Pfizer 2010 Annual Report Download - page 11

Financial Review
Pfizer Inc. and Subsidiary Companies
•In the fourth quarter of 2008, we completed the acquisition of a number of animal health product lines from Schering-Plough
Corporation (Schering-Plough) for approximately $170 million.
•In October 2008, an agreement with Medivation, Inc. (Medivation) to develop and commercialize Latrepirdine (Dimebon), Medivation’s
investigational drug for treatment of Alzheimer’s disease and Huntington’s disease went into effect. Latrepirdine currently is being
evaluated in a Phase 3 trial in patients with mild-to-moderate Alzheimer’s disease and in a Phase 3 trial in patients with Huntington’s
disease. Under the collaboration agreement with Medivation, we made an upfront payment of $225 million, which is included in
Research and development expenses in 2008. We also agreed to make additional payments of up to $500 million based upon
development and regulatory milestones, as well as additional milestone payments based upon the successful commercialization of the
product.
•In the second quarter of 2008, we acquired Encysive Pharmaceuticals Inc. (Encysive), a biopharmaceutical company whose main
product was Thelin, through a tender offer, for approximately $200 million, including transaction costs (see the “Product Developments-
Biopharmaceutical” section of this Financial Review and Notes to Consolidated Financial Statements—Note 3B. Other Significant
Transactions and Events: Asset Impairment Charges). In addition, in the second quarter of 2008, we acquired Serenex, Inc. (Serenex),
a privately held biotechnology company. In connection with these acquisitions, we recorded approximately $170 million in Acquisition-
related in-process research and development charges and approximately $450 million in intangible assets in 2008.
•In the second quarter of 2008, we entered into an agreement with a subsidiary of Celldex for an exclusive worldwide license to
CDX-110, an experimental therapeutic vaccine in Phase 2 development for the treatment of glioblastoma multiforme, and exclusive
rights to the use of EGFRvIII vaccines in other potential indications. Under the license and development agreement, an upfront
payment was made in 2008. In September 2010, we terminated this agreement.
•In the first quarter of 2008, we acquired CovX, a privately held biotherapeutics company, and we acquired all the outstanding shares of
Coley Pharmaceutical Group, Inc., (Coley), a biopharmaceutical company. In connection with these and two smaller acquisitions
related to Animal Health, we recorded approximately $440 million in Acquisition-related in-process research and development charges
in 2008. In 2010 and 2009, we resolved certain contingencies and met certain milestones associated with CovX and recorded $125
million in 2010 and $68 million in 2009 of Acquisition-related in-process research and development charges.
Our Financial Guidance for 2011
We forecast 2011 revenues of $66.0 billion to $68.0 billion, Reported diluted earnings per common share (EPS) of $1.09 to $1.24
and Adjusted diluted EPS of $2.16 to $2.26. The current exchange rates assumed in connection with the 2011 financial guidance
are the mid-January 2011 exchange rates. For an understanding of Adjusted income, see the “Adjusted Income” section of this
Financial Review.
A reconciliation of 2011 Adjusted income and Adjusted diluted EPS guidance to 2011 Reported Net income attributable to Pfizer Inc.
and Reported diluted EPS attributable to Pfizer Inc. common shareholders guidance follows:
FULL-YEAR 2011 GUIDANCE
(BILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) NET INCOME(a) DILUTED EPS(a)
Adjusted income/diluted EPS(b) guidance ~$17.1-$17.9 ~$2.16-$2.26
Purchase accounting impacts of transactions completed as of 12/31/10 (4.7) (0.59)
Acquisition-related costs (1.9-2.2) (0.25-0.28)
Non-acquisition-related restructuring costs(c) (1.4-1.6) (0.18-0.20)
Reported Net income attributable to Pfizer Inc./diluted EPS guidance ~$8.6-$9.9 ~$1.09-$1.24
(a) Assumes the completion of the acquisition of all remaining shares of King Pharmaceuticals, Inc., but does not assume the completion of any other
business-development transactions not completed as of December 31, 2010. Also excludes the potential effects of the resolution of litigation-related
matters not substantially resolved as of December 31, 2010.
(b) For an understanding of Adjusted income, see the “Adjusted Income” section of this Financial Review.
(c) Amounts relate to actions to be taken in connection with our planned reduction in R&D spending, including our realigned R&D footprint. In our
reconciliation between Net income attributable to Pfizer Inc., as reported under principles generally accepted in the United States of America (U.S.
GAAP), and Adjusted income, these amounts will be categorized as Certain Significant Items.
For a description of the savings and costs associated with our integration of Wyeth and our new Research and Development
productivity initiative, please see “Our Financial Targets for 2012” below.
Our 2011 financial guidance is subject to a number of factors and uncertainties—as described in the “Forward-Looking Information
and Factors That May Affect Future Results”, “Our Operating Environment” and “Our Strategy” sections of this Financial Review and
in Part I, Item 1A, “Risk Factors”, of our 2010 Annual Report on Form 10-K.
Our Financial Targets for 2012
At exchange rates in effect in mid-January 2011, we are targeting 2012 revenues of $63.0 billion to $65.5 billion, Reported diluted
EPS between $1.58 and $1.73 and Adjusted diluted EPS between $2.25 and $2.35. For an understanding of Adjusted income, see
the “Adjusted Income” section of this Financial Review.
2010 Financial Report 9