Pfizer 2012 Annual Report Download - page 9

Financial Review
Pfizer Inc. and Subsidiary Companies
8
2012 Financial Report
We continue to closely evaluate our global research and development function and pursue strategies intended to improve innovation and
overall productivity in R&D by prioritizing areas that we believe have the greatest scientific and commercial promise, utilizing appropriate risk/
return profiles and focusing on areas that we believe have the highest potential to deliver value in the near term and over time. To that end, our
research primarily focuses 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 of focus,
we have realigned and reduced our research and development footprint and outsourced certain functions that do not drive competitive
advantage for Pfizer. For additional information, see the “Our Financial Guidance for 2013” and “Costs and Expenses—Restructuring Charges
and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives” 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.
We continue to build on our broad portfolio of businesses through various business development transactions. See the “Our Business
Development Initiatives” section of this Financial Review for information on our recent transactions and strategic investments that we believe
complement our businesses.
We continue to aggressively defend our patent rights against increasingly aggressive infringement whenever appropriate (see Notes to
Consolidated Financial Statements—Note 17. Commitments and Contingencies), and we will continue to support efforts that strengthen
worldwide recognition of patent rights while taking necessary steps to ensure appropriate patient access. In addition, we will continue to
employ innovative approaches to prevent counterfeit pharmaceuticals from entering the supply chain and to achieve greater control over the
distribution of our products, and we will continue to participate in the generics market for our products, whenever appropriate, once they lose
exclusivity.
We remain focused on achieving an appropriate cost structure for the Company. For information regarding our cost-reduction and productivity
initiatives, see the “Costs and Expenses—Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/
Productivity Initiatives” section of this Financial Review.
Our strategy also includes directly enhancing shareholder value through dividends and share repurchases. On December 17, 2012, our Board
of Directors declared a first-quarter 2013 dividend of $0.24 per share, an increase from the $0.22 per-share quarterly dividend paid during
2012. Also, on November 30, 2012, a new $10 billion share repurchase plan, to be utilized over time, became effective.
Our Business Development Initiatives
We are committed to capitalizing on growth opportunities by advancing our own pipeline and maximizing the value of our in-line products, as
well as through various forms of business development, which can include alliances, licenses, joint ventures, dispositions and acquisitions. We
view our business development activity as an enabler of our strategies, and we seek to generate profitable revenue growth and enhance
shareholder value by pursuing a disciplined, strategic and financial approach to evaluating business development opportunities. We are
especially interested in opportunities in our five high-priority therapeutic areas—immunology and inflammation; oncology; cardiovascular and
metabolic diseases; neuroscience and pain; and vaccines––and in emerging markets and established products. We assess our businesses
and assets as part of our regular, ongoing portfolio review process and also continue to consider business development activities for our
businesses.
The most significant recent transactions and events are described below.
• On February 6, 2013, an initial public offering of Zoetis was completed, pursuant to which we sold 99.015 million shares of Zoetis in
exchange for the retirement of approximately $2.5 billion of Pfizer commercial paper issued on January 10, 2013. The IPO represented
approximately 19.8% of the total outstanding Zoetis shares. For additional information, see Notes to Consolidated Financial
Statements––Note 19A. Subsequent Events: Zoetis Debt Offering and Initial Public Offering.
• On November 30, 2012, we completed the sale of our Nutrition business to Nestlé for $11.85 billion in cash. For additional information,
see Notes to Consolidated Financial Statements—Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method
Investments: Divestitures.
• On November 27, 2012, we completed our acquisition of NextWave Pharmaceuticals Incorporated (NextWave), a privately held, specialty
pharmaceutical company. As a result of the acquisition, Pfizer now holds exclusive North American rights to Quillivant XR™
(methylphenidate hydrochloride), the first once-daily liquid medication approved in the U.S. for the treatment of ADHD. The total
consideration for the acquisition was approximately $442 million. For additional information, see Notes to Consolidated Financial
Statements—Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions.
• On October 31, 2012, our equity-method investee, ViiV Healthcare Limited (ViiV), acquired the remaining 50% of Shionogi-ViiV
Healthcare LLC, its equity-method investee, from Shionogi & Co., Ltd. (Shionogi) in consideration for a 10% interest in ViiV (newly issued
shares) and contingent consideration in the form of future royalties. For additional information, see Notes to Consolidated Financial
Statements—Note 2D. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Equity-Method
Investments.