Market Overview

PFIZER REPORTS FOURTH-QUARTER AND FULL-YEAR 2017 RESULTS

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PROVIDES 2018 FINANCIAL GUIDANCE

  • Full-Year 2017 Revenues of $52.5 Billion, Comparable with Full-Year
    2016 Operationally; Excluding Impact of February 2017 Divestiture of
    Hospira Infusion Systems (HIS), Revenues Increased 2% Operationally
  • Fourth-Quarter 2017 Revenues of $13.7 Billion, Comparable with
    Fourth-Quarter 2016 Operationally; Excluding Impact of February 2017
    Divestiture of HIS, Revenues Increased 2% Operationally
  • Full-Year 2017 Reported Diluted EPS(1) of $3.52, Adjusted
    Diluted EPS(2) of $2.65; Fourth-Quarter 2017 Reported
    Diluted EPS(1) of $2.02, Adjusted Diluted EPS(2)
    of $0.62
  • Provides 2018 Financial Guidance, Including Revenues of $53.5 to $55.5
    Billion, Adjusted Diluted EPS(2) of $2.90 to $3.00 and
    Adjusted Effective Tax Rate(2) of Approximately 17.0%
    • 2018 Guidance Midpoints Imply Revenue Growth of 4% and Adjusted
      Diluted EPS(2) Growth of 11%
  • Anticipates Repatriation Tax Liability of Approximately $15 Billion,
    Payable to the U.S. Treasury

Pfizer Inc. (NYSE:PFE) reported financial results for fourth-quarter
and full-year 2017 and provided 2018 financial guidance.

Results for the fourth quarter and the full year of 2017 and 2016(3)
are summarized below.

OVERALL RESULTS

($ in millions, except
per share amounts)

  Fourth-Quarter     Full-Year
2017   2016   Change 2017   2016   Change
Revenues $ 13,703   $ 13,627   1% $ 52,546   $ 52,824   (1%)
Reported Net Income(1) 12,274 775 * 21,308 7,215 *
Reported Diluted EPS(1) 2.02 0.13 * 3.52 1.17 *
Adjusted Income(2) 3,772 2,894 30% 16,085 14,761 9%
Adjusted Diluted EPS(2)   0.62   0.47   32%     2.65   2.40   11%

* Indicates calculation result is greater than 100%.

 
REVENUES
($ in millions)   Fourth-Quarter     Full-Year

 

2017

 

 

2016   % Change   2017

 

  2016   % Change
    Total   Oper.     Total   Oper.
Innovative Health $ 8,218 $ 7,726 6 %   5 % $ 31,422 $ 29,197 8 %   8 %
Essential Health   5,484     5,902   (7 %)   (8 %)   21,124     23,627   (11 %)   (10 %)
Total Company $ 13,703   $ 13,627   1 %     $ 52,546   $ 52,824   (1 %)    
 
Excluding HIS revenues from all periods:
Total Company $ 13,703 $ 13,348 3 % 2 % $ 52,449 $ 51,666 2 % 2 %
Essential Health     5,484     5,623   (2 %)   (3 %)       21,027     22,469   (6 %)  

(6

%)

 

On December 22, 2017, the U.S. enacted significant changes to U.S. tax
law following the passage and signing of H.R.1, "An Act to provide for
reconciliation pursuant to titles II and V of the concurrent resolution
on the budget for fiscal year 2018" (also known as the "Tax Cuts and
Jobs Act" or the "TCJA"). The TCJA is complex and significantly changes
the U.S. corporate income tax system by, among other things, reducing
the Federal corporate income tax rate from 35% to 21%, transitioning
U.S. international taxation from a worldwide tax system to a territorial
tax system and imposing a repatriation tax that is payable over eight
years on deemed repatriated accumulated earnings of foreign
subsidiaries. Given the significant changes resulting from and
complexities associated with the TCJA, the estimated financial impacts
for fourth-quarter and full-year 2017 as well as the estimated impact on
2018 Financial Guidance for the effective tax rate on Adjusted income(2)
are provisional and subject to further analysis, interpretation
and clarification of the TCJA, which could result in changes to these
estimates during 2018.

Acquisitions and divestitures completed in 2016 and 2017 impacted
financial results in the periods presented(4). Some amounts
in this press release may not add due to rounding. All percentages have
been calculated using unrounded amounts. References to operational
variances pertain to period-over-period growth rates that exclude the
impact of foreign exchange(5).

2018 FINANCIAL GUIDANCE(6)

Pfizer's 2018 financial guidance is presented below. Financial guidance
reflects a full year contribution from Consumer Healthcare. Pfizer
continues to expect that any decision regarding strategic alternatives
for Consumer Healthcare will be made during 2018. Financial guidance
also assumes no generic competition for Lyrica in the U.S. until June
2019, which is contingent upon a six-month patent-term extension granted
by the U.S. Food and Drug Administration (FDA) for pediatric
exclusivity, which the company is currently pursuing.

     
Revenues   $53.5 to $55.5 billion
Adjusted Cost of Sales(2) as a Percentage of Revenues   20.5% to 21.5%
Adjusted SI&A Expenses(2)   $14.0 to $15.0 billion
Adjusted R&D Expenses(2)   $7.4 to $7.9 billion
Adjusted Other (Income)/Deductions(2)   Approximately $400 million of income
Effective Tax Rate on Adjusted Income(2)   Approximately 17.0%
Adjusted Diluted EPS(2)   $2.90 to $3.00

The 2018 financial guidance for the effective tax rate on Adjusted income(2)
reflects the enactment of the TCJA.

Financial guidance for Adjusted diluted EPS(2) anticipates
share repurchases totaling $5.0 billion in 2018. Dilution related to
share-based employee compensation programs is expected to offset by
approximately half the reduction in shares associated with these
anticipated share repurchases.

CAPITAL ALLOCATION

  • Increasing Investment in the U.S.
    • Over the next five years, Pfizer plans to invest approximately
      $5.0 billion in capital projects in the U.S., including the
      strengthening of Pfizer's manufacturing presence in the U.S.
    • In fourth-quarter 2017, following the passage of the TCJA, Pfizer
      made a $200 million charitable contribution to the Pfizer
      Foundation, an organization that provides grant and investment
      funding to support organizations and social entrepreneurs in an
      effort to improve health care delivery.
    • Pfizer also plans to make a $500 million contribution to its U.S.
      pension plan in 2018.
    • The company also has allocated approximately $100 million for a
      special, one-time bonus to be paid to all non-executive Pfizer
      colleagues in first-quarter 2018.
  • During 2017, Pfizer returned $12.7 billion directly to shareholders,
    through a combination of:
    • $7.7 billion of dividends, composed of quarterly payments of $0.32
      per share of common stock; and
    • a $5.0 billion accelerated share repurchase agreement executed in
      February 2017 and completed in May 2017, which resulted in a
      reduction of approximately 150 million shares of Pfizer's
      outstanding common stock.
  • The full-year 2017 diluted weighted-average shares used to calculate
    earnings per common share was 6,058 million shares, a reduction of 100
    million shares compared to full-year 2016.
  • In 2018, Pfizer anticipates quarterly dividend payments of $0.34 per
    share of common stock in addition to $5.0 billion of share repurchases.
  • As of January 30, 2018, Pfizer's remaining share repurchase
    authorization was $16.4 billion, which includes a new $10.0 billion
    share repurchase program that was authorized by Pfizer's board of
    directors in December 2017.

EXECUTIVE COMMENTARY

Ian Read, Chairman and Chief Executive Officer, stated, "Pfizer had a
strong year in 2017, delivering solid financial results, advancing
several significant pipeline programs and enhancing shareholder value
with prudent capital allocation decisions. Regarding our revenue
performance in 2017, Pfizer Innovative Health was driven by continued
strength from several anchor brands, including Ibrance, Eliquis and
Xeljanz -- all of which currently have market-leading positions with
many years of patent protection remaining. Pfizer Essential Health
generated strong operational revenue growth in emerging markets and in
our Biosimilars portfolio but was negatively impacted by the HIS
divestiture, the expected impact of product losses of exclusivity and
legacy Hospira product shortages in the U.S.

"In 2017, we received ten approvals from the FDA, significantly more
than Pfizer has achieved in any year in the past decade. Building on
these achievements, during 2018 we look forward to important regulatory
decisions and clinical data readouts across our pipeline that will drive
the next wave of innovation at Pfizer.

"I believe our capital allocation decisions in 2017 enhanced shareholder
value. In addition to investing in our business, we also returned $12.7
billion directly to shareholders through a combination of dividends and
share repurchases and we decided to explore potential strategic
alternatives for our Consumer Healthcare business. We remain on track to
make this decision, which could include everything from a full or
partial separation to ultimately deciding to retain the business, during
2018.

"I believe our current management and business structure, the tireless
dedication of our colleagues and the strong culture we have nurtured
position Pfizer especially well for continued success," Mr. Read
concluded.

Frank D'Amelio, Executive Vice President, Business Operations and Chief
Financial Officer, stated, "Overall, I am pleased with our 2017
financial performance. Despite absorbing a $2.1 billion impact from
products that recently lost marketing exclusivity, we were still able to
achieve 1% operational revenue growth in 2017 after excluding the net
impact of acquisitions and divestitures completed in 2016 and 2017. We
also delivered Adjusted diluted EPS(2) growth of 11% in 2017,
primarily reflecting a lower effective tax rate due to tax reform,
strong performance of key products, continued success in managing our
operating expenses and the net impact of our share repurchases.

"Our 2018 financial guidance at the midpoint of our ranges implies
revenue growth of 4% and Adjusted diluted EPS(2) growth of
11% compared to 2017 results, which absorbs an anticipated $2.0 billion
revenue headwind due to products that recently lost marketing
exclusivity. Our effective tax rate on Adjusted income(2) is
expected to be approximately 17.0% in 2018, significantly lower than the
approximately 23.0% that we previously anticipated for full-year 2017,
prior to the enactment of tax reform. Notably, our guidance for Adjusted
diluted EPS(2) anticipates share repurchases totaling $5.0
billion in 2018, which is expected to be offset by approximately half
due to dilution related to share-based employee compensation programs.

"Finally, regarding tax reform, I am pleased that the aspects of most
importance to us were addressed in the new tax code, strengthening our
ability to make capital allocation decisions that maximize patient
benefit and enhance shareholder value. In addition to an anticipated
effective tax rate on Adjusted income(2) in 2018 that is
meaningfully lower than in prior years, Pfizer anticipates a
repatriation tax liability of approximately $15 billion payable to the
U.S. Treasury over eight years as a result of the passage of the TCJA,"
Mr. D'Amelio concluded.

QUARTERLY FINANCIAL HIGHLIGHTS (Fourth-Quarter 2017 vs.
Fourth-Quarter 2016)

Fourth-quarter 2017 revenues totaled $13.7 billion, an increase of $75
million, or 1% compared to the prior-year quarter, reflecting the
favorable impact of foreign exchange of $114 million, or 1%, offset by
an operational decline of $39 million, or less than 1%.

Excluding the revenues for HIS in the prior-year quarter and the
favorable impact of foreign exchange, fourth-quarter 2017 revenues
increased by $240 million, or 2% operationally. Fourth-quarter 2017
revenues excluding the net impact of acquisitions and divestitures
completed in 2016 and 2017 increased $137 million, or 1% operationally,
compared to fourth-quarter 2016.

Innovative Health Highlights

  • IH revenues increased 5% operationally in fourth-quarter 2017, driven
    by continued growth from key brands including Eliquis globally,
    Xeljanz primarily in the U.S., Prevenar 13 primarily in emerging
    markets, as well as Lyrica, Ibrance and Chantix/Champix, all primarily
    in the U.S. Global revenues for Eliquis increased 43% operationally,
    while global Xeljanz revenues grew 47% operationally.
  • Global Prevnar 13/Prevenar 13 revenues increased 7% operationally in
    fourth-quarter 2017.
    • Prevenar 13 revenues in international markets increased 27%
      operationally, primarily due to the favorable overall impact of
      timing and increased volume associated with government purchases
      in certain emerging markets for the pediatric indication compared
      with the year-ago quarter, as well as from the inclusion of
      Prevenar 13 in additional national immunization programs in
      certain emerging markets for the adult and pediatric indications
      in fourth-quarter 2017.
    • In the U.S., Prevnar 13 revenues declined 7%, primarily due to the
      continued decline in revenues for the adult indication due to a
      smaller remaining "catch up" opportunity compared to the
      prior-year quarter, partially offset by increased government
      purchases in fourth-quarter 2017 compared to fourth-quarter 2016
      for the pediatric indication.
  • Global Ibrance revenues grew 11% operationally in fourth-quarter 2017.
    • In the U.S., Ibrance revenues increased 27% compared with the
      prior-year quarter, primarily due to continued strong uptake in
      the metastatic breast cancer setting.
    • Ibrance revenues in international markets declined in
      fourth-quarter 2017, negatively impacted by a one-time price
      adjustment to full-year 2017 revenues in certain developed Europe
      markets related to finalizing reimbursement agreements in these
      markets. These agreements establish pricing levels comparable to
      European pricing analogues for oncology products, ensure patient
      access and are expected to drive future growth in these markets.
      Despite the one-time impact in fourth-quarter 2017, underlying
      Ibrance volumes in developed Europe remain strong, increasing 20%
      sequentially compared to third-quarter 2017.
  • Fourth-quarter 2017 IH operational revenue growth was negatively
    impacted by lower revenues for Viagra in the U.S. primarily due to
    generic competition that began in December 2017 and for Enbrel in most
    developed Europe markets due to continued biosimilar competition.

Essential Health Highlights

  • Fourth-quarter 2017 EH revenues declined 8% operationally, of which 5%
    operationally was due to the February 2017 divestiture of HIS.
    Fourth-quarter 2017 EH revenues were also negatively impacted by an
    18% operational decline from Peri-LOE Products, primarily due to
    expected declines in Pristiq in the U.S. as well as Lyrica in
    developed Europe. EH revenues were also negatively impacted by a 10%
    operational decline from the Sterile Injectable Pharmaceuticals (SIP)
    portfolio, primarily due to continued legacy Hospira product shortages
    in the U.S. These declines were partially offset by 72% operational
    growth from Biosimilars, primarily from Inflectra in the U.S. and
    developed Europe.
  • EH revenues in emerging markets grew 10% operationally, primarily
    driven by 10% operational growth from the Legacy Established Products
    portfolio and 23% operational growth from the SIP portfolio. Excluding
    HIS from both periods, EH revenues in emerging markets grew 12%
    operationally.

GAAP Reported(1) Income Statement
Highlights

 
SELECTED TOTAL COMPANY REPORTED COSTS AND EXPENSES(1)
                 
($ in millions)

(Favorable)/Unfavorable

Fourth-Quarter Full-Year
2017 2016 % Change 2017 2016 % Change
    Total   Oper.     Total   Oper.
Cost of Sales(1) $ 3,259 $ 3,218 1 % (1 %) $ 11,240 $ 12,329 (9 %) (8 %)
Percent of Revenues 23.8 % 23.6 % N/A N/A 21.4 % 23.3 % N/A N/A
SI&A Expenses(1) 4,551 4,423 3 % 2 % 14,784 14,837
R&D Expenses(1)   2,311     2,512   (8 %) (8 %)   7,657     7,872   (3 %) (3 %)
Total $ 10,121   $ 10,153     (2 %) $ 33,681   $ 35,038   (4 %) (3 %)
 
Other (Income)/Deductions––net(1) $ 1,331 $ 841 58 % 64 % $ 1,315 $ 3,655 (64 %) (61 %)

Effective Tax Rate on
Reported Income(1)

    (1,189.0 %)     1.7 %               (73.5 %)     13.4 %        
 

The increase in fourth-quarter 2017 other deductions––net(1)
was primarily driven by higher net losses on the retirement of certain
outstanding debt securities compared to the prior-year quarter. The
decrease in full-year 2017 other deductions––net(1) was
primarily driven by the non-recurrence of impairment charges in 2016 as
a result of the HIS divestiture as well as lower other impairment
charges in 2017 compared to the prior year, partially offset primarily
by the aforementioned higher net losses from the retirement of certain
outstanding debt securities compared with last year.

As a result of the enactment of the TCJA, Pfizer's fourth-quarter and
full-year 2017 provision for taxes on Reported income(1) was
favorably impacted by approximately $10.7 billion, primarily reflecting
the remeasurement of U.S. deferred tax liabilities, which includes the
repatriation tax on deemed repatriated accumulated earnings of foreign
subsidiaries.

Adjusted(2) Income Statement Highlights

 
SELECTED TOTAL COMPANY ADJUSTED COSTS AND EXPENSES(2)
                 
($ in millions)

(Favorable)/Unfavorable

Fourth-Quarter Full-Year
2017 2016 % Change 2017 2016 % Change
    Total   Oper.     Total   Oper.
Adjusted Cost of Sales(2) $ 3,062 $ 3,046 1 % (2 %) $ 10,790 $ 11,630 (7 %) (6 %)
Percent of Revenues 22.3 % 22.4 % N/A N/A 20.5 % 22.0 % N/A N/A
Adjusted SI&A Expenses(2) 4,318 4,402 (2 %) (3 %) 14,469 14,745 (2 %) (2 %)
Adjusted R&D Expenses(2)   2,300       2,505     (8 %)   (9 %)   7,626       7,841     (3 %)   (3 %)
Total $ 9,679     $ 9,953     (3 %)   (4 %) $ 32,885     $ 34,215     (4 %)   (3 %)
 
Adjusted Other (Income)/Deductions––net(2) ($180 ) ($182 ) (1 %) (29 %) ($699 ) ($729 ) (4 %) (20 %)
Effective Tax Rate on Adjusted Income(2)     8.6 %     24.1 %               20.0 %     23.0 %        
 

Pfizer's fourth-quarter 2017 and full-year 2017 provision for taxes on
Adjusted income(2) was favorably impacted due to the
aforementioned enactment of the TCJA, primarily reflecting the
remeasurement of U.S. deferred tax liabilities on deemed repatriated
earnings of foreign subsidiaries that were accrued during 2017.

Fourth-quarter 2017 diluted weighted-average shares outstanding used to
calculate Reported(1) and Adjusted(2) diluted EPS
declined by 80 million shares compared to the prior-year quarter and,
for full-year 2017, declined by 100 million shares compared to full-year
2016. Both fourth-quarter 2017 and full-year 2017 diluted
weighted-average shares outstanding were favorably impacted by Pfizer's
share repurchase program, reflecting the impact of the $5 billion
accelerated share repurchase agreement executed in February 2017 and
completed in May 2017, partially offset by dilution related to
share-based employee compensation programs.

A full reconciliation of Reported(1) to Adjusted(2)
financial measures and associated footnotes can be found starting on
page 21 of the press release located at the hyperlink below.

FULL-YEAR REVENUE SUMMARY (Full-Year 2017 vs. Full-Year 2016)

Full-year 2017 revenues totaled $52.5 billion, a decrease of $278
million, or 1%, reflecting a slight operational decline of $20 million,
or less than 1%, and the unfavorable impact of foreign exchange of $259
million, or less than 1%.

Excluding the net impact of acquisitions and divestitures completed in
2016 and 2017 and the unfavorable impact of foreign exchange, full-year
2017 revenues increased by $387 million, or 1% operationally, primarily
reflecting:

  • Operational growth from certain key products, including Ibrance and
    Eliquis globally, Xeljanz primarily in the U.S., as well as Inflectra
    primarily in the U.S. and developed Europe; and
  • Total operational revenue growth in emerging markets of $1.1 billion,
    or 11%,

partially offset by:

  • Product losses of exclusivity that negatively impacted 2017 revenues
    by $2.1 billion operationally, primarily Enbrel in developed Europe,
    Pristiq and Viagra in the U.S., as well as Lyrica and Vfend in
    developed Europe;
  • Lower revenues from the SIP portfolio, primarily due to legacy Hospira
    product shortages in the U.S.; and
  • an operational decline from Prevnar 13, reflecting the expected
    decline in revenues for the Adult indication in the U.S.

