UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July ~~4, 2021~~3, 2022

☐ 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 registrant as specified in its charter)


Delaware			13-5315170
(State of Incorporation)			(I.R.S. Employer Identification No.)

235 East 42nd Street, New York, New York 10017

(Address of principal executive offices) (zip code)

(212) 733-2323

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $.05 par value

PFE

~~New York Stock Exchange~~

~~0.250% Notes due 2022~~

~~PFE22~~

New York Stock Exchange

1.000% Notes due 2027

PFE27

New York Stock Exchange

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			x			No			☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).


Yes			x			No			☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large Accelerated filer x Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Yes			☐			No			x

At August ~~9, 2021,~~5, 2022, ~~5,606,688,356~~5,612,351,809 shares of the issuer’s voting common stock were outstanding.


TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION			Page

Item 1.
Financial Statements

Condensed Consolidated Statements of Income			5

Condensed Consolidated Statements of Comprehensive Income			6

Condensed Consolidated Balance Sheets			7

Condensed Consolidated Statements of Equity			8

Condensed Consolidated Statements of Cash Flows			109

Notes to Condensed Consolidated Financial Statements			1110

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations			37

Item 3.
Quantitative and Qualitative Disclosures About Market Risk			5859

Item 4.
Controls and Procedures			59

PART II. OTHER INFORMATION

Item 1.
Legal Proceedings			59

Item 1A.
Risk Factors			59

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds			59

Item 3.
Defaults Upon Senior Securities			N/A

Item 4.
Mine Safety Disclosures			N/A

Item 5.
Other Information			N/A

Item 6 .
Exhibits			5960

Signature			60

N/A = Not Applicable


DEFINED TERMS

Unless the context requires otherwise, references to “Pfizer,” “the Company,” “we,” “us” or “our” in this Form 10-Q (defined below) refer to Pfizer Inc. and its subsidiaries. Pfizer’s fiscal quarter-end for subsidiaries operating outside the U.S. is as of and for the three and six months ended May 29, 2022 and May 30, 2021, and for U.S. subsidiaries is as of and for the three and six months ended July 3, 2022 and July 4, 2021. References to “Notes” in this Form 10-Q are to the ~~notes~~Notes to the ~~condensed~~Condensed or ~~consolidated financial statements~~Consolidated Financial Statements in this Form 10-Q or in our ~~2020~~2021 Form 10-K. We also have used several other terms in this Form 10-Q, most of which are explained or ~~defined:~~defined below:


~~2020~~2021 Form 10-K			Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021
ACIP			Advisory Committee on Immunization Practices
ALK			anaplastic lymphoma kinase
Alliance revenues			Revenues from alliance agreements under which we co-promote products discovered or developed by other companies or us
~~Allogene~~Arena			~~Allogene Therapeutics, Inc.~~
~~Array~~			~~Array BioPharma~~Arena Pharmaceuticals, Inc.
Astellas			Astellas Pharma Inc., Astellas US LLC and Astellas Pharma US, Inc.
ATTR-CM			transthyretin amyloid cardiomyopathy
Biohaven			Biohaven Pharmaceutical Holding Company Ltd.
BioNTech			BioNTech SE
Biopharma			Pfizer Biopharmaceuticals Group
BLA			Biologics License Application
BMS			Bristol-Myers Squibb Company
~~BNT162b2~~BNT162b2*			Pfizer-BioNTech COVID-19 Vaccine, also known as Comirnaty
BOD			Board of Directors
CDC			U.S. Centers for Disease Control and Prevention
CGRP			calcitonin gene-related peptide
CMA			conditional marketing ~~authorization~~authorisation
Comirnaty*			Pfizer-BioNTech COVID-19 Vaccine, also known as BNT162b2
Consumer Healthcare JV			GSK Consumer Healthcare JV
COVID-19			novel coronavirus disease of 2019
Developed Europe			Includes the following markets: Western Europe, Scandinavian countries and Finland
Developed Markets			Includes the following markets: U.S., Developed Europe, Japan, ~~Canada,~~South Korea, Australia, ~~South Korea~~Canada and New Zealand
Developed Rest of World			Includes the following markets: Japan, ~~Canada,~~South Korea, Australia, ~~South Korea~~Canada and New Zealand
EC			European Commission
EMA			European Medicines Agency
Emerging Markets			Includes, but is not limited to, the following markets: Asia (excluding Japan and South Korea), Latin America, ~~Eastern~~Central Europe, ~~Central~~Eastern Europe, the Middle East, Africa and Turkey
EPS			earnings per share
EU			European Union
EUA			emergency use authorization
Exchange Act			Securities Exchange Act of 1934, as amended
FDA			U.S. Food and Drug Administration
FFDCA			U.S. Federal Food, Drug and Cosmetic Act
Form 10-Q			This Quarterly Report on Form 10-Q for the quarterly period ended July ~~4, 2021~~3, 2022
GAAP			Generally Accepted Accounting Principles
GIST			gastrointestinal stromal tumors
GPD			Global Product Development organization
GSK			GlaxoSmithKline plc
Haleon			Haleon plc
HIPAA			Health Insurance Portability and Accountability Act of 1996
Hospira			Hospira, Inc.
IPR&D			in-process research and development
IRS			U.S. Internal Revenue Service
JAK			Janus kinase
JV			joint venture
King			King Pharmaceuticals LLC (formerly King Pharmaceuticals, Inc.)
LIBOR			London Interbank Offered Rate
~~Lilly~~			~~Eli Lilly & Company~~
LOE			loss of exclusivity
~~MCO~~			~~managed care organization~~
mCRC			metastatic colorectal cancer
mCRPC			metastatic castration-resistant prostate cancer
mCSPC			metastatic castration-sensitive prostate cancer
MD&A			Management’s Discussion and Analysis of Financial Condition and Results of Operations
~~Meridian~~			~~Meridian Medical Technologies, Inc.~~
~~MTM~~			~~mark-to-market~~
~~Mylan~~			~~Mylan N.V.~~
~~Mylan-Japan collaboration~~			~~a pre-existing strategic collaboration between Pfizer and Mylan for generic drugs in Japan that terminated on December 21, 2020~~


Meridian			Meridian Medical Technologies, Inc.
mRNA			messenger ribonucleic acid
MSA			Manufacturing Supply Agreement
Mylan			Mylan N.V.
Myovant			Myovant Sciences Ltd.
NDA			New Drug Application
nmCRPC			non-metastatic castration-resistant prostate cancer
NSCLC			non-small cell lung cancer
OPKO			OPKO Health, Inc.
OTC			over-the-counter
~~PBM~~Paxlovid*			~~pharmacy benefit manager~~an oral COVID-19 treatment (nirmatrelvir [PF-07321332] tablets and ritonavir tablets)
~~PDUFA~~PC1			~~Prescription Drug User Fee Act~~Pfizer CentreOne
PGS			Pfizer Global Supply
Pharmacia			Pharmacia Corporation
PRAC			Pharmacovigilance Risk Assessment Committee
PsA			psoriatic arthritis
QTD			Quarter-to-date or three months ended
RA			rheumatoid arthritis
RCC			renal cell carcinoma
R&D			research and development
ReViral			ReViral Ltd.
Sandoz			Sandoz, Inc., a division of Novartis AG
SEC			U.S. Securities and Exchange Commission
~~SI&A~~sNDA			~~selling, informational and administrative~~supplemental new drug application
TSAs			transition service arrangements
UC			ulcerative colitis
U.K.			United Kingdom
U.S.			United States
Upjohn Business			Pfizer’s former global, primarily off-patent branded and generics business, which ~~includes~~included a portfolio of 20 globally recognized solid oral dose brands, including Lipitor, Lyrica, Norvasc, Celebrex and Viagra, as well as a U.S.-based generics platform, Greenstone, that was spun-off on November 16, 2020 and combined with Mylan to create Viatris
~~Valneva~~			~~Valneva SE~~
Viatris			Viatris Inc.
ViiV			ViiV Healthcare Limited
WRDM			Worldwide Research, Development and Medical
YTD			Year-to-date or six months ended

*This Form 10-Q includes discussion of the COVID-19 vaccine that Pfizer has co-developed with BioNTech (BNT162b2) and our oral COVID-19 treatment (Paxlovid). The vaccine may be referred to by its brand name, Comirnaty (approved under a BLA in the U.S.), or as BNT162b2 (authorized under EUA in the U.S.). The vaccine is FDA-approved to prevent COVID-19 in individuals 12 years of age and older. In addition, Comirnaty/BNT162b2 is authorized for emergency use by the FDA for individuals 6 months of age and older, as a third dose for certain immunocompromised individuals 5 years of age and older, as a booster dose for individuals 5 years of age and older and as a second booster dose for individuals 50 years of age and older and for certain immunocompromised individuals 12 years of age and older. Paxlovid is authorized for emergency use by the FDA under an EUA for the treatment of mild-to-moderate COVID-19 in adults and pediatric patients (12 years of age and older weighing at least 40 kg [88 lbs]) with positive results of direct SARS CoV-2 viral testing, and who are at high-risk for progression to severe COVID-19, including hospitalization or death. The emergency uses are only authorized for the duration of the declaration that circumstances exist justifying the authorization of emergency use of the medical product under Section 564(b)(1) of the FFDCA unless the declaration is terminated or authorization revoked sooner. The FDA has issued EUAs to certain other companies for products intended for the prevention or treatment of COVID-19 and may continue to do so during the duration of the Declaration. See the EUA Fact Sheets at www.cvdvaccine-us.com and www.covid19oralrx.com.

This Form 10-Q 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 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.

Some amounts in this Form 10-Q may not add due to rounding. All percentages have been calculated using unrounded amounts. All trademarks mentioned are the property of their owners.

The information contained on our website, our Facebook, Instagram, YouTube and LinkedIn pages or our Twitter accounts, or any third-party website, is not incorporated by reference into this Form 10-Q.


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PFIZER INC. AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
(MILLIONS, EXCEPT PER COMMON SHARE DATA)	(MILLIONS, EXCEPT PER COMMON SHARE DATA)	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020		(MILLIONS, EXCEPT PER COMMON SHARE DATA)	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Revenues	Revenues	$	18,977	$	9,864	$	33,559	$	19,947	Revenues	$	27,742	$	18,899	$	53,402	$	33,415
Costs and expenses:	Costs and expenses:									Costs and expenses:
Cost of sales(a)	Cost of sales(a)	7,049		1,826		11,259		3,766		Cost of sales(a)	8,648		6,996		18,632		11,153
Selling, informational and administrative expenses(a)	Selling, informational and administrative expenses(a)	2,928		2,659		5,712		5,200		Selling, informational and administrative expenses(a)	3,048		2,923		5,642		5,700
Research and development expenses(a)	Research and development expenses(a)	2,459		2,078		4,473		3,750		Research and development expenses(a)	2,815		2,239		5,116		4,233
Acquired in-process research and development expenses(b)										Acquired in-process research and development expenses(b)	1		219		356		238
Amortization of intangible assets	Amortization of intangible assets	931		869		1,802		1,718		Amortization of intangible assets	822		917		1,657		1,776
Restructuring charges and certain acquisition-related costs	Restructuring charges and certain acquisition-related costs	(1)		360		22		414		Restructuring charges and certain acquisition-related costs	189		(1)		381		21
(Gain) on completion of Consumer Healthcare JV transaction		0		0		0		(6)

Other (income)/deductions––net	Other (income)/deductions––net	(998)		(955)		(2,001)		(764)		Other (income)/deductions––net	772		(1,343)		1,122		(2,347)
Income from continuing operations before provision for taxes on income		6,609		3,026		12,291		5,868
Provision for taxes on income		1,043		422		1,849		782
Income from continuing operations before provision/(benefit) for taxes on income										Income from continuing operations before provision/(benefit) for taxes on income	11,447		6,949		20,497		12,641
Provision/(benefit) for taxes on income										Provision/(benefit) for taxes on income	1,570		1,123		2,742		1,931
Income from continuing operations	Income from continuing operations	5,565		2,604		10,443		5,087		Income from continuing operations	9,877		5,825		17,756		10,710

Income from discontinued operations––net of tax		24		893		32		1,774
Discontinued operations––net of tax										Discontinued operations––net of tax	34		(236)		26		(235)

Net income before allocation to noncontrolling interests	Net income before allocation to noncontrolling interests	5,589		3,497		10,475		6,860		Net income before allocation to noncontrolling interests	9,911		5,589		17,781		10,475
Less: Net income attributable to noncontrolling interests	Less: Net income attributable to noncontrolling interests	26		8		35		17		Less: Net income attributable to noncontrolling interests	6		26		12		35
Net income attributable to Pfizer Inc. common shareholders	Net income attributable to Pfizer Inc. common shareholders	$	5,563	$	3,489	$	10,440	$	6,843	Net income attributable to Pfizer Inc. common shareholders	$	9,906	$	5,563	$	17,769	$	10,440

Earnings per common share––basic:	Earnings per common share––basic:									Earnings per common share––basic:
Income from continuing operations attributable to Pfizer Inc. common shareholders	Income from continuing operations attributable to Pfizer Inc. common shareholders	$	0.99	$	0.47	$	1.86	$	0.91	Income from continuing operations attributable to Pfizer Inc. common shareholders	$	1.76	$	1.04	$	3.17	$	1.91
Income from discontinued operations––net of tax		0		0.16		0.01		0.32
Discontinued operations––net of tax										Discontinued operations––net of tax	0.01		(0.04)		—		(0.04)
Net income attributable to Pfizer Inc. common shareholders	Net income attributable to Pfizer Inc. common shareholders	$	0.99	$	0.63	$	1.87	$	1.23	Net income attributable to Pfizer Inc. common shareholders	$	1.77	$	0.99	$	3.17	$	1.87

Earnings per common share––diluted:	Earnings per common share––diluted:									Earnings per common share––diluted:
Income from continuing operations attributable to Pfizer Inc. common shareholders	Income from continuing operations attributable to Pfizer Inc. common shareholders	$	0.98	$	0.46	$	1.84	$	0.90	Income from continuing operations attributable to Pfizer Inc. common shareholders	$	1.73	$	1.02	$	3.09	$	1.88
Income from discontinued operations––net of tax		0		0.16		0.01		0.32
Discontinued operations––net of tax										Discontinued operations––net of tax	0.01		(0.04)		—		(0.04)
Net income attributable to Pfizer Inc. common shareholders	Net income attributable to Pfizer Inc. common shareholders	$	0.98	$	0.62	$	1.84	$	1.22	Net income attributable to Pfizer Inc. common shareholders	$	1.73	$	0.98	$	3.10	$	1.84

Weighted-average shares––basic	Weighted-average shares––basic	5,598		5,554		5,591		5,550		Weighted-average shares––basic	5,593		5,598		5,605		5,591
Weighted-average shares––diluted	Weighted-average shares––diluted	5,678		5,619		5,670		5,616		Weighted-average shares––diluted	5,712		5,678		5,735		5,670

(a)Exclusive of amortization of intangible ~~assets, except as disclosed in~~assets.

(b)See Note 9 ~~in this Form 10-Q and~~ ~~Note 1L~~ ~~in our 2020 Form 10-K.~~1D.

See Accompanying Notes.

PFIZER INC. AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
(MILLIONS)	(MILLIONS)	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020		(MILLIONS)	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Net income before allocation to noncontrolling interests	Net income before allocation to noncontrolling interests	$	5,589	$	3,497	$	10,475	$	6,860	Net income before allocation to noncontrolling interests	$	9,911	$	5,589	$	17,781	$	10,475

Foreign currency translation adjustments, net	Foreign currency translation adjustments, net	36		(173)		501		(1,430)		Foreign currency translation adjustments, net	(1,268)		36		(1,631)		501

Unrealized holding gains/(losses) on derivative financial instruments, net	Unrealized holding gains/(losses) on derivative financial instruments, net	(248)		213		(35)		(288)		Unrealized holding gains/(losses) on derivative financial instruments, net	651		(248)		854		(35)
Reclassification adjustments for (gains)/losses included in net income(a)	Reclassification adjustments for (gains)/losses included in net income(a)	(21)		(186)		238		(167)		Reclassification adjustments for (gains)/losses included in net income(a)	(144)		(21)		(357)		238
		(270)		27		203		(455)			507		(270)		497		203
Unrealized holding gains/(losses) on available-for-sale securities, net	Unrealized holding gains/(losses) on available-for-sale securities, net	59		42		138		(9)		Unrealized holding gains/(losses) on available-for-sale securities, net	(486)		59		(620)		138
Reclassification adjustments for (gains)/losses included in net income(b)	Reclassification adjustments for (gains)/losses included in net income(b)	61		44		(181)		59		Reclassification adjustments for (gains)/losses included in net income(b)	255		61		487		(181)

		120		87		(43)		50			(232)		120		(132)		(43)

Reclassification adjustments related to amortization of prior service costs and other, net	Reclassification adjustments related to amortization of prior service costs and other, net	(39)		(45)		(79)		(89)		Reclassification adjustments related to amortization of prior service costs and other, net	(31)		(39)		(68)		(79)
Reclassification adjustments related to curtailments of prior service costs and other, net										Reclassification adjustments related to curtailments of prior service costs and other, net	1		(1)		(10)		(5)

Other		(1)		5		(5)		4
		(41)		(40)		(84)		(85)			(30)		(41)		(78)		(84)
Other comprehensive income/(loss), before tax	Other comprehensive income/(loss), before tax	(155)		(100)		577		(1,920)		Other comprehensive income/(loss), before tax	(1,023)		(155)		(1,344)		577
Tax provision/(benefit) on other comprehensive income/(loss)	Tax provision/(benefit) on other comprehensive income/(loss)	(63)		87		21		(293)		Tax provision/(benefit) on other comprehensive income/(loss)	(55)		(63)		(115)		21
Other comprehensive income/(loss) before allocation to noncontrolling interests	Other comprehensive income/(loss) before allocation to noncontrolling interests	$	(92)	$	(187)	$	556	$	(1,628)	Other comprehensive income/(loss) before allocation to noncontrolling interests	$	(968)	$	(92)	$	(1,228)	$	556

Comprehensive income/(loss) before allocation to noncontrolling interests	Comprehensive income/(loss) before allocation to noncontrolling interests	$	5,498	$	3,310	$	11,031	$	5,233	Comprehensive income/(loss) before allocation to noncontrolling interests	$	8,943	$	5,498	$	16,553	$	11,031
Less: Comprehensive income/(loss) attributable to noncontrolling interests	Less: Comprehensive income/(loss) attributable to noncontrolling interests	28		(4)		38		5		Less: Comprehensive income/(loss) attributable to noncontrolling interests	—		28		6		38
Comprehensive income/(loss) attributable to Pfizer Inc.	Comprehensive income/(loss) attributable to Pfizer Inc.	$	5,469	$	3,314	$	10,992	$	5,228	Comprehensive income/(loss) attributable to Pfizer Inc.	$	8,943	$	5,469	$	16,546	$	10,992

(a)Reclassified into Other (income)/deductions—net and Cost of sales. See Note 7E.

(b)Reclassified into Other (income)/deductions—net.

See Accompanying Notes.

PFIZER INC. AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS


(MILLIONS)	(MILLIONS)	July 4, 2021		December 31, 2020		(MILLIONS)	July 3, 2022		December 31, 2021
		(Unaudited)					(Unaudited)
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	2,372	$	1,784	Cash and cash equivalents	$	1,780	$	1,944
Short-term investments	Short-term investments	19,328		10,437		Short-term investments	31,524		29,125
Trade accounts receivable, less allowance for doubtful accounts: 2021—$500; 2020—$508		10,587		7,930
Trade accounts receivable, less allowance for doubtful accounts: 2022—$461; 2021—$492						Trade accounts receivable, less allowance for doubtful accounts: 2022—$461; 2021—$492	15,155		11,479
Inventories	Inventories	8,948		8,046		Inventories	10,454		9,059
Current tax assets	Current tax assets	3,761		3,264		Current tax assets	2,583		4,266
Other current assets	Other current assets	3,818		3,605		Other current assets	5,970		3,820
Total current assets	Total current assets	48,814		35,067		Total current assets	67,466		59,693
Equity-method investments	Equity-method investments	16,608		16,856		Equity-method investments	14,799		16,472
Long-term investments	Long-term investments	4,334		3,406		Long-term investments	4,163		5,054
Property, plant and equipment, less accumulated depreciation: 2021—$15,328; 2020—$14,812		14,224		13,900
Property, plant and equipment, less accumulated depreciation: 2022—$14,969; 2021—$15,074						Property, plant and equipment, less accumulated depreciation: 2022—$14,969; 2021—$15,074	15,244		14,882
Identifiable intangible assets	Identifiable intangible assets	27,323		28,471		Identifiable intangible assets	29,065		25,146
Goodwill	Goodwill	49,867		49,577		Goodwill	49,891		49,208
Noncurrent deferred tax assets and other noncurrent tax assets	Noncurrent deferred tax assets and other noncurrent tax assets	2,694		2,383		Noncurrent deferred tax assets and other noncurrent tax assets	7,002		3,341
Other noncurrent assets	Other noncurrent assets	6,056		4,569		Other noncurrent assets	7,659		7,679

Total assets	Total assets	$	169,920	$	154,229	Total assets	$	195,290	$	181,476

Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Short-term borrowings, including current portion of long-term debt: 2021—$3,687; 2020—$2,002		$	3,888	$	2,703
Short-term borrowings, including current portion of long-term debt: 2022—$1,276; 2021—$1,636						Short-term borrowings, including current portion of long-term debt: 2022—$1,276; 2021—$1,636	$	5,990	$	2,241
Trade accounts payable	Trade accounts payable	4,327		4,309		Trade accounts payable	6,208		5,578
Dividends payable	Dividends payable	2,184		2,162		Dividends payable	2,245		2,249
Income taxes payable	Income taxes payable	1,742		1,049		Income taxes payable	3,350		1,266
Accrued compensation and related items	Accrued compensation and related items	2,015		3,058		Accrued compensation and related items	1,997		3,332
Deferred revenues	Deferred revenues	4,291		1,113		Deferred revenues	3,804		3,067
Other current liabilities	Other current liabilities	17,217		11,527		Other current liabilities	23,816		24,939

Total current liabilities	Total current liabilities	35,664		25,920		Total current liabilities	47,410		42,671

Long-term debt	Long-term debt	35,354		37,133		Long-term debt	34,294		36,195
Pension benefit obligations	Pension benefit obligations	4,305		4,766		Pension benefit obligations	3,030		3,489
Postretirement benefit obligations	Postretirement benefit obligations	634		645		Postretirement benefit obligations	227		235
Noncurrent deferred tax liabilities	Noncurrent deferred tax liabilities	4,161		4,063		Noncurrent deferred tax liabilities	558		349
Other taxes payable	Other taxes payable	11,259		11,560		Other taxes payable	10,990		11,331
Other noncurrent liabilities	Other noncurrent liabilities	8,228		6,669		Other noncurrent liabilities	11,311		9,743
Total liabilities	Total liabilities	99,605		90,756		Total liabilities	107,821		104,013

Commitments and Contingencies	Commitments and Contingencies	0		0		Commitments and Contingencies	0		0

Common stock	Common stock	472		470		Common stock	476		473
Additional paid-in capital	Additional paid-in capital	89,336		88,674		Additional paid-in capital	91,183		90,591

Treasury stock	Treasury stock	(111,356)		(110,988)		Treasury stock	(113,939)		(111,361)
Retained earnings	Retained earnings	96,346		90,392		Retained earnings	116,608		103,394
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(4,758)		(5,310)		Accumulated other comprehensive loss	(7,119)		(5,897)
Total Pfizer Inc. shareholders’ equity	Total Pfizer Inc. shareholders’ equity	70,042		63,238		Total Pfizer Inc. shareholders’ equity	87,208		77,201
Equity attributable to noncontrolling interests	Equity attributable to noncontrolling interests	273		235		Equity attributable to noncontrolling interests	261		262
Total equity	Total equity	70,315		63,473		Total equity	87,469		77,462
Total liabilities and equity	Total liabilities and equity	$	169,920	$	154,229	Total liabilities and equity	$	195,290	$	181,476

See Accompanying Notes.

PFIZER INC. AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(UNAUDITED)


		PFIZER INC. SHAREHOLDERS																												PFIZER INC. SHAREHOLDERS
		Preferred Stock			Common Stock					Treasury Stock																	Common Stock									Treasury Stock
(MILLIONS, EXCEPT PREFERRED SHARES)		Shares	Stated Value		Shares	Par Value		Add’l Paid-In Capital		Shares	Cost		Retained Earnings		Accum. Other Comp. Loss		Share- holders’ Equity			Non-controlling interests		Total Equity
(MILLIONS, EXCEPT PER COMMON SHARE DATA)																			(MILLIONS, EXCEPT PER COMMON SHARE DATA)							Shares		Par Value			Add’l Paid-In Capital				Shares			Cost			Retained Earnings				Accum. Other Comp. Loss				Share- holders’ Equity				Non-controlling interests				Total Equity
Balance, April 3, 2022																			Balance, April 3, 2022							9,494		$	476		$	90,844			(3,903)			$	(113,931)		$	111,193			$	(6,157)			$	82,424			$	261			$	82,685
Net income																			Net income																						9,906								9,906				6				9,911
Other comprehensive income/(loss), net of tax																			Other comprehensive income/(loss), net of tax																										(963)				(963)				(5)				(968)
Cash dividends declared, per share: $0.80																			Cash dividends declared, per share: $0.80
Common stock																			Common stock																						(4,489)								(4,489)								(4,489)

Share-based payment transactions																			Share-based payment transactions							2		—			339				—			(8)			(2)								330								330
Purchases of common stock																			Purchases of common stock																—			—											—								—

Other																			Other												—				—			—			—								—				—				—
Balance, July 3, 2022																			Balance, July 3, 2022							9,496		$	476		$	91,183			(3,903)			$	(113,939)		$	116,608			$	(7,119)			$	87,208			$	261			$	87,469

																										PFIZER INC. SHAREHOLDERS
																									Common Stock						Treasury Stock
(MILLIONS, EXCEPT PER COMMON SHARE DATA)																			(MILLIONS, EXCEPT PER COMMON SHARE DATA)							Shares		Par Value			Add’l Paid-In Capital				Shares			Cost			Retained Earnings				Accum. Other Comp. Loss				Share- holders’ Equity				Non-controlling interests				Total Equity
Balance, April 4, 2021	Balance, April 4, 2021	0	$	0	9,445	$	472	$	89,002	(3,851)	$	(111,349)	$	95,158	$	(4,664)	$	68,620		$	245	$	68,865	Balance, April 4, 2021						9,445			$	472		$	89,002			(3,851)			$	(111,349)			$	95,158			$	(4,664)			$	68,620			$	245	$	68,865
Net income	Net income												5,563				5,563			26		5,589		Net income																							5,563								5,563				26		5,589
Other comprehensive income/(loss), net of tax	Other comprehensive income/(loss), net of tax														(94)		(94)			2		(92)		Other comprehensive income/(loss), net of tax																											(94)				(94)				2		(92)
Cash dividends declared, per share: $0.78	Cash dividends declared, per share: $0.78																				Cash dividends declared, per share: $0.78
Common stock	Common stock												(4,293)				(4,293)					(4,293)		Common stock																							(4,293)								(4,293)						(4,293)
Preferred stock																	—					0
Noncontrolling interests																	—			—		0

Share-based payment transactions	Share-based payment transactions				5	—		334		—	(7)		(76)				251					251		Share-based payment transactions						5			—			334				—			(7)				(76)								251						251
Purchases of common stock	Purchases of common stock									—	—						—					0		Purchases of common stock																—			—												—						—
Preferred stock conversions and redemptions		—	—					—		—	—						—					0

Other	Other							—		—	—		(7)				(6)			—		(6)		Other												—				—			—				(7)								(6)				—		(6)
Balance, July 4, 2021	Balance, July 4, 2021	0	$	0	9,450	$	472	$	89,336	(3,851)	$	(111,356)	$	96,346	$	(4,758)	$	70,042		$	273	$	70,315	Balance, July 4, 2021						9,450			$	472		$	89,336			(3,851)			$	(111,356)			$	96,346			$	(4,758)			$	70,042			$	273	$	70,315

		PFIZER INC. SHAREHOLDERS
		Preferred Stock			Common Stock					Treasury Stock
(MILLIONS, EXCEPT PREFERRED SHARES)		Shares	Stated Value		Shares	Par Value		Add’l Paid-In Capital		Shares	Cost		Retained Earnings		Accum. Other Comp. Loss		Share- holders’ Equity			Non-controlling interests		Total Equity
Balance, March 29, 2020		417	$	17	9,393	$	470	$	87,680	(3,841)	$	(111,010)	$	94,680	$	(6,808)	$	65,028		$	312	$	65,341
Net income													3,489				3,489			8		3,497
Other comprehensive income/(loss), net of tax															(174)		(174)			(12)		(187)
Cash dividends declared, per share: $0.76
Common stock													(4,223)				(4,223)					(4,223)
Preferred stock													—				—					0
Noncontrolling interests																	—			(80)		(80)
Share-based payment transactions					2	—		221		—	1						222					222
Purchases of common stock										—	—						—					0
Preferred stock conversions and redemptions		(417)	(17)					(14)		1	31						—					0
Other								—		—	—		—				—			—		0
Balance, June 28, 2020		0	$	0	9,394	$	470	$	87,886	(3,840)	$	(110,978)	$	93,946	$	(6,983)	$	64,342		$	228	$	64,570


		PFIZER INC. SHAREHOLDERS
	Common Stock				Treasury Stock
(MILLIONS, EXCEPT PER COMMON SHARE DATA)		Shares	Par Value		Add’l Paid-In Capital		Shares	Cost		Retained Earnings		Accum. Other Comp. Loss		Share- holders’ Equity		Non-controlling interests		Total Equity
Balance, January 1, 2022		9,471	$	473	$	90,591	(3,851)	$	(111,361)	$	103,394	$	(5,897)	$	77,201	$	262	$	77,462
Net income										17,769				17,769		12		17,781
Other comprehensive income/(loss), net of tax												(1,223)		(1,223)		(6)		(1,228)
Cash dividends declared, per share: $0.80
Common stock										(4,489)				(4,489)				(4,489)


Share-based payment transactions		25	2		588		(12)	(578)		(66)				(53)				(53)
Purchases of common stock							(39)	(2,000)						(2,000)				(2,000)

Other					3		—	—		—				3		(7)		(4)
Balance, July 3, 2022		9,496	$	476	$	91,183	(3,903)	$	(113,939)	$	116,608	$	(7,119)	$	87,208	$	261	$	87,469

		PFIZER INC. SHAREHOLDERS
	Common Stock				Treasury Stock
(MILLIONS, EXCEPT PER COMMON SHARE DATA)		Shares	Par Value		Add’l Paid-In Capital		Shares	Cost		Retained Earnings		Accum. Other Comp. Loss		Share- holders’ Equity		Non-controlling interests		Total Equity
Balance, January 1, 2021		9,407	$	470	$	88,674	(3,840)	$	(110,988)	$	90,392	$	(5,310)	$	63,238	$	235	$	63,473
Net income										10,440				10,440		35		10,475
Other comprehensive income/(loss), net of tax												552		552		3		556
Cash dividends declared, per share: $0.78
Common stock										(4,377)				(4,377)				(4,377)


Share-based payment transactions		43	2		662		(11)	(368)		(76)				221				221
Purchases of common stock							—	—						—				—

Other					—		—	—		(33)				(33)		—		(33)
Balance, July 4, 2021		9,450	$	472	$	89,336	(3,851)	$	(111,356)	$	96,346	$	(4,758)	$	70,042	$	273	$	70,315

See Accompanying Notes.

~~PFIZER INC. AND SUBSIDIARY COMPANIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF EQUITY~~

~~(UNAUDITED)~~

PFIZER INC. SHAREHOLDERS
Preferred Stock Common Stock Treasury Stock
(MILLIONS, EXCEPT PREFERRED SHARES) Shares Stated Value Shares Par Value Add’l
Paid-In Capital Shares Cost Retained Earnings Accum. Other Comp.
Loss Share-
holders’ Equity Non-controlling interests Total Equity
Balance, January 1, 2021 0 $ 0 9,407 $ 470 $ 88,674 (3,840) $ (110,988) $ 90,392 $ (5,310) $ 63,238 $ 235 $ 63,473
Net income 10,440 10,440 35 10,475
Other comprehensive income/(loss), net of tax 552 552 3 556
Cash dividends declared, per share: $0.78
Common stock (4,377) (4,377) (4,377)
Preferred stock — 0
Noncontrolling interests — — 0
Share-based payment transactions 43 2 662 (11) (368) (76) 221 221
Purchases of common stock — — — 0
Preferred stock conversions and redemptions — — — — — — 0
Other — — — (33) (33) — (33)
Balance, July 4, 2021 0 $ 0 9,450 $ 472 $ 89,336 (3,851) $ (111,356) $ 96,346 $ (4,758) $ 70,042 $ 273 $ 70,315
PFIZER INC. SHAREHOLDERS
Preferred Stock Common Stock Treasury Stock
(MILLIONS, EXCEPT PREFERRED SHARES) Shares Stated Value Shares Par Value Add’l
Paid-In Capital Shares Cost Retained Earnings Accum. Other Comp.
Loss Share-
holders’ Equity Non-controlling interests Total Equity
Balance, January 1, 2020 431 $ 17 9,369 $ 468 $ 87,428 (3,835) $ (110,801) $ 91,397 $ (5,367) $ 63,143 $ 303 $ 63,447
Net income 6,843 6,843 17 6,860
Other comprehensive income/(loss), net of tax (1,616) (1,616) (12) (1,628)
Cash dividends declared, per share: $0.76
Common stock (4,294) (4,294) (4,294)
Preferred stock — — 0
Noncontrolling interests — (80) (80)
Share-based payment transactions 25 1 473 (6) (208) 266 266
Purchases of common stock — — — 0
Preferred stock conversions and redemptions (431) (17) (15) 1 31 (1) (1)
Other — — — — — — 0
Balance, June 28, 2020 0 $ 0 9,394 $ 470 $ 87,886 (3,840) $ (110,978) $ 93,946 $ (6,983) $ 64,342 $ 228 $ 64,570

~~See Accompanying Notes.~~

PFIZER INC. AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


		Six Months Ended					Six Months Ended
(MILLIONS)	(MILLIONS)	July 4, 2021		June 28, 2020		(MILLIONS)	July 3, 2022		July 4, 2021
Operating Activities	Operating Activities					Operating Activities
Net income before allocation to noncontrolling interests	Net income before allocation to noncontrolling interests	$	10,475	$	6,860	Net income before allocation to noncontrolling interests	$	17,781	$	10,475
Income from discontinued operations—net of tax		32		1,774
Discontinued operations—net of tax						Discontinued operations—net of tax	26		(235)
Net income from continuing operations before allocation to noncontrolling interests	Net income from continuing operations before allocation to noncontrolling interests	10,443		5,087		Net income from continuing operations before allocation to noncontrolling interests	17,756		10,710
Adjustments to reconcile net income before allocation to noncontrolling interests to net cash provided by operating activities:	Adjustments to reconcile net income before allocation to noncontrolling interests to net cash provided by operating activities:					Adjustments to reconcile net income before allocation to noncontrolling interests to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	2,554		2,365		Depreciation and amortization	2,362		2,515
Asset write-offs and impairments	Asset write-offs and impairments	77		58		Asset write-offs and impairments	58		55
Gain on completion of Consumer Healthcare JV transaction, net of cash conveyed		0		(6)

Deferred taxes from continuing operations	Deferred taxes from continuing operations	47		33		Deferred taxes from continuing operations	(3,461)		137

Share-based compensation expense	Share-based compensation expense	394		244		Share-based compensation expense	373		393
Benefit plan contributions in excess of expense/income	Benefit plan contributions in excess of expense/income	(779)		(526)		Benefit plan contributions in excess of expense/income	(146)		(779)
Other adjustments, net	Other adjustments, net	(1,305)		(370)		Other adjustments, net	1,270		(1,305)
Other changes in assets and liabilities, net of acquisitions and divestitures	Other changes in assets and liabilities, net of acquisitions and divestitures	4,398		(2,056)		Other changes in assets and liabilities, net of acquisitions and divestitures	(3,496)		4,102
Net cash provided by operating activities from continuing operations	Net cash provided by operating activities from continuing operations	15,828		4,829		Net cash provided by operating activities from continuing operations	14,717		15,828
Net cash provided by operating activities from discontinued operations		9		1,860
Net cash provided by/(used in) operating activities from discontinued operations						Net cash provided by/(used in) operating activities from discontinued operations	(5)		9
Net cash provided by operating activities	Net cash provided by operating activities	15,837		6,688		Net cash provided by operating activities	14,711		15,837

Investing Activities	Investing Activities					Investing Activities
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(1,094)		(906)		Purchases of property, plant and equipment	(1,394)		(1,091)
Purchases of short-term investments	Purchases of short-term investments	(15,982)		(5,141)		Purchases of short-term investments	(18,937)		(15,982)
Proceeds from redemptions/sales of short-term investments	Proceeds from redemptions/sales of short-term investments	7,572		4,595		Proceeds from redemptions/sales of short-term investments	20,151		7,572
Net (purchases of)/proceeds from redemptions/sales of short-term investments with original maturities of three months or less	Net (purchases of)/proceeds from redemptions/sales of short-term investments with original maturities of three months or less	(505)		(537)		Net (purchases of)/proceeds from redemptions/sales of short-term investments with original maturities of three months or less	(3,153)		(505)
Purchases of long-term investments	Purchases of long-term investments	(100)		(168)		Purchases of long-term investments	(1,324)		(100)
Proceeds from redemptions/sales of long-term investments	Proceeds from redemptions/sales of long-term investments	297		536		Proceeds from redemptions/sales of long-term investments	226		297

Acquisition of business, net of cash acquired						Acquisition of business, net of cash acquired	(6,225)		—
Other investing activities, net	Other investing activities, net	(72)		(9)		Other investing activities, net	(91)		(72)
Net cash provided by/(used in) investing activities from continuing operations	Net cash provided by/(used in) investing activities from continuing operations	(9,884)		(1,630)		Net cash provided by/(used in) investing activities from continuing operations	(10,746)		(9,880)
Net cash provided by/(used in) investing activities from discontinued operations	Net cash provided by/(used in) investing activities from discontinued operations	0		(11,452)		Net cash provided by/(used in) investing activities from discontinued operations	—		(3)
Net cash provided by/(used in) investing activities	Net cash provided by/(used in) investing activities	(9,884)		(13,082)		Net cash provided by/(used in) investing activities	(10,746)		(9,884)

Financing Activities	Financing Activities					Financing Activities
Proceeds from short-term borrowings	Proceeds from short-term borrowings	0		12,352		Proceeds from short-term borrowings	4,012		—
Principal payments on short-term borrowings		0		(13,166)

Net (payments on)/proceeds from short-term borrowings with original maturities of three months or less	Net (payments on)/proceeds from short-term borrowings with original maturities of three months or less	(499)		(2,314)		Net (payments on)/proceeds from short-term borrowings with original maturities of three months or less	379		(499)
Proceeds from issuance of long-term debt		0		5,194

Principal payments on long-term debt	Principal payments on long-term debt	0		(2,181)		Principal payments on long-term debt	(1,609)		—

Purchases of common stock						Purchases of common stock	(2,000)		—
Cash dividends paid	Cash dividends paid	(4,355)		(4,216)		Cash dividends paid	(4,493)		(4,355)
Other financing activities, net	Other financing activities, net	(509)		(163)		Other financing activities, net	(347)		(509)
Net cash provided by/(used in) financing activities from continuing operations		(5,364)		(4,493)
Net cash provided by/(used in) financing activities from discontinued operations		0		11,452

Net cash provided by/(used in) financing activities	Net cash provided by/(used in) financing activities	(5,364)		6,959		Net cash provided by/(used in) financing activities	(4,058)		(5,364)
Effect of exchange-rate changes on cash and cash equivalents and restricted cash and cash equivalents	Effect of exchange-rate changes on cash and cash equivalents and restricted cash and cash equivalents	5		(70)		Effect of exchange-rate changes on cash and cash equivalents and restricted cash and cash equivalents	(67)		5
Net increase/(decrease) in cash and cash equivalents and restricted cash and cash equivalents	Net increase/(decrease) in cash and cash equivalents and restricted cash and cash equivalents	593		495		Net increase/(decrease) in cash and cash equivalents and restricted cash and cash equivalents	(159)		593
Cash and cash equivalents and restricted cash and cash equivalents, at beginning of period	Cash and cash equivalents and restricted cash and cash equivalents, at beginning of period	1,825		1,350		Cash and cash equivalents and restricted cash and cash equivalents, at beginning of period	1,983		1,825
Cash and cash equivalents and restricted cash and cash equivalents, at end of period	Cash and cash equivalents and restricted cash and cash equivalents, at end of period	$	2,418	$	1,845	Cash and cash equivalents and restricted cash and cash equivalents, at end of period	$	1,824	$	2,418
Supplemental Cash Flow Information	Supplemental Cash Flow Information					Supplemental Cash Flow Information

Cash paid/(received) during the period for:	Cash paid/(received) during the period for:					Cash paid/(received) during the period for:
Income taxes	Income taxes	$	2,188	$	1,290	Income taxes	$	3,098	$	2,188
Interest paid	Interest paid	798		910		Interest paid	771		798
Interest rate hedges	Interest rate hedges	(67)		(66)		Interest rate hedges	(10)		(67)

Non-cash transaction:	Non-cash transaction:					Non-cash transaction:
Right-of-use assets obtained in exchange for lease liabilities	Right-of-use assets obtained in exchange for lease liabilities	$	1,204	$	74	Right-of-use assets obtained in exchange for lease liabilities	$	242	$	1,204

See Accompanying Notes.

109

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1. Basis of Presentation and Significant Accounting Policies

A. Basis of Presentation

We prepared these condensed consolidated financial statements in conformity with U.S. GAAP, consistent in all material respects with those applied in our ~~2020~~2021 Form ~~10-K, except as disclosed in~~ ~~Note 1C~~.10-K. As permitted under the SEC requirements for interim reporting, certain footnotes or other financial information have been condensed or omitted.

These financial statements include all normal and recurring adjustments that are considered necessary for the fair statement of results for the interim periods presented. The information included in this Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our ~~2020~~2021 Form 10-K. Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be representative of those for the full year.

Pfizer’s fiscal quarter-end for subsidiaries operating outside the U.S. is as of and for the three and six months ended May ~~30, 2021~~29, 2022 and May ~~24, 2020,~~30, 2021, and for U.S. subsidiaries is as of and for the three and six months ended July 3, 2022 and July 4, 2021.

At the beginning of our fiscal fourth quarter of 2021, we reorganized our commercial operations and ~~June 28, 2020.~~began to manage our commercial operations through a new global structure consisting of 2 operating segments, each led by a single manager: Biopharma, our innovative science-based biopharmaceutical business, and PC1, our global contract development and manufacturing organization and a leading supplier of specialty active pharmaceutical ingredients. Biopharma is the only reportable segment. See Note 17A in our 2021 Form 10-K and Note 13 below.

Business development activities completed in 2021 and 2022 impacted financial results in the periods presented. Discontinued operations in the periods presented relate to the previously divested Meridian subsidiary and post-closing adjustments for other previously divested businesses. See ~~Note~~Notes 1A and 2B in our ~~2020~~2021 Form 10-K, and Note 2. ~~On November 16, 2020, we completed the spin-off and the combination of our Upjohn Business with Mylan to form Viatris. For additional information, see~~ ~~Note~~ 2B ~~in our 2020 Form 10-K. On December 21, 2020, which fell in Pfizer’s international first quarter of 2021, Pfizer~~below.

We have made certain reclassification adjustments to conform prior-period amounts to the current presentation for discontinued operations, acquired IPR&D expenses and Viatris completed the termination of the Mylan-Japan collaboration pursuant to an agreement dated November 13, 2020 and we transferred related inventories and operations that were part of the Mylan-Japan collaboration to Viatris. As a result, the financial position and results of operations of the Upjohn Business and the Mylan-Japan collaboration are presented as discontinued operations. Prior-period information has been restated to reflect our current organization structure.segment reporting.

B. New Accounting Standard Adopted in ~~2021~~2022

On January 1, ~~2021,~~2022, we early adopted a new accounting standard for ~~income tax that eliminates certain exceptions~~contract assets and contract liabilities acquired in a business combination. Under the new standard, acquired contract assets and contract liabilities are required to be recognized and measured by the ~~guidance related to~~acquirer on the ~~approach for intraperiod tax allocation, the methodology for calculating income taxes~~acquisition date in ~~an interim period and the recognition of deferred tax liabilities for outside basis differences. The~~accordance with Accounting Standards Codification 606. This new guidance ~~also simplifies aspects~~generally results in the acquirer recognizing contract assets and contract liabilities at the same amounts that were recorded by the acquiree. Previously, these amounts were recognized by the acquirer at fair value as of the ~~accounting for franchise taxes~~acquisition date. We adopted this new standard on a prospective basis and ~~enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The adoption of this guidance did not have a material~~there was no impact onto our ~~condensed~~ consolidated financial statements.

~~For information on new accounting standards adopted in 2020, see~~ ~~Note 1B~~ ~~in our 2020 Form 10-K.~~

C. ~~Change in Accounting Principle~~

In the first quarter of 2021, we adopted a change in accounting principle to a more preferable policy under U.S. GAAP to immediately recognize actuarial gains and losses arising from the remeasurement of our pension and postretirement plans (MTM Accounting).~~Under the prior policy, we deferred recognition of these gains and losses in~~ ~~Accumulated other comprehensive loss~~. The accumulated actuarial gains/losses outside of a “corridor” were then amortized into net periodic benefit costs over the average remaining service period or the average life expectancy of participants. This change has been applied to all pension and postretirement plans on a retrospective basis for all prior periods presented, and as of January 1, 2020, resulted in a cumulative effect decrease to ~~Retained earnings~~ ~~of $6.3 billion, with a corresponding offset to~~ ~~Accumulated other comprehensive loss. Each time a pension or postretirement plan is remeasured, the actuarial gain or loss is recognized immediately and classified as~~ ~~Other (income)/deductions––net~~.

We believe that MTM Accounting is a more preferable policy as it provides improved transparency of results and performance, better alignment with fair value accounting principles and a better reflection of current economic and interest rate trends on plan investments and assumptions and the actuarial impact of plan remeasurements.

~~PFIZER INC. AND SUBSIDIARY COMPANIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

The impacts of the adjustments on our condensed consolidated financial statements are summarized as follows:
Three Months Ended
July 4, 2021 June 28, 2020
(MILLIONS, EXCEPT PER COMMON SHARE DATA) Previous
Accounting
Principle Impact of Change As Reported Previous Accounting Principle Impact of Change As Adjusted
Condensed Consolidated Statements of Income:
Other (income)/deductions––net $ (916) $ (82) $ (998) $ (873) $ (82) $ (955)
Income from continuing operations before provision for taxes on income 6,527 82 6,609 2,944 82 3,026
Provision for taxes on income 1,025 18 1,043 396 26 422
Income from discontinued operations––net of tax 24 0 24 887 6 893
Net income before allocation to noncontrolling interests 5,526 63 5,589 3,434 62 3,497
Net income attributable to Pfizer Inc. common shareholders 5,500 63 5,563 3,426 62 3,489
Earnings per common share––basic:
Income from continuing operations attributable to Pfizer Inc. common shareholders $ 0.98 $ 0.01 $ 0.99 $ 0.46 $ 0.01 $ 0.47
Income from discontinued operations––net of tax 0 0 0 0.16 0 0.16
Net income attributable to Pfizer Inc. common shareholders 0.98 0.01 0.99 0.62 0.01 0.63
Earnings per common share––diluted:
Income from continuing operations attributable to Pfizer Inc. common shareholders $ 0.97 $ 0.01 $ 0.98 $ 0.45 $ 0.01 $ 0.46
Income from discontinued operations––net of tax 0 0 0 0.16 0 0.16
Net income attributable to Pfizer Inc. common shareholders 0.97 0.01 0.98 0.61 0.01 0.62
Condensed Consolidated Statements of Comprehensive Income:
Foreign currency translation adjustments, net $ 61 $ (25) $ 36 $ (242) $ 68 $ (173)
Benefit plans: actuarial gains/(losses), net (2) 2 0 5 (5) 0
Reclassification adjustments related to amortization 74 (74) 0 67 (67) 0
Reclassification adjustments related to settlements, net 3 (3) 0 13 (13) 0
Other (25) 25 0 68 (68) 0
Tax provision/(benefit) on other comprehensive income/(loss) (4) (59) (63) 113 (26) 87
Six Months Ended
July 4, 2021 June 28, 2020
(MILLIONS, EXCEPT PER COMMON SHARE DATA) Previous
Accounting
Principle Impact of Change As Reported Previous Accounting Principle Impact of Change As Adjusted
Condensed Consolidated Statements of Income:
Other (income)/deductions––net $ (1,773) $ (228) $ (2,001) $ (657) $ (107) $ (764)
Income from continuing operations before provision for taxes on income 12,063 228 12,291 5,761 107 5,868
Provision for taxes on income 1,798 51 1,849 751 30 782
Income from discontinued operations––net of tax 32 0 32 1,835 (61) 1,774
Net income before allocation to noncontrolling interests 10,298 177 10,475 6,845 16 6,860
Net income attributable to Pfizer Inc. common shareholders 10,263 177 10,440 6,828 16 6,843
Earnings per common share––basic:
Income from continuing operations attributable to Pfizer Inc. common shareholders $ 1.83 $ 0.03 $ 1.86 $ 0.90 $ 0.01 $ 0.91
Income from discontinued operations––net of tax 0.01 0 0.01 0.33 (0.01) 0.32
Net income attributable to Pfizer Inc. common shareholders 1.84 0.03 1.87 1.23 0 1.23
Earnings per common share––diluted:
Income from continuing operations attributable to Pfizer Inc. common shareholders $ 1.81 $ 0.03 $ 1.84 $ 0.89 $ 0.01 $ 0.90
Income from discontinued operations––net of tax 0.01 0 0.01 0.33 (0.01) 0.32
Net income attributable to Pfizer Inc. common shareholders 1.81 0.03 1.84 1.22 0 1.22

~~PFIZER INC. AND SUBSIDIARY COMPANIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

Six Months Ended
July 4, 2021 June 28, 2020
(MILLIONS) Previous
Accounting
Principle Impact of Change As Reported Previous Accounting Principle Impact of Change As Adjusted
Condensed Consolidated Statements of Comprehensive Income:
Foreign currency translation adjustments, net $ 607 $ (106) $ 501 $ (1,513) $ 84 $ (1,430)
Benefit plans: actuarial gains/(losses), net 45 (45) 0 (160) 160 0
Reclassification adjustments related to amortization 148 (148) 0 133 (133) 0
Reclassification adjustments related to settlements, net 23 (23) 0 66 (66) 0
Other (106) 106 0 84 (84) 0
Tax provision/(benefit) on other comprehensive income/(loss) 69 (47) 21 (265) (28) (293)
Condensed Consolidated Statements of Cash Flows:
Deferred taxes from continuing operations $ (4) $ 51 $ 47 $ 3 $ 30 $ 33
Benefit plan contributions in excess of expense/income (551) (228) (779) (419) (107) (526)
July 4, 2021 December 31, 2020
(MILLIONS) Previous Accounting Principle Impact of Change As Reported Previous Accounting Principle Impact of Change As Adjusted
Condensed Consolidated Balance Sheets:
Noncurrent deferred tax assets and other noncurrent tax assets $ 2,697 $ (3) $ 2,694 $ 2,383 $ 0 $ 2,383
Other noncurrent assets 6,044 12 6,056 4,569 0 4,569
Pension benefit obligations 4,305 (1) 4,305 4,766 0 4,766
Retained earnings 96,169 177 96,346 96,770 (6,378) 90,392
Accumulated other comprehensive loss (4,589) (168) (4,758) (11,688) 6,378 (5,310)

D. Revenues and Trade Accounts Receivable

Revenue Recognition––We record revenues from product sales when there is a transfer of control of the product from us to the customer. We typically determine transfer of control based on when the product is shipped or delivered and title passes to the customer. For certain contracts, the finished product may temporarily be stored at our or our third-party subcontractors’ locations under a bill-and-hold arrangement. Revenue is recognized on bill-and-hold arrangements at the point in time when the customer obtains control of the product and all of the following criteria have been met: the arrangement is substantive; the product is identified separately as belonging to the customer; the product is ready for physical transfer to the customer; and we do not have the ability to use the product or direct it to another customer. In determining when the customer obtains control of the product, we consider certain indicators, including whether we have a present right to payment from the customer, whether title and/or significant risks and rewards of ownership have transferred to the customer and whether customer acceptance has been received.

Customers––Our prescription pharmaceutical products, with the exception of Paxlovid, are sold principally to wholesalers, but we also sell directly to retailers, hospitals, clinics, government agencies and pharmacies. We principally sell Paxlovid to government agencies. In the U.S., we primarily sell our vaccine products directly to the federal government, CDC, wholesalers, individual provider offices, retail pharmacies and integrated delivery networks. Outside the U.S., we primarily sell our vaccines to government and non-government institutions.

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Deductions from Revenues––Our accruals for Medicare, Medicaid and related state program and performance-based contract rebates, chargebacks, sales allowances and sales returns and cash discounts are as follows:


(MILLIONS)	(MILLIONS)	July 4, 2021		December 31, 2020		(MILLIONS)	July 3, 2022		December 31, 2021
Reserve against Trade accounts receivable, less allowance for doubtful accounts	Reserve against Trade accounts receivable, less allowance for doubtful accounts	$	959	$	861	Reserve against Trade accounts receivable, less allowance for doubtful accounts	$	1,057	$	1,077
Other current liabilities:	Other current liabilities:					Other current liabilities:
Accrued rebates	Accrued rebates	3,301		3,017		Accrued rebates	3,875		3,811
Other accruals	Other accruals	443		436		Other accruals	458		528
Other noncurrent liabilities	Other noncurrent liabilities	384		399		Other noncurrent liabilities	386		433
Total accrued rebates and other sales-related accruals	Total accrued rebates and other sales-related accruals	$	5,087	$	4,712	Total accrued rebates and other sales-related accruals	$	5,776	$	5,850

Trade Accounts Receivable––Trade accounts receivable are stated at their net realizable value. The allowance for credit losses reflects our best estimate of expected credit losses of the receivables portfolio determined on the basis of historical experience, current information, and forecasts of future economic conditions. In developing the estimate for expected credit losses, trade accounts receivables are segmented into pools of assets depending on market (U.S. versus international), delinquency status, and customer type (high risk versus low risk and government versus non-government), and fixed reserve percentages are established for each pool of trade accounts receivables.

In determining the reserve percentages for each pool of trade accounts receivables, we considered our historical experience with certain customers and customer types, regulatory and legal environments, country and political risk, and other relevant current and future forecasted macroeconomic factors. These credit risk indicators are monitored on a quarterly basis to determine whether there have been any changes in the economic environment that would indicate the established reserve percentages should be adjusted, and are considered on a regional basis to reflect more geographic-specific metrics. Additionally, write-offs and recoveries of customer receivables are tracked against collections on a quarterly basis to determine whether the reserve percentages remain appropriate. When management becomes aware of certain customer-specific factors that impact credit risk,

~~PFIZER INC. AND SUBSIDIARY COMPANIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

specific allowances for these known troubled accounts are recorded. Trade accounts receivable are written off after all reasonable means to collect the full amount (including litigation, where appropriate) have been exhausted.

During the three and six months ended July 3, 2022 and July 4, 2021, ~~and June 28, 2020,~~ additions to the allowance for credit losses, write-offs and recoveries of customer receivables were not material to our condensed consolidated financial statements. For additional information on our trade accounts receivable, see Note 1G1H in our ~~2020~~2021 Form 10-K.

D. Acquired In-Process Research and Development Expenses

In the first quarter of 2022, we began reporting acquired IPR&D expense as a separate line item in our consolidated statements of income. Acquired in-process research and development expenses includes costs incurred in connection with (a) all upfront and milestone payments on collaboration and in-license agreements, including premiums on equity securities and (b) asset acquisitions of acquired IPR&D. These costs were previously recorded in Research and development expenses. Prior periods have been revised to conform to the current period presentation. When we acquire net assets that do not constitute a business, as defined in U.S. GAAP, no goodwill is recognized and acquired IPR&D is expensed. The fair value of IPR&D acquired in connection with a business combination is recorded on the balance sheet as Identifiable intangible assets. See Notes 1E and 10 in our2021 Form 10-K.

Note 2.Acquisition, Discontinued Operations, ~~and~~ Equity-Method Investment and Collaborative Arrangement

A. Acquisition

Arena––On March 11, 2022, we acquired Arena, a clinical stage company, for $100 per share in cash. The total fair value of the consideration transferred was $6.6 billion ($6.2 billion, net of cash acquired). In addition, $138 million in payments to Arena employees for the fair value of previously unvested long-term incentive awards was recognized as post-closing compensation expense and recorded in Restructuring charges and certain acquisition-related costs (see Note 3).

Arena’s portfolio includes development-stage therapeutic candidates in gastroenterology, dermatology, and cardiology, including etrasimod, an oral, selective sphingosine 1-phosphate (S1P) receptor modulator currently in development for a range of immuno-inflammatory diseases including UC, Crohn’s disease, atopic dermatitis, eosinophilic esophagitis, and alopecia areata. In connection with this acquisition, we provisionally recorded: (i) $5.5 billion in Identifiable intangible assets, consisting of $5.0 billion of IPR&D and $460 million of indefinite-lived Licensing agreements and other, (ii) $1.0 billion of Goodwill and (iii) $510 million of net deferred tax liabilities. The allocation of the consideration transferred to the assets acquired and the liabilities assumed has not yet been finalized.

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

B. Discontinued Operations

Meridian––On December 31, 2021, we completed the sale of our Meridian subsidiary. In the three and six months ended July 3, 2022, the amounts recorded under the interim TSAs and MSA were not material.

Upjohn Separation and Combination with ~~Mylan~~

Mylan––On November 16, 2020, we completed the spin-off and the combination of the Upjohn Business with Mylan to form Viatris. ~~See~~ ~~Note 1A.~~

In connection with this transaction, Pfizer and Viatris entered into various agreements to effect the separation and combination and to provide a framework for our relationship after the combination, including a separation and distribution agreement, interim operating models, including agency arrangements, ~~manufacturing and supply agreements (MSAs), transition service agreements (TSAs),~~MSAs, TSAs, a tax matters agreement, and an employee matters agreement, among others. The interim agency operating model arrangements primarily include billings, collections and remittance of rebates that we are performing on a transitional basis on behalf of Viatris. Under the MSAs, Pfizer or Viatris, as the case may be, manufactures, labels and packages products for the other party. In the three and six months ended July 4, 2021, the amounts recorded under ~~the above~~these agreements were not material to our consolidated results of ~~operations.~~operations in the three and six months ended July 3, 2022 and July 4, 2021. Net amounts due from Viatris under the ~~above~~ agreements were approximately ~~$434~~$272 million as of July ~~4, 2021~~3, 2022 and ~~$401~~$53 million as of December 31, ~~2020.~~2021. The cash flows associated with the ~~above~~ agreements are included in Net cash provided by operating activities from continuing operations, except for a $277 million payment to Viatris made in the first quarter of 2021 pursuant to terms of the separation agreement, which is reported in Other financing activities, net.

Discontinued operations—net of tax for the three and six months ended July 4, 2021 reflects pre-tax loss from discontinued operations of $346 million and $337 million, respectively, and primarily includes pre-disposal operations related to our former Meridian subsidiary including a $345 million pre-tax expense to resolve a Multi-District Litigation relating to EpiPen against the Company in the U.S. District Court for the District of Kansas (prior to presenting Meridian as discontinued operations, this EpiPen litigation amount was ~~recorded as a payable to Viatris~~included in Other ~~current liabilities~~(income)/deductions––net). ~~as of December 31, 2020. In addition, Pfizer~~For the three and ~~Mylan had pre-existing arms-length commercial agreements, which are continuing with Viatris and are not material to Pfizer’s consolidated financial statements.~~

~~The operating results of the Upjohn Business and the Mylan-Japan collaboration are reported as~~six months ended July 3, 2022, ~~Income from discontinued operations––net of tax.~~

Components of Income from discontinued operations––net of tax:
Three Months Ended(a)
Six Months Ended(a)
(MILLIONS) July 4,
2021 June 28,
2020 July 4,
2021 June 28,
2020
Revenues $ 0 $ 1,937 $ 27 $ 3,883
Costs and expenses:
Cost of sales 0 458 14 900
Selling, informational and administrative expenses 6 371 (2) 703
Research and development expenses 0 54 1 105
Amortization of intangible assets 0 36 0 72
Restructuring charges and certain acquisition-related costs 0 2 0 17
Other (income)/deductions––net 0 1 1 71
Pre-tax income/(loss) from discontinued operations (6) 1,015 13 2,015
Provision/(benefit) for taxes on income (30) 122 (19) 241
Income from discontinued operations––net of tax $ 24 $ 893 $ 32 $ 1,774

~~(a)In the second quarter of 2021,~~ ~~Income from discontinued~~Discontinued operations—net of tax reflects pre-tax income from discontinued operations of $34 million and $24 million, respectively, and relates to post-closing adjustments ~~directly related to our discontinued operations, including~~for previously divested businesses primarily for tax and ~~benefits-related adjustments. In the first six months of 2021,~~ ~~Income from discontinued operations—net of tax~~ ~~also includes the operations of the Mylan-Japan collaboration, which terminated during Pfizer’s international first quarter of 2021, and a post-closing adjustment for a~~ legal ~~matter directly related to the discontinued Upjohn Business. In the three and six months ended June 28, 2020,~~ ~~Income from discontinued operations—net of tax~~ relates to the Upjohn Business and the Mylan-Japan collaboration and includes the change in accounting principle in the first quarter of 2021 to MTM Accounting, which has been applied on a retrospective basis for all prior periods presented. See ~~Note 1C~~.matters.

~~PFIZER INC. AND SUBSIDIARY COMPANIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

B.C. Equity-Method Investment

~~Formation of~~ Consumer Healthcare JV

JV––

On July 31, 2019, we completed a transaction in which we and GSK combined our respective consumer healthcare businesses into a new JV that ~~operates~~operated globally under the GSK Consumer Healthcare name. In exchange for the contribution of our consumer healthcare business to the JV, we received a 32% equity stake in the new company and GSK ~~owns~~owned the remaining 68%.

We ~~are accounting~~have accounted for our interest in the Consumer Healthcare JV as an equity-method investment. The carrying value of our investment in the Consumer Healthcare JV is ~~$16.4~~$14.6 billion as of July ~~4, 2021~~3, 2022 and ~~$16.7~~$16.3 billion as of December 31, ~~2020~~2021 and is reported as a private equity investment in Equity-method investments as of July ~~4, 2021~~3, 2022 and December 31, ~~2020.~~2021. The Consumer Healthcare JV is a foreign investee whose reporting currency is the U.K. pound, and therefore we translate its financial statements into U.S. dollars and recognize the impact of foreign currency translation adjustments in the carrying value of our investment and in other comprehensive income. The decrease in the value of our investment from December 31, ~~2020~~2021 is primarily due to ~~dividends totaling approximately $274 million, as well as $200 million~~$1.7 billion in pre-tax foreign currency translation adjustments (see Note 6), as well as dividends totaling approximately $354 million, partially offset by our share of the JV’s earnings. We record our share of earnings from the Consumer Healthcare JV on a quarterly basis on a one-quarter lag in Other (income)/deductions––net. Our total share of the JV’s earnings generated in the first quarter of 2022, which we recorded in our operating results in the second quarter of 2022, was $150 million. Our total share of the JV’s earnings generated in the fourth quarter of 2021 and first quarter of 2022, which we recorded in our operating results in the first six months of 2022, was $335 million. Our total share of the JV’s earnings generated in the first quarter of 2021, which we recorded in our operating results in the second quarter of 2021, was $148 million. Our total share of the JV’s earnings generated in the fourth quarter of 2020 and first quarter of 2021, which we recorded in our operating results in the first six months of 2021, was $218 million. Our total share of the JV’s earnings generated in the first quarter of 2020, which we recorded in our operating results in the second quarter of 2020, was $129 million. Our total share of the JV’s earnings generated in the fourth quarter of 2019 and first quarter of 2020, which we recorded in our operating results in the first six months of 2020, was $140 million. See ~~Note 4~~. The total amortization and adjustment of basis differences resulting from the excess of the initial fair value of our investment over the underlying equity in the carrying value of the net assets of the JV is included in Other (income)/deductions––net and was not material to our results of operations in the periods presented. See Note 4.

Summarized financial information for our equity method investee, the Consumer Healthcare JV, for the three and six months ending March 31, 2021, the most recent period available, and for the three and six months ending March 31, 2020, is as follows:
Three Months Ended Six Months Ended
(MILLIONS) March 31,
2021 March 31,
2020 March 31,
2021 March 31,
2020
Net sales $ 3,180 $ 3,503 $ 6,275 $ 6,691
Cost of sales (1,169) (1,394) (2,356) (3,205)
Gross profit $ 2,011 $ 2,109 $ 3,919 $ 3,486
Income from continuing operations 483 425 716 471
Net income 483 425 716 471
Income attributable to shareholders 461 405 682 441

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)



Summarized financial information for our equity method investee, the Consumer Healthcare JV, for the three and six months ending March 31, 2022, the most recent period available, and for the three and six months ending March 31, 2021, is as follows:
	Three Months Ended				Six Months Ended
(MILLIONS)	March 31, 2022		March 31, 2021		March 31, 2022		March 31, 2021
Net sales	$	3,526	$	3,180	$	6,945	$	6,275
Cost of sales	(1,322)		(1,169)		(2,634)		(2,356)
Gross profit	$	2,204	$	2,011	$	4,312	$	3,919
Income from continuing operations	487		483		1,077		716
Net income	487		483		1,077		716
Income attributable to shareholders	468		461		1,046		682

In connection with GSK’s previously announced planned demerger of at least 80% of GSK’s 68% equity interest in the Consumer Healthcare JV, in March 2022 the Consumer Healthcare JV completed its offering of a total aggregate principal amount of $8.75 billion in U.S. dollar-denominated senior notes of various maturities, €2.35 billion in euro-denominated senior notes of various maturities and £700 million in U.K. pound-denominated senior notes of various maturities (collectively, the “notes”). The notes were guaranteed by GSK generally up to and excluding the date of the demerger (the “Guarantee Assumption Date”). We agreed to indemnify GSK for 32% (representing our pro rata equity interest in the Consumer Healthcare JV) of any amount payable by GSK pursuant to its guarantee of the notes. Our indemnity was provided solely for the benefit of GSK. Neither we nor any of our subsidiaries is an issuer or guarantor of any of the notes.

Following its issuance of the notes in March 2022, which fell in our international second quarter of 2022, the Consumer Healthcare JV loaned to us and GSK the net proceeds received from the notes on a pro rata equity ownership basis, for which we received a loan of £2.9 billion ($3.7 billion as of the end of our second quarter of 2022), at an interest rate of 1.365% per annum payable semi-annually in arrears.

On July 18, 2022, GSK completed its demerger of the Consumer Healthcare JV which became Haleon, an independent, publicly traded company listed on the London Stock Exchange that holds the joint Consumer Healthcare business of GSK and Pfizer following the demerger. In conjunction with the demerger, we received £3.5 billion ($4.2 billion) in dividends from the JV in July 2022, which decreased the carrying value of our investment. Simultaneous with the receipt of the dividends, we repaid the loan from the JV. GSK similarly received pro rata dividends and simultaneously repaid its pro rata loan from the JV. In conjunction with these transactions, our indemnification of GSK’s guarantee discussed above was terminated. We continue to own 32% of Haleon after the transactions related to the demerger and continue to account for our interest in Haleon as an equity-method investment.

D. Collaborative Arrangement

Collaboration with Biohaven––In November 2021, we entered into a collaboration and license agreement and related sublicense agreement with Biohaven and certain of its subsidiaries to commercialize rimegepant and zavegepant for the treatment and prevention of migraines outside of the U.S., subject to regulatory approval. Biohaven will continue to lead R&D globally and we have the exclusive right to commercialization globally, outside of the U.S. Upon the closing of the transaction on January 4, 2022, we paid Biohaven $500 million, including an upfront payment of $150 million and an equity investment of $350 million. We recognized $263 million for the upfront payment and premium paid on our equity investment in Acquired in-process research and development expenses. Biohaven is also eligible to receive up to $740 million in non-U.S. commercialization milestone payments, in addition to tiered double-digit royalties on net sales outside of the U.S. In addition to the milestone payments and royalties above, we will also reimburse Biohaven for the portion of certain additional milestone payments and royalties due to third parties in accordance with preexisting Biohaven agreements, which are attributed to ex-U.S. sales.

Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives

A. Transforming to a More Focused Company Program

With the formation of the Consumer Healthcare JV in 2019 and the spin-off of our Upjohn Business in the fourth quarter of 2020, Pfizer has transformed into a focused, global leader in science-based innovative medicines and vaccines. We ~~have undertaken~~continue our efforts to ensure our cost base ~~aligns~~and support model align appropriately with ~~our new~~this operating structure. While certain direct costs

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

transferred to the Consumer Healthcare JV, and to the Upjohn Business in connection with the spin-off, there are indirect costs which did not transfer. ~~In addition, we~~This program is primarily composed of the following three initiatives:

•We are taking steps to restructure our corporate enabling functions to appropriately support ~~and drive the purpose of~~ our business, ~~and~~ R&D and PGS platform functions. ~~The program costs discussed below are expected to be incurred primarily from 2020 through 2022, and may be rounded and represent approximations~~.

We expect costs, ~~for this program,~~ primarily related to restructuring our corporate enabling functions, to total ~~$1.6~~$1.8 billion, ~~on a pre-tax basis,~~ with substantially all costs to be cash expenditures. Actions include, among others, changes in location of certain activities, expanded use and co-location of centers of excellence and shared services, and increased use of digital technologies. The associated actions and the specific costs ~~will~~ primarily include severance and benefit plan impacts, exit costs as well as associated implementation costs.

•In addition, we are transforming our commercial go-to market model in the way we engage patients and physicians. We expect costs of $1.2 billion, with all costs to be cash expenditures. Actions include, among others, centralization of certain activities and enhanced use of digital technologies. The costs for this effort primarily include severance and associated implementation costs.

•We are also optimizing our manufacturing network under this program and incurring one-time costs for cost-reduction initiatives related to our manufacturing operations. We expect to incur costs of $800 million, with approximately 25% of the costs to be non-cash. The costs for this effort include, among other things, severance costs, implementation costs, product transfer costs, site exit costs, as well as accelerated depreciation.

The program costs discussed above are expected to be incurred primarily from 2020 through 2022, and may be rounded and represent approximations.

From the start of this program in the fourth quarter of 2019 through July 3, 2022, we incurred costs of $2.5 billion, of which $987 million ($800 million of restructuring charges) is associated with Biopharma.

B. Key Activities


The following summarizes acquisitions and cost-reduction/productivity initiatives costs and credits:
	Three Months Ended				Six Months Ended
(MILLIONS)	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Restructuring charges/(credits):
Employee terminations	$	110	$	(4)	$	135	$	19
Asset impairments	20		2		28		(3)
Exit costs/(credits)	18		(3)		29		(3)
Restructuring charges/(credits)(a)	147		(5)		191		12
Transaction costs(b)	36		—		42		—
Integration costs and other(c)	6		4		148		8
Restructuring charges and certain acquisition-related costs	189		(1)		381		21
Net periodic benefit costs/(credits) recorded in Other (income)/deductions––net	—		4		(6)		12
Additional depreciation––asset restructuring recorded in our condensed consolidated statements of income as follows(d):
Cost of sales	7		27		15		34
Selling, informational and administrative expenses	—		16		—		16

Total additional depreciation––asset restructuring	7		43		15		49
Implementation costs recorded in our condensed consolidated statements of income as follows(e):
Cost of sales	15		10		27		21
Selling, informational and administrative expenses	134		80		208		144


Total implementation costs	149		90		235		166
Total costs associated with acquisitions and cost-reduction/productivity initiatives	$	345	$	137	$	625	$	248

(a)Primarily represents cost reduction initiatives. Restructuring charges/(credits) associated with Biopharma: charges of $50 million and $46 million for the three and six months ended July 3, 2022, respectively, and credits of $4 million and charges of $1 million for the three and six months ended July 4, 2021, respectively.

(b)Represents external costs for banking, legal, accounting and other similar services.

1514

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Also, as part of this program, we expect to incur costs related to manufacturing network optimization, including certain legacy cost-reduction initiatives, of $500 million, with approximately 20% of the costs to be non-cash. The costs for this effort include, among other things, implementation costs, product transfer costs, site exit costs, as well as accelerated depreciation.

~~From the start of this program in the fourth quarter of 2019 through July 4, 2021, we incurred costs of $1.2 billion.~~

~~B. Key Activities~~

The following summarizes acquisitions and cost-reduction/productivity initiatives costs and credits, which are composed primarily of the Transforming to a More Focused Company program:
Three Months Ended Six Months Ended
(MILLIONS) July 4,
2021 June 28,
2020 July 4,
2021 June 28,
2020
Restructuring charges/(credits):
Employee terminations $ (4) $ 345 $ 19 $ 355
Asset impairments 2 (8) (2) 23
Exit costs/(credits) (3) 1 (3) 1
Restructuring charges/(credits)(a)
(5) 338 14 379
Transaction costs(b)
0 11 0 14
Integration costs and other(c)
4 11 8 21
Restructuring charges and certain acquisition-related costs (1) 360 22 414
Net periodic benefit costs recorded in Other (income)/deductions––net(d)
4 1 12 2
Additional depreciation––asset restructuring recorded in our condensed consolidated statements of income as follows(e):

Cost of sales 31 4 41 10
Selling, informational and administrative expenses 16 0 16 0
Research and development expenses 0 2 0 (3)
Total additional depreciation––asset restructuring 47 6 56 6
Implementation costs recorded in our condensed consolidated statements of income as follows(f):

Cost of sales 10 9 21 17
Selling, informational and administrative expenses 80 63 144 78
Research and development expenses 0 1 0 1
Total implementation costs 90 73 166 96
Total costs associated with acquisitions and cost-reduction/productivity initiatives $ 140 $ 441 $ 256 $ 518

~~(a)Primarily represents cost reduction initiatives.~~

~~(b)Represents external costs for banking, legal, accounting and other similar services.~~

(c)Represents external, incremental costs directly related to integrating acquired businesses, such as expenditures for consulting and the integration of systems and processes, and certain other qualifying costs.

~~(d)Amounts for~~ In the three and six months ended ~~June 28, 2020 include~~July 3, 2022, integration costs and other were mostly related to our acquisition of Arena, including $138 million in payments to Arena employees in the ~~impact~~first quarter of ~~a change in accounting principle.~~2022 for the fair value of previously unvested long-term incentive awards. See Note ~~1C.~~2A.

~~(e)~~(d)Represents the impact of changes in the estimated useful lives of assets involved in restructuring actions.

~~(f)~~(e)Represents external, incremental costs directly related to implementing our non-acquisition-related cost-reduction/productivity initiatives.


The following summarizes the components and changes in restructuring accruals:	The following summarizes the components and changes in restructuring accruals:									The following summarizes the components and changes in restructuring accruals:
(MILLIONS)	(MILLIONS)	Employee Termination Costs		Asset Impairment Charges		Exit Costs		Accrual		(MILLIONS)	Employee Termination Costs		Asset Impairment Charges		Exit Costs		Accrual
Balance, December 31, 2020(a)		$	782	$	0	$	15	$	798
Balance, December 31, 2021(a)										Balance, December 31, 2021(a)	$	1,014	$	—	$	57	$	1,071
Provision	Provision	19		(2)		(3)		14		Provision	135		28		29		191
Utilization and other(b)	Utilization and other(b)	(215)		2		(1)		(215)		Utilization and other(b)	(244)		(28)		(78)		(349)
Balance, July 4, 2021(c)		$	585	$	0	$	11	$	596
Balance, July 3, 2022(c)										Balance, July 3, 2022(c)	$	904	$	—	$	8	$	913

(a)Included in Other current liabilities ($~~628~~816 million) and Other noncurrent liabilities ($~~169~~255 million).

(b)Includes adjustments for foreign currency translation.

(c)Included in Other current liabilities ($~~473~~794 million) and Other noncurrent liabilities ($~~123~~119 million).

~~PFIZER INC. AND SUBSIDIARY COMPANIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

Note 4. Other (Income)/Deductions—Net


Components of Other (income)/deductions––net include:	Components of Other (income)/deductions––net include:									Components of Other (income)/deductions––net include:
		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
(MILLIONS)	(MILLIONS)	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020		(MILLIONS)	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Interest income	Interest income	$	(13)	$	(19)	$	(12)	$	(53)	Interest income	$	(30)	$	(13)	$	(44)	$	(12)
Interest expense	Interest expense	316		367		651		757		Interest expense	293		316		614		651
Net interest expense	Net interest expense	303		348		639		704		Net interest expense	263		303		571		639
Royalty-related income	Royalty-related income	(212)		(191)		(388)		(310)		Royalty-related income	(217)		(212)		(389)		(388)
Net (gains)/losses on asset disposals	Net (gains)/losses on asset disposals	(58)		1		(98)		2		Net (gains)/losses on asset disposals	—		(58)		(1)		(98)
Net (gains)/losses recognized during the period on equity securities(a)	Net (gains)/losses recognized during the period on equity securities(a)	(800)		(732)		(1,200)		(478)		Net (gains)/losses recognized during the period on equity securities(a)	541		(800)		1,241		(1,200)
Income from collaborations, out-licensing arrangements and sales of compound/product rights(b)	Income from collaborations, out-licensing arrangements and sales of compound/product rights(b)	(21)		(100)		(252)		(215)		Income from collaborations, out-licensing arrangements and sales of compound/product rights(b)	(5)		(21)		(14)		(252)
Net periodic benefit costs/(credits) other than service costs~~(c)~~	Net periodic benefit costs/(credits) other than service costs~~(c)~~	(237)		(191)		(503)		(294)		Net periodic benefit costs/(credits) other than service costs~~(c)~~	295		(237)		12		(503)
Certain legal matters, net~~(d)~~	Certain legal matters, net~~(d)~~	369		14		420		22		Certain legal matters, net~~(d)~~	19		24		98		74

Consumer Healthcare JV equity method (income)/loss(e)		(140)		(126)		(202)		(92)
Consumer Healthcare JV equity method (income)/loss(c)										Consumer Healthcare JV equity method (income)/loss(c)	(149)		(140)		(334)		(202)
Other, net	Other, net	(201)		22		(417)		(104)		Other, net	26		(201)		(62)		(417)
Other (income)/deductions––net	Other (income)/deductions––net	$	(998)	$	(955)	$	(2,001)	$	(764)	Other (income)/deductions––net	$	772	$	(1,343)	$	1,122	$	(2,347)

(a)The losses in the second quarter and first six months of 2022 include, among other things, unrealized losses of $432 million and $776 million, respectively, related to investments in BioNTech and Cerevel Therapeutics Holdings, Inc. (Cerevel). The gains in the second quarter and first six months of 2021 ~~include,~~included, among other things, unrealized gains of $917 million and $1.0 billion, respectively, related to investments in BioNTech and Cerevel Therapeutics, LLC. The gains in the second quarter and first six months of 2020 included, among other things, unrealized gains of $568 million and $501 million, respectively, related to our investments in Allogene and BioNTech.Cerevel.

(b)The first six months of 2021 ~~includes,~~included, among other things, $188 million of net collaboration income from BioNTech in the first quarter of 2021 related to the COVID-19 vaccine. The second quarter and first six months of 2020 mainly included, among other things, $40 million of milestone income from Puma Biotechnology, Inc. related to Neratinib regulatory approvals in the EU, and $30 million of milestone income from Lilly related to the first commercial sale in the U.S. of LOXO-292 for the treatment of RET fusion-positive NSCLC. The first six months of 2020 also included an upfront payment to us of $75 million from our sale of our CK1 assets to Biogen, Inc.Comirnaty.

(c)~~Amounts include the impact of a change in accounting principle. See~~ ~~Notes 1C~~ ~~and~~ 10.

~~(d)~~The second quarter and first six months of 2021 primarily include an amount to resolve a Multi-District Litigation relating to EpiPen pending against the Company in the U.S. District Court for the District of Kansas for $345 million, which remains subject to court approval. See ~~Note 12A1~~.

~~(e)~~See Note 2B2C.

Note 5. Tax Matters

A. Taxes on Income from Continuing Operations

Our effective tax rate for continuing operations was ~~15.8%~~13.7% for the second quarter of 2022, compared to 16.2% for the second quarter of 2021, ~~compared to 14.0% for the second quarter of 2020,~~ and was ~~15.0%~~13.4% for the first six months of ~~2021,~~2022, compared to ~~13.3%~~15.3% for the first six months of ~~2020.~~

2021. The ~~higher~~lower effective tax ~~rate~~rates for the second quarter and first six months of ~~2021,~~2022, compared to the second quarter and first six months of ~~2020, was~~2021, were primarily due to athe favorable change in the jurisdictional mix of earnings ~~primarily related to BNT162b2.~~as a result of operating fluctuations in the normal course of business.

We elected, with the filing of our 2018 U.S. Federal Consolidated Income Tax Return, to pay our initial estimated $15 billion repatriation tax liability on accumulated post-1986 foreign earnings over eight years through 2026. The ~~third~~fourth annual installment of this liability was paid by its April ~~15, 2021~~18, 2022 due date. The ~~fourth~~fifth annual installment is due April ~~15, 2022~~18, 2023 and is reported in current Income taxes payableas of July ~~4, 2021.~~ 3, 2022. The remaining liability is reported in noncurrent Other taxes

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

payable. Our obligations may vary as a result of changes in our uncertain tax positions and/or availability of attributes such as foreign tax and other credit carryforwards.

B. 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.

The U.S. is one of our major tax jurisdictions, and we are regularly audited by the IRS. With respect to Pfizer, the IRS has issued Revenue Agent’s Reports (RARs) for tax years 2011-2013 and 2014-2015. We are not in agreement with the RARs and are currently appealing certain disputed issues. Tax years 2016-2018 are currently under audit. Tax years ~~2019-2021~~2019-2022 are open

~~PFIZER INC. AND SUBSIDIARY COMPANIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

but not under audit. All other tax years are closed. In addition to the open audit years in the U.S., we have open audit years in certain major international tax jurisdictions dating back to ~~2010.~~2011.

For additional information, see Note 5D in our ~~2020~~2021 Form 10-K.

C. Tax Provision/(Benefit) on Other Comprehensive Income/(Loss)


Components of Tax provision/(benefit) on other comprehensive income/(loss) include:	Components of Tax provision/(benefit) on other comprehensive income/(loss) include:									Components of Tax provision/(benefit) on other comprehensive income/(loss) include:
		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
(MILLIONS)	(MILLIONS)	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020		(MILLIONS)	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Foreign currency translation adjustments, net(a)	Foreign currency translation adjustments, net(a)	$	(19)	$	70	$	2	$	(177)	Foreign currency translation adjustments, net(a)	$	(114)	$	(19)	$	(185)	$	2
Unrealized holding gains/(losses) on derivative financial instruments, net	Unrealized holding gains/(losses) on derivative financial instruments, net	(51)		51		7		(82)		Unrealized holding gains/(losses) on derivative financial instruments, net	98		(51)		130		7
Reclassification adjustments for (gains)/losses included in net income	Reclassification adjustments for (gains)/losses included in net income	1		(35)		35		(20)		Reclassification adjustments for (gains)/losses included in net income	(3)		1		(26)		35
		(50)		16		43		(102)			95		(50)		105		43
Unrealized holding gains/(losses) on available-for-sale securities, net	Unrealized holding gains/(losses) on available-for-sale securities, net	7		5		17		(1)		Unrealized holding gains/(losses) on available-for-sale securities, net	(61)		7		(78)		17
Reclassification adjustments for (gains)/losses included in net income	Reclassification adjustments for (gains)/losses included in net income	8		6		(23)		7		Reclassification adjustments for (gains)/losses included in net income	32		8		61		(23)
		15		11		(5)		6			(29)		15		(17)		(5)

Reclassification adjustments related to amortization of prior service costs and other, net	Reclassification adjustments related to amortization of prior service costs and other, net	(8)		(11)		(17)		(21)		Reclassification adjustments related to amortization of prior service costs and other, net	(7)		(8)		(16)		(17)
Reclassification adjustments related to curtailments of prior service costs and other, net										Reclassification adjustments related to curtailments of prior service costs and other, net	—		(1)		(2)		(1)

Other		(1)		1		(1)		1
		(8)		(9)		(18)		(20)			(8)		(8)		(18)		(18)
Tax provision/(benefit) on other comprehensive income/(loss)	Tax provision/(benefit) on other comprehensive income/(loss)	$	(63)	$	87	$	21	$	(293)	Tax provision/(benefit) on other comprehensive income/(loss)	$	(55)	$	(63)	$	(115)	$	21

(a)Taxes are not provided for foreign currency translation adjustments relating to investments in international subsidiaries that we intend to hold indefinitely.

Note 6. Accumulated Other Comprehensive Loss, Excluding Noncontrolling Interests


The following summarizes the changes, net of tax, in Accumulated other comprehensive loss:	The following summarizes the changes, net of tax, in Accumulated other comprehensive loss:										The following summarizes the changes, net of tax, in Accumulated other comprehensive loss:
		Net Unrealized Gains/(Losses)						Benefit Plans							Net Unrealized Gains/(Losses)						Benefit Plans
(MILLIONS)	(MILLIONS)	Foreign Currency Translation Adjustments		Derivative Financial Instruments		Available-For-Sale Securities			Prior Service (Costs)/Credits and Other			Accumulated Other Comprehensive Income/(Loss)		(MILLIONS)	Foreign Currency Translation Adjustments		Derivative Financial Instruments		Available-For-Sale Securities		Prior Service (Costs)/Credits and Other		Accumulated Other Comprehensive Income/(Loss)
Balance, December 31, 2020(a)		$	(5,450)	$	(428)	$	116		$	452		$	(5,310)
Balance, December 31, 2021														Balance, December 31, 2021	$	(6,172)	$	119	$	(220)	$	377	$	(5,897)
Other comprehensive income/(loss)~~(b)~~(a)	Other comprehensive income/(loss)~~(b)~~(a)	495		160		(37)			(66)			552		Other comprehensive income/(loss)~~(b)~~(a)	(1,440)		392		(116)		(59)		(1,223)

Balance, July 4, 2021		$	(4,955)	$	(268)	$	79		$	386		$	(4,758)
Balance, July 3, 2022														Balance, July 3, 2022	$	(7,612)	$	511	$	(336)	$	318	$	(7,119)

(a)~~Amounts include the impact of a change in accounting principle. See~~ ~~Note 1C.~~

~~(b)~~Amounts do not include foreign currency translation adjustments attributable to noncontrolling interests. Foreign currency translation adjustments ~~primarily~~ include ~~gains from the strengthening of the U.K. pound, Canadian dollar and euro against the U.S. dollar, and net gains related to the impact of our net investment hedging program, partially offset by~~ net losses ~~from foreign currency translation adjustments~~ related to our ~~equity-method~~equity method investment in the Consumer Healthcare JV (see Note 2B2C).and the impact of our net investment hedging program.

1816

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 7. Financial Instruments

A. Fair Value Measurements

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis and Fair Value Hierarchy, using a Market Approach:


		July 4, 2021						December 31, 2020							July 3, 2022						December 31, 2021
(MILLIONS)	(MILLIONS)	Total		Level 1		Level 2		Total		Level 1		Level 2		(MILLIONS)	Total		Level 1		Level 2		Total		Level 1		Level 2
Financial assets:	Financial assets:													Financial assets:
Short-term investments	Short-term investments													Short-term investments
Classified as equity securities with readily determinable fair values:
Equity securities with readily determinable fair values:														Equity securities with readily determinable fair values:
Money market funds	Money market funds	$	2,284	$	0	$	2,284	$	567	$	0	$	567	Money market funds	$	4,373	$	—	$	4,373	$	5,365	$	—	$	5,365

Classified as available-for-sale debt securities:
Available-for-sale debt securities:														Available-for-sale debt securities:
Government and agency—non-U.S.	Government and agency—non-U.S.	12,448		0		12,448		7,719		0		7,719		Government and agency—non-U.S.	21,758		—		21,758		17,318		—		17,318
Government and agency—U.S.	Government and agency—U.S.	260		0		260		982		0		982		Government and agency—U.S.	2,839		—		2,839		4,050		—		4,050
Corporate and other	Corporate and other	1,317		0		1,317		1,008		0		1,008		Corporate and other	1,024		—		1,024		647		—		647
		14,025		0		14,025		9,709		0		9,709			25,621		—		25,621		22,014		—		22,014
Total short-term investments	Total short-term investments	16,309		0		16,309		10,276		0		10,276		Total short-term investments	29,994		—		29,994		27,379		—		27,379
Other current assets	Other current assets													Other current assets
Derivative assets:	Derivative assets:													Derivative assets:
Interest rate contracts	Interest rate contracts	2		0		2		18		0		18		Interest rate contracts	8		—		8		4		—		4
Foreign exchange contracts	Foreign exchange contracts	289		0		289		234		0		234		Foreign exchange contracts	1,322		—		1,322		704		—		704
Total other current assets	Total other current assets	290		0		290		251		0		251		Total other current assets	1,331		—		1,331		709		—		709
Long-term investments	Long-term investments													Long-term investments
Classified as equity securities with readily determinable fair values(a)		3,736		3,711		25		2,809		2,776		32
Equity securities with readily determinable fair values(a)														Equity securities with readily determinable fair values(a)	3,041		3,028		13		3,876		3,849		27

Classified as available-for-sale debt securities:
Available-for-sale debt securities:														Available-for-sale debt securities:
Government and agency—non-U.S.	Government and agency—non-U.S.	9		0		9		6		0		6		Government and agency—non-U.S.	305		—		305		465		—		465
Government and agency—U.S.	Government and agency—U.S.	54		0		54		121		0		121		Government and agency—U.S.	—		—		—		6		—		6
Corporate and other	Corporate and other	0		0		0		0		0		0		Corporate and other	74		—		74		50		—		50
		63		0		63		128		0		128			379		—		379		521		—		521
Total long-term investments	Total long-term investments	3,799		3,711		88		2,936		2,776		160		Total long-term investments	3,420		3,028		392		4,397		3,849		548
Other noncurrent assets	Other noncurrent assets													Other noncurrent assets
Derivative assets:	Derivative assets:													Derivative assets:
Interest rate contracts	Interest rate contracts	23		0		23		117		0		117		Interest rate contracts	—		—		—		16		—		16
Foreign exchange contracts	Foreign exchange contracts	142		0		142		5		0		5		Foreign exchange contracts	562		—		562		242		—		242
Total derivative assets	Total derivative assets	165		0		165		122		0		122		Total derivative assets	562		—		562		259		—		259
Insurance contracts(b)	Insurance contracts(b)	767		0		767		693		0		693		Insurance contracts(b)	665		—		665		808		—		808
Total other noncurrent assets	Total other noncurrent assets	931		0		931		814		0		814		Total other noncurrent assets	1,227		—		1,227		1,067		—		1,067
Total assets	Total assets	$	21,330	$	3,711	$	17,618	$	14,278	$	2,776	$	11,501	Total assets	$	35,972	$	3,028	$	32,944	$	33,552	$	3,849	$	29,703

Financial liabilities:	Financial liabilities:													Financial liabilities:
Other current liabilities	Other current liabilities													Other current liabilities
Derivative liabilities:	Derivative liabilities:													Derivative liabilities:

Foreign exchange contracts	Foreign exchange contracts	$	308	$	0	$	308	$	501	$	0	$	501	Foreign exchange contracts	$	432	$	—	$	432	$	476	$	—	$	476
Total other current liabilities	Total other current liabilities	308		0		308		501		0		501		Total other current liabilities	432		—		432		476		—		476
Other noncurrent liabilities	Other noncurrent liabilities													Other noncurrent liabilities
Derivative liabilities:	Derivative liabilities:													Derivative liabilities:

Interest rate contracts														Interest rate contracts	206		—		206		—		—		—
Foreign exchange contracts	Foreign exchange contracts	651		0		651		599		0		599		Foreign exchange contracts	653		—		653		405		—		405
Total other noncurrent liabilities	Total other noncurrent liabilities	651		0		651		599		0		599		Total other noncurrent liabilities	859		—		859		405		—		405
Total liabilities	Total liabilities	$	959	$	0	$	959	$	1,100	$	0	$	1,100	Total liabilities	$	1,291	$	—	$	1,291	$	881	$	—	$	881

(a)Long-term equity securities of ~~$181~~$144 million as of July ~~4, 2021~~3, 2022 and ~~$190~~$194 million as of December 31, ~~2020~~2021 were held in restricted trusts for U.S. non-qualified employee benefit plans.

(b)Includes life insurance policies held in restricted trusts for U.S. non-qualified employee benefit plans. The underlying invested assets in these contracts are marketable securities, which are carried at fair value, with changes in fair value recognized in Other (income)/deductions—net (see Note 4).

1917

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Financial Assets and Liabilities Not Measured at Fair Value on a Recurring ~~Basis~~

Carrying values and estimated fair values using a market approach:
July 4, 2021 December 31, 2020
(MILLIONS) Carrying Value Estimated Fair Value at Level 2 Carrying Value Estimated Fair Value at Level 2
Financial Liabilities
Long-term debt, excluding the current portion $ 35,354 $ 41,725 $ 37,133 $ 45,533
Basis––The carrying value of Long-term debt, excluding the current portion was $34 billion as of July 3, 2022 and $36 billion as of December 31, 2021. The estimated fair value of such debt, using a market approach and Level 2 inputs, was $34 billion as of July 3, 2022 and $42 billion as of December 31, 2021.

The differences between the estimated fair values and carrying values of held-to-maturity debt securities, private equity securities, long-term receivables and short-term borrowings not measured at fair value on a recurring basis were not significant as of July ~~4, 2021~~3, 2022 and December 31, ~~2020.~~2021. The fair value measurements of our held-to-maturity debt securities and short-term borrowings are based on Level 2 inputs. The fair value measurements of our long-term receivables and private equity securities are based on Level 3 inputs.

B. Investments

Total Short-Term, Long-Term and Equity-Method Investments


The following summarizes our investments by classification type:	The following summarizes our investments by classification type:					The following summarizes our investments by classification type:
(MILLIONS)	(MILLIONS)	July 4, 2021		December 31, 2020		(MILLIONS)	July 3, 2022		December 31, 2021
Short-term investments	Short-term investments					Short-term investments
Equity securities with readily determinable fair values(a)	Equity securities with readily determinable fair values(a)	$	2,284	$	567	Equity securities with readily determinable fair values(a)	$	4,373	$	5,365
Available-for-sale debt securities	Available-for-sale debt securities	14,025		9,709		Available-for-sale debt securities	25,621		22,014
Held-to-maturity debt securities	Held-to-maturity debt securities	3,019		161		Held-to-maturity debt securities	1,530		1,746
Total Short-term investments	Total Short-term investments	$	19,328	$	10,437	Total Short-term investments	$	31,524	$	29,125

Long-term investments	Long-term investments					Long-term investments
Equity securities with readily determinable fair values	Equity securities with readily determinable fair values	$	3,736	$	2,809	Equity securities with readily determinable fair values	$	3,041	$	3,876

Available-for-sale debt securities	Available-for-sale debt securities	63		128		Available-for-sale debt securities	379		521
Held-to-maturity debt securities	Held-to-maturity debt securities	35		37		Held-to-maturity debt securities	39		34
Private equity securities at cost(b)	Private equity securities at cost(b)	500		432		Private equity securities at cost(b)	705		623
Total Long-term investments	Total Long-term investments	$	4,334	$	3,406	Total Long-term investments	$	4,163	$	5,054
Equity-method investments	Equity-method investments	16,608		16,856		Equity-method investments	14,799		16,472
Total long-term investments and equity-method investments	Total long-term investments and equity-method investments	$	20,942	$	20,262	Total long-term investments and equity-method investments	$	18,962	$	21,526
Held-to-maturity cash equivalents	Held-to-maturity cash equivalents	$	567	$	89	Held-to-maturity cash equivalents	$	225	$	268

(a)As of July ~~4, 2021~~3, 2022 and December 31, ~~2020,~~2021, includes money market funds primarily invested in U.S. Treasury and government debt.

(b)Represent investments in the life sciences sector.

Debt Securities


At July 4, 2021, our debt investment portfolio consisted of debt securities issued across diverse governments, corporate and financial institutions, which are investment-grade. The contractual or estimated maturities, are as follows:
At July 3, 2022, our investment portfolio consisted of debt securities issued across diverse governments, corporate and financial institutions, which are investment-grade. The contractual or estimated maturities, are as follows:																						At July 3, 2022, our investment portfolio consisted of debt securities issued across diverse governments, corporate and financial institutions, which are investment-grade. The contractual or estimated maturities, are as follows:
		July 4, 2021														December 31, 2020											July 3, 2022														December 31, 2021
				Gross Unrealized						Maturities (in Years)								Gross Unrealized											Gross Unrealized						Maturities (in Years)								Gross Unrealized
(MILLIONS)	(MILLIONS)	Amortized Cost		Gains		Losses		Fair Value		Within 1		Over 1 to 5		Over 5		Amortized Cost		Gains		Losses				Fair Value		(MILLIONS)	Amortized Cost		Gains		Losses		Fair Value		Within 1		Over 1 to 5		Over 5		Amortized Cost		Gains		Losses		Fair Value
Available-for-sale debt securities	Available-for-sale debt securities																									Available-for-sale debt securities
Government and agency––non-U.S.	Government and agency––non-U.S.	$	12,371	$	122	$	(35)	$	12,457	$	12,448	$	9	$	0	$	7,593	$	136	$	(4)			$	7,725	Government and agency––non-U.S.	$	22,445	$	36	$	(419)	$	22,062	$	21,758	$	305	$	—	$	18,032	$	13	$	(263)	$	17,783
Government and agency––U.S.	Government and agency––U.S.	314		0		(1)		314		260		54		0		1,104		0		(1)				1,103		Government and agency––U.S.	2,840		—		(1)		2,839		2,839		—		—		4,056		—		(1)		4,055
Corporate and other	Corporate and other	1,312		5		0		1,317		1,317		0		0		1,006		2		0				1,008		Corporate and other	1,098		2		(2)		1,098		1,024		74		—		698		—		(1)		697
Held-to-maturity debt securities	Held-to-maturity debt securities																						Held-to-maturity debt securities
Time deposits and other	Time deposits and other	914		0		0		914		884		19		11		283		0		0				283		Time deposits and other	913		—		—		913		878		23		11		947		—		—		947
Government and agency––non-U.S.	Government and agency––non-U.S.	2,706		0		0		2,706		2,701		4		1		5		0		0				5		Government and agency––non-U.S.	881		—		—		881		876		3		1		1,102		—		—		1,102
Total debt securities	Total debt securities	$	17,618	$	126	$	(36)	$	17,709	$	17,611	$	86	$	12	$	9,991	$	138	$	(5)			$	10,124	Total debt securities	$	28,177	$	38	$	(422)	$	27,794	$	27,376	$	406	$	12	$	24,835	$	14	$	(265)	$	24,584

Any expected credit losses to these portfolios would be immaterial to our financial statements.

2018

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Equity Securities


The following presents the calculation of the portion of unrealized (gains)/losses that relates to equity securities, excluding equity-method investments, held at the reporting date:	The following presents the calculation of the portion of unrealized (gains)/losses that relates to equity securities, excluding equity-method investments, held at the reporting date:									The following presents the calculation of the portion of unrealized (gains)/losses that relates to equity securities, excluding equity-method investments, held at the reporting date:
		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
(MILLIONS)	(MILLIONS)	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020		(MILLIONS)	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Net (gains)/losses recognized during the period on equity securities(a)		(800)		$	(732)	(1,200)		$	(478)
Net (gains)/losses recognized during the period on equity securities(a)										Net (gains)/losses recognized during the period on equity securities(a)	$	541	$	(800)	$	1,241	$	(1,200)
Less: Net (gains)/losses recognized during the period on equity securities sold during the period	Less: Net (gains)/losses recognized during the period on equity securities sold during the period	24		1		(5)		(18)		Less: Net (gains)/losses recognized during the period on equity securities sold during the period	(68)		24		(79)		(5)
Net unrealized (gains)/losses during the reporting period on equity securities still held at the reporting date(b)	Net unrealized (gains)/losses during the reporting period on equity securities still held at the reporting date(b)	$	(823)	$	(733)	$	(1,196)	$	(459)	Net unrealized (gains)/losses during the reporting period on equity securities still held at the reporting date(b)	$	610	$	(823)	$	1,320	$	(1,196)

(a)Reported in Other (income)/deductions––net. See Note 4.

(b)Included in net unrealized ~~gains~~(gains)/losses are observable price changes on equity securities without readily determinable fair values. As of July ~~4, 2021,~~3, 2022, there were cumulative impairments and downward adjustments of ~~$93~~$108 million and upward adjustments of ~~$98~~$194 million. Impairments, downward and upward adjustments were not significant in the second ~~quarters~~quarter and first six months of ~~2021~~2022 and ~~2020.~~2021.

C. Short-Term Borrowings


Short-term borrowings include:	Short-term borrowings include:					Short-term borrowings include:
(MILLIONS)	(MILLIONS)	July 4, 2021		December 31, 2020		(MILLIONS)	July 3, 2022		December 31, 2021
Commercial paper		$	100	$	556

Current portion of long-term debt, principal amount	Current portion of long-term debt, principal amount	3,689		2,004		Current portion of long-term debt, principal amount	$	1,251	$	1,636
Other short-term borrowings, principal amount(a)	Other short-term borrowings, principal amount(a)	101		145		Other short-term borrowings, principal amount(a)	4,714		605
Total short-term borrowings, principal amount	Total short-term borrowings, principal amount	3,890		2,705		Total short-term borrowings, principal amount	5,965		2,241
Net fair value adjustments related to hedging and purchase accounting						Net fair value adjustments related to hedging and purchase accounting	25		—

Net unamortized discounts, premiums and debt issuance costs		(2)		(2)
Total Short-term borrowings, including current portion of long-term debt, carried at historical proceeds, as adjusted	Total Short-term borrowings, including current portion of long-term debt, carried at historical proceeds, as adjusted	$	3,888	$	2,703	Total Short-term borrowings, including current portion of long-term debt, carried at historical proceeds, as adjusted	$	5,990	$	2,241

(a)~~Includes~~As of July 3, 2022, primarily includes $3.7 billion related to the Consumer Healthcare JV loan (see Note 2C), and cash collateral (see Note 7F). As of December 31, 2021, primarily includes cash collateral. SeeNote 7F.

D. Long-Term Debt


The following summarizes the aggregate principal amount of our senior unsecured long-term debt, and adjustments to report our aggregate long-term debt:	The following summarizes the aggregate principal amount of our senior unsecured long-term debt, and adjustments to report our aggregate long-term debt:					The following summarizes the aggregate principal amount of our senior unsecured long-term debt, and adjustments to report our aggregate long-term debt:
(MILLIONS)	(MILLIONS)	July 4, 2021		December 31, 2020		(MILLIONS)	July 3, 2022		December 31, 2021
Total long-term debt, principal amount	Total long-term debt, principal amount	$	34,038	$	35,774	Total long-term debt, principal amount	$	33,352	$	34,948
Net fair value adjustments related to hedging and purchase accounting	Net fair value adjustments related to hedging and purchase accounting	1,507		1,562		Net fair value adjustments related to hedging and purchase accounting	1,125		1,438
Net unamortized discounts, premiums and debt issuance costs	Net unamortized discounts, premiums and debt issuance costs	(196)		(207)		Net unamortized discounts, premiums and debt issuance costs	(185)		(195)
Other long-term debt	Other long-term debt	5		4		Other long-term debt	2		4
Total long-term debt, carried at historical proceeds, as adjusted	Total long-term debt, carried at historical proceeds, as adjusted	$	35,354	$	37,133	Total long-term debt, carried at historical proceeds, as adjusted	$	34,294	$	36,195
Current portion of long-term debt, carried at historical proceeds, as adjusted (not included above)		$	3,687	$	2,002

E. Derivative Financial Instruments and Hedging Activities

Foreign Exchange ~~Risk~~

Risk––

A significant portion of our revenues, earnings and net investments in foreign affiliates is exposed to changes in foreign exchange rates. WeWhere foreign exchange risk is not offset by other exposures, we manage our foreign exchange risk principally through the use of derivative financial instruments and foreign currency debt. These financial instruments serve to mitigate the impact on net income as a result of remeasurement into another currency, or against the impact of translation into U.S. dollars of certain foreign exchange-denominated transactions.

The derivative financial instruments primarily hedge or offset exposures in the euro, U.K. pound, Japanese yen, and Canadian ~~dollar. We hedge~~dollar, and include a portion of our forecasted foreign exchange-denominated intercompany inventory sales ~~denominated in euro, Japanese yen, Canadian dollar, Chinese renminbi, U.K. pound and Australian dollar for~~hedged up to two years. We may seek to protect against possible declines in the reported net investments of our foreign business entities.

~~PFIZER INC. AND SUBSIDIARY COMPANIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

Interest Rate ~~Risk~~

Risk––Our interest-bearing investments and borrowings are subject to interest rate risk. Depending on market conditions, we may change the profile of our outstanding debt or investments by entering into derivative financial instruments like interest rate swaps, either to hedge or offset the exposure to changes in the fair value of hedged items with fixed interest rates, or to convert variable rate debt or investments to fixed rates. The derivative financial instruments primarily hedge U.S. dollar fixed-rate debt.

The following summarizes the fair value of the derivative financial instruments and notional amounts (including those reported as part of discontinued operations):
July 4, 2021 December 31, 2020
Fair Value Fair Value
(MILLIONS) Notional Asset Liability Notional Asset Liability
Derivatives designated as hedging instruments:
Foreign exchange contracts(a)
$ 24,630 $ 340 $ 846 $ 24,369 $ 145 $ 1,005
Interest rate contracts 1,000 24 0 1,950 135 0
364 846 280 1,005
Derivatives not designated as hedging instruments:
Foreign exchange contracts $ 17,085 91 113 $ 15,063 94 95
Total $ 455 $ 959 $ 373 $ 1,100

~~(a)The notional amount of outstanding foreign exchange contracts hedging our intercompany forecasted inventory sales was $4.9 billion as of July 4, 2021 and $5.0 billion as of December 31, 2020.~~

The following summarizes information about the gains/(losses) incurred to hedge or offset operational foreign exchange or interest rate risk exposures (including those reported as part of discontinued operations):

Gains/(Losses)
Recognized in OID(a)
Gains/(Losses)
Recognized in OCI(a)
Gains/(Losses)
Reclassified from
OCI into OID and COS(a)
Three Months Ended
(MILLIONS) July 4,
2021 June 28,
2020 July 4,
2021 June 28,
2020 July 4,
2021 June 28,
2020
Derivative Financial Instruments in Cash Flow Hedge Relationships:
Foreign exchange contracts(b)
$ — $ — $ (258) $ 187 $ 13 $ 172
Amount excluded from effectiveness testing and amortized into earnings(c)
— — 9 13 8 14
Derivative Financial Instruments in Fair Value Hedge Relationships:
Interest rate contracts 26 6 — — — —
Hedged item (26) (6) — — — —
Derivative Financial Instruments in Net Investment Hedge Relationships:
Foreign exchange contracts — — 1 (144) 0 0
The portion of foreign exchange contracts excluded from the assessment of hedge effectiveness(c)
— — 36 29 26 42
Non-Derivative Financial Instruments in Net Investment Hedge Relationships:(d)

Foreign currency short-term borrowings — — (11) 0 0 0
Foreign currency long-term debt — — (8) (42) 0 0
Derivative Financial Instruments Not Designated as Hedges:
Foreign exchange contracts (65) 8 — — — —
All other net(c)
— — 0 12 0 0
$ (65) $ 8 $ (230) $ 56 $ 47 $ 228

2219

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Gains/(Losses)
Recognized in OID(a)
Gains/(Losses)
Recognized in OCI(a)
Gains/(Losses)
Reclassified from
OCI into OID and COS(a)
Six Months Ended
(MILLIONS) July 4,
2021 June 28,
2020 July 4,
2021 June 28,
2020 July 4,
2021 June 28,
2020
Derivative Financial Instruments in Cash Flow Hedge Relationships:
Foreign exchange contracts(b)
$ — $ — $ (56) $ (341) $ (255) $ 126
Amount excluded from effectiveness testing and amortized into earnings(c)
— — 21 42 18 41
Derivative Financial Instruments in Fair Value Hedge Relationships:
Interest rate contracts (1) 392 — — — —
Hedged item 1 (392) — — — —
Derivative Financial Instruments in Net Investment Hedge Relationships:
Foreign exchange contracts — — 155 240 0 0
The portion of foreign exchange contracts excluded from the assessment of hedge effectiveness(c)
— — 35 176 55 84
Non-Derivative Financial Instruments in Net Investment Hedge Relationships:(d)
Foreign currency short-term borrowings — — 27 8 0 0
Foreign currency long-term debt — — 48 3 0 0
Derivative Financial Instruments Not Designated as Hedges:
Foreign exchange contracts (23) (51) — — — —
All other net(c)
— — 0 12 0 (1)
$ (23) $ (51) $ 230 $ 139 $ (182) $ 251


The following summarizes the fair value of the derivative financial instruments and notional amounts (including those reported as part of discontinued operations):
	July 3, 2022						December 31, 2021
			Fair Value						Fair Value
(MILLIONS)	Notional		Asset		Liability		Notional		Asset		Liability
Derivatives designated as hedging instruments:
Foreign exchange contracts(a)	$	31,576	$	1,642	$	711	$	29,576	$	787	$	717
Interest rate contracts	2,250		8		206		2,250		21		—
			1,650		917				808		717
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	25,929	243		375		$	21,419	160		164
Total			$	1,893	$	1,291			$	968	$	881

(a)The notional amount of outstanding foreign exchange contracts hedging our intercompany forecasted inventory sales was $4.6 billion as of July 3, 2022 and $4.8 billion as of December 31, 2021.


The following summarizes information about the gains/(losses) incurred to hedge or offset operational foreign exchange or interest rate risk exposures (including those reported as part of discontinued operations):
	Gains/(Losses) Recognized in OID(a)				Gains/(Losses) Recognized in OCI(a)				Gains/(Losses) Reclassified from OCI into OID and COS(a)
	Three Months Ended
(MILLIONS)	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Derivative Financial Instruments in Cash Flow Hedge Relationships:
Foreign exchange contracts(b)	$	—	$	—	$	624	$	(258)	$	119	$	13
Amount excluded from effectiveness testing and amortized into earnings(c)	—		—		27		9		25		8
Derivative Financial Instruments in Fair Value Hedge Relationships:
Interest rate contracts	(66)		26		—		��		—		—
Hedged item	66		(26)		—		—		—		—


Derivative Financial Instruments in Net Investment Hedge Relationships:
Foreign exchange contracts	—		—		674		1		—		—
Amount excluded from effectiveness testing and amortized into earnings(c)	—		—		59		36		33		26
Non-Derivative Financial Instruments in Net Investment Hedge Relationships:(d)
Foreign currency short-term borrowings	—		—		—		(11)		—		—
Foreign currency long-term debt	—		—		48		(8)		—		—
Derivative Financial Instruments Not Designated as Hedges:
Foreign exchange contracts	(394)		(65)		—		—		—		—

	$	(394)	$	(65)	$	1,432	$	(230)	$	177	$	47

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)



	Gains/(Losses) Recognized in OID(a)				Gains/(Losses) Recognized in OCI(a)				Gains/(Losses) Reclassified from OCI into OID and COS(a)
	Six Months Ended
(MILLIONS)	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Derivative Financial Instruments in Cash Flow Hedge Relationships:
Foreign exchange contracts(b)	$	—	$	—	$	811	$	(56)	$	314	$	(255)
Amount excluded from effectiveness testing and amortized into earnings(c)	—		—		43		21		43		18
Derivative Financial Instruments in Fair Value Hedge Relationships:
Interest rate contracts	(222)		(1)		—		—		—		—
Hedged item	222		1		—		—		—		—


Derivative Financial Instruments in Net Investment Hedge Relationships:
Foreign exchange contracts	—		—		933		155		—		—
Amount excluded from effectiveness testing and amortized into earnings(c)	—		—		(15)		35		63		55
Non-Derivative Financial Instruments in Net Investment Hedge Relationships:(d)
Foreign currency short-term borrowings	—		—		26		27		—		—
Foreign currency long-term debt	—		—		70		48		—		—
Derivative Financial Instruments Not Designated as Hedges:
Foreign exchange contracts	(413)		(23)		—		—		—		—

	$	(413)	$	(23)	$	1,868	$	230	$	421	$	(182)

(a)OID = Other (income)/deductions—net, included in Other (income)/deductions—net in the condensed consolidated statements of income. COS = Cost of Sales, included in Cost of sales in the condensed consolidated statements of income. OCI = Other comprehensive income/(loss), included in the condensed consolidated statements of comprehensive income.

(b)The amounts reclassified from OCI into COS were:

•a net gain of $68 million in the second quarter of 2022;

•a net gain of $102 million in the first six months of 2022;

•a net loss of $31 million in the second quarter of 2021; and

•a net loss of $76 million in the first six months of ~~2021;~~

•~~a net gain of $80 million in the second quarter of 2020; and~~

•~~a net gain of $150 million in the first six months of 2020.~~2021.

The remaining amounts were reclassified from OCI into OID. Based on quarter-end foreign exchange rates that are subject to change, we expect to reclassify a pre-tax ~~loss~~gain of ~~$128~~$725 million within the next 12 months into income. The maximum length of time over which we are hedging our exposure to the variability in future foreign exchange cash flows is approximately 2221 years and relates to foreign currency debt.

(c)The amounts reclassified from OCI were reclassified into OID.

(d)Short-term borrowings and long-term debt include foreign currency borrowings, which are used in net investment hedges. The short-term ~~borrowings~~borrowings’ carrying value as of ~~July 4,~~December 31, 2021 was ~~$1.2~~$1.1 billion. The long-term debt carrying values as of July ~~4, 2021~~3, 2022 and December 31, ~~2020~~2021 were ~~$881~~$774 million and ~~$2.1 billion,~~$844 million, respectively.


The following summarizes cumulative basis adjustments for fair value hedges to our long-term debt:
The following summarizes cumulative basis adjustments to our debt in fair value hedges:														The following summarizes cumulative basis adjustments to our debt in fair value hedges:
		July 4, 2021						December 31, 2020							July 3, 2022						December 31, 2021
				Cumulative Amount of Fair Value Hedging Adjustment Increase/(Decrease) to Carrying Amount						Cumulative Amount of Fair Value Hedging Adjustment Increase/(Decrease) to Carrying Amount							Cumulative Amount of Fair Value Hedging Adjustment Increase/(Decrease) to Carrying Amount						Cumulative Amount of Fair Value Hedging Adjustment Increase/(Decrease) to Carrying Amount
(MILLIONS)	(MILLIONS)	Carrying Amount of Hedged Assets/Liabilities(a)		Active Hedging Relationships		Discontinued Hedging Relationships		Carrying Amount of Hedged Assets/Liabilities(a)		Active Hedging Relationships		Discontinued Hedging Relationships		(MILLIONS)	Carrying Amount of Hedged Assets/Liabilities(a)		Active Hedging Relationships		Discontinued Hedging Relationships		Carrying Amount of Hedged Assets/Liabilities(a)		Active Hedging Relationships		Discontinued Hedging Relationships

Short-term borrowings, including current portion of long-term debt														Short-term borrowings, including current portion of long-term debt	$	—	$	—	$	22	$	—	$	—	$	—

Long-term debt	Long-term debt	$	993	$	23	$	1,202	$	2,016	$	117	$	1,149	Long-term debt	$	2,234	$	(206)	$	1,081	$	2,233	$	16	$	1,154

(a)Carrying amounts exclude the cumulative amount of fair value hedging adjustments.

2321

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

F. Credit Risk

A significant portion of our trade accounts receivable balances are due from ~~drug wholesalers.~~wholesalers and governments. For additional information on our trade accounts receivables with significant customers, see Note ~~13B~~13C below and Note ~~17B~~17C in our ~~2020~~2021 Form 10-K.

As of July ~~4, 2021,~~3, 2022, the largest investment exposures in our portfolio represent primarily sovereign debt instruments issued by France, Germany, Canada, the U.S., Japan, ~~Germany, U.K., Canada, France, Denmark, Australia~~Switzerland and the ~~Netherlands.~~

U.K.

With respect to our derivative financial instrument agreements with financial institutions, we do not expect to incur a significant loss from failure of any counterparty. Derivative financial instruments are executed under International Swaps and Derivatives Association ~~(ISDA)~~ master agreements with credit-support annexes that contain zero threshold provisions requiring collateral to be exchanged daily depending on levels of exposure. As a result, there are no significant concentrations of credit risk with any individual financial institution. As of July ~~4, 2021,~~3, 2022, the aggregate fair value of these derivative financial instruments that are in a net payable position was ~~$618~~$362 million, for which we have posted collateral of ~~$716~~$414 million with a corresponding amount reported in Short-term investments. As of July ~~4, 2021,~~3, 2022, the aggregate fair value of our derivative financial instruments that are in a net receivable position was ~~$35~~$739 million, for which we have received collateral of ~~$25~~$755 million with a corresponding amount reported in Short-term borrowings, including current portion of long-term debt.

Note 8. Other Financial Information

A. Inventories


The following summarizes the components of Inventories:	The following summarizes the components of Inventories:					The following summarizes the components of Inventories:
(MILLIONS)	(MILLIONS)	July 4, 2021		December 31, 2020		(MILLIONS)	July 3, 2022		December 31, 2021
Finished goods	Finished goods	$	3,702	$	2,878	Finished goods	$	3,219	$	3,641
Work-in-process	Work-in-process	4,388		4,430		Work-in-process	5,194		4,424
Raw materials and supplies	Raw materials and supplies	859		738		Raw materials and supplies	2,041		994
Inventories(a)	Inventories(a)	$	8,948	$	8,046	Inventories(a)	$	10,454	$	9,059
Noncurrent inventories not included above(b)	Noncurrent inventories not included above(b)	$	981	$	890	Noncurrent inventories not included above(b)	$	943	$	939

(a)The ~~change~~increase from December 31, ~~2020~~2021 primarily reflects higher inventory levels for Paxlovid, and increases for certain products ~~including inventory build for new product launches (primarily BNT162b2),~~due to network strategy and supply recovery, ~~and foreign exchange,~~ partially offset by decreases due to market ~~demand and network strategy.~~demand.

(b)Included in Other noncurrent assets. ~~There are no recoverability issues for these amounts.~~

B. Other Current Liabilities

Other current liabilities includes, among other things, amounts payable to BioNTech for the gross profit split for ~~BNT162b2,~~Comirnaty, which totaled ~~$4.5~~$7.9 billion as of July ~~4, 2021~~3, 2022 and ~~$25 million~~$9.7 billion as of December 31, ~~2020.~~2021.

Note 9. Identifiable Intangible Assets

The following summarizes the components of Identifiable intangible assets:
July 4, 2021 December 31, 2020
(MILLIONS) Gross
Carrying
Amount Accumulated
Amortization Identifiable
Intangible
Assets, less
Accumulated
Amortization Gross
Carrying
Amount Accumulated
Amortization Identifiable
Intangible
Assets, less
Accumulated
Amortization
Finite-lived intangible assets
Developed technology rights(a)
$ 74,370 $ (52,754) $ 21,616 $ 73,545 $ (50,902) $ 22,643
Brands 922 (791) 131 922 (774) 148
Licensing agreements and other 2,290 (1,248) 1,042 2,292 (1,186) 1,106
77,582 (54,793) 22,789 76,759 (52,862) 23,896
Indefinite-lived intangible assets
Brands 827 827 827 827
IPR&D 3,134 3,134 3,175 3,175
Licensing agreements and other 573 573 573 573
4,535 4,535 4,575 4,575
Identifiable intangible assets(b)
$ 82,116 $ (54,793) $ 27,323 $ 81,334 $ (52,862) $ 28,471
A. Identifiable Intangible Assets

~~(a)The increase in the gross carrying amount primarily reflects $500 million of capitalized BNT162b2 sales milestones to BioNTech.~~

~~(b)The decrease is primarily due to amortization, partially offset by the capitalization of the BNT162b2 milestones described above.~~


The following summarizes the components of Identifiable intangible assets:
	July 3, 2022						December 31, 2021
(MILLIONS)	Gross Carrying Amount		Accumulated Amortization		Identifiable Intangible Assets, less Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Identifiable Intangible Assets, less Accumulated Amortization
Finite-lived intangible assets
Developed technology rights	$	73,097	$	(54,903)	$	18,193	$	73,346	$	(53,732)	$	19,614
Brands	922		(824)		98		922		(807)		115
Licensing agreements and other	2,296		(1,352)		945		2,284		(1,299)		985

	76,315		(57,079)		19,236		76,552		(55,838)		20,714
Indefinite-lived intangible assets
Brands	827				827		827				827
IPR&D(a)	8,029				8,029		3,092				3,092
Licensing agreements and other(a)	973				973		513				513
	9,829				9,829		4,432				4,432
Identifiable intangible assets(a), (b)	$	86,144	$	(57,079)	$	29,065	$	80,984	$	(55,838)	$	25,146

2422

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

~~Amortization~~(a)The increase in the gross carrying amounts mainly reflect the impact of the acquisition of Arena. See Note 2A.

~~Total~~(b)The increase is primarily due to the acquisition of Arena, partially offset by amortization expense.

B. Goodwill


The following summarizes the changes in the carrying amount of Goodwill:
(MILLIONS)	Total(a)
Balance, January 1, 2022	$	49,208
Additions(b)	1,033
Other(c)	(350)
Balance, July 3, 2022	$	49,891

(a)All goodwill is assigned within the Biopharma reportable segment.

(b)Additions relate to our acquisition of ~~finite-lived intangible assets was $942 million for~~Arena. See Note 2A.

(c)Other represents the ~~second quarter~~impact of ~~2021 and $880 million for the second quarter of 2020, and $1.8 billion for the first six months of 2021 and $1.7 billion for the first six months of 2020.~~foreign exchange.

Note 10. Pension and Postretirement Benefit Plans


The following summarizes the components of net periodic benefit cost/(credit):
	Pension Plans
	U.S.				International				Postretirement Plans
	Three Months Ended
(MILLIONS)	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Service cost	$	—	$	—	$	30	$	33	$	7	$	9
Interest cost	118		114		41		37		7		7
Expected return on plan assets	(245)		(261)		(77)		(82)		(12)		(10)
Amortization of prior service cost/(credit)	—		—		—		—		(31)		(39)
Actuarial (gains)/losses(a)	490		2		—		—		—		—
Curtailments	—		—		—		(1)		(1)		—
Special termination benefits	1		4		—		—		—		—
Net periodic benefit cost/(credit) reported in income	$	365	$	(142)	$	(6)	$	(14)	$	(30)	$	(32)


	Pension Plans
	U.S.				International				Postretirement Plans
	Six Months Ended
(MILLIONS)	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Service cost	$	—	$	—	$	60	$	66	$	15	$	18
Interest cost	236		227		82		73		14		14
Expected return on plan assets	(490)		(521)		(156)		(164)		(23)		(20)
Amortization of prior service credits	1		(1)		—		(1)		(68)		(77)
Actuarial (gains)/losses(a)	424		(45)		—		—		—		—
Curtailments	—		—		—		(1)		(14)		—
Special termination benefits	7		12		—		—		1		1
Net periodic benefit cost/(credit) reported in income	$	178	$	(329)	$	(14)	$	(26)	$	(76)	$	(64)

~~As discussed~~(a)Mainly reflects interim actuarial remeasurement losses in ~~Note 1C, we adopted a change~~2022, primarily driven by unfavorable plan asset performance, partially offset by gains due to an increase in accounting principle to a more preferable policy under U.S. GAAP to immediately recognize actuarial gains and losses arising from the remeasurement of pension and postretirement plans. This change has been applied to all pension and postretirement plans on a retrospective basis for all prior periods presented.interest rates.

The following summarizes the components of net periodic benefit cost/(credit), including in 2020 costs/(credits) reported as part of discontinued operations:
Pension Plans
U.S. International Postretirement
Plans
Three Months Ended
(MILLIONS) July 4,
2021 June 28,
2020 July 4,
2021 June 28,
2020 July 4,
2021 June 28,
2020
Service cost $ 0 $ 0 $ 33 $ 36 $ 9 $ 10
Interest cost 114 138 37 40 7 13
Expected return on plan assets (261) (251) (82) (78) (10) (9)
Amortization of prior service credits 0 (1) 0 (1) (39) (43)
Curtailments 0 0 (1) 0 0 0
Actuarial (gains)/losses 2 (6) 0 0 0 0
Special termination benefits 4 0 0 0 0 0
Net periodic benefit cost/(credit) reported in income $ (142) $ (119) $ (14) $ (3) $ (32) $ (30)
Pension Plans
U.S. International Postretirement
Plans
Six Months Ended
(MILLIONS) July 4,
2021 June 28,
2020 July 4,
2021 June 28,
2020 July 4,
2021 June 28,
2020
Service cost $ 0 $ 0 $ 66 $ 72 $ 18 $ 19
Interest cost 227 280 73 82 14 25
Expected return on plan assets (521) (503) (164) (159) (20) (18)
Amortization of prior service credits (1) (2) (1) (1) (77) (86)
Curtailments 0 0 (1) 0 0 0
Actuarial (gains)/losses (45) 158 0 3 0 0
Special termination benefits 12 1 0 0 1 0
Net periodic benefit cost/(credit) reported in income $ (329) $ (66) $ (26) $ (4) $ (64) $ (59)

The components of net periodic benefit cost/(credit) other than the service cost component are primarily included in Other (income)/deductions––net (see Note 4).

For the six months ended July ~~4, 2021,~~3, 2022, we contributed ~~$111~~$134 million, ~~$217~~$89 million, and ~~$31~~$11 million to our U.S. Pension Plans, International Pension Plans, and Postretirement Plans, respectively, from our general assets, which include direct employer benefit payments.

2523

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 11. Earnings Per Common Share Attributable to Pfizer Inc. Common Shareholders


The following presents the detailed calculation of EPS:	The following presents the detailed calculation of EPS:									The following presents the detailed calculation of EPS:
		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
(MILLIONS)	(MILLIONS)	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020		(MILLIONS)	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
EPS Numerator––Basic	EPS Numerator––Basic									EPS Numerator––Basic
Income from continuing operations attributable to Pfizer Inc.		$	5,539	$	2,596	$	10,408	$	5,070
Less: Preferred stock dividends––net of tax		0		0		0		0

Income from continuing operations attributable to Pfizer Inc. common shareholders	Income from continuing operations attributable to Pfizer Inc. common shareholders	5,539		2,596		10,408		5,070		Income from continuing operations attributable to Pfizer Inc. common shareholders	$	9,871	$	5,799	$	17,743	$	10,675
Income from discontinued operations––net of tax		24		893		32		1,774
Discontinued operations––net of tax										Discontinued operations––net of tax	34		(236)		26		(235)

Net income attributable to Pfizer Inc. common shareholders	Net income attributable to Pfizer Inc. common shareholders	$	5,563	$	3,489	$	10,440	$	6,843	Net income attributable to Pfizer Inc. common shareholders	$	9,906	$	5,563	$	17,769	$	10,440
EPS Numerator––Diluted	EPS Numerator––Diluted									EPS Numerator––Diluted
Income from continuing operations attributable to Pfizer Inc. common shareholders and assumed conversions	Income from continuing operations attributable to Pfizer Inc. common shareholders and assumed conversions	$	5,539	$	2,596	$	10,408	$	5,070	Income from continuing operations attributable to Pfizer Inc. common shareholders and assumed conversions	$	9,871	$	5,799	$	17,743	$	10,675
Income from discontinued operations––net of tax, attributable to Pfizer Inc. common shareholders and assumed conversions		24		893		32		1,774
Discontinued operations––net of tax, attributable to Pfizer Inc. common shareholders and assumed conversions										Discontinued operations––net of tax, attributable to Pfizer Inc. common shareholders and assumed conversions	34		(236)		26		(235)
Net income attributable to Pfizer Inc. common shareholders and assumed conversions	Net income attributable to Pfizer Inc. common shareholders and assumed conversions	$	5,563	$	3,489	$	10,440	$	6,843	Net income attributable to Pfizer Inc. common shareholders and assumed conversions	$	9,906	$	5,563	$	17,769	$	10,440
EPS Denominator	EPS Denominator									EPS Denominator
Weighted-average number of common shares outstanding––Basic	Weighted-average number of common shares outstanding––Basic	5,598		5,554		5,591		5,550		Weighted-average number of common shares outstanding––Basic	5,593		5,598		5,605		5,591
Common-share equivalents: stock options, stock issuable under employee compensation plans, convertible preferred stock and accelerated share repurchase agreements		80		65		79		66
Common-share equivalents: stock options and stock issuable under employee compensation plans										Common-share equivalents: stock options and stock issuable under employee compensation plans	119		80		130		79
Weighted-average number of common shares outstanding––Diluted	Weighted-average number of common shares outstanding––Diluted	5,678		5,619		5,670		5,616		Weighted-average number of common shares outstanding––Diluted	5,712		5,678		5,735		5,670
Anti-dilutive common stock equivalents(a)	Anti-dilutive common stock equivalents(a)	5		6		4		4		Anti-dilutive common stock equivalents(a)	1		5		—		4

(a)These common stock equivalents were outstanding for the periods presented, but were not included in the computation of diluted EPS for those periods because their inclusion would have had an anti-dilutive effect.

Note 12. Contingencies and Certain Commitments

We and certain of our subsidiaries are subject to numerous contingencies arising in the ordinary course of business, including tax and legal contingencies. The following outlines our legal contingencies. For a discussion of our tax contingencies, see Note 5B.

A. Legal Proceedings

Our legal contingencies include, but are not limited to, the following:

•Patent litigation, which typically involves challenges to the coverage and/or validity of patents on various products, processes or dosage forms. An adverse outcome could result in loss of patent protection for a product, a significant loss of revenues from a product or impairment of the value of associated assets. We are the plaintiff in the majority of these actions. An adverse outcome in actions in which we are the plaintiff could result in loss of patent protection for a drug, a significant loss of revenues from that drug or impairment of the value of associated assets.

•Product liability and other product-related litigation related to current or former products, which can include personal injury, consumer, off-label promotion, securities, antitrust and breach of contract claims, among others, and often involves highly complex issues relating to medical causation, label warnings and reliance on those warnings, scientific evidence and findings, actual, provable injury and other matters.

•Commercial and other asserted or unasserted matters, which can include acquisition-, licensing-, intellectual property-, collaboration- or co-promotion-related and product-pricing claims and environmental claims and proceedings, and can involve complexities that will vary from matter to matter.

~~PFIZER INC. AND SUBSIDIARY COMPANIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

•Government investigations, which often are related to the extensive regulation of pharmaceutical companies by national, state and local government agencies in the U.S. and in other jurisdictions.

Certain of these contingencies could result in increased expenses and/or losses, including damages, royalty payments, fines and/or civil penalties, which could be substantial, and/or criminal charges.

We believe that our claims and defenses in matters in which we are a defendant 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 effect on our financial position. However, we could incur judgments, enter into settlements or revise our expectations regarding the

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

outcome of matters, which could have a material adverse effect on our results of operations and/or our cash flows in the period in which the amounts are accrued or paid.

We have accrued for losses that are both probable and reasonably estimable. Substantially all of our contingencies are subject to significant uncertainties and, therefore, 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, which result from a complex series of judgments about future events and uncertainties, are based on estimates and assumptions that have been deemed reasonable by management, but 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.

Amounts recorded for legal and environmental contingencies can result from a complex series of judgments about future events and uncertainties and can rely heavily on estimates and assumptions. For proceedings under environmental laws to which a governmental authority is a party, we have adopted a disclosure threshold of $1 million in potential or actual governmental monetary sanctions.

The principal pending matters to which we are a party are discussed below. In determining whether a pending matter is a principal matter, we consider both quantitative and qualitative factors to assess materiality, such as, among others, the amount of damages and the nature of other relief sought, if specified; our view of the merits of the claims and of the strength of our defenses; whether the action purports to be, or is, a class action and, if not certified, our view of the likelihood that a class will be certified by the court; the jurisdiction in which the proceeding is pending; whether related actions have been transferred to multidistrict litigation; any experience that we or, to our knowledge, other companies have had in similar proceedings; whether disclosure of the action would be important to a reader of our financial statements, including whether disclosure might change a reader’s judgment about our financial statements in light of all of the information that is available to the reader; the potential impact of the proceeding on our reputation; and the extent of public interest in the matter. In addition, with respect to patent matters in which we are the plaintiff, we consider, among other things, the financial significance of the product protected by the patent(s) at issue. Some of the matters discussed below include those which management believes that the likelihood of possible loss in excess of amounts accrued is remote.

A1. Legal Proceedings––Patent Litigation

We are involved in suits relating to our patents, including but not limited to, those discussed below. Most involve claims by generic drug manufacturers that patents covering our products (or those of our collaboration/licensing ~~partners)~~partners to which we have licenses or co-promotion rights and to which we may or may not be a party), processes or dosage forms are invalid and/or do not cover the product of the generic drug manufacturer. Also, counterclaims, as well as various independent actions, have been filed alleging that our assertions of, or attempts to enforce, patent rights with respect to certain products constitute unfair competition and/or violations of antitrust laws. In addition to the challenges to the U.S. patents that are discussed below, patent rights to certain of our products or those of our collaboration/licensing partners are being challenged in various other jurisdictions. ~~For example, some~~Some of our collaboration or licensing partners face challenges to the validity of their patent rights in non-U.S. jurisdictions. For example, in April 2022, the U.K. High Court issued a judgment finding invalid a BMS patent related to Eliquis due to expire in 2026. BMS is seeking permission to appeal the High Court’s decision. Additional challenges remain pending in other jurisdictions. Also, for example, in July 2022, CureVac AG (CureVac) brought a patent infringement action against BioNTech and certain of its subsidiaries in the German Regional Court alleging that Comirnaty infringes 3 German utility model patents and 1 expired European patent. Additional challenges involving Comirnaty patents may be filed against us and/or BioNTech in other jurisdictions in the future. Adverse decisions in these matters could have a material adverse effect on our results of operations.We are also party to patent damages suits in various jurisdictions pursuant to which generic drug manufacturers, payers, governments or other parties are seeking damages from us for allegedly causing delay of generic entry. ~~Additionally, our licensing and collaboration partners face challenges by generic drug manufacturers to patents covering products for which we have licenses or co-promotion rights.~~

We also are often involved in other proceedings, such as inter partes review, post-grant review, re-examination or opposition proceedings, before the U.S. Patent and Trademark Office, the European Patent Office, or other foreign counterparts relating to our intellectual property or the intellectual property rights of others. Also, if one of our patents is found to be invalid by such proceedings, generic or competitive products could be introduced into the market resulting in the erosion of sales of our existing products. For example, several of the patents in our pneumococcal vaccine portfolio ~~were~~have been challenged in inter partes review and post-grant review proceedings in the U.S. Patent and Trademark Office. In ~~2017,~~addition, another patent was challenged in federal court in Delaware; and that case was settled in September 2021 on terms not material to the company. Other challenges to pneumococcal vaccine patents remain pending at the Patent Trial and Appeal Board (PTAB) initiated proceedings, which remain pending, with respect to 2 of our pneumococcal vaccine patents. However, the PTAB declined to initiate proceedings as to two other pneumococcal vaccine patents; those 2 patents, and ~~1 other patent, are now being challenged in federal court in Delaware. Challenges to other pneumococcal vaccine patents remain pending~~ outside the U.S. The invalidation of any of the patents in our pneumococcal portfolio could potentially allow additional competitor vaccines, if approved, to enter the marketplace earlier than anticipated. In the event that any of the patents are found valid and infringed, a competitor’s vaccine, ~~into~~if approved, might be prohibited from entering the ~~marketplace. In the event~~market or a competitor might be required to pay us a royalty.

2725

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

~~that any of the patents are found valid and infringed, a competitor’s vaccine might be prohibited from entering the market or a competitor might be required to pay us a royalty.~~

We are also subject to patent litigation pursuant to which one or more third parties seek damages and/or injunctive relief to compensate for alleged infringement of its patents by our commercial or other activities. For example, our Hospira subsidiaries are involved in patent and patent-related disputes over their attempts to bring generic pharmaceutical ~~and biosimilar~~ products to market. If one of our marketed products is found to infringe valid patent rights of a third party, such third party may be awarded significant damages or royalty payments, or we may be prevented from further sales of that product. Such damages may be enhanced as much as three-fold if we or one of our subsidiaries is found to have willfully infringed valid patent rights of a third party.

Actions In Which We Are The Plaintiff

EpiPen

In 2010, King, which we acquired in 2011 and is a wholly-owned subsidiary, brought a patent-infringement action against Sandoz in the U.S. District Court for the District of New Jersey in connection with Sandoz’s abbreviated new drug application (ANDA) filed with the FDA seeking approval to market an epinephrine injectable product. Sandoz is challenging patents, which expire in 2025, covering the next-generation autoinjector for use with epinephrine that is sold under the EpiPen brand name. We expect that the outcome of this matter will not be material to us.

Xeljanz (tofacitinib)

Beginning in 2017, we brought patent-infringement actions against several generic manufacturers that filed separate ANDAs with the FDA seeking approval to market their generic versions of tofacitinib tablets in one or both of 5 mg and 10 mg dosage strengths, and in both immediate and extended release forms. To date, we have settled actions with several manufacturers on terms not material to us. The remaining actions continue in the U.S. District Court for the District of Delaware as described below.

In ~~2018,~~October 2021, we brought a separate ~~patent infringement~~patent-infringement action against ~~Teva Pharmaceuticals USA,~~Sinotherapeutics Inc. ~~(Teva)~~(Sinotherapeutics) asserting the infringement and validity of our patent covering extended release formulations of tofacitinib that was challenged by ~~Teva~~Sinotherapeutics in its ANDA seeking approval to market a generic version of tofacitinib 11 mg extended release tablets.

In ~~January 2021,~~February 2022, we brought a separate patent-infringement action against ~~Aurobindo~~Slayback Pharma ~~Limited (Aurobindo)~~LLC (Slayback) asserting the infringement and validity of our compound patent covering the ~~2025 Patent and the 2023 Patent, which Aurobindo~~active ingredient that was challenged by Slayback in its ANDA seeking approval to market a generic version of tofacitinib 5oral solution 1 mg/mL. In May 2022, we settled our action against Slayback on terms not material to us.

In June 2022, we brought a separate patent infringement action against MSN Laboratories Private Ltd. (MSN) asserting the infringement and validity of our compound patent covering the active agreement that was challenged by MSN in its ANDAs seeking approval to market generic versions of tofacitinib immediate release tablets (5 mg, 10 mg) and ~~10 mg tablets.~~oral solution 1 mg/mL.

Inlyta (axitinib)

In 2019, Glenmark Pharmaceuticals ~~Limited~~Ltd. (Glenmark) notified us that it had filed an ANDA with the FDA seeking approval to market a generic version of Inlyta. Glenmark asserts the invalidity and non-infringement of the crystalline form patent for Inlyta that expires in 2030. In 2019, we filed suit against Glenmark in the U.S. District Court for the District of Delaware, asserting the validity and infringement of the crystalline form patent for Inlyta.

Ibrance (palbociclib)

In 2019, several generic companies notified us that they had filed ANDAs with the FDA seeking approval to market generic versions of Ibrance. The companies assert the invalidity and non-infringement of 2 composition of matter patents, one of which expires in 2023 and one of which expires in 2027, as a result of a U.S. Patent Term Extension certificate issued in January 2021, and a method of use patent covering palbociclib, which expires in 2023. In 2019, we brought patent infringement actions against each of the generic filers in various federal courts, asserting the validity and infringement of the patents challenged by the generic companies. Beginning in September 2020, we received correspondence from several generic companies notifying us that they would seek approval to market generic versions of ~~Ibrance.~~Ibrance capsules. The generic companies assert the invalidity and non-infringement of our crystalline form patent which expires in 2034. Beginning in October 2020, we brought patent infringement actions against each of these generic companies in various federal courts, asserting the validity and infringement of the crystalline form patent. We have settled with certain of these generic companies on terms not material to us, and we dismissed the patent infringement actions against the remaining generic companies.

~~Matter~~Beginning in January 2021, several generic companies notified us that they had filed ANDAs with the FDA seeking approval to market generic versions of Ibrance tablets. The generic companies are challenging some or all of the following patents: (i) the composition of matter patent expiring in 2027; (ii) the composition of matter patent expiring in 2023; (iii) the method of use patent expiring in 2023; (iv) the crystalline form patent expiring in 2034; and (v) a tablet formulation patent expiring in 2036. We brought patent infringement actions against each of the generic filers in various federal courts, asserting the validity and infringement of the patents challenged by the generic companies. We have settled with one of these generic companies on terms not material to us, and we dismissed the patent infringement actions relating to the crystalline form of patent, the composition of matter patent expiring in 2023, and the method of use patent against the generic companies that had challenged these patents.

Eucrisa

Beginning in September 2021, several generic companies notified us that they had filed ANDAs with the FDA seeking approval to market generic versions of Eucrisa. The companies assert the invalidity and non-infringement of a composition of

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

matter patent expiring in 2026, two method of use patents expiring in 2027, and one other method of use patent expiring in 2030. In September 2021, we brought patent infringement actions against the generic filers in the U.S. District Court for the District of Delaware, asserting the validity and infringement of the patents challenged by the generic companies.

Actions in Which We are the Defendant

Comirnaty

In March 2022, Alnylam Pharmaceuticals, Inc. (Alnylam) filed a complaint in the U.S. District Court for the District of Delaware against Pfizer and Pharmacia & Upjohn Co. LLC, our wholly owned subsidiary, alleging that Comirnaty infringes U.S. Patent No. 11,246,933, which was issued in February 2022, and seeking unspecified monetary damages. In July 2022, Alnylam filed a second complaint in the U.S. District Court for the District of Delaware against Pfizer, Pharmacia & Upjohn Co. LLC, BioNTech and BioNTech Manufacturing GmbH, alleging that Comirnaty infringes U.S. Patent No. 11,382,979, which was issued in July 2022, and seeking unspecified monetary damages.

Paxlovid

In June 2022, Enanta Pharmaceuticals, Inc. filed a complaint in the U.S. District Court for the District of Massachusetts against Pfizer alleging that the active ingredient in Paxlovid, nirmatrelvir, infringes U.S. Patent No. 11,358,953, which was issued in June 2022, and seeking unspecified monetary damages.

Matters Involving ~~Our~~Pfizer and its Collaboration/Licensing Partners

Eliquis

In 2017, NaN generic companies sent BMS Paragraph-IV certification letters informing BMS that they had filed ANDAs seeking approval of generic versions of Eliquis, challenging the validity and infringement of one or more of the 3 patents listed in the Orange Book for Eliquis. NaN of the patents expired in December 2019 and the remaining patents currently are set to expire in 2026 and 2031. Eliquis has been jointly developed and is being commercialized by BMS and Pfizer. BMS and Pfizer filed patent-infringement actions against all generic filers in the U.S. District Court for the District of Delaware and the U.S. District Court for the District of West Virginia, asserting that each of the generic companies’ proposed products would infringe each of the patent(s) that each generic filer challenged. Some generic filers challenged only the 2031 patent, some challenged both the 2031 and 2026 patent, and one generic company challenged all 3 patents. In August 2020, the U.S.

~~PFIZER INC. AND SUBSIDIARY COMPANIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

District Court for the District of Delaware ruled that both the 2026 patent and the 2031 patent are valid and infringed by the proposed generic products. In August and September 2020, the generic filers appealed the District Court’s decision to the U.S. Court of Appeals for the Federal Circuit. Prior to the August 2020 ruling, we and BMS settled with certain of the companies on terms not material to us, and we and BMS may settle with other generic companies in the future. In September 2021, the U.S. Court of Appeals for the Federal Circuit affirmed the District Court’s decision.

Comirnaty

In July 2022, Pfizer, BioNTech and BioNTech Manufacturing GmbH filed a declaratory judgment complaint against CureVac in the U.S. District Court for the District of Massachusetts seeking a judgment of non-infringement for the following 3 patents relating to Comirnaty: U.S. Patent Nos. 11,135,312, 11,149,278, and 11,241,493.

A2. Legal Proceedings––Product Litigation

We are defendants in numerous cases, including but not limited to those discussed below, related to our pharmaceutical and other products. Plaintiffs in these cases seek damages and other relief on various grounds for alleged personal injury and economic loss.

Asbestos

Between 1967 and 1982, Warner-Lambert owned American Optical Corporation (American Optical), which manufactured and sold respiratory protective devices and asbestos safety clothing. In connection with the sale of American Optical in 1982, Warner-Lambert agreed to indemnify the purchaser for certain liabilities, including certain asbestos-related and other claims. Warner-Lambert was acquired by Pfizer in 2000 and is a wholly owned subsidiary of Pfizer. Warner-Lambert is actively engaged in the defense of, and will continue to explore various means of resolving, these claims.

Numerous lawsuits against American Optical, Pfizer and certain of its previously owned subsidiaries are pending in various federal and state courts seeking damages for alleged personal injury from exposure to products allegedly containing asbestos and other allegedly hazardous materials sold by Pfizer and certain of its previously owned subsidiaries.

There also are a small number of lawsuits pending in various federal and state courts seeking damages for alleged exposure to asbestos in facilities owned or formerly owned by Pfizer or its subsidiaries.

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Effexor

Beginning in 2011, actions, including purported class actions, were filed in various federal courts against Wyeth and, in certain of the actions, affiliates of Wyeth and certain other defendants relating to Effexor XR, which is the extended-release formulation of Effexor. The plaintiffs in each of the class actions seek to represent a class consisting of all persons in the U.S. and its territories who directly purchased, indirectly purchased or reimbursed patients for the purchase of Effexor XR or generic Effexor XR from any of the defendants from June 14, 2008 until the time the defendants’ allegedly unlawful conduct ceased. The plaintiffs in all of the actions allege delay in the launch of generic Effexor XR in the U.S. and its territories, in violation of federal antitrust laws and, in certain of the actions, the antitrust, consumer protection and various other laws of certain states, as the result of Wyeth fraudulently obtaining and improperly listing certain patents for Effexor XR in the Orange Book, enforcing certain patents for Effexor XR and entering into a litigation settlement agreement with a generic drug manufacturer with respect to Effexor XR. Each of the plaintiffs seeks treble damages (for itself in the individual actions or on behalf of the putative class in the purported class actions) for alleged price overcharges for Effexor XR or generic Effexor XR in the U.S. and its territories since June 14, 2008. All of these actions have been consolidated in the U.S. District Court for the District of New Jersey.

In 2014, the District Court dismissed the direct purchaser plaintiffs’ claims based on the litigation settlement agreement, but declined to dismiss the other direct purchaser plaintiff claims. In 2015, the District Court entered partial final judgments as to all settlement agreement claims, including those asserted by direct purchasers and end-payer plaintiffs, which plaintiffs appealed to the U.S. Court of Appeals for the Third Circuit. In 2017, the U.S. Court of Appeals for the Third Circuit reversed the District Court’s decisions and remanded the claims to the District Court.

Lipitor

Beginning in 2011, purported class actions relating to Lipitor were filed in various federal courts against, among others, Pfizer, certain Pfizer affiliates, and, in most of the actions, Ranbaxy Laboratories Ltd. (Ranbaxy) and certain Ranbaxy affiliates. The plaintiffs in these various actions seek to represent nationwide, multi-state or statewide classes consisting of persons or entities who directly purchased, indirectly purchased or reimbursed patients for the purchase of Lipitor (or, in certain of the actions, generic Lipitor) from any of the defendants from March 2010 until the cessation of the defendants’ allegedly unlawful conduct (the Class Period). The plaintiffs allege delay in the launch of generic Lipitor, in violation of federal antitrust laws and/or state antitrust, consumer protection and various other laws, resulting from (i) the 2008 agreement pursuant to which Pfizer and Ranbaxy settled certain patent litigation involving Lipitor and Pfizer granted Ranbaxy a license to sell a generic version of Lipitor in various markets beginning on varying dates, and (ii) in certain of the actions, the procurement and/or enforcement of certain patents for Lipitor. Each of the actions seeks, among other things, treble damages on behalf of the putative class for alleged price overcharges for Lipitor (or, in certain of the actions, generic Lipitor) during the Class Period. In addition, individual actions have been filed against Pfizer, Ranbaxy and certain of their affiliates, among others, that assert claims and seek relief for the plaintiffs that are substantially similar to the claims asserted and the relief sought in the purported class actions described above. These various actions have been consolidated for pre-trial proceedings in a Multi-District Litigation in the U.S. District Court for the District of New Jersey.

~~PFIZER INC. AND SUBSIDIARY COMPANIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

In September 2013 and 2014, the District Court dismissed with prejudice the claims of the direct purchasers. In October and November 2014, the District Court dismissed with prejudice the claims of all other Multi-District Litigation plaintiffs. All plaintiffs ~~have~~ appealed the District Court’s orders dismissing their claims with prejudice to the U.S. Court of Appeals for the Third Circuit. In addition, the direct purchaser class plaintiffs appealed the order denying their motion to amend the judgment and for leave to amend their complaint to the Court of Appeals. In 2017, the Court of Appeals reversed the District Court’s decisions and remanded the claims to the District Court.

Also, in 2013, the State of West Virginia filed an action in West Virginia state court against Pfizer and Ranbaxy, among others, that asserts claims and seeks relief on behalf of the State of West Virginia and residents of that state that are substantially similar to the claims asserted and the relief sought in the purported class actions described above.

EpiPen (Direct Purchaser)

Beginning in 2017, purported class actions were filed in various federal courts by indirect purchasers of EpiPen against Pfizer, and/or its affiliates King and Meridian, and/or various entities affiliated with Mylan, and Mylan former Chief Executive Officer, Heather Bresch. The plaintiffs in these actions seek to represent U.S. nationwide classes comprising persons or entities who paid for any portion of the end-user purchase price of an EpiPen between 2009 until the cessation of the defendants’ allegedly unlawful conduct. In February 2020, a ~~similar~~ lawsuit was filed in the U.S. District Court for the District of Kansas against Pfizer, its current and former affiliates King and Meridian, and ~~the~~various Mylan entities, on behalf of a purported U.S. nationwide class of direct purchaser plaintiffs who purchased EpiPen devices directly from the ~~defendants (the 2020 Lawsuit).~~defendants. Plaintiffs in ~~these actions~~this action generally allege ~~against~~that Pfizer ~~and/or its affiliates, that Pfizer’s and/or its affiliates’~~and Mylan conspired to delay market entry of generic EpiPen through the settlement of patent litigation regarding EpiPen, and thereby delayed market entry of generic EpiPen in violation of federal ~~and various state~~ antitrust laws. At least 1 lawsuit also alleges that Pfizer and/or Mylan violated the federal Racketeer Influenced and Corrupt Organizations Act (RICO). Plaintiffs also filed various federal antitrust, state consumer protection and unjust enrichment claims against, and relating to conduct attributable solely to, Mylan and/or its affiliates regarding EpiPen.law. Plaintiffs seek treble damages for alleged overcharges for EpiPen since 2011. In ~~2017, all of these actions, except for~~July 2021, the ~~2020 Lawsuit, were consolidated for coordinated pre-trial proceedings in a Multi-District Litigation in the U.S.~~ District Court ~~for~~granted defendants’ motion to dismiss the ~~District of Kansas with other EpiPen-related actions against Mylan and/or its affiliates to which Pfizer, King and Meridian are not parties.~~direct purchaser complaint, without prejudice. In ~~July~~September 2021, ~~Pfizer and~~ plaintiffs filed a stipulation of settlement to resolve the Multi-District Litigation for $345 million. The settlement is subject to court approval, and the payment is being made in accordance with the terms of the settlement agreement. Separately, with respect to the 2020 Lawsuit, in July 2021,an amended complaint. In August 2022, the District Court granted Pfizer’s motion to dismiss the ~~direct purchaser complaint, without prejudice.~~complaint.

In July 2020, a new lawsuit was filed in the U.S. District Court for the District of Colorado on behalf of indirect purchasers. Plaintiff represents a putative U.S. nationwide class of persons or entities who paid for any portion of the end-user purchase price of certain refill or replacement EpiPens since 2010. Plaintiff alleges that Pfizer and Meridian misrepresented the shelf-life and expiration date of EpiPen, in violation of the federal RICO statute. Plaintiff seeks treble damages for alleged unnecessary replacement or refill purchases of EpiPens by members of the putative class. Pfizer and plaintiff reached an agreement to settle the action on terms not material to Pfizer, and in July 2021, filed a joint stipulation of dismissal with prejudice.PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Nexium 24HR and Protonix

A number of individual and multi-plaintiff lawsuits have been filed against Pfizer, certain of its subsidiaries and/or other pharmaceutical manufacturers in various federal and state courts alleging that the plaintiffs developed kidney-related injuries purportedly as a result of the ingestion of certain proton pump inhibitors. The cases against Pfizer involve Protonix and/or Nexium 24HR and seek compensatory and punitive damages and, in some cases, treble damages, restitution or disgorgement. In 2017, the federal actions were ordered transferred for coordinated pre-trial proceedings to a Multi-District Litigation in the U.S. District Court for the District of New Jersey. As part of our Consumer Healthcare JV transaction with GSK, the JV has agreed to assume, and to indemnify Pfizer for, liabilities arising out of such litigation to the extent related to Nexium 24HR.

Docetaxel

•Personal Injury Actions

A number of lawsuits have been filed against Hospira and Pfizer in various federal and state courts alleging that plaintiffs who were treated with Docetaxel developed permanent hair loss. The significant majority of the cases also name other defendants, including the manufacturer of the branded product, Taxotere. Plaintiffs seek compensatory and punitive damages.

In 2016, the federal cases were transferred for coordinated pre-trial proceedings to a Multi-District Litigation in the U.S. District Court for the Eastern District of Louisiana.

•Mississippi Attorney General Government Action

In 2018, the Attorney General of Mississippi filed a complaint in Mississippi state court against the manufacturer of the branded product and 8 other manufacturers including Pfizer and Hospira, alleging, with respect to Pfizer and Hospira, a failure to

~~PFIZER INC. AND SUBSIDIARY COMPANIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

warn about a risk of permanent hair loss in violation of the Mississippi Consumer Protection Act. The action seeks civil penalties and injunctive relief.

~~Array Securities Litigation~~

In 2017, 2 purported class actions were filed in the U.S. District Court for the District of Colorado alleging that Array, which we acquired in 2019 and is our wholly owned subsidiary, and certain of its former officers violated federal securities laws in connection with certain disclosures made, or omitted, by Array regarding the NRAS-mutant melanoma program. In 2018, the actions were consolidated into a single proceeding. In March 2021, the parties reached an agreement in principle to resolve the litigation on terms not material to Pfizer, which is subject to final Court approval.

Zantac

A number of lawsuits have been filed against Pfizer in various federal and state courts alleging that plaintiffs developed various types of cancer, or face an increased risk of developing cancer, purportedly as a result of the ingestion of Zantac. The significant majority of these cases also name other defendants that have historically manufactured and/or sold Zantac. Pfizer has not sold Zantac since 2006, and only sold an OTC version of the product. Plaintiffs seek compensatory and punitive damages.

In February 2020, the federal actions were transferred for coordinated pre-trial proceedings to a Multi-District Litigation in the U.S. District Court for the Southern District of Florida. Plaintiffs in the Multi-District Litigation have filed against Pfizer and many other defendants a master personal injury complaint, asserting a consolidated consumer class action ~~complaint~~ alleging, among other things, claims under consumer protection statutes of all 50 states, and a medical monitoring complaint seeking to certify medical monitoring classes under the laws of 13 states. Plaintiffs previously had filed a consolidated third-party payor class action complaint alleging violation of the RICO statute and seeking reimbursement for payments made for the prescription version of Zantac, but the Multi-District Litigation court dismissed that complaint; Plaintiffs have appealed the dismissal to the U.S. Court of Appeals for the Eleventh Circuit. In addition, (i) Pfizer has received service of 2 Canadian class action complaints naming Pfizer and other defendants, and seeking compensatory and punitive damages for personal injury and economic loss, allegedly arising from the defendants’ sale of Zantac in Canada; and (ii) the State of New Mexico and the Mayor and City Council of Baltimore separately filed civil actions against Pfizer and many other defendants in state court, alleging various state statutory and common law claims in connection with the defendants’ alleged sale of Zantac in those jurisdictions. In April 2021, a Judicial Council Coordinated Proceeding was created in the Superior Court of California in Alameda County to coordinate personal injury actions against Pfizer and other defendants filed in California state court.

Chantix

Beginning in August 2021, a number of putative class actions have been filed against Pfizer in various U.S. federal courts following Pfizer’s voluntary recall of Chantix due to the presence of a nitrosamine, N-nitroso-varenicline. Plaintiffs assert that they suffered economic harm purportedly as a result of purchasing Chantix or generic varenicline medicines sold by Pfizer. Plaintiffs seek to represent nationwide and state-specific classes and seek various remedies, including damages and medical monitoring. Similar putative class actions have been filed in Canada and Israel, where the product brand is Champix.

A3. Legal Proceedings––Commercial and Other Matters

Monsanto-Related Matters

In 1997, Monsanto Company (Former Monsanto) contributed certain chemical manufacturing operations and facilities to a newly formed corporation, Solutia Inc. (Solutia), and spun off the shares of Solutia. In 2000, Former Monsanto merged with Pharmacia & Upjohn Company to form Pharmacia. Pharmacia then transferred its agricultural operations to a newly created subsidiary, named Monsanto Company (New Monsanto), which it spun off in a two-stage process that was completed in 2002. Pharmacia was acquired by Pfizer in 2003 and is a wholly owned subsidiary of Pfizer.

In connection with its spin-off that was completed in 2002, New Monsanto assumed, and agreed to indemnify Pharmacia for, any liabilities related to Pharmacia’s former agricultural business. New Monsanto has defended and/or is defending Pharmacia

PFIZER INC. AND SUBSIDIARY COMPANIES

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(UNAUDITED)

in connection with various claims and litigation arising out of, or related to, the agricultural business, and has been indemnifying Pharmacia when liability has been imposed or settlement has been reached regarding such claims and litigation.

In connection with its spin-off in 1997, Solutia assumed, and agreed to indemnify Pharmacia for, liabilities related to Former Monsanto’s chemical businesses. As the result of its reorganization under Chapter 11 of the U.S. Bankruptcy Code, Solutia’s indemnification obligations relating to Former Monsanto’s chemical businesses are primarily limited to sites that Solutia has owned or operated. In addition, in connection with its spin-off that was completed in 2002, New Monsanto assumed, and agreed to indemnify Pharmacia for, any liabilities primarily related to Former Monsanto’s chemical businesses, including, but not limited to, any such liabilities that Solutia assumed. Solutia’s and New Monsanto’s assumption of, and agreement to indemnify Pharmacia for, these liabilities apply to pending actions and any future actions related to Former Monsanto’s chemical businesses in which Pharmacia is named as a defendant, including, without limitation, actions asserting environmental claims, including alleged exposure to polychlorinated biphenyls. Solutia and/or New Monsanto are defending Pharmacia in connection with various claims and litigation arising out of, or related to, Former Monsanto’s chemical businesses, and have been indemnifying Pharmacia when liability has been imposed or settlement has been reached regarding such claims and litigation.

Environmental Matters

In 2009, we submitted a revised site-wide feasibility study with regard to the Wyeth Holdings ~~Corporation’s~~Corporation (formerly, American Cyanamid Company) discontinued industrial chemical facility in Bound Brook, New Jersey. In 2011, Wyeth Holdings

~~PFIZER INC. AND SUBSIDIARY COMPANIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

Corporation executed an Administrative Settlement Agreement and Order on Consent for Removal Action (the 2011 Administrative Settlement Agreement) with the ~~EPA~~U.S. Environmental Protection Agency (EPA) with regard to the Bound Brook facility. In accordance with the 2011 Administrative Settlement Agreement, we completed construction of an interim ~~remedy to address the discharge of impacted groundwater from the facility to the Raritan River.~~remedy. In 2012, the EPA issued a final remediation plan for the Bound Brook facility’s main plant ~~area, which is generally in accordance with one of the remedies evaluated in our revised site-wide feasibility study.~~area. In 2013, Wyeth Holdings Corporation (now Wyeth Holdings LLC) entered into an Administrative Settlement Agreement and Order on Consent with the EPA to allow us to undertake detailed engineering design of the remedy for the main plant area and to perform a focused feasibility study for 2 adjacent lagoons. In 2015, the U.S., on behalf of the EPA, filed a complaint and consent decree with the federal District Court for the District of New Jersey that allows Wyeth Holdings LLC to complete the design and to implement the remedy for the main plant area. The consent decree (which supersedes the 2011 Administrative Settlement Agreement) was entered by the District Court in 2015. In 2018, the EPA issued a final remediation plan for the 2 adjacent ~~lagoons, which is generally in accordance with one of the remedies evaluated in our focused feasibility study, and, in~~lagoons. In 2019, Wyeth Holdings LLC entered into an Administrative Settlement Agreement and Order on Consent with the EPA to allow us to undertake detailed engineering design of the remedy for the lagoons. In September 2021, the U.S., on behalf of the EPA, filed a complaint and consent decree with the federal District Court for the District of New Jersey, which the court approved in November 2021, that will allow Wyeth Holdings LLC to complete the design and implement the remedy for the 2 adjacent lagoons.

We have accrued for the estimated costs of the site remedies for the Bound Brook facility.

We are a party to a number of other proceedings brought under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, and other state, local or foreign laws in which the primary relief sought is the cost of past and/or future remediation.

Contracts with Iraqi Ministry of Health

In 2017, a number of U.S. service members, civilians, and their families brought a complaint in the U.S. District Court for the District of Columbia against a number of pharmaceutical and medical devices companies, including Pfizer and certain of its subsidiaries, alleging that the defendants violated the U.S. Anti-Terrorism Act. The complaint alleges that the defendants provided funding for terrorist organizations through their sales practices pursuant to pharmaceutical and medical device contracts with the Iraqi Ministry of Health, and seeks monetary relief. In July 2020, the District Court granted defendants’ motions to dismiss and dismissed all of plaintiffs’ claims. ~~The plaintiffs are appealing~~In January 2022, the Court of Appeals reversed the District Court’s decision. In February 2022, the defendants filed for en banc review of the Court of Appeals’ decision.

Allergan Complaint for Indemnity

In 2019, Pfizer was named as a defendant in a complaint, along with King, filed by Allergan Finance LLC (Allergan) in the Supreme Court of the State of New York, asserting claims for indemnity related to Kadian, which was owned for a short period by King in 2008, prior to Pfizer's acquisition of King in 2010. This suit was voluntarily discontinued without prejudice in January 2021.

~~Breach of Contract––Xalkori/Lorbrena~~

We are a defendant in a breach of contract action brought by New York University (NYU) in the Supreme Court of the State of New York (Supreme Court). NYU alleges that it is entitled to royalties on Pfizer’s sales of~~Xalkori under the terms of a Research and License Agreement between NYU and Sugen, Inc. Sugen, Inc. was acquired by Pharmacia in August 1999, and~~ ~~Pharmacia was acquired by Pfizer in 2003 and is a wholly owned subsidiary of Pfizer.~~ The action was originally filed in 2013. In 2015, the Supreme Court dismissed the action and, in 2017, the New York State Appellate Division reversed the decision and remanded the proceedings to the Supreme Court. In January 2020, the Supreme Court denied both parties’ summary judgment motions.Viatris Securities Litigation

In October ~~2020, NYU~~2021, a putative class action was filed ~~a separate breach~~in the Court of ~~contract action against Pfizer alleging that it is entitled to royalties~~Common Pleas of Allegheny County, Pennsylvania on ~~sales~~behalf of ~~Lorbrena under~~former Mylan N.V. shareholders who received Viatris common stock in exchange for Mylan shares in connection with the ~~terms~~spin-off of the ~~same NYU-Sugen, Inc. Research~~Upjohn Business and ~~Licensing Agreement.~~its combination with Mylan (the Transactions). Viatris, Pfizer, and certain of each

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

company’s current and former officers, directors and employees are named as defendants. The complaint alleges that the defendants violated certain provisions of the Securities Act of 1933 in connection with certain disclosures made in or omitted from the registration statement and related prospectus issued in connection with the Transactions. Plaintiff seeks damages, costs and expenses and other equitable and injunctive relief.

A4. Legal Proceedings––Government Investigations

We are subject to extensive regulation by government agencies in the U.S., other developed markets and multiple emerging markets in which we operate. Criminal charges, substantial fines and/or civil penalties, limitations on our ability to conduct business in applicable jurisdictions, corporate integrity or deferred prosecution agreements, as well as reputational harm and increased public interest in the matter could result from government investigations in the U.S. and other jurisdictions in which we do business. These matters often involve government requests for information on a voluntary basis or through subpoenas after which the government may seek additional information through follow-up requests or additional subpoenas. In addition, in a qui tam lawsuit in which the government declines to intervene, the relator may still pursue a suit for the recovery of civil damages and penalties on behalf of the government. Among the investigations by government agencies are the matters discussed below.

~~PFIZER INC. AND SUBSIDIARY COMPANIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

Greenstone Investigations

•U.S. Department of Justice Antitrust Division Investigation

Since July 2017, the U.S. Department of Justice's Antitrust Division has been investigating our former Greenstone generics business. We believe this is related to an ongoing broader antitrust investigation of the generic pharmaceutical industry. We have produced records relating to this investigation.

•State Attorneys General and Multi-District Generics Antitrust Litigation

In April 2018, Greenstone received requests for information from the Antitrust Department of the Connecticut Office of the Attorney General. In May 2019, Attorneys General of more than 40 states plus the District of Columbia and Puerto Rico filed a complaint against a number of pharmaceutical companies, including Greenstone and Pfizer. The matter has been consolidated with a Multi-District Litigation in the Eastern District of Pennsylvania. As to Greenstone and Pfizer, the complaint alleges anticompetitive conduct in violation of federal and state antitrust laws and state consumer protection laws. In June 2020, the State Attorneys General filed a new complaint against a large number of companies, including Greenstone and Pfizer, making similar allegations, but concerning a new set of drugs. This complaint was transferred to the Multi-District Litigation in July 2020. The Multi-District Litigation also includes civil complaints filed by private plaintiffs and state counties against Pfizer, Greenstone and a significant number of other defendants asserting allegations that generally overlap with those asserted by the State Attorneys General.

Subpoena relating to Manufacturing of Quillivant XR

In October 2018, we received a subpoena from the U.S. Attorney’s Office for the Southern District of New York (SDNY) seeking records relating to our relationship with another drug manufacturer and its production and manufacturing of drugs including, but not limited to, Quillivant XR. We have produced records pursuant to the subpoena.

Government Inquiries relating to Meridian Medical Technologies

In February 2019, we received a civil investigative demand from the U.S. Attorney’s Office for the SDNY. The civil investigative demand seeks records and information related to alleged quality issues involving the manufacture of auto-injectors at ~~our~~the Meridian site. In August 2019, we received a HIPAA subpoena from the U.S. Attorney’s Office for the Eastern District of Missouri seeking similar records and information. We are producing records in response to these requests.

U.S. Department of Justice/SEC Inquiry relating to Russian Operations

In June 2019, we received an informal request from the U.S. Department of Justice’s Foreign Corrupt Practices Act (FCPA) Unit seeking documents relating to our operations in Russia. In September 2019, we received a similar request from the SEC’s FCPA Unit. We have produced records pursuant to these requests.

Docetaxel––Mississippi Attorney General Government Investigation

See Legal Proceedings––Product Litigation––Docetaxel––Mississippi Attorney General Government Investigation above for information regarding a government investigation related to Docetaxel marketing practices.

U.S. Department of Justice Inquiries relating to India Operations

In March 2020, we received an informal request from the U.S. Department of Justice's Consumer Protection Branch seeking documents relating to our manufacturing operations in India, including at our former facility located at Irrungattukottai in India. In April 2020, we received a similar request from the U.S. Attorney’s Office for the SDNY regarding a civil investigation concerning operations at our facilities in India. We are producing records pursuant to these requests.

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

U.S. Department of Justice/SEC Inquiry relating to China Operations

In June 2020, we received an informal request from the U.S. Department of Justice's FCPA Unit seeking documents relating to our operations in China. In August 2020, we received a similar request from the SEC’s FCPA Unit. We are producing records pursuant to these requests.

Zantac––State of New Mexico and Mayor and City Council of Baltimore Civil Actions

See ~~Note 12A2. Contingencies and Certain Commitments:~~ Legal Proceedings––Product Litigation––Zantac above for information regarding civil actions separately filed by the State of New Mexico and the Mayor and City Council of Baltimore alleging various state statutory and common law claims in connection with the defendants’ alleged sale of Zantac in those jurisdictions.

B. Guarantees and Indemnifications

In the ordinary course of business and in connection with the sale of assets and businesses and other transactions, we often indemnify our counterparties against certain liabilities that may arise in connection with the transaction or that are related to events and activities prior to or following a transaction. If the indemnified party were to make a successful claim pursuant to the terms of the indemnification, we may be required to reimburse the loss. These indemnifications are generally subject to various restrictions and limitations. Historically, we have not paid significant amounts under these provisions and, as of July ~~4, 2021,~~3, 2022, the estimated fair value of these indemnification obligations ~~was~~is not ~~significant.~~

material to Pfizer. See
Note 2C

~~PFIZER INC. AND SUBSIDIARY COMPANIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

for a description of the March 2022 indemnity provided by Pfizer to GSK in connection with the issuance of notes by the Consumer Healthcare JV. In conjunction with the completion of GSK’s demerger transactions in July 2022, GSK’s guarantee and our related indemnification of GSK’s guarantee were terminated.

In addition, in connection with our entry into certain agreements and other transactions, our counterparties may ~~agree~~be obligated to indemnify us. For example, our collaboration agreement with EMD Serono, Inc. to co-promote Rebif in the U.S. expired at the end of 2015 and included certain indemnity provisions. Patent litigation brought by Biogen Idec MA Inc. against EMD Serono Inc. and Pfizer is pending in the U.S. District Court for the District of New Jersey and the United States Court of Appeals for the Federal Circuit. EMD Serono Inc. has acknowledged that it is obligated to satisfy any award of damages. In addition, in November 2020, we and Mylan completed the transaction to spin-off our Upjohn Business and combine it with Mylan to form Viatris. As part of the transaction and as previously disclosed, each of Viatris and Pfizer has agreed to assume, and to indemnify ~~Pfizer~~the other for, liabilities arising out of certain matters. Also, our global agreement with BioNTech to co-develop a mRNA-based coronavirus vaccine program aimed at preventing COVID-19 infection, includes certain indemnity provisions pursuant to which each of BioNTech and Pfizer has agreed to indemnify the other for certain liabilities that may arise in connection with certain third-party claims relating to Comirnaty.

We have also guaranteed the long-term debt of certain companies that we acquired and that now are subsidiaries of Pfizer. See Note 7D.

C. Contingent Consideration for Acquisitions

We may be required to make payments to sellers for certain prior business combinations that are contingent upon future events or outcomes. For additional information, see Note 1D1E in our ~~2020~~2021 Form 10-K.

Note 13. ~~Product,~~Segment, Geographic and Other Revenue Information

A. ~~Geographic~~Segment Information

The following summarizes revenues by geographic area:
Three Months Ended Six Months Ended
(MILLIONS) July 4,
2021 June 28,
2020 %
Change July 4,
2021 June 28,
2020 %
Change
United States $ 7,593 $ 5,113 48 $ 15,190 $ 10,403 46
Developed Europe 4,577 1,864 * 7,615 3,573 *
Developed Rest of World 2,997 989 * 4,120 1,908 *
Emerging Markets 3,810 1,897 * 6,634 4,063 63
Revenues $ 18,977 $ 9,864 92 $ 33,559 $ 19,947 68
* Indicates calculation not meaningful or results are equal to or greater than 100%.
We manage our commercial operations through 2 operating segments: Biopharma and PC1. The Biopharma and PC1 segments are each led by a single manager. Biopharma is the only reportable segment. Biopharma is a science-based medicines business that includes six therapeutic areas – Vaccines, Hospital, Oncology, Internal Medicine, Rare Disease, and Inflammation & Immunology. The Hospital therapeutic area commercializes our global portfolio of sterile injectable and anti-infective medicines, as well as an oral COVID-19 treatment.

