Pfizer 2010 Annual Report Download - page 112

Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
E. Guarantees and Indemnifications
In the ordinary course of business and in connection with the sale of assets and businesses, we often indemnify our counterparties
against certain liabilities that may arise in connection with the transaction or related to activities prior to the transaction. These
indemnifications typically pertain to environmental, tax, employee and/or product-related matters and patent-infringement claims. If
the indemnified party were to make a successful claim pursuant to the terms of the indemnification, we would be required to
reimburse the loss. These indemnifications are generally subject to threshold amounts, specified claim periods and other restrictions
and limitations. Historically, we have not paid significant amounts under these provisions and, as of December 31, 2010, recorded
amounts for the estimated fair value of these indemnifications were not significant.
20. Segment, Geographic and Revenue Information
Business Segments
Effective with the acquisition of Wyeth, we operate in the following two distinct commercial organizations, which constitute our two
business segments:
•Biopharmaceutical consists of the Primary Care, Specialty Care, Oncology, Established Products and Emerging Markets units and
includes products that prevent and treat cardiovascular and metabolic diseases, central nervous system disorders, arthritis and pain,
infectious and respiratory diseases, urogenital conditions, cancer, eye diseases and endocrine disorders, among others.
Biopharmaceutical’s segment profit includes costs related to research and development, manufacturing, and sales and marketing
activities that are associated with the products in our Biopharmaceutical segment.
•Diversified includes Animal Health products and services that prevent and treat diseases in livestock and companion animals,
including vaccines, parasiticides and anti-infectives; Consumer Healthcare products that include over-the-counter healthcare products
such as pain management therapies (analgesics and heat wraps), cough/cold/allergy remedies, dietary supplements, hemorrhoidal
care and personal care items; Nutrition products that consist mainly of infant and toddler nutritional products; and Capsugel, which
represents our capsule products and services business. Diversified’s segment profit includes costs related to research and
development, manufacturing, and sales and marketing activities that are associated with the products in our Diversified segment.
Segment profit/(loss) is measured based on income from continuing operations before provision for taxes on income and income
attributable to noncontrolling interests. Certain costs, such as significant impacts of purchase accounting for acquisitions,
restructuring and acquisition-related costs, costs related to our cost-reduction initiatives and certain asset impairment charges are
included in Corporate/Other only. This methodology is utilized by management to evaluate our businesses. We regularly review our
segments and the approach used by management to evaluate performance and allocate resources.
Each segment offers different products requiring different marketing and distribution strategies. We sell our products primarily to
customers in the wholesale sector. In 2010, sales to our three largest U.S. wholesaler customers represented approximately 14%,
10% and 9% of total revenues and, collectively, represented approximately 17% of accounts receivable as of December 31, 2010.
These sales and related accounts receivable were concentrated in the Biopharmaceutical segment. In 2009, sales to our three
largest U.S. wholesaler customers represented approximately 17%, 11% and 10% of total revenues and, collectively, represented
approximately 13% of accounts receivable as of December 31, 2009.
Revenues exceeded $500 million in each of 18 countries outside the U.S. in 2010, in each of 13 countries outside the U.S. in 2009
and in each of 14 countries outside the U.S. in 2008. The U.S. was the only country to contribute more than 10% of total revenues in
each year.
Segment Revenues and Profit
Segment revenues and profit are as follows:
YEAR ENDED DECEMBER 31,
(MILLIONS OF DOLLARS) 2010(a) 2009(a) 2008
Revenues
Biopharmaceutical $ 58,523 $ 45,448 $ 44,174
Diversified 8,966 4,189 3,592
Corporate/Other(b) 320 372 530
Total revenues $ 67,809 $ 50,009 $ 48,296
Segment profit/(loss)(c)
Biopharmaceutical $ 28,981 $ 21,939 $ 21,786
Diversified 2,042 935 972
Corporate/Other(b), (d) (21,601) (12,047) (13,064)
Total profit/(loss) $ 9,422 $ 10,827 $ 9,694
(a) Includes revenues and profit/(loss) from legacy Wyeth operations for a full year in 2010. 2009 includes revenues and profit/(loss) from legacy Wyeth
operations commencing on the Wyeth acquisition date, October 15, 2009, in accordance with Pfizer’s domestic and international year-ends.
(b) Corporate/Other includes, among other things, Pfizer CentreSource, which includes contract manufacturing and bulk pharmaceutical chemical
sales. Corporate/Other under Segment profit/(loss) also includes, among other things, interest income/(expense), corporate administration
expenses, certain performance-based and all share-based compensation expenses, significant impacts of purchase accounting for acquisitions, all
acquisition-related costs, substantially all restructurings, significant asset impairments and litigation charges.
110 2010 Financial Report