmental, tax, employee and/or product-related matters, and patent-inf ringement claims. If the indemnif ied party were to
make a successf ul claim pursuant to the terms of the indemnif ication, we would be required to reimburse the loss. These indemnif ications
generally are subject to threshold amounts, specif ied claim periods and other restrictions and limitations. Historically, we have not paid signif icant
amounts under these provisions and, as of December 31, 2012 , recorded amounts f or the estimated f air value of these indemnif ications are not
signif icant.
Certain of our co-promotion or license agreements give our licensors or partners the rights to negotiate f or, or in some cases to obtain under
certain f inancial conditions, co-promotion or other rights in specif ied countries with respect to certain of our products.
Share-Purchase Plans
On December 12, 2011, we announced that the Board of Directors had authorized a $10 billion share-purchase plan (the December 2011 Stock
Purchase Plan). On November 1, 2012, we announced that the Board of Directors had authorized an additional $10 billion share-purchase plan,
which became ef f ective on November 30, 2012.
In 2012, we purchased approximately 349 million shares of our common stock f or approximately $8.2 billion . In 2011, we purchased
approximately 459 million shares of our common stock f or approximately $9.0 billion . In 2010, we purchased approximately 61 million shares of
our common stock f or approximately $1.0 billion . Af ter giving ef f ect to share purchases through year-end 2012, our remaining share-purchase
authorization is approximately $11.8 billion at December 31, 2012 .
Dividends on Common Stock
We paid dividends on our common stock of $6.5 billion in 2012 and $6.2 billion in 2011. In December 2012, our Board of Directors declared a f irst-
quarter 2013 dividend of $0.24 per share, payable on March 5, 2013, to shareholders of record at the close of business on February 1, 2013. The
f irst-quarter 2013 cash dividend will be our 297
th
consecutive quarterly dividend.
Our current and projected dividends provide a return to shareholders while maintaining suf f icient capital to invest in growing our businesses and
increasing shareholder value. Our dividends are not restricted by debt covenants. While the dividend level remains a decision of Pf izers Board of
Directors and will continue to be evaluated in the context of f uture business perf ormance, we currently believe that we can support f uture annual
dividend increases, barring signif icant unf oreseen events.
NEW ACCOUNTING STANDARDS
Recently Adopted Accounting Standards
See Notes to Consolidated Financial Statements Note 1B. Basis of Presentation and Significant Accounting Policies: Adoption of New
Accounting Standards.
Recently Issued Accounting Standards, Not Adopted as of December 31, 2012
None
FORWARD-LOOKING INFORMATION AND FACTORS THAT MAY AFFECT FUTURE RESULTS
This report and other written or oral statements that we make f rom time to time contain f orward-looking statements that set f orth anticipated
results based on managements plans and assumptions. Such f orward-looking statements involve substantial risks and uncertainties. We have
tried, wherever possible, to identif y such statements by using words such as will, anticipate, estimate, expect, project, intend, plan,
44

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believe, target, f orecast, goal, objective and other words and terms of similar meaning or by using f uture dates in connection with any
discussion of , among other things, our anticipated f uture operating or f inancial perf ormance, business plans and prospects, in-line products and
product candidates, strategic reviews, capital allocation, business-development plans and plans relating to share repurchases and dividends. In
particular, these include statements relating to f uture actions, business plans and prospects, prospective products or product approvals, f uture
perf ormance or results of current and anticipated products, sales ef f orts, expenses, interest rates, f oreign exchange rates, the outcome of
contingencies, such as legal proceedings, plans relating to share repurchases and dividends, government regulation and f inancial results,
including, in particular, the f inancial guidance set f orth in the Our Financial Guidance f or 2013 section of this Financial Review and the
anticipated costs and cost reductions set f orth in the Restructuring Charges and Other Costs Associated with Acquisitions and Cost-
Reduction/Productivity Initiatives section of this Financial Review. Among the f actors that could cause actual results to dif f er materially f rom past
and projected f uture results are the f ollowing:
the outcome of research and development activities including, without limitation, the ability to meet anticipated
clinical trial commencement and completion dates, regulatory submission and approval dates, and launch dates f or
product candidates;
decisions by regulatory authorities regarding whether and when to approve our drug applications, as well as their
decisions regarding labeling, ingredients and other matters that could af f ect the availability or commercial potential of
our products;
the speed with which regulatory authorizations, pricing approvals and product launches may be achieved;
the outcome of post-approval clinical trials, which could result in the loss of marketing approval f or a product or
changes in the labeling f or, and/or increased or new concerns about the saf ety or ef f icacy of , a product that could
af f ect its availability or commercial potential;
the success of external business-development activities;
competitive developments, including the impact on our competitive position of new product entrants, in-line branded
products, generic products, private label products and product candidates that treat diseases and conditions similar to
those treated by our in-line drugs and drug candidates;
the implementation by the FDA of an abbreviated legal pathway to approve biosimilar products, which could subject
our biologic products to competition f rom biosimilar products in the U.S., with attendant competitive pressures, af ter
the expiration of any applicable exclusivity period and patent rights;
the ability to meet generic and branded competition af ter the loss of patent protection f or our products or competitor
products;
the ability to successf ully market both new and existing products domestically and internationally;
dif f iculties or delays in manuf acturing;
trade buying patterns;
the impact of existing and f uture legislation and regulatory provisions on product exclusivity;
trends toward managed care and healthcare cost containment;
the impact of the U.S. Budget Control Act of 2011 (the Budget Control Act) and the def icit-reduction actions to be
taken pursuant to the Budget Control Act in order to achieve the def icit-reduction targets provided f or therein, and the
impact of any broader def icit-reduction ef f orts;
the possible f ailure of the U.S. f ederal government to suspend enf orcement of the f ederal debt ceiling beyond May 18, 2013 or to increase
the f ederal debt ceiling and any resulting inability of the f ederal government to satisf y its f inancial obligations, including under Medicare,
Medicaid and other publicly f unded or subsidized health programs;
the impact of U.S. healthcare legislation enacted in 2010the Patient Protection and Af f ordable Care Act, as amended
by the Health Care and Education Reconciliation Actand of any modif ication or repeal of any of the provisions
thereof ;
U.S. legislation or regulatory action af f ecting, among other things, pharmaceutical product pricing, reimbursement or
access, including under Medicaid, Medicare and other publicly f unded or subsidized health programs; the importation
of prescription drugs f rom outside the U.S. at prices that are regulated by governments of various f oreign countries;
direct-to-consumer advertising and interactions with healthcare prof essionals; and the use of comparative ef f ectiveness
methodologies that could be implemented in a manner that f ocuses primarily on the cost dif f erences and minimizes the
therapeutic dif f erences among pharmaceutical products and restricts access to innovative medicines;
legislation or regulatory action in markets outside the U.S. af f ecting pharmaceutical product pricing, reimbursement or
access, including, in particular, continued government-mandated price reductions f or certain biopharmaceutical
products in certain European and emerging market countries;
the exposure of our operations outside the U.S. to possible capital and exchange controls, expropriation and other
restrictive government actions, changes in intellectual property legal protections and remedies, as well as political
unrest and unstable governments and legal systems;
contingencies related to actual or alleged environmental contamination;
claims and concerns that may arise regarding the saf ety or ef f icacy of in-line products and product candidates;
2012 Financial Report

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Pf izer Inc. and Subsidiary Companies


any signif icant breakdown, inf iltration or interruption of our inf ormation technology systems and inf rastructure;
legal def ense costs, insurance expenses, settlement costs, the risk of an adverse decision or settlement and the
adequacy of reserves related to product liability, patent protection, government investigations, consumer, commercial,
securities, antitrust, environmental and tax issues, ongoing ef f orts to explore various means f or resolving asbestos
litigation, and other legal proceedings;
our ability to protect our patents and other intellectual property, both domestically and internationally;
interest rate and f oreign currency exchange rate f luctuations, including the impact of possible currency devaluations in countries
experiencing high inf lation rates;
governmental laws and regulations af f ecting domestic and f oreign operations, including, without limitation, tax
obligations and changes af f ecting the tax treatment by the U.S. of income earned outside the U.S. that may result
f rom pending and possible f uture proposals;
any signif icant issues involving our largest wholesaler customers, which account f or a substantial portion of our
revenues;
the possible impact of the increased presence of counterf eit medicines in the pharmaceutical supply chain on our
revenues and on patient conf idence in the integrity of our medicines;
any signif icant issues that may arise related to the outsourcing of certain operational and staf f f unctions to third
parties, including with regard to quality, timeliness and compliance with applicable legal requirements and industry
standards;
changes in U.S. generally accepted accounting principles;
uncertainties related to general economic, political, business, industry, regulatory and market conditions including,
without limitation, uncertainties related to the impact on us, our customers, suppliers and lenders and counterparties to
our f oreign-exchange and interest-rate agreements of challenging global economic conditions and recent and possible
f uture changes in global f inancial markets; and the related risk that our allowance f or doubtf ul accounts may not be
adequate;
any changes in business, political and economic conditions due to actual or threatened terrorist activity in the U.S. and
other parts of the world, and related U.S. military action overseas;
growth in costs and expenses;
changes in our product, segment and geographic mix;
our ability to successf ully implement any strategic alternative that we decide to pursue with regard to our remaining
approximately 80% ownership stake in Zoetis Inc. and the impact thereof ; and
the impact of acquisitions, divestitures, restructurings, product recalls and withdrawals and other unusual items,
including our ability to realize the projected benef its of our cost-reduction and productivity initiatives, including those related
to our research and development organization.
We cannot guarantee that any f orward-looking statement will be realized, although we believe we have been prudent in our plans and
assumptions. Achievement of anticipated results is subject to substantial risks, uncertainties and inaccurate assumptions. Should known or
unknown risks or uncertainties materialize or should underlying assumptions prove inaccurate, actual results could vary materially f rom past
results and those anticipated, estimated or projected. Investors should bear this in mind as they consider f orward-looking statements.
We undertake no obligation to publicly update f orward-looking statements, whether as a result of new inf ormation, f uture events or otherwise.
You are advised, however, to consult any f urther disclosures we make on related subjects in our Form 10-Q, 8-K and 10-K reports and our other
f ilings with the SEC.
Certain risks, uncertainties and assumptions are discussed here and under the heading entitled Risk Factors in Part I, Item 1A. of our Annual
Report on Form 10-K f or the year ended December 31, 2012, which will be f iled in February 2013. We note these f actors f or investors as
permitted by the Private Securities Litigation Ref orm Act of 1995. You should understand that it is not possible to predict or identif y all such
f actors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.
This report includes discussion of certain clinical studies relating to various in-line products and/or product candidates. These studies typically are
part of a larger body of clinical data relating to such products or product candidates, and the discussion herein should be considered in the
context of the larger body of data. In addition, clinical trial data are subject to dif f ering interpretations, and, even when we view data as suf f icient
to support the saf ety and/or ef f ectiveness of a product candidate or a new indication f or an in-line product, regulatory authorities may not share
our views and may require additional data or may deny approval altogether.
Financial Risk Management
The overall objective of our f inancial risk management program is to seek to minimize the impact of f oreign exchange rate movements and interest
rate movements on our earnings. We manage these f inancial exposures through operational means and by using various f inancial instruments.
These practices may change as economic conditions change.
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Foreign Exchange Risk
A signif icant portion of our revenues and earnings is exposed to changes in f oreign exchange rates. We seek to manage our f oreign exchange
risk, in part, through operational means, including managing same-currency revenues in relation to same-currency costs and same-currency
assets in relation to same-currency liabilities.
Foreign exchange risk is also managed through the use of f oreign currency f orward-exchange contracts. These contracts are used to of f set the
potential earnings ef f ects f rom mostly intercompany short-term f oreign currency assets and liabilities that arise f rom operations. Foreign currency
swaps are used to of f set the potential earnings ef f ects f rom f oreign currency debt. We also use f oreign currency f orward-exchange contracts
and f oreign currency swaps to hedge the potential earnings ef f ects f rom short-term and long-term f oreign currency investments, third-party
loans and intercompany loans.
In addition, under certain market conditions, we protect against possible declines in the reported net investments of our Japanese yen
subsidiaries. In these cases, we use currency swaps or f oreign currency debt.
Our f inancial instrument holdings at year-end were analyzed to determine their sensitivity to f oreign exchange rate changes. The f air values of
these instruments were determined using various methodologies. For additional details, see Notes to Consolidated Financial Statements Note
7A. Financial Instruments: Selected Financial Assets and Liabilities. In this sensitivity analysis, we assumed that the change in one currencys
rate relative to the U.S. dollar would not have an ef f ect on other currencies rates relative to the U.S. dollar; all other f actors were held constant. If
the dollar were to appreciate against all other currencies by 10%, the expected adverse impact on net income related to our f inancial instruments
would be immaterial. For additional details, see Notes to Consolidated Financial Statements Note 7E. Financial Instruments: Derivative Financial
Instruments and Hedging Activities .
Interest Rate Risk
Our U.S. dollar interest-bearing investments, loans and borrowings are subject to interest rate risk. We also are subject to interest rate risk on
euro debt, investments and currency swaps, U.K. debt and currency swaps, Japanese yen short and long-term borrowings and currency
swaps. We seek to invest, loan and borrow primarily on a short-term or variable-rate basis. From time to time, depending on market conditions, we
will f ix interest rates either through entering into f ixed-rate investments and borrowings or through the use of derivative f inancial instruments
such as interest rate swaps. In light of current market conditions, our current borrowings are primarily on a long-term, f ixed-rate basis. We may
change this practice as market conditions change.
Our f inancial instrument holdings at year-end were analyzed to determine their sensitivity to interest rate changes. The f air values of these
instruments were determined using various methodologies. For additional details, see Notes to Consolidated Financial Statements Note 7A.
Financial Instruments: Selected Financial Assets and Liabilities . In this sensitivity analysis, we used a one hundred basis point parallel shif t in
the interest rate curve f or all maturities and f or all instruments; all other f actors were held constant. If there were a one hundred basis point
decrease in interest rates, the expected adverse impact on net income related to our f inancial instruments would be immaterial.
Contingencies
Legal Matters
We and certain of our subsidiaries are subject to numerous contingencies arising in the ordinary course of business, such as patent litigation,
product liability and other product-related litigation, commercial litigation, environmental claims and proceedings, government investigations and
guarantees and indemnif ications (see Notes to Consolidated Financial Statements Note 17. Commitments and Contingencies).
Certain of these contingencies could result in losses, including damages, f ines and/or civil penalties, and/or criminal charges, which could be
substantial.
We believe that our claims and def enses in these matters are substantial, but litigation is inherently unpredictable and excessive verdicts do
occur. We do not believe that any of these matters will have a material adverse ef f ect on our f inancial position. However, we could incur
judgments, enter into settlements or revise our expectations regarding the outcome of certain matters, and such developments could have a
material adverse ef f ect on our results of operations in the period in which the amounts are accrued and/or our cash f lows in the period in which
the amounts are paid.
We have accrued f or losses that are both probable and reasonably estimable. Substantially all of these contingencies are subject to signif icant
uncertainties and, theref ore, determining the likelihood of a loss and/or the measurement of any loss can be complex. Consequently, we are
unable to estimate the range of reasonably possible loss in excess of amounts accrued. Our assessments are based on estimates and
assumptions that have been deemed reasonable by management, but the assessment process relies heavily on estimates and assumptions that
may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause us to change those estimates
and assumptions.
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Pf izer Inc. and Subsidiary Companies


Tax Matters
We and certain of our subsidiaries are subject to numerous contingencies arising in the ordinary course of business f or tax matters (see Notes to
Consolidated Financial Statements Note 5D. Tax Matters: Tax Contingencies).
We account f or income tax contingencies using a benef it recognition model. If our initial assessment f ails to result in the recognition of a tax
benef it, we regularly monitor our position and subsequently recognize the tax benef it: (i) if there are changes in tax law, analogous case law or
there is new inf ormation that suf f iciently raise the likelihood of prevailing on the technical merits of the position to more likely than not; (ii) if the
statute of limitations expires; or (iii) if there is a completion of an audit resulting in a f avorable settlement of that tax year with the appropriate
agency. We regularly re-evaluate our tax positions based on the results of audits of f ederal, state and f oreign income tax f ilings, statute of
limitations expirations, changes in tax law or receipt of new inf ormation that would either increase or decrease the technical merits of a position
relative to the more-likely-than-not standard.
Our assessments are based on estimates and assumptions that have been deemed reasonable by management, but our estimates of
unrecognized tax benef its and potential tax benef its may not be representative of actual outcomes, and variation f rom such estimates could
materially af f ect our f inancial statements in the period of settlement or when the statutes of limitations expire, as we treat these events as
discrete items in the period of resolution. Finalizing audits with the relevant taxing authorities can include f ormal administrative and legal
proceedings, and, as a result, it is dif f icult to estimate the timing and range of possible changes related to our uncertain tax positions, and such
changes could be signif icant.
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Managements Report
We prepared and are responsible f or the f inancial statements that appear in our 2012 Financial Report. These f inancial statements are in
conf ormity with accounting principles generally accepted in the United States of America and, theref ore, include amounts based on inf ormed
judgments and estimates. We also accept responsibility f or the preparation of other f inancial inf ormation that is included in this document.
Report on Internal Control Over Financial Reporting
The management of the Company is responsible f or establishing and maintaining adequate internal control over f inancial reporting as def ined in
Rules 13a-15(f ) and 15d-15(f ) under the Securities Exchange Act of 1934. The Companys internal control over f inancial reporting is designed to
provide reasonable assurance regarding the reliability of f inancial reporting and the preparation of f inancial statements f or external purposes in
accordance with generally accepted accounting principles in the United States of America. The Companys internal control over f inancial reporting
includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and f airly ref lect the
transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of f inancial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the
Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Companys assets that could have a
material ef f ect on the f inancial statements.
Because of its inherent limitations, internal control over f inancial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of ef f ectiveness to f uture periods are subject to the risk that controls may become inadequate because of changes in conditions or
that the degree of compliance with the policies or procedures may deteriorate. Management assessed the ef f ectiveness of the Companys
internal control over f inancial reporting as of December 31, 2012. In making this assessment, management used the criteria set f orth by the
Committee of Sponsoring Organizations of the Treadway Commission in Internal ControlIntegrated Framework. Based on our assessment and
those criteria, management believes that the Company maintained ef f ective internal control over f inancial reporting as of December 31, 2012.
The Companys independent auditors have issued their auditors report on the Companys internal control over f inancial reporting. That report
appears in our 2012 Financial Report under the heading, Report of Independent Registered Public Accounting Firm on Internal Control Over
Financial Reporting.


Ian Read

Chairman and Chief Executive Of f icer


Frank DAmelio Loretta Cangialosi
Principal Financial Of f icer Principal Accounting Of f icer

February 28, 2013
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The Audit Committee reviews the Companys f inancial reporting process on behalf of the Board of Directors. Management has the primary
responsibility f or the f inancial statements and the reporting process, including the system of internal controls.
In this context, the Committee has met and held discussions with management and the independent registered public accounting f irm regarding the
f air and complete presentation of the Companys results and the assessment of the Companys internal control over f inancial reporting. The
Committee has discussed signif icant accounting policies applied by the Company in its f inancial statements, as well as alternative treatments.
Management has represented to the Committee that the Companys consolidated f inancial statements were prepared in accordance with
accounting principles generally accepted in the United States of America, and the Committee has reviewed and discussed the consolidated
f inancial statements with management and the independent registered public accounting f irm. The Committee has discussed with the independent
registered public accounting f irm matters required to be discussed under applicable Public Company Accounting Oversight Board standards.
In addition, the Committee has reviewed and discussed with the independent registered public accounting f irm the auditors independence f rom
the Company and its management. As part of that review, the Committee has received the written disclosures and the letter required by applicable
requirements of the Public Company Accounting Oversight Board regarding the independent accountants communications with the Audit
Committee concerning independence, and the Committee has discussed the independent registered public accounting f irms independence f rom
the Company.
The Committee also has considered whether the independent registered public accounting f irms provision of non-audit services to the Company
is compatible with the auditors independence. The Committee has concluded that the independent registered public accounting f irm is independent
f rom the Company and its management.
As part of its responsibilities f or oversight of the Companys Enterprise Risk Management process, the Committee has reviewed and discussed
Company policies with respect to risk assessment and risk management, including discussions of individual risk areas, as well as an annual
summary of the overall process.
The Committee has discussed with the Companys Internal Audit Department and independent registered public accounting f irm the overall scope
of and plans f or their respective audits. The Committee meets with the Chief Internal Auditor, Chief Compliance and Risk Of f icer and
representatives of the independent registered public accounting f irm, in regular and executive sessions to discuss the results of their
examinations, the evaluations of the Companys internal controls, and the overall quality of the Companys f inancial reporting and compliance
programs.
In reliance on the reviews and discussions ref erred to above, the Committee has recommended to the Board of Directors, and the Board has
approved, that the audited f inancial statements be included in the Companys Annual Report on Form 10-K f or the year ended December 31, 2012,
f or f iling with the SEC. The Committee has selected, and the Board of Directors has ratif ied, the selection of the Companys independent registered
public accounting f irm f or 2013.

W. Don Cornwell
Chair, Audit Committee

February 28, 2013
The Audit Committee Report does not constitute soliciting material, and shall not be deemed to be filed or incorporated by reference into any
Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates the Audit Committee Report by reference therein.

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The Board of Directors and Shareholders of Pfizer Inc.:
We have audited the accompanying consolidated balance sheets of Pf izer Inc. and Subsidiary Companies as of December 31, 2012 and 2011,
and the related consolidated statements of income, comprehensive income, equity, and cash f lows f or each of the years in the three-year period
ended December 31, 2012. These consolidated f inancial statements are the responsibility of the Companys management. Our responsibility is to
express an opinion on these consolidated f inancial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perf orm the audit to obtain reasonable assurance about whether the f inancial statements are f ree of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the f inancial statements. An audit
also includes assessing the accounting principles used and signif icant estimates made by management, as well as evaluating the overall f inancial
statement presentation. We believe that our audits provide a reasonable basis f or our opinion.
In our opinion, the consolidated f inancial statements ref erred to above present f airly, in all material respects, the f inancial position of Pf izer Inc.
and Subsidiary Companies as of December 31, 2012 and 2011, and the results of their operations and their cash f lows f or each of the years in
the three-year period ended December 31, 2012, in conf ormity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the ef f ectiveness of
Pf izer Inc. and Subsidiary Companies internal control over f inancial reporting as of December 31, 2012, based on criteria established in Internal
Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report
dated February 28, 2013 expressed an unqualif ied opinion on the ef f ective operation of the Companys internal control over f inancial reporting.