WeEach operating segment has responsibility for its commercial activities. Regional commercial organizations market, distribute and sell our ~~collaboration partner, BioNTech, have entered into agreements to~~products and are supported by global platform functions that are responsible for the research, development, manufacturing and supply ~~pre-specified doses~~ of ~~BNT162b2 with multiple~~our products and global corporate enabling functions. Biopharma receives its R&D services from WRDM and GPD. These services include IPR&D projects for new investigational products and additional indications for in-line products. Each operating segment has a geographic footprint across developed and emerging ~~nations around~~markets. Our chief operating decision maker uses the ~~world~~revenues and are continuing to deliver doses of BNT162b2 under such agreements. We currently sell the BNT162b2 vaccine directly to government and government sponsored customers. This includes supply agreements entered into in November 2020 and February and May 2021 with the European Commission (EC) on behalfearnings of the ~~different EU member states~~operating segments, among other factors, for performance evaluation and resource allocation.

Other Costs and Business Activities––Certain pre-tax costs are not allocated to our operating segment results, such as costs associated with: (i) R&D and medical expenses managed by our WRDM and GPD organizations, (ii) corporate enabling functions and other corporate costs, (iii) overhead costs primarily associated with our manufacturing operations, (iv) our share of earnings from the Consumer Healthcare JV, as well as (v) all amortization of intangible assets, acquisition-related items, and certain significant items representing substantive and/or unusual, and in some cases recurring, items that are evaluated on an

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

individual basis by management and that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis. Beginning in the first quarter of 2022, acquisition-related items may now include purchase accounting impacts that previously would have been included as part of a reconciling item entitled “Purchase accounting adjustments” that we no longer separately present, such as: (i) the incremental charge to cost of sales from the sale of acquired inventory that was written up to fair value, (ii) depreciation related to the increase/decrease in fair value of acquired fixed assets, (iii) amortization related to the increase in fair value of acquired debt and (iv) the fair value changes for contingent consideration. The operating results of PC1, our global contract development and manufacturing organization, are included in Other business activities.

Segment Assets––We manage our assets on a total company basis, not by operating segment, as our operating assets are shared or commingled. Therefore, our chief operating decision maker does not regularly review any asset information by operating segment and, accordingly, we do not report asset information by operating segment. Total assets were $195 billion as of July 3, 2022 and $181 billion as of December 31, 2021.

Selected Income Statement Information


The following provides selected income statement information by reportable segment:
	Three Months Ended								Six Months Ended
	Revenues				Earnings(a)				Revenues				Earnings(a)
(MILLIONS)	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Reportable Segment:
Biopharma	$	27,425	$	18,463	$	17,223	$	9,816	$	52,748	$	32,588	$	30,662	$	18,199
Other business activities(b)	317		437		(3,441)		(2,524)		655		827		(5,917)		(4,571)
Reconciling Items:
Amortization of intangible assets	—		—		(822)		(928)		—		—		(1,657)		(1,798)
Acquisition-related items	—		—		(82)		(34)		—		—		(269)		27
Certain significant items(c)	—		—		(1,431)		618		—		—		(2,322)		784
	$	27,742	$	18,899	$	11,447	$	6,949	$	53,402	$	33,415	$	20,497	$	12,641

(a)Income from continuing operations before provision/(benefit) for taxes on income. Biopharma’s earnings include dividend income from our investment in ViiV of $69 million in the second quarter of 2022 and $62 million in the second quarter of 2021, and $125 million in the first six months of 2022 and $89 million in the first six months of 2021.

(b)Other business activities include revenues and costs associated with PC1, as well as costs that we do not allocate to our operating segments, per above. Included in earnings in the second quarter and first six months of 2022 is a $450 million write-off to Cost of sales of inventory related to COVID-19 products that have exceeded or are expected to exceed their approved shelf-lives prior to being used.

(c)Certain significant items are substantive and/or unusual, and in some cases recurring, items (as noted above). For earnings in the second quarter and first six months of 2022, includes, among other ~~countries. Each EU member state submits its own BNT162b2 vaccine order to us~~items, net losses on equity securities of $539 million and ~~is responsible for payment pursuant to terms~~$1.2 billion, respectively, recorded in Other (income)/deductions––net. For earnings in the second quarter and first six months of ~~the supply agreements negotiated by the EC.~~2021, includes, among other items, net gains on equity securities of $798 million and $1.2 billion, respectively, recorded in Other (income)/deductions––net.

B. Geographic Information


The following summarizes revenues by geographic area:
	Three Months Ended					Six Months Ended
(MILLIONS)	July 3, 2022		July 4, 2021		% Change	July 3, 2022		July 4, 2021		% Change
United States	$	11,222	$	7,515	49	$	20,140	$	15,046	34
Developed Europe	5,480		4,577		20	11,569		7,615		52
Developed Rest of World	5,034		2,997		68	8,320		4,120		102
Emerging Markets	6,006		3,810		58	13,373		6,634		102
Revenues	$	27,742	$	18,899	47	$	53,402	$	33,415	60

C. Other Revenue Information

Significant ~~Customers~~

Customers––For information on our significant wholesale customers, see Note ~~17B~~17C in our ~~2020~~2021 Form 10-K. Additionally, revenues from the U.S. government represented ~~12%~~26% and ~~14%~~22% of total revenues for the three and six months ended July ~~4, 2021,~~3, 2022, respectively, and primarily represent sales of ~~BNT162b2.~~Comirnaty and Paxlovid. Accounts receivable from the U.S.

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

government represented 9%23% of total trade accounts receivable as of July ~~4, 2021,~~3, 2022, and primarily relate to sales of ~~BNT162b2.~~Comirnaty and Paxlovid.

Significant Product Revenues

The following provides detailed revenue information for several of our major products:


(MILLIONS)	(MILLIONS)		Three Months Ended				Six Months Ended				(MILLIONS)		Three Months Ended				Six Months Ended
PRODUCT	PRODUCT	PRIMARY INDICATION OR CLASS	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020		PRODUCT	PRIMARY INDICATION OR CLASS	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
TOTAL REVENUES(a)	TOTAL REVENUES(a)		$	18,977	$	9,864	$	33,559	$	19,947	TOTAL REVENUES(a)		$	27,742	$	18,899	$	53,402	$	33,415
PFIZER BIOPHARMACEUTICALS GROUP (BIOPHARMA)(a), (b)											PFIZER BIOPHARMACEUTICALS GROUP (BIOPHARMA)(a), (b)		$	27,425	$	18,463	$	52,748	$	32,588
Vaccines	Vaccines		$	9,234	$	1,247	$	14,127	$	2,857	Vaccines		$	10,459	$	9,234	$	25,399	$	14,127
BNT162b2 direct sales and alliance revenues		Active immunization to prevent COVID-19	7,838		0		11,300		0
Prevnar 13/Prevenar 13		Pneumococcal disease	1,241		1,116		2,524		2,566
FSME/IMMUN-TicoVac		Tick-borne encephalitis disease	61		45		114		93
Comirnaty direct sales and alliance revenues											Comirnaty direct sales and alliance revenues	Active immunization to prevent COVID-19	8,848		7,838		22,075		11,300
Prevnar family(c)											Prevnar family(c)	Pneumococcal disease	1,429		1,241		2,994		2,524
Nimenrix	Nimenrix	Meningococcal disease	49		56		95		130		Nimenrix	Meningococcal ACWY disease	65		49		142		95
FSME-IMMUN/TicoVac											FSME-IMMUN/TicoVac	Tick-borne encephalitis disease	68		61		110		114
All other Vaccines	All other Vaccines	Various	46		30		94		68		All other Vaccines	Various	49		46		78		94
Hospital(a)											Hospital(a)		$	9,714	$	1,745	$	12,905	$	3,630
Paxlovid											Paxlovid	COVID-19 infection (high risk population)	8,115		—		9,585		—
Sulperazon											Sulperazon	Bacterial infections	210		141		420		334
Ig Portfolio(d)											Ig Portfolio(d)	Various	125		107		232		212
Zavicefta											Zavicefta	Bacterial infections	100		104		204		198
Zithromax											Zithromax	Bacterial infections	54		43		180		132
Medrol											Medrol	Anti-inflammatory glucocorticoid	79		112		155		211
Fragmin											Fragmin	Treatment/prevention of venous thromboembolism	72		77		142		149
Vfend											Vfend	Fungal infections	54		72		119		153
All other Anti-infectives											All other Anti-infectives	Various	367		474		749		929
All other Hospital											All other Hospital	Various	537		613		1,120		1,314
Oncology											Oncology		$	3,088	$	3,145	$	6,055	$	6,007
Ibrance											Ibrance	HR-positive/HER2-negative metastatic breast cancer	1,320		1,404		2,557		2,657
Xtandi alliance revenues											Xtandi alliance revenues	mCRPC, nmCRPC, mCSPC	290		303		558		570
Inlyta											Inlyta	Advanced RCC	274		257		508		486
Zirabev(e)											Zirabev(e)	Treatment of mCRC; unresectable, locally advanced, recurrent or metastatic NSCLC; recurrent glioblastoma; metastatic RCC; and persistent, recurrent or metastatic cervical cancer	138		129		286		215
Bosulif											Bosulif	Philadelphia chromosome–positive chronic myelogenous leukemia	156		136		284		259
Xalkori											Xalkori	ALK-positive and ROS1-positive advanced NSCLC	118		120		244		255
Ruxience(e)											Ruxience(e)	Non-hodgkin’s lymphoma, chronic lymphocytic leukemia, granulomatosis with polyangiitis (Wegener’s Granulomatosis) and microscopic polyangiitis	113		120		237		218
Retacrit(e)											Retacrit(e)	Anemia	106		103		221		212
Sutent											Sutent	Advanced and/or metastatic RCC, adjuvant RCC, refractory GIST (after disease progression on, or intolerance to, imatinib mesylate) and advanced pancreatic neuroendocrine tumor	97		194		211		394
Lorbrena											Lorbrena	ALK-positive metastatic NSCLC	77		66		149		126
Bavencio alliance revenues											Bavencio alliance revenues	Locally advanced or metastatic urothelial carcinoma; metastatic Merkel cell carcinoma; immunotherapy and tyrosine kinase inhibitor combination for patients with advanced RCC	58		37		125		68
Aromasin											Aromasin	Post-menopausal early and advanced breast cancer	59		51		121		103
Besponsa											Besponsa	Relapsed or refractory B-cell acute lymphoblastic leukemia	58		45		109		95
Braftovi											Braftovi	In combination with Mektovi for metastatic melanoma in patients with a BRAFV600E/K mutation and, in combination with Erbitux® (cetuximab)(f), for the treatment of BRAFV600E -mutant mCRC after prior therapy	51		42		98		89
Trazimera(e)											Trazimera(e)	HER-positive breast cancer and metastatic stomach cancers	46		41		98		87
Mektovi											Mektovi	In combination with Braftovi for metastatic melanoma in patients with a BRAFV600E/K mutation	44		36		84		71
All other Oncology											All other Oncology	Various	82		60		163		102
Internal Medicine											Internal Medicine		$	2,405	$	2,403	$	4,846	$	4,997
Eliquis alliance revenues and direct sales											Eliquis alliance revenues and direct sales	Nonvalvular atrial fibrillation, deep vein thrombosis, pulmonary embolism	1,745		1,481		3,537		3,124

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(MILLIONS) Three Months Ended Six Months Ended
PRODUCT PRIMARY INDICATION OR CLASS July 4,
2021 June 28,
2020 July 4,
2021 June 28,
2020
Oncology $ 3,145 $ 2,647 $ 6,007 $ 5,082
Ibrance HR-positive/HER2-negative metastatic breast cancer 1,404 1,349 2,657 2,598
Xtandi alliance revenues mCRPC, nmCRPC, mCSPC 303 266 570 475
Inlyta Advanced RCC 257 195 486 364
Sutent Advanced and/or metastatic RCC, adjuvant RCC, refractory GIST (after disease progression on, or intolerance to, imatinib mesylate) and advanced pancreatic neuroendocrine tumor 194 209 394 414
Bosulif Philadelphia chromosome–positive chronic myelogenous leukemia 136 113 259 213
Xalkori ALK-positive and ROS1-positive advanced NSCLC 120 138 255 287
Ruxience(b)
Non-hodgkin’s lymphoma, chronic lymphocytic leukemia, granulomatosis with polyangiitis (Wegener’s Granulomatosis) and microscopic polyangiitis 120 11 218 19
Zirabev(b)
Treatment of mCRC; unresectable, locally advanced, recurrent or metastatic NSCLC; recurrent glioblastoma; metastatic RCC; and persistent, recurrent or metastatic cervical cancer 129 9 215 15
Retacrit(b)
Anemia 103 87 212 176
Lorbrena ALK-positive metastatic NSCLC 66 46 126 88
Aromasin Post-menopausal early and advanced breast cancer 51 39 103 72
Besponsa Relapsed or refractory B-cell acute lymphoblastic leukemia 45 46 95 90
Braftovi
In combination with Mektovi for metastatic melanoma in patients with a BRAFV600E/K mutation and, in combination with Erbitux® (cetuximab), for the treatment of
BRAFV600E-mutant mCRC after prior therapy
42 36 89 74
Mektovi
In combination with Braftovi for metastatic melanoma in patients with a BRAFV600E/K mutation
36 32 71 69
All other Oncology Various 138 69 257 128
Internal Medicine $ 2,403 $ 2,279 $ 4,997 $ 4,610
Eliquis direct sales and alliance revenues Nonvalvular atrial fibrillation, deep vein thrombosis, pulmonary embolism 1,481 1,272 3,124 2,572
Chantix/Champix An aid to smoking cessation treatment in adults 18 years of age or older 184 235 401 505
Premarin family Symptoms of menopause 128 152 271 304
Toviaz Overactive bladder 62 64 119 124
BMP2 Development of bone and cartilage 66 57 115 127
Pristiq Depression 42 43 101 84
All other Internal Medicine Various 440 455 865 894
Hospital(a)
$ 2,259 $ 1,863 $ 4,602 $ 3,951
Sulperazon Bacterial infections 141 102 334 289
Medrol Anti-inflammatory glucocorticoid 112 78 211 207
Zavicefta Bacterial infections 104 46 198 95
Vfend Fungal infections 72 75 153 149
Fragmin Treatment/prevention of venous thromboembolism 77 58 149 118
EpiPen Epinephrine injection used in treatment of life-threatening allergic reactions 80 75 147 160
Zithromax Bacterial infections 43 55 132 193
Zyvox Bacterial infections 48 55 103 125
Precedex Sedation agent in surgery or intensive care 42 114 97 156
IVIg Products(c)
Various 107 85 212 183
Pfizer CentreOne(d)
Various 437 224 827 376
All other Anti-infectives Various 425 321 823 717
All other Hospital Various 569 574 1,217 1,183
Inflammation & Immunology (I&I) $ 1,041 $ 1,149 $ 2,107 $ 2,127
Xeljanz RA, PsA, UC, active polyarticular course juvenile idiopathic arthritis 586 635 1,124 1,086
Enbrel (Outside the U.S. and Canada) RA, juvenile idiopathic arthritis, PsA, plaque psoriasis, pediatric plaque psoriasis, ankylosing spondylitis and nonradiographic axial spondyloarthritis 286 337 605 684


(MILLIONS)		Three Months Ended				Six Months Ended
PRODUCT	PRIMARY INDICATION OR CLASS	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Premarin family	Symptoms of menopause	115		128		217		271
BMP2	Development of bone and cartilage	75		66		142		115
Toviaz	Overactive bladder	45		62		99		119
Chantix/Champix	An aid to smoking cessation treatment in adults 18 years of age or older	1		184		4		401
All other Internal Medicine	Various	424		482		846		966
Rare Disease		$	909	$	895	$	1,872	$	1,720
Vyndaqel/Vyndamax	ATTR-cardiomyopathy and polyneuropathy	552		501		1,164		953
BeneFIX	Hemophilia B	113		112		225		225
Genotropin	Replacement of human growth hormone	91		109		171		189
Somavert	Acromegaly	64		68		132		133
Refacto AF/Xyntha	Hemophilia A	64		77		129		165
All other Rare Disease	Various	25		29		50		55
Inflammation & Immunology (I&I)		$	850	$	1,041	$	1,671	$	2,107
Xeljanz	RA, PsA, UC, active polyarticular course juvenile idiopathic arthritis, ankylosing spondylitis	430		586		802		1,124
Enbrel (Outside the U.S. and Canada)	RA, juvenile idiopathic arthritis, PsA, plaque psoriasis, pediatric plaque psoriasis, ankylosing spondylitis and nonradiographic axial spondyloarthritis	257		286		537		605
Inflectra(e)	Crohn’s disease, pediatric Crohn’s disease, UC, pediatric UC, RA in combination with methotrexate, ankylosing spondylitis, PsA and plaque psoriasis	137		136		272		313
All other I&I	Various	25		33		60		65
PFIZER CENTREONE(b)		$	317	$	437	$	655	$	827
Total Alliance revenues		$	2,317	$	1,880	$	4,631	$	3,650
Total Biosimilars(e)		$	580	$	559	$	1,185	$	1,089
Total Sterile Injectable Pharmaceuticals(g)		$	1,286	$	1,381	$	2,617	$	2,863

(a)On December 31, 2021, we completed the sale of our Meridian subsidiary. Prior to its sale, Meridian was managed as part of the Hospital therapeutic area. Beginning in the fourth quarter of 2021, the financial results of Meridian were reflected as discontinued operations. Prior-period financial information has been restated, as appropriate. See Note 1A.

(b)At the beginning of our fiscal fourth quarter of 2021, we reorganized our commercial operations and began to manage our commercial operations through a new global structure consisting of 2 operating segments, each led by a single manager: Biopharma, our innovative science-based biopharmaceutical business, and PC1. PC1, which previously had been managed within the Hospital therapeutic area, includes revenues from our contract manufacturing, including certain Comirnaty-related manufacturing activities performed on behalf of BioNTech ($55 million and $101 million for the second quarter and the first six months of 2022, respectively, and $87 million for both the second quarter and the first six months of 2021), and revenues from our active pharmaceutical ingredient sales operation, as well as revenues related to our manufacturing and supply agreements with former legacy Pfizer businesses/partnerships, including but not limited to, transitional manufacturing and supply agreements with Viatris following the spin-off of the Upjohn Business. We have revised prior-period information to conform to the current management structure.

(c)Prevnar family include revenues from Prevnar 13/Prevenar 13 (pediatric and adult) and Prevnar 20/Apexxnar (adult).

(d)Immunoglobulin (Ig) portfolio includes the revenues from Panzyga, Octagam and Cutaquig.

(e)Biosimilars are highly similar versions of approved and authorized biological medicines and primarily include revenues from Zirabev, Inflectra, Ruxience, Retacrit and Trazimera.

(f)Erbitux® is a registered trademark of ImClone LLC.

(g)Total Sterile Injectable Pharmaceuticals represents the total of all branded and generic injectable products in the Hospital therapeutic area, including anti-infective sterile injectable pharmaceuticals.

Remaining Performance Obligations––Contracted revenue expected to be recognized from remaining performance obligations for firm orders in long-term contracts to supply Comirnaty to our customers totaled approximately $24 billion as of July 3, 2022, which includes amounts received in advance and deferred, as well as amounts that will be invoiced as we deliver these products to our customers in future periods. Of this amount, we expect to recognize revenue of approximately $12 billion in 2022, $12 billion in 2023 and $200 million in 2024. Remaining performance obligations exclude arrangements with an original expected contract duration of less than one year.

Deferred Revenues––Our deferred revenues primarily relate to advance payments received or receivable from various government or government sponsored customers in international markets for supply of Comirnaty and Paxlovid. The deferred revenues related to Comirnaty and Paxlovid total $3.9 billion as of July 3, 2022, with $3.7 billion and $198 million recorded in current and noncurrent liabilities, respectively. The deferred revenues related to Comirnaty total $3.3 billion as of December 31, 2021, with $3.0 billion and $249 million recorded in current liabilities and noncurrent liabilities, respectively. There were no deferred revenues associated with Paxlovid as of December 31, 2021. The increase in Comirnaty and Paxlovid deferred revenues during the first six months of 2022 was primarily the result of additional advance payments received as we entered

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(MILLIONS) Three Months Ended Six Months Ended
PRODUCT PRIMARY INDICATION OR CLASS July 4,
2021 June 28,
2020 July 4,
2021 June 28,
2020
Inflectra/Remsima(b)
Crohn’s disease, pediatric Crohn’s disease, UC, pediatric UC, RA in combination with methotrexate, ankylosing spondylitis, PsA and plaque psoriasis 136 150 313 308
All other I&I Various 33 26 65 48
Rare Disease $ 895 $ 681 $ 1,720 $ 1,319
Vyndaqel/Vyndamax ATTR-cardiomyopathy and polyneuropathy 501 277 953 508
BeneFIX Hemophilia B 112 109 225 230
Genotropin Replacement of human growth hormone 109 106 189 209
Refacto AF/Xyntha Hemophilia A 77 91 165 181
Somavert Acromegaly 68 67 133 131
All other Rare Disease Various 29 31 55 61
Total Alliance revenues $ 1,880 $ 1,404 $ 3,650 $ 2,786
Total Biosimilars(b)
$ 559 $ 289 $ 1,089 $ 578
Total Sterile Injectable Pharmaceuticals(e)
$ 1,381 $ 1,233 $ 2,863 $ 2,634

~~(a)On November 16, 2020, we completed the spin-off and the combination of our Upjohn Business with Mylan to form Viatris. See~~ ~~Note 1A~~. Beginning in the fourth quarter of 2020, the results of our Meridian subsidiary, which was previously included in our former Upjohn operating segment, are reported in the Hospital therapeutic area for all periods presented.

~~(b)Biosimilars are highly similar versions of approved and authorized biological medicines and primarily include revenues from Inflectra/Remsima, Ruxience, Zirabev and Retacrit.~~

~~(c)Intravenous immunoglobulin (IVIg) products include the revenues from Panzyga, Octagam and Cutaquig.~~

~~(d)~~Pfizer CentreOne includes revenues from our contract manufacturing and active pharmaceutical ingredient sales operation, as well as revenues related to our manufacturing and supply agreements with former legacy Pfizer businesses/partnerships, including but not limited to, manufacturing and supply agreements with Viatris following the spin-off of the Upjohn Business.

~~(e)~~Total Sterile Injectable Pharmaceuticals represents the total of all branded and generic injectable products in the Hospital therapeutic area, including anti-infective sterile injectable pharmaceuticals.

~~Deferred Revenues~~

Our deferred revenues primarily relate to advance payments received or receivable in connection with contracts that we entered into during 2021 and 2020 with various government or government sponsored customers in international markets for supply of BNT162b2. The deferred revenues associated with the advance payments related to BNT162b2 total $4.3 billion as of July 4, 2021 and $957 million as of December 31, 2020 and are recorded in current liabilities. The increase in the BNT162b2 deferred revenues during the first six months of 2021 was the result of additional advance payments received as we entered into new or amended contracts, ~~or as we invoiced customers in~~including new advance ~~of vaccine deliveries~~payments received for Paxlovid contracts, less amounts recognized in Revenues as we delivered ~~doses~~the products to our ~~customers.~~customers and the impact of foreign exchange. During the second quarter and first six months of ~~2021,~~2022, we recognized revenue of ~~$622~~$800 million and ~~$814 million,~~$2.4 billion, respectively, that was included in the balance of ~~BNT162b2~~Comirnaty deferred revenues as of December 31, ~~2020.~~2021. The ~~BNT162b2~~Comirnaty and Paxlovid deferred revenues as of July ~~4, 2021~~3, 2022 will be recognized in Revenues proportionately as we ~~deliver doses~~transfer control of the ~~vaccine~~products to our customers and satisfy our performance obligation under the contracts, ~~which we expect~~with the amounts included in current liabilities expected to ~~occur~~be recognized in Revenues within the next 12 ~~months.~~months, and the amounts included in noncurrent liabilities expected to be recognized in Revenues in the last six months of 2023 and in the first quarter of 2024. Deferred revenues associated with contracts for other products were not significant as of July 3, 2022 or December 31, 2021.

ITEM 2. ~~MANAGEMENTS’S~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

OVERVIEW OF OUR PERFORMANCE, OPERATING ENVIRONMENT, STRATEGY AND OUTLOOK

~~Our Business and Strategy~~

Most of our revenues come from the manufacture and sale of biopharmaceutical products. With the formation of the Consumer Healthcare JV in 2019 and the completion of the spin-off and combination of our Upjohn Business with Mylan in November 2020, Pfizer has transformed into a focused, global leader in science-based innovative medicines and vaccines. We operate as a single operating segment engaged in the discovery, development, manufacturing, marketing, sale and distribution of biopharmaceutical products worldwide. The financial results of the Upjohn Business and the Mylan-Japan collaboration are reflected as discontinued operations. Prior-period information has been restated to reflect our current organization structure. We expect to incur costs of approximately $700 million in connection with separating Upjohn, of which approximately 75% has been incurred since inception and through the second quarter of 2021. These charges include costs and expenses related to separation of legal entities and transaction costs.

~~For additional information about our business, strategy and operating environment, see the~~ ~~Item 1. Business~~ ~~section and~~ ~~Overview of Our Performance, Operating Environment, Strategy and Outlook~~ ~~section within MD&A of our 2020 Form 10-K.~~

References to operational variances pertain to period-over-period changes that exclude the impact of foreign exchange rates. Although foreign exchange rate changes are part of our business, they are not within our control and since they can mask positive or negative trends in the business, we believe presenting operational variances excluding these foreign exchange changes provides useful information to evaluate our results.

Our Business and Strategy

We apply science and our global resources to bring therapies to people that extend and significantly improve their lives through the discovery, development, manufacture, marketing, sale and distribution of biopharmaceutical products worldwide. At the beginning of our fiscal fourth quarter of 2021, we reorganized our commercial operations and began to manage our commercial operations through a new global structure consisting of two operating segments: Biopharma and PC1. Biopharma is the only reportable segment. See Note 1A. We expect to incur costs of approximately $700 million in connection with separating Upjohn, of which approximately 80% has been incurred since inception and through the second quarter of 2022. These charges include costs and expenses related to separation of legal entities and transaction costs.

Beginning in our third fiscal quarter of 2022, we are making several additionalorganizational changes to further transform our operations. These changes include establishing a new commercial structure within Biopharma that is designed to better support Comirnaty and Paxlovid in a potential full commercial setting while optimizing our performance across three broad therapeutic areas:

•Primary Care will consist of our COVID-19 products (currently Comirnaty and Paxlovid), as well as the Internal Medicine and Vaccines product portfolios, including potential future mRNA products.

•Specialty Care will consist of our Inflammation & Immunology, Rare Disease and Hospital (excluding Paxlovid) product portfolios.

•Oncology will consist of our Oncology product portfolio.

We are currently evaluating what impacts these organizational changesmay have on our financial reporting.

For additional information about our business, strategy and operating environment, see the Item 1. Business section and Overview of Our Performance, Operating Environment, Strategy and Outlook section within MD&A of our 2021 Form 10-K.

Our Business Development Initiatives

We are committed to strategically capitalizing on growth opportunities, primarily by advancing our own product pipeline and maximizing the value of our existing products, ~~as well as~~but also through various business development activities.

Our significant recent business development activities ~~include:~~include the transactions discussed in Note 2 and the following:

~~Collaboration with Arvinas,~~Acquisition of Global Blood Therapeutics, Inc. ~~(Arvinas)~~(GBT)––In ~~July 2021,~~August 2022, we and GBT announced that the companies entered into an agreement under which we will acquire GBT, a ~~global collaboration~~biopharmaceutical company dedicated to the discovery, development and delivery of life-changing treatments that provide hope to underserved patient communities, starting with ~~Arvinas to develop and commercialize ARV-471, an investigational oral PROTAC~~® (PROteolysis TArgeting Chimera) estrogen receptor protein degrader. The estrogen receptor is a well-known disease driver in most breast cancers. ARV-471 is currently in a Phase 2 dose expansion clinical trial for the treatment of patients with estrogen receptor positive / human epidermal growth factor receptor 2 negative (ER+/HER2-) locally advanced or metastatic breast cancer.sickle cell disease. Under the terms of the ~~collaboration~~ agreement, we ~~made~~will acquire all outstanding shares of GBT for $68.50 per share in cash for a total enterprise value of approximately $5.4 billion, including debt and net of cash acquired. The proposed transaction is subject to customary closing conditions, including receipt of regulatory approvals and approval by GBT’s stockholders.

Acquisition of ReViral––In June 2022, which falls in our international third quarter of 2022, we completed our acquisition of ReViral, a privately held, clinical-stage biopharmaceutical company focused on discovering, developing and commercializing novel antiviral therapeutics that target respiratory syncytial virus, for a total consideration of up to $525 million, including an upfront payment ~~to Arvinas~~ of ~~$650~~$425 million ~~in July 2021. Separately,~~upon closing and an additional $100 million contingent upon future development milestones.

Acquisition of Biohaven––In May 2022, we and Biohaven announced that the companies entered into an agreement under which we will ~~make a $350 million equity investment~~acquire Biohaven, the maker of Nurtec® ODT (rimegepant), an innovative dual-acting migraine therapy approved for both acute treatment and episodic prevention of migraine in ~~Arvinas, receiving approximately 3.5 million newly issued~~adults. Under the terms of the agreement, we will acquire all outstanding common shares of ~~Arvinas~~Biohaven not already owned by us for $148.50 per share, in cash. The proposed transaction includes the acquisition of Biohaven’s CGRP programs, including rimegepant, zavegepant and a portfolio of five pre-clinical CGRP assets. Biohaven common ~~stock, priced~~shareholders, including Pfizer, will also receive 0.5 of a share of New Biohaven, a new publicly traded company that will retain Biohaven’s non-CGRP development stage pipeline compounds, per Biohaven common share. Pfizer will pay transaction consideration totaling approximately $11.6 billion in cash. Pfizer will also make payments at ~~a 30% premium~~closing to settle Biohaven’s third party debt and for the redemption of all outstanding shares of Biohaven’s redeemable preferred stock.

This agreement follows on the November 2021 collaboration for the commercialization of rimegepant and zavegepant outside the U.S., in connection with which Pfizer acquired 2.6% of Biohaven’s common stock. New Biohaven will also have the right to receive tiered royalties from Pfizer on any annual net sales of rimegepant and zavegepant in the U.S. in excess of $5.25 billion. The proposed transaction is subject to the ~~30-day volume weighted average price on July 20, 2021, representing an equity ownership stake by Pfizer of approximately 7% as of July 20, 2021. Closing~~completion of the ~~equity investment agreement is contingent on completion of review under antitrust laws, including the Hart-Scott-Rodino Antitrust Improvements Act of 1976 in the U.S.,~~New Biohaven spin-off transaction and other customary closing conditions. ~~Arvinas is also eligible to receive up to $400 million in approval milestones and up to $1 billion in commercial milestones.~~All required antitrust clearances have been received. The companies ~~will equally share worldwide development costs, commercialization expenses and profits.~~expect the transaction to close by early 2023.

~~Acquisition of Amplyx Pharmaceuticals, Inc.(Amplyx)~~––In April 2021, we announced that we acquired Amplyx, a privately-held company dedicated to the development of therapies for debilitating and life-threatening diseases that affect people with compromised immune systems. Amplyx’s lead compound, Fosmanogepix (APX001), is a novel investigational asset in Phase 2 development for the treatment of invasive fungal infections.

~~For a discussion of recent significant business development activities, see~~ ~~Note 2.~~ For a description of the more significant recent transactions through February ~~25, 2021,~~24, 2022, the filing date of our ~~2020~~2021 Form 10-K, see Note 2 in our ~~2020~~2021 Form 10-K.

Our Second Quarter ~~2021~~2022 and First Six Months of 2022 Performance

Revenues

~~Revenues~~

––Revenues increased ~~$9.1~~$8.8 billion, or ~~92%~~47%, in the second quarter of ~~2021~~2022 to ~~$19.0~~$27.7 billion from ~~$9.9~~$18.9 billion in the second quarter of ~~2020,~~2021, reflecting an operational increase of ~~$8.5~~$10.1 billion, or ~~86%~~53%, as well as ~~a favorable~~an unfavorable impact of foreign exchange of ~~$637 million,~~$1.3 billion, or 6%7%. The operational increase was primarily driven by growth from Paxlovid and Comirnaty. Excluding ~~direct sales~~the impact of Paxlovid and ~~alliance revenues of BNT162b2 of $7.8 billion,~~Comirnaty, revenues increased ~~10%~~1% operationally, reflecting strong growth in Eliquis, the Prevnar family and Vyndaqel/Vyndamax, ~~Eliquis, Prevnar 13/Prevenar 13, Inlyta, Xtandi, Biosimilars and the Hospital therapeutic area,~~ partially offset by declines in ~~Enbrel,~~Chantix/Champix, Xeljanz and ~~Chantix/Champix.~~Sutent.

Revenues increased ~~$13.6~~$20.0 billion, or ~~68%~~60%, in the first six months of ~~2021~~2022 to ~~$33.6~~$53.4 billion from ~~$19.9~~$33.4 billion in the first six months of ~~2020,~~2021, reflecting an operational increase of ~~$12.7~~$22.0 billion, or ~~64%~~66%, as well as ~~the favorable~~an unfavorable impact of foreign exchange

of ~~$921 million,~~$2.0 billion, or 5%6%. The operational increase was primarily driven by growth from Comirnaty and Paxlovid. Excluding ~~direct sales~~the impact of Comirnaty and ~~alliance revenues of BNT162b2 of $11.3 billion,~~Paxlovid, revenues increased 9%1% operationally, reflecting strong growth in Eliquis, the Prevnar family, Vyndaqel/Vyndamax ~~Inlyta, Xtandi,~~and Biosimilars, ~~and the Hospital therapeutic area,~~ partially offset by declines in Chantix/Champix, ~~Enbrel~~Xeljanz and ~~Prevnar 13/Prevenar 13.~~Sutent.

See the Analysis of the Condensed Consolidated Statements of Income––Revenues by Geography and Revenues––Selected Product Discussion sections for more information, including a discussion of key drivers of our revenue performance. For information regarding the primary indications or class of certain products, see Note ~~13B.~~13C.

Income from ~~continuing operations before provision~~Continuing Operations Before Provision/(Benefit) for ~~taxes~~Taxes on ~~income~~

Income––The ~~increase of $3.6 billion~~increases in Income from continuing operations before ~~provision~~provision/(benefit) for taxes on income of $4.5 billion in the second quarter of ~~2021,~~2022 and $7.9 billion in the first six months of 2022, compared to the same ~~period~~periods in ~~2020, was~~2021, respectively, were primarily attributable to (i) higher revenues, ~~lower~~partially offset by (ii) increases in Cost of sales, (iii)net losses on equity securities in the second quarter and first six months of 2022 versus net gains on equity securities in the second quarter and first six months of 2021, (iv) increases in Research and development expenses, (v) net periodic benefit costs associated with pension and other postretirement plans incurred in the second quarter and first six months of 2022 versus net periodic benefit credits recognized in the second quarter and first six months of 2021 and (vi) increases in Restructuring charges and certain acquisition-related ~~costs,~~ ~~higher net gains on equity securities, higher net gains on asset disposals and lower interest expense, partially offset by higher~~ ~~Cost of sales,~~ ~~higher~~ ~~Research and development expenses,~~ ~~higher legal charges, higher~~ ~~Selling, informational and administrative expenses~~ ~~and lower income from collaborations~~.

~~The increase of $6.4 billion in~~ ~~Income from continuing operations before provision for taxes on income~~ ~~in the first six months of 2021, compared to the same period in 2020, was primarily attributable to higher revenues, highernet gains on equity securities, lower~~ ~~Restructuring charges and certain acquisition-related costs,~~ higher net periodic benefit credits related to pension and postretirement plans, higher Consumer Healthcare JV equity method income, lower interest expense and higher net gains on asset disposals, partially offset by higher ~~Cost of sales,~~ ~~higher~~ ~~Research and development expenses,~~ ~~higher~~ ~~Selling, informational and administrative expenses~~ ~~andhigher legal charges~~.costs.

See the Analysis of the Condensed Consolidated Statements of Income within ~~this~~ MD&A and Note 4 for additional information.

For information on our tax provision and effective tax rate, see the ~~Provision~~Provision/(Benefit) for Taxes on Income section within MD&A and Note 5.

Our Operating Environment

We, like other businesses in our industry, are subject to certain industry-specific challenges. These include, among others, the topics listed below, as well as in the Item 1. Business––Government Regulation and inPrice Constraints and Item 1A. Risk Factors sections,and the Overview of Our Performance, Operating Environment, Strategy and Outlook––Our Operating Environment section of the MD&Aof our ~~2020~~2021 Form 10-K.

Intellectual Property Rights and Collaboration/Licensing Rights

––The loss, expiration or invalidation of intellectual property rights, patent litigation settlements with manufacturers and the expiration of co-promotion and licensing rights can have a material adverse effect on our revenues. Certain of our products have experienced patent-based expirations or loss of regulatory exclusivity in certain markets in the last few years, and we expect certain products to face ~~significantly~~ increased generic competition over the next few years. For example, the basic product patent for Chantix in the U.S. expired in November 2020. While multi-source generic competition for Chantix has not yet begun, it could commence at any time. Also, the basic product patent for Sutent in the U.S. will expire on August 15, 2021. While additional patent expiries will continue, we expect a moderate impact of reduced revenues due to patent expiries from ~~2021~~2022 through 2025. Further, legal or regulatory action by various stakeholders or governments could potentially result in us not seeking intellectual property protection for or agreeing not to enforce or being restricted from enforcing intellectual property related to our products. For example, in May 2021, the Brazilian Supreme Court voted to invalidate Article 40 of Brazil’s Patent Law, which guaranteed a minimum 10-year patent term from patent grant, and to give retroactive effect to such decision. We continue to vigorously defend our patent rights against infringement, and we will continue to support efforts that strengthen worldwide recognition of patent rights while taking necessary steps to help ensure appropriate patient access.

For additional information on patent rights we consider most significant in relation to our business as a whole, see the Item 1. Business––Patents and Other Intellectual Property Rights section of our ~~2020~~2021 Form 10-K. For a discussion of recent developments with respect to patent litigation, see Note 12A1.

Regulatory Environment/Pricing and Access––Government and Other Payer Group Pressures

The pricing of medicines and vaccines by pharmaceutical manufacturers and the cost of healthcare, which includes medicines, vaccines, medical services and hospital services, continues to be important to payers, governments, patients, and other stakeholders. Federal and state governments and––Governments globally, as well as private third-party payers in the U.S. continue to take action to manage the utilization of drugs and cost of drugs, including increasingly employing formularies to control costs by taking into account discounts in connection with decisions about formulary inclusion or favorable formulary placement. We consider a number of factors impacting the pricing of our medicines and vaccines. Within the U.S., we often engage with patients, doctors and healthcare plans. We also often provide significant discounts from the list price to insurers, including PBMs and MCOs. The price that patients pay in the U.S. for prescribed medicines and vaccines is ultimately set by healthcare providers and insurers.

~~Governments globally~~ may use a variety of measures to control costs, including, among others, proposing

pricing reform or legislation, employing formularies to control costs, cross country collaboration and procurement, price cuts, mandatory rebates, health technology assessments, forced localization as a condition of market access, “international reference pricing” (i.e., the practice of a country linking its regulated medicine prices to those of other countries), quality consistency evaluation processes and volume-based procurement. ~~In the U.S., we expect to see continued focus by Congress and the Biden Administration on regulating pricing resulting in legislative and regulatory efforts designed to control costs.~~ We anticipate that these and similar initiatives will continue to increase pricing and access pressures globally. In the U.S., we recently implemented a policy that will help improve contract pharmacy integrity. The U.S. Department of Health and Human Services (HHS) has sent letters to numerous manufacturers that have also implemented contract pharmacy integrity initiatives expressing the view that their programs are in violation of the 340B statute, and referring those programs for potential enforcement action. We believe that our program is consistent with the statute. Additional legal or legislative developments with respect to the 340B program may have an adverse impact on our integrity initiative, and we may face enforcement action or penalties, depending upon such developments. For additional information, see the Item 1. Business––Pricing Pressures and Managed Care Organizations and ––Government Regulation and Price Constraints sections in our ~~2020~~2021 Form 10-K and the Overview of Our Performance, Operating Environment, Strategy and Outlook––Our Operating Environment section of the MD&A in our 2021 Form 10-K.

Product Supply

––We periodically encounter supply delays, disruptions and shortages, including due to a voluntary recall of a product. In July 2021, Pfizer issued a voluntary recall in the U.S. for 12 lots of Chantix due to the presence of a nitrosamine, N-nitroso-varenicline, above the Pfizer-established acceptable daily intake level. Nitrosamines are impurities which are common in water and foods and everyone is exposed to some level of nitrosamines.product recalls. In response to requests from various regulatory authorities, manufacturers across the pharmaceutical industry, including Pfizer, ~~have been~~are evaluating their product portfolios for the potential ~~for the~~ presence or formation of nitrosamines. This has led to recalls, including our voluntary recall of Chantix in 2021 and additional voluntary recalls initiated for other products in 2022 due to the presence of nitrosamines ~~in pharmaceutical~~above the applicable acceptable intake limit, and may lead to additional recalls or other market actions for Pfizer products. ~~We are currently undertaking an evaluation of our entire portfolio.~~ For information on our Chantix recall in 2021 and risks related to product manufacturing, see the Item 1A. Risk Factors––Product Manufacturing, Sales and Marketing Risks section of our ~~2020~~2021 Form 10-K.

The Global Economic Environment

In addition to the industry-specific factors discussed above, we, like other businesses of our size and global extent of activities, are exposed to ~~the~~ economic ~~cycle.~~cycles. For additional information, ~~please~~ see the Overview of Our Performance, Operating Environment, Strategy and Outlook––The Global Economic Environment section of the MD&A of our ~~2020~~2021 Form 10-K.

~~COVID-19 Pandemic~~Russia/Ukraine Conflict––Our global operations may be impacted by certain factors in the global economic environment including impacts of political or civil unrest or military action, including the armed conflict between Russia and Ukraine. Consistent with our commitment to putting patients first, we are maintaining the supply of medicines to Russia, including the provision of needed medicines to patients already enrolled in clinical trials. Effective March 14, 2022, Pfizer is donating the equivalent of profits of our Russian subsidiary to causes that provide direct humanitarian support to the people of Ukraine, in addition to the company’s ongoing efforts to support the humanitarian response in the region. Our first down payment of $5 million is going to eight global and local non-governmental organizations to support humanitarian relief and response efforts. We will continue to divert these profits to the Ukrainian relief efforts until peace is achieved. Additionally, we are not initiating new clinical trials in Russia, have stopped recruiting new patients in our ongoing clinical trials in the country, and halted all new investments with local suppliers intended to build manufacturing capacity in Russia. For both the six months ended July 3, 2022 and the fiscal year ended December 31, 2021, the business of our Russia and Ukraine subsidiaries represented less than 1% of our consolidated revenues and assets, and while we are monitoring the effects of the armed conflict between Russia and Ukraine, the situation continues to evolve and the long-term implications, including the broader economic consequences of the conflict, are difficult to predict at this time. While as of now, we do not anticipate any significant negative impacts on our business from this conflict, continued regional instability, geopolitical shifts, potential additional sanctions and other restrictive measures against Russia, neighboring countries or allies of Russia, and any retaliatory measures taken by Russia, neighboring countries or allies of Russia, in response to such measures could adversely affect the global macroeconomic environment, our operations, currency exchange rates and financial markets, which could in turn adversely impact our business and results of operations.