Additionally, there was one less selling day in both U.S. and
international markets during full-year 2017 compared to full-year 2016,
resulting in an unfavorable impact on full-year 2017 revenues of
approximately $200 million compared to the prior year.

RECENT NOTABLE DEVELOPMENTS (Since October 31, 2017)

Product Developments

  • Bavencio (avelumab)
    • In December 2017, Merck KGaA, Darmstadt, Germany, which operates
      its biopharmaceutical business as EMD Serono in the U.S. and
      Canada (Merck KGaA), and Pfizer announced that the FDA granted
      Breakthrough Therapy Designation (BTD) for avelumab in combination
      with Inlyta (axitinib) for treatment-naïve patients with advanced
      renal cell carcinoma (RCC). The BTD is based on the preliminary
      evaluation of clinical data from JAVELIN Renal 100, a global Phase
      1b study assessing the safety and efficacy of avelumab in
      combination with Inlyta for the treatment of treatment-naïve
      patients with advanced RCC. BTD is designed to accelerate the
      development and review of potential medicines for serious
      conditions, and preliminary clinical evidence indicates that the
      therapy may demonstrate a substantial improvement over currently
      available therapies on one or more clinically significant
      endpoints. This is the second BTD granted to avelumab. In the
      U.S., Inlyta is approved as monotherapy for the treatment of
      advanced RCC after failure of one prior systemic therapy.
    • In November 2017, Merck KGaA and Pfizer announced that the Phase 3
      JAVELIN Gastric 300 trial did not meet its primary endpoint of
      superior overall survival with single-agent avelumab compared with
      physician's choice of chemotherapy. The trial investigated
      avelumab as a third-line treatment for unresectable, recurrent or
      metastatic gastric or gastroesophageal junction adenocarcinoma
      patients whose disease progressed following two prior therapeutic
      regimens, regardless of programmed death ligand-1 (PD-L1)
      expression. The safety profile of avelumab was consistent with
      that observed in the overall JAVELIN clinical development program.
      The JAVELIN Gastric 300 data will be further examined in an effort
      to better understand these results and will also be submitted for
      presentation at an upcoming medical congress. The outcome of
      JAVELIN Gastric 300 does not have any impact on current avelumab
      approvals.
  • Bosulif (bosutinib) -- In December 2017, Pfizer announced that
    the FDA approved a supplemental New Drug Application (sNDA) to expand
    the indication for Bosulif to include adult patients with
    newly-diagnosed chronic phase Philadelphia chromosome-positive chronic
    myelogenous leukemia (Ph+ CML). The sNDA was reviewed and approved
    under the FDA's Priority Review and accelerated approval programs
    based on molecular and cytogenetic response rates. Continued approval
    for this indication may be contingent upon verification and
    confirmation of clinical benefit in an ongoing long-term follow up
    trial. Bosulif was first approved in September 2012 in the U.S. for
    the treatment of adult patients with chronic, accelerated or blast
    phase Ph+ CML with resistance or intolerance to prior therapy.
  • Ibrance (palbociclib) -- In December 2017, Pfizer announced
    updated progression-free survival (PFS) results from the Phase 3
    PALOMA-2 trial reinforcing the clinical benefit of Ibrance combined
    with letrozole. The data, which were presented at the 2017 San Antonio
    Breast Cancer Symposium (SABCS), demonstrated that the combination of
    Ibrance plus letrozole reduced the risk of disease progression by 44%
    and improved median PFS by more than one year compared to letrozole
    plus placebo (27.6 months [95% CI: 22.4, 30.3] vs. 14.5 months [95%
    CI: 12.3, 17.1]) when used as the initial treatment for postmenopausal
    women with estrogen receptor-positive, human epidermal growth factor
    receptor 2-negative metastatic breast cancer (HR=0.56 [95% CI: 0.46,
    0.69]). This updated, post-hoc analysis included a median follow-up of
    more than three years, which is the longest to date of any Phase 3
    study of a CDK 4/6 inhibitor. Overall survival data were not yet
    mature at the time of this updated PFS analysis.
  • Steglatro (ertugliflozin), Steglujan (ertugliflozin and
    sitagliptin) and Segluromet (ertugliflozin and metformin hydrochloride)

    -- In December 2017, Pfizer and Merck, known as MSD outside the U.S.
    and Canada, announced that the FDA approved Steglatro (ertugliflozin)
    tablets, an oral sodium-glucose cotransporter 2 (SGLT2) inhibitor, as
    an adjunct to diet and exercise to improve glycemic control in adults
    with type 2 diabetes mellitus. The FDA also approved two fixed-dose
    combinations: Steglujan (ertugliflozin and sitagliptin) tablets as an
    adjunct to diet and exercise to improve glycemic control in adults
    with type 2 diabetes mellitus when treatment with both ertugliflozin
    and sitagliptin is appropriate, and Segluromet (ertugliflozin and
    metformin hydrochloride) tablets as an adjunct to diet and exercise to
    improve glycemic control in adults with type 2 diabetes mellitus who
    are not adequately controlled on a regimen containing ertugliflozin or
    metformin, or in patients who are already treated with both
    ertugliflozin and metformin. In January 2018, the Committee for
    Medicinal Products for Human Use (CHMP) of the European Medicines
    Agency recommended the approvals of Steglatro, Steglujan and
    Segluromet. The European Commission will now review the CHMP's
    recommendation, with a decision expected in the first half of 2018.
  • Sutent (sunitinib malate) -- In November 2017, Pfizer announced
    that the FDA approved a new indication expanding the use of Sutent to
    include the adjuvant treatment of adult patients at high risk of
    recurrent renal cell carcinoma following nephrectomy.
  • Xeljanz/Xeljanz XR (tofacitinib)
    • In December 2017, Pfizer announced that the FDA approved Xeljanz
      (5 mg twice daily) and Xeljanz XR (extended release 11 mg once
      daily) for the treatment of adult patients with active psoriatic
      arthritis (PsA) who have had an inadequate response or intolerance
      to methotrexate or other disease-modifying antirheumatic drugs
      (DMARDs). Xeljanz/Xeljanz XR is the first and only Janus kinase
      (JAK) inhibitor approved by the FDA for both moderate to severe
      rheumatoid arthritis and active PsA.
    • In December 2017, Pfizer announced that the FDA extended the
      Prescription Drug User Fee Act (PDUFA) date by three months for
      the sNDA for Xeljanz, under review for the treatment of adult
      patients with moderately to severely active ulcerative colitis
      (UC) who have demonstrated an inadequate response, loss of
      response, or intolerance to corticosteroids, azathioprine,
      6-mercaptopurine, or tumor necrosis factor inhibitor therapy. The
      FDA determined that additional review time was necessary due to
      information recently submitted by Pfizer. The updated PDUFA goal
      date for a decision by the FDA is in June 2018. The FDA has
      confirmed that the sNDA will be the subject of a Gastrointestinal
      Drugs Advisory Committee meeting that is scheduled for March 8,
      2018 to discuss the efficacy and safety data as well as
      benefit-risk considerations of the UC sNDA.

