| Segment, Geographic and Other Revenue Information | Segment, Geographic and Other Revenue Information A. Segment Information We manage our commercial operations through two distinct business segments: Pfizer Innovative Health (IH) and Pfizer Essential Health (EH). The IH and EH segments are each led by a single manager. Each operating segment has responsibility for its commercial activities and for certain IPR&D projects for new investigational products and additional indications for in-line products that generally have achieved proof-of-concept. Each business has a geographic footprint across developed and emerging markets. Our chief operating decision maker uses the revenues and earnings of the two operating segments, among other factors, for performance evaluation and resource allocation. We regularly review our segments and the approach used by management for performance evaluation and resource allocation. In July 2018, we announced that we will reorganize our commercial operations effective at the beginning of our 2019 fiscal year. We will organize the company into three businesses: a science-based Innovative Medicines business, which will include all of the current Pfizer Innovative Health medicines and vaccines business units as well as biosimilars and a new hospital business unit for anti-infectives and sterile injectables; an off-patent branded and generic Established Medicines business operating with substantial autonomy within Pfizer; and a Consumer Healthcare business. We are currently evaluating the impact to our operating segments and other costs and activities based on how the businesses will be managed in 2019. As described in Note 1A , the February 3, 2017 sale of HIS impacted our results of operations in 2017. Operating Segments Some additional information about our business segments as of September 30, 2018 follows: IH focuses on developing and commercializing novel, value-creating medicines and vaccines that significantly improve patients’ lives, as well as products for consumer healthcare. EH includes legacy brands that have lost or will soon lose market exclusivity in both developed and emerging markets, branded and generic sterile injectable products, biosimilars, and select branded products including anti-infectives. EH also includes an R&D organization, as well as our contract manufacturing business. Through February 2, 2017, EH also included HIS. Leading brands include: - Prevnar 13/Prevenar 13 - Xeljanz - Eliquis - Lyrica (U.S., Japan and certain other markets) Enbrel (outside the U.S. and Canada) Ibrance - Xtandi - Several OTC consumer healthcare products (e.g., Advil and Centrum ) Leading brands include: - Lipitor - Norvasc - Lyrica (Europe, Russia, Turkey, Israel and Central Asia countries) - Celebrex - Viagra* - Inflectra/Remsima - Sulperazon - Several other sterile injectable products * Viagra lost exclusivity in the U.S. in December 2017. Beginning in 2018, revenues for Viagra in the U.S. and Canada, which were reported in IH through 2017, are reported in EH (which reported all other Viagra revenues excluding the U.S. and Canada through 2017). Therefore, beginning in 2018, total Viagra worldwide revenues are reported in EH. The following organizational change impacted our operating segments in 2018: • Effective in the first quarter of 2018, certain costs for Pfizer’s StratCO group, which were previously reported in the operating results of our operating segments and Corporate, are reported in Other Unallocated. StratCO costs primarily include headcount costs, vendor costs and data costs largely in support of Pfizer’s commercial operations. The majority of the StratCO costs reflect additional amounts that our operating segments would have incurred had each segment operated as a standalone company during the periods presented. The reporting change was made to streamline accountability and speed decision making. In the third quarter of 2017, we reclassified approximately $125 million of costs from IH, approximately $36 million of costs from EH and approximately $19 million of costs from Corporate to Other unallocated costs to conform to the current period presentation. In the first nine months of 2017, we reclassified approximately $344 million of costs from IH, approximately $114 million of costs from EH and approximately $40 