COVID-19 Pandemic––The ~~continuation of the~~ COVID-19 pandemic has impacted our business, operations and financial condition and results.

Our Response to COVID-19

~~We are committed~~Pfizer is continuing to ~~confronting~~help lead the ~~public health challenge posed by~~global effort to confront the COVID-19 pandemic by ~~collaborating with industry partners,~~advancing a vision for industry-wide collaboration while continuing to make significant investments in breakthrough science and global ~~regulators and academic institutions to develop potential approaches to prevent and treat COVID-19. We have made some important advances, including, among others:~~manufacturing.

•~~COVID-19 Vaccine Development Program~~Comirnaty/BNT162b2:

◦~~The FDA has authorized the distribution and use of~~ We have collaborated with BioNTech to jointly develop Comirnaty/BNT162b2, ~~in the U.S.~~a mRNA-based coronavirus vaccine to help prevent ~~COVID-19 for individuals 12 years of age and older under an EUA. BNT162b2 has not been approved or licensed by~~COVID-19. For additional information, see the ~~FDA. The EUA authorizes distribution and use~~Product Developments section of this product subject to the conditions set forth in the EUA, and only for the duration of the declaration by the Department of Health & Human Services that circumstances exist justifying authorization of emergency use of drugs and biological products (such as BNT162b2) during the COVID-19 pandemic under Section 564 of the U.S. Federal Food, Drug and Cosmetic Act (the Declaration), or until revocation of the EUA by the FDA. The FDA has issued EUAs to certain other companies for products intended for the prevention or treatment of COVID-19 and may continue to do so during the duration of the Declaration. The FDA expects EUA holders to work towards submission of a BLA as soon as possible. In May 2021, we and BioNTech completed the rolling submission of the BLA seeking full approval for BNT162b2 in individuals 16 years and older. In July 2021, the FDA granted Priority Review designation for this BLA. The PDUFA goal date for this BLA is set for January 2022, but the FDA may potentially act sooner. BNT162b2 has been granted a CMA, EUA or temporary authorization in many other countries around the world.MD&A. We continue to ~~study vaccines to help prevent COVID-19, including evaluating pediatric~~evaluate our vaccine and ~~maternal indications for BNT162b2, assessing~~ the short- and long-term safety and efficacy of ~~BNT162b2,~~Comirnaty. We are also studying ~~vaccines~~monovalent, bivalent and variant-adapted vaccine candidates to potentially help prevent COVID-19 caused by ~~new and emerging~~ variants ~~and potentially developing booster doses or an updated~~of concern, as well as a next-generation mRNA vaccine ~~as needed.~~candidate.

◦Based on current projections, we and BioNTech expect to manufacture in total up to 3 billion doses by the end of December 2021, subject to continuous process improvements, expansion at current facilities and adding new suppliers and contract manufacturers. The companies have entered into agreements to supply pre-specified doses of ~~BNT162b2~~Comirnaty in 2022 with multiple developed and emerging ~~nations~~countries around the world and are continuing to deliver doses of ~~BNT162b2~~Comirnaty to governments under such

agreements. We also signed agreements with ~~the U.S., the EU, Israel and Canada~~multiple countries to supply ~~BNT162b2~~Comirnaty doses in ~~2022 and beyond~~2023 and are currently negotiating similar potential agreements with multiple countries as well. Additionally, we will continue our efforts to help ensure equitable access to Comirnaty and anticipate delivering at least two billion doses to low- and middle-income countries—one billion of which were delivered in 2021 and approximately 460 million of which were delivered in the first half of 2022. Certain of the aforementioned doses to low- and middle-income countries are being supplied to the U.S. government at a not-for-profit price to be donated to the world’s poorest nations.

◦As of July 28, 2022, we forecasted approximately $32 billion of revenues for Comirnaty in 2022, with gross profit to be split evenly with BioNTech, which includes doses expected to be delivered in fiscal 2022, primarily under contracts signed as of mid-July 2022.

•Paxlovid:

◦In December 2021, the FDA authorized the emergency use of Paxlovid, a novel oral COVID-19 treatment, for the treatment of mild-to-moderate COVID-19 in adults and pediatric patients (12 years of age and older weighing at least 40 kg [88 lbs]) with positive results of direct SARS-CoV-2 viral testing, and who are at high risk for progression to severe COVID-19, including hospitalization or death. Paxlovid has been granted an authorization or approval in many other countries. In June 2022, we submitted an NDA to the FDA for approval of Paxlovid for the treatment of COVID-19 in both vaccinated and unvaccinated individuals who are at high risk for progression to severe illness from COVID-19 consistent with the current EUA. For additional information, see the Product Developments section of this MD&A.

◦We continue to evaluate Paxlovid in other populations, including in non-hospitalized, symptomatic, pediatric patients with a confirmed diagnosis of COVID-19 who are at risk of progression to severe disease (Phase 2/3 study, EPIC-PEDS (Evaluation of Protease Inhibition for COVID-19 in Pediatric Patients)). We also plan to study Paxlovid in those who are immunocompromised, hospitalized with severe COVID-19 and at increased risk for poor outcomes due to the disease, or who are pregnant. In June 2022, we announced that due to a very low rate of hospitalization or death observed in the standard-risk patient population, we ceased enrollment into the Phase 2/3 EPIC-SR (Evaluation of Protease Inhibition for COVID-19 in Standard-Risk Patients) study evaluating the use of Paxlovid in patients who are at standard risk for developing severe COVID-19. Pfizer had previously announced that the primary endpoint for EPIC-SR was not met.

◦We have entered into agreements to supply pre-specified courses of Paxlovid to multiple countries, such as the U.S. and U.K., as well as an agreement with UNICEF to supply low- and middle-income countries. Through the first half of 2022, we produced 30 million treatment courses, and we have capacity to meet the demand for Paxlovid in a flexible manner going forward.

◦As of July 28, ~~2021, based on the 2.1~~2022, we forecasted approximately $22 billion ~~doses that are~~of revenues for Paxlovid in 2022, which includes treatment courses expected to be delivered in ~~2021 under agreements that have been~~fiscal 2022, primarily relating to supply contracts signed ~~through~~or committed as of mid-July ~~2021, we forecasted approximately $33.5 billion in revenues in 2021 from BNT162b2, with~~2022.

gross profit to be split evenly with BioNTech. This forecast may be adjusted in the future as additional agreements are signed and as circumstances warrant, and does not include the additional 200 million doses we announced on July 23, 2021 that we will deliver to the U.S. Government, of which 110 million doses are expected to be delivered from October to December 2021. We anticipate that a significant amount of the remaining 2021 vaccine manufacturing capacity will be delivered to middle- and low-income countries where we price in line with income levels or at a not-for-profit price.

•~~COVID-19 Protease Inhibitors~~:

◦In July 2021, we initiated a Phase 2/3 study to evaluate the efficacy, safety and tolerability of an investigational, novel oral antiviral therapeutic for COVID-19, PF-07321332, which is a SARS-CoV2-3CL protease inhibitor.

◦We also have completed a Phase 1b clinical trial for an intravenously administered investigational protease inhibitor for COVID-19, PF-07304814. Following recent communications with the FDA, we anticipate the initiation of a Phase 2/3 study of PF-07304814 in the third quarter of 2021.

Despite our significant investments and efforts, any of our ongoing development programs related to COVID-19 may not be successful as the risk of failure is significant, and there can be no certainty these efforts will yield a successful product or that costs will ultimately be recouped.

Impact of COVID-19 on Our Business and Operations

As part of our on-going monitoring and assessment, we have made certain assumptions regarding the pandemic for purposes of our operational planning and financial projections, including assumptions regarding the duration, severity and the global macroeconomic impact of the pandemic, as well as COVID-19 vaccine and oral COVID-19 treatment revenues, supply and contracts, which remain dynamic. Despite careful tracking and planning, we are unable to accurately predict the extent of the impact of the pandemic on our business, operations and financial condition and results due to the uncertainty of future developments. We are focused on all aspects of our business and are implementing measures aimed at mitigating issues where possible, including by using digital technology to assist in operations for our commercial, manufacturing, R&D and corporate enabling functions globally.

As discussed in our ~~2020~~2021 Form 10-K, apart from our introduction of Comirnaty/BNT162b2 and Paxlovid, our business and operations were impacted ~~in 2020~~ by the pandemic in various ways; certain of those impacts have continued in ~~2021.~~2022. For additional detail and discussion on the impact of the COVID-19 pandemic on certain of our products, sales and marketing, supply chain and clinical trials, see the Analysis of the Condensed Consolidated Statements of Income—Revenues by Geography andRevenues—Selected Product Discussion sections within this MD~~&A. In 2021, we have continued not to see a significant disruption to our supply chain to date,~~&A and ~~all~~the Overview of Our Performance, Operating Environment, Strategy and Outlook—The Global Economic Environment—COVID-19 Pandemic section of the MD&A of our manufacturing sites globally have continued to operate at or near normal levels. However, we are seeing an increase in overall demand in the industry for certain components and raw materials potentially constraining available supply, which could have a future impact on our business. We are continuing to monitor and implement mitigation strategies in an effort to reduce any potential impact.2021 Form 10-K.

We will continue to pursue efforts to maintain the continuity of our operations while monitoring for new developments related to the pandemic. Future developments could result in additional favorable or unfavorable impacts on our business, operations or financial condition and results. If we experience significant disruption in our manufacturing or supply chains or significant disruptions in clinical trials or other operations, or if demand for our products is significantly reduced as a result of the COVID-19 pandemic, or if demand for our COVID-19 vaccine or oral COVID-19 treatment is reduced or no longer exists, we could experience a material adverse impact on our business, operations and financial condition and results.

For additional information, ~~please~~ see the Item 1A. Risk Factors—COVID-19 Pandemic section and the Overview of Our Performance, Operating Environment, Strategy and Outlook section of the MD&A of our ~~2020~~2021 Form 10-K.

SIGNIFICANT ACCOUNTING POLICIES AND APPLICATION OF CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS

For a description of our significant accounting policies, see Note 1 in our ~~2020~~2021 Form 10-K. Of these policies, the following are considered critical to an understanding of our consolidated financial statements as they require the application of the most subjective and the most complex judgments: Acquisitions (Note 1D1E); Fair Value (Note 1E1F); Revenues (Note 1G1H); Asset Impairments (Note 1L1M); Tax Assets and Liabilities and Income Tax Contingencies (Note 1P1Q); Pension and Postretirement Benefit Plans (Note 1Q1R); and Legal and Environmental Contingencies (Note 1R1S).

For a discussion about the critical accounting estimates and assumptions impacting our consolidated financial statements, see the Significant Accounting Policies and Application of Critical Accounting Estimates and Assumptions section within MD&A in our ~~2020~~2021 Form 10-K. See also Note 1C1D in our ~~2020~~2021 Form 10-K for a discussion about the risks associated with estimates and assumptions.

For a discussion of a recently adopted accounting standard, ~~a change in accounting principle related to our pension and postretirement plans, and significant accounting policies,~~ see ~~Notes~~Note 1B 1C ~~and~~. For a discussion of presentation changes for Acquired in-process research and development expenses, see Note 1D.

ANALYSIS OF THE CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Revenues by Geography


The following presents worldwide revenues by geography:	The following presents worldwide revenues by geography:																The following presents worldwide revenues by geography:
		Three Months Ended																Three Months Ended
		Worldwide				U.S.				International				World-wide	U.S.	Inter-national		Worldwide				U.S.				International				World-wide	U.S.	Inter-national
(MILLIONS)	(MILLIONS)	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020		% Change in Revenues			(MILLIONS)	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021		% Change in Revenues
Operating segments:																	Operating segments:
Biopharma																	Biopharma	$	27,425	$	18,463	$	11,136	$	7,380	$	16,289	$	11,083	49	51	47
Pfizer CentreOne																	Pfizer CentreOne	317		437		86		136		230		301		(27)	(36)	(23)
Total revenues	Total revenues	$	18,977	$	9,864	$	7,593	$	5,113	$	11,384	$	4,751	92	48	*	Total revenues	$	27,742	$	18,899	$	11,222	$	7,515	$	16,519	$	11,384	47	49	45

		Six Months Ended																Six Months Ended
		Worldwide				U.S.				International				World-wide	U.S.	Inter-national		Worldwide				U.S.				International				World-wide	U.S.	Inter-national
(MILLIONS)	(MILLIONS)	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020		% Change in Revenues			(MILLIONS)	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021		% Change in Revenues
Operating segments:																	Operating segments:
Biopharma																	Biopharma	$	52,748	$	32,588	$	19,952	$	14,757	$	32,795	$	17,830	62	35	84
Pfizer CentreOne																	Pfizer CentreOne	655		827		188		288		467		539		(21)	(35)	(13)
Total revenues	Total revenues	$	33,559	$	19,947	$	15,190	$	10,403	$	18,369	$	9,544	68	46	92	Total revenues	$	53,402	$	33,415	$	20,140	$	15,046	$	33,262	$	18,369	60	34	81

*
~~Calculation is not meaningful or results are equal to or greater than 100%.~~

Second Quarter of ~~2021~~2022 vs. Second Quarter of ~~2020~~2021

The following provides an analysis of the worldwide change in revenues by geographic areas in the second quarter of 2021:
Three Months Ended July 4, 2021
(MILLIONS) Worldwide U.S. International
Operational growth/(decline):
Growth from BNT162b2, Vyndaqel/Vyndamax, Eliquis, Prevnar 13/Prevenar 13, Inlyta, Xtandi, Ibrance, Biosimilars and the Hospital therapeutic area, partially offset by decline from Xeljanz. See the Analysis of the Condensed Consolidated Statements of Income––Revenues––Selected Product Discussion within MD&A for additional analysis
$ 8,613 $ 2,515 $ 6,098
Lower revenues for Enbrel and Chantix/Champix. The decrease for Enbrel internationally primarily reflects continued biosimilar competition in most developed Europe markets and Japan, which is expected to continue. The decrease in Chantix/Champix was driven by the U.S. and primarily reflects a negative impact on available supply related to the voluntary recall of certain lots of product following the discovery of the presence of a nitrosamine, N-nitroso-varenicline, above the Pfizer-established acceptable daily intake level and a hold on distribution of new product pending additional testing, as well as the negative impact of the COVID-19 pandemic resulting in a decline in patient visits to doctors for preventative health purposes and the loss of patent protection in the U.S. in November 2020 (119) (41) (77)
Other operational factors, net (18) 6 (24)
Operational growth/(decline), net 8,476 2,480 5,996
Favorable impact of foreign exchange 637 — 637
Revenues increase/(decrease)
$ 9,113 $ 2,480 $ 6,633


The following provides an analysis of the change in worldwide revenues by geographic areas in the second quarter of 2022:
	Three Months Ended July 3, 2022
(MILLIONS)	Worldwide		U.S.		International
Operational growth/(decline):
Worldwide growth from Paxlovid, Comirnaty, Eliquis, Prevnar family, Vyndaqel/Vyndamax, Inlyta and Biosimilars, partially offset by worldwide declines from Xeljanz, Ibrance and Xtandi. See the Analysis of the Condensed Consolidated Statements of Income––Revenues––Selected Product Discussion within MD&A for additional analysis	$	10,486	$	3,972	$	6,514
Decline from PC1. See the Analysis of the Condensed Consolidated Statements of Income––Revenues––Selected Product Discussion within MD&A for additional analysis	(109)		(49)		(60)
Lower revenues for Chantix/Champix and Sutent: •The decrease in Chantix/Champix was driven by the ongoing global pause in shipments of Chantix due to the presence of N-nitroso-varenicline above an acceptable level of intake set by various global regulators, the ultimate timing for resolution of which may vary by country •The decrease for Sutent primarily reflects lower volume demand in the U.S. and Europe following its loss of exclusivity in August 2021 and January 2022, respectively	(273)		(177)		(97)
Other operational factors, net	(1)		(39)		37
Operational growth, net	10,103		3,707		6,395

Unfavorable impact of foreign exchange	(1,260)		—		(1,260)
Revenues increase/(decrease)	$	8,842	$	3,707	$	5,135

Emerging markets revenues increased ~~$1.9~~$2.2 billion, or ~~101%~~58%, in the second quarter of ~~2021~~2022 to ~~$3.8~~$6.0 billion from ~~$1.9~~$3.8 billion in the second quarter of ~~2020,~~2021, reflecting an operational increase of ~~$1.8~~$2.4 billion, or ~~94%~~63%, and ~~a favorable~~an unfavorable impact from foreign exchange of approximately 6%. The operational increase in emerging markets was primarily driven by growth from Comirnaty and Paxlovid.

First Six Months of 2022 vs. First Six Months of 2021


The following provides an analysis of the worldwide change in revenues by geographic areas in the first six months of 2022:
	Six Months Ended July 3, 2022
(MILLIONS)	Worldwide		U.S.		International
Operational growth/(decline):
Worldwide growth from Comirnaty, Paxlovid, Eliquis, Prevnar family, Vyndaqel/Vyndamax, Inlyta and Biosimilars, partially offset by worldwide declines from Xeljanz, Ibrance and Xtandi. See the Analysis of the Condensed Consolidated Statements of Income––Revenues––Selected Product Discussion within MD&A for additional analysis	$	22,854	$	5,736	$	17,117
Decline from PC1. See the Analysis of the Condensed Consolidated Statements of Income––Revenues––Selected Product Discussion within MD&A for additional analysis	(152)		(100)		(52)
Lower revenues for Chantix/Champix and Sutent: •The decrease in Chantix/Champix was driven by the ongoing global pause in shipments of Chantix due to the presence of N-nitroso-varenicline above an acceptable level of intake set by various global regulators, the ultimate timing for resolution of which may vary by country •The decrease for Sutent primarily reflects lower volume demand in the U.S. and Europe following its loss of exclusivity in August 2021 and January 2022, respectively	(568)		(381)		(187)
Other operational factors, net	(108)		(160)		53
Operational growth/(decline), net	22,026		5,094		16,931

Unfavorable impact of foreign exchange	(2,038)		—		(2,038)
Revenues increase/(decrease)	$	19,988	$	5,094	$	14,893

Emerging markets revenues increased $6.7 billion, or 102%, in the first six months of 2022 to $13.4 billion from $6.6 billion in the first six months of 2021, reflecting an operational increase of $7.2 billion, or 108%, and an unfavorable impact from foreign exchange of approximately 7%. The operational increase in emerging markets was primarily driven by ~~revenues from BNT162b2 and~~ growth from ~~Eliquis.~~Comirnaty and Paxlovid.

4142

~~First Six Months of 2021 vs. First Six Months of 2020~~

The following provides an analysis of the worldwide change in revenues by geographic areas in the first six months of 2021:
Six Months Ended July 4, 2021
(MILLIONS) Worldwide U.S. International
Operational growth/(decline):
Growth from BNT162b2, Eliquis, Vyndaqel/Vyndamax, Inlyta, Xtandi, Xeljanz, Biosimilars and the Hospital therapeutic area, partially offset by decline from Prevnar 13/Prevenar 13, while Ibrance was flat. See the Analysis of the Condensed Consolidated Statements of Income––Revenues––Selected Product Discussion within MD&A for additional analysis
$ 12,952 $ 4,899 $ 8,054
Lower revenues for Chantix/Champix and Enbrel. The decrease in Chantix/Champix was driven by the U.S. and primarily reflects the negative impact of the COVID-19 pandemic resulting in a decline in patient visits to doctors for preventative health purposes and the loss of patent protection in the U.S. in November 2020, as well as a negative impact on available supply related to the voluntary recall of certain lots of product following the discovery of the presence of a nitrosamine, N-nitroso-varenicline, above the Pfizer-established acceptable daily intake level and a hold on distribution of new product pending additional testing. The decrease for Enbrel internationally primarily reflects continued biosimilar competition in most developed Europe markets and Japan, which is expected to continue (211) (87) (125)
Other operational factors, net (50) (25) (26)
Operational growth/(decline), net 12,691 4,787 7,903
Favorable impact of foreign exchange 921 — 921
Revenues increase/(decrease)
$ 13,612 $ 4,787 $ 8,825

Emerging markets revenues increased $2.6 billion, or 63%, in the first six months of 2021 to $6.6 billion from $4.1 billion in the first six months of 2020, reflecting an operational increase of $2.5 billion, or 61%, and a favorable impact from foreign exchange of approximately 2%. The operational increase in emerging markets was primarily driven by revenues from BNT162b2 and growth from Eliquis.

Revenue Deductions

––Our gross product revenues are subject to a variety of deductions, which generally are estimated and recorded in the same period that the revenues are recognized. These deductions represent estimates of related obligations and, as such, knowledge and judgment are required when estimating the impact of these revenue deductions on gross sales for a reporting period. Historically, adjustments to these estimates to reflect actual results or updated expectations, have not been material to our overall business and generally have been less than 1% of revenues. Product-specific rebates, however, can have a significant impact on year-over-year individual product revenue growth trends.


The following presents information about revenue deductions:	The following presents information about revenue deductions:									The following presents information about revenue deductions:
		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
(MILLIONS)	(MILLIONS)	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020		(MILLIONS)	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Medicare rebates	Medicare rebates	$	182	$	143	$	371	$	327	Medicare rebates	$	186	$	182	$	387	$	371
Medicaid and related state program rebates	Medicaid and related state program rebates	306		283		652		580		Medicaid and related state program rebates	225		306		466		652
Performance-based contract rebates	Performance-based contract rebates	788		655		1,541		1,269		Performance-based contract rebates	862		788		1,667		1,541
Chargebacks	Chargebacks	1,518		1,033		2,949		2,064		Chargebacks	1,797		1,518		3,534		2,949
Sales allowances	Sales allowances	1,213		864		2,357		1,886		Sales allowances	1,367		1,211		2,571		2,354
Sales returns and cash discounts	Sales returns and cash discounts	235		217		459		439		Sales returns and cash discounts	328		235		598		459
Total	Total	$	4,243	$	3,194	$	8,329	$	6,565	Total	$	4,765	$	4,240	$	9,223	$	8,326

Revenue deductions are primarily a function of product sales volume, mix of products sold, contractual or legislative discounts and rebates.

For information on our accruals for revenue deductions, including the balance sheet classification of these accruals, see Note ~~1D.~~1C.

4243

Revenues––Selected Product Discussion

(MILLIONS) Revenue % Change
Product Period Global
Revenues Region July 4, 2021 June 28, 2020 Total Oper. Operational Results Commentary
BNT162b2(a)
QTD
$7,838

*
U.S. $ 2,034 $ — * Driven by global uptake, following a CMA, EUA or temporary authorization.
Int’l. 5,804 — * *
Worldwide $ 7,838 $ — * *
YTD
$11,300

*
U.S. $ 4,072 $ — *
Int’l. 7,228 — * *
Worldwide $ 11,300 $ — * *
Eliquis QTD
$1,481

Up 13%

(operationally)
U.S. $ 831 $ 722 15
QTD and YTD growth led by the U.S. and emerging markets, driven primarily by continued increased adoption in non-valvular atrial fibrillation and oral anti-coagulant market share gains.
YTD was also impacted by a favorable adjustment related to the Medicare “coverage gap” provision resulting from lower than previously expected discounts in prior periods.
Int’l. 650 550 18 10
Worldwide $ 1,481 $ 1,272 16 13
YTD
$3,124

Up 19%

(operationally)
U.S. $ 1,812 $ 1,527 19
Int’l. 1,312 1,045 26 19
Worldwide $ 3,124 $ 2,572 21 19
Ibrance QTD
$1,404

Up 2%

(operationally)
U.S. $ 862 $ 927 (7)
QTD growth driven by accelerating demand internationally as the delays in diagnosis and treatment initiations caused by COVID-19 show signs of recovery across several international markets, partially offset by a decline in the U.S., which despite maintaining a strong leadership position within the CDK 4/6 class with 73% share of first-line new patient starts, reflects an increase in the proportion of patients accessing Ibrance through our Patient Assistance Program.
YTD was flat as accelerating demand internationally was offset by a decline in the U.S., as described above.
Int’l. 542 422 28 21
Worldwide $ 1,404 $ 1,349 4 2
YTD
$2,657

Flat

(operationally)
U.S. $ 1,656 $ 1,779 (7)
Int’l. 1,002 819 22 16
Worldwide $ 2,657 $ 2,598 2 —
Prevnar 13/
Prevenar 13
QTD
$1,241

Up 9%

(operationally)
U.S. $ 642 $ 481 34
QTD growth primarily resulting from:
•U.S. growth in the pediatric indication, primarily due to higher levels of healthcare activity and wellness visits compared to the prior-year quarter, which was heavily impacted by COVID-19-related mobility restrictions and limitations, as well as favorable timing of government purchases, partially offset by lower year-over-year birth rates(b); and
•U.S. growth in the adult indication, primarily due to higher levels of healthcare activity and wellness visits compared to the prior-year quarter, as described above, partially offset by the impact of a lower remaining eligible unvaccinated population,
This growth was partially offset by:
•decline in developed Europe, reflecting significantly increased adult demand in the prior-year quarter in Germany and certain other markets resulting from greater vaccine awareness for respiratory illnesses due to the COVID-19 pandemic.

YTD decline primarily resulting from:
•impact of the revised ACIP recommendation for the adult indication to shared clinical decision making, which means the decision to vaccinate should be made at the individual level between healthcare providers and their patients, as well as the continued impact of a lower remaining eligible adult population; and
•decline in developed Europe, reflecting significantly increased adult demand in the prior-year in Germany and certain other markets resulting from greater vaccine awareness for respiratory illnesses due to the COVID-19 pandemic, partially offset by:
•U.S. growth in the pediatric indication due to the factors discussed above.
Int’l. 599 636 (6) (9)
Worldwide $ 1,241 $ 1,116 11 9
YTD
$2,524

Down 3%

(operationally)
U.S. $ 1,280 $ 1,275 —
Int’l. 1,244 1,291 (4) (6)
Worldwide $ 2,524 $ 2,566 (2) (3)
Biopharma


(MILLIONS)				Revenue				% Change
Product	Period	Global Revenues	Region	July 3, 2022		July 4, 2021		Total	Oper.	Operational Results Commentary
Comirnaty(a)	QTD	$8,848 Up 20% (operationally)	U.S.	$	1,080	$	2,034	(47)		Driven by strong operational growth in international markets, led by increased sales of doses to serve emerging markets and increased deliveries to certain international developed markets, partially offset by a slower pace of deliveries to the U.S. and Canada.
			Int’l.	7,768		5,804		34	43
			Worldwide	$	8,848	$	7,838	13	20
	YTD	$22,075 * (operationally)	U.S.	$	3,395	$	4,072	(17)
			Int’l.	18,681		7,228		*	*
			Worldwide	$	22,075	$	11,300	95	*
Paxlovid	QTD	$8,115 *	U.S.	$	4,455	$	—	*		Driven by the U.S. launch under emergency use authorization in December 2021 and international launches in late 2021 and early 2022 following regulatory approvals or emergency use authorizations.
			Int’l.	3,660		—		*	*
			Worldwide	$	8,115	$	—	*	*
	YTD	$9,585 *	U.S.	$	5,470	$	—	*
			Int’l.	4,115		—		*	*
			Worldwide	$	9,585	$	—	*	*
Eliquis	QTD	$1,745 Up 23% (operationally)	U.S.	$	1,064	$	831	28		Global growth driven primarily by continued oral anti-coagulant adoption and market share gains in non-valvular atrial fibrillation, particularly in the U.S. and certain markets in Europe, as well as favorable changes in channel mix in the U.S. In addition, YTD performance was negatively impacted by the non-recurrence of an $80 million favorable adjustment related to the Medicare “coverage gap” provision recorded in the first quarter of 2021.
			Int’l.	681		650		5	16
			Worldwide	$	1,745	$	1,481	18	23
	YTD	$3,537 Up 17% (operationally)	U.S.	$	2,144	$	1,812	18
			Int’l.	1,394		1,312		6	15
			Worldwide	$	3,537	$	3,124	13	17
Prevnar family	QTD	$1,429 Up 18% (operationally)	U.S.	$	906	$	642	41		Growth primarily driven by the adult indications in the U.S. due to strong stocking and patient demand following the launch of Prevnar 20 for the adult population, partially offset by unfavorable timing of government and private purchasing of Prevnar 13 for the pediatric indication globally. In addition, YTD international performance was negatively impacted by competitive pressures in China for the pediatric indication and timing of government purchasing for the adult indication.
			Int’l.	523		599		(13)	(7)
			Worldwide	$	1,429	$	1,241	15	18
	YTD	$2,994 Up 21% (operationally)	U.S.	$	1,920	$	1,280	50
			Int’l.	1,074		1,244		(14)	(10)
			Worldwide	$	2,994	$	2,524	19	21
Ibrance	QTD	$1,320 Down 3% (operationally)	U.S.	$	868	$	862	1		QTD decline primarily driven by prior-year quarter clinical trial purchases in international developed markets, partially offset by modest growth in the U.S. despite continued increase in the proportion of patients accessing Ibrance through the Patient Assistance Program. YTD decline largely due to a continued increase in the proportion of patients accessing Ibrance through the U.S. Patient Assistance Program and prior-year quarter clinical trial purchases in international developed markets, partially offset by higher volumes in emerging markets.
			Int’l.	452		542		(17)	(8)
			Worldwide	$	1,320	$	1,404	(6)	(3)
	YTD	$2,557 Down 1% (operationally)	U.S.	$	1,621	$	1,656	(2)
			Int’l.	936		1,002		(7)	1
			Worldwide	$	2,557	$	2,657	(4)	(1)
Vyndaqel/ Vyndamax	QTD	$552 Up 16% (operationally)	U.S.	$	296	$	225	32		Growth largely driven by continued strong uptake of the ATTR-CM indication, primarily in developed Europe and the U.S., partially offset by a planned price decrease which recently went into effect in Japan.
			Int’l.	256		276		(7)	3
			Worldwide	$	552	$	501	10	16
	YTD	$1,164 Up 28% (operationally)	U.S.	$	561	$	430	30
			Int’l.	603		523		15	26
			Worldwide	$	1,164	$	953	22	28
Xeljanz	QTD	$430 Down 24% (operationally)	U.S.	$	254	$	390	(35)		Driven primarily by declines in net price due to unfavorable changes in channel mix, decreased prescription volumes globally resulting from ongoing shifts in prescribing patterns related to JAK class label changes, and unfavorable wholesaler inventory buying patterns in the U.S.
			Int’l.	176		195		(10)	(2)
			Worldwide	$	430	$	586	(27)	(24)
	YTD	$802 Down 26% (operationally)	U.S.	$	457	$	722	(37)
			Int’l.	345		402		(14)	(8)
			Worldwide	$	802	$	1,124	(29)	(26)

4344


(MILLIONS)	(MILLIONS)					Revenue					% Change						(MILLIONS)							Revenue							% Change
Product	Product	Period	Global Revenues		Region	July 4, 2021		June 28, 2020			Total		Oper.		Operational Results Commentary		Product	Period		Global Revenues	Region			July 3, 2022				July 4, 2021			Total		Oper.		Operational Results Commentary
Xeljanz		QTD	$586 Down 9% (operationally)		U.S.	$	390	$	458		(15)				QTD decline driven by the U.S., despite 2% year-over-year growth in U.S. prescription volume, reflecting an unfavorable change in channel mix toward lower-priced channels and continued investments to improve formulary positioning and unlock access to additional patient lives, as well as a negative impact on new patient starts resulting from an ongoing review by the FDA of safety data from the post-marketing ORAL Surveillance study of Xeljanz in subjects with rheumatoid arthritis who were 50 years of age or older and had at least one additional cardiovascular risk factor. This decline was partially offset by operational growth internationally mainly driven by continued uptake in the UC indication in certain developed markets. YTD growth reflects continued uptake in the RA and UC indications in certain international markets, partially offset by the U.S., as described above.
					Int’l.	195		177			10		5
					Worldwide	$	586	$	635		(8)		(9)
		YTD	td,124 Up 2% (operationally)		U.S.	$	722	$	744		(3)
						402		343			17		13
						$	1,124	$	1,086		3		2
Vyndaqel/ Vyndamax		QTD	$501 Up 77% (operationally)		U.S.	$	225	$	145		54				Primarily driven by continued strong uptake of the ATTR-CM indication in developed Europe, the U.S. and Japan.
								131			*
								$	277		81		77
			$	430		$	272			58
						236				*			*
						$	508			88		82
Xtandi	Xtandi					$	266			14				Primarily driven by strong demand across the mCRPC, nmCRPC and mCSPC indications.			Xtandi	QTD		td90 Down 4% (operationally)	U.S.			$	290			$	303		(4)				Decline largely due to channel mix and fluctuating enrollment rates in the Xtandi Patient Assistance Program, partially offset by recent demand growth and an increase in new patient starts across the mCRPC, nmCRPC, and mCSPC indications.
						—				—		Int’l.										—				—				—		—
						$	266			14		14			Worldwide							$	290			$	303			(4)		(4)
						$	475			20								YTD		$558 Down 2% (operationally)	U.S.			$	558			$	570		(2)
						—				—		—										—				—				—		—
						$	475			20		20										$	558			$	570			(2)		(2)
Inlyta	Inlyta					$	132			17				Primarily reflecting increased adoption in the U.S. and developed Europe of combinations of certain immune checkpoint inhibitors and Inlyta for the first-line treatment of patients with advanced RCC.	Inlyta	QTD		td74 Up 11% (operationally)		U.S.		$	162			$	155			5				Growth primarily reflects continued adoption in emerging markets and developed Europe of combinations of certain immune checkpoint inhibitors and Inlyta for the first-line treatment of patients with advanced RCC.
						63				62		53														102				9		20
						$	195			32		29														$	257			6		11
						$	248			20								$	302			$	296					2
						116				63		55										190						8			17
						$	364			34		31										$	486					4			8
Biosimilars	Biosimilars					$	161			*				Primarily driven by recent oncology monoclonal antibody biosimilar launches globally and continued growth from Retacrit in the U.S.	Biosimilars							$	363					10					Growth mainly driven by oncology biosimilars primarily due to strong U.S. growth of Zirabev and Retacrit. In addition, YTD performance was negatively impacted by decreases in Inflectra globally as a result of competitive pressures for certain biosimilars.
						128				52		39										195						(8)			(1)
						$	289			93		88										$	559					4			7
						$	328			*												$	691					21
						250				59		47										398						(13)			(6)
						$	578			88		83										$	1,089					9			11
Hospital						$	830			—				Primarily driven by Pfizer CentreOne, our contract manufacturing operation, reflecting manufacturing of legacy Upjohn products for Viatris under manufacturing and supply agreements, certain BNT162b2 manufacturing activities performed on behalf of BioNTech and remdesivir for Gilead Sciences Inc., as well as growth from recent anti-infective product launches in international markets, partially offset by a decline in U.S. sales of certain sterile injectable products utilized in the intubation and mechanical ventilation of patients being treated for COVID-19 due to high demand for these products in the comparable periods.
						1,032				38		30
						$	1,863			21		17
						$	1,721			1
						2,231				28		22
						$	3,951			16		13

Pfizer CentreOne


(MILLIONS)				Revenue				% Change
Operating Segment	Period	Global Revenues	Region	July 3, 2022		July 4, 2021		Total	Oper.	Operational Results Commentary
PC1	QTD	$317 Down 25% (operationally)	U.S.	$	86	$	136	(36)		Decline primarily driven by lower manufacturing of divested products under manufacturing and supply agreements and lower COVID-19 manufacturing activities performed on behalf of customers, including, with respect to the second quarter, Comirnaty supply to BioNTech.
			Int’l.	230		301		(23)	(20)
			Worldwide	$	317	$	437	(27)	(25)
	YTD	$655 Down 18% (operationally)	U.S.	$	188	$	288	(35)
			Int’l.	467		539		(13)	(10)
			Worldwide	$	655	$	827	(21)	(18)

(a)~~BNT162b2~~Comirnaty includes direct sales and alliance revenues related to sales of the Pfizer-BioNTech COVID-19 vaccine, which are recorded within our Vaccines therapeutic area. It does not include revenues for certain ~~BNT162b2~~Comirnaty-related manufacturing activities performed on behalf of BioNTech, ~~related to the COVID-19 vaccine,~~ which are included in the ~~Pfizer CentreOne~~PC1 contract development and manufacturing ~~operation within~~operation. Revenues related to these manufacturing activities totaled $55 million and $101 million for the ~~Hospital area.~~

~~(b)The U.S. birth rate decline is 4% compared to 2020 levels, according to Demographic Intelligence.~~second quarter and the first six months of 2022, respectively, and $87 million for both the second quarter and the first six months of 2021.

* ~~Calculation is~~Indicates calculation not ~~meaningful or results are equal to or greater than 100%.~~meaningful.

See the Item 1. Business—Patents and Other Intellectual Property Rights section of our ~~2020~~2021 Form 10-K for information regarding the expiration of various patent rights, Note 12 for a discussion of recent developments concerning patent and product litigation relating to certain of the products discussed above, and Note ~~13B~~13C for information regarding the primary indications or class of the selected products discussed.

Product Developments

A comprehensive update of Pfizer’s development pipeline was published as of July 28, ~~2021~~2022 and is available at www.pfizer.com/science/drug-product-pipeline. It includes an overview of our research and a list of compounds in development with targeted indication and phase of development, as well as mechanism of action for some candidates in Phase 1 and all candidates from Phase 2 through registration.

The following provides information as of the date of this filing about significant marketing application-related regulatory actions by, and filings pending with, the FDA and regulatory authorities in the EU and Japan.

The table below includes only approvals for products that have occurred in the last twelve months and generally does not include approvals that may have occurred prior to that time. The table includes filings with regulatory decisions pending (even if the filing occurred outside of the last twelve-month period).

PRODUCT

DISEASE AREA

APPROVED/FILED*

U.S.

JAPAN

Comirnaty/BNT162b2

~~PF-07302048 (COVID-19 Vaccine)~~(PF-07302048)(a)

Immunization to prevent COVID-19 (16 years of age and older)

~~EUA~~BLA

~~Dec.~~Aug.

~~2020~~2021

CMA

Dec.

2020

Approved

Feb.

2021

Immunization to prevent COVID-19 (12-15 years of age)

~~EUA~~sBLA

~~May~~July

~~2021~~2022

CMA

May

2021

Approved

May

2021

Immunization to prevent COVID-19 (booster)

~~Bavencio~~EUA

~~(avelumab)(b)~~Sep.

2021

~~First-line maintenance urothelial cancer~~CMA

Oct.

2021

Approved

Nov.

2021

Immunization to prevent COVID-19 (5-11 years of age)

EUA

Oct.

2021

CMA

Nov.

2021

Approved

Jan.

~~2021~~

~~Approved~~

~~Feb.~~

~~2021~~2022

Nyvepria
(pegfilgrastim-apgf)Immunization to prevent COVID-19 (6 months through 4 years of age)

~~Neutropenia in patients undergoing cancer chemotherapy (biosimilar)~~

EUA

June

2022

~~Approved~~Filed

~~Nov.~~July

~~2020~~

~~Braftovi (encorafenib)(c)~~2022

~~Second or third-line BRAFv600E-mutant mCRC (combination with Erbitux~~® ~~(cetuximab))~~

~~Approved~~Filed

~~Nov.~~July

~~2020~~2022

~~Braftovi (encorafenib) and Mektovi (binimetinib)~~Cibinqo
(abrocitinib)~~(c)~~

~~Second or third-line BRAFV600E-mutant mCRC (combination with Erbitux~~® ~~(cetuximab))~~

~~Approved~~

~~Nov.~~

~~2020~~

~~Xtandi~~

~~(enzalutamide)(d)~~

~~mCSPC~~

~~Approved~~

~~April~~

~~2021~~

~~abrocitinib (PF-04965842)(e)~~

Atopic dermatitis

~~Filed~~Approved

~~Oct.~~Jan.

~~2020~~2022

~~Filed~~

~~Oct.~~

~~2020~~

~~Filed~~Approved

Dec.

~~2020~~2021

Approved

Sep.

2021

~~Infliximab Pfizer (infliximab)~~

~~Ankylosing spondylitis (biosimilar)~~

~~Approved~~

~~Oct.~~

~~2020~~

~~Bevacizumab Pfizer (bevacizumab)~~

~~NSCLC (biosimilar)~~

~~Approved~~

~~Sept.~~

~~2020~~

~~tanezumab(f)~~

~~Chronic pain due to moderate-to-severe osteoarthritis~~

~~Filed~~

~~March~~

~~2020~~

~~Filed~~

~~March~~

~~2020~~

~~Filed~~

~~Aug.~~

~~2020~~

Xeljanz

(tofacitinib)~~(e)~~

Ankylosing spondylitis

~~Filed~~Approved

~~Aug.~~Dec.

~~2020~~2021

~~Filed~~Approved

~~Feb.~~Nov.

2021

Myfembree

(relugolix fixed dose combination)~~(g)~~(b)

Uterine fibroids (combination with estradiol and norethindrone acetate)

Approved

May

2021

Endometriosis (combination with estradiol and norethindrone acetate)

~~Lorbrena~~Approved

Aug.

2022

Lorbrena/Lorviqua

(lorlatinib)

~~First- line~~First-line ALK-positive NSCLC

Approved

Mar.

2021

~~Filed~~Approved

~~Feb.~~Jan.

~~2021~~2022

~~Filed~~Approved

~~Dec.~~Nov.

~~2020~~2021

~~somatrogon~~Ngenla

~~(PF-06836922)~~(somatrogon)~~(h)~~(c)

Pediatric growth hormone deficiency

Filed

Jan.

2021

~~Filed~~Approved

Feb.

~~2021~~2022

~~Filed~~Approved

Jan.

~~2021~~2022

Prevnar 2020/Apexxnar

(Vaccine)~~(i)~~(d)

Immunization to prevent invasive and non-invasive pneumococcal infections (adults)

Approved

June

2021

~~Filed~~Approved

Feb.

~~2021~~2022

TicoVac
(Vaccine)

Immunization to prevent tick-borne encephalitis

~~Filed~~Approved

~~Feb.~~Aug.

2021

Paxlovid(e)(nirmatrelvir [PF-07321332]; ritonavir)

COVID-19 infection (high risk population)

EUA

Dec.

2021

CMA

Jan.

2022

Approved

Feb.

2022

Vydura

(rimegepant)(f)

Acute migraine

Approved

Apr.

2022

Migraine prevention

Approved

Apr.

2022

*For the U.S., the filing date is the date on which the FDA accepted our submission. For the EU, the filing date is the date on which the EMA validated our submission.

