Pfizer 2013 Annual Report Download - page 31

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Financial Review
Pfizer Inc. and Subsidiary Companies
30
2013 Financial Report
2012 v. 2011
Cost of sales decreased 21% in 2012, compared to 2011, primarily due to:
• lower purchase accounting charges, primarily reflecting the fair value adjustments to acquired inventory from Wyeth and King that was
subsequently sold;
• lower costs related to our cost-reduction and productivity initiatives and acquisition-related costs, as well as the benefits generated from
the ongoing productivity initiatives to streamline the manufacturing network;
• reduced manufacturing volumes related to products that lost exclusivity in various markets; and
• the favorable impact of foreign exchange of 3%,
partially offset by:
• an unfavorable shift in geographic, product and business mix due to products that lost exclusivity in various markets.
Selling, Informational and Administrative (SI&A) Expenses
Year Ended December 31, % Change
(MILLIONS OF DOLLARS) 2013 2012 2011 13/12 12/11
Selling, informational and administrative expenses $14,355 $ 15,171 $ 17,581 (5) (14)
As a percentage of Revenues 27.8%27.8%28.8%
2013 v. 2012
SI&A expenses decreased 5% in 2013, compared to 2012, primarily due to:
• savings generated from a reduction in marketing functions, partly in response to product losses of exclusivity and more streamlined
corporate support functions; and
• the favorable impact of foreign exchange of 1%,
partially offset by:
• increased spending in support of several new product launches.
2012 v. 2011
SI&A expenses decreased 14% in 2012, compared to 2011, primarily due to:
• savings generated from a reduction in the field force and a decrease in promotional spending, both partly in response to product losses of
exclusivity;
• more streamlined corporate support functions; and
• the favorable impact of foreign exchange of 2%,
partially offset by:
• costs associated with the separation of Zoetis employees, net assets and operations from Pfizer.
Research and Development (R&D) Expenses
Year Ended December 31, % Change
(MILLIONS OF DOLLARS) 2013 2012 2011 13/12 12/11
Research and development expenses $6,678 $7,482 $8,681 (11)(14)
As a percentage of Revenues 12.9%13.7%14.2%
2013 v. 2012
R&D expenses decreased 11% in 2013, compared to 2012, primarily due to:
• the non-recurrence of a $250 million payment to AstraZeneca in 2012 to obtain the exclusive, global, OTC rights to Nexium; and
• lower charges related to implementing our cost-reduction and productivity initiatives.
2012 v. 2011
R&D expenses decreased 14% in 2012, compared to 2011, primarily due to:
• savings generated by the discontinuation of certain therapeutic areas and R&D programs in connection with our previously announced
cost-reduction and productivity initiatives; and
• lower charges related to implementing our cost-reduction and productivity initiatives,