KPMG LLP
New York, New York

February 28, 2013
2012 Financial Report

51
Financial Review
Pf izer Inc. and Subsidiary Companies


The Board of Directors and Shareholders of Pfizer Inc.:
We have audited the internal control over f inancial reporting of Pf izer Inc. and Subsidiary Companies as of December 31, 2012, based on criteria
established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). Pf izer Inc. and Subsidiary Companies management is responsible f or maintaining ef f ective internal control over f inancial reporting and f or
its assessment of the ef f ectiveness of internal control over f inancial reporting, included in the accompanying Managements Report on Internal
Control Over Financial Reporting. Our responsibility is to express an opinion on the Companys internal control over f inancial reporting based on
our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perf orm the audit to obtain reasonable assurance about whether ef f ective internal control over f inancial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal control over f inancial reporting, assessing the risk that
a material weakness exists, and testing and evaluating the design and operating ef f ectiveness of internal control based on the assessed risk. Our
audit also included perf orming such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis f or our opinion.
A companys internal control over f inancial reporting is a process designed to provide reasonable assurance regarding the reliability of f inancial
reporting and the preparation of f inancial statements f or external purposes in accordance with generally accepted accounting principles. A
companys internal control over f inancial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and f airly ref lect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of f inancial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the companys assets that could have a material ef f ect on the f inancial statements.
Because of its inherent limitations, internal control over f inancial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of ef f ectiveness to f uture periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Pf izer Inc. and Subsidiary Companies maintained, in all material respects, ef f ective internal control over f inancial reporting as of
December 31, 2012, based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated
balance sheets of Pf izer Inc. and Subsidiary Companies as of December 31, 2012 and 2011, and the related consolidated statements of income,
comprehensive income, equity, and cash f lows f or each of the years in the three-year period ended December 31, 2012, and our report dated
February 28, 2013 expressed an unqualif ied opinion on those consolidated f inancial statements.


KPMG LLP
New York, New York

February 28, 2013

52

2012 Financial Report
Financial Review
Pf izer Inc. and Subsidiary Companies


Year Ended December 31,
(MILLIONS, EXCEPT PER COMMON SHARE DATA)
2012 2011 2010
Revenues $ 58,986 $ 65,259 $ 65,165
Costs and expenses:
Cost of sales
(a)
11,334 14,076 14,788
Selling, inf ormational and administrative expenses
(a)
16,616 18,832 18,973
Research and development expenses
(a)
7,870 9,074 9,483
Amortization of intangible assets 5,175 5,544 5,364
Restructuring charges and certain acquisition-related costs 1,880 2,930 3,145
Other deductionsnet 4,031 2,499 3,941
Income f rom continuing operations bef ore provision f or taxes on income 12,080 12,304 9,471
Provision f or taxes on income 2,562 3,909 1,153
Income f rom continuing operations 9,518 8,395 8,318
Discontinued operations:
Income/(loss) f rom discontinued operationsnet of tax 297 350 (19)
Gain/(loss) on sale of discontinued operationsnet of tax 4,783 1,304 (11)
Discontinued operationsnet of tax 5,080 1,654 (30)
Net income bef ore allocation to noncontrolling interests 14,598 10,049 8,288
Less: Net income attributable to noncontrolling interests 28 40 31
Net income attributable to Pf izer Inc. $ 14,570 $ 10,009 $ 8,257

Earnings per common sharebasic
( b)

Income f rom continuing operations attributable to Pf izer Inc. common shareholders $ 1.27 $ 1.07 $ 1.03
Discontinued operationsnet of tax 0.68 0.21
Net income attributable to Pf izer Inc. common shareholders $ 1.96 $ 1.28 $ 1.03
Earnings per common sharediluted
(b)

Income f rom continuing operations attributable to Pf izer Inc. common shareholders $ 1.26 $ 1.06 $ 1.03
Discontinued operationsnet of tax 0.68 0.21
Net income attributable to Pf izer Inc. common shareholders $ 1.94 $ 1.27 $ 1.02

Weighted-average sharesbasic 7,442 7,817 8,036
Weighted-average sharesdiluted 7,508 7,870 8,074

Cash dividends paid per common share $ 0.88 $ 0.80 $ 0.72
(a)
Exclusiv e of amortization of intangible assets, except as disclosed in Note 1K. Basis of Presentation and Significant Accounting Policies: Amortization of Intangible
Assets, Depreciation and Certain Long-Lived Assets.
(b)
EPS amounts may not add due to rounding.
See Notes to Consolidated Financial Statements, which are an integral part of these statements.
2012 Financial Report 53

Financial Review
Pf izer Inc. and Subsidiary Companies


Year Ended December 31,
(MILLIONS OF DOLLARS)
2012 2011 2010
Net income bef ore allocation to noncontrolling interests $ 14,598 $ 10,049 $ 8,288

Foreign currency translation adjustments $ (811) $ 796 $ (3,534)
Reclassif ication adjustments
(a)
(207) (127) (7)
(1,018) 669 (3,541)
Unrealized holding gains/(losses) on derivative f inancial instruments 684 (502) (1,043)
Reclassif ication adjustments f or realized (gains)/losses
(b)
(263) 239 702
421 (263) (341)
Unrealized holding gains/(losses) on available-f or-sale securities 135 (143) 7
Reclassif ication adjustments f or realized (gains)/losses
(b)
3 15 (141)
138 (128) (134)
Benef it plans: Actuarial losses, net (2,232) (2,459) (1,426)
Reclassif ication adjustments related to amortization
(c)
473 284 262
Reclassif ication adjustments related to curtailments and settlements, net
(c)
317 355 266
Other 22 (100) 88
(1,420) (1,920) (810)
Benef it plans: Prior service credits and other 25 106 550
Reclassif ication adjustments related to amortization
(c)
(69) (69) (42)
Reclassif ication adjustments related to curtailments and settlements, net
(c)
(130) (91) (49)
Other (3) 3 5
(177) (51) 464
Other comprehensive loss, bef ore tax (2,056) (1,693) (4,362)
Tax benef it on other comprehensive loss
(d)
(225) (959) (375)
Other comprehensive loss bef ore allocation to noncontrolling interests $ (1,831) $ (734) $ (3,987)


Comprehensive income bef ore allocation to noncontrolling interests $ 12,767 $ 9,315 $ 4,301
Less: Comprehensive income/(loss) attributable to noncontrolling interests 21 (5) 36
Comprehensive income attributable to Pf izer Inc. $ 12,746 $ 9,320 $ 4,265
(a)
For 2012 and 2011, reclassif ied to Gain/(loss) on sale of discontinued operationsnet of tax .
(b)
Reclassif ied into Other deductionsnet in the consolidated statements of income.
(c)
Generally reclassif ied into Cost of sales, Selling, informational and administrative expenses, and/or Research and development expenses , as appropriate, in the
consolidated statements of income.
(d)
See Note 5E. Tax Matters: Taxes on Items of Other Comprehensive Income/(Loss).
See Notes to Consolidated Financial Statements, which are an integral part of these statements.
54

2012 Financial Report
Financial Review
Pf izer Inc. and Subsidiary Companies


As of December 31,
(MILLIONS, EXCEPT PREFERRED STOCK ISSUED AND PER COMMON SHARE DATA)
2012 2011

Assets
Cash and cash equivalents $ 10,389 $ 3,182
Short-term investments 22,319 23,270
Accounts receivable, less allowance f or doubtf ul accounts, 2012$374; 2011$226 12,378 13,058
Inventories 7,063 6,610
Taxes and other current assets 9,196 9,380
Assets of discontinued operations and other assets held f or sale 70 5,317
Total current assets 61,415 60,817
Long-term investments 14,149 9,814
Property, plant and equipment, less accumulated depreciation 14,461 15,921
Goodwill 44,672 44,569
Identif iable intangible assets, less accumulated amortization 46,013 51,184
Taxes and other noncurrent assets 5,088 5,697
Total assets $ 185,798 $ 188,002

Liabilities and Equity
Short-term borrowings, including current portion of long-term debt: 2012$2,449; 2011$6 $ 6,424 $ 4,016
Accounts payable 4,264 3,678
Dividends payable 1,734 1,796
Income taxes payable 1,010 1,009
Accrued compensation and related items 2,046 2,120
Other current liabilities 13,141 15,066
Liabilities of discontinued operations 1,224
Total current liabilities 28,619 28,909

Long-term debt 31,036 34,926
Pension benef it obligations 7,830 6,355
Postretirement benef it obligations 3,493 3,344
Noncurrent def erred tax liabilities 21,593 18,861
Other taxes payable 6,610 6,886
Other noncurrent liabilities 4,939 6,100
Total liabilities 104,120 105,381

Commitments and Contingencies

Pref erred stock, without par value, at stated value; 27 shares authorized; issued:
2012967; 20111,112

39

45
Common stock, $0.05 par value; 12,000 shares authorized; issued: 20128,956;
20118,902 448 445
Additional paid-in capital 72,608 71,423
Employee benef it trusts (1) (3)
Treasury stock, shares at cost: 20121,680; 20111,327 (40,121) (31,801)
Retained earnings 54,240 46,210
Accumulated other comprehensive loss (5,953) (4,129)
Total Pf izer Inc. shareholders equity 81,260 82,190
Equity attributable to noncontrolling interests 418 431
Total equity 81,678 82,621
Total liabilities and equity $ 185,798 $ 188,002

See Notes to Consolidated Financial Statements, which are an integral part of these statements.
2012 Financial Report

55
Financial Review
Pf izer Inc. and Subsidiary Companies




PFIZER INC. SHAREHOLDERS

Preferred Stock

Common Stock



Employee Benefit
Trusts

TreasuryStock







(MILLIONS,
EXCEPT PREFERRED
SHARES)

Shares

Stated
Value

Shares

Par
Value

Addl
Paid-In
Capital

Shares

Fair
Value

Shares

Cost

Retained
Earnings

Accum.
Other
Comp.
Inc./
(Loss)

Share -
holders
Equity

Non-
controlling
Interests

Total
Equity
Balance, January1, 2010

1,511

$ 61

8,869

$ 443

$70,497

(19)

$(333)

(799)

$ (21,632)

$ 40,426

$ 552

$90,014

$ 432

$90,446
Net income

8,257

8,257

31

8,288
Other comprehensive
loss, net of tax

(3,992)

(3,992)

5

(3,987)
Cash dividends declared:

Common stock

(5,964)

(5,964)

(5,964)
Preferred stock

(3)

(3)

(3)
Noncontrolling interests

(17)

(17)
Share-based payment
transactions

2


209

1

14

(5)

(82)

141

141
Purchases of common stock

(61)

(1,000)

(1,000)

(1,000)
Employee benefit trust
transactionsnet

(19)

16

292

273

273
Preferred stockconversions
and redemptions

(232)

(9)

(1)


2

(8)

(8)
Other





5

1

74

2

20

1




95

1

96
Balance, December 31,
2010

1,279

52

8,876

444

70,760


(7)

(864)

(22,712)

42,716

(3,440)

87,813

452

88,265
Net income

10,009

10,009

40

10,049
Other comprehensive
loss, net of tax

(689)

(689)

(45)

(734)
Cash dividends declared:

Common stock

(6,512)

(6,512)

(6,512)
Preferred stock

(3)

(3)

(3)
Noncontrolling interests

(19)

(19)
Share-based payment
transactions

23

1

594

(5)

(90)

505

505
Purchases of common stock

(459)

(9,000)

(9,000)

(9,000)
Preferred stockconversions
and redemptions

(167)

(7)

(2)


1

(8)

(8)
Other





3


71


4

1


75

3

78
Balance, December 31,
2011

1,112

45

8,902

445

71,423


(3)

(1,327)

(31,801)

46,210

(4,129)

82,190

431

82,621
Net income

14,570

14,570

28

14,598
Other comprehensive
loss, net of tax

(1,824)

(1,824)

(7)

(1,831)
Cash dividends declared:

Common stock

(6,537)

(6,537)

(6,537)
Preferred stock

(3)

(3)

(3)
Noncontrolling
interests

(9)

(9)
Share-based payment
transactions

52

3

1,150

(4)

(97)

1,056

1,056
Purchases of common
stock

(349)

(8,228)

(8,228)

(8,228)
Preferred stock
conversions and
redemptions

(145)

(6)

(3)


1

(8)

(8)
Other





2


38




44

(25)

19
Balance, December 31,
2012

967

$ 39

8,956

$ 448

$72,608


$ (1)

(1,680)

$ (40,121)

$ 54,240

$(5,953)

$81,260

$ 418

$81,678
See Notes to Consolidated Financial Statements, which are an integral part of these statements.
56

2012 Financial Report
Financial Review
Pf izer Inc. and Subsidiary Companies


Year Ended December 31,
(MILLIONS)
2012 2011 2010

Operating Activities
Net income bef ore allocation to noncontrolling interests $ 14,598 $ 10,049 $ 8,288
Adjustments to reconcile net income bef ore allocation to noncontrolling interests to net cash provided
by operating activities:
Depreciation and amortization 7,611 8,907 8,399
Asset write-of f s and impairment charges 1,299 1,198 3,486
Share-based compensation expense 481 419 405
(Gain)/loss on sale of discontinued operations (7,123) (1,688) 11
Def erred taxes f rom continuing operations 739 307 2,109
Def erred taxes f rom discontinued operations 1,459 147 (156)
Benef it plan contributions (in excess of )/less than expense 135 (1,769) (677)
Other non-cash adjustments, net (203) (172) (49)
Other changes in assets and liabilities, net of acquisitions and divestitures:
Accounts receivable 275 (66) (608)
Inventories (631) 1,084 2,917
Other assets 83 701 (818)
Accounts payable 579 (367) (301)
Other liabilities (3,438) 1,508 1,114
Other tax accounts, net 1,190 (18) (12,666)
Net cash provided by operating activities 17,054 20,240 11,454

Investing Activities
Purchases of property, plant and equipment (1,327) (1,660) (1,513)
Purchases of short-term investments (24,018) (18,447) (11,082)
Proceeds f rom redemptions and sales of short-term investments 25,302 14,176 5,699
Net proceeds f rom redemptions and sales of short-term investments with
original maturities of 90 days or less 1,459 10,874 5,950
Purchases of long-term investments (11,145) (4,620) (4,128)
Proceeds f rom redemptions and sales of long-term investments 4,990 2,147 4,737
Acquisitions, net of cash acquired (1,050) (3,282) (273)
Proceeds f rom sale of businesses 11,850 2,376
Other investing activities 93 279 118
Net cash provided by/(used in) investing activities 6,154 1,843 (492)

Financing Activities
Proceeds f rom short-term borrowings 7,995 12,810 6,400
Principal payments on short-term borrowings (3) (3,826) (9,249)
Net payments on short-term borrowings with original maturities of 90 days or less
(8,204) (7,540) (1,297)
Principal payments on long-term debt (1,513) (6,986) (6)
Purchases of common stock (8,228) (9,000) (1,000)
Cash dividends paid (6,534) (6,234) (6,088)
Other f inancing activities 488 169 66
Net cash used in f inancing activities (15,999) (20,607) (11,174)
Ef f ect of exchange-rate changes on cash and cash equivalents (2) (29) (31)
Net increase/(decrease) in cash and cash equivalents 7,207 1,447 (243)
Cash and cash equivalents, beginning 3,182 1,735 1,978

Cash and cash equivalents, ending $ 10,389 $ 3,182 $ 1,735

Supplemental Cash Flow Inf ormation
Cash paid during the period f or:
Income taxes $ 2,430 $ 2,938 $ 11,775
Interest 1,873 2,085 2,155
See Notes to Consolidated Financial Statements, which are an integral part of these statements.
2012 Financial Report

57
Financial Review
Pf izer Inc. and Subsidiary Companies


Note 1. Basis of Presentation and Significant Accounting Policies
A. Basis of Presentation
The consolidated f inancial statements include our parent company and all subsidiaries, and are prepared in accordance with accounting principles
generally accepted in the United States of America (U.S. GAAP). The decision whether or not to consolidate an entity requires consideration of
majority voting interests, as well as ef f ective economic or other control over the entity. Typically, we do not seek control by means other than
voting interests. For subsidiaries operating outside the United States (U.S.), the f inancial inf ormation is included as of and f or the year ended
November 30 f or each year presented. Substantially all unremitted earnings of international subsidiaries are f ree of legal and contractual
restrictions. All signif icant transactions among our businesses have been eliminated.
We have made certain reclassif ication adjustments to conf orm prior-period amounts to the current presentation, primarily related to certain
inventories (see Note 8. Inventories ) and certain investments (see Note 7. Financial Instruments). As of the third quarter of 2012 , the Animal
Health and Consumer Healthcare business units are no longer managed as a single operating segment.
Pf izer previously announced its intention to initiate an initial public of f ering (IPO) of up to a 19.8% stake in Zoetis Inc. (Zoetis), a subsidiary of
Pf izer, and on February 6, 2013, an IPO of Zoetis was completed, pursuant to which we sold 99.015 million shares of Zoetis, which represented
approximately 19.8% of the total outstanding Zoetis shares. For additional inf ormation, see Note 19A. Subsequent Events: Zoetis Debt Offering
and Initial Public Offering .
On November 30, 2012, we completed the sale of our Nutrition business to Nestl and recognized a gain related to the sale of this business in
Gain/(loss) on sale of discontinued operationsnet of tax in the consolidated statement of income f or the year ended December 31, 2012. The
operating results of this business are reported as Income/(loss) from discontinued operationsnet of tax in the consolidated statements of
income f or all periods presented. In addition, in the consolidated balance sheet as of December 31, 2011, the assets and liabilities associated with
this business are classif ied as Assets of discontinued operations and other assets held for sale and Liabilities of discontinued operations, as
appropriate. For additional inf ormation, see Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:
Divestitures . Prior period amounts have been restated.
On August 1, 2011, we completed the sale of our Capsugel business and recognized a gain related to the sale of this business in G ain/(loss) on
sale of discontinued operationsnet of tax in the consolidated statement of income f or the year ended December 31, 2011. The operating results
of this business are reported as Income/(loss) from discontinued operationsnet of tax in the consolidated statements of income f or the years
ended December 31, 2011 and 2010. For additional inf ormation, see Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-
Method Investments: Divestitures .
On January 31, 2011, we acquired King Pharmaceuticals, Inc. (King). Commencing f rom the acquisition date, our f inancial statements ref lect the
assets, liabilities, operating results and cash f lows of King, and, in accordance with our domestic and international reporting periods, our
consolidated f inancial statements f or the year ended December 31, 2011 ref lect approximately 11 months of Kings U.S. operations and
approximately 10 months of Kings international operations. For additional inf ormation, see Note 2A. Acquisitions, Divestitures, Collaborative
Arrangements and Equity-Method Investments: Acquisitions .
B. Adoption of New Accounting Standards
The provisions of the f ollowing new accounting and disclosure standards were adopted as of January 1, 2012:
Presentation of comprehensive income in f inancial statements. As a result of adopting this new standard, we have presented separate
Consolidated Statements of Comprehensive Income.
An amendment to the guidelines on the measurement and disclosure of f air value that is consistent between U.S. GAAP and
International Financial Reporting Standards. The adoption of this new standard did not have a signif icant impact on our f inancial
statements.
C. Estimates and Assumptions
In preparing the consolidated f inancial statements, we use certain estimates and assumptions that af f ect reported amounts and disclosures,
including amounts recorded and disclosed in connection with acquisitions. These estimates and underlying assumptions can impact all elements of
our f inancial statements. For example, in the consolidated statements of income, estimates are used when accounting f or deductions f rom
revenues (such as rebates, chargebacks, sales returns and sales allowances), determining the cost of inventory that is sold, allocating cost in
the f orm of depreciation and amortization, and estimating restructuring charges and the impact of contingencies. On the consolidated balance
sheets, estimates are used in determining the valuation and recoverability of assets, such as accounts receivables, investments, inventories,
f ixed assets and intangible assets (including acquired in-process research & development (IPR&D) assets and goodwill), and estimates are used
in determining the reported amounts of liabilities, such as taxes payable, benef it obligations, accruals f or contingencies, rebates, chargebacks,
sales returns and sales allowances, and restructuring reserves, all of which also impact the consolidated statements of income.
Our estimates are of ten based on complex judgments, probabilities and assumptions that we believe to be reasonable but that can be inherently
uncertain and unpredictable. If our estimates and assumptions are not representative of actual outcomes, our results could be materially impacted.
58

2012 Financial Report
Financial Review
Pf izer Inc. and Subsidiary Companies


As f uture events and their ef f ects cannot be determined with precision, our estimates and assumptions may prove to be incomplete or inaccurate,
or unanticipated events and circumstances may occur that might cause us to change those estimates and assumptions. We are subject to risks
and uncertainties that may cause actual results to dif f er f rom estimated amounts, such as changes in the healthcare environment, competition,
litigation, legislation and regulations. We regularly evaluate our estimates and assumptions using historical experience and expectations about the
f uture. We adjust our estimates and assumptions when f acts and circumstances indicate the need f or change. Those changes generally will be
ref lected in our f inancial statements on a prospective basis unless they are required to be treated retrospectively under relevant accounting
standards. It is possible that other prof essionals, applying reasonable judgment to the same f acts and circumstances, could develop and support
a range of alternative estimated amounts.
D. Acquisitions
Our consolidated f inancial statements include the operations of an acquired business af ter the completion of the acquisition. We account f or
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 f air values as of the acquisition date and that the f air value of acquired IPR&D be recorded on the
balance sheet. Transaction costs are expensed as incurred. Any excess of the consideration transf erred over the assigned values of the net
assets acquired is recorded as goodwill. When we acquire net assets that do not constitute a business as def ined in U.S. GAAP, no goodwill is
recognized and acquired IPR&D is expensed.
Contingent consideration in business acquisitions is included as part of the acquisition cost and is recognized at f air value as of the acquisition
date. Fair value is generally estimated by using a probability-weighted income approach. Any liability resulting f rom contingent consideration is
remeasured to f air value at each reporting date until the contingency is resolved. These changes in f air value are recognized in earnings in Other
deductionsnet .
Amounts recorded f or acquisitions can result f rom a complex series of judgments about f uture events and uncertainties and can rely heavily on
estimates and assumptions. For inf ormation about the risks associated with estimates and assumptions, see Note 1C. Basis of Presentation and
Significant Accounting Policies: Estimates and Assumptions .
E. Fair Value
We are of ten required to measure certain assets and liabilities at f air value, either upon initial recognition or f or subsequent accounting or
reporting. For example, we use f air value extensively in the initial recognition of net assets acquired in a business combination and when
accounting f or and reporting on certain f inancial instruments. We estimate f air value using an exit price approach, which requires, among other
things, that we determine the price that would be received to sell an asset or paid to transf er a liability in an orderly market. The determination of
an exit price is considered f rom the perspective of market participants, considering the highest and best use of non-f inancial assets and, f or
liabilities, assuming that the risk of non-perf ormance will be the same bef ore and af ter the transf er.
When estimating f air value, depending on the nature and complexity of the asset or liability, we may use one or all of the f ollowing approaches:
Income approach, which is based on the present value of a f uture stream of net cash f lows.
Market approach, which is based on market prices and other inf ormation f rom market transactions involving identical or comparable
assets or liabilities.
Cost approach, which is based on the cost to acquire or construct comparable assets less an allowance f or f unctional and/or
economic obsolescence.
Our f air value methodologies depend on the f ollowing types of inputs:
Quoted prices f or identical assets or liabilities in active markets (Level 1 inputs).
Quoted prices f or similar assets or liabilities in active markets or quoted prices f or identical or similar assets or liabilities in markets that
are not active or are directly or indirectly observable (Level 2 inputs).
Unobservable inputs that ref lect estimates and assumptions (Level 3 inputs).
A single estimate of f air value can result f rom a complex series of judgments about f uture events and uncertainties and can rely heavily on
estimates and assumptions. For inf ormation about the risks associated with estimates and assumptions, see Note 1C. Basis of Presentation and
Significant Accounting Policies: Estimates and Assumptions.
F. Foreign Currency Translation
For most of our international operations, local currencies have been determined to be the f unctional currencies. We translate f unctional currency
assets and liabilities to their U.S. dollar equivalents at exchange rates in ef f ect as of the balance sheet date and we translate f unctional currency
income and expense amounts to their U.S. dollar equivalents at average exchange rates f or the period. The U.S. dollar ef f ects that arise f rom
changing translation rates are recorded in Other comprehensive income/(loss) . The ef f ects of converting non-f unctional currency assets and
liabilities into the f unctional currency are recorded in Other deductionsnet . For operations in highly inf lationary economies, we translate
monetary items at rates in ef f ect as of the balance sheet date, with translation adjustments recorded in Other deductionsnet , and we translate
non-monetary items at historical rates.
2012 Financial Report