(a)Being developed in collaboration with BioNTech. ~~In July 2021,~~Comirnaty/BNT162b2 is approved by the FDA for individuals 12 years and older (30-µg, 2-dose primary series) and is FDA authorized to provide: (i) a 3-µg, 3-dose primary series to individuals 6 months through 4 years of age, (ii) a 10-µg, 2-dose primary series to individuals 5-11 years of age, (iii) a third 10-µg primary series dose to individuals 5-11 years of age with certain kinds of immunocompromise, (iv) a 30-µg, 2-dose primary series to individuals 12 years of age and older, (iv) a third 30-µg primary series dose to individuals 12 years of age and older with certain kinds of immunocompromise, (v) a single 10-µg booster dose to individuals 5-11 years of age who have completed a primary series with Comirnaty/BNT162b2, (vi) a 30-µg, first booster dose to individuals 12 years of age and older who have completed a primary series with Comirnaty/BNT162b2, (vii) a 30-µg, first booster dose to individuals 18 years of age and older who have completed primary vaccination with a different authorized or approved COVID-19 vaccine (booster schedule based on labeling information of vaccine used for primary series), (viii) a 30-µg, second booster dose to individuals 50 years of age and older who have received a first booster dose of any authorized or approved COVID-19 vaccine and (ix) a 30-µg, second booster dose to individuals 12 years of age and older with certain kinds of immunocompromise and who have received a first booster dose of any authorized or approved COVID-19 vaccine. Comirnaty/BNT162b2 has been granted ~~Priority Review designation for~~CMA by the ~~BLA for PF-07302048 or BNT162b2~~EC to prevent COVID-19 in people aged 5 years and older. The vaccine is administered as a 2-dose series, 3 weeks apart. Adults and adolescents from the age of 12 are given 30-µg per dose; children aged 5 to 11 years are given 10-µg per dose. In addition, the CMA has been expanded to include a booster dose (third dose) at least 3 months after the second dose in individuals 1612 years of age and older. ~~The PDUFA goal date~~A third primary course dose may be administered at least 28 days after the second dose to people aged 5 years and older with a severely weakened immune system. In July 2022, Pfizer and BioNTech completed a submission to the EMA for ~~a decision~~an Omicron-adapted bivalent COVID-19 vaccine candidate, based on the BA.1 sub-lineage, for individuals 12 years of age and older. In Japan, Comirnaty/BNT162b2 has been granted exceptional approval by the ~~FDA~~Ministry of Health, Labour and Welfare to prevent infections caused by SARS-CoV-2 in people aged 5 years and older. The vaccine is administered as a 2-dose series, 3 weeks apart. Adults and adolescents from the age of 12 are given 30-µg per dose; children aged 5 to 11 years are given 10-µg per dose. In addition, the exceptional approval has been expanded to include a booster dose (third dose) at least 5 months after the second dose in ~~January 2022.~~individuals 12 years of age and older.

(b)Being developed in collaboration with ~~Merck KGaA, Germany.~~Myovant. In June 2022, the FDA accepted for review a sNDA for Myfembree (relugolix 40 mg, estradiol 1 mg, and norethindrone acetate 0.5 mg) proposing updates to Myfembree’s U.S. Prescribing Information based on safety and efficacy data from the Phase 3 LIBERTY randomized withdrawal study in premenopausal women with heavy menstrual bleeding associated with uterine fibroids for up to two years. The PDUFA goal date for this sNDA is January 29, 2023.

(c)Being developed in collaboration with OPKO. In January 2022, Pfizer and OPKO received a Complete Response Letter (CRL) from the FDA for the BLA for somatrogon. Discussions are ongoing with the FDA regarding the CRL and how to best address their concerns.

(d)In October 2021, the CDC’s ACIP voted to recommend Prevnar 20 for routine use in adults. Specifically, the ACIP voted to recommend the following: (i) adults 65 years of age or older who have not previously received a pneumococcal conjugate vaccine or whose previous vaccination history is unknown should receive a pneumococcal conjugate vaccine (either pneumococcal 20-valent conjugate vaccine (PCV20) or pneumococcal 15-valent conjugate vaccine (PCV15)). If PCV15 is used, this should be followed by a dose of pneumococcal polysaccharide vaccine (PPSV23); and (ii) adults aged 19 years of age or older with certain underlying medical conditions or other risk factors who have not previously received a pneumococcal conjugate vaccine or whose previous vaccination history is unknown should receive a pneumococcal conjugate vaccine (either PCV20 or PCV15). If PCV15 is used, this should be followed by a dose of PPSV23. The recommendations were published in the Morbidity and Mortality Weekly Report on January 28, 2022. The publication also notes “for adults who have received pneumococcal conjugate vaccine (PCV13) but have not completed their recommended pneumococcal vaccine series with PPSV23, one dose of Prevnar 20 may be used if PPSV23 is not available.”

(e)In January 2022, the EMA approved the CMA of Paxlovid for treating COVID-19 in adults who do not require supplemental oxygen and who are at increased risk of the disease becoming severe. In June 2022, we announced the submission of an NDA to the FDA for approval of Paxlovid for the treatment of COVID-19 in both vaccinated and unvaccinated individuals who are at high risk for progression to severe illness from COVID-19.

(f)Under a commercialization arrangement with Biohaven.

In December 2021, in light of the results from the completed required postmarketing safety study of Xeljanz, ORAL Surveillance (A3921133), the U.S. label for Xeljanz was revised. In addition, at the request of the EC, the PRAC of the EMA has adopted a referral procedure under Article 20 of Regulation (EC) No 726/2004 to assess safety information relating to oral JAK inhibitors authorized for inflammatory diseases, including Xeljanz and Cibinqo, which is ongoing. For additional information, see Item 1A. Risk Factors—Post-Authorization/Approval Data andthe Product Development sections of our 2021 Form 10-K.

In China, the following products received regulatory approvals in the last twelve months: Cresemba for fungal infection and Besponsa for second line acute lymphoblastic leukemia, both in December 2021; Paxlovid for COVID-19 infection in February 2022; Cibinqo for atopic dermatitis in April 2022; Lorbrena for non-small cell lung cancer (first line and second line therapy) in April 2022.

The following provides information about additional indications and new drug candidates in late-stage development:


LATE-STAGE CLINICAL PROGRAMS FOR ADDITIONAL USES AND DOSAGE FORMS FOR IN-LINE AND IN-REGISTRATION PRODUCTS	PRODUCT/CANDIDATE	PROPOSED DISEASE AREA
	Ibrance (palbociclib)(a)	ER+/HER2+ metastatic breast cancer
	Xtandi (enzalutamide)(b)	Non-metastatic high-risk castration sensitive prostate cancer
	Talzenna (talazoparib)	Combination with Xtandi (enzalutamide) for first-line mCRPC
		Combination with Xtandi (enzalutamide) for DNA Damage Repair (DDR)-deficient mCSPC
	PF-06482077 (Vaccine)	Immunization to prevent invasive and non-invasive pneumococcal infections (pediatric)
	somatrogon (PF-06836922)(c)	Adult growth hormone deficiency
	Braftovi (encorafenib) and Erbitux® (cetuximab)(d)	First-line BRAFv600E-mutant mCRC
	Myfembree (relugolix fixed dose combination)(e)	Combination with estradiol and norethindrone acetate for contraceptive efficacy
	Braftovi (encorafenib) and Mektovi (binimetinib) and Keytruda® (pembrolizumab)(f)	BRAFv600E-mutant metastatic or unresectable locally advanced melanoma
	Paxlovid (nirmatrelvir [PF-07321332]; ritonavir)	COVID-19 infection (pediatric)
NEW DRUG CANDIDATES IN LATE-STAGE DEVELOPMENT	aztreonam-avibactam (PF-06947387)	Treatment of infections caused by Gram-negative bacteria
	fidanacogene elaparvovec (PF-06838435)(g)	Hemophilia B
	giroctocogene fitelparvovec (PF-07055480)(h)	Hemophilia A
	PF-06425090 (Vaccine)(i)	Immunization to prevent primary clostridioides difficile infection
	PF-06886992 (Vaccine)	Immunization to prevent serogroups meningococcal infection (adolescent and young adults)
	PF-06928316 (Vaccine)	Immunization to prevent respiratory syncytial virus infection (maternal)
		Immunization to prevent respiratory syncytial virus infection (older adults)
	ritlecitinib (PF-06651600)	Alopecia areata
	sasanlimab (PF-06801591)	Combination with Bacillus Calmette-Guerin for non-muscle-invasive bladder cancer
	fordadistrogene movaparvovec (PF-06939926)	Duchenne muscular dystrophy
	marstacimab (PF-06741086)	Hemophilia
	elranatamab (PF-06863135)(j)	Multiple myeloma triple-class refractory
		Multiple myeloma double-class exposed
		Newly diagnosed multiple myeloma
	Omicron-based mRNA vaccine(k)	Immunization to prevent COVID-19 (adults)
	Etrasimod (PF-07915503)	Ulcerative colitis (moderately to severely active)
	VLA15 (PF-07307405)(l)	Immunization to prevent Lyme Disease

(a)Being developed in collaboration with The Alliance Foundation Trials, LLC.

(b)Being developed in collaboration with Astellas.

(c)Being developed in collaboration with OPKO.

(d)Erbitux® is a registered trademark of ImClone LLC. In the EU, we are developing in collaboration with the Pierre Fabre Group. In Japan, we are developing in collaboration with Ono Pharmaceutical Co., Ltd.

~~(d)Being developed in collaboration with Astellas.~~

(e)The FDA has notified the company that it will not meet the PDUFA goal dates for the New Drug Application for abrocitinib and the supplemental New Drug Application for Xeljanz/Xeljanz XR (tofacitinib). The FDA cited its ongoing review of Pfizer's post-marketing safety study, ORAL Surveillance, evaluating tofacitinib in rheumatoid arthritis patients, as a factor for the extensions.

~~(f)~~Being developed in collaboration with Lilly. In March 2021, the FDA Joint Arthritis Advisory Committee and Drug Safety and Risk Management Advisory Committee on tanezumab resulted in a 19:1 against vote on whether the proposed risk evaluation and mitigation strategy (REMS) for tanezumab will ensure benefits outweigh risks.

~~(g)~~Being developed in collaboration with Myovant.

~~(h)Being developed in collaboration with OPKO.~~

~~(i)The CDC’s ACIP is expected to meet in October 2021 to discuss and update recommendations on the safe and appropriate use of pneumococcal vaccines in adults.~~

~~The following provides information about additional indications and new drug candidates in late-stage development:~~


	~~PRODUCT/CANDIDATE~~	~~PROPOSED DISEASE AREA~~
~~LATE-STAGE CLINICAL PROGRAMS FOR ADDITIONAL USES AND DOSAGE FORMS~~ ~~FOR IN-LINE AND IN-REGISTRATION PRODUCTS~~	~~Bavencio (avelumab)(a)~~	~~First-line NSCLC~~
	~~Ibrance (palbociclib)(b)~~	~~ER+/HER2+ metastatic breast cancer~~
	~~Xtandi (enzalutamide)(c)~~	~~Non-metastatic high-risk castration sensitive prostate cancer~~
	~~Talzenna (talazoparib)~~	~~Combination with Xtandi (enzalutamide) for first-line mCRPC~~
		~~Combination with Xtandi (enzalutamide) for DNA Damage Repair (DDR)-deficient mCSPC~~
	~~PF-06482077 (Vaccine)~~	~~Invasive and non-invasive pneumococcal infections (pediatric)~~
	~~somatrogon (PF-06836922)(d)~~	~~Adult growth hormone deficiency~~
	~~tanezumab(e)~~	~~Cancer pain~~
	~~Braftovi (encorafenib) and Erbitux~~® ~~(cetuximab)(f)~~	~~First-line BRAFv600E-mutant mCRC~~
	~~Relugolix fixed dose combination(g)~~	~~Combination with estradiol and norethindrone acetate for endometriosis~~
		~~Combination with estradiol and norethindrone acetate for contraceptive efficacy~~
	~~Braftovi (encorafenib) and Mektovi (binimetinib) and Keytruda~~® ~~(pembrolizumab)(h)~~	~~BRAFv600E-mutant metastatic or unresectable locally advanced melanoma~~
	~~PF-07302048/BNT162b2 (Pfizer/BioNTech COVID-19 vaccine)(i)~~	~~COVID-19 Infection (children 2 to 11 years of age)~~
		~~COVID-19 Infection (infants 6 months to <24 months)~~
	~~PF-07302048/BNT162b2 booster(i)~~	~~COVID-19 Infection~~

~~NEW DRUG CANDIDATES IN LATE-STAGE DEVELOPMENT~~	aztreonam-avibactam (PF-06947387)	~~Treatment of infections caused by Gram-negative bacteria~~
	~~fidanacogene elaparvovec (PF-06838435)(j)~~	~~Hemophilia B~~
	~~giroctocogene fitelparvovec~~ ~~(PF-07055480)(k)~~	~~Hemophilia A~~
	~~PF-06425090 (Vaccine)~~	~~Primary clostridioides difficile infection~~
	~~PF-06886992 (Vaccine)~~	~~Serogroups meningococcal (adolescent and young adults)~~
	~~PF-06928316 (Vaccine)~~	~~Respiratory syncytial virus infection (maternal)~~
	~~PF-07265803~~	~~Dilated cardiomyopathy due to Lamin A/C gene mutation~~
	~~ritlecitinib (PF-06651600)~~	~~Alopecia areata~~
	~~sasanlimab (PF-06801591)~~	~~Combination with Bacillus Calmette-Guerin for non-muscle-invasive bladder cancer~~
	~~fordadistrogene movaparvovec (PF-06939926)~~	~~Duchenne muscular dystrophy~~
	~~marstacimab (PF-06741086)~~	~~Hemophilia~~

~~(a)Being developed in collaboration with Merck KGaA, Germany.~~

~~(b)Being developed in collaboration with the Alliance Foundation Trial.~~

~~(c)Being developed in collaboration with Astellas.~~

~~(d)Being developed in collaboration with OPKO.~~

~~(e)Being developed in collaboration with Lilly.~~

(f)~~Erbitux~~Keytruda® is a registered trademark of ~~ImClone LLC.~~Merck Sharp & Dohme Corp. In the EU, we are developing in collaboration with the Pierre Fabre Group. In Japan, we are developing in collaboration with Ono Pharmaceutical Co., Ltd.

(g)Being developed in collaboration with ~~Myovant.~~

~~(h)Keytruda~~® ~~is a registered trademark of Merck Sharp & Dohme Corp.~~

~~(i)Being developed in collaboration with BioNTech.~~

~~(j)Being developed in collaboration with~~ Spark Therapeutics, Inc.

~~(k)~~(h)Being developed in collaboration with Sangamo Therapeutics, Inc.

(i)In March 2022, Pfizer announced results from the CLOVER trial (Clostridium difficile Vaccine Efficacy Trial), a pivotal Phase 3 study evaluating its Clostridioides difficile (C. difficile) vaccine candidate (PF-06425090) in the prevention of C. difficile infection (CDI). Initial analyses of two protocol defined secondary endpoints indicated a favorable benefit in reducing CDI severity and 100% vaccine efficacy in preventing medically attended CDI, although the trial did not meet its pre-specified primary endpoint of prevention of primary CDI. Safety reviews indicated that the investigational vaccine was safe and well tolerated. Pfizer is evaluating next steps for the program in coordination with regulatory agencies.

(j)Multiple myeloma triple-class refractory is currently in a Phase 2 registration-enabling study.

(k)Being developed in collaboration with BioNTech.

(l)Being developed in collaboration with Valneva SE.

In April 2022, Pfizer shared top-line results from the Paxlovid Phase 2/3 EPIC-PEP (Evaluation of Protease Inhibition for COVID-19 in Post-Exposure Prophylaxis) study in adults living in the same household as someone with a confirmed COVID-19 infection observing a risk reduction of 32% and 37% in adults who received Paxlovid for five and ten days, respectively, to prevent infection. These results, however, were not statistically significant and, as such, the primary endpoint of reducing the risk of confirmed and symptomatic COVID-19 infection in adults who had been exposed to the virus through a household contact was not met. In June 2022, an updated analysis from 1,153 patients enrolled in Paxlovid EPIC-SR (Evaluation of Protease Inhibition for COVID-19 in Standard Risk Patients) through December 2021 showed a non-significant 51% relative risk reduction (secondary endpoint, treatment arm: 5/576; placebo: 10/569). The primary endpoint in the EPIC-SR study also was not met. A sub-group analysis of 721 vaccinated adults with at least one risk factor for progression to severe COVID-19 showed a non-significant 57% relative risk reduction in hospitalization or death (treatment arm: 3/361; placebo: 7/360). Additional analyses of secondary endpoint data showed that treatment with Paxlovid resulted in a nominally significant 62% decrease in COVID-19-related medical visits per day across all patients, relative to placebo (p=0.0228). Types of medical visits included trips to the emergency room, urgent care, hospital admissions, and telehealth calls, among others. An additional pre-specified descriptive analysis showed a 72% reduction in the average number of days in hospital among Paxlovid-treated patients versus placebo in EPIC-SR. Other not statistically significant findings included no Paxlovid-treated patients admitted to the intensive care unit, compared to three in the placebo group, and no deaths in patients who received Paxlovid with one death in the placebo group. Due to a very low rate of hospitalization or death observed in the standard-risk patient population, Pfizer decided to cease enrollment into EPIC-SR and include available data in the NDA submission to the FDA to support the use of Paxlovid in appropriate individuals at high risk of progression to severe illness. For additional information on Paxlovid, please see the COVID-19 Pandemic section of this MD&A.

In August 2022, we announced that an interim futility analysis of the global Phase 3 trial, REALM-DCM, designed to evaluate the efficacy and safety of PF-07265803 in patients with symptomatic dilated cardiomyopathy (DCM) due to a mutation of the gene encoding the lamin A/C protein (LMNA), indicated the trial is unlikely to meet its primary endpoint upon completion. Based on these results, the Phase 3 trial and further development of PF-07265803 will be discontinued. This decision is not based on safety concerns.

For additional information about our R&D organization, see the Item 1. Business—Research and Development section of our ~~2020~~2021 Form 10-K.

COSTS AND EXPENSES

																										Costs and expenses follow:
		Three Months Ended							Six Months Ended								Three Months Ended							Six Months Ended
(MILLIONS)	(MILLIONS)	July 4, 2021			June 28, 2020			% Change	July 4, 2021			June 28, 2020			% Change	(MILLIONS)	July 3, 2022			July 4, 2021			% Change	July 3, 2022			July 4, 2021			% Change
Cost of sales	Cost of sales	$	7,049		$	1,826		*	$	11,259		$	3,766		*	Cost of sales	$	8,648		$	6,996		24	$	18,632		$	11,153		67
Percentage of Revenues	Percentage of Revenues	37.1		%	18.5		%		33.6		%	18.9		%		Percentage of Revenues	31.2		%	37.0		%		34.9		%	33.4		%
Selling, informational and administrative expenses	Selling, informational and administrative expenses	2,928			2,659			10	5,712			5,200			10	Selling, informational and administrative expenses	3,048			2,923			4	5,642			5,700			(1)
Research and development expenses	Research and development expenses	2,459			2,078			18	4,473			3,750			19	Research and development expenses	2,815			2,239			26	5,116			4,233			21
Acquired in-process research and development expenses																Acquired in-process research and development expenses	1			219			(100)	356			238			50
Amortization of intangible assets	Amortization of intangible assets	931			869			7	1,802			1,718			5	Amortization of intangible assets	822			917			(10)	1,657			1,776			(7)
Restructuring charges and certain acquisition-related costs	Restructuring charges and certain acquisition-related costs	(1)			360			*	22			414			(95)	Restructuring charges and certain acquisition-related costs	189			(1)			*	381			21			*
Other (income)/deductions—net	Other (income)/deductions—net	(998)			(955)			5	(2,001)			(764)			*	Other (income)/deductions—net	772			(1,343)			*	1,122			(2,347)			*
* Indicates calculation not meaningful or results are equal to or greater than 100%.
* Indicates calculation not meaningful.																* Indicates calculation not meaningful.

Cost of Sales

Cost of sales increased ~~$5.2~~$1.7 billion in the second quarter and $7.5 billion in the first six months of ~~2021,~~2022, primarily due to:

•the impact of ~~BNT162b2,~~Comirnaty, which includes a charge for the 50% gross profit split with BioNTech and applicable royalty expenses;

•the ~~unfavorable~~impact of Paxlovid; and

•a $450 million write-off of inventory related to COVID-19 products that have exceeded or are expected to exceed their approved shelf-lives prior to being used,

partially offset by:

•the favorable impact of foreign exchange ~~and hedging activity on intercompany inventory; and~~rates.

•The decrease in ~~increased~~Cost of sales ~~volumes~~ as a percentage of ~~other~~revenues in the second quarter of 2022 was primarily due to favorable changes in sales mix, including significant sales of Paxlovid, as well as the favorable impact of foreign exchange rates, and an increase in alliance revenues, which have no associated cost of sales, partially offset by the impact of Comirnaty and the inventory write-offs related to COVID-19 products ~~driven mostly by Pfizer CentreOne.~~as discussed above.

The increase in Cost of sales as a percentage of revenues in the ~~second quarter and in the~~ first six months of ~~2021, compared to the same periods in 2020,~~2022 was primarily due to ~~all~~the impact of Comirnaty and the ~~factors~~inventory write-off related to COVID-19 products as discussed above, partially offset by favorable changes in sales mix, including significant sales of Paxlovid, as well as the favorable impact of foreign exchange rates, and an increase in alliance revenues, which have no associated cost of sales.

Selling, Informational and Administrative (SI&A) Expenses

SI&A expenses increased ~~$269~~$125 million in the second quarter of ~~2021,~~2022, mostly due to:

•increased ~~product-related~~ spending ~~across multiple therapeutic categories~~on Paxlovid and ~~other costs associated with~~Comirnaty and a ~~return to more normal activity levels compared to the prior-year quarter;~~higher provision for healthcare reform fees based on sales of Paxlovid and

•~~the unfavorable impact of foreign exchange,~~ Comirnaty,

partially offset by:

•~~lower spending for corporate enabling functions; and~~

•~~lower spending on Chantix following the loss~~a decrease in our liability to be paid to participants of ~~patent protection in the U.S. in November 2020.~~our supplemental savings plan.

SI&A expenses ~~increased $511~~decreased $59 million in the first six months of ~~2021, mostly~~2022, mainly due to:

•~~increased product-related spending across multiple therapeutic categories and other costs associated with~~ a ~~return to more normal activity levels compared to the prior-year quarter;~~

•~~an increase to expense resulting from the increase~~decrease in our liability to be paid to participants of our supplemental savings plan;

•the ~~unfavorable~~favorable impact of foreign exchange; and

•~~costs related to BNT162b2, driven by~~lower spending across the Inflammation & Immunology and Internal Medicine therapeutic areas,

partially offset by:

•increased spending on Paxlovid and Comirnaty and a higher provision for healthcare reform fees based on sales

~~partially offset by:~~

•~~lower spending on Chantix following the loss~~ of ~~patent protection in the U.S. in November 2020.~~Paxlovid and Comirnaty.

Research and Development (R&D) Expenses

R&D expenses increased ~~$381~~$576 million in the second quarter and ~~$723~~$883 million in the first six months of ~~2021,~~2022, primarily ~~due to:~~

•~~incremental~~driven by increased investments across multiple ~~therapeutic categories,~~late-stage clinical programs, including ~~additional spending~~development costs and at-risk manufacturing related to ~~development of BNT162b2~~programs to prevent and ~~therapeutics to help~~ treat COVID-19, as well as costs to develop recently acquired assets.

•~~a charge for~~Acquired In-Process Research and Development (IPR&D) Expenses

Acquired IPR&D ~~related to an asset~~expenses decreased $218 million in the second quarter of 2022, primarily reflecting the acquisition ~~completed~~of Amplyx Pharmaceuticals Inc. (Amplyx) in the second quarter of 2021, and no transactions giving rise to acquired IPR&D expenses in the second quarter of 2022.

Acquired IPR&D expenses increased $118 million in the first six months of 2022, largely due to:

•an upfront payment to Biohaven and a premium paid on our equity investment in Biohaven; and

•a premium paid on our equity investment in BioNTech to develop a potential mRNA vaccine against shingles,

partially offset by:

•the ~~non-recurrence~~acquisition of ~~upfront payments to Valneva and BioNTech.~~Amplyx in the second quarter of 2021.

Amortization of Intangible Assets

Amortization of intangible assets ~~increased $62~~decreased $95 million in the second quarter and ~~$85~~$119 million in the first six months of ~~2021,~~2022, primarily as a result of lower amortization of ~~capitalized BNT162b2~~Comirnaty sales milestones to BioNTech.

4749

Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives

Transforming to a More Focused Company Program

––For a description of our program, as well as the anticipated and actual costs, see Note 3. The program savings discussed below may be rounded and represent approximations. In connection with ~~the costs primarily related to the~~restructuring our corporate enabling functions, ~~initiatives,~~ we expect gross cost savings of $1.0 billion, or net cost savings, excluding merit and inflation growth and certain real estate cost increases, of $700 million, to be achieved primarily from 2021 through 2022. In connection with ~~manufacturing network optimization, including legacy cost reduction initiatives,~~transforming our marketing strategy, we expect net cost savings of ~~$300~~$1.4 billion, to be achieved primarily from 2022 through 2024. In connection with manufacturing network optimization, we expect net cost savings of $550 million to be achieved primarily from 2020 through ~~2022.~~2023.

Certain qualifying costs for this program were recorded in the first two quarters of ~~2021~~2022 and ~~2020~~2021 and are reflected as Certain Significant Items and excluded from our non-GAAP measure of Adjusted Income. See the Non-GAAP Financial Measure: Adjusted Income section of this MD&A.

In addition to this program, we continuously monitor our operations for cost reduction and/or productivity opportunities, especially in light of the losses of exclusivity and the expiration of collaborative arrangements for various products.

Other (Income)/Deductions—Net

~~Other income—~~The period-over-period changes were primarily driven by:

•net ~~increased $43 million~~losses on equity securities in the second quarter and first six months of ~~2021, mainly due to:~~

•~~a favorable impact of foreign exchange;~~

•~~higher transition services agreement income;~~

•~~higher~~2022 versus net gains ~~on equity securities;~~

•~~higher net gains on asset disposals;~~

•~~lower interest expense;~~recognized in the second quarter and first six months of 2021; and

•~~higher~~net periodic benefit costs recorded in the second quarter and first six months of 2022 versus net periodic benefit credits ~~other than service costs related to pension and postretirement plans,~~

~~partially offset by:~~

•~~higher legal charges; and~~

•~~lower income from collaborations.~~

~~Other income—net increased $1.2 billion~~recorded in the second quarter and first six months of ~~2021, mainly due to:~~

•~~higher net gains on equity securities;~~

•~~higher net periodic benefit credits other than service costs related to pension and postretirement plans;~~

•~~higher transition services agreement income;~~

•~~higher Consumer Healthcare JV equity method income;~~

•~~lower interest expense;~~

•~~higher net gains on asset disposals; and~~

•~~higher royalty income,~~

~~partially offset by:~~

•~~higher legal charges.~~2021.

See Note 4 for additional information.

~~PROVISION~~PROVISION/(BENEFIT) FOR TAXES ON INCOME


		Three Months Ended							Six Months Ended								Three Months Ended							Six Months Ended
(MILLIONS)	(MILLIONS)	July 4, 2021			June 28, 2020			% Change	July 4, 2021			June 28, 2020			% Change	(MILLIONS)	July 3, 2022			July 4, 2021			% Change	July 3, 2022			July 4, 2021			% Change
Provision for taxes on income		$	1,043		$	422		*	$	1,849		$	782		*
Provision/(benefit) for taxes on income																Provision/(benefit) for taxes on income	$	1,570		$	1,123		40	$	2,742		$	1,931		42
Effective tax rate on continuing operations	Effective tax rate on continuing operations	15.8		%	14.0		%		15.0		%	13.3		%		Effective tax rate on continuing operations	13.7		%	16.2		%		13.4		%	15.3		%
* Indicates calculation not meaningful or results are equal to or greater than 100%.

For information about our effective tax rate and the events and circumstances contributing to the changes between periods, as well as details about discrete elements that impacted our tax provisions, see Note 5.

DISCONTINUED OPERATIONS

For information about our discontinued operations, see Note 2A2B.

NON-GAAP FINANCIAL MEASURE: ADJUSTED INCOME

Adjusted income is an alternative measure of performance used by management to evaluate our overall performance ~~in conjunction with other~~as a supplement to our GAAP reported performance measures. As such, we believe that investors’ understanding of our performance is enhanced by disclosing this measure. We use Adjusted income, certain components of Adjusted income and Adjusted diluted EPS to present the results of our major operations––the discovery, development, manufacture, marketing, sale and distribution of biopharmaceutical products worldwide––prior to considering certain income statement elements as follows:

Measure

Definition

~~Illustrative Use~~Relevance of Metrics to Our Business Performance

Adjusted income

Net income attributable to Pfizer Inc. common shareholders(a) before the impact of ~~purchase accounting for acquisitions,~~amortization of intangible assets, certain acquisition-related items, discontinued operations and certain significant items

•~~Monthly managerial analysis of our operating results~~Provides investors useful information to:

◦evaluate the normal recurring operational activities, and ~~our annual budgets are prepared using these non-GAAP measures~~their components, on a comparable year-over-year basis

◦assist in modeling expected future performance on a normalized basis

•~~Senior management’s compensation is determined, in part, using these non-GAAP measures~~Provides investors insight into the way we manage our budgeting and forecasting, how we evaluate and manage our recurring operations and how we reward and compensate our senior management(b)

Adjusted cost of sales, Adjusted selling, informational and administrative expenses, Adjusted research and development expenses ~~Adjusted amortization of intangible assets~~ and Adjusted other (income)/deductions––net

Cost of sales, Selling, informational and administrative expenses, Research and development expenses ~~Amortization of intangible assets~~ and Other (income)/deductions––net (a), each before the impact of ~~purchase accounting for acquisitions,~~amortization of intangible assets, certain acquisition-related items, discontinued operations and certain significant items, which are components of the Adjusted income measure

Adjusted diluted EPS

EPS attributable to Pfizer Inc. common shareholders––diluted(a) before the impact of ~~purchase accounting for acquisitions,~~amortization of intangible assets, certain acquisition-related items, discontinued operations and certain significant items

(a)Most directly comparable GAAP measure.

(b)The short-term incentive plans for substantially all non-sales-force employees worldwide are funded from a pool based on our performance, measured in significant part byversus three budgeted metrics, one of which is Adjusted diluted EPS (as defined for annual incentive compensation purposes), which is derived from Adjusted income and accounts for 40% of the bonus pool ~~funding.~~funding tied to financial performance. Additionally, the payout for ~~Performance Share Awards~~performance share awards is determined in part by Adjusted net income, which is derived from Adjusted income. ~~Starting with~~Beginning in the ~~2020~~first quarter of 2022, we no longer exclude any expenses for acquired IPR&D from our non-GAAP Adjusted results but we continue to exclude certain of these expenses for our financial results for annual incentive compensation purposes. The bonus pool funding, which is largely based on financial performance, ~~year and consistent with shareholder feedback received in 2019, the Compensation Committee of the BOD approved adding an~~is adjusted by our R&D pipeline ~~achievement factor to the existing short-term incentive financial metrics.~~performance, as measured by four metrics, and performance against certain of our environmental, social and governance (ESG) metrics, and may be further modified by our Compensation Committee’s assessment of other factors.

Adjusted income and its components and Adjusted diluted EPS are non-GAAP financial measures that have no standardized meaning prescribed by GAAP and, therefore, are limited in their usefulness to investors. Because of their non-standardized definitions, they may not be comparable to the calculation of similar measures of other companies and are presented ~~solely~~ to permit investors to more fully understand how management assesses performance. A limitation of these measures is that they provide a view of our operations without including all events during a period, and do not provide a comparable view of our performance to peers. These measures are not, and should not be viewed as, substitutes for their most directly comparable GAAP measures of Net income attributable to Pfizer Inc. common shareholders, components of Net income attributable to Pfizer Inc. common shareholders and EPS attributable to Pfizer Inc. common shareholders—diluted, respectively. ~~See the accompanying reconciliations of certain GAAP reported to non-GAAP adjusted information for the second quarters and first six months of 2021 and 2020 below.~~

We also recognize that, as internal measures of performance, these measures have limitations, and we do not restrict our performance-management process solely to these measures. We also use other tools designed to achieve the highest levels of performance. For example, our R&D organization has productivity targets, upon which its effectiveness is measured. In addition, total shareholder return, both on an absolute basis and relative to a publicly traded pharmaceutical index, plays a significant role in determining payouts under certain of our incentive compensation plans.

~~Purchase Accounting Adjustments~~Beginning in the first quarter of 2022, our reconciliation of certain GAAP reported to non-GAAP adjusted information is updated to reflect the following, and prior-period information has been revised to conform to the current period presentation:

Adjusted Income and Adjusted Diluted EPS

Acquired IPR&D—Non-GAAP Adjusted financial measures include expenses for all acquired IPR&D costs incurred in connection with upfront and milestone payments on collaboration and in-license agreements, including premiums on equity securities, as well as asset acquisitions of acquired IPR&D. Previously, certain of these items were excluded from our non-GAAP adjusted results. Acquired IPR&D expenses that previously would have been excluded from non-GAAP Adjusted income ~~excludes certain significant purchase accounting impacts resulting from business combinations~~but are now included in both GAAP Reported income and non-GAAP Adjusted income: (i) had no impact in the second quarter of 2022, (ii) were approximately $339 million pre-tax ($276 million, net of tax), or $0.05 per share, in the first six months of 2022 and (iii) were approximately $186 million for both pre-tax and net ~~asset acquisitions. These impacts can include~~of tax, or $0.03 per share, in both the ~~incremental charge~~second quarter and first six months of 2021.

Amortization of Intangible Assets—We began excluding all amortization of intangibles from non-GAAP Adjusted income, compared to ~~cost~~excluding only amortization of ~~sales from the sale of acquired inventory that was written up to fair value, amortization~~intangibles related to large mergers or acquisitions under the ~~increase~~prior methodology, and presenting it as a separate reconciling line. Previously, the adjustment under the prior methodology was included as part of

a reconciling line entitled “Purchase accounting adjustments” that we no longer separately present. The impact of this policy change resulted in ~~fair value~~benefits of $0.02 and $0.03 on Adjusted diluted EPS in the ~~acquired finite-lived intangible assets,~~second quarter and ~~to a much lesser extent, depreciation related to~~first six months of 2022, respectively, and $0.03 and $0.04 in the ~~increase/decrease in fair value~~second quarter and first six months of ~~the acquired fixed assets, amortization related to the increase in fair value of acquired debt, and the fair value changes for contingent consideration. Therefore, the~~ 2021, respectively.

Acquisition-Related Items—Adjusted income ~~measure includes the revenues earned upon the sale of the acquired products without considering the acquisition cost of those products.~~

~~Acquisition-Related Items~~

~~Adjusted income excludes~~continues to exclude certain acquisition-related items, which are comprised of transaction, integration, restructuring charges and additional depreciation costs for business combinations because these costs are unique to each transaction and represent costs

that were incurred to restructure and integrate businesses as a result of an acquisition. We have made no adjustments for resulting synergies. Beginning in the first quarter of 2022, acquisition-related items may now include purchase accounting impacts that previously would have been included as part of a reconciling line entitled “Purchase accounting adjustments” that we no longer separately present, such as: (i) the incremental charge to cost of sales from the sale of acquired inventory that was written up to fair value, (ii) depreciation related to the increase/decrease in fair value of acquired fixed assets, (iii) amortization related to the increase in fair value of acquired debt and (iv) the fair value changes for contingent consideration.

Discontinued Operations

—Adjusted income ~~excludes~~continues to exclude the results of discontinued operations, as well as any related gains or losses on the disposal of such operations. We believe that this presentation is meaningful to investors because, while we review our therapeutic areas and product lines for strategic fit with our operations, we do not build or run our business with the intent to discontinue parts of our business. Restatements due to discontinued operations do not impact compensation or change the Adjusted income measure for the compensation in respect of the restated periods, but are presented for consistency across all periods.

Certain Significant Items

—Adjusted income ~~excludes~~continues to exclude certain significant items representing substantive and/or unusual items that are evaluated individually on a quantitative and qualitative basis. Certain significant items may be highly variable and difficult to predict. Furthermore, in some cases it is reasonably possible that they could reoccur in future periods. For example, although major non-acquisition-related cost-reduction programs are specific to an event or goal with a defined term, we may have subsequent programs based on reorganizations of the business, cost productivity or in response to LOE or economic conditions. Legal charges to resolve litigation are also related to specific cases, which are facts and circumstances specific and, in some cases, may also be the result of litigation matters at acquired companies that were inestimable, not probable or unresolved at the date of acquisition. Gains and losses on equity securities, and pension and postretirement actuarial remeasurement gains and losses have a very high degree of inherent market volatility, which we do not control and cannot predict with any level of certainty and because we do not believe including these gains and losses assists investors in understanding our business or is reflective of our core operations and business. Unusual items represent items that are not part of our ongoing business; items that, either as a result of their nature or size, we would not expect to occur as part of our normal business on a regular basis; items that would be non-recurring; or items that relate to products we no longer sell. ~~For~~

See the Reconciliations of GAAP Reported to Non-GAAP Adjusted information—Certain Line Items below for a non-inclusive list of certain significant items ~~see~~and the ~~Details of Income Statement Items Included in GAAP Reported but Excluded from Non-GAAP Adjusted Income~~ ~~below.~~

Beginning in 2021, we exclude pension and postretirement actuarial remeasurement gains and losses from our measure of Adjusted income because of their inherent market volatility, which we do not control and cannot predict with any level of certainty and because we do not believe including these gains and losses assists investors in understanding our business or is reflective of our core operations and business.

~~Also, see the~~Non-GAAP Financial Measure: Adjusted Income section ~~of the~~within MD&A of our ~~2020~~2021 Form 10-K for additional information.

Reconciliations of GAAP Reported to Non-GAAP Adjusted Information––Certain Line Items

Three Months Ended July 4, 2021
(MILLIONS, EXCEPT PER COMMON SHARE DATA) GAAP Reported
Purchase Accounting Adjustments(a)
Acquisition-Related Items(a)
Discontinued Operations(a)
Certain Significant Items(a)
Non-GAAP Adjusted
Revenues $ 18,977 $ — $ — $ — $ — $ 18,977
Cost of sales 7,049 6 — — (57) 6,997
Selling, informational and administrative expenses 2,928 (1) — — (135) 2,792
Research and development expenses 2,459 1 — — (188) 2,273
Amortization of intangible assets 931 (762) — — — 169
Restructuring charges and certain acquisition-related costs (1) — (3) — 4 —
(Gain) on completion of Consumer Healthcare JV transaction — — — — — —
Other (income)/deductions––net (998) (37) — — 460 (575)
Income from continuing operations before provision for taxes on income 6,609 793 3 — (83) 7,321
Provision for taxes on income(b)
1,043 167 1 — — 1,212
Income from continuing operations 5,565 625 3 — (84) 6,110
Income from discontinued operations––net of tax 24 — — (24) — —
Net income attributable to noncontrolling interests 26 — — — — 26
Net income attributable to Pfizer Inc. common shareholders 5,563 625 3 (24) (84) 6,084
Earnings per common share attributable to Pfizer Inc. common shareholders––diluted 0.98 0.11 — — (0.01) 1.07

Six Months Ended July 4, 2021
(MILLIONS, EXCEPT PER COMMON SHARE DATA) GAAP Reported
Purchase Accounting Adjustments(a)
Acquisition-Related Items(a)
Discontinued Operations(a)
Certain Significant Items(a)
Non-GAAP Adjusted
Revenues $ 33,559 $ — $ — $ — $ — $ 33,559
Cost of sales 11,259 11 — — (96) 11,175
Selling, informational and administrative expenses 5,712 (1) — — (259) 5,451
Research and development expenses 4,473 3 — — (190) 4,286
Amortization of intangible assets 1,802 (1,525) — — — 277
Restructuring charges and certain acquisition-related costs 22 — (2) — (20) —
(Gain) on completion of Consumer Healthcare JV transaction — — — — — —
Other (income)/deductions––net (2,001) 16 — — 810 (1,175)
Income from continuing operations before provision for taxes on income 12,291 1,497 2 — (244) 13,546
Provision for taxes on income(b)
1,849 354 — — (38) 2,165
Income from continuing operations 10,443 1,143 1 — (206) 11,381
Income from discontinued operations––net of tax 32 — — (32) — —
Net income attributable to noncontrolling interests 35 — — — — 35
Net income attributable to Pfizer Inc. common shareholders 10,440 1,143 1 (32) (206) 11,346
Earnings per common share attributable to Pfizer Inc. common shareholders––diluted 1.84 0.20 — (0.01) (0.04) 2.00

Three Months Ended June 28, 2020
(MILLIONS, EXCEPT PER COMMON SHARE DATA) GAAP Reported
Purchase Accounting Adjustments(a)
Acquisition-Related Items(a)
Discontinued Operations(a)
Certain Significant Items(a)
Non-GAAP Adjusted
Revenues $ 9,864 $ — $ — $ — $ — $ 9,864
Cost of sales 1,826 5 — — (36) 1,795
Selling, informational and administrative expenses 2,659 (1) — — (131) 2,528
Research and development expenses 2,078 1 — — (238) 1,841
Amortization of intangible assets 869 (798) — — — 71
Restructuring charges and certain acquisition-related costs 360 — (21) — (339) —
(Gain) on completion of Consumer Healthcare JV transaction — — — — — —
Other (income)/deductions––net (955) (82) — — 595 (442)
Income from continuing operations before provision for taxes on income 3,026 874 21 — 150 4,071
Provision for taxes on income(b)
422 180 5 — (17) 591
Income from continuing operations 2,604 694 16 — 167 3,481
Income from discontinued operations––net of tax 893 — — (893) — —
Net income attributable to noncontrolling interests 8 — — — — 8
Net income attributable to Pfizer Inc. common shareholders 3,489 694 16 (893) 167 3,473
Earnings per common share attributable to Pfizer Inc. common shareholders––diluted 0.62 0.12 — (0.16) 0.03 0.62
Six Months Ended June 28, 2020
(MILLIONS, EXCEPT PER COMMON SHARE DATA) GAAP Reported
Purchase Accounting Adjustments(a)
Acquisition-Related Items(a)
Discontinued Operations(a)
Certain Significant Items(a)
Non-GAAP Adjusted
Revenues $ 19,947 $ — $ — $ — $ — $ 19,947
Cost of sales 3,766 9 — — (63) 3,712
Selling, informational and administrative expenses 5,200 — — — (223) 4,978
Research and development expenses 3,750 3 — — (239) 3,514
Amortization of intangible assets 1,718 (1,576) — — — 142
Restructuring charges and certain acquisition-related costs 414 — (35) — (379) —
(Gain) on completion of Consumer Healthcare JV transaction (6) — — — 6 —
Other (income)/deductions––net (764) (85) — — 145 (704)
Income from continuing operations before provision for taxes on income 5,868 1,650 34 — 752 8,305
Provision for taxes on income(b)
782 356 8 — 123 1,269
Income from continuing operations 5,087 1,294 26 — 629 7,036
Income from discontinued operations––net of tax 1,774 — — (1,774) — —
Net income attributable to noncontrolling interests 17 — — — — 17
Net income attributable to Pfizer Inc. common shareholders 6,843 1,294 26 (1,774) 629 7,019
Earnings per common share attributable to Pfizer Inc. common shareholders––diluted 1.22 0.23 — (0.32) 0.11 1.25

~~(a)For details of adjustments, see~~ ~~Details of Income Statement Items Included in GAAP Reported but Excluded from Non-GAAP Adjusted Income~~.

