Pfizer 2011 Annual Report Download - page 26

Financial Review
Pfizer Inc. and Subsidiary Companies
Research and Development
Research and Development Operations
Innovation is critical to the success of our company and drug discovery and development is time-consuming, expensive and
unpredictable, particularly for human health products. As a result, and also because we are predominately a human health
company, the vast majority of our R&D spending is associated with human health products, compounds and activities.
We incurred the following expenses in connection with our Research and Development (R&D) operations (see also Notes to
Consolidated Financial Statements––Note 18. Segment, Geographic and Revenue Information):
RESEARCH AND DEVELOPMENT EXPENSES
YEAR ENDED DECEMBER 31, % INCR./(DECR.)
(MILLIONS OF DOLLARS) 2011 2010 2009 11/10 10/09
Primary Care Operating Segment(a) $1,307 $1,473 $1,407 (11) 5
Specialty Care and Oncology Operating Segment(a) 1,561 1,624 1,060 (4) 53
Established Products and Emerging Markets Operating Segment(a) 441 452 392 (2) 15
Animal Health and Consumer Healthcare Operating Segment(a) 425 428 297 (1) 44
Nutrition and Pfizer CentreSource(a) 41 34 8 17 *
Worldwide Research and Development/Pfizer Medical(b) 3,337 3,709 2,698 (10) 37
Corporate and other(c) 2,000 1,672 1,962 20 (15)
$9,112 $9,392 $7,824 (3) 20
(a) Our operating segments, in addition to their sales and marketing responsibilities, are responsible for certain development activities. Generally, these
responsibilities relate to additional indications for in-line products and IPR&D projects that have achieved proof-of-concept. R&D spending may
include upfront and milestone payments for intellectual property rights.
(b) Worldwide Research and Development is generally responsible for human health research projects until proof-of-concept is achieved, and then for
transitioning those projects to the appropriate business unit for possible clinical and commercial development. R&D spending may include upfront
and milestone payments for intellectual property rights. This 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. Pfizer Medical is responsible for all
human-health-related regulatory submissions and interactions with regulatory agencies, including all safety event activities, for conducting clinical
trial audits and readiness reviews and for providing Pfizer-related medical information to healthcare providers.
(c) Corporate and other includes unallocated costs, primarily facility costs, information technology, share-based compensation, and restructuring
related costs.
Our human health R&D spending is conducted through a number of matrix organizations––Research Units, within our Worldwide
Research and Development organization, that are generally responsible for research assets (assets that have not yet achieved
proof-of-concept); Business Units that are generally responsible for development assets (assets that have achieved
proof-of-concept); and science-based and other platform-services organizations.
We take a holistic approach to our human health R&D operations and manage the operations on a total-company basis through our
matrix organizations described above. Specifically, a single committee, co-chaired by members of our R&D and commercial
organizations, is accountable for aligning resources among all of our human health R&D projects and for ensuring that our company
is focusing its R&D resources in the areas where we believe that we can be most successful and maximize our return on
investment. We believe that this approach also serves to maximize accountability and flexibility.
Our Research Units are organized in a variety of ways (by therapeutic area or combinations of therapeutic areas, by discipline, by
location, etc.) to enhance flexibility, cohesiveness and focus. Because of our structure, we can rapidly redeploy resources, within a
Research Unit, between various projects as necessary because the workforce shares similar skills, expertise and/or focus.
Our platform-services organizations, where a significant portion of our R&D spending occurs, provide technical expertise and other
services to the various R&D projects, and are organized into science-based functions such as Pharmaceutical Sciences, Chemistry,
Drug Safety, and Development Operations, and non-science-based functions, such as Facilities, Business Technology and Finance.
As a result, within each of these functions, we are able to migrate resources among projects, candidates and/or targets in any
therapeutic area and in most phases of development, allowing us to react quickly in response to evolving needs.
Generally, we do not disaggregate total R&D expense by development phase or by therapeutic area since, as described above, we
do not manage a significant portion of our R&D operations by development phase or by therapeutic area. Further, as we are able to
adjust a significant portion of our spending quickly, as conditions change, also as described above, we believe that any prior-period
information about R&D expense by development phase or by therapeutic area would not necessarily be representative of future
spending.
Product Developments—Biopharmaceutical
We continue to invest in R&D to provide potential future sources of revenues through the development of new products, as well as
through additional uses for in-line and alliance products. We have achieved our previously announced goal of 15 to 20 regulatory
submissions in the 2010-to-2012 period. Notwithstanding our efforts, there are no assurances as to when, or if, we will receive
regulatory approval for additional indications for existing products or any of our other products in development.
We continue to closely evaluate our global research and development function and to pursue strategies to improve innovation and
overall productivity by prioritizing areas with the greatest scientific and commercial promise, utilizing appropriate risk/return profiles
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