59
Financial Review
Pf izer Inc. and Subsidiary Companies


G. Revenues
Revenue Recognition We record revenues f rom product sales when the goods are shipped and title passes to the customer. At the time of
sale, we also record estimates f or a variety of sales deductions, such as sales rebates, discounts and incentives, and product returns. When we
cannot reasonably estimate the amount of f uture product returns and/or other sales deductions, we record revenues when the risk of product
return and/or additional sales deductions has been substantially eliminated. We record sales of certain of our vaccines to the U.S. government as
part of the Pediatric Vaccine Stockpile program; these rules require that f or f ixed commitments made by the U.S. government, we record revenues
when risk of ownership f or the completed product has been passed to the U.S. government. There are no specif ic perf ormance obligations
associated with products sold under this program.
Deductions from Revenues As is typical in the biopharmaceutical industry, our gross product sales are subject to a variety of deductions that
generally are estimated and recorded in the same period that the revenues are recognized and primarily represent rebates and discounts to
government agencies, wholesalers, distributors and managed care organizations with respect to our biopharmaceutical products. These
deductions represent estimates of the related obligations.
Specif ically:
In the U.S., we record provisions f or pharmaceutical Medicaid, Medicare and perf ormance-based contract rebates based upon our
experience ratio of rebates paid and actual prescriptions written during prior quarters. We apply the experience ratio to the respective
periods sales to determine the rebate accrual and related expense. This experience ratio is evaluated regularly to ensure that the historical
trends are as current as practicable. In addition, to account f or the impacts of the Patient Protection and Af f ordable Care Act, as amended by
the Health Care and Education Reconciliation Act (together, U.S. Healthcare Legislation), we also consider the increase in minimum rebate
and extension of Medicaid prescription drug rebates f or drugs dispensed to enrollees. We estimate discounts on branded prescription drug
sales to Medicare Part D participants in the Medicare coverage gap, also known as the doughnut hole, based on historical experience of
benef iciary prescriptions and consideration of the utilization that is expected to result f rom the discount in the coverage gap. We evaluate
this estimate regularly to ensure that the historical trends and f uture expectations are as current as practicable. For perf ormance-based
contract rebates, we also consider current contract terms, such as changes in f ormulary status and discount rates.
Outside the U.S., the majority of our pharmaceutical rebates, discounts and price reductions (collectively, sales allowances) are contractual
or legislatively mandated and our estimates are based on actual invoiced sales within each period; both of these elements help to reduce the
risk of variations in the estimation process. Some European countries base their rebates on the governments unbudgeted pharmaceutical
spending, and we use an estimated allocation f actor (based on historical payments) and total revenues by country against our actual
invoiced sales to project the expected level of reimbursement. We obtain third-party inf ormation that helps us to monitor the adequacy of
these accruals.
Provisions f or pharmaceutical chargebacks (primarily reimbursements to wholesalers f or honoring contracted prices to third parties) closely
approximate actual as we settle these deductions generally within two to f ive weeks of incurring the liability.
Provisions f or pharmaceutical returns are based on a calculation f or each market that incorporates the f ollowing, as appropriate: local
returns policies and practices; returns as a percentage of sales; an understanding of the reasons f or past returns; estimated shelf lif e by
product; an estimate of the amount of time between shipment and return or lag time; and any other f actors that could impact the estimate of
f uture returns, such as loss of exclusivity, product recalls or a changing competitive environment. Generally, returned products are
destroyed, and customers are ref unded the sales price in the f orm of a credit.
We record sales incentives as a reduction of revenues at the time the related revenues are recorded or when the incentive is of f ered,
whichever is later. We estimate the cost of our sales incentives based on our historical experience with similar incentives programs.
Our accruals f or Medicaid rebates, Medicare rebates, perf ormance-based contract rebates, sales allowances and chargebacks were $3.8 billion
as of December 31, 2012, and $4.8 billion as of December 31, 2011, and substantially all are included in Other current liabilities .
Amounts recorded f or sales deductions can result f rom a complex series of judgments about f uture events and uncertainties and can rely heavily
on estimates and assumptions. For inf ormation about the risks associated with estimates and assumptions, see Note 1C. Basis of Presentation
and Significant Accounting Policies: Estimates and Assumptions.
Taxes collected f rom customers relating to product sales and remitted to governmental authorities are presented on a net basis; that is, they are
excluded f rom Revenues .
Collaborative Arrangements Payments to and f rom our collaboration partners are presented in our consolidated statements of income based on
the nature of the arrangement (including its contractual terms), the nature of the payments and applicable accounting guidance. Under co-
promotion agreements, we record the amounts received f rom our partners as alliance revenues, a component of Revenues, when our co-
promotion partners are the principal in the transaction and we receive a share of their net sales or prof its. Alliance revenues are recorded when
our co-promotion partners ship the product and title passes to their customers. The related expenses f or selling and marketing these products are
included in Selling, informational and administrative expenses. In collaborative arrangements where we manuf acture a product f or our partner,
we record revenues when our partner sells the product and title passes to its customer. All royalty payments to collaboration partners are
included in Cost of sales .

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H. Cost of Sales and Inventories
We carry inventories at the lower of cost or market. The cost of f inished goods, work in process and raw materials is determined using average
actual cost. We regularly review our inventories f or impairment and reserves are established when necessary.
I. Selling, Informational and Administrative Expenses
Selling, inf ormational and administrative costs are expensed as incurred. Among other things, these expenses include the internal and external
costs of marketing, advertising, shipping and handling, inf ormation technology and legal def ense.
Advertising expenses totaled approximately $2.9 billion in 2012, $3.7 billion in 2011 and $3.8 billion in 2010. Production costs are expensed as
incurred and the costs of radio time, television time and space in publications are expensed when the related advertising occurs.
J. Research and Development Expenses
Research and development (R&D) costs are expensed as incurred. These expenses include the costs of our proprietary R&D ef f orts, as well as
costs incurred in connection with certain licensing arrangements. Bef ore a compound receives regulatory approval, we record upf ront and
milestone payments made by us to third parties under licensing arrangements as expense. Upf ront payments are recorded when incurred, and
milestone payments are recorded when the specif ic milestone has been achieved. Once a compound receives regulatory approval , we record
any milestone payments in Identifiable intangible assets, less accumulated amortization and, unless the asset is determined to have an indef inite
lif e, we amortize the payments on a straight-line basis over the remaining agreement term or the expected product lif e cycle, whichever is
shorter.
K. Amortization of Intangible Assets, Depreciation and Certain Long-Lived Assets
Long-lived assets include:
Goodwill Goodwill represents the excess of the consideration transf erred f or an acquired business over the assigned values of its net
assets. Goodwill is not amortized.
Identifiable intangible assets, less accumulated amortization These acquired assets are recorded at cost. Intangible assets with f inite
lives are amortized on a straight-line basis over their estimated usef ul lives. Intangible assets with indef inite lives that are associated with
marketed products are not amortized until a usef ul lif e can be determined. Intangible assets associated with IPR&D projects are not amortized
until approval is obtained in a major market, typically either the U.S. or the European Union (EU), or in a series of other countries, subject to
certain specif ied conditions and management judgment. The usef ul lif e of an amortizing asset generally is determined by identif ying the period
in which substantially all of the cash f lows are expected to be generated.
Property, plant and equipment, less accumulated depreciation These assets are recorded at cost and are increased by the cost of any
signif icant improvements af ter purchase. Property, plant and equipment assets, other than land and construction in progress, are
depreciated on a straight-line basis over the estimated usef ul lif e of the individual assets. Depreciation begins when the asset is ready f or its
intended use. For tax purposes, accelerated depreciation methods are used as allowed by tax laws.
Amortization expense related to f inite-lived acquired intangible assets that contribute to our ability to sell, manuf acture, research, market and
distribute products, compounds and intellectual property are included in Amortization of intangible assets as they benef it multiple business
f unctions. Amortization expense related to intangible assets that are associated with a single f unction and depreciation of property, plant and
equipment are included in Cost of sales, Selling, informational and administrative expenses and Research and development expenses, as
appropriate.
We review all of our long-lived assets f or impairment indicators throughout the year and we perf orm detailed testing whenever impairment
indicators are present. In addition, we perf orm impairment testing f or goodwill and indef inite-lived assets at least annually. When necessary, we
record charges f or impairments.
Specif ically:
For f inite-lived intangible assets, such as Developed Technology Rights, and f or other long-lived assets, such as property, plant and
equipment, whenever impairment indicators are present, we calculate the undiscounted value of the projected cash f lows associated with
the asset, or asset group, and compare this estimated amount to the carrying amount. If the carrying amount is f ound to be greater, we
record an impairment loss f or the excess of book value over f air value. In addition, in all cases of an impairment review, we re-evaluate the
remaining usef ul lives of the assets and modif y them, as appropriate.
For indef inite-lived intangible assets, such as Brands and IPR&D assets, when necessary, we determine the f air value of the asset and
record an impairment loss, if any, f or the excess of book value over f air value. In addition, in all cases of an impairment review other than f or
IPR&D assets, we re-evaluate whether continuing to characterize the asset as indef inite-lived is appropriate.
For goodwill, when necessary, we determine the f air value of each reporting unit and compare that value to its book value. If the carrying
amount is f ound to be greater, we then determine the implied f air value of goodwill by subtracting the f air value of all the identif iable net
assets other than goodwill f rom the f air value of the reporting unit and record an impairment loss, if any, f or the excess of the book value of
goodwill over the implied f air value.
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Impairment reviews can involve a complex series of judgments about f uture events and uncertainties and can rely heavily on estimates and
assumptions. For inf ormation about the risks associated with estimates and assumptions, see Note 1C. Basis of Presentation and Significant
Accounting Policies: Estimates and Assumptions.
L. Restructuring Charges and Certain Acquisition-Related Costs
We may incur restructuring charges in connection with acquisitions when we implement plans to restructure and integrate the acquired
operations or in connection with our cost-reduction and productivity initiatives. Included in Restructuring charges and certain acquisition-related
costs are all restructuring charges, as well as certain other costs associated with acquiring and integrating an acquired business. (If the
restructuring action results in a change in the estimated usef ul lif e of an asset, that incremental impact is classif ied in Cost of sales, Selling,
informational and administrative expenses and Research and development expenses , as appropriate). Termination costs are a signif icant
component of our restructuring charges and are generally recorded when the actions are probable and estimable. Transaction costs, such as
banking, legal, accounting and other costs incurred in connection with a business acquisition are expensed as incurred .
Amounts recorded f or restructuring charges and other associated costs can result f rom a complex series of judgments about f uture events and
uncertainties and can rely heavily on estimates and assumptions. For inf ormation about the risks associated with estimates and assumptions, see
Note 1C. Basis of Presentation and Significant Accounting Policies: Estimates and Assumptions.
M. Cash Equivalents and Statement of Cash Flows
Cash equivalents include items almost as liquid as cash, such as certif icates of deposit and time deposits with maturity periods of three months or
less when purchased. If items meeting this def inition are part of a larger investment pool, we classif y them as Short-term investments .
Cash f lows associated with f inancial instruments designated as f air value or cash f low hedges may be included in operating, investing or
f inancing activities, depending on the classif ication of the items being hedged. Cash f lows associated with f inancial instruments designated as net
investment hedges are classif ied according to the nature of the hedge instrument. Cash f lows associated with f inancial instruments that do not
qualif y f or hedge accounting treatment are classif ied according to their purpose and accounting nature.
N. Investments and Derivative Financial Instruments
Many, but not all, of our f inancial instruments are carried at f air value. For example, substantially all of our cash equivalents, short-term
investments and long-term investments are classif ied as available-f or-sale securities and are carried at f air value, with changes in unrealized
gains and losses, net of tax, reported in Other comprehensive loss (see Note 6. Accumulated Other Comprehensive Loss, Excluding
Noncontrolling Interests) . Derivative f inancial instruments are carried at f air value in various balance sheet categories (see Note 7A. Financial
Instruments: Selected Financial Assets and Liabilities ), with changes in f air value reported in current earnings or def erred f or qualif ying
hedging relationships. Virtually all of our valuation measurements f or investments and derivative f inancial instruments are based on the use of
quoted prices f or similar instruments in active markets, or quoted prices f or identical or similar instruments in markets that are not active or are
directly or indirectly observable.
Realized gains or losses on sales of investments are determined by using the specif ic identif ication cost method.
Investments where we have signif icant inf luence over the f inancial and operating policies of the investee are accounted f or under the equity
method. Under the equity method, we record our share of the investee's income and expenses, in Other deductions net . The excess of the
cost of the investment over our share of the equity of the investee as of the acquisition date is allocated to the identif iable assets of the investee,
with any remaining allocated to goodwill. Such investments are initially recorded at cost, which typically does not include amounts of contingent
consideration.
We regularly evaluate all of our f inancial assets f or impairment. For investments in debt and equity securities, when a decline in f air value, if any,
is determined to be other-than-temporary, an impairment charge is recorded in the statement of income, and a new cost basis in the investment is
established.
Impairment reviews can involve a complex series of judgments about f uture events and uncertainties and can rely heavily on estimates and
assumptions. For inf ormation about the risks associated with estimates and assumptions, see Note 1C. Basis of Presentation and Significant
Accounting Policies: Estimates and Assumptions.
O. Deferred Tax Assets and Liabilities and Income Tax Contingencies
Def erred tax assets and liabilities are recognized f or the expected f uture tax consequences of dif f erences between the f inancial reporting and
tax bases of assets and liabilities using enacted tax rates and laws. We provide a valuation allowance when we believe that our def erred tax
assets are not recoverable based on an assessment of estimated f uture taxable income that incorporates ongoing, prudent and f easible tax-
planning strategies.
We account f or income tax contingencies using a benef it recognition model. If we consider that a tax position is more likely than not to be
sustained upon audit, based solely on the technical merits of the position, we recognize the benef it. We measure the benef it by determining the
amount that is greater than 50% likely of being realized upon settlement, presuming that the tax position is examined by the appropriate taxing
authority that has f ull knowledge of all relevant inf ormation.
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Under the benef it recognition model, if our initial assessment f ails to result in the recognition of a tax benef it, we regularly monitor our position and
subsequently recognize the tax benef it: (i) if there are changes in tax law, analogous case law or there is new inf ormation that suf f iciently raise
the likelihood of prevailing on the technical merits of the position to more-likely-than-not; (ii) if the statute of limitations expires; or (iii) if there is a
completion of an audit resulting in a f avorable settlement of that tax year with the appropriate agency. We regularly re-evaluate our tax positions
based on the results of audits of f ederal, state and f oreign income tax f ilings, statute of limitations expirations, changes in tax law or receipt of
new inf ormation that would either increase or decrease the technical merits of a position relative to the more-likely-than-not standard. Liabilities
associated with uncertain tax positions are classif ied as current only when we expect to pay cash within the next 12 months. Interest and
penalties, if any, are recorded in Provision for taxes on income and are classif ied on our consolidated balance sheet with the related tax liability.
Amounts recorded f or valuation allowances and income tax contingencies can result f rom a complex series of judgments about f uture events and
uncertainties and can rely heavily on estimates and assumptions. For inf ormation about the risks associated with estimates and assumptions, see
Note 1C. Basis of Presentation and Significant Accounting Policies: Estimates and Assumptions.
P. Pension and Postretirement Benefit Plans
The majority of our employees worldwide are covered by def ined benef it pension plans, def ined contribution plans or both. In the U.S., we have
both qualif ied and supplemental (non-qualif ied) def ined benef it plans, as well as other postretirement benef it plans, consisting primarily of
healthcare and lif e insurance f or retirees. Beginning on January 1, 2011, f or employees hired in the U.S. and Puerto Rico af ter December 31,
2010, we no longer of f er a def ined benef it plan and, instead, of f er an enhanced benef it under our def ined contribution plan. On May 8, 2012, we
announced to employees that as of January 1, 2018, Pf izer will transition its U.S. and Puerto Rico employees f rom its def ined benef it plans to an
enhanced def ined contribution savings plan. We recognize the overf unded or underf unded status of each of our def ined benef it plans as an
asset or liability on our consolidated balance sheet. The obligations are generally measured at the actuarial present value of all benef its
attributable to employee service rendered, as provided by the applicable benef it f ormula. Our pension and other postretirement obligations may
include assumptions such as long-term rate of return on plan assets, expected employee turnover and participant mortality. For our pension plans,
the obligation may also include assumptions as to f uture compensation levels. For our other postretirement benef it plans, the obligation may
include assumptions as to the expected cost of providing the healthcare and lif e insurance benef its, as well as the extent to which those costs
are shared with the employee or others (such as governmental programs). Plan assets are measured at f air value. Net periodic benef it costs are
recognized, as required, into Cost of sales, Selling, informational and administrative expenses and Research and development expenses , as
appropriate.
Amounts recorded f or pension and postretirement benef it plans can result f rom a complex series of judgments about f uture events and
uncertainties and can rely heavily on estimates and assumptions. For inf ormation about the risks associated with estimates and assumptions, see
Note 1C. Basis of Presentation and Significant Accounting Policies: Estimates and Assumptions.
Q. Legal and Environmental Contingencies
We and certain of our subsidiaries are subject to numerous contingencies arising in the ordinary course of business, such as patent litigation,
product liability and other product-related litigation, commercial litigation, environmental claims and proceedings, government investigations and
guarantees and indemnif ications. We record accruals f or these contingencies to the extent that we conclude that a loss is both probable and
reasonably estimable. If some amount within a range of loss appears to be a better estimate than any other amount within the range, we accrue
that amount. Alternatively, when no amount within a range of loss appears to be a better estimate than any other amount, we accrue the lowest
amount in the range. We record anticipated recoveries under existing insurance contracts when recovery is assured.
Amounts recorded f or contingencies can result f rom a complex series of judgments about f uture events and uncertainties and can rely heavily on
estimates and assumptions. For inf ormation about the risks associated with estimates and assumptions, see Note 1C. Basis of Presentation and
Significant Accounting Policies: Estimates and Assumptions.
R. Share-Based Payments
Our compensation programs can include share-based payments. Generally, grants under share-based payment programs are accounted f or at
f air value and these f air values are generally amortized on a straight-line basis over the vesting terms into Cost of sales, Selling, informational
and administrative expenses and Research and development expenses , as appropriate.
Amounts recorded f or share-based compensation can result f rom a complex series of judgments about f uture events and uncertainties and can
rely heavily on estimates and assumptions. For inf ormation about the risks associated with estimates and assumptions, see Note 1C. Basis of
Presentation and Significant Accounting Policies: Estimates and Assumptions .
Note 2. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments
A. Acquisitions
NextWave Pharmaceuticals, Inc.
On November 27, 2012, we completed our acquisition of NextWave Pharmaceuticals Incorporated (NextWave), a privately held, specialty
pharmaceutical company. As a result of this acquisition, Pf izer now holds exclusive North American rights to Quillivant XR (methylphenidate
hydrochloride), the f irst once-daily liquid medication approved in the U.S. f or the treatment of attention def icit hyperactivity disorder. Quillivant
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XR received approval f rom the U.S. Food and Drug Administration on September 27, 2012, and was launched in the U.S. on January 14, 2013. The
total consideration f or the acquisition was approximately $442 million , which consisted of upf ront payments to NextWave's shareholders of about
$278 million and contingent consideration with an estimated acquisition-date f air value of about $164 million . The contingent consideration
consists of up to $425 million in additional payments that are contingent upon attainment of certain revenue milestones. In connection with this
Established Products acquisition, we recorded approximately $516 million in Identifiable intangible assets , consisting primarily of $472 million in
Developed technology rights and $44 million in In-process research and development , $165 million in net def erred tax liabilities and $91 million in
Goodwill. The allocation of the consideration transf erred to the assets acquired and the liabilities assumed has not been f inalized.
Nexium Over-the-Counter Rights
On August 13, 2012, we announced that we entered into an agreement with AstraZeneca f or the global over-the-counter (OTC) rights f or
Nexium, a leading prescription drug currently approved to treat the symptoms of gastroesophageal ref lux disease. Under the terms of the
agreement, we acquired the exclusive global rights to market Nexium f or the OTC indications, which are subject to regulatory approval. We made
an upf ront payment of $250 million to AstraZeneca, and AstraZeneca is eligible to receive milestone payments of up to $550 million based on
product launches and level of sales, as well as royalty payments based on sales. The upf ront payment f or this Consumer Healthcare asset
acquisition was expensed and included in Research and development expenses in our consolidated statement of income f or the year ended
December 31, 2012.
Alacer Corp.
On February 26, 2012, we completed our acquisition of Alacer Corp., a company that manuf actures, markets and distributes Emergen-C, a line of
ef f ervescent, powdered drink mix vitamin supplements that is the largest-selling branded vitamin C line in the U.S. In connection with this
Consumer Healthcare acquisition, we recorded $181 million in Identifiable intangible assets , consisting primarily of the Emergen-C indef inite-lived
brand, $69 million in net def erred tax liabilities and $192 million in Goodwill . The allocation of the consideration transf erred to the assets acquired
and the liabilities assumed has been f inalized.
Ferrosan Holding A/S
On December 1, 2011, we completed our acquisition of the consumer healthcare business of Ferrosan Holding A/S (Ferrosan), a Danish company
engaged in the sale of science-based consumer healthcare products, including dietary supplements and lif estyle products, primarily in the Nordic
region and the emerging markets of Russia and Central and Eastern Europe. This acquisition is ref lected in our consolidated f inancial statements
beginning in the f irst f iscal quarter of 2012 . Our acquisition of Ferrosans consumer healthcare business increases our presence in dietary
supplements with a new set of brands and pipeline products. Also, we believe that the acquisition allows us to expand the marketing of
Ferrosans brands through Pf izers global f ootprint and provide greater distribution and scale f or certain Pf izer brands, such as Centrum and
Caltrate, in Ferrosans key markets. In connection with this Consumer Healthcare acquisition, we recorded $362 million in Identifiable intangible
assets, consisting of indef inite-lived and f inite-lived brands, $94 million in net def erred tax liabilities and $322 million in Goodwill . The allocation of
the consideration transf erred to the assets acquired and the liabilities assumed has been f inalized.
Excaliard
On November 30, 2011, we completed our acquisition of Excaliard Pharmaceuticals, Inc. (Excaliard), a privately owned biopharmaceutical
company. Excaliard's lead compound, EXC-001, a Phase 2 compound, is an antisense oligonucleotide designed to interrupt the process of skin
f ibrosis by inhibiting expression of connective tissue growth f actor (CTGF). The total consideration f or the acquisition was approximately $174
million , which consisted of an upf ront payment to Excaliard's shareholders of about $86 million and contingent consideration with an estimated
acquisition-date f air value of about $88 million . The contingent consideration consists of up to $230 million in additional payments that are
contingent upon the attainment of certain regulatory and revenue milestones. Payments under the contingent consideration arrangement were $30
million in 2012 as a regulatory milestone was reached. In connection with this Worldwide Research and Development acquisition, we recorded
approximately $257 million in Identifiable intangible assetsIn-process research and development, approximately $87 million in net def erred tax
liabilities and approximately $8 million in Goodwill .
Icagen
On September 20, 2011, we completed our cash tender of f er f or the outstanding shares of Icagen, Inc. (Icagen), resulting in an approximate 70%
ownership of the outstanding shares of Icagen, a biopharmaceutical company f ocused on discovery, development and commercialization of novel
orally-administered small molecule drugs that modulate ion channel targets. On October 27, 2011, we acquired all of the remaining shares of
Icagen. In connection with this Worldwide Research and Development acquisition, we recorded approximately $19 million in Identifiable intangible
assets .
King Pharmaceuticals, Inc.
Description of the Transaction
On January 31, 2011 (the acquisition date), we completed a tender of f er f or the outstanding shares of common stock of King at a purchase price
of $14.25 per share in cash and acquired approximately 92.5% of the outstanding shares. On February 28, 2011, we acquired all of the remaining
shares of King f or $14.25 per share in cash. As a result, the total f air value of consideration transf erred f or King was approximately $3.6 billion in
cash ( $3.2 billion , net of cash acquired).
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Kings principal businesses consisted of a prescription pharmaceutical business f ocused on delivering new f ormulations of pain treatments
designed to discourage common methods of misuse and abuse; the Meridian auto-injector business f or emergency drug delivery, which develops
and manuf actures the EpiPen; an established products portf olio; and an animal health business that of f ers a variety of f eed-additive products f or
a wide range of species.
Recording of Assets Acquired and Liabilities Assumed
The f ollowing table provides the assets acquired and liabilities assumed f rom King:
(MILLIONS OF DOLLARS)