~~(b)~~The effective tax rate on Non-GAAP Adjusted income was 16.6% in the second quarter of 2021, compared to 14.5% in the second quarter of 2020. The effective tax rate on Non-GAAP Adjusted income was 16.0% in the first six months of 2021, compared to 15.3% in the first six months of 2020. The increase was due to a change in the jurisdictional mix of earnings primarily related to BNT162b2.


	Three Months Ended July 3, 2022
Data presented will not (in all cases) aggregate to totals. (MILLIONS, EXCEPT PER COMMON SHARE DATA)	Cost of sales(a)		Selling, informational and administrative expenses(a)		Other (income)/deductions––net(a)		Net income attributable to Pfizer Inc. common shareholders(a)		Earnings per common share attributable to Pfizer Inc. common shareholders––diluted
GAAP reported	$	8,648	$	3,048	$	772	$	9,906	$	1.73
Amortization of intangible assets	—		—		—		822
Acquisition-related items(b)	5		(2)		(13)		82
Discontinued operations(c)	—		—		—		(34)
Certain significant items:
Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(d)	(22)		(134)		—		272

(Gains)/losses on equity securities	—		—		(539)		539
Actuarial valuation and other pension and postretirement plan (gains)/losses	—		—		(490)		490
Other(e)	(6)		(13)		(107)		130
Income tax provision—non-GAAP items							(551)
Non-GAAP adjusted	$	8,625	$	2,900	$	(377)	$	11,656	$	2.04

~~Details of Income Statement Items Included in GAAP Reported but Excluded from Non-GAAP Adjusted Income~~


	Six Months Ended July 3, 2022
Data presented will not (in all cases) aggregate to totals. (MILLIONS, EXCEPT PER COMMON SHARE DATA)	Cost of sales(a)		Selling, informational and administrative expenses(a)		Other (income)/deductions––net(a)		Net income attributable to Pfizer Inc. common shareholders(a)		Earnings per common share attributable to Pfizer Inc. common shareholders––diluted
GAAP reported	$	18,632	$	5,642	$	1,122	$	17,769	$	3.10
Amortization of intangible assets	—		—		—		1,657
Acquisition-related items(b)	8		(3)		(39)		269
Discontinued operations(c)	—		—		—		(24)
Certain significant items:
Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(d)	(42)		(208)		—		394

(Gains)/losses on equity securities	—		—		(1,237)		1,237
Actuarial valuation and other pension and postretirement plan (gains)/losses	—		—		(418)		418
Other(e)	(17)		(35)		(211)		273
Income tax provision—Non-GAAP items							(999)
Non-GAAP adjusted	$	18,582	$	5,396	$	(783)	$	20,993	$	3.66

Three Months Ended Six Months Ended
(MILLIONS) July 4,
2021 June 28,
2020 July 4,
2021 June 28,
2020
Purchase accounting adjustments
Amortization, depreciation and other(a)
$ 799 $ 879 $ 1,508 $ 1,659
Cost of sales (6) (5) (11) (9)
Total purchase accounting adjustments––pre-tax 793 874 1,497 1,650
Income taxes(b)
(167) (180) (354) (356)
Total purchase accounting adjustments––net of tax 625 694 1,143 1,294
Acquisition-related items
Restructuring charges/(credits)(c)
— (1) (7) —
Transaction costs(c)
— 11 — 14
Integration costs and other(c)
4 11 8 21
Total acquisition-related items––pre-tax 3 21 2 34
Income taxes(b)
(1) (5) — (8)
Total acquisition-related items––net of tax 3 16 1 26
Discontinued operations
Income from discontinued operations––net of tax(d)
(24) (893) (32) (1,774)
Certain significant items
Restructuring charges/(credits)––cost reduction initiatives(e)
(4) 339 20 379
Implementation costs and additional depreciation––asset restructuring(f)
137 79 222 102
Net (gains)/losses on asset disposals(g)
(58) — (58) —
Net (gains)/losses recognized during the period on equity securities(g)
(798) (696) (1,197) (501)
Certain legal matters, net(g)
363 14 374 22
Business and legal entity alignment costs(h)
51 73 125 149
Actuarial valuation and other pension and postretirement plan (gains)/losses(i)
6 (6) (33) 76
(Gain) on completion of Consumer Healthcare JV transaction(j)
— — — (6)
Other(k)
220 347 303 530
Total certain significant items––pre-tax (83) 150 (244) 752
Income taxes(b)
— 17 38 (123)
Total certain significant items––net of tax (84) 167 (206) 629
Total purchase accounting adjustments, acquisition-related items, discontinued operations and certain significant items––net of tax, attributable to Pfizer Inc. $ 520 $ (16) $ 906 $ 176


	Three Months Ended July 4, 2021
Data presented will not (in all cases) aggregate to totals. (MILLIONS, EXCEPT PER COMMON SHARE DATA)	Cost of sales(a)		Selling, informational and administrative expenses(a)		Other (income)/deductions––net(a)		Net income attributable to Pfizer Inc. common shareholders(a)		Earnings per common share attributable to Pfizer Inc. common shareholders––diluted
GAAP reported	$	6,996	$	2,923	$	(1,343)	$	5,563	$	0.98
Amortization of intangible assets	—		(10)		—		928
Acquisition-related items	6		(1)		(37)		34
Discontinued operations(c)	—		—		—		346
Certain significant items:
Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(d)	(37)		(96)		—		129

(Gains)/losses on equity securities	—		—		798		(798)
Actuarial valuation and other pension and postretirement plan (gains)/losses	—		—		(6)		6
Other(e)	(16)		(39)		13		44
Income tax provision—non-GAAP items							(230)
Non-GAAP adjusted	$	6,949	$	2,778	$	(576)	$	6,023	$	1.06


	Six Months Ended July 4, 2021
Data presented will not (in all cases) aggregate to totals. (MILLIONS, EXCEPT PER COMMON SHARE DATA)	Cost of sales(a)		Selling, informational and administrative expenses(a)		Other (income)/deductions––net(a)		Net income attributable to Pfizer Inc. common shareholders(a)		Earnings per common share attributable to Pfizer Inc. common shareholders––diluted
GAAP reported	$	11,153	$	5,700	$	(2,347)	$	10,440	$	1.84
Amortization of intangible assets	—		(19)		(1)		1,798
Acquisition-related items	11		(1)		16		(27)
Discontinued operations(c)	—		—		—		337
Certain significant items:
Restructuring charges/(credits) and implementation costs and additional depreciation—asset restructuring(d)	(55)		(160)		—		234

(Gains)/losses on equity securities	—		—		1,197		(1,197)
Actuarial valuation and other pension and postretirement plan (gains)/losses	—		—		33		(33)
Other(e)	(34)		(99)		(74)		211
Income tax provision—Non-GAAP items							(390)
Non-GAAP adjusted	$	11,076	$	5,421	$	(1,177)	$	11,375	$	2.01

(a)~~Included primarily~~Items that reconcile GAAP Reported to non-GAAP Adjusted balances are shown pre-tax. Our effective tax rates for GAAP reported income from continuing operations were: 13.7% and 13.4% in the three and six months ended July 3, 2022, respectively, and 16.2% and 15.3% in the three and six months ended July 4, 2021, respectively. See ~~Amortization of intangible assets.~~Note 5. Our effective tax rates on non-GAAP adjusted income were: 15.4% and 15.1% in the three and six months ended July 3, 2022, respectively, and 17.1% and 16.3% in the three and six months ended July 4, 2021, respectively.

(b)~~Included~~Acquisition-related items in the three and six months ended July 3, 2022 primarily represent integration and other costs for the acquisition of Arena in March 2022. See ~~Provision for taxes on income.~~Note 2A ~~Includes the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying the applicable tax rate.~~.

(c)~~Included in~~ ~~Restructuring charges~~Relates to the previously divested Meridian subsidiary and ~~certain acquisition-related costs.~~ ~~See~~ ~~Note 3.~~

~~(d)Included in~~ ~~Income from discontinued operations––net of tax.~~ post-closing adjustments for other previously divested businesses. See Note ~~2A.~~2B.

~~(e)~~(d)Includes employee termination costs, asset impairments and other exit costs ~~not associated with acquisitions, which are included in~~ ~~Restructuring charges and certain acquisition-related costs.~~ ~~See~~ ~~Note 3~~.

~~(f)Relates~~related to our cost-reduction and productivity initiatives not ~~related to acquisitions (see~~associated with acquisitions. See Note 33.

(e)). For the second quarter of ~~2021,~~2022, the total Other (income)/deductions––net adjustment of $107 million primarily ~~included in~~includes charges of $55 million mostly representing our equity-method accounting pro rata share of costs of preparing for separation from GSK recorded by the GSK Consumer Healthcare JV, and charges of $19 million for certain legal matters. For the first six months of 2022, the total ~~Cost of sales~~Other (income)/deductions––net ~~($41 million)~~adjustment of $211 million primarily includes charges for certain legal matters of $98 million and charges of $61 million mostly representing our equity-method accounting pro rata share of restructuring charges and costs of preparing for separation from GSK recorded by the GSK Consumer Healthcare JV. For the first six months of 2021, amounts in Selling, informational and administrative expenses ~~($96 million). For the first six months~~ of ~~2021,~~$99 million primarily ~~included in~~ ~~Cost of sales~~ ~~($62 million) and~~ ~~Selling, informational and administrative expenses~~ ~~($160 million). For the second quarter of 2020, primarily included in~~ ~~Cost of sales~~ ~~($14 million) and~~ ~~Selling, informational and administrative expenses~~ ~~($63 million). For the first six months of 2020, primarily included in~~ ~~Cost of sales~~ ~~($27 million) and~~ ~~Selling, informational and administrative expenses~~ ~~($78 million).~~

~~(g)Included in~~ ~~Other (income)/deductions~~—~~net.~~ ~~See~~ ~~Note 4~~.

~~(h)Mainly represents~~include costs for consulting, legal, tax and advisory services associated with ~~the~~a non-recurring internal reorganization of legal entities. For the ~~second quarter of 2021, primarily included in~~ ~~Cost of sales~~ ~~($16 million) and~~ ~~Selling, informational and administrative expenses~~ ~~($34 million), and for the~~ first six months of 2021, ~~primarily included in~~ ~~Cost of sales~~ ~~($32 million) and~~ ~~Selling, informational and administrative expenses~~ ~~($87 million). For~~ the ~~second quarter of 2020, primarily included in~~ ~~Cost of sales~~ ~~($19 million) and~~ ~~Selling, informational and administrative expenses~~ ~~($47 million),and for the first six months of 2020, primarily included in~~ ~~Cost of sales~~ ~~($30 million),~~ ~~Selling, informational and administrative expenses~~ ~~($108 million) and~~ ~~Research and development expenses~~ ~~($11 million).~~

~~(i)Included in~~ ~~Other (income)/deductions––net.~~ For the first six months of 2021, includes a $45 million interim actuarial remeasurement pre-tax gain and for the first six months of 2020, includes a $74 million interim actuarial remeasurement pre-tax loss. See ~~Note 1C.~~

~~(j)Included in~~ ~~(Gain) on completion of Consumer Healthcare JV transaction.~~ ~~See~~ ~~Note 2B~~.

~~(k)For the second quarter of 2021, primarily included in~~ ~~Research and development expenses~~ ~~($187 million) and~~total Other (income)/deductions––net ~~($27 million). For the first six months~~adjustment of ~~2021,~~$74 million primarily ~~included in~~ ~~Selling, informational and administrative expenses~~ ~~($12 million), Research and development expenses~~ ~~($185 million)and~~ ~~Other (income)/deductions––net~~ ~~($104 million). For the second quarter of 2020, primarily included in~~ ~~Selling, informational and administrative expenses~~ ~~($21 million),~~ ~~Research and development expenses~~ ~~($229 million) and~~ ~~Other (income)/deductions––net~~ ~~($93 million). For the first six months of 2020, primarily included in~~ ~~Selling, informational and administrative expenses~~ ~~($37 million),~~ ~~Research and development expenses~~ ~~($230 million) and~~ ~~Other (income)/deductions––net~~ ~~($257 million). Among other things, the second quarter and first six months of 2021 include a charge of $186~~

~~million for IPR&D related to an asset acquisition completed in the second quarter of 2021. Also, the second quarter of 2021, includes charges of $31 million and the first six months of 2021~~ includes charges of $81 million ~~recorded in~~ ~~Other (income)/deductions––net,~~ ~~primarily~~representing our equity-method accounting pro rata share of restructuring charges and ~~business combination accounting charges~~costs of preparing for separation from GSK recorded by the ~~Consumer Healthcare JV. Among other things, the second quarter of 2020 included charges of $85 million and the first six months of 2020 included charges of $245 million recorded in~~ ~~Other (income)/deductions––net,~~ ~~primarilyrepresenting our pro rata share of restructuring and business combination accounting charges recorded by the~~GSK Consumer Healthcare JV. The second quarter and first six months of ~~2020 also included upfront payments of $130 million to Valneva~~2022 and ~~$72 million to BioNTech, which were recorded to~~2021 include insignificant reconciling amounts for Research and development ~~expenses.~~expenses.

ANALYSIS OF THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash Flows from Continuing Operations


		Six Months Ended						Six Months Ended
(MILLIONS)	(MILLIONS)	July 4, 2021		June 28, 2020		Drivers of change	(MILLIONS)		July 3, 2022		July 4, 2021		Drivers of change
Cash provided by/(used in):	Cash provided by/(used in):						Cash provided by/(used in):
Operating activities from continuing operations	Operating activities from continuing operations	$	15,828	$	4,829	The change is driven primarily by higher net income and advance payments in 2021 for BNT162b2 recorded in deferred revenue and the impact of timing of receipts and payments in the ordinary course of business, including an accrual for the gross profit split due to BioNTech, partially offset by a non-cash change in Other Adjustments, net, primarily resulting from an increase in unrealized gains on equity securities.	Operating activities from continuing operations		$	14,717	$	15,828	The change was driven primarily by (i) a decrease in the change in amounts due to BioNTech for the gross profit split for Comirnaty and a decrease in the change in deferred revenues (see Notes 8 and 13C), as well as (ii) the impact of timing of receipts and payments in the ordinary course of business, partially offset by (iii) higher net income adjusted for non-cash items, including an increase from non-cash unrealized losses on equity securities recognized in 2022, compared to unrealized gains recognized in 2021.
Investing activities from continuing operations	Investing activities from continuing operations	$	(9,884)	$	(1,630)	The change is driven mainly by a $10.8 billion increase in purchases of short-term investments with original maturities of greater than three months, partially offset by a $3.0 billion increase in redemptions of short-term investments with original maturities of greater than three months.	Investing activities from continuing operations		$	(10,746)	$	(9,880)	The change was driven mainly by $6.2 billion cash paid for the acquisition of Arena, net of cash acquired, a $3.0 billion increase in purchases of short-term investments with original maturities of greater than three months, a $2.6 billion increase in net purchases of short-term investments with original maturities of three months or less, and a $1.2 billion increase in purchases of long-term investments, partially offset by a $12.6 billion increase in redemptions of short-term investments with original maturities of greater than three months.
Financing activities from continuing operations	Financing activities from continuing operations	$	(5,364)	$	(4,493)	The change is driven mostly by a $5.2 billion decrease in proceeds from issuances of long-term debt, and a $277 million payment to Viatris in connection with the spin-off of the Upjohn Business, partially offset by a $2.2 billion reduction in principal repayments on long-term debt, a $1.8 billion decrease in payments on short-term borrowings with maturities of three months or less, and an $814 million net reduction in repayments of short-term borrowings with maturities of greater than three months.	Financing activities from continuing operations		$	(4,058)	$	(5,364)	The change was driven mostly by $4.0 billion proceeds from short-term borrowings, largely reflecting the loan from the Consumer Healthcare JV (see Note 2C), and an $879 million net increase in proceeds from short-term borrowings with original maturities of three months or less, partially offset by $2.0 billion purchases of the Company’s common stock in 2022 and a $1.6 billion increase in repayments of long-term debt.

Cash Flows from Discontinued Operations

Cash flows from discontinued operations ~~primarily~~ relate to ~~our former Upjohn Business and the Mylan-Japan collaboration~~previously divested businesses (see Note 2A2B)~~. In 2020, investing and financing activities from discontinued operations primarily reflect investments in money market funds with proceeds from issuances of long-term debt~~.

ANALYSIS OF FINANCIAL CONDITION, LIQUIDITY, CAPITAL RESOURCES AND MARKET RISK

We rely largely on operating cash flows, short-term investments or commercial paper borrowings and long-term debt to provide for our liquidity requirements. We strive to improve cash inflows through working capital efficiencies. Due to our significant operating cash flows, which is a key strength of our liquidity and capital resources and our primary funding source, as well as our financial assets, access to capital markets, revolving credit agreements, and available lines of

credit, ~~and revolving credit agreements,~~ we believe that we have, and will maintain, the ability to meet our liquidity needs to support ongoing operations, our capital allocation objectives, and our contractual and other obligations for the foreseeable future. ~~We have taken~~For additional information, including information about off-balance sheet arrangements, see the Analysis of Financial Condition, Liquidity, Capital Resources and ~~will continue to take a conservative approach to~~Market Risk section within MD&A in our ~~financial investments~~2021 Form 10-K. For information about the sources and ~~monitoring~~uses of our ~~liquidity position in response to~~funds, as well as our operating cash flows, see our condensed consolidated statements of cash flows, condensed consolidated balance sheets, condensed consolidated statements of equity, and the Analysis of the Condensed Consolidated Statements of Cash Flows within MD&A. For information on our money market ~~changes. Our~~funds, available-for sale-debt securities and long-term debt, ~~investments consist primarily of high-quality, highly liquid, well-diversified available-for-sale debt securities.~~

see
Note 7

Debt Capacity––Lines of Credit

We have available lines of credit and revolving credit agreements with a group of banks and other financial intermediaries. We typically maintain cash and cash equivalent balances and short-term investments which, together with our available revolving credit facilities, are in excess of our commercial paper and other short-term borrowings. As of July ~~4, 2021~~3, 2022, we had access to a $7 billion committed U.S. revolving credit facility expiring in ~~2025.~~2026, which may be used for general corporate purposes including to support our commercial paper borrowings. In addition to the U.S. revolving credit facility, our lenders have provided us an additional ~~$395~~$527 million in lines of credit, of which ~~$363~~$495 million expire within one year. Essentially all lines of credit were unused as of July ~~4, 2021.~~3, 2022.

~~Selected Measures~~Capital Allocation Framework

Our capital allocation framework is primarily devised to facilitate (i) the achievement of ~~Liquidity~~medical breakthroughs through R&D investments and ~~Capital Resources~~

The following presents certain relevant measures of our liquidity and capital resources:
(MILLIONS, EXCEPT RATIOS) July 4,
2021 December 31, 2020
Selected financial assets(a):

Cash and cash equivalents $ 2,372 $ 1,784
Short-term investments 19,328 10,437
Long-term investments, excluding private equity securities at cost 3,834 2,973
25,533 15,195
Debt:
Short-term borrowings, including current portion of long-term debt 3,888 2,703
Long-term debt 35,354 37,133
39,242 39,835
Selected net financial liabilities $ (13,709) $ (24,641)
Working capital(b)
$ 13,150 $ 9,147
Ratio of current assets to current liabilities 1.37:1 1.35:1
business development activities and (ii) returning capital to shareholders through dividends and share repurchases. See the Overview of Our Performance, Operating Environment, Strategy and Outlook section within MD&A of our 2021 Form 10-K. In April 2022, our BOD declared a dividend of $0.40 per share, paid on June 10, 2022, to shareholders of record at the close of business on May 13, 2022. In June 2022, our BOD declared a dividend of $0.40 per share, payable on September 6, 2022, to shareholders of record at the close of business on July 29, 2022.

~~(a)~~In the first quarter of 2022, we purchased 39 million shares of our common stock at a cost of $2.0 billion under our publicly announced share purchase plan. We did not purchase shares in the second quarter of 2022. See Note 712 in our 2021 Form 10-K and Unregistered Sales of Equity Securities and Use of Proceeds in Part II, Item 2 for ~~a description of certain assets held and for a description of credit risk related to~~more information. At July 3, 2022, our ~~financial instruments held.~~remaining share-purchase authorization was approximately $3.3 billion.

~~(b)~~In keeping with Pfizer’s transformation into a more focused, global leader in science-based innovative medicines and vaccines, we intend to exit our 32% ownership interest in Haleon in a disciplined manner, with the objective of maximizing value for our shareholders. See The increase in working capital was primarily driven by an increase in short-term investments due to operating cash flow generation, partially offset by the timing of accruals, cash receipts and payments in the ordinary course of business and capital expenditures.Note 2C.

Off-Balance Sheet Arrangements

For information about ~~the sources and uses of our funds, see the~~ ~~Analysis of the Condensed Consolidated Statements of Cash Flows~~ ~~section within MD&A.~~

~~For information about credit ratings, LIBOR, global economic conditions, and market risk,~~off-balance sheet arrangements, see the Analysis of Financial Condition, Liquidity, Capital Resources and Market ~~Risk—Selected Measures of Liquidity and Capital Resources~~Risk sectionwithin MD&A in our ~~2020~~2021 Form 10-K.

~~Off-Balance Sheet Arrangements~~

~~Additionally, certain~~In March 2022, in connection with GSK’s previously announced planned demerger, the Consumer Healthcare JV issued notes of $8.75 billion, €2.35 billion and £700 million with various maturities. GSK guaranteed the notes and we agreed to indemnify GSK for 32% of any amount payable by GSK. In conjunction with the completion of GSK’s demerger transactions in July 2022, GSK’s guarantee and our co-promotion or license agreements give our licensors or partners the rights to negotiate for, or in some cases to obtain under certain financial conditions, co-promotion or other rights in specified countries with respect to certainrelated indemnification of ~~our products.~~

GSK’s guarantee were terminated.

~~Share-Purchase Plans and Accelerated Share Repurchase Agreements~~

~~At July 4, 2021, our remaining share-purchase authorization was approximately $5.3 billion, with no repurchases in the first six months of 2021.~~ See Note 122C.

Global Economic Conditions

Beginning in our ~~2020 Form 10-K for~~second quarter of 2022, our operations in Turkey function in a hyperinflationary economy. The impact to Pfizer is not considered material. For more information ~~on our publicly announced share-purchase plans.~~about global economic conditions, see the Overview of Our Performance, Operating Environment, Strategy and Outlook—The Global Economic Environment section within this MD&A.

For additional information about our diverse sources of funds, global economic conditions, and information about credit ratings, market risk and LIBOR, see the Analysis of Financial Condition, Liquidity, Capital Resources and Market Risk sectionwithin MD&A in our 2021 Form 10-K.

~~Dividends on Common Stock~~

~~In June 2021, our BOD declared a dividend of $0.39 per share, payable on September 7, 2021, to shareholders of record at the close of business on July 30, 2021~~. Our current and projected dividends provide a return to shareholders while maintaining sufficient capital to invest in growing our business. Our dividends are not restricted by debt covenants. While the dividend level remains a decision of Pfizer’s BOD and will continue to be evaluated in the context of future business performance, we currently believe that we can support future annual dividend increases, barring significant unforeseen events.

NEW ACCOUNTING STANDARDS

Recently Adopted Accounting Standard

See Note 1B.

Recently Issued Accounting ~~Standard,~~Standards, Not Adopted as of July ~~4, 2021~~3, 2022

Standard/Description

Effective Date

Effect on the
Financial Statements

Reference rate reform provides temporary optional expedients and exceptions to the guidance for contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued after 2021 because of reference rate reform.

The new guidance provides the following optional expedients:

1.Simplify accounting analyses under current U.S. GAAP for contract modifications.

2.Simplify the assessment of hedge effectiveness and allow hedging relationships affected by reference rate reform to continue.

3.Allow a one-time election to sell or transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform.

Elections can be adopted prospectively at any time through December 31, 2022.

We are assessing the impact, ~~of the provisions of~~but currently do not expect this new guidance to have a material impact on our consolidated financial statements.

In June 2022, the FASB issued final guidance to clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered when measuring fair value. Recognizing a contractual sale restriction as a separate unit of account is not permitted.

January 1, 2024, with early adoption permitted.

We are assessing the impact, but currently do not expect this new guidance to have a material impact on our consolidated financial statements.

FORWARD-LOOKING INFORMATION AND FACTORS THAT MAY AFFECT FUTURE RESULTS

This Form 10-Q contains forward-looking statements. We also provide forward-looking statements in other materials we release to the public, as well as public oral statements. Given their forward-looking nature, these statements involve substantial risks, uncertainties and potentially inaccurate assumptions.

We have tried, wherever possible, to identify such statements by using words such as “will,” “may,” “could,” “likely,” “ongoing,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “assume,” “target,” “forecast,” “guidance,” “goal,” “objective,” “aim,” ~~“seek”~~“seek,” “potential,” “hope” and other words and terms of similar meaning or by using future dates.

We include forward-looking information in our discussion of the following, among other topics:

•our anticipated operating and financial performance, reorganizations, business plans, strategy and prospects;

•expectations for our product pipeline, in-line products and product candidates, including anticipated regulatory submissions, data read-outs, study starts, approvals, clinical trial results and other developing data, ~~that become available,~~ revenue contribution, growth, performance, timing of exclusivity and potential benefits;

•strategic reviews, capital allocation objectives, dividends and share repurchases;

•plans for and prospects of our acquisitions, dispositions and other business development activities, and our ability to successfully capitalize on these opportunities;

•sales, expenses, interest rates, foreign exchange rates and the outcome of contingencies, such as legal proceedings;

•expectations for impact of or changes to existing or new government regulations or laws;

•our ability to anticipate and respond to macroeconomic, geopolitical, health and industry trends, pandemics, acts of war and other large-scale crises; and

•manufacturing and product supply.

In particular, forward-looking information in this Form 10-Q includes statements relating to specific future actions and effects, including, among others, the expected benefits of the organizational changes to further transform our operations, including establishing a new commercial structure within Biopharma, our efforts to respond to COVID-19, including our ~~development of a vaccine to help prevent COVID-19~~plans and ~~our investigational protease inhibitors,~~expectations regarding Comirnaty and Paxlovid, and any potential future vaccines or treatments; the forecasted revenue, ~~contribution~~demand, manufacturing and supply of ~~BNT162b2~~Comirnaty and ~~the potential number of doses that we and BioNTech believe can be manufactured;~~Paxlovid; our expectations regarding the impact of COVID-19 on our business; the expected impact of patent expiries and competition from generic manufacturers; the expected pricing pressures on our products and the anticipated impact to our business; the availability of raw materials for 2022; the expected charges and/or costs in connection with the spin-off of the Upjohn Business and its combination with Mylan; the benefits expected from our business development transactions; our anticipated liquidity position; the anticipated costs and savings from certain of our initiatives, including our Transforming to a More Focused Company program; ~~anticipated study starts;~~and our planned capital ~~spending; and the expectations for our quarterly dividend payments.~~spending.

Given their nature, we cannot assure that any outcome expressed in these forward-looking statements will be realized in whole or in part. Actual outcomes may vary materially from past results and those anticipated, estimated, implied or projected. These forward-looking statements may be affected by underlying assumptions that may prove inaccurate or incomplete, or by known or unknown risks and uncertainties, including those described in this section and in the Item 1A. Risk Factors section in our ~~2020~~2021 Form 10-K.

Therefore, you are cautioned not to unduly rely on forward-looking statements, which speak only as of the date of this Form 10-Q. We undertake no obligation to update forward-looking statements, whether as a result of new information, future events

or otherwise, except as required by applicable securities law. You are advised, however, to consult any further disclosures we make on related subjects.

Some of the factors that could cause actual results to differ are identified below, as well as those discussed in the Item 1A. Risk Factors section in our ~~2020~~2021 Form 10-K and within this MD&A. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. The occurrence of any of the risks identified below, or in the Item 1A. Risk Factors section in our ~~2020~~2021 Form 10-K or within this MD&A, or other risks currently unknown, could have a material adverse effect on our business, financial condition or results, ~~of operations,~~ or we may be required to increase our accruals for contingencies. 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:

Risks Related to Our Business, Industry and Operations, and Business ~~Development:~~Development

•the outcome of R&D activities, including, the ability to meet anticipated pre-clinical or clinical endpoints, commencement and/or completion dates for our pre-clinical or clinical trials, regulatory submission dates, and/or regulatory approval and/or launch dates; the possibility of unfavorable pre-clinical and clinical trial results, including the possibility of unfavorable new pre-clinical or clinical data ~~and~~and/or further analyses of existing pre-clinical or clinical data; the risk that pre-clinical and clinical trial data are subject to differing interpretations and assessments, including during the peer review/publication process, in the scientific community generally, and by regulatory authorities; and whether and when additional data from our pipeline programs will be published in scientific journal publications, and if so, when and with what modifications and interpretations;

•our ability to successfully address comments received from regulatory authorities such as the FDA or the EMA, or obtain approval for new products and indications from regulators on a timely basis or at all; regulatory decisions impacting labeling, including the scope of indicated patient populations, product dosage, manufacturing processes, safety and/or other matters, including decisions relating to emerging developments regarding potential product impurities; the impact of recommendations by technical or advisory committees; and the timing of pricing approvals and product launches;

•claims and concerns that may arise regarding the safety or efficacy of in-line products and product candidates, including claims and concerns that may arise from the outcome of post-approval clinical trials, which could impact marketing approval, product labeling, and/or availability or commercial potential, including uncertainties regarding the commercial or other impact of the results of the Xeljanz ORAL Surveillance (A3921133) study or ~~any potential~~ actions by regulatory authorities based on analysis of ORAL Surveillance or other data, including on other ~~Janus kinase (JAK)~~JAK inhibitors in our portfolio;

•the success and impact of external business development activities, including the ability to identify and execute on potential business development opportunities; the ability to satisfy the conditions to closing of announced transactions in the anticipated time frame or at all; the ability to realize the anticipated benefits of any such transactions in the anticipated time frame or at all; the potential need for and impact of additional equity or debt financing to pursue these opportunities, which could result in increased leverage and/or a downgrade of our credit ratings; challenges integrating the businesses and operations; disruption to business and operations relationships; risks related to growing revenues for certain acquired products; significant transaction costs; and unknown liabilities;

•competition, including from new product entrants, in-line branded products, generic products, private label products, biosimilars and product candidates that treat or prevent diseases and conditions similar to those treated or intended to be prevented by our in-line products and product candidates;

•the ability to successfully market both new and existing products, including biosimilars;

•difficulties or delays in manufacturing, sales or marketing; supply disruptions, shortages or stock-outs at our facilities or ~~our third party suppliers’ facilities;~~third-party facilities that we rely on; and legal or regulatory actions;

•the impact of public health outbreaks, epidemics or pandemics (such as the COVID-19 pandemic), including the impact of vaccine mandates where applicable, on our business, operations and financial condition and results, including impacts on our employees, manufacturing, supply chain, sales and marketing, ~~research and development~~R&D and clinical trials;

•risks and uncertainties related to our efforts to develop and commercialize a vaccine to help prevent COVID-19 and ~~potential treatments for~~an oral COVID-19 treatment, as well as challenges related to their manufacturing, supply and distribution;

•risks related to our ability to achieve our revenue forecasts for Comirnaty and Paxlovid or any potential future COVID-19 vaccines or treatments, including, among other things, whether and when additional supply or purchase agreements will be reached, the risk that demand for any products may be reduced or no longer exist and the possibility that COVID-19 will diminish in severity or prevalence or disappear entirely, which may lead to reduced revenues or excess inventory;

•trends toward managed care and healthcare cost containment, and our ability to obtain or maintain timely or adequate pricing or favorable formulary placement for our products;

•interest rate and foreign currency exchange rate fluctuations, including the impact of possible currency devaluations in countries experiencing high inflation rates;

•any significant issues involving our largest wholesale distributors or government customers, which account for a substantial portion of our revenues;

•the impact of the increased presence of counterfeit medicines or vaccines in the pharmaceutical supply chain;

•any significant issues related to the outsourcing of certain operational and staff functions to third parties; and any significant issues related to our JVs and other third-party business arrangements;

•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, such as inflation, and recent and possible future changes in global financial markets;

•any changes in business, political and economic conditions due to actual or threatened terrorist activity, geopolitical instability, civil unrest or military action;

•the impact of product recalls, withdrawals and other unusual items, including uncertainties related to regulator-directed risk evaluations and ~~assessments;~~assessments, including our ongoing evaluation of our product portfolio for the potential presence or formation of nitrosamines;

•trade buying patterns;

•the risk of an impairment charge related to our intangible assets, goodwill or equity-method investments;

•the impact of, and risks and uncertainties related to, restructurings and internal reorganizations, as well as any other corporate strategic initiatives, and cost-reduction and productivity initiatives, each of which requires upfront costs but may fail to yield anticipated benefits and may result in unexpected costs or organizational disruption;

Risks Related to Government Regulation and Legal ~~Proceedings:~~Proceedings

•the impact of any U.S. healthcare reform or legislation or 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;

•U.S. federal or state legislation or regulatory action and/or policy efforts affecting, among other things, pharmaceutical product pricing, intellectual property, reimbursement or access or restrictions on U.S. direct-to-consumer advertising; limitations on interactions with healthcare professionals and other industry stakeholders; as well as pricing pressures for our products as a result of highly competitive insurance markets;

•legislation or regulatory action in markets outside of the U.S., including China, affecting pharmaceutical product pricing, intellectual property, 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 globally to possible capital and exchange controls, economic conditions, expropriation and other restrictive government actions, changes in intellectual property legal protections and remedies, as well as the impact of political unrest or civil unrest or military action, including the ongoing conflict between Russia and Ukraine and the continued economic consequences, unstable governments and legal systems and inter-governmental disputes;

•legal defense costs, insurance expenses, settlement costs and contingencies, including those related to actual or alleged environmental contamination;

•the risk and impact of an adverse decision or settlement and the adequacy of reserves related to legal proceedings;

•the risk and impact of tax related litigation;

•governmental laws and regulations affecting our operations, including, without limitation, changes in laws and regulations or their interpretation, including, among others, changes in tax laws and regulations internationally and in the U.S., including, among others, ~~any~~potential adoption of global minimum taxation requirements and potential changes to ~~the~~ existing tax law by the current U.S. Presidential administration and ~~Congress increasing the corporate tax rate and/or the tax rate on foreign earnings;~~Congress;

Risks Related to Intellectual Property, Technology and ~~Security:~~Security

•any significant breakdown or interruption of our information technology systems and ~~infrastructure;~~infrastructure (including cloud services);

•any business disruption, theft of confidential or proprietary information, extortion or integrity compromise resulting from a ~~cyberattack;~~cyber-attack or other malfeasance by third parties, including, but not limited to, nation states, employees, business partners or others;

•the risk that our currently pending or future patent applications may not be granted on a timely basis or at all, or any patent-term extensions that we seek may not be granted on a timely basis, if at all; and

•our ability to protect our patents and other intellectual property, ~~including~~such as against claims of invalidity that could result in LOE, including challenges faced by our collaboration or licensing partners to the validity of their patent rights, asserted and/or unasserted intellectual property claims and in response to any pressure, or legal or regulatory action by, various stakeholders or governments that could potentially result in us not seeking intellectual property protection for or agreeing not to enforce or being restricted from enforcing intellectual property related to our products, including our vaccine to help prevent COVID-19 and ~~potential treatments for COVID-19.~~our oral COVID-19 treatment.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information required by this item is incorporated by reference from the discussion in the Analysis of Financial Condition, Liquidity, Capital Resources and Market ~~Risk—Selected Measures of Liquidity and Capital Resources—Market~~ Risk section within MD&A of our ~~2020~~2021 Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, 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.

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.


PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Certain legal proceedings in which we are involved are discussed in Note 12A.

ITEM 1A. RISK FACTORS

We refer to the ~~“Our~~Overview of Our Performance, Operating ~~Environment”, “The~~Environment, Strategy and Outlook—Our Operating Environment and —The Global Economic ~~Environment”, “COVID-19 Pandemic”~~Environment sections and ~~“Forward-Looking~~the Forward-Looking Information and Factors That May Affect Future ~~Results” sections~~Results section of the MD&A of this Form 10-Q and ~~to Part I, Item 1A, “Risk Factors”~~ of our ~~2020~~2021 Form 10-K and to the Item 1A. Risk Factors section of our 2021 Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following summarizes purchases of our common stock during the second quarter of ~~2021:~~2022:

Period
Total Number of
Shares Purchased(a)
Average Price
Paid per Share(a)
Total Number of Shares Purchased as Part of Publicly Announced Plan
Approximate Value of Shares That May Yet Be Purchased Under the Plan(b)
April 5 through May 2, 2021 42,590 $ 37.84 — $ 5,292,881,709
May 3 through May 30, 2021 104,104 $ 40.04 — $ 5,292,881,709
May 31 through July 4, 2021 26,950 $ 39.07 — $ 5,292,881,709
Total 173,644 $ 39.35 —


Period	Total Number of Shares Purchased(a)	Average Price Paid per Share(a)		Total Number of Shares Purchased as Part of Publicly Announced Plan	Approximate Value of Shares That May Yet Be Purchased Under the Plan(b)
April 4 through May 1, 2022	22,946	$	52.51	—	$	3,292,882,444
May 2 through May 29, 2022	50,629	$	49.77	—	$	3,292,882,444
May 30 through July 3, 2022	77,399	$	52.00	—	$	3,292,882,444
Total	150,974	$	51.33	—

(a)Represents (i) ~~168,612~~149,013 shares of common stock surrendered to the Company to satisfy tax withholding obligations in connection with the vesting of awards under our long-term incentive programs and (ii) the open market purchase by the trustee of ~~5,032~~1,961 shares of common stock in connection with the reinvestment of dividends paid on common stock held in trust for employees who deferred receipt of performance share awards.

(b)See the Analysis of Financial Condition, Liquidity, Capital Resources and Market Risk—Capital Allocation Framework section within the MD&A of this Form 10-Q and Note 12 in our ~~2020~~2021 Form ~~10-K~~10-K.

ITEM 6. EXHIBITS


Exhibit 31.1	-	Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2	-	Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 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.
Exhibit 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.
Exhibit 101:
EX-101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
EX-101.SCH EX-101.CAL EX-101.LAB EX-101.PRE EX-101.DEF		Inline XBRL Taxonomy Extension Schema Inline XBRL Taxonomy Extension Calculation Linkbase Inline XBRL Taxonomy Extension Label Linkbase Inline XBRL Taxonomy Extension Presentation Linkbase Inline XBRL Taxonomy Extension Definition Document
Exhibit 104		Cover Page Interactive Data File––the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		Pfizer Inc.
		(Registrant)


Dated:	August ~~12, 2021~~10, 2022	/s/ Jennifer B. Damico
		Jennifer B. Damico Senior Vice President and Controller (Principal Accounting Officer and Duly Authorized Officer)


Components of Income from discontinued operations––net of tax:
	Three Months Ended(a)				Six Months Ended(a)
(MILLIONS)	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Revenues	$	0	$	1,937	$	27	$	3,883
Costs and expenses:
Cost of sales	0		458		14		900
Selling, informational and administrative expenses	6		371		(2)		703
Research and development expenses	0		54		1		105
Amortization of intangible assets	0		36		0		72
Restructuring charges and certain acquisition-related costs	0		2		0		17
Other (income)/deductions––net	0		1		1		71
Pre-tax income/(loss) from discontinued operations	(6)		1,015		13		2,015
Provision/(benefit) for taxes on income	(30)		122		(19)		241




Income from discontinued operations––net of tax	$	24	$	893	$	32	$	1,774


	Three Months Ended June 28, 2020
(MILLIONS, EXCEPT PER COMMON SHARE DATA)	GAAP Reported		Purchase Accounting Adjustments(a)		Acquisition-Related Items(a)		Discontinued Operations(a)		Certain Significant Items(a)		Non-GAAP Adjusted
Revenues	$	9,864	$	—	$	—	$	—	$	—	$	9,864
Cost of sales	1,826		5		—		—		(36)		1,795
Selling, informational and administrative expenses	2,659		(1)		—		—		(131)		2,528
Research and development expenses	2,078		1		—		—		(238)		1,841
Amortization of intangible assets	869		(798)		—		—		—		71
Restructuring charges and certain acquisition-related costs	360		—		(21)		—		(339)		—
(Gain) on completion of Consumer Healthcare JV transaction	—		—		—		—		—		—
Other (income)/deductions––net	(955)		(82)		—		—		595		(442)
Income from continuing operations before provision for taxes on income	3,026		874		21		—		150		4,071
Provision for taxes on income(b)	422		180		5		—		(17)		591
Income from continuing operations	2,604		694		16		—		167		3,481
Income from discontinued operations––net of tax	893		—		—		(893)		—		—
Net income attributable to noncontrolling interests	8		—		—		—		—		8
Net income attributable to Pfizer Inc. common shareholders	3,489		694		16		(893)		167		3,473
Earnings per common share attributable to Pfizer Inc. common shareholders––diluted	0.62		0.12		—		(0.16)		0.03		0.62


	Six Months Ended June 28, 2020
(MILLIONS, EXCEPT PER COMMON SHARE DATA)	GAAP Reported		Purchase Accounting Adjustments(a)		Acquisition-Related Items(a)		Discontinued Operations(a)		Certain Significant Items(a)		Non-GAAP Adjusted
Revenues	$	19,947	$	—	$	—	$	—	$	—	$	19,947
Cost of sales	3,766		9		—		—		(63)		3,712
Selling, informational and administrative expenses	5,200		—		—		—		(223)		4,978
Research and development expenses	3,750		3		—		—		(239)		3,514
Amortization of intangible assets	1,718		(1,576)		—		—		—		142
Restructuring charges and certain acquisition-related costs	414		—		(35)		—		(379)		—
(Gain) on completion of Consumer Healthcare JV transaction	(6)		—		—		—		6		—
Other (income)/deductions––net	(764)		(85)		—		—		145		(704)
Income from continuing operations before provision for taxes on income	5,868		1,650		34		—		752		8,305
Provision for taxes on income(b)	782		356		8		—		123		1,269
Income from continuing operations	5,087		1,294		26		—		629		7,036
Income from discontinued operations––net of tax	1,774		—		—		(1,774)		—		—
Net income attributable to noncontrolling interests	17		—		—		—		—		17
Net income attributable to Pfizer Inc. common shareholders	6,843		1,294		26		(1,774)		629		7,019
Earnings per common share attributable to Pfizer Inc. common shareholders––diluted	1.22		0.23		—		(0.32)		0.11		1.25


The following presents certain relevant measures of our liquidity and capital resources:
(MILLIONS, EXCEPT RATIOS)	July 4, 2021		December 31, 2020
Selected financial assets(a):
Cash and cash equivalents	$	2,372	$	1,784
Short-term investments	19,328		10,437
Long-term investments, excluding private equity securities at cost	3,834		2,973
	25,533		15,195
Debt:
Short-term borrowings, including current portion of long-term debt	3,888		2,703
Long-term debt	35,354		37,133
	39,242		39,835
Selected net financial liabilities	$	(13,709)	$	(24,641)

Working capital(b)	$	13,150	$	9,147
Ratio of current assets to current liabilities	1.37:1		1.35:1