Pipeline Developments

A comprehensive update of Pfizer's development pipeline was published
today and is now available at www.pfizer.com/science/drug-product-pipeline.
It includes an overview of Pfizer's research and a list of compounds in
development with targeted indication and phase of development, as well
as mechanism of action for some candidates in Phase 1 and all candidates
from Phase 2 through registration.

  • PF-04965842 -- In December 2017, Pfizer announced the
    initiation of a Phase 3 program for its once-daily JAK1 inhibitor,
    PF-04965842, to evaluate its efficacy and safety for the treatment of
    moderate-to-severe atopic dermatitis (AD). This Phase 3 trial is a
    randomized, double-blind, placebo-controlled, parallel-group study and
    will evaluate 375 patients 12 years and older with moderate-to-severe
    AD. Trial participants will be randomly assigned to receive 200 mg
    once daily or 100 mg once daily or placebo. The primary endpoints are
    the proportion of patients achieving an Investigator Global Assessment
    (IGA) score of 0/1 and ≥2 point improvement, and the proportion of
    patients with at least a 75% or greater change from baseline in their
    Eczema Area and Severity Index (EASI) score. The treatment duration
    will be 12 weeks, the same duration as the Phase 2b study B7451006,
    with a 4 week safety follow-up period or the option to enter a
    long-term extension study at Week 12. The design of the Phase 3 trial
    is based on the Phase 2 results that were presented at the 26th
    Congress of the European Academy of Dermatology and Venereology in
    September 2017.
  • PF-05280586 (potential biosimilar to rituximab) -- In January
    2018, Pfizer announced that the Phase 3 REFLECTIONS B3281006, a
    comparative safety and efficacy study of PF-05280586 versus MabThera®(7)
    (rituximab-EU), met its primary endpoint, demonstrating equivalence in
    overall response rate for the first-line treatment of patients with
    CD20-positive, low tumor burden, follicular lymphoma. PF-05280586 is
    being developed by Pfizer as a potential biosimilar to Rituxan®
    (rituximab-U.S.)/MabThera®(7).
  • Talazoparib (MDV3800) -- In December 2017, Pfizer announced
    that the Phase 3 EMBRACA trial in patients with germline (inherited)
    BRCA1/2-positive (gBRCA+) locally advanced and/or metastatic breast
    cancer demonstrated superior PFS in patients treated with talazoparib,
    an investigational, oral, dual-mechanism poly ADP ribose polymerase
    (PARP) inhibitor that is taken once daily, compared to patients who
    received physician's choice standard of care chemotherapy. Median PFS
    was 8.6 months (95% CI: 7.2, 9.3) for patients treated with
    talazoparib and 5.6 months (95% CI: 4.2, 6.7) for those treated with
    chemotherapy [HR: 0.54 (95% CI: 0.41, 0.71), p<0.0001]. This
    represents a 46% reduction in the risk of disease progression. In
    addition, the proportion of patients achieving a complete or partial
    response (objective response rate) in the talazoparib group was more
    than twice that of the control arm (62.6% for talazoparib vs. 27.2%
    for chemotherapy [OR: 4.99 (95% CI: 2.9-8.8), p<0.0001]). The EMBRACA
    data was presented as an oral presentation at the 2017 SABCS.
  • Utomilumab (PF-05082566) -- In January 2018, Pfizer disclosed
    initial results from one arm of the Phase 1b JAVELIN Medley trial in
    PDx-naïve and PDx-experienced patients using concurrent dosing of
    utomilumab with avelumab. While the combination had a manageable
    safety profile, early signals of efficacy were insufficient to support
    advancing the utomilumab and avelumab combination into Phase 3 trials.
    Exploratory analyses to potentially identify patient segments that may
    benefit from this particular combination continue. Detailed results
    from this trial will be presented at a future medical meeting. The
    results of other ongoing studies involving utomilumab, including the
    triple combination of avelumab, utomilumab and PF-04518600 (OX40
    agonist) in solid tumors, will further inform next steps for
    utomilumab.

Corporate Developments

  • In January 2018, the FDA upgraded the status of Pfizer's McPherson,
    Kansas manufacturing facility to Voluntary Action Indicated (VAI)
    based on an October 2017 inspection. The change to VAI status will
    lift the compliance hold that the FDA placed on approval of pending
    applications and is an important step toward resolving the issues
    cited in the February 2017 FDA Warning Letter.
  • In January 2018, Pfizer announced its decision to end internal
    neuroscience discovery and early development efforts and re-allocate
    funding to other areas where the company has stronger scientific
    leadership. The company plans to create a dedicated neuroscience
    venture fund to support continued efforts to advance the field. The
    development of tanezumab and potential treatments for rare
    neuromuscular disorders is not impacted by this decision.
  • In January 2018, Pfizer and Sangamo Therapeutics, Inc. (Sangamo)
    announced a collaboration for the development of a potential gene
    therapy using zinc finger protein transcription factors (ZFP-TFs) to
    treat amyotrophic lateral sclerosis (ALS) and frontotemporal lobar
    degeneration (FTLD) linked to mutations of the C9ORF72 gene. Under the
    terms of the collaboration agreement, Sangamo will receive a $12
    million upfront payment from Pfizer. Sangamo will be responsible for
    the development of ZFP-TF candidates. Pfizer will be operationally and
    financially responsible for subsequent research, development,
    manufacturing and commercialization for the C9ORF72 ZFP-TF program and
    any resulting products. Sangamo is eligible to receive potential
    development and commercial milestone payments of up to $150 million,
    as well as tiered royalties on net sales.
  • In December 2017, Pfizer's board of directors declared a 34-cent
    first-quarter 2018 dividend on the company's common stock,
    representing an increase of approximately 6% compared to the company's
    first-quarter 2017 dividend. The first-quarter 2018 dividend is
    payable March 1, 2018 to shareholders of record at the close of
    business on February 2, 2018. Additionally, the board of directors
    also authorized a new $10 billion share repurchase program to be
    utilized over time. This new program is in addition to the $6.4
    billion remaining under the company's current authorization.
  • In December 2017, Pfizer and Basilea Pharmaceutica Ltd. (Basilea)
    entered into an agreement whereby Pfizer will be granted the exclusive
    development and commercialization rights in China and several
    countries in the Asia Pacific region to Cresemba (isavuconazole), a
    novel antifungal medicine for the treatment of adult patients with
    diagnosed invasive aspergillosis and mucormycosis. Under the terms of
    the agreement, Pfizer will have exclusive rights to develop,
    distribute and commercialize Cresemba in sixteen Asian Pacific
    countries and China (including Hong Kong and Macao). These rights do
    not include Japan. The specific financial terms of the agreement
    remain confidential. The agreement is subject to customary regulatory
    approval. In July 2017, Pfizer completed an agreement with Basilea to
    obtain the exclusive commercialization rights to Cresemba in Europe
    (with the exception of the Nordic countries). Since that time, Pfizer
    has assumed responsibility for the ongoing commercialization of
    Cresemba in Austria, France, Germany, Italy, and the United Kingdom
    and successfully launched Cresemba in Spain with additional launches
    expected in 2018 and beyond.
  • In November 2017, Pfizer announced a series of leadership and
    organizational changes with effect from January 1, 2018, including:
    • Dr. Albert Bourla, formerly Group President, Pfizer Innovative
      Health, was named Chief Operating Officer;
    • John Young, formerly Group President, Pfizer Essential Health, was
      named Group President, Pfizer Innovative Health, reporting to Dr.
      Bourla; and
    • Angela Hwang, formerly Global President and General Manager for
      Pfizer Inflammation & Immunology, was named Group President,
      Pfizer Essential Health, reporting to Dr. Bourla, and joins the
      company's Executive Leadership team.