Amounts
Recognized as of
Acquisition Date
(Final)
Working capital, excluding inventories $ 155
Inventories 340
Property, plant and equipment 412
Identif iable intangible assets, excluding in-process research and development 1,806
In-process research and development 303
Net tax accounts (328)
All other long-term assets and liabilities, net 102
Total identif iable net assets 2,790
Goodwill
(a)
765
Net assets acquired/total consideration transf erred $ 3,555
(a)

Goodwill recorded as of the acquisition date totaled $720 million f or our three biopharmaceutical operating segments and $45 million f or our Animal Health operating
segment. (Since the acquisition of King, we hav e rev ised our operating segments. See Note 18A. Segment, Geographic and Other Revenue Information: Segment
Information. )
As of the acquisition date, the f air value of accounts receivable approximated the book value acquired. The gross contractual amount receivable
was $200 million , virtually all of which was expected to be collected.
Goodwill is calculated as the excess of the consideration transf erred over the net assets recognized and represents the f uture economic
benef its arising f rom other assets acquired that could not be individually identif ied and separately recognized. Specif ically, the goodwill recorded
as part of the acquisition of King includes the f ollowing:
the expected synergies and other benef its that we believed would result f rom combining the operations of King with the operations of
Pf izer;
any intangible assets that did not qualif y f or separate recognition, as well as f uture, yet unidentif ied projects and products; and
the value of the going-concern element of Kings existing businesses (the higher rate of return on the assembled collection of net
assets versus if Pf izer had acquired all of the net assets separately).
Goodwill is not amortized and is not deductible f or income tax purposes (see Note 10A. Goodwill and Other Intangible Assets: Goodwill f or
additional inf ormation).
The assets and liabilities arising f rom contingencies recognized as of the acquisition date are not signif icant to Pf izers consolidated f inancial
statements.
Actual and Pro Forma Impact of Acquisition
Revenues f rom King are included in Pf izer's consolidated statements of income f rom the acquisition date, January 31, 2011, through Pf izers
domestic and international year-ends and were $1.3 billion in 2011. We are not able to provide the results of operations attributable to King in
2011 as those operations had been substantially integrated into the larger Pf izer operation shortly af ter the acquisition.
The f ollowing table provides supplemental pro f orma inf ormation:
Unaudited Pro Forma
Consolidated Results
(a)
Year Ended December 31,
(MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA)
2011 2010
Revenues $ 65,368 $ 66,540
Net income attributable to Pf izer Inc. 10,228 8,013
Diluted earnings per share attributable to Pf izer Inc. common shareholders 1.30 0.99
(a)
The pro f orma inf ormation f or December 31, 2011 and 2010 assumes that the acquisition of King occurred on January 1, 2010.
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The unaudited pro f orma consolidated results do not purport to project the f uture results of operations of the combined company nor do they
ref lect the expected realization of any cost savings associated with the acquisition. The unaudited pro f orma consolidated results ref lect the
historical f inancial inf ormation of Pf izer and King, adjusted f or the f ollowing pre-tax amounts:
Elimination of King's historical intangible asset amortization expense (approximately $6 million in 2011 and $116 million in 2010).
Additional amortization expense (approximately $15 million in 2011 and $190 million in 2010) related to the f air value of identif iable intangible
assets acquired.
Additional depreciation expense (approximately $3 million in 2011 and $35 million in 2010) related to the f air value adjustment to property,
plant and equipment acquired.
Adjustment related to the f air value adjustments to acquisition-date inventory estimated to have been sold (elimination of $160 million charge
in 2011 and addition of $160 million charge in 2010).
Adjustment f or acquisition-related costs directly attributable to the acquisition (elimination of $224 million of charges in 2011 and addition of
$224 million of charges in 2010, ref lecting charges incurred by both King and Pf izer).
FoldRx Pharmaceuticals, Inc.
On October 6, 2010, we completed our acquisition of FoldRx Pharmaceuticals, Inc. (FoldRx), a privately held drug discovery and clinical
development company. FoldRx's lead product candidate, Vyndaqel (taf amidis meglumine), is a f irst-in-class oral therapy f or the treatment of
transthyretin f amilial amyloid polyneuropathy (TTR-FAP). The total consideration f or the acquisition was approximately $400 million , which
consisted of an upf ront payment to FoldRx's shareholders of approximately $200 million and contingent consideration with an estimated
acquisition-date f air value of approximately $200 million . The contingent consideration consists of up to $455 million in additional payments that are
contingent upon the attainment of certain regulatory and revenue milestones. Payments under the contingent consideration arrangement were
$225 million in 2012, as a regulatory milestone was achieved. In connection with this Specialty Care acquisition, we recorded approximately $500
million in Identifiable intangible assetsIn-process research and development, approximately $160 million in net def erred tax liabilities and
approximately $60 million in Goodwill. In 2012, we recorded a decrease in the f air value of the contingent consideration of approximately $42
million and in 2011, we recorded an increase in the f air value of the contingent consideration of approximately $85 million .
B. Divestitures
Nutrition Business
On November 30, 2012, we completed the sale of our Nutrition business to Nestl f or $11.85 billion in cash, and recognized a gain of
approximately $4.8 billion , net of tax, in Gain/(loss) on sale of discontinued operationsnet of tax . The divested business includes:
our f ormer Nutrition operating segment and certain prenatal vitamins previously commercialized by the Pf izer Consumer Healthcare
operating segment; and
other associated amounts, such as direct manuf acturing costs, enabling support f unctions and other costs not charged to the business,
purchase-accounting impacts, acquisition-related costs, impairment charges, restructuring charges and implementation costs
associated with our cost reduction/productivity initiatives, all of which are reported outside our operating segment results.
The operating results of this business are reported as Income/(loss) from discontinued operationsnet of tax in the consolidated statements of
income f or all periods presented. In addition, in the consolidated balance sheet as of December 31, 2011, the assets and liabilities associated with
this discontinued operation are classif ied as Assets of discontinued operations and other assets held for sale and Liabilities of discontinued
operations , as appropriate.
While the f ull purchase price of $11.85 billion was received on November 30, the sale of the business was not completed in certain non-U.S.
jurisdictions where regulatory review of the transaction remains ongoing. In these jurisdictions, which represent a relatively small portion of the
Nutrition business, we continue to operate the business on an interim basis pending regulatory approval or divestiture to a third party buyer.
These interim arrangements, pursuant to which Pf izer operates the business f or the net economic benef it of Nestl and is indemnif ied by Nestl
against any risk associated with such operations during the interim period, are expected to conclude by the end of 2013 and the sale of these
certain jurisdictions are expected to be completed by the end of 2013. As such, and as we have already received all of the expected proceeds
f rom the sale, and as Nestl is contractually obligated to complete the transaction (or permit us to divest the delayed businesses to a third party
buyer on its behalf ) regardless of the outcome of any pending regulatory reviews, we have treated these delayed-close businesses as sold f or
accounting purposes.
In connection with the sale transaction, we also entered into certain transitional agreements designed to ensure and f acilitate the orderly transf er
of business operations to the buyer. These agreements primarily relate to administrative services, which are generally to be provided f or a period
of 2 to 18 months. We will also manuf acture and supply certain prenatal vitamin products f or a transitional period. These agreements are not
material and none conf ers upon us the ability to inf luence the operating and/or f inancial policies of the Nutrition business subsequent to the sale.
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Capsugel Business
On August 1, 2011, we completed the sale of our Capsugel business f or approximately $2.4 billion in cash and recognized a gain of approximately
$1.3 billion, net of tax, in Gain/(loss) on sale of discontinued operationsnet of tax . The operating results of this business are reported as
Income/(loss) from discontinued operationsnet of tax f or 2011 and 2010.
Discontinued Operations
The f ollowing table provides the components of Discontinued operationsnet of tax :
Year Ended December 31,
(a)
(MILLIONS OF DOLLARS)
2012 2011 2010
Revenues $ 2,258 $ 2,673 $ 2,643
Pre-tax income/(loss) f rom discontinued operations 414 487 (50)
Provision/(benef it) f or taxes on income
(b)
117 137 (31)
Income/(loss) from discontinued operationsnet of tax 297 350 (19)
Pre-tax gain/(loss) on sale of discontinued operations 7,123 1,688 (11)
Provision f or taxes on income
(c)
2,340 384
Gain/(loss) on sale of discontinued operationsnet of tax 4,783 1,304 (11)
Discontinued operationsnet of tax $ 5,080 $ 1,654 $ (30)
(a)

Includes the Nutrition business f or all periods presented (through Nov ember 30, 2012) and the Capsugel business f or 2011 (through August 1, 2011) and 2010 only .
The net loss in 2010 includes the impairment of an indef inite-liv ed Brand intangible asset in the Nutrition business of approximately $385 million (pre-tax).
(b)

Includes a def erred tax expense of $24 million f or 2012 , a def erred tax benef it of $43 million f or 2011 , and a def erred tax benef it of $156 million f or 2010 . These
def erred tax prov isions include def erred taxes related to inv estments in certain f oreign subsidiaries resulting f rom our intention not to hold these subsidiaries
indef initely .
(c)

Includes a def erred tax expense of $1.4 billion f or 2012 and $190 million f or 2011 . These def erred tax prov isions include def erred tax expense of $2.2 billion f or 2012
and $190 million f or 2011 on certain current-y ear f unds earned outside the U.S. that will not be indef initely reinv ested ov erseas.
The f ollowing table provides the components of Assets of discontinued operations and other assets held for sale and Liabilities of
discontinued operations :
As of December 31,
(MILLIONS OF DOLLARS)
2012 2011
Accounts receivable, less allowance f or doubtf ul accounts $ $ 550
Other current assets 419
Property, plant and equipment, less accumulated depreciation 70 1,118
Goodwill 498
Identif iable intangible assets, less accumulated amortization 2,648
Other noncurrent assets 84
Assets of discontinued operations and other assets held for sale $ 70 $ 5,317

Current liabilities $ $ 385
Other liabilities 839
Liabilities of discontinued operations $ $ 1,224
The net cash f lows of our discontinued operations f or each of the categories of operating, investing and f inancing activities are not signif icant f or
any period presented, except that investing activities includes the proceeds f rom the sale of these businesses.
C. Collaborative Arrangements
In the normal course of business, we enter into collaborative arrangements with respect to in-line medicines, as well as medicines in development
that require completion of research and regulatory approval. Collaborative arrangements are contractual agreements with third parties that involve
a joint operating activity, typically a research and/or commercialization ef f ort, where both we and our partner are active participants in the activity
and are exposed to the signif icant risks and rewards of the activity. Our rights and obligations under our collaborative arrangements vary. For
example, we have agreements to co-promote pharmaceutical products discovered by us or other companies, and we have agreements where
we partner to co-develop and/or participate together in commercializing, marketing, promoting, manuf acturing and/or distributing a drug product.
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The f ollowing table provides the amounts and classif ication of payments (income/(expense)), between us and our collaboration partners:
Year Ended December 31,
(MILLIONS OF DOLLARS)
2012 2011 2010
Revenues Revenues
(a)
$ 1,231 $ 1,029 $ 710
Revenue sAlliance revenues
(b)
3,492 3,630 4,084
Total revenues f rom collaborative arrangements 4,723 4,659 4,794
Cost of sales
(c)
(362) (420) (124)
Selling, informational and administrative expenses
(d)
(290) (237) (131)
Research and development expenses
(e)
(74) (299) (316)
Other deductionsnet (15) 34 37
(a)
Represents sales to our partners of products manuf actured by us.
(b)
Substantially all relate to amounts earned f rom our partners under co-promotion agreements.
(c)
Primarily relates to roy alties earned by our partners and cost of sales associated with inv entory purchased f rom our partners.
(d)
Represents net reimbursements to our partners f or selling, inf ormational and administrativ e expenses incurred.
(e)

Primarily related to net reimbursements, as well as upf ront pay ments and pre-approv al milestone pay ments earned by our partners. The upf ront and milestone
pay ments were as f ollows: $44 million in 2012, $210 million in 2011 and $147 million in 2010.
The amounts disclosed in the above table do not include transactions with third parties other than our collaboration partners, or other costs
associated with the products under the collaborative arrangements. In addition, during 2012 and 2011, we paid $29 million and $61 million ,
respectively, in post-approval milestones to collaboration partners. These payments were recorded in Identifiable intangible assets
Developed technology rights .
D. Equity-Method Investments
ViiV Healthcare Limited (ViiV)
On October 31, 2012, our equity-method investee, ViiV, acquired the remaining 50% of Shionogi-ViiV Healthcare LLC, its equity-method investee,
f rom Shionogi & Co., Ltd. (Shionogi) in consideration f or a 10% interest in ViiV (newly issued shares) and contingent consideration in the f orm of
f uture royalties. As a result of this transaction, ViiV recorded a gain associated with the step-up on the 50% interest previously held by ViiV.
Also, Pf izer's equity interest in ViiV was reduced f rom 15% to 13.5% and GlaxoSmithKline plc's equity interest was reduced f rom 85% to 76.5% .
As a result of the above, we recognized a gain of $44 million , which was recorded in Other deductions net , in the f ourth quarter of 2012.
Our investment in ViiV is accounted f or under the equity method due to the signif icant inf luence that we have over the operations of ViiV through
our board representation and minority veto rights.
Investment in Hisun Pf izer Pharmaceuticals Company Limited
On September 6, 2012, Pf izer and Zhejiang Hisun Pharmaceuticals Co., Ltd., a leading Chinese pharmaceutical company, created a new company,
Hisun Pf izer Pharmaceuticals Company Limited (HPP), to develop, manuf acture and commercialize of f -patent pharmaceutical products in China and
global markets. In accordance with our international reporting periods, this transaction was accounted f or in the f ourth quarter of 2012 . HPP was
established with registered capital of $250 million . Zhejiang Hisun Pharmaceuticals holds a 51% equity interest and Pf izer holds a 49% equity
interest in HPP. In 2013, the parties will contribute select existing products to HPP, which will have a broad portf olio covering cardiovascular
disease, inf ectious disease, oncology, mental health, and other therapeutic areas. See also Note 19B. Subsequent Events: Hisun Pfizer
Pharmaceuticals Company Limited (HPP). The parties will also contribute manuf acturing sites, cash and other relevant assets. Our investment in
HPP is accounted f or under the equity method due to the signif icant inf luence that we have over the operations of HPP through our board
representation, minority veto rights and 49% voting interest.
Investment in Laboratrio Teuto Brasileiro
On November 8, 2010, we consummated our partnership to develop and commercialize generic medicines with Laboratrio Teuto Brasileiro S.A.
(Teuto) a leading generics company in Brazil. As part of the transaction, we acquired a 40% equity stake in Teuto, and entered into a series of
commercial agreements. The partnership is enhancing our position in Brazil, a key emerging market, by providing access to Teutos portf olio of
products. Through this partnership, we have access to signif icant distribution networks in rural and suburban areas in Brazil, and the opportunity
to register and commercialize Teutos products in various markets outside Brazil. Under the terms of our purchase agreement with Teuto, we
made an upf ront payment at the closing of approximately $230 million . On May 23, 2012, we made a perf ormance-based milestone payment to
Teuto of $91.5 million , which was recorded as an additional investment in Teuto. We have an option to acquire the remaining 60% of Teutos
shares beginning in 2014, and Teutos shareholders have an option to sell their 60% stake to us beginning in 2015. The portion of the total
arrangement consideration that was allocated to the net call/put option, based on relative f air values of the 40% equity investment and the net
option, is being accounted f or at cost and will be evaluated f or impairment on an ongoing basis. Our investment in Teuto is accounted f or under
the equity method due to the signif icant inf luence we have over the operations of Teuto through our board representation, minority veto rights and
40% voting interest.
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Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-
Reduction/Productivity Initiatives
We incur signif icant costs in connection with acquiring, integrating and restructuring businesses and in connection with our global cost-reduction
and productivity initiatives. For example:
In connection with acquisition activity, we typically incur costs associated with executing the transactions, integrating the acquired
operations (which may include expenditures f or consulting and the integration of systems and processes), and restructuring the
combined company (which may include charges related to employees, assets and activities that will not continue in the combined
company); and
In connection with our cost-reduction and productivity initiatives, we typically incur costs and charges associated with site closings and
other f acility rationalization actions, workf orce reductions and the expansion of shared services, including the development of global
systems.
All of our businesses and f unctions may be impacted by these actions, including sales and marketing, manuf acturing and research and
development, as well as groups such as inf ormation technology, shared services and corporate operations. Since the acquisition of Wyeth on
October 15, 2009, our cost-reduction initiatives announced on January 26, 2009, but not completed as of December 31, 2009, were incorporated
into a comprehensive plan to integrate Wyeths operations to generate cost savings and to capture synergies across the combined company. In
addition, among our ongoing cost reduction/productivity initiatives, on February 1, 2011, we announced a new productivity initiative to accelerate
our strategies to improve innovation and productivity in R&D by prioritizing areas that we believe have the greatest scientif ic and commercial
promise, utilizing appropriate risk/return prof iles and f ocusing on areas that we believe have the highest potential to deliver value in the near term
and over time.
The f ollowing table provides the components of costs associated with acquisitions and cost-reduction/productivity initiatives:
Year Ended December 31,
(MILLIONS OF DOLLARS)
2012 2011 2010
Transaction costs
(a)
$ 1 $ 30 $ 22
Integration costs
(b)
405 725 1,001
Restructuring charges:
(c)

Employee termination costs 997 1,794 1,062
Asset impairments 328 256 869
Exit costs 149 125 191
Restructuring charges and certain acquisition-related costs 1,880 2,930 3,145
Additional depreciationasset restructuring

recorded in our
consolidated statements of income as f ollows:
(d)

Cost of sales 267 555 520
Selling, informational and administrative expenses 20 75 227
Research and development expenses 296 605 34
Total additional depreciationasset restructuring 583 1,235 781
Implementation costs recorded in our consolidated
statements of income as f ollows:
(e)

Cost of sales 31 250
Selling, informational and administrative expenses 129 25
Research and development expenses 232 72
Total implementation costs 392 347
Total costs associated with acquisitions and cost-reduction/productivity initiatives $ 2,855 $ 4,512 $ 3,926
(a)

Transaction costs represent external costs directly related to acquired businesses and primarily include expenditures f or banking, legal, accounting and other similar
serv ices.
(b)

I ntegration costs represent external, incremental costs directly related to integrating acquired businesses, and primarily include expenditures f or consulting and the
integration of sy stems and processes.
(c)

From the beginning of our cost-reduction and transf ormation initiativ es in 2005 through December 31, 2012 , Employee termination costs represent the expected
reduction of the workf orce by approximately 62,200 employ ees, mainly in manuf acturing, sales and research, of which approximately 51,700 employ ees hav e been
terminated as of December 31, 2012 . In 2012 , substantially all employ ee termination costs represent additional costs with respect to approximately 4,800
employ ees.
The restructuring charges in 2012 are associated with the f ollowing:
Primary Care operating segment ( $295 million ), Specialty Care and Oncology operating segment ( $175 million ), Established Products and Emerging
Markets operating segment ( $125 million ), Animal Health operating segment ( $59 million ), Consumer Healthcare operating segment ( $45 million ),
research and dev elopment operations ( $6 million income), manuf acturing operations ( $265 million ) and Corporate ( $516 million ).
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The restructuring charges in 2011 are associated with the f ollowing:
Primary Care operating segment ( $593 million ), Specialty Care and Oncology operating segment ( $220 million ), Established Products and Emerging
Markets operating segment ( $110 million ), Animal Health operating segment ( $45 million ), Consumer Healthcare operating segment ( $8 million ), research
and dev elopment operations ( $490 million ), manuf acturing operations ( $287 million ) and Corporate ( $422 million ).
The restructuring charges in 2010 are associated with the f ollowing:
Primary Care operating segment ( $71 million ), Specialty Care and Oncology operating segment ( $197 million ), Established Products and Emerging
Markets operating segment ( $43 million ), Animal Health operating segment ( $34 million ), Consumer Healthcare operating segment ( $12 million ), research
and dev elopment operations ( $297 million ), manuf acturing operations ( $1.1 billion ) and Corporate ( $350 million ).
(d)
Additional depreciationasset restructuring represents the impact of changes in the estimated usef ul liv es of assets inv olv ed in restructuring actions.
(e)
Implementation costs represent external, incremental costs directly related to implementing our non-acquisition-related cost-reduction/productiv ity initiativ es.
The f ollowing table provides the components of and changes in our restructuring accruals:
(MILLIONS OF DOLLARS)