million of costs from Corporate to Other unallocated costs to conform to the current period presentation. Other Costs and Business Activities Certain pre-tax costs are not allocated to our operating segment results, such as costs associated with the following: • WRD, which is generally responsible for research projects for our IH business until proof-of-concept is achieved and then for transitioning those projects to the IH segment via the GPD organization for possible clinical and commercial development. R&D spending may include upfront and milestone payments for intellectual property rights. The WRD organization also has responsibility for certain science-based and other platform-services organizations, which provide technical expertise and other services to the various R&D projects, including EH R&D projects. WRD is also responsible for facilitating all regulatory submissions and interactions with regulatory agencies, including all safety-event activities. • GPD, which is generally responsible for the clinical development of assets that are in clinical trials for our WRD and Innovative portfolios. GPD also provides technical support and other services to Pfizer R&D projects. • Corporate, representing platform functions (such as worldwide technology, global real estate operations, legal, finance, human resources, worldwide public affairs, compliance and worldwide procurement), the provision of medical information to healthcare providers, patients and other parties, transparency and disclosure activities, clinical trial results publication, grants for healthcare quality improvement and medical education, and partnerships with global public health and medical associations, as well as certain compensation and other corporate costs, such as interest income and expense, and gains and losses on investments. Effective in the first quarter of 2018, certain costs for StratCO, which were previously reported in the operating results of our operating segments and Corporate, are reported in Other Unallocated. For additional information, see note below on Other unallocated costs. • Other unallocated costs, representing overhead expenses associated with our manufacturing and commercial operations that are not directly assessed to an operating segment, as business unit (segment) management does not manage these costs (which include manufacturing variances associated with production). In connection with the StratCO reporting change, in the third quarter of 2017, we reclassified approximately $125 million of costs from IH, approximately $36 million of costs from EH and approximately $19 million of costs from Corporate to Other unallocated costs to conform to the current period presentation. In the first nine months of 2017, we reclassified approximately $344 million of costs from IH, approximately $114 million of costs from EH and approximately $40 million of costs from Corporate to Other unallocated costs to conform to the current period presentation. • Certain transactions and events such as (i) purchase accounting adjustments, where we incur expenses associated with the amortization of fair value adjustments to inventory, intangible assets and PP&E; (ii) acquisition-related costs, where we incur costs for executing the transaction, integrating the acquired operations and restructuring the combined company; and (iii) certain significant items, representing substantive and/or unusual, and in some cases recurring, items (such as restructuring or legal charges) that are evaluated on an 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. Such items can include, but are not limited to, non-acquisition-related restructuring costs, as well as costs incurred for legal settlements, asset impairments and disposals of assets or businesses, including, as applicable, any associated transition activities. Segment Assets We manage our assets on a total company basis, not by operating segment, as many of our operating assets are shared (such as our plant network assets) or commingled (such as accounts receivable, as many of our customers are served by both operating segments). 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 approximately $168 billion as of September 30, 2018 and $172 billion as of December 31, 2017 . Selected Income Statement Information The following table provides selected income statement information by reportable segment: Three Months Ended Revenues Earnings (a) (MILLIONS OF DOLLARS) September 30, October 1, September 30, October 1, Reportable Segments: IH (b) $ 8,471 $ 8,118 $ 5,388 $ 5,000 EH (b) 4,826 5,050 2,527 2,801 Total reportable segments 13,298 13,168 7,915 7,801 Other business activities (c), (d) — — (736 ) (759 ) Reconciling Items: Corporate (b), (d) — — (1,337 ) (1,363 ) Purchase accounting adjustments (d) — — (1,309 ) (1,154 ) Acquisition-related costs (d) — — (112 ) (155 ) Certain significant items (e) — — 213 (449 ) Other unallocated (b), (d) — — (457 ) (335 ) $ 13,298 $ 13,168 $ 4,177 $ 3,585 Nine Months Ended Revenues Earnings (a) (MILLIONS OF DOLLARS) September 30, October 1, September 30, October 1, Reportable Segments: IH (b) $ 24,573 $ 23,204 $ 15,419 $ 14,534 EH (b) 15,097 15,639 8,133 8,672 Total reportable segments 39,670 38,843 23,552 23,206 Other business activities (c), (d) — — (2,130 ) (2,205 ) Reconciling Items: Corporate (b), (d) — — (3,633 ) (3,908 ) Purchase accounting adjustments (d) — — (3,665 ) (3,527 ) Acquisition-related costs (d) — — (221 ) (347 ) Certain significant items (e) — — (8 ) (797 ) Other unallocated (b), (d) — — (1,064 ) (1,070 ) $ 39,670 $ 38,843 $ 12,831 $ 11,351 (a) Income from continuing operations before provision for taxes on income. IH’s earnings include d ividend income of $91 million and $54 million in the third quarter of 2018 and 2017 , respectively, and $226 million and $211 million in the first nine months of 2018 and 2017 , respectively, from our investment in ViiV. For additional information, see Note 4. (b) In connection with the StratCO reporting change, in the third quarter of 2017, we reclassified approximately $125 million of costs from IH, approximately $36 million of costs from EH and approximately $19 million of costs from Corporate to Other unallocated costs to conform to the current period presentation. In the first nine months of 2017, we reclassified approximately $344 million of costs from IH, approximately $114 million of costs from EH and approximately $40 million of costs from Corporate to Other unallocated costs to conform to the current period presentation. (c) Other business activities includes the costs managed by our WRD and GPD organizations. (d) For a description, see the “Other Costs and Business Activities” section above. (e) Certain significant items are substantive and/or unusual, and in some cases recurring, items (such as restructuring or legal charges) 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. For Earnings in the third quarter of 2018 , certain significant items includes: (i) restructuring credits and implementation costs associated with our cost-reduction ini tiatives that are not associated with an acquisition of $35 million , (ii) net charges for certain legal matters of $37 million , (iii) income of $2 million , representing an adjustment t o amounts previously recorded to write down the HIS net assets to fair value less costs to sell and (iv) other income of $282 million , which includes, among other things, a non-cash $343 million pre-tax gain in Other (income)/deductions––net associated with our transaction with Bain Capital to create a new biopharmaceutical company, Cerevel, to continue development of a portfolio of clinical and preclinical stage neuroscience assets primarily targeting disorders of the central nervous system. For additional information, see Note 2B, Note 3 and Note 4. For Earnings in the third quarter of 2017 , certain significant items includes: (i) restructuring credits and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $55 million , (ii) charges for certain legal matters of $183 million , (iii) income of $12 million , representing an adjustment to amounts previously recorded to write down the HIS net assets to fair value less costs to sell, (iv) certain asset impairment charges of $127 million , (v) charges for business and legal entity alignment of $16 million and (vi) other charges of $81 million , which includes, among other things, $55 million in inventory losses, overhead costs related to the period in which our Puerto Rico plants were not operational, and incremental costs, all of which resulted from hurricanes in Puerto Rico and are included in Cost of sales . For additional information, see Note 2B , Note 3 and Note 4 . For Earnings in the first nine months of 2018 , certain significant items includes: (i) restructuring credits and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $127 million , (ii) net credits for certain legal matters of $70 million , (iii) income of $1 million , representing an adjustment to amounts previously recorded to write down the HIS net assets to fair value less costs to sell, (iv) certain asset impairment charges of $31 million , (v) charges for business and legal entity alignment of $4 million and (vi) other income of $84 million , which includes, among other things, a non-cash $343 million pre-tax gain in Other (income)/deductions––net associated with our transaction with Bain Capital to create a new biopharmaceutical company, Cerevel, to continue development of a portfolio of clinical and preclinical stage neuroscience assets primarily targeting disorders of the central nervous system, a $119 million charge, in the aggregate, in Selling, information and administrative expenses , for a special one-time bonus paid to virtually all Pfizer colleagues, excluding executives, which was one of several actions taken by us after evaluating the expected positive net impact of the December 2017 enactment of the TCJA on us, and a $50 million pre-tax gain in Other (income)/deductions––net as a result of the contribution of our allogeneic chimeric antigen receptor T cell therapy development program assets in connection with our contribution agreement entered into with Allogene. For additional information, see Note 2B , Note 3 and Note 4 . For Earnings in the first nine months of 2017 , certain significant items includes: (i) restructuring credits and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $133 million , (ii) charges for certain legal matters of $191 million , (iii) charges of $52 million , representing adjustments to amounts previously recorded to write-down the HIS net assets to fair value less costs to sell, (iv) certain asset impairment charges of $127 million , (v) charges for business and legal entity alignment of $54 million and (v) other charges of $239 million , which include, among other things, $55 million in inventory losses, overhead costs related to the period in which our Puerto Rico plants were not operational, and incremental costs, all of which resulted from hurricanes in Puerto Rico and are included in Cost of sales , and a net loss of $30 million related to the sale of our 40% ownership investment in Teuto, including the extinguishment of a put option for the then remaining 60% ownership interest, which is included in Other (income)/deductions––net . For additional information, see Note 2B , Note 3 and Note 4 . Equity in the net income of investees accounted for by the equity method is not significant for any of our operating segments. The operating segment information does not purport to represent the revenues, costs and income from continuing operations before provision for taxes on income that each of our operating segments would have recorded had each segment operated as a standalone company during the periods presented. B. Geographic Information As described in Note 1A , the February 3, 2017 sale of HIS impacted our results of operations in 2017. The following table provides revenues by geographic area: Three Months Ended Nine Months Ended (MILLIONS OF DOLLARS) September 30, October 1, % September 30, October 1, % U.S. $ 6,361 $ 6,534 (3 ) $ 18,861 $ 19,516 (3 ) Developed Europe (a) 2,231 2,163 3 6,657 6,309 6 Developed Rest of World (b) 1,640 1,632 1 4,795 4,797 — Emerging Markets (c) 3,066 2,839 8 9,358 8,222 14 Revenues $ 13,298 $ 13,168 1 $ 39,670 $ 38,843 2 (a) Developed Europe region includes the following markets: Western Europe, Scandinavian countries and Finland. Revenues denominated in euros were $1.8 billion and $1.7 billion in the third quarter of 2018 and 2017 , respectively, and $5.3 billion and $5.0 billion in the first nine months of 2018 and 2017 , respectively. (b) Developed Rest of World region includes the following markets: Japan, Canada, Australia, South Korea and New Zealand. (c) Emerging Markets region includes, but is not limited to, the following markets: Asia (excluding Japan and South Korea), Latin America, Eastern Europe, Africa, the Middle East, Central Europe and Turkey. C. Other Revenue Information Significant Product Revenues As described in Note 1A , the February 3, 2017 sale of HIS impacted our results of operations in 2017. The following table provides detailed revenue information: (MILLIONS OF DOLLARS) Three Months Ended Nine Months Ended PRODUCT PRIMARY INDICATIONS OR CLASS September 30, October 1, September 30, October 1, TOTAL REVENUES $ 13,298 $ 13,168 $ 39,670 $ 38,843 PFIZER INNOVATIVE HEALTH (IH) (a) $ 8,471 $ 8,118 $ 24,573 $ 23,204 Internal Medicine $ 2,463 $ 2,455 $ 7,339 $ 7,245 Lyrica IH (b) Epilepsy, post-herpetic neuralgia and diabetic peripheral neuropathy, fibromyalgia, neuropathic pain due to spinal cord injury 1,132 1,150 3,398 3,382 Eliquis alliance revenues and direct sales Atrial fibrillation, deep vein thrombosis, pulmonary embolism 870 644 2,524 1,813 Chantix/Champix An aid to smoking cessation treatment in adults 18 years of age or older 261 240 789 727 BMP2 Development of bone and cartilage 54 79 206 198 Toviaz Overactive bladder 67 62 197 187 Viagra IH (c) Erectile dysfunction — 206 — 711 All other Internal Medicine Various 79 75 224 228 Vaccines $ 1,845 $ 1,649 $ 4,708 $ 4,385 Prevnar 13/Prevenar 13 Vaccines for prevention of pneumococcal disease 1,660 1,522 4,290 4,069 FSME/IMMUN-TicoVac Tick-borne encephalitis vaccine 57 43 162 119 Trumenba Meningococcal Group B vaccine 61 42 95 79 All other Vaccines Various 67 43 160 117 Oncology $ 1,775 $ 1,616 $ 5,294 $ 4,551 Ibrance Advanced breast cancer 1,025 878 2,985 2,410 Sutent Advanced and/or metastatic RCC, adjuvant RCC, refractory GIST (after disease progression on, or intolerance to, imatinib mesylate) and advanced pancreatic neuroendocrine tumor 248 276 785 805 Xtandi alliance revenues Castration-resistant prostate cancer 180 150 510 422 Xalkori ALK-positive and ROS1-positive advanced NSCLC 127 146 417 442 Inlyta Advanced RCC 71 84 226 256 Bosulif Philadelphia chromosome–positive chronic myelogenous leukemia 69 57 206 163 All other Oncology Various 55 26 164 54 Inflammation & Immunology (I&I) $ 1,018 $ 1,000 $ 2,951 $ 2,863 Enbrel (Outside the U.S. and Canada) Rheumatoid arthritis, juvenile idiopathic arthritis, psoriatic arthritis, plaque psoriasis, pediatric plaque psoriasis, ankylosing spondylitis and nonradiographic axial spondyloarthritis 531 613 1,589 1,818 Xeljanz Rheumatoid arthritis, psoriatic arthritis, ulcerative colitis 432 348 1,221 935 Eucrisa Mild-to-moderate atopic dermatitis (eczema) 40 15 104 33 All other I&I Various 15 23 37 78 Rare Disease $ 531 $ 569 $ 1,651 $ 1,637 BeneFIX Hemophilia 132 151 420 453 Genotropin Replacement of human growth hormone 143 136 416 375 Refacto AF/Xyntha Hemophilia 117 140 388 409 Somavert Acromegaly 64 65 195 182 All other Rare Disease Various 74 77 232 218 Consumer Healthcare $ 839 $ 829 $ 2,631 $ 2,522 PFIZER ESSENTIAL HEALTH (EH) (d) $ 4,826 $ 5,050 $ 15,097 $ 15,639 Legacy Established Products (LEP) (e) $ 2,533 $ 2,681 $ 7,865 $ 7,995 Lipitor Reduction of LDL cholesterol 507 491 1,539 1,341 Norvasc Hypertension 247 226 773 684 Premarin family Symptoms of menopause 204 238 605 711 Xalatan/Xalacom Glaucoma and ocular hypertension 76 83 233 241 Effexor Depression and certain anxiety disorders 78 76 228 215 Zoloft Depression and certain anxiety disorders 72 78 223 215 Zithromax Bacterial infections 54 61 216 202 EpiPen Epinephrine injection used in treatment of life-threatening allergic reactions 68 82 215 253 Xanax Anxiety disorders 52 58 163 164 Sildenafil Citrate Erectile dysfunction 1 — 72 — All other LEP Various 1,176 1,288 3,599 3,969 (MILLIONS OF DOLLARS) Three Months Ended Nine Months Ended PRODUCT PRIMARY INDICATIONS OR CLASS September 30, October 1, September 30, October 1, Sterile Injectable Pharmaceuticals (SIP) (f) $ 1,239 $ 1,273 $ 3,928 $ 4,270 Sulperazon Treatment of infections 145 114 464 345 Medrol Steroid anti-inflammatory 95 109 318 352 Fragmin Slows blood clotting 76 79 221 221 Tygacil Tetracycline class antibiotic 60 60 186 192 Zosyn/Tazocin Antibiotic 55 47 175 124 Precedex Sedation agent in surgery or intensive care 47 51 166 182 All other SIP Various 761 814 2,399 2,852 Peri-LOE Products (g) $ 698 $ 794 $ 2,208 $ 2,398 Viagra EH (c) Erectile dysfunction 137 102 509 285 Celebrex Arthritis pain and inflammation, acute pain 188 212 494 564 Vfend Fungal infections 87 97 294 305 Lyrica EH (b) Epilepsy, neuropathic pain and generalized anxiety disorder 81 134 251 428 Zyvox Bacterial infections 50 68 184 220 Revatio Pulmonary arterial hypertension 53 58 163 189 Pristiq Depression 52 69 156 230 All other Peri-LOE Products Various 49 55 157 176 Biosimilars (h) Various $ 197 $ 141 $ 558 $ 367 Inflectra/Remsima Inflammatory diseases 166 112 469 284 All other Biosimilars Various 31 28 89 82 Pfizer CentreOne (i) $ 159 $ 161 $ 539 $ 514 Hospira Infusion Systems (HIS) (j) Various $ — $ — $ — $ 97 Total Lyrica (b) Epilepsy, post-herpetic neuralgia and diabetic peripheral neuropathy, fibromyalgia, neuropathic pain due to spinal cord injury $ 1,213 $ 1,285 $ 3,649 $ 3,810 Total Viagra (c) Erectile dysfunction $ 137 $ 308 $ 509 $ 996 Total Alliance revenues Various $ 977 $ 741 $ 2,820 $ 2,112 (a) The IH business encompasses Internal Medicine, Vaccines, Oncology, Inflammation & Immunology, Rare Disease and Consumer Healthcare. (b) Lyrica revenues from all of Europe, Russia, Turkey, Israel and Central Asia countries are included in Lyrica EH. All other Lyrica revenues are included in Lyrica IH. Total Lyrica revenues represent the aggregate of worldwide revenues from Lyrica IH and Lyrica EH. (c) Viagra lost exclusivity in the U.S. in December 2017. Beginning in 2018, revenues for Viagra in the U.S. and Canada, which were reported in IH through 2017, are reported in EH (which reported all other Viagra revenues excluding the U.S. and Canada through 2017). Therefore, beginning in 2018, total Viagra revenues are reported in EH. Total Viagra revenues in 2017 represent the aggregate of worldwide revenues from Viagra IH and Viagra EH. (d) The EH business encompasses Legacy Established Products, Sterile Injectable Pharmaceuticals, Peri-LOE Products, Biosimilars, Pfizer CentreOne and HIS (through February 2, 2017). (e) Legacy Established Products primarily include products that have lost patent protection (excluding Sterile Injectable Pharmaceuticals and Peri-LOE Products). In the fourth quarter of 2017, we sold our equity share in Hisun Pfizer. As a result, effective in the first quarter of 2018, Hisun Pfizer-related revenues, previously reported in emerging markets within All Other LEP and All Other SIP, are reported in emerging markets within Pfizer CentreOne. (f) Sterile Injectable Pharmaceuticals includes branded and generic injectables (excluding Peri-LOE Products). In the fourth quarter of 2017, we sold our equity share in Hisun Pfizer. As a result, effective in the first quarter of 2018, Hisun Pfizer-related revenues, previously reported in emerging markets within All Other LEP and All Other SIP, are reported in emerging markets within Pfizer CentreOne. (g) Peri-LOE Products includes products that have recently lost or are anticipated to soon lose patent protection. These products primarily include: Lyrica in Europe, Russia, Turkey, Israel and Central Asia; worldwide revenues for Celebrex, Pristiq, Zyvox, Vfend, Revatio and Inspra; and beginning in 2018, Viagra revenues for all countries (and Viagra revenues for all countries other than the U.S. and Canada in 2017, see note (c) above). (h) Biosimilars includes Inflectra/Remsima (biosimilar infliximab) in the U.S. and certain international markets, Nivestim (biosimilar filgrastim) in certain European, Asian and Africa/Middle Eastern markets and in the U.S. and Retacrit (biosimilar epoetin zeta) in certain European and Africa/Middle Eastern markets. (i) Pfizer CentreOne includes revenues from our contract manufacturing and active pharmaceutical ingredient sales operation, including sterile injectables contract manufacturing, and revenues related to our manufacturing and supply agreements, including with Zoetis Inc. In the fourth quarter of 2017, we sold our equity share in Hisun Pfizer. As a result, effective in the first quarter of 2018, Hisun Pfizer-related revenues, previously reported in emerging markets within All Other LEP and All Other SIP, are reported in emerging markets within Pfizer CentreOne. (j) HIS (through February 2, 2017) includes Medication Management Systems products composed of infusion pumps and related software and services, as well as IV Infusion Products, including large volume IV solutions and their associated administration sets. |