    Additional members of the Pfizer Executive Leadership team reporting
    to Dr. Bourla include:

    • Dr. Kirsten Lund-Jurgensen – Executive Vice President and
      President Pfizer Global Supply
    • Dr. Rod MacKenzie – Executive Vice President, Chief Development
      Officer
    • Laurie Olson – Executive Vice President, Strategy and Commercial
      Operations

    In addition to Dr. Bourla, the following members of Pfizer's
    Executive Leadership team will continue to report to Ian Read,
    Pfizer's Chairman and CEO:

    • Frank D'Amelio – Executive Vice President, Business Operations and
      Chief Financial Officer
    • Dr. Mikael Dolsten – Executive Vice President and President,
      Worldwide Research & Development
    • Chuck Hill – Executive Vice President, Worldwide Human Resources
    • Rady Johnson – Executive Vice President, Chief Compliance and Risk
      Officer
    • Doug Lankler – Executive Vice President, General Counsel
    • Dr. Freda Lewis-Hall – Executive Vice President and Chief Medical
      Officer
    • Sally Susman – Executive Vice President, Corporate Affairs

Please find Pfizer's press release and associated financial tables,
including reconciliations of certain GAAP Reported(1) to
non-GAAP Adjusted(2) information, at the following hyperlink:

https://s21.q4cdn.com/317678438/files/doc_financials/Quarterly/2017/Q4_2017_PFE_Earnings_Release.pdf

(Note: If clicking on the above link does not open up a new web page,
you may need to cut and paste the above URL into your browser's address
bar.)

For additional details, see the associated financial schedules and
product revenue tables attached to the press release located at the
hyperlink referred to above and the attached disclosure notice.

(1)   Revenues is defined as revenues in accordance with U.S. generally
accepted accounting principles (GAAP). Reported net income is
defined as net income attributable to Pfizer Inc. in accordance with
U.S. GAAP. Reported diluted earnings per share (EPS) is defined as
reported diluted EPS attributable to Pfizer Inc. common shareholders
in accordance with U.S. GAAP.
(2)

Adjusted income and its components and Adjusted diluted EPS are
defined as reported U.S. GAAP net income(1) and its
components and reported diluted EPS(1) excluding
purchase accounting adjustments, acquisition-related costs,
discontinued operations and certain significant items (some of
which may recur, such as restructuring or legal charges, but which
management does not believe are reflective of ongoing core
operations), including significant changes resulting from tax
legislation such as the Tax Cuts and Jobs Act ("TCJA"). Adjusted
cost of sales, Adjusted selling, informational and administrative
(SI&A) expenses, Adjusted research and development (R&D) expenses
and Adjusted other (income)/deductions are income statement line
items prepared on the same basis as, and therefore components of,
the overall Adjusted income measure. As described in the
"Management's Discussion and Analysis of Financial Condition and
Results of Operations––Non-GAAP Financial Measure (Adjusted
Income)" section of Pfizer's Quarterly Report on Form 10-Q for the
fiscal quarter ended October 1, 2017, management uses Adjusted
income, among other factors, to set performance goals and to
measure the performance of the overall company. Because Adjusted
income is an important internal measurement for Pfizer, management
believes that investors' understanding of our performance is
enhanced by disclosing this performance measure. Pfizer reports
Adjusted income, certain components of Adjusted income, and
Adjusted diluted EPS in order to portray the results of the
company's major operations––the discovery, development,
manufacture, marketing and sale of prescription medicines,
vaccines and consumer healthcare (OTC) products––prior to
considering certain income statement elements. See the
accompanying reconciliations of certain GAAP Reported to Non-GAAP
Adjusted information for the fourth quarter and full year of 2017
and 2016. The Adjusted income and its components and Adjusted
diluted EPS measures are not, and should not be viewed as,
substitutes for U.S. GAAP net income and its components and
diluted EPS.

(3) Pfizer's fiscal year-end for international subsidiaries is November
30 while Pfizer's fiscal year-end for U.S. subsidiaries is December
31. Therefore, Pfizer's fourth quarter and full year for U.S.
subsidiaries reflect the three and twelve months ending on December
31, 2017 and December 31, 2016 while Pfizer's fourth quarter and
full year for subsidiaries operating outside the U.S. reflect the
three and twelve months ending on November 30, 2017 and November 30,
2016.
(4) The following acquisitions and divestitures impacted financial
results for the periods presented:
  • On June 24, 2016, Pfizer acquired Anacor Pharmaceuticals, Inc.
    (Anacor). Therefore, financial results for full-year 2017 reflect
    legacy Anacor operations while financial results for full-year 2016
    reflect approximately six months of legacy Anacor operations.
    Financial results for the fourth quarter of 2017 and 2016 both reflect
    legacy Anacor operations.
  • On September 28, 2016, Pfizer acquired Medivation, Inc. (Medivation).
    Therefore, financial results for fourth-quarter and full-year 2017
    reflect legacy Medivation operations while financial results for
    full-year 2016 reflect approximately three months of legacy Medivation
    operations. Financial results for the fourth quarter of 2017 and 2016
    both reflect legacy Medivation operations.
  • On December 22, 2016, Pfizer completed the acquisition of the
    development and commercialization rights to AstraZeneca's small
    molecule anti-infective business, primarily outside the U.S.
    Therefore, financial results for fourth-quarter and full-year 2017
    reflect contributions from certain legacy AstraZeneca anti-infective
    products while fourth-quarter and full-year 2016 do not include any
    contributions from legacy AstraZeneca anti-infective products.
  • On February 3, 2017, Pfizer completed the sale of its global infusion
    therapy net assets, Hospira Infusion Systems (HIS). Therefore,
    financial results for the fourth quarter of 2017 do not reflect any
    contribution from legacy HIS operations, while full-year 2017 reflects
    approximately one month of legacy HIS domestic operations and
    approximately two months of legacy HIS international operations(3).
    Financial results for fourth-quarter and full-year 2016 both reflect
    legacy HIS global operations, respectively.
(5)   References to operational variances in this press release pertain to
period-over-period growth rates that exclude the impact of foreign
exchange. The operational variances are determined by multiplying or
dividing, as appropriate, the current period U.S. dollar results by
the current period average foreign exchange rates and then
multiplying or dividing, as appropriate, those amounts by the
prior-year period average foreign exchange rates. Although exchange
rate changes are part of Pfizer's business, they are not within
Pfizer's control. Exchange rate changes, however, can mask positive
or negative trends in the business; therefore, Pfizer believes
presenting operational variances provides useful information in
evaluating the results of its business.
(6) The 2018 financial guidance reflects the following:
  • Pfizer does not provide guidance for GAAP Reported financial measures
    (other than Revenues) or a reconciliation of forward-looking non-GAAP
    financial measures to the most directly comparable GAAP Reported
    financial measures on a forward-looking basis because it is unable to
    predict with reasonable certainty the ultimate outcome of pending
    litigation, unusual gains and losses, acquisition-related expenses and
    potential future asset impairments without unreasonable effort. These
    items are uncertain, depend on various factors, and could have a
    material impact on GAAP Reported results for the guidance period.
  • Does not assume the completion of any business development
    transactions not completed as of December 31, 2017, including any
    one-time upfront payments associated with such transactions.
  • Exchange rates assumed are as of mid-January 2018.
  • Reflects an anticipated negative revenue impact of $2.0 billion due to
    recent and expected generic and biosimilar competition for certain
    products that have recently lost or are anticipated to soon lose
    patent protection. Assumes no generic competition for Lyrica in the
    U.S. until June 2019, which is contingent upon a six-month patent-term
    extension granted by the FDA for pediatric exclusivity, which the
    company is currently pursuing.
  • Reflects the anticipated favorable impact of $900 million on revenues
    and $0.06 on Adjusted diluted EPS(2) as a result of
    favorable changes in foreign exchange rates relative to the U.S.
    dollar compared to foreign exchange rates from 2017.
  • Guidance for Adjusted diluted EPS(2) assumes diluted
    weighted-average shares outstanding of approximately 6.0 billion
    shares, which reflects anticipated share repurchases totaling $5.0
    billion in 2018. Dilution related to share-based employee compensation
    programs is expected to offset by approximately half the reduction in
    shares associated with these anticipated share repurchases.
  • Guidance for the effective tax rate on Adjusted income(2)
    reflects the enactment of the TCJA.
(7)   Rituximab is marketed in the U.S. under the brand name Rituxan®
and marketed in the E.U. and other regions under the brand name
MabThera®. Rituxan® and MabThera®
are registered trademarks of Genentech, Inc.

DISCLOSURE NOTICE: Except where otherwise noted, the information
contained in this earnings release and the related attachments is as of
January 30, 2018. We assume no obligation to update any forward-looking
statements contained in this earnings release and the related
attachments as a result of new information or future events or
developments.

This earnings release and the related attachments contain
forward-looking statements about our anticipated future operating and
financial performance, business plans and prospects, in-line products
and product candidates, including anticipated regulatory submissions,
data read-outs, approvals, performance, timing of exclusivity and
potential benefits of Pfizer's products and product candidates,
strategic reviews, capital allocation, business-development plans, the
benefits expected from our acquisitions and other business development
activities, manufacturing and product supply and plans relating to share
repurchases and dividends, among other things, that involve substantial
risks and uncertainties. You can identify these statements by the fact
that they use future dates or use words such as "will," "may," "could,"
"likely," "ongoing," "anticipate," "estimate," "expect," "project,"
"intend," "plan," "believe," "target," "forecast," "goal," "objective,"
"aim" and other words and terms of similar meaning. Among the factors
that could cause actual results to differ materially from past results
and future plans and projected future results are the following:

  • the outcome of research and development activities, including, without
    limitation, the ability to meet anticipated pre-clinical and clinical
    trial commencement and completion dates, regulatory submission and
    approval dates, and launch dates for product candidates, as well as
    the possibility of unfavorable pre-clinical and clinical trial
    results, including unfavorable new clinical data and additional
    analyses of existing clinical data;
  • decisions by regulatory authorities regarding whether and when to
    approve our drug applications, which will depend on the assessment by
    such regulatory authorities of the benefit-risk profile suggested by
    the totality of the efficacy and safety information submitted;
    decisions by regulatory authorities regarding labeling, ingredients
    and other matters that could affect the availability or commercial
    potential of our products; and uncertainties regarding our ability to
    address the comments received by us from regulatory authorities such
    as the U.S. Food and Drug Administration (FDA) and the European
    Medicines Agency with respect to certain of our drug applications to
    the satisfaction of those authorities;
  • 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 for a product or changes in the
    labeling for, and/or increased or new concerns about the safety or
    efficacy of, a product that could affect its availability or
    commercial potential;
  • risks associated with preliminary, early stage or interim data,
    including the risk that final results of studies for which
    preliminary, early stage or interim data have been provided and/or
    additional clinical trials may be different from (including less
    favorable than) the preliminary, early stage or interim data results
    and may not support further clinical development of the applicable
    product candidate or indication;
  • the success of external business-development activities, including the
    ability to satisfy the conditions to closing of announced transactions
    in the anticipated time frame or at all or to realize the anticipated
    benefits of such transactions;
  • competitive developments, including the impact on our competitive
    position of new product entrants, in-line branded products, generic
    products, private label products, biosimilars 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 and regulatory authorities in certain
    other countries of an abbreviated legal pathway to approve biosimilar
    products, which could subject our biologic products to competition
    from biosimilar products, with attendant competitive pressures, after
    the expiration of any applicable exclusivity period and patent rights;
  • risks related to our ability to develop and launch biosimilars,
    including risks associated with "at risk" launches, defined as the
    marketing of a product by Pfizer before the final resolution of
    litigation (including any appeals) brought by a third party alleging
    that such marketing would infringe one or more patents owned or
    controlled by the third party;
  • the ability to meet competition from generic, branded and biosimilar
    products after the loss or expiration of patent protection for our
    products or competitor products;
  • the ability to successfully market both new and existing products
    domestically and internationally;
  • difficulties or delays in manufacturing, including delays caused by
    natural events, such as hurricanes; supply shortages at our
    facilities; and legal or regulatory actions, such as warning letters,
    suspension of manufacturing, seizure of product, debarment,
    injunctions or voluntary recall of a product;
  • trade buying patterns;
  • the impact of existing and future legislation and regulatory
    provisions on product exclusivity;
  • trends toward managed care and healthcare cost containment, and our
    ability to obtain or maintain timely or adequate pricing or formulary
    placement for our products;
  • the impact of any significant spending reductions or cost controls
    affecting Medicare, Medicaid or other publicly funded or subsidized
    health programs or changes in the tax treatment of employer-sponsored
    health insurance that may be implemented;
  • the impact of any U.S. healthcare reform or legislation, including any
    repeal, substantial modification or invalidation of some or all of the
    provisions of the U.S. Patient Protection and Affordable Care Act, as
    amended by the Health Care and Education Reconciliation Act;
  • U.S. federal or state legislation or regulatory action and/or policy
    efforts affecting, among other things, pharmaceutical product pricing,
    reimbursement or access, including under Medicaid, Medicare and other
    publicly funded or subsidized health programs; patient out-of-pocket
    costs for medicines, manufacturer prices and/or price increases that
    could result in new mandatory rebates and discounts or other pricing
    restrictions; the importation of prescription drugs from outside the
    U.S. at prices that are regulated by governments of various foreign
    countries; restrictions on 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 the cost differences and minimizes
    the therapeutic differences among pharmaceutical products and
    restricts access to innovative medicines; as well as pricing pressures
    for our products as a result of highly competitive insurance markets;
  • legislation or regulatory action in markets outside the U.S. affecting
    pharmaceutical product pricing, reimbursement or access, including, in
    particular, continued government-mandated reductions in prices and
    access restrictions for certain biopharmaceutical products to control
    costs in those markets;
  • 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, unstable governments and legal
    systems and inter-governmental disputes;
  • contingencies related to actual or alleged environmental contamination;
  • claims and concerns that may arise regarding the safety or efficacy of
    in-line products and product candidates;
  • any significant breakdown, infiltration or interruption of our
    information technology systems and infrastructure;
  • legal defense costs, insurance expenses and settlement costs;
  • the risk of an adverse decision or settlement and the adequacy of
    reserves related to legal proceedings, including patent litigation,
    product liability and other product-related litigation, including
    personal injury, consumer, off-label promotion, securities, antitrust
    and breach of contract claims, commercial, environmental, government
    investigations, employment and other legal proceedings, including
    various means for resolving asbestos litigation, as well as tax issues;
  • the risk that our currently pending or future patent applications may
    not result in issued patents, or be granted on a timely basis, or any
    patent-term extensions that we seek may not be granted on a timely
    basis, if at all;
  • our ability to protect our patents and other intellectual property,
    both domestically and internationally;
  • interest rate and foreign currency exchange rate fluctuations,
    including the impact of possible currency devaluations in countries
    experiencing high inflation rates;
  • governmental laws and regulations affecting domestic and foreign
    operations, including, without limitation, tax obligations and changes
    affecting the tax treatment by the U.S. of income earned outside the
    U.S. that may result from pending and possible future proposals,
    including further clarifications and/or interpretations of the
    recently passed Tax Cuts and Jobs Act;
  • any significant issues involving our largest wholesale distributors,
    which account for a substantial portion of our revenues;
  • the possible impact of the increased presence of counterfeit medicines
    in the pharmaceutical supply chain on our revenues and on patient
    confidence in the integrity of our medicines;
  • the end result of any negotiations between the U.K. government and the
    EU regarding the terms of the U.K.'s exit from the EU, which could
    have implications on our research, commercial and general business
    operations in the U.K. and the EU, including the approval and supply
    of our products;
  • any significant issues that may arise related to the outsourcing of
    certain operational and staff functions to third parties, including
    with regard to quality, timeliness and compliance with applicable
    legal requirements and industry standards;
  • any significant issues that may arise related to our joint ventures
    and other third-party business arrangements;
  • changes in U.S. generally accepted accounting principles;
  • further clarifications and/or changes in interpretations of existing
    laws and regulations, or changes in laws and regulations, in the U.S.
    and other countries;
  • 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 foreign-exchange and
    interest-rate agreements of challenging global economic conditions and
    recent and possible future changes in global financial markets; and
    the related risk that our allowance for doubtful 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;
  • the impact of purchase accounting adjustments, acquisition-related
    costs, discontinued operations and certain significant items;
  • the impact of acquisitions, divestitures, restructurings, internal
    reorganizations, product recalls, withdrawals and other unusual items,
    including our ability to realize the projected benefits of our
    cost-reduction and productivity initiatives and of the internal
    separation of our commercial operations into our current operating
    structure;
  • the risk of an impairment charge related to our intangible assets,
    goodwill or equity-method investments;
  • risks related to internal control over financial reporting;
  • risks and uncertainties related to our acquisitions of Hospira, Inc.
    (Hospira), Anacor Pharmaceuticals, Inc. (Anacor), Medivation, Inc.
    (Medivation) and AstraZeneca's small molecule anti-infectives
    business, including, among other things, the ability to realize the
    anticipated benefits of those acquisitions, including the possibility
    that expected cost savings related to the acquisition of Hospira and
    accretion related to the acquisitions of Hospira, Anacor and
    Medivation will not be realized or will not be realized within the
    expected time frame; the risk that the businesses will not be
    integrated successfully; disruption from the transactions making it
    more difficult to maintain business and operational relationships;
    risks related to our ability to grow revenues for Xtandi and expand
    Xtandi into the non-metastatic castration-resistant prostate cancer
    setting; significant transaction costs; and unknown liabilities; and
  • risks and uncertainties related to our evaluation of strategic
    alternatives for our Consumer Healthcare business, including, among
    other things, the ability to realize the anticipated benefits of any
    strategic alternatives we may pursue for our Consumer Healthcare
    business, the potential for disruption to our business and diversion
    of management's attention from other aspects of our business, the
    possibility that such strategic alternatives will not be completed on
    terms that are advantageous to Pfizer, the possibility that we may be
    unable to realize a higher value for Pfizer Consumer Healthcare
    through strategic alternatives and unknown liabilities.

We cannot guarantee that any forward-looking statement will be realized.
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. Investors should bear this in
mind as they consider forward-looking statements, and are cautioned not
to put undue reliance on forward-looking statements. A further list and
description of risks, uncertainties and other matters can be found in
our Annual Report on Form 10-K for the fiscal year ended December 31,
2016 and in our subsequent reports on Form 10-Q, in each case including
in the sections thereof captioned "Forward-Looking Information and
Factors That May Affect Future Results" and "Item 1A. Risk Factors", and
in our subsequent reports on Form 8-K.

The operating segment information provided in this earnings release and
the related attachments does not purport to represent the revenues,
costs and income from continuing operations before provision for taxes
on income that each of our operating segments would have recorded had
each segment operated as a standalone company during the periods
presented.

This earnings release may include 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 differing interpretations, and, even
when we view data as sufficient to support the safety and/or
effectiveness of a product candidate or a new indication for an in-line
product, regulatory authorities may not share our views and may require
additional data or may deny approval altogether.

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