Employee
Termination
Costs
Asset
Impairment
Charges Exit Costs Accrual
Balance, January 1, 2011 $ 2,149 $ $ 101 $ 2,250
Provision 1,794 256 125 2,175
Utilization and other
(a)
(1,518) (256) (134) (1,908)
Balance, December 31, 2011
(b)
2,425 92 2,517
Provision 997 328 149 1,474
Utilization and other
(a)
(1,629) (328) (84) (2,041)
Balance, December 31, 2012
(c)
$ 1,793 $ $ 157 $ 1,950
(a)
Includes adjustments f or f oreign currency translation.
(b)
Included in Other current liabilities ( $1.6 billion ) and Other noncurrent liabilities ( $930 million ).
(c)
Included in Other current liabilities ( $1.2 billion ) and Other noncurrent liabilities ( $731 million ).
Total restructuring charges incurred f rom the beginning of our cost-reduction and productivity initiatives in 2005 through December 31, 2012 were
$15.6 billion .
The asset impairment charges included in restructuring charges f or 2012 primarily relate to assets held f or sale and are based on an estimate of
f air value, which was determined to be lower than the carrying value of the assets prior to the impairment charge.
The f ollowing table provides additional inf ormation about the long-lived assets held f or sale that were impaired in 2012:

Fair Value
(a)

Year Ended
December 31,
2012
(MILLIONS OF DOLLARS)
Amount Level 1 Level 2 Level 3 Impairment
Long-lived assets
(b)
$ 139 $ $ 139 $ $ 210
(a)

The f air v alue amount is presented as of the date of impairment, as these assets are not measured at f air v alue on a recurring basis. See also Note 1E. Basis of
Presentation and Significant Accounting Policies: Fair Value .
(b)

Ref lects property , plant and equipment and other long-liv ed held-f or-sale assets written down to their f air v alue of $139 million , less costs to sell of $3 million (a net
of $136 million ), in 2012 . The impairment charges of $210 million are included in Restructuring charges and certain acquisition-related costs . Fair v alue is determined
primarily using a market approach, with v arious inputs, such as recent sales transactions.
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Note 4. Other DeductionsNet
The f ollowing table provides components of Other deductionsnet :
Year Ended December 31,
(MILLIONS OF DOLLARS)
2012 2011 2010
Interest income
(a)
$ (383) $ (456) $ (400)
Interest expense
(a)
1,524 1,681 1,797
Net interest expense 1,141 1,225 1,397
Royalty-related income (469) (569) (579)
Net gain on asset disposals
(b)
(52) (15) (243)
Certain legal matters, net
(c)
2,220 784 1,723
Certain asset impairment charges
(d)
927 902 1,790
Costs associated with the separation of Zoetis
(e)
125 33
Other, net 139 139 (147)
Other deductionsnet $ 4,031 $ 2,499 $ 3,941
(a)

2012 v . 2011 Interest income decreased due to lower av erage cash balances and lower interest rates earned on inv estments. Interest expense decreased due to
lower debt balances and the ef f ectiv e conv ersion of some f ixed-rate liabilities to f loating-rate liabilities. 2011 v . 2010 Interest income increased due to higher cash
balances and higher interest rates earned on inv estments. Interest expense decreased due to lower long- and short-term debt balances and the ef f ectiv e conv ersion
of some f ixed-rate liabilities to f loating rate liabilities. Capitalized interest expense totaled $ 41 million in 2012 , $ 50 million in 2011 and $ 36 million in 2010 .
(b)

Net gains include realized gains and losses on sales of av ailable-f or-sale securities: in 2012 , 2011 and 2010 , gross realized gains were $ 39 million , $ 79 million and
$ 153 million , respectiv ely . Gross realized losses were $ 6 million in 2012 , $ 73 million in 2011 and $ 12 million in 2010 . Proceeds, primarily f rom the sale of
av ailable-f or-sale securities, were $ 19 billion in 2012 , $ 10.2 billion in 2011 and $ 5.3 billion in 2010 . In 2010, also includes gains on sales of certain inv estments and
businesses.
(c)

In 2012 , primarily includes a $491 million charge resulting f rom an agreement-in-principle with the U.S. Department of Justice to resolv e an inv estigation into Wy eth's
historical promotional practices in connection with Rapamune, a $450 million settlement of a lawsuit by Brigham Young Univ ersity related to Celebrex, and charges
related to hormone-replacement therapy litigation and Chantix litigation. In 2011 , primarily includes charges related to hormone-replacement therapy litigation. In 2010
, includes a $1.3 billion charge f or asbestos litigation related to our wholly owned subsidiary , Quigley Company , Inc. (See Note 17. Commitments and Contingencies. )
(d)

In 2012 , includes intangible asset impairment charges of $872 million , ref lecting (i) $393 million of IPR&D assets, primarily related to compounds that targeted
autoimmune and inf lammatory diseases (f ull write-of f ) and, to a lesser extent, compounds related to pain treatment; (ii) $175 million related to our Consumer
Healthcare indef inite-liv ed brand assets, primarily Robitussin, a cough suppressant; (iii) $279 million related to Dev eloped Technology Rights, a charge comprised of
impairments of v arious products, none of which indiv idually exceeded $45 million ; and (iv ) $25 million of f inite-liv ed brands. The intangible asset impairment charges
f or 2012 ref lect, among other things, the impact of new scientif ic f indings, updated commercial f orecasts, changes in pricing, an increased competitiv e env ironment,
litigation uncertainties regarding intellectual property and declining gross margins. The impairment charges in 2012 are associated with the f ollowing: Worldwide
Research and Dev elopment ( $303 million ); Consumer Healthcare ( $200 million ); Primary Care ( $135 million ); Established Products ( $83 million ); Specialty Care (
$56 million ); Emerging Markets ( $56 million ) and Animal Health ( $39 million ). In addition, in 2012 , also includes charges of approximately $55 million f or certain
inv estments. These inv estment impairment charges ref lect the dif f icult global economic env ironment.
In 2011 , includes intangible asset impairment charges of $851 million , the majority of which relates to intangible assets that were acquired as part of our acquisition
of Wy eth. These impairment charges ref lect (i) $475 million of IPR&D assets, primarily related to two compounds f or the treatment of certain autoimmune and
inf lammatory diseases; (ii) $193 million related to our biopharmaceutical indef inite-liv ed brand, Xanax; and (iii) $183 million related to Dev eloped Technology Rights
comprising the impairment of f iv e assets. The intangible asset impairment charges f or 2011 ref lect, among other things, the impact of new scientif ic f indings and an
increased competitiv e env ironment. The impairment charges in 2011 are associated with the f ollowing: Worldwide Research and Dev elopment ( $394 million );
Established Products ( $193 million ); Specialty Care ( $135 million ); Primary Care ( $56 million ); Oncology ( $56 million ) and Animal Health ( $17 million ). In
addition, in 2011 , also includes charges of approximately $51 million f or certain inv estments. These inv estment impairment charges ref lect the dif f icult global
economic env ironment.
In 2010, includes intangible asset impairment charges of $1.8 billion , the majority of which relates to intangible assets that were acquired as part of our acquisition
of Wy eth. These impairment charges ref lect (i) $945 million of IPR&D assets, primarily Prev nar 13/Prev enar 13 Adult, a compound f or the prev ention of
pneumococcal disease in adults age 50 and older, and Neratinib, a compound f or the treatment of breast cancer; (ii) $292 million of indef inite-liv ed Brands, primarily
related to Robitussin; and (iii) $540 million of Dev eloped Technology Rights, primarily Thelin, a product that treated pulmonary hy pertension, and Protonix, a product
that treats erosiv e gastroesophageal ref lux disease. These impairment charges, most of which occurred in the third quarter of 2010, ref lect, among other things, the
f ollowing: f or IPR&D assets, the impact of changes to the dev elopment programs, the projected dev elopment and regulatory time-f rames and the risk associated
with these assets; f or Brand assets, the current competitiv e env ironment and planned inv estment support; and, f or Dev eloped Technology Rights, in the case of
Thelin, we v oluntarily withdrew the product in regions where it was approv ed and discontinued all clinical studies worldwide, and f or the others, an increased
competitiv e env ironment. The impairment charges in 2010 are generally associated with the f ollowing: Specialty Care ( $708 million ); Oncology ( $396 million );
Consumer Healthcare ( $292 million ); Established Products ( $182 million ); Primary Care ( $145 million ); and Worldwide Research and Dev elopment ( $54 million ).
(e)
Costs incurred in connection with the initial public of f ering of a 19.8% ownership stake in Zoetis. Includes expenditures f or banking, legal, accounting and similar

serv ices. (See Note 19A. Subsequent Events: Zoetis Debt Offering and Initial Public Offering.)
The asset impairment charges included in Other deductionsnet in 2012 primarily relate to identif iable intangible assets and are based on
estimates of f air value.
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The f ollowing table provides additional inf ormation about the intangible assets that were impaired in 2012:

Year Ended
December 31,
Fair Value
(a)
2012
(MILLIONS OF DOLLARS)
Amount Level 1 Level 2 Level 3 Impairment
Intangible assetsIPR&D
(b)
$ 54 $ $ $ 54 $ 393
Intangible assetsOther
(b)
1,006 1,006 479
Total $ 1,060 $ $ $ 1,060 $ 872
(a)

The f air v alue amount is presented as of the date of impairment, as these assets are not measured at f air v alue on a recurring basis. See also Note 1E. Basis of
Presentation and Significant Accounting Policies: Fair Value .
(b)

Ref lects intangible assets written down to their estimated f air v alue of $1.1 billion in 2012 . The impairment charges of $872 million are included in Other deductions
net. Fair v alue is determined using the income approach, specif ically the multi-period excess earnings method, also known as the discounted cash f low method.
We start with a f orecast of all the expected net cash f lows associated with the asset, which includes the application of a terminal v alue f or indef inite-liv ed assets,
and then we apply an asset-specif ic discount rate to arriv e at a net present v alue amount. Some of the more signif icant estimates and assumptions inherent in this
approach include: the amount and timing of the projected net cash f lows, which includes the expected impact of competitiv e, legal and/or regulatory f orces on the
projections and the impact of technological risk associated with IPR&D assets, as well as the selection of a long-term growth rate; the discount rate, which seeks to
ref lect the v arious risks inherent in the projected cash f lows; and the tax rate, which seeks to incorporate the geographic div ersity of the projected cash f lows.
Note 5. Tax Matters
A. Taxes on Income from Continuing Operations
The f ollowing table provides the components of Income from continuing operations before provision for taxes on income :
Year Ended December 31,
(MILLIONS OF DOLLARS)
2012 2011 2010
United States $ (4,732) $ (2,210) $ (2,256)
International 16,812 14,514 11,727
Income from continuing operations before provision for taxes on income
( a), (b)
$ 12,080 $ 12,304 $ 9,471
(a)

2012 v . 2011 The increase in the domestic loss was primarily due to the reduction in rev enues resulting f rom the loss of exclusiv ity of Lipitor, Geodon and certain
other biopharmaceutical products; certain legal settlements and related charges, primarily associated with Rapamune, Celebrex, hormone-replacement therapy and
Chantix; higher costs associated with the separation of Zoetis; and the pay ment to AstraZeneca to obtain the exclusiv e global ov er-the-counter rights to Nexium,
partially of f set by lower acquisition-related costs. The increase in international income was due to lower purchase accounting costs, lower acquisition-related costs,
and lower charges related to cost-reduction and productiv ity initiativ es, partially of f set by the reduction in rev enues resulting f rom the loss of exclusiv ity of Lipitor,
Geodon and certain other biopharmaceutical products.
(b)

2011 v . 2010 The decrease in the domestic loss was primarily due to the non-recurrence of a charge of $1.3 billion (pre-tax) in 2010 f or asbestos litigation related
to our wholly owned subsidiary , Quigley Company , Inc., partially of f set by a reduction in rev enues due to the loss of exclusiv ity f or sev eral biopharmaceutical
products and the impact of the U.S. Healthcare Legislation. The increase in international income was due to the f av orable impact of f oreign exchange, lower
impairment charges, as well as increased rev enues f rom biopharmaceutical products, such as the Prev nar/Prev enar f amily , Enbrel and Celebrex.
The f ollowing table provides the components of Provision for taxes on income based on the location of the taxing authorities:
Year Ended December 31,
(MILLIONS OF DOLLARS)
2012 2011 2010
United States
Current income taxes:
Federal $ (752) $ 1,349 $ (2,790)
State and local (44) 207 (323)
Def erred income taxes:

Federal 851 364 2,103
State and local (328) (240) 8
Total U.S. tax provision/(benef it) (273) 1,680 (1,002)
International
Current income taxes 2,619 2,046 2,157
Def erred income taxes 216 183 (2)
Total international tax provision 2,835 2,229 2,155
Provision for taxes on income
(a), (b), (c), (d)
$ 2,562 $ 3,909 $ 1,153
(a)
In 2012 , the Provision for taxes on income was impacted by the f ollowing:
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Pf izer Inc. and Subsidiary Companies


U.S. tax expense of approximately $2.2 billion as a result of prov iding U.S. def erred income taxes on certain current-y ear f unds earned outside the U.S. that
will not be indef initely reinv ested ov erseas (see Note 5C. Tax Matters: Deferred Taxes );
U.S. tax benef its of approximately $1.1 billion , representing tax and interest, resulting f rom a multi-y ear settlement with the IRS with respect to audits of the
Pf izer Inc. tax returns f or the y ears 2006 through 2008, and international tax benef its of approximately $310 million , representing tax and interest, resulting
f rom the resolution of certain tax positions pertaining to prior y ears with v arious f oreign tax authorities, and f rom the expiration of certain statutes of
limitations;
The non-deductibility of a $336 million f ee pay able to the f ederal gov ernment as a result of the U.S. Healthcare Legislation;
The non-deductibility of the $491 million legal charge associated with Rapamune litigation (see also Note 4. Other Deductions Net ); and
The expiration of the U.S. research and dev elopment tax credit on December 31, 2011.
(b)
In 2011 , the Provision for taxes on income was impacted by the f ollowing:
U.S. tax expense of approximately $ 2.1 billion as a result of prov iding U.S. def erred income taxes on certain current-y ear f unds earned outside the U.S. that
will not be indef initely reinv ested ov erseas (see Note 5C. Tax Matters: Deferred Taxes );
International tax benef its of approximately $267 million , representing tax and interest, resulting f rom the resolution of certain prior-period tax positions with
v arious f oreign tax authorities and f rom the expiration of certain statutes of limitations, and U.S. tax benef its of approximately $80 million , representing tax
and interest, resulting f rom the settlement of certain audits with the IRS; and
The non-deductibility of a $248 million f ee pay able to the f ederal gov ernment as a result of the U.S. Healthcare Legislation.
(c)
In 2010 , the Provision for taxes on income was impacted by the f ollowing:
U.S. tax expense of approximately $2.5 billion as a result of prov iding U.S. def erred income taxes on certain current-y ear f unds earned outside the U.S. that
will not be indef initely reinv ested ov erseas (see Note 5C. Tax Matters: Deferred Taxes );
U.S. tax benef its of approximately $2.0 billion , representing tax and interest, resulting f rom a multi-y ear audit settlement with the IRS, and international tax
benef its of approximately $460 million , representing tax and interest, resulting f rom the resolution of certain prior-period tax positions with v arious f oreign tax
authorities, and f rom the expiration of certain statutes of limitations; and
The write-of f of approximately $270 million of def erred tax assets related to the Medicare Part D subsidy f or retiree prescription drug cov erage, resulting f rom
the prov isions of the U.S. Healthcare Legislation enacted in March 2010 concerning the tax treatment of that subsidy ef f ectiv e f or tax y ears beginning af ter
December 31, 2012.
(d)
In all y ears, f ederal, state and international net tax liabilities assumed or established as part of a business acquisition are not included in Provision for taxes on
income (see Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions ).
B. Tax Rate Reconciliation
The reconciliation of the U.S. statutory income tax rate to our ef f ective tax rate f or Income from continuing operations f ollows:
Year Ended December 31,
2012 2011 2010
U.S. statutory income tax rate 35.0 % 35.0 % 35.0 %
Taxation of non-U.S. operations
(a), (b), (c)
(3.0) (3.1) 2.5
Tax settlements and resolution of certain tax positions
(d)
(12.0) (2.8) (26.3)
U.S. Healthcare Legislation
(d)
1.0 0.7 2.8
U.S. research and development tax credit and manuf acturing deduction
(d)
(0.3) (0.9) (2.3)
Certain legal settlements and charges
(d)
1.4 0.4
Acquired IPR&D 0.5
Wyeth acquisition-related costs 0.5
Sales of biopharmaceutical companies 0.2
All othernet (0.9) 2.7 (0.9)
Ef f ective tax rate f or income f rom continuing operations 21.2 % 31.8 % 12.2 %
(a)

For taxation of non-U.S. operations, this rate impact ref lects the income tax rates and relativ e earnings in the locations where we do business outside the United
States, together with the cost of repatriation decisions, as well as changes in uncertain tax positions not included in the reconciling item called Tax settlements and
resolution of certain tax positions. Specif ically : (i) the jurisdictional location of earnings is a signif icant component of our ef f ectiv e tax rate each y ear as tax rates
outside the U.S. are generally lower than the U.S. statutory income tax rate, and the rate impact of this component is inf luenced by the specif ic location of non-U.S.
earnings and the lev el of such earnings as compared to our total earnings; (ii) the cost of repatriation decisions, and other U.S. tax implications of our f oreign
operations, is a signif icant component of our ef f ectiv e tax rate each y ear and generally of f sets some of the reduction to our ef f ectiv e tax rate each y ear resulting
f rom the jurisdictional location of earnings; and (iii) the impact of changes in uncertain tax positions not included in the reconciling item called Tax settlements and
resolution of certain tax positions is a component of our ef f ectiv e tax rate each y ear that can result in either an increase or decrease to our ef f ectiv e tax rate. The
jurisdictional mix of earnings, which includes the impact of the location of earnings as well as repatriation costs, can v ary as a result of the repatriation decisions, as
a result of operating f luctuations in the normal course of business and as a result of the extent and location of other income and expense items, such as restructuring
charges, asset impairments and gains and losses on strategic business decisions. See also Note 5A. Tax Matters: Taxes on Income fromContinuing Operations f or the
components of pre-tax income and Provision for taxes on income, which is based on the location of the taxing authorities, and f or inf ormation about settlements and
other items impacting Provision for taxes on income .
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(b)
In all periods presented, the reduction in the ef f ectiv e tax rate resulting f rom the jurisdictional location of earnings is largely due to generally lower tax rates as well
as manuf acturing and other incentiv es associated with our subsidiaries in Puerto Rico, Ireland and Singapore. We benef it f rom a Puerto Rican incentiv e grant that
expires in 2029. Under the grant, we are partially exempt f rom income, property and municipal taxes. In Ireland, we benef ited f rom an incentiv e tax rate ef f ectiv e
through 2010 on income f rom manuf acturing operations. In Singapore, we benef it f rom incentiv e tax rates ef f ectiv e through 2031 on income f rom manuf acturing and
other operations.
(c)

2010 The rate impact in 2010 also includes the adjustments to increase our uncertain tax positions based on tax positions taken during a prior period (see also the
reconciliation of our gross unrecognized tax benef its f or 2010 in Note 5D. Tax Matters: Tax Contingencies , where substantially all of the prior period increases relate
to non-U.S. jurisdictions). Without this impact, the rate impact in 2010 would hav e been approximately a 2.1% reduction of the U.S. statutory income tax rate.
(d)

For a discussion about tax settlements and resolution of certain tax positions, the impact of U.S. Healthcare Legislation, the U.S. research and dev elopment tax
credit and the impact of certain legal settlements and charges, see Note 5A. Tax Matters: Taxes on Income fromContinuing Operations . We receiv ed no benef it f rom
the U.S. research and dev elopment tax credit in 2012 as the credit expired on December 31, 2011 and was not extended until January 2013.
C. Deferred Taxes
Def erred taxes arise as a result of basis dif f erentials between f inancial statement accounting and tax amounts.
The components of our def erred tax assets and liabilities, shown bef ore jurisdictional netting, f ollow:
2012 Deferred Tax 2011 Def erred Tax
(MILLIONS OF DOLLARS)
Assets (Liabilities) Assets (Liabilities)
Prepaid/def erred items $ 1,817 $ (119) $ 1,659 $ (211)
Inventories 330 (198) 324 (52)
Intangible assets 1,649 (14,187) 1,713 (15,301)
Property, plant and equipment 508 (1,485) 226 (1,311)
Employee benef its 5,042 (391) 4,280 (524)
Restructurings and other charges 784 (334) 553 (95)
Legal and product liability reserves 1,888 1,812
Net operating loss/credit carryf orwards 3,439 4,381
Unremitted earnings
(c)
(16,042) (11,699)
State and local tax adjustments 385 476
All other 1,259 (504) 1,105 (121)
17,101 (33,260) 16,529 (29,314)
Valuation allowances (1,102) (1,201)
Total def erred taxes $ 15,999 $ (33,260) $ 15,328 $ (29,314)
Net def erred tax liability
(a), (b)
$ (17,261) $ (13,986)
(a)

2012 v . 2011 The net def erred tax liability position increased, ref lecting an increase in noncurrent def erred tax liabilities related to unremitted earnings, as well as a
decrease in def erred tax assets related to net operating loss and credit carry f orwards, partially of f set by the reduction in noncurrent def erred tax liabilities resulting
f rom the amortization of identif iable intangible assets and the increase in def erred tax assets related to employ ee benef its.
(b)

In 2012 , included in Taxes and other current assets ( $3.6 billion ), Taxes and other noncurrent assets ( $700 million ), Other current liabilities ( $11 million ) and
Noncurrent deferred tax liabilities ( $21.6 billion ). In 2011 , included in Taxes and other current assets ( $4.0 billion ), Taxes and other noncurrent assets ( $1.2 billion ),
Other current liabilities ( $350 million ) and Noncurrent deferred tax liabilities ( $18.9 billion ).
(c)

See Note 5A. Tax Matters: Taxes on Income fromContinuing Operations and Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method
Investments: Divestitures.
We have carryf orwards, primarily related to f oreign tax credits, net operating and capital losses and charitable contributions, which are available
to reduce f uture U.S. f ederal and state, as well as international, income taxes payable with either an indef inite lif e or expiring at various times f rom
2013 to 2032. Certain of our U.S. net operating losses are subject to limitations under Internal Revenue Code Section 382.
Valuation allowances are provided when we believe that our def erred tax assets are not recoverable based on an assessment of estimated
f uture taxable income that incorporates ongoing, prudent and f easible tax planning strategies.
As of December 31, 2012 , we have not made a U.S. tax provision on approximately $73.0 billion of unremitted earnings of our international
subsidiaries. As these earnings are intended to be indef initely reinvested overseas, the determination of a hypothetical unrecognized def erred tax
liability as of December 31, 2012 , is not practicable.
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D. Tax Contingencies
We are subject to income tax in many jurisdictions, and a certain degree of estimation is required in recording the assets and liabilities related to
income taxes. All of our tax positions are subject to audit by the local taxing authorities in each tax jurisdiction. These tax audits can involve
complex issues, interpretations and judgments and the resolution of matters may span multiple years, particularly if subject to negotiation or
litigation. Our assessments are based on estimates and assumptions that have been deemed reasonable by management, but our estimates of
unrecognized tax benef its and potential tax benef its may not be representative of actual outcomes, and variation f rom such estimates could
materially af f ect our f inancial statements in the period of settlement or when the statutes of limitations expire. We treat these events as discrete
items in the period of resolution.
For a description of our accounting policies associated with accounting f or income tax contingencies, see Note 1O. Basis of Presentation and
Significant Accounting Policies: Deferred Tax Assets and Liabilities and Income Tax Contingencies. For a description of the risks associated
with estimates and assumptions, see Note 1C. Basis of Presentation and Significant Accounting Policies: Estimates and Assumptions.
Uncertain Tax Positions
As tax law is complex and of ten subject to varied interpretations, it is uncertain whether some of our tax positions will be sustained upon audit.
As of December 31, 2012 and 2011, we had approximately $5.0 billion and $6.1 billion , respectively, in net liabilities associated with uncertain tax
positions, excluding associated interest:
Tax assets associated with uncertain tax positions primarily represent our estimate of the potential tax benef its in one tax jurisdiction that could
result f rom the payment of income taxes in another tax jurisdiction. These potential benef its generally result f rom cooperative ef f orts among
taxing authorities, as required by tax treaties to minimize double taxation, commonly ref erred to as the competent authority process. The
recoverability of these assets, which we believe to be more likely than not, is dependent upon the actual payment of taxes in one tax
jurisdiction and, in some cases, the successf ul petition f or recovery in another tax jurisdiction. As of December 31, 2012 and 2011, we had
approximately $1.3 billion and $1.2 billion , respectively, in assets associated with uncertain tax positions. In 2012, these amounts were
included in Taxes and other noncurrent assets ( $887 million ) and Noncurrent deferred tax liabilities ( $446 million ). In 2011, these amounts
were included in Taxes and other noncurrent assets .
Tax liabilities associated with uncertain tax positions represent unrecognized tax benef its, which arise when the estimated benef it recorded in
our f inancial statements dif f ers f rom the amounts taken or expected to be taken in a tax return because of the uncertainties described above.
These unrecognized tax benef its relate primarily to issues common among multinational corporations. Substantially all of these unrecognized tax
benef its, if recognized, would impact our ef f ective income tax rate.
The reconciliation of the beginning and ending amounts of gross unrecognized tax benef its f ollows:
(MILLIONS OF DOLLARS)
2012 2011 2010
Balance, beginning $ (7,309) $ (6,759) $ (7,657)
Acquisitions
(a)
(72) (49)
Divestitures
(b)
85
Increases based on tax positions taken during a prior period
(c)
(139) (502) (513)
Decreases based on tax positions taken during a prior period
(c), (d)
1,442 271 2,384
Decreases based on cash payments f or a prior period 647 575 280
Increases based on tax positions taken during the current period
(c)
(1,125) (855) (1,396)
Impact of f oreign exchange 78 (89) 104
Other, net
(c), (e)
6 122 88
Balance, ending
(f)
$ (6,315) $ (7,309) $ (6,759)
(a)

The amount in 2011 primarily relates to the acquisition of King. See also Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method
Investments: Acquisitions.
(b)

Primarily relates to the sale of our Nutrition business. See also Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:
Divestitures.
(c)
Primarily included in Provision for taxes on income.
(d)

Primarily related to ef f ectiv ely settling certain issues with the U.S. and f oreign tax authorities. See also Note 5A. Tax Matters: Taxes on Income fromContinuing
Operations.
(e)
Includes decreases as a result of a lapse of applicable statutes of limitations.
(f)

In 2012, included in Income taxes payable ( $36 million ), Taxes and other current assets ( $30 million ), Taxes and other noncurrent assets ( $169 million ),
Noncurrent deferred tax liabilities ( $231 million ) and Other taxes payable ( $5.8 billion ). In 2011, included in Income taxes payable ( $357 million ), Taxes and
other current assets ( $11 million ), Taxes and other noncurrent assets ( $225 million ), Noncurrent deferred tax liabilities ( $677 million ) and Other taxes payable (
$6.0 billion ).
Interest related to our unrecognized tax benef its is recorded in accordance with the laws of each jurisdiction and is recorded in Provision for
taxes on income in our consolidated statements of income. In 2012 , we recorded net interest income of $120 million primarily as a result of
settling certain issues with the U.S. and various f oreign tax authorities; in 2011 , we recorded net interest expense of $203 million ; and in 2010
, we recorded net interest income of $545 million , primarily as a result of settling certain issues with the U.S. and various f oreign tax
authorities. Gross accrued interest totaled $766 million as of December 31, 2012 (ref lecting a decrease of approximately $63 million as a result
of cash payments) and $951 million as of December 31, 2011 (ref lecting a decrease of approximately $203 million as a result of cash
payments). In 2012 , these amounts were included in Taxes and other current assets ( $14 million ) and Other taxes payable ( $752 million ). In
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Pf izer Inc. and Subsidiary Companies


2011 , these amounts were included in Income taxes payable ( $120 million ), Taxes and other current assets ( $2 million ) and Other taxes
payable ( $829 million ). Accrued penalties are not signif icant. See also Note 5A. Tax Matters: Taxes on Income from Continuing Operations.
Status of Tax Audits and Potential Impact on Accruals f or Uncertain Tax Positions
The United States is one of our major tax jurisdictions and we are regularly audited by the IRS:
With respect to Pf izer Inc., tax years 2009-2010 are currently under audit. Tax years 2011-2012 are not under audit. All other tax years are
closed.
With respect to Wyeth, tax years 2006 through the Wyeth acquisition date (October 15, 2009) are currently under audit. All other tax years
are closed.
With respect to King, the audit f or tax year 2008 has been ef f ectively settled, and f or Alpharma Inc. (a subsidiary of King), tax years 2005-
2007 have been ef f ectively settled. For King, tax years 2009 through the date of acquisition (January 31, 2011) are open, but not under
audit. All other tax years are closed. The open tax years and audits f or King and its subsidiaries are not material to Pf izer Inc.
In addition to the open audit years in the U.S., we have open audit years in other major tax jurisdictions, such as Canada (2001-2012), Japan
(2007-2012), Europe (2007-2012, primarily ref lecting Ireland, the United Kingdom, France, Italy, Spain and Germany), Latin America (1998-2012,
primarily ref lecting Brazil and Mexico) and Puerto Rico (2007-2012).
Any settlements or statutes of limitations expirations could result in a signif icant decrease in our uncertain tax positions. We estimate that it is
reasonably possible that within the next twelve months, our gross unrecognized tax benef its, exclusive of interest, could decrease by as much
as $150 million , as a result of settlements with taxing authorities or the expiration of the statutes of limitations. Our assessments are based on
estimates and assumptions that have been deemed reasonable by management, but our estimates of unrecognized tax benef its and potential tax
benef its may not be representative of actual outcomes, and variation f rom such estimates could materially af f ect our f inancial statements in the
period of settlement or when the statutes of limitations expire, as we treat these events as discrete items in the period of resolution. Finalizing
audits with the relevant taxing authorities can include f ormal administrative and legal proceedings, and, as a result, it is dif f icult to estimate the
timing and range of possible changes related to our uncertain tax positions, and such changes could be signif icant.
E. Taxes on Items of Other Comprehensive Income/(Loss)
The f ollowing table provides the components of tax benef it on Other comprehensive loss :
Year Ended December 31,
(MILLIONS OF DOLLARS)
2012 2011 2010
Foreign currency translation adjustments
(a)
$ 110 $ (61) $ (165)
Unrealized holding gains/(losses) on derivative f inancial instruments 246 (207) (342)
Reclassif ication adjustments f or realized (gains)/losses (98) 97 215
148 (110) (127)
Unrealized holding gains/(losses) on available-f or-sale securities 20 (17) (4)
Reclassif ication adjustments f or realized (gains)/losses 1 (18)
21 (17) (22)
Benef it plans: Actuarial losses, net (721) (993) (504)
Reclassif ication adjustments related to amortization 171 99 94
Reclassif ication adjustments related to curtailments and settlements, net 105 118 98
Other 15 29 82
(430) (747) (230)
Benef it plans: Prior service credits and other 7 41 210
Reclassif ication adjustments related to amortization (27) (27) (18)
Reclassif ication adjustments related to curtailments and settlements, net
(51) (35) (19)
Other (3) (3) (4)
(74) (24) 169
Tax benefit on other comprehensive loss $ (225) $ (959) $ (375)
(a)
Taxes are not prov ided f or f oreign currency translation adjustments relating to inv estments in international subsidiaries that will be held indef initely .
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Note 6. Accumulated Other Comprehensive Loss, Excluding Noncontrolling Interests
The f ollowing table provides the changes, net of tax, in Accumulated other comprehensive income/(loss) :
Net Unrealized Gain/(Losses) Benef it Plans
(MILLIONS OF DOLLARS)

Currency
Translation
Adjustment
And Other
Derivative
Financial
Instruments
Available-
For-Sale
Securities
Actuarial
Gains/(Losses)
Prior Service
(Costs)/
Credits And
Other
Accumulated
Other
Comprehensive
Income/(Loss)
Balance, January 1, 2010 $ 3,550 $ 6 $ 269 $ (3,367) $ 94 $ 552
Other comprehensive income/(loss)
(a)
(3,381) (214) (112) (580) 295 (3,992)
Balance, December 31, 2010 169 (208) 157 (3,947) 389 (3,440)
Other comprehensive income/(loss)
(a)
775 (153) (111) (1,173) (27) (689)
Balance, December 31, 2011 944 (361) 46 (5,120) 362 (4,129)
Other comprehensive
income/(loss)
(a)
(1,121) 273 117 (990) (103) (1,824)
Balance, December 31, 2012 $ (177) $ (88) $ 163 $ (6,110) $ 259 $ (5,953)
(a)
Amounts do not include f oreign currency translation adjustments attributable to noncontrolling interests of $7 million loss in 2012 , $45 million loss in 2011 and
$5 million income in 2010 .
As of December 31, 2012, we estimate that we will reclassif y into 2013 income the f ollowing pre-tax amounts currently held in Accumulated
other comprehensive loss : $4.7 million of the unrealized holding gains on derivative f inancial instruments; $609 million of actuarial losses related
to benef it plan obligations and plan assets and other benef it plan items; and $62 million of prior service credits, primarily related to benef it plan
amendments.
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Note 7. Financial Instruments
A. Selected Financial Assets and Liabilities
The f ollowing table provides additional inf ormation about certain of our f inancial assets and liabilities:
As of December 31,
(MILLIONS OF DOLLARS)
2012 2011
Selected f inancial assets measured at f air value on a recurring basis
(a)

Trading securities
(b)
$ 142 $ 154
Available-f or-sale debt securities
(c)
32,584 29,179
Available-f or-sale money market f unds
(d)
1,727 1,727
Available-f or-sale equity securities, excluding money market f unds
(c)
263 317
Derivative f inancial instruments in receivable positions:
(e)

Interest rate swaps 1,036 1,033
Foreign currency f orward-exchange contracts 152 349
Foreign currency swaps 194 17
36,098 32,776
Other selected f inancial assets
Held-to-maturity debt securities, carried at amortized cost
(c), (f)
1,513 1,587
Private equity securities, carried at equity method or at cost
(f), (g)
1,239 1,020
2,752 2,607
Total selected f inancial assets $ 38,850 $ 35,383

Financial liabilities measured at f air value on a recurring basis
(a)

Derivative f inancial instruments in a liability position:
(h)

Foreign currency swaps $ 428 $ 1,396
Foreign currency f orward-exchange contracts 243 355
Interest rate swaps 33 14
704 1,765
Other f inancial liabilities
(i)

Short-term borrowings, carried at historical proceeds, as adjusted
(f)
6,424 4,016
Long-term debt, carried at historical proceeds, as adjusted
(j), (k)
31,036 34,926
37,460 38,942
Total selected f inancial liabilities $ 38,164 $ 40,707
(a)

We use a market approach in v aluing f inancial instruments on a recurring basis. See also Note 1E. Basis of Presentation and Significant Accounting Policies: Fair
Value . All of our f inancial assets and liabilities measured at f air v alue on a recurring basis use Lev el 2 inputs in the calculation of f air v alue, except less than 1% that
use Lev el 1 or Lev el 3 inputs.
(b)
Trading securities are held in trust f or legacy business acquisition sev erance benef its.
(c)
Gross unrealized gains and losses are not signif icant.
(d)

Includes $408 million as of December 31, 2012 and $357 million as of December 31, 2011 of money market f unds held in trust in connection with the asbestos
litigation inv olv ing Quigley Company , Inc., a wholly owned subsidiary . As of December 31, 2011 , this amount includes approximately $625 million of money market
f unds that were held in escrow to secure certain of Wy eths pay ment obligations under its 1999 Nationwide Class Action Settlement Agreement, which relates to
litigation against Wy eth concerning its f ormer weight-loss products, Redux and Pondimin. The amounts held in escrow at December 31, 2011 were released f rom
restriction during 2012 and classif ied as part of Short-terminvestments.
(e)

Designated as hedging instruments, except f or certain contracts used as of f sets; namely , f oreign currency f orward-exchange contracts with f air v alues of $102
million as of December 31, 2012 ; and f oreign currency f orward-exchange contracts with f air v alues of $169 million and interest rate swaps with f air v alues of $8
million as of December 31, 2011 .
(f)
The dif f erences between the estimated f air v alues and carry ing v alues of held to maturity debt securities, priv ate equity securities at cost and short-term borrowings
not measured at f air v alue on a recurring basis were not signif icant as of December 31, 2012 or December 31, 2011 . The f air v alue measurements of our held-to-
maturity debt securities and our short-term borrowings are based on Lev el 2 inputs, using a market approach. The f air v alue measurements of our priv ate equity
securities at cost are based on Lev el 3 inputs, using a market approach.
(g)
Our priv ate equity securities represent inv estments in the lif e sciences sector.
(h)

Designated as hedging instruments, except f or certain contracts used as of f sets; namely , f oreign currency f orward-exchange contracts with f air v alues of $141
million and f oreign currency swaps with f air v alues of $129 million as of December 31, 2012 ; and f oreign currency f orward-exchange contracts with f air v alues of
$141 million and f oreign currency swaps with f air v alues of $123 million as of December 31, 2011 .
(i)
Some carry ing amounts may include adjustments f or discount or premium amortization or f or the ef f ect of interest rate swaps designated as hedges.
(j)
Includes f oreign currency debt with f air v alues of $809 million as of December 31, 2012 and $919 million as of December 31, 2011 , which are used as hedging
instruments.
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(k)
The f air v alue of our long-term debt (not including the current portion of long-term debt) is $37.5 billion as of December 31, 2012 and $40.1 billion as of
December 31, 2011 . The f air v alue measurements f or our long-term debt are based on Lev el 2 inputs, using a market approach.
A single estimate of f air value can result f rom a complex series of judgments about f uture events and uncertainties and can rely heavily on
estimates and assumptions. For a description of our general accounting policies associated with developing f air value estimates, see Note 1E.
Basis of Presentation and Significant Accounting Policies: Fair Value . For a description of the risks associated with estimates and assumptions,
see Note 1C. Basis of Presentation and Significant Accounting Policies: Estimates and Assumptions .
The f ollowing methods and assumptions were used to estimate the f air value of our f inancial assets and liabilities:
Trading equity securitiesquoted market prices.
Trading debt securitiesobservable market interest rates.
Available-f or-sale debt securitiesthird-party matrix-pricing model that uses signif icant inputs derived f rom or corroborated by observable
market data and credit-adjusted interest rate yield curves.
Available-f or-sale money market f undsobservable Net Asset Value prices.
Available-f or-sale equity securities, excluding money market f undsthird-party pricing services that principally use a composite of
observable prices.
Derivative f inancial instruments (assets and liabilities)third-party matrix-pricing model that uses signif icant inputs derived f rom or
corroborated by observable market data. Where applicable, these models discount f uture cash f low amounts using market-based observable
inputs, including interest rate yield curves, and f orward and spot prices f or currencies. The credit risk impact to our derivative f inancial
instruments was not signif icant.
Held-to-maturity debt securitiesthird-party matrix-pricing model that uses signif icant inputs derived f rom or corroborated by observable
market data and credit-adjusted interest rate yield curves.
Private equity securities, excluding equity-method investmentsapplication of the implied volatility associated with an observable biotech
index to the carrying amount of our portf olio.
Short-term borrowings and long-term debtthird-party matrix-pricing model that uses signif icant inputs derived f rom or corroborated by
observable market data and our own credit rating.
We periodically review the methodologies, inputs and outputs of third-party pricing services f or reasonableness. Our procedures can include, f or
example, ref erencing other third-party pricing models, monitoring key observable inputs (like LIBOR interest rates) and selectively perf orming test-
comparisons of values with actual sales of f inancial instruments.
The f ollowing table provides the classif ication of these selected f inancial assets and liabilities in our consolidated balance sheets:
As of December 31,
(MILLIONS OF DOLLARS)
2012 2011
Assets
Cash and cash equivalents $ 1,000 $ 900
Short-term investments 22,319 23,270
Long-term investments 14,149 9,814
Taxes and other current assets
(a)
296 357
Taxes and other noncurrent assets
(b)
1,086 1,042
$ 38,850 $ 35,383
Liabilities
Short-term borrowings, including current portion of long-term debt $ 6,424 $ 4,016
Other current liabilities
(c)
330 459
Long-term debt 31,036 34,926
Other noncurrent liabilities
(d)
374 1,306


$ 38,164

$ 40,707
(a)

As of December 31, 2012 , deriv ativ e instruments at f air v alue include f oreign currency f orward-exchange contracts ( $152 million ) and f oreign currency swaps (
$144 million ) and, as of December 31, 2011 , include f oreign currency f orward-exchange contracts ( $349 million ) and interest rate swaps ( $8 million ).
(b)

As of December 31, 2012 , deriv ativ e instruments at f air v alue include interest rate swaps ( $1 billion ) and f oreign currency swaps ( $50 million ) and, as of
December 31, 2011 , include interest rate swaps ( $1 billion ) and f oreign currency swaps ( $17 million ).
(c)

At December 31, 2012 , deriv ativ e instruments at f air v alue include f oreign currency f orward-exchange contracts ( $243 million ) and f oreign currency swaps ( $87
million ) and, as of December 31, 2011 , include f oreign currency f orward-exchange contracts ( $355 million ) and f oreign currency swaps ( $104 million ).
(d)

At December 31, 2012 , deriv ativ e instruments at f air v alue include f oreign currency swaps ( $341 million ) and interest rate swaps ( $33 million ) and, as of
December 31, 2011 , include f oreign currency swaps ( $1.3 billion ) and interest rate swaps ( $14 million ).
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In addition, we have long-term receivables where the determination of f air value employs discounted f uture cash f lows, using current interest
rates at which similar loans would be made to borrowers with similar credit ratings and f or the same remaining maturities. The dif f erences
between the estimated f air values and carrying values of these receivables were not signif icant as of December 31, 2012 or December 31, 2011
.
There were no signif icant impairments of f inancial assets recognized in any period presented.
B. Investments in Debt Securities
The f ollowing table provides the contractual maturities of the available-f or-sale and held-to-maturity debt securities:
Years
Over 1 Over 5
December 31,
2012
(MILLIONS OF DOLLARS)
Within 1 to 5 to 10 Total
Available-f or-sale debt securities
Western European and other government debt
(a)
$ 13,671 $ 2,084 $ $ 15,755
Corporate debt
(b)
1,085 4,468 1,741 7,294
Reverse repurchase agreements
(c)
2,790 2,790
Western European, Scandinavian and other government agency debt
(a)
2,348 415 2,763
Federal Home Loan Mortgage Corporation and Federal National Mortgage
Association asset-backed securities 2,492 43 2,535
U.S. government debt 688 197 885
Supranational debt
(a)
168 394 562
Held-to-maturity debt securities
Certif icates of deposit and other 1,240 273 1,513
Total debt securities $ 21,990 $ 10,323 $ 1,784 $ 34,097
(a)
All issued by abov e-inv estment-grade gov ernments, gov ernment agencies or supranational entities, as applicable.
(b)
Largely issued by abov e-inv estment-grade institutions in the f inancial serv ices sector.
(c)
Inv olv ing U.S. gov ernment securities.
C. Short-Term Borrowings
Short-term borrowings include amounts f or commercial paper of $2.7 billion as of December 31, 2012 and 2011 . The weighted-average ef f ective
interest rate on short-term borrowings outstanding was 1.6% as of December 31, 2012 and 0.2% as of December 31, 2011 .
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D. Long-Term Debt
The f ollowing table provides the components of our senior unsecured long-term debt:
As of December 31,
(MILLIONS OF DOLLARS)
Maturity Date 2012 2011
6.20%
(a)
March 2019 $ 3,327 $ 3,248
5.35%
(a)
March 2015 3,065 3,069
7.20%
(a)
March 2039 2,903 2,948
4.75% euro
(b)
June 2016 2,638 2,583
5.75% euro
(b)
June 2021 2,634 2,581
3.625% euro
(b), (c)
June 2013 2,392
6.50% U.K . pound
(b)
June 2038 2,407 2,306
5.95% April 2037 2,086 2,088
5.50% February 2014 1,832 1,893
5.50%
(d)
March 2013 1,564
4.55% euro May 2017 1,384 1,325
4.75% euro December 2014 1,284 1,266
5.50% February 2016 1,048 1,061
Notes and other debt with a weighted-average interest rate of 6.51%
(e)
20212036 3,403 3,435
Notes and other debt with a weighted-average interest rate of 5.28%
(f)
20142018 2,254 2,302
Foreign currency notes and other f oreign currency debt with a weighted-
average interest rate of 2.48%
(g)
2014-2016 771 865
Long-term debt $ 31,036 $ 34,926
Current portion of long-term debt (not included above) $ 2,449 $ 6
(a)

Instrument is callable by us at any time at the greater of 100% of the principal amount or the sum of the present v alues of the remaining scheduled pay ments of
principal and interest discounted at the U.S. Treasury rate plus 0.50% plus, in each case, accrued and unpaid interest.
(b)

Instrument is callable by us at any time at the greater of 100% of the principal amount or the sum of the present v alues of the remaining scheduled pay ments of
principal and interest discounted at a comparable gov ernment bond rate plus 0.20% plus, in each case, accrued and unpaid interest.
(c)
At December 31, 2012, the note has been reclassif ied to Current portion of long-termdebt .
(d)
At December 31, 2012, the note had been called and is no longer outstanding.
(e)
Contains debt issuances with a weighted-av erage maturity of approximately 17 y ears .
(f)
Contains debt issuances with a weighted-av erage maturity of approximately 4 y ears .
(g)
Contains debt issuances with a weighted-av erage maturity of approximately 3 y ears .
The f ollowing table provides the maturity schedule of our Long-term debt outstanding as of December 31, 2012:
(MILLIONS OF DOLLARS)
2014 2015 2016 2017 Af ter 2017 Total
Maturities $ 3,922 $ 3,065 $ 4,449 $ 1,907 $ 17,693 $ 31,036
E. Derivative Financial Instruments and Hedging Activities
Foreign Exchange Risk
A signif icant portion of our revenues, earnings and net investments in f oreign af f iliates is exposed to changes in f oreign exchange rates. We
seek to manage our f oreign exchange risk, in part, through operational means, including managing same-currency revenues in relation to same-
currency costs and same-currency assets in relation to same-currency liabilities. Depending on market conditions, f oreign exchange risk also is
managed through the use of derivative f inancial instruments and f oreign currency debt. These f inancial instruments serve to protect net income
and net investments against the impact of the translation into U.S. dollars of certain f oreign exchange-denominated transactions. As of
December 31, 2012 , the aggregate notional amount of f oreign exchange derivative f inancial instruments hedging or of f setting f oreign currency
exposures is $45.6 billion . The derivative f inancial instruments primarily hedge or of f set exposures in the euro, Japanese yen and U.K. pound.
The maximum length of time over which we are hedging f uture f oreign exchange cash f low relates to our $2.4 billion U.K. pound debt maturing in
2038.
All derivative contracts used to manage f oreign currency risk are measured at f air value and are reported as assets or liabilities on the
consolidated balance sheet. Changes in f air value are reported in earnings or in Other comprehensive income/(loss) , depending on the nature
and purpose of the f inancial instrument (of f set or hedge relationship) and the ef f ectiveness of the hedge relationships, as f ollows:
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We record in Other comprehensive income/(loss) the ef f ective portion of the gains or losses on f oreign currency f orward-exchange
contracts and f oreign currency swaps that are designated as cash f low hedges and reclassif y those amounts, as appropriate, into earnings
in the same period or periods during which the hedged transaction af f ects earnings.
We recognize the gains and losses on f orward-exchange contracts and f oreign currency swaps that are used to of f set the same f oreign
currency assets or liabilities immediately into earnings along with the earnings impact of the items they generally of f set. These contracts
essentially take the opposite currency position of that ref lected in the month-end balance sheet to counterbalance the ef f ect of any currency
movement.
We recognize the gain and loss impact on f oreign currency swaps designated as hedges of our net investments in earnings in three ways:
over timef or the periodic net swap payments; immediatelyto the extent of any change in the dif f erence between the f oreign exchange
spot rate and f orward rate; and upon sale or substantial liquidation of our net investmentsto the extent of change in the f oreign exchange
spot rates.
We record in Other comprehensive income/(loss) the f oreign exchange gains and losses related to f oreign exchange-denominated debt
designated as a hedge of our net investments in f oreign subsidiaries and reclassif y those amounts into earnings upon the sale or substantial
liquidation of our net investments.
Any inef f ectiveness is recognized immediately into earnings. There was no signif icant inef f ectiveness f or any period presented.
Interest Rate Risk

Our interest-bearing investments, loans and borrowings are subject to interest rate risk. We seek to invest and loan primarily on a short-term or
variable-rate basis; however, in light of current market conditions, we currently borrow primarily on a long-term, f ixed-rate basis. From time to
time, depending on market conditions, we will change the prof ile of our outstanding debt by entering into derivative f inancial instruments like
interest rate swaps.
We entered into derivative f inancial instruments to hedge or of f set the f ixed interest rates on the hedged item, matching the amount and timing of
the hedged item. As of December 31, 2012 , the aggregate notional amount of interest rate derivative f inancial instruments is $11.6 billion . The
derivative f inancial instruments primarily hedge U.S. dollar and euro f ixed-rate debt.
All derivative contracts used to manage interest rate risk are measured at f air value and reported as assets or liabilities on the consolidated
balance sheet. Changes in f air value are reported in earnings, as f ollows:
We recognize the gains and losses on interest rate swaps that are designated as f air value hedges in earnings upon the recognition of the
change in f air value of the hedged risk. We recognize the of f setting earnings impact of f ixed-rate debt attributable to the hedged risk also in
earnings.
Any inef f ectiveness is recognized immediately into earnings. There was no signif icant inef f ectiveness f or any period presented.
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The f ollowing table provides inf ormation about the gains/(losses) incurred to hedge or of f set operational f oreign exchange or interest rate risk:

Amount of
Gains/(Losses)
Recognized in OID
(a), (b), (c)

Amount of
Gains/(Losses)
Recognized in OCL
(Ef f ective Portion)
(a), (d)

Amount of
Gains/(Losses)
Reclassif ied f rom
OCL into OID
(Ef f ective Portion)
(a), (d)
(MILLIONS OF DOLLARS)

Dec 31,
2012
Dec 31,
2011
Dec 31,
2012
Dec 31,
2011
Dec 31,
2012
Dec 31,
2011
Derivative Financial Instruments in Cash
Flow Hedge Relationships:
Foreign currency swaps $ $ $ 676 $ (496) $ 257 $ (243)

Derivative Financial Instruments in Net
Investment Hedge Relationships:
Foreign currency swaps (4) 7 200 (1,059)

Derivative Financial Instruments Not
Designated as Hedges:
Foreign currency f orward-exchange
contracts (61) (260)
Foreign currency swaps (7) 106

Non-Derivative Financial Instruments in
Net Investment Hedge Relationships:
Foreign currency short-term
borrowings 940
Foreign currency long-term debt 88 (41)
All other net 7 15 5 (4) 6 4
$ (65) $ (132) $ 969 $ (660) $ 263 $ (239)
(a)

OID = Other (income)/deductionsnet, included in Other deductionsnet in the consolidated statements of income . OCL = Other comprehensiv e loss, included in
the consolidated statements of comprehensiv e income .
(b)
Also includes gains and losses attributable to the hedged risk in f air v alue hedge relationships.
(c)
There was no signif icant inef f ectiv eness f or any period presented.
(d)

Amounts presented represent the ef f ectiv e portion of the gain or loss. For deriv ativ e f inancial instruments in cash f low hedge relationships, the ef f ectiv e portion is
included in Other comprehensive lossUnrealized holding gains/(losses) on derivative financial instruments . For deriv ativ e f inancial instruments in net inv estment
hedge relationships and f or f oreign currency debt designated as hedging instruments, the ef f ectiv e portion is included in Other comprehensive lossforeign currency
translation adjustments.
For inf ormation about the f air value of our derivative f inancial instruments, and the impact on our consolidated balance sheets, see Note 7A.
Financial Instruments: Selected Financial Assets and Liabilities above . Certain of our derivative instruments are covered by associated credit-
support agreements that have credit-risk-related contingent f eatures designed to reduce our counterparties exposure to our risk of def aulting on
amounts owed. As of December 31, 2012 , the aggregate f air value of these derivative instruments that are in a net liability position is $451 million
, f or which we have posted collateral of $424 million in the normal course of business. These f eatures include the requirement to pay additional
collateral in the event of a downgrade in our debt ratings. If there had been a downgrade to below an A rating by S&P or the equivalent rating by
Moodys Investors Service, on December 31, 2012 , we would have been required to post an additional $58 million of collateral to our
counterparties. The collateral advanced receivables are reported in Cash and cash equivalents.
F. Credit Risk
On an ongoing basis, we review the creditworthiness of counterparties to our f oreign exchange and interest rate agreements and do not expect
to incur a signif icant loss f rom f ailure of any counterparties to perf orm under the agreements. There are no signif icant concentrations of credit
risk related to our f inancial instruments with any individual counterparty. As of December 31, 2012 , we had $2.9 billion due f rom a well-
diversif ied, highly rated group (S&P ratings of mostly A+ or better) of bank counterparties around the world. See Note 7B. Financial Instruments:
Investments in Debt Securities above f or details about our investments.
In general, there is no requirement f or collateral f rom customers. However, derivative f inancial instruments are executed under master netting
agreements with f inancial institutions. These agreements contain provisions that provide f or the ability f or collateral payments, depending on
levels of exposure, our credit rating and the credit rating of the counterparty. As of December 31, 2012 , we received cash collateral of $660
million against various counterparties. The collateral primarily supports the approximate f air value of our derivative contracts. With respect to the
collateral received, which is included in Cash and cash equivalents, the obligations are reported in Short-term borrowings, including current
portion of long-term debt.
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Note 8. Inventories
The f ollowing table provides the components of Inventories :
As of December 31,
(MILLIONS OF DOLLARS)
2012 2011
Finished goods $ 2,529 $ 2,311
Work-in-process 3,794 3,514
Raw materials and supplies 740 785
Inventories $ 7,063 $ 6,610
Noncurrent inventories (not included above)
(a)
$ 761 $ 800
(a)
Included in Taxes and other noncurrent assets . There are no recov erability issues associated with these amounts.
Note 9. Property, Plant and Equipment
The f ollowing table provides the components of Property, plant and equipment :
Usef ul Lives As of December 31,
(MILLIONS OF DOLLARS)
(Years) 2012 2011
Land $ 597 $ 737
Buildings 33-50 11,420 12,089
Machinery and equipment 8-20 10,795 10,882
Furniture, f ixtures and other 3-12 1/2 3,962 4,235
Construction in progress 1,108 1,294
27,882 29,237
Less: Accumulated depreciation 13,421 13,316
Property, plant and equipment
(a)
$ 14,461 $ 15,921
(a)

The decrease in total property , plant and equipment is primarily due to depreciation, disposals, impairments and the impact of f oreign exchange, partially of f set by
capital additions.
Note 10. Goodwill and Other Intangible Assets
A. Goodwill
The f ollowing table provides the components of and changes in the carrying amount of Goodwill :
(MILLIONS OF DOLLARS)

Primary
Care
Specialty
Care and
Oncology
Established
Products and
Emerging
Markets
Other
Operating
Segments
(a)
Total
Balance, January 1, 2011 $ 6,050 $ 16,659 $ 18,274 $ 2,449 $ 43,432
Additions
(b)
129 300 321 55 805
Other
(c)
50 138 151 (7) 332
Balance, December 31, 2011 6,229 17,097 18,746 2,497 44,569
Additions
(d)


91

514

605
Other
(c)
(77) (212) (234) 21 (502)
Balance, December 31, 2012 $ 6,152 $ 16,885 $ 18,603 $ 3,032 $ 44,672
(a)
Ref lects amounts associated with Animal Health and Consumer Healthcare.
(b)
Primarily ref lects the acquisition of King (see Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions) .
(c)
Primarily ref lects the impact of f oreign exchange.
(d)

Related to our acquisitions of Ferrosan, Alacer and NextWav e (see Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:
Acquisitions) .
As of December 31, 2012 and 2011, the gross goodwill balance was $45.2 billion and $45.1 billion , respectively. Accumulated goodwill
impairment losses, generated entirely by our Animal Health operating segment in f iscal 2002, were $536 million as of December 31, 2012 and
2011.
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B. Other Intangible Assets
The f ollowing table provides the components of Identifiable intangible assets :
December 31, 2012 December 31, 2011
(MILLIONS OF DOLLARS)

Gross
Carrying
Amount
Accumulated
Amortization
Identifiable
Intangible
Assets, less
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Identif iable
Intangible
Assets, less
Accumulated
Amortization
Finite-lived intangible assets
Developed technology rights $ 73,112 $ (37,069) $ 36,043 $ 72,678 $ (31,922) $ 40,756
Brands 1,873 (781) 1,092 1,678 (687) 991
License agreements and other 1,085 (793) 292 1,048 (577) 471
76,070 (38,643) 37,427 75,404 (33,186) 42,218
Indef inite-lived intangible assets
Brands 7,828 7,828 7,694 7,694
In-process research and
development 688 688 1,200 1,200
Trademarks/Tradenames 70 70 72 72
8,586 8,586 8,966 8,966
Identifiable intangible assets
(a)
$ 84,656 $ (38,643) $ 46,013 $ 84,370 $ (33,186) $ 51,184
(a)

The decrease is primarily related to amortization, as well as impairment charges (see Note 4. Other Deductions Net ), partially of f set by the assets acquired as part
of the acquisitions of NextWav e, Ferrosan and Alacer (see Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:
Acquisitions ).
As of December 31, 2012 , our identif iable intangible assets are associated with the f ollowing, as a percentage of total identif iable intangible
assets, less accumulated amortization:
Developed Technology Rights: Specialty Care ( 66% ); Established Products ( 19% ); Primary Care ( 13% ); Animal Health ( 1% ); and
Oncology ( 1% );
Brands, f inite-lived: Consumer Healthcare ( 64% ); Established Products ( 24% ); and Animal Health ( 12% );
Brands, indef inite-lived: Consumer Healthcare ( 66% ); and Established Products ( 34% ); and
IPR&D: Worldwide Research and Development ( 55% ); Established Products ( 20% ); Primary Care ( 12% ); Specialty Care ( 10% ); and
Animal Health ( 3% ).
There are no percentages f or our Emerging Markets business unit as it is a geographic-area unit, not a product-based unit. The carrying value of
the assets associated with our Emerging Markets business unit is included within the assets associated with the other f our biopharmaceutical
business units.
For inf ormation about intangible asset impairments, see Note 4. Other Deductions Net.
Developed Technology Rights
Developed technology rights represent the amortized cost associated with developed technology, which has been acquired f rom third parties and
which can include the right to develop, use, market, sell and/or of f er f or sale the product, compounds and intellectual property that we have
acquired with respect to products, compounds and/or processes that have been completed. We possess a well-diversif ied portf olio of hundreds
of developed technology rights across therapeutic categories, primarily representing the commercialized products included in our f ive
biopharmaceutical business units. Virtually all of these assets were acquired in connection with our Wyeth acquisition in 2009 and our Pharmacia
acquisition in 2003. The more signif icant components of developed technology rights are the f ollowing (in order of signif icance): Prevnar
13/Prevenar 13 Inf ant and Enbrel and, to a lesser extent, Premarin, Prevnar 13/Prevenar 13 Adult, Ef f exor, Pristiq, Tygacil, BMP-2, Ref acto AF and
Benef ix. Also included in this category are the post-approval milestone payments made under our alliance agreements f or certain
biopharmaceutical products.
Brands
Brands represent the amortized or unamortized cost associated with tradenames and know-how, as the products themselves do not receive
patent protection. Most of these assets are associated with our Consumer Healthcare business unit. Virtually all of these assets were acquired in
connection with our Wyeth acquisition in 2009 and our Pharmacia acquisition in 2003. The more signif icant components of indef inite-lived brands
are the f ollowing (in order of signif icance): Advil, Xanax, Centrum and Medrol. The more signif icant components of f inite-lived brands are the
f ollowing (in order of signif icance): Depo-Provera, Advil Cold and Sinus and Idof orm and Bif if orm.
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In-Process Research and Development
IPR&D assets represent research and development assets that have not yet received regulatory approval in a major market. The more signif icant
components of IPR&D are a treatment f or skin f ibrosis and programs f or the treatment of staph aureus inf ections and epilepsy, as well as a
vaccine f or the prevention of meningitidis serogroup B in adolescents and young adults.
IPR&D assets are required to be classif ied as indef inite-lived assets until the successf ul completion or the abandonment of the associated
research and development ef f ort. Accordingly, during the development period af ter the date of acquisition, these assets will not be amortized until
approval is obtained in a major market, typically either the U.S. or the EU, or in a series of other countries, subject to certain specif ied conditions
and management judgment. At that time, we will determine the usef ul lif e of the asset, reclassif y the asset out of in-process research and
development and begin amortization. If the associated research and development ef f ort is abandoned, the related IPR&D assets will likely be
written-of f , and we will record an impairment charge.
Among the IPR&D assets reclassif ied to Developed Technology rights as a result of being approved in a major market were the f ollowing: in 2012,
two IPR&D assets with a combined book value of approximately $160 million and, in late 2011, Prevenar 13 f or adults age 50 years and older and
Vyndaqel (taf amidis meglumine), with a combined book value of approximately $2.3 billion .
For inf ormation about impairments of IPR&D assets, see Note 4. Other DeductionsNet.
For IPR&D assets, the risk of f ailure is signif icant and there can be no certainty that these assets ultimately will yield a successf ul product. The
nature of the biopharmaceutical business is high-risk and, as such, we expect that many of these IPR&D assets will become impaired and be
written of f at some time in the f uture.
Amortization
The weighted-average lif e of both our total f inite-lived intangible assets and the largest component, Developed technology rights, is approximately
11 years. Total amortization expense f or f inite-lived intangible assets was $5.4 billion in 2012 , $5.8 billion in 2011 and $5.5 billion in 2010 .
The f ollowing table provides the annual amortization expense expected f or the years 2013 through 2017:
(MILLIONS OF DOLLARS)
2013 2014 2015 2016 2017
Amortization expense $ 4,804 $ 4,145 $ 3,735 $ 3,488 $ 3,373
Note 11. Pension and Postretirement Benefit Plans and Defined Contribution Plans
The majority of our employees worldwide are covered by def ined benef it pension plans, def ined contribution plans or both. In the U.S., we have
both qualif ied and supplemental (non-qualif ied) def ined benef it plans. A qualif ied plan meets the requirements of certain sections of the Internal
Revenue Code, and, generally, contributions to qualif ied plans are tax deductible. A qualif ied plan typically provides benef its to a broad group of
employees with restrictions on discriminating in f avor of highly compensated employees with regard to coverage, benef its and contributions. A
supplemental (non-qualif ied) plan provides additional benef its to certain employees. In addition, we provide medical and lif e insurance benef its to
certain retirees and their eligible dependents through our postretirement plans.
Beginning on January 1, 2011, f or employees hired in the U.S. and Puerto Rico af ter December 31, 2010, we no longer of f er a def ined benef it plan
and, instead, of f er an enhanced benef it under our def ined eligible contribution plan. In addition to the standard matching contribution by the
Company, the enhanced benef it provides an automatic Company contribution f or such eligible employees based on age and years of service.
On May 8, 2012, we announced to employees that as of January 1, 2018, Pf izer will transition its U.S. and Puerto Rico employees f rom its def ined
benef it plans to an enhanced def ined contribution savings plan. As a result of this decision to f reeze the U.S. and Puerto Rico def ined benef it
plans, a curtailment was triggered and we perf ormed a re-measurement of the pension obligations and plan assets in the second quarter of 2012
, which had an immaterial impact to the f unded status of the plans. For the year ended December 31, 2012 , we recorded, among other impacts, a
curtailment gain of approximately $59 million in the consolidated statement of income.
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A. Components of Net Periodic Benefit Costs and Changes in Other Comprehensive Loss
The f ollowing table provides the annual cost and changes in Other comprehensive loss f or our benef it plans:
Year Ended December 31,
Pension Plans

U.S.
Qualif ied
(a)

U.S.
Supplemental
(Non-Qualif ied)
(b)
International
(c)

Postretirement
Plans
(d)
(MILLIONS OF
DOLLARS)
2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010
Service cost
(e)
$ 357 $ 351 347 $ 35 $ 36 28 $ 215 $ 243 224 $ 68 $ 68 79
Interest cost
(e)
697 734 740 62 72 77 406 443 418 182 195 211
Expected return on
plan assets
(e)
(983) (871) (782) (424) (437) (425) (46) (35) (31)
Amortization of :
Actuarial
losses
(e)
306 145 151 41 36 29 93 86 67 33 17 15
Prior service
credits (10) (8) 2 (3) (3) (2) (7) (5) (4) (49) (53) (38)
Curtailments and
settlements
net 83 95 (52) 24 23 1 (9) (3) (65) (68) (23)
Special termination
benef its 8 23 73 30 26 180 5 5 6 6 3 19
Net periodic
benef it costs 458 469 479 189 190 313 279 335 283 129 127 232
Changes in Other
comprehensive
loss
(f)
461 1,879 260 110 36 117 759 (365) 152 267 421 (183)
Total amount
recognized in
comprehensive
income $ 919 $ 2,348 $ 739 $ 299 $ 226 $ 430 $1,038 $ (30) $ 435 $ 396 $ 548 $ 49
(a)

2012 v . 2011 The decrease in net periodic benef it cost f or our U.S. qualif ied plans was primarily driv en by (i) higher expected return on plan assets (resulting f rom
contributions made to the plan in 2011 that increased the plan asset base), (ii) lower interest costs, (iii) a decrease in special termination benef its, and (iv ) lower
curtailments and settlements net due to the curtailment gain resulting f rom the decision to f reeze the def ined benef it plans in the U.S. and Puerto Rico largely
of f set by an increase in the amounts amortized f or actuarial losses (resulting f rom a decrease in the discount rate and lower than expected actual returns in 2011).
2011 v . 2010 The decrease in the U.S. qualif ied pension plans' net periodic benef it costs was largely driv en by lower special termination benef its costs and higher
expected returns due to contributions made to the plans, partially of f set by lower curtailment gains and an increase in settlement costs associated with on-going
restructuring ef f orts.
(b)

2012 v . 2011 The net periodic benef it cost f or our U.S. supplemental (non-qualif ied) pension plans was largely unchanged as the curtailment gain resulting f rom the
decision to f reeze the def ined benef it plans in the U.S. and Puerto Rico was more than of f set by higher settlement activ ity . 2011 v . 2010 The decrease in the
U.S. supplemental (non-qualif ied) plans net periodic benef it costs was primarily driv en by lower special termination benef its costs associated with Wy eth-related
restructuring initiativ es.
(c)

2012 v . 2011 The decrease in net periodic benef it costs f or our international pension plans was primarily driv en by changes impacting our U.K. plans in 2011 (see
(e) below) as well as higher curtailment gains resulting f rom ongoing restructuring initiativ es. 2011 v . 2010 The increase in the international plans net periodic
benef it costs as compared to the prior y ear was primarily driv en by changes in assumptions, including the decrease in discount rates across most plans.
(d)

2012 v . 2011 The net periodic benef it cost f or our postretirement plans was largely unchanged, as an increase in amounts amortized f or actuarial plan losses was
partially of f set by higher expected return on plan assets. 2011 v . 2010 The decrease in the postretirement plans net periodic benef it costs was due to the
harmonization of the Wy eth postretirement medical program initiated in mid-2010 .
(e)
The decrease in serv ice cost in 2012 f or our international plans is largely driv en by restructuring activ ities in the U.K. and Ireland. The decrease in interest cost in

2012 and 2011 ref lect lower interest rates during the periods. The increase in the expected return on plan assets in 2012 f or our U.S. qualif ied plans is due to a higher
plan asset base . The higher amortization of actuarial losses is due larger accumulated actuarial losses resulting f rom lower interest rates.
(f)
For details, see our Consolidated Statements of Comprehensiv e Income and Note 6. Accumulated Other Comprehensive Loss, Excluding Noncontrolling Interests.
The f ollowing table provides the amounts in Accumulated other comprehensive loss expected to be amortized into 2013 net periodic benef it
costs:
Pension Plans
(MILLIONS OF DOLLARS)

U.S.
Qualif ied
U.S.
Supplemental
(Non-Qualif ied) International
Postretirement
Plans
Actuarial losses $ (360) $ (54) $ (149) $ (46)
Prior service credits and other 7 2 8 45
Total $ (353) $ (52) $ (141) $ (1)
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B. Actuarial Assumptions
The f ollowing table provides the weighted-average actuarial assumptions of our benef it plans:
(PERCENTAGES)
2012 2011 2010
Weighted-average assumptions used to determine benef it obligations
Discount rate:
U.S. qualif ied pension plans 4.3% 5.1% 5.9%
U.S. non-qualif ied pension plans 3.9% 5.0% 5.8%
International pension plans 3.8% 4.7% 4.8%
Postretirement plans 4.1% 4.8% 5.6%
Rate of compensation increase:
U.S. qualif ied pension plans 2.7% 3.5% 4.0%
U.S. non-qualif ied pension plans 2.8% 3.5% 4.0%
International pension plans 3.1% 3.3% 3.5%
Weighted-average assumptions used to determine net periodic benef it cost
Discount rate:
U.S. qualif ied pension plans 5.1% 5.9% 6.3%
U.S. non-qualif ied pension plans 5.0% 5.8% 6.2%
International pension plans 4.7% 4.8% 5.1%
Postretirement plans 4.8% 5.6% 6.0%
Expected return on plan assets:
U.S. qualif ied pension plans 8.5% 8.5% 8.5%
International pension plans 5.9% 6.0% 6.4%
Postretirement plans 8.5% 8.5% 8.5%
Rate of compensation increase:
U.S. qualif ied pension plans 3.5% 4.0% 4.0%
U.S. non-qualif ied pension plans 3.5% 4.0% 4.0%
International pension plans 3.3% 3.5% 3.6%
The assumptions above are used to develop the benef it obligations at f iscal year-end and to develop the net periodic benef it cost f or the
subsequent f iscal year. Theref ore, the assumptions used to determine net periodic benef it cost f or each year are established at the end of each
previous year, while the assumptions used to determine benef it obligations are established at each year-end.
The net periodic benef it cost and the benef it obligations are based on actuarial assumptions that are reviewed on an annual basis. We revise
these assumptions based on an annual evaluation of long-term trends, as well as market conditions that may have an impact on the cost of
providing retirement benef its.
The expected rates of return on plan assets f or our U.S. qualif ied, international and postretirement plans represent our long-term assessment of
return expectations, which we may change based on shif ts in economic and f inancial market conditions. The 2012 expected rates of return f or
these plans ref lect our long-term outlook f or a globally diversif ied portf olio, which is inf luenced by a combination of return expectations f or
individual asset classes, actual historical experience and our diversif ied investment strategy. The historical returns are one of the inputs used to
provide context f or the development of our expectations f or f uture returns. Using this inf ormation, we develop ranges of returns f or each asset
class and a weighted-average expected return f or our targeted portf olio, which includes the impact of portf olio diversif ication and active portf olio
management.
The f ollowing table provides the healthcare cost trend rate assumptions f or our U.S. postretirement benef it plans:
2012 2011
Healthcare cost trend rate assumed f or next year 7.5% 7.8%
Rate to which the cost trend rate is assumed to decline 4.5% 4.5%
Year that the rate reaches the ultimate trend rate 2027 2027
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The f ollowing table provides the ef f ects as of December 31, 2012 of a one-percentage-point increase or decrease in the healthcare cost trend
rate assumed f or postretirement benef its:
(MILLIONS OF DOLLARS)
Increase Decrease
Ef f ect on total service and interest cost components $ 17 $ (16)
Ef f ect on postretirement benef it obligation 333 (293)
Actuarial and other assumptions f or pension and postretirement plans can result f rom a complex series of judgments about f uture events and
uncertainties and can rely heavily on estimates and assumptions. For a description of the risks associated with estimates and assumptions, see
Note 1C. Basis of Presentation and Significant Accounting Policies: Estimates and Assumptions .

C .Obligations and Funded Status
The f ollowing table provides an analysis of the changes in our benef it obligations, plan assets and f unded status of our benef it plans:
Year Ended December 31,
Pension Plans
U.S. Qualif ied
(a)

U.S. Supplemental
(Non-Qualif ied)
(b)
International
(c)

Postretirement
Plans
(d)
(MILLIONS OF DOLLARS)
2012 2011 2012 2011 2012 2011 2012 2011
Change in benef it obligation
(e)


Benef it obligation, beginning $ 14,835 $ 13,035 $ 1,431 $ 1,401 $ 8,891 $ 8,965 $ 3,900 $ 3,582
Service cost 357 351 35 36 215 243 68 68
Interest cost 697 734 62 72 406 443 182 195
Employee contributions 9 12 58 45
Plan amendments (73) (9) (1) 4 (24) (28)
Changes in actuarial assumptions and
other 1,926 1,808 252 111 1,232 (516) 259 300
Foreign exchange impact (80) 304 1
Acquisitions (1) 56 1 71 3 14
Curtailments (605) (97) (80) (10) (101) (121) (11) 17
Settlements (485) (476) (121) (128) (33) (56)
Special termination benef its 8 23 30 26 5 5 6 3
Benef its paid (464) (526) (61) (68) (387) (395) (274) (296)
Benef it obligation, ending
(e)
16,268 14,835 1,549 1,431 10,227 8,891 4,165 3,900

Change in plan assets
Fair value of plan assets, beginning 12,005 10,596 6,953 6,542 422 414
Actual gain on plan assets 1,464 398 668 176 85 9
Company contributions 20 1,969 182 196 383 475 353 250
Employee contributions 9 12 58 45
Foreign exchange impact (35) 197
Acquisitions 44 31 2
Settlements (485) (476) (121) (128) (33) (56)
Benef its paid (464) (526) (61) (68) (387) (395) (274) (296)
Fair value of plan assets, ending 12,540 12,005 7,589 6,953 644 422
Funded statusPlan assets less than
benef it obligation $ (3,728) $ (2,830) $ (1,549) $ (1,431) $ (2,638) $ (1,938) $ (3,521) $ (3,478)
(a)

The unf av orable change in the f unded status of our U.S. qualif ied plans is primarily due to the decrease in the discount rate, partially of f set by the curtailment
resulting f rom the decision to f reeze the def ined benef it plans in the U.S. and Puerto Rico, and an increase in the actual gain on plan assets.
(b)

Our U.S. supplemental (non-qualif ied) plans are generally not f unded and these obligations, which are substantially greater than the annual cash outlay f or these
liabilities, will be paid f rom cash generated f rom operations.
(c)

The unf av orable change in the f unded status of our international plans is primarily due to changes in actuarial assumptions, partially of f set by an increase in the
actual gain on plan assets. Outside the U.S., in general, we f und our def ined benef it plans to the extent that tax or other incentiv es exist.
(d)

The f unded status of our postretirement plans is largely unchanged as changes in actuarial assumptions were of f set by the actual return on plan assets and
increased contributions.
(e)

For the U.S. and international pension plans, the benef it obligation is the projected benef it obligation. For the postretirement plans, the benef it obligation is the
accumulated postretirement benef it obligation (ABO). The ABO f or all of our U.S. qualif ied pension plans was $15.9 billion in 2012 and $13.8 billion in 2011 . The ABO
f or our U.S. supplemental (non-qualif ied) pension plans was $1.5 billion in 2012 and $1.2 billion 2011 . The ABO f or our international pension plans was $9.4 billion in
2012 and $8.3 billion in 2011 .
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The f ollowing table provides inf ormation as to how the f unded status is recognized in our consolidated balance sheets:
As of December 31,
Pension Plans
U.S. Qualif ied
U.S. Supplemental
(Non-Qualif ied) International
Postretirement
Plans
(MILLIONS OF DOLLARS)
2012 2011 2012 2011 2012 2011 2012 2011
Noncurrent assets
(a)
$ $ $ $ $ 124 $ 327 $ $
Current liabilities
(b)
(162) (130) (47) (41) (28) (134)
Noncurrent liabilities
(c)
(3,728) (2,830) (1,387) (1,301) (2,715) (2,224) (3,493) (3,344)
Funded status $ (3,728) $ (2,830) $ (1,549) $ (1,431) $ (2,638) $ (1,938) $ (3,521) $ (3,478)
(a)
Included primarily in Taxes and other noncurrent assets .
(b)
Included in Accrued compensation and related items .
(c)
Included in Pension benefit obligations and Postretirement benefit obligations , as appropriate.
The f ollowing table provides the pre-tax components of amounts recognized in Accumulated other comprehensive loss :
As of December 31,
Pension Plans
U.S. Qualif ied
U.S. Supplemental
(Non-Qualif ied) International
Postretirement
Plans
(MILLIONS OF DOLLARS)
2012 2011 2012 2011 2012 2011 2012 2011
Actuarial losses
(a)
$ (5,027) $ (4,638) $ (664) $ (566) $ (2,780) $ (2,020) $ (932) $ (759)
Prior service (costs)/credits and
other 51 123 14 26 (20) (21) 374 468
Total $ (4,976) $ (4,515) $ (650) $ (540) $ (2,800) $ (2,041) $ (558) $ (291)
(a)

The actuarial losses primarily represent the impact of changes in discount rates and other assumptions that result in cumulativ e changes in our projected benef it
obligations as well as the cumulativ e dif f erence between the expected return and actual return on plan assets. These actuarial losses are recognized in Accumulated
other comprehensive loss and are amortized into net periodic benef it costs ov er an av erage period of 9.8 y ears f or our U.S. qualif ied plans, an av erage period of 9.9
y ears f or our U.S. supplemental (non-qualif ied) plans, an av erage period of 14.5 y ears f or our international plans and an av erage period of 11.0 y ears f or our
postretirement plans.
The f ollowing table provides inf ormation related to the f unded status of selected benef it plans:
As of December 31,
Pension Plans
U.S. Qualif ied
U.S. Supplemental
(Non-Qualif ied) International
(MILLIONS OF DOLLARS)
2012 2011 2012 2011 2012 2011
Pension plans with an accumulated benef it obligation in excess of
plan assets:
Fair value of plan assets $ 12,540 $ 12,005 $ $ $ 2,776 $ 2,529
Accumulated benef it obligation 15,870 13,799 1,465 1,225 5,056 4,446
Pension plans with a projected benef it obligation in excess of plan
assets:
Fair value of plan assets 12,540 12,005 6,432 2,686
Projected benef it obligation 16,268 14,835 1,549 1,431 9,193 4,951
All of our U.S. plans and substantially all of our international plans were underf unded as of December 31, 2012.
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D. Plan Assets
The f ollowing table provides the components of plan assets:
Fair Value
(a)
Fair Value
(a)
(MILLIONS OF DOLLARS)

As of
December 31,
2012 Level 1 Level 2 Level 3
As of
December 31,
2011 Level 1 Level 2 Level 3
U.S. qualif ied pension plans
Cash and cash
equivalents $ 368 $ $ 368 $ $ 2,111 $ $ 2,111 $
Equity securities:
Global equity securities 3,536 3,519 17 2,522 2,509 12 1
Equity commingled
f unds 2,215 2,215 1,794 1,794
Debt securities:
Fixed income
commingled f unds 943 943 870 870
Government bonds 1,093 1,093 808 805 3
Corporate debt
securities 2,414 2,411 3 1,971 1,966 5
Other investments:
Private equity f unds 866 866 920 920
Insurance contracts 348 348 353 353
Other 757 757 656 656
Total 12,540 3,519 7,395 1,626 12,005 2,509 7,911 1,585
International pension plans
Cash and cash
equivalents 299 299 299 299
Equity securities:
Global equity securities 1,723 1,638 85 1,513 1,432 81
Equity commingled
f unds 2,194 2,194 1,966 1,966
Debt securities:
Fixed income
commingled f unds

825


825


785


785

Government bonds 914 914 956 956


Corporate debt
securities 613 613 536 536
Other investments:
Private equity f unds 110 14 96 55 4 51
Insurance contracts 465 117 348 433 67 366
Other 446 57 389 410 62 348
Total 7,589 1,638 5,118 833 6,953 1,432 4,756 765
U.S. postretirement plans
(b)

Cash and cash
equivalents 28 28 19 19
Equity securities:
Global equity securities 79 79 24 24
Equity commingled
f unds 50 50 17 17
Debt securities:
Fixed income
commingled f unds 20 20 8 8
Government bonds 25 25 8 8
Corporate debt
securities 55 55 19 19
Other investments:
Insurance contracts 350 350 312 312
Other 37 37 15 15
Total $ 644 $ 79 $ 565 $ $ 422 $ 24 $ 398 $
(a)

Fair v alues are determined based on v aluation inputs categorized as Lev el 1, 2 or 3 (see Note 1E. Basis of Presentation and Significant Accounting Policies: Fair
Value ).
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(b)
Ref lects postretirement plan assets, which support a portion of our U.S. retiree medical plans.
The f ollowing table provides an analysis of the changes in our more signif icant investments valued using signif icant unobservable inputs:
Year Ended December 31,
U.S. Qualif ied Pension Plans International Pension Plans
Private Equity Funds Other Insurance Contracts Other
(MILLIONS OF DOLLARS)
2012 2011 2012 2011 2012 2011 2012 2011
Fair value, beginning $ 920 $ 899 $ 656 $ 465 $ 366 $ 366 $ 348 $ 214
Actual return on plan assets:
Assets held, ending 4 (246) 61 24 8 8 (14) (4)
Assets sold during the period 55 (6) 5
Purchases, sales and settlements, net (58) 212 40 173 (5) (12) 50 120
Transf er into/(out of ) Level 3 (5) (15) 12
Exchange rate changes (16) 19 6
Fair value, ending $ 866 $ 920 $ 757 $ 656 $ 348 $ 366 $ 389 $ 348
A single estimate of f air value can result f rom a complex series of judgments about f uture events and uncertainties and can rely heavily on
estimates and assumptions. For a description of our general accounting policies associated with developing f air value estimates, see Note 1E.
Basis of Presentation and Significant Accounting Policies: Fair Value. For a description of the risks associated with estimates and assumptions,
see Note 1C. Basis of Presentation and Significant Accounting Policies: Estimates and Assumptions.
Specif ically, the f ollowing methods and assumptions were used to estimate the f air value of our pension and postretirement plans assets:
Cash and cash equivalents, Equity commingled f unds, Fixed-income commingled f undsobservable prices.
Global equity securitiesquoted market prices.
Government bonds, Corporate debt securitiesobservable market prices.
Other investmentsprincipally unobservable inputs that are signif icant to the estimation of f air value. These unobservable inputs could
include, f or example, the investment managers assumptions about earnings multiples and f uture cash f lows.
We periodically review the methodologies, inputs and outputs of third-party pricing services f or reasonableness.
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The f ollowing table provides the long-term target asset allocations ranges and the percentage of the f air value of plan assets f or benef it plans:
As of December 31,

Target
Allocation Percentage Percentage of Plan Assets
(PERCENTAGES)
2012 2012 2011
U.S. qualified pension plans
Cash and cash equivalents 0-5 2.9% 17.6%
Equity securities 25-50 45.9% 36.0%
Debt securities 30-55 35.5% 30.4%
Real estate and other investments 10-15 15.7% 16.0%
Total 100% 100% 100%
International pension plans
Cash and cash equivalents 0-5 3.9% 4.4%
Equity securities 25-50 51.6% 50.0%
Debt securities 30-55 31.0% 32.7%
Real estate and other investments 10-15 13.5% 12.9%
Total 100% 100% 100.0%
U.S. postretirement plans
Cash and cash equivalents 0-5 4.4% 4.6%
Equity securities 10-35 20.1% 9.7%
Debt securities 5-30 15.5% 8.1%
Real estate, insurance contracts and other investments 55-70 60.0% 77.6%
Total 100% 100% 100%
We utilize long-term asset allocation ranges in the management of our plans invested assets. Our long-term return expectations are developed
based on a diversif ied, global investment strategy that takes into account historical experience, as well as the impact of portf olio diversif ication,
active portf olio management, and our view of current and f uture economic and f inancial market conditions. As market conditions and other f actors
change, we may adjust our targets accordingly and our asset allocations may vary f rom the target allocations.
Our long-term asset allocation ranges ref lect our asset class return expectations and tolerance f or investment risk within the context of the
respective plans long-term benef it obligations. These ranges are supported by analysis that incorporates historical and expected returns by
asset class, as well as volatilities and correlations across asset classes and our liability prof ile. This analysis, ref erred to as an asset-liability
analysis, also provides an estimate of expected returns on plan assets, as well as a f orecast of potential f uture asset and liability balances.
The plans assets are managed with the objectives of minimizing pension expense and cash contributions over the long term. Asset liability
studies are perf ormed periodically in order to support asset allocations.
The investment managers of each separately managed account are permitted to use derivative securities as described in their investment
management agreements.
Investment perf ormance is reviewed on a monthly basis in total, as well as by asset class and individual manager, relative to one or more
benchmarks. Investment perf ormance and detailed statistical analysis of both investment perf ormance and portf olio holdings are conducted, a
large portion of which is presented to senior management on a quarterly basis. Periodic f ormal meetings are held with each investment manager
to review the investments.
E. Cash Flows
It is our practice to f und amounts f or our qualif ied pension plans that are at least suf f icient to meet the minimum requirements set f orth in applicable
employee benef it laws and local tax laws.
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The f ollowing table provides the expected f uture cash f low inf ormation related to our benef it plans:
Pension Plans
(MILLIONS OF DOLLARS)
U.S.Qualif ied
U.S. Supplemental
(Non-Qualif ied) International Postretirement Plans
Expected employer contributions:
2013 $ $ 162 $ 343 $ 257
Expected benef it payments:
2013 $ 1,115 $ 162 $ 444 $ 295
2014 782 137 400 306
2015 796 116 417 313
2016 812 111 430 321
2017 856 114 442 329
20182022 4,595 561 2,396 1,748
The table ref lects the total U.S. and international plan benef its projected to be paid f rom the plans or f rom our general assets under the current
actuarial assumptions used f or the calculation of the benef it obligation and, theref ore, actual benef it payments may dif f er f rom projected benef it
payments.
F. Defined Contribution Plans
We have savings and investment plans in several countries, including the U.S., U.K., Japan, Spain and the Netherlands. For the U.S. plans,
employees may contribute a portion of their salaries and bonuses to the plans, and we match, largely in company stock or company stock units, a
portion of the employee contributions. In the U.S., the matching contributions in company stock are sourced through open market purchases.
Employees are permitted to subsequently diversif y all or any portion of their company matching contribution. The contribution match f or certain
legacy Pharmacia U.S. participants is held in an employee stock ownership plan. We recorded charges related to our plans of $297 million in 2012
, $288 million in 2011 and $259 million in 2010 .
Note 12. Equity
A. Common Stock
We purchase our common stock through privately negotiated transactions or in open market purchases as circumstances and prices warrant.
Purchased shares under each of the share-purchase plans, which are authorized by our Board of Directors, are available f or general corporate
purposes. On December 12, 2011, we announced that the Board of Directors had authorized a $10 billion share-purchase plan (the December
2011 Stock Purchase Plan). On November 1, 2012, we announced that the Board of Directors had authorized an additional $10 billion share-
purchase plan, which became ef f ective on November 30, 2012.
In 2012, we purchased approximately 349 million shares of our common stock f or approximately $8.2 billion . In 2011, we purchased
approximately 459 million shares of our common stock f or approximately $9.0 billion . In 2010, we purchased approximately 61 million shares of
our common stock f or approximately $1 billion . Af ter giving ef f ect to share purchases through year-end 2012, our remaining share-purchase
authorization is approximately $11.8 billion at December 31, 2012 .
B. Preferred Stock
The Series A convertible perpetual pref erred stock is held by an Employee Stock Ownership Plan (Pref erred ESOP) Trust and provides dividends
at the rate of 6.25% , which are accumulated and paid quarterly. The per-share stated value is $40,300 and the pref erred stock ranks senior to
our common stock as to dividends and liquidation rights. Each share is convertible, at the holders option, into 2,574.87 shares of our common
stock with equal voting rights. The conversion option is indexed to our common stock and requires share settlement, and, theref ore, is reported at
the f air value at the date of issuance. We may redeem the pref erred stock at any time or upon termination of the Pref erred ESOP, at our option, in
cash, in shares of common stock, or a combination of both at a price of $40,300 per share.
C. Employee Stock Ownership Plans
We have two employee stock ownership plans (collectively, the ESOPs), the Pref erred ESOP and another that holds common stock of the
Company (Common ESOP).
Allocated shares held by the Common ESOP are considered outstanding f or the earnings per share (EPS) calculations and the eventual
conversion of allocated pref erred shares held by the Pref erred ESOP is assumed in the diluted EPS calculation. As of December 31, 2012 , the
Pref erred ESOP held pref erred shares with a stated value of approximately $39 million , convertible into approximately 2 million shares of our
common stock. As of December 31, 2012 , the Common ESOP held approximately 3 million shares of our common stock. As of December 31, 2012
, all pref erred and common shares held by the ESOPs have been allocated to the Pharmacia U.S. and certain Puerto Rico savings plan
participants.
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D. Employee Benefit Trust
The Pf izer Inc. Employee Benef it Trust (EBT) was established in 1999 to f und our employee benef it plans through the use of its holdings of Pf izer
Inc. stock. Our consolidated balance sheets ref lect the f air value of the shares owned by the EBT as a reduction of Equity. Beginning in May
2009, the Company began using the shares held in the EBT to help f und the Companys matching contribution in the Pf izer Savings Plan.
Note 13. Share-Based Payments
Our compensation programs can include share-based payments, in the f orm of stock options, Restricted Stock Units (RSUs), Portf olio
Perf ormance Shares (PPSs), Perf ormance Share Awards (PSAs) and Total Shareholder Return Units (TSRUs).
The Companys shareholders approved the amendment and restatement of the 2004 Stock Plan at the Annual Meeting of Shareholders held on
April 23, 2009. The primary purpose of the amendment was to increase the number of shares of common stock available f or grants by 425 million
shares. In addition, the amendment provided other changes, including that the number of stock options, Stock Appreciation Rights (SARs) (known
as TSRUs) or other perf ormance-based awards that may be granted to any one individual during any 36 -month period is limited to 8 million
shares, and that RSUs, PPSs, PSAs and restricted stock grants count as 2 shares, while stock options and TSRUs count as 1 share, toward the
maximums f or the incremental 425 million shares. As of December 31, 2012 , 236 million shares were available f or award. The 2004 Stock Plan,
as amended, is the only Pf izer plan under which equity-based compensation may currently be awarded to executives and other employees.
Although not required to do so, we have used authorized and unissued shares and, to a lesser extent, shares held in our Employee Benef it Trust
and treasury stock to satisf y our obligations under these programs.
A. Impact on Net Income
The f ollowing table provides the components of share-based compensation expense and the associated tax benef it:
Year Ended December 31,
(MILLIONS OF DOLLARS)
2012 2011 2010
Restricted stock units $ 235 $ 228 $ 211
Stock options 157 166 150
Total shareholder return units 35 17 28
Perf ormance share awards 35 3 14
Portf olio perf ormance shares 14
Directors compensation and other 5 5 2
Share-based payment expense 481 419 405
Tax benef it f or share-based compensation expense (149) (139) (129)
Share-based payment expense, net of tax $ 332 $ 280 $ 276
Amounts capitalized as part of inventory cost and the impact of modif ications under our cost-reduction and productivity initiatives to share-based
awards were not signif icant f or any period presented. Generally, the modif ications resulted in an acceleration of vesting, either in accordance
with plan terms or at managements discretion.
B. Restricted Stock Units (RSUs)
RSUs are awarded to select employees and, when vested, entitle the holder to receive a specif ied number of shares of Pf izer common stock,
including shares resulting f rom dividend equivalents paid on such RSUs. For RSUs granted during the periods presented, in virtually all instances,
the units vest af ter three years of continuous service f rom the grant date.
We measure the value of RSU grants as of the grant date using the closing price of Pf izer common stock. The values determined through this f air
value methodology generally are amortized on a straight-line basis over the vesting term into Cost of sales, Selling, informational and
administrative