Pfizer 2015 Annual Report Download - page 46

Financial Review
Pfizer Inc. and Subsidiary Companies
2015 Financial Report
45
Total GIP revenues from emerging markets were $1.6 billion in 2015, consistent with $1.6 billion in 2014, reflecting 9% operational growth,
which was offset by the unfavorable impact of foreign exchange.
• Cost of sales as a percentage of Revenues decreased 2.2 percentage points in 2015, compared to 2014, primarily driven by a decrease in
royalty expense, favorable foreign exchange and an increase in alliance revenues, which have no associated cost of sales. The decrease in
Cost of sales of 16% in 2015, compared to 2014, was primarily driven by favorable foreign exchange and, to a lesser extent, a decrease in
royalty expense.
• The slight increase in Selling, informational and administrative expenses in 2015, compared to 2014, reflects additional investment in
Eliquis, Lyrica and certain other products, largely offset by favorable foreign exchange and reduced investment in certain other products.
• The increase in Research and development expenses of 22% in 2015, compared to 2014, primarily reflects the $295 million upfront
payment to OPKO Health, Inc. made in the first quarter of 2015 and increased investment in certain late-stage pipeline programs, primarily
bococizumab, partially offset by lower clinical trial expenses for certain previously approved products.
• The unfavorable change in Other (income)/deductions––net of 4% in 2015, compