Pfizer 2010 Annual Report Download - page 8

Financial Review
Pfizer Inc. and Subsidiary Companies
Our Strategy
We believe that our medicines provide significant value for both healthcare providers and patients, not only from the improved
treatment of diseases but also from a reduction in other healthcare costs, such as emergency room or hospitalization costs, as well
as improvements in health, wellness and productivity. We continue to actively engage in dialogues about the value of our products
and how we can best work with patients, physicians and payers to prevent and treat disease and improve outcomes. We will work
within the current legal and pricing structures, as well as continue to review our pricing arrangements and contracting methods with
payers, to maximize access to patients and minimize any adverse impact on our revenues.
In response to the challenging operating environment, we have taken and continue to take many steps to strengthen our Company
and better position ourselves for the future. We believe in a comprehensive approach to our challenges—organizing our business to
maximize research, development and commercial opportunities, diversifying our sources of revenue, restructuring when necessary
to capture cost-reduction opportunities, opportunistically investing in acquisitions and collaboration arrangements and protecting our
intellectual property. Selected highlights are as follows:
•We believe that our Primary Care, Specialty Care, Established Products, Oncology and Emerging Markets biopharmaceutical business
unit structure enables us to better:
Omanage our products’ growth and development from proof-of-concept throughout their entire time on the market;
Obring innovation to our “go to market” promotional and commercial strategies;
Odevelop ways to further enhance the value of established products, including those that have lost or are about to lose their
exclusivity;
Oexpand our already substantial presence in emerging markets; and
Ocreate product-line extensions where feasible.
•Our Animal Health, Consumer Healthcare, Nutrition and Capsugel business units provide diverse sources of revenues.
•Through our PharmaTherapeutics research group (discovery of small molecules and related modalities) and BioTherapeutics research
group (large-molecule research, including vaccines), we continue to develop and deliver innovative medicines that will benefit patients
around the world and make the investments that we believe are necessary to serve patients’ needs and to generate long-term growth.
On February 1, 2011, we announced that we are continuing to closely evaluate our global research and development function and
will accelerate our current strategies to improve innovation and overall productivity by prioritizing areas with the greatest scientific
and commercial promise, utilizing appropriate risk/return profiles and focusing on areas with the highest potential to deliver value
in the near term and over time. To that end, our research will primarily focus on five high-priority areas that have a mix of small
and large molecules—immunology and inflammation, oncology, cardiovascular and metabolic diseases, neuroscience and pain
and vaccines. In addition to reducing the number of disease areas the Company will focus on, key steps in this process include a
realigned research and development footprint, with a planned exit from the Company’s Sandwich, United Kingdom (U.K.) site,
subject to works council and union consultations, the planned shift of selected resources from the Company’s Groton, Connecticut
site to its Cambridge, Massachusetts site, and the planned outsourcing of certain functions that do not drive competitive
advantage for Pfizer. As a result of these actions, we expect significant reductions in our annual research and development
expenses, which are reflected in our 2011 financial guidance and 2012 financial targets, and we expect to incur significant costs,
which are also reflected in our 2011 financial guidance and 2012 financial targets. For additional information, see the “Our
Financial Guidance for 2011”, “Our Financial Targets for 2012” and “Costs and Expenses—Cost-Reduction and Productivity
Initiatives and Related Costs” sections of this Financial Review.
While a significant portion of R&D is done internally, we continue to seek to expand our pipeline by entering into agreements with
other companies to develop, license or acquire promising compounds, technologies or capabilities. Collaboration, alliance and
license agreements and acquisitions allow us to capitalize on these compounds to expand our pipeline of potential future
products. In addition, collaborations and alliances allow us to share risk and to access external scientific and technological
expertise.
For information about our pending new drug applications (NDA) and supplemental filings, see the “Revenues—Product
Developments-Biopharmaceutical” section of this Financial Review.
•Our acquisition strategy included the acquisition of Wyeth in 2009, which significantly increased our diversification. We continue to build
on our broad portfolio of businesses through various business development transactions announced in 2010. We believe the following
transactions will complement our businesses as follows:
OOur acquisition of King Pharmaceuticals, Inc. complements our current portfolio of pain treatments in our Primary Care unit and
provides potential growth opportunities in our Established Products and Animal Health units.
OOur acquisition of FoldRx Pharmaceuticals, Inc. is expected to strengthen our presence in the growing rare medical disease market,
which complements our Specialty Care unit.
OOur alliance with Biocon complements our Established Products and Emerging Markets unit by advancing our strategies in
biosimilars and positions us competitively in the diabetes market over time.
OOur investment in and commercial agreements with Laboratório Teuto Brasileiro S.A. (Teuto) complement our Emerging Markets
unit by giving us access to a large network of independent distributors in Brazil and provide us the opportunity to commercialize
Teuto’s products outside of Brazil which may also provide opportunities for our Established Products unit.
6 2010 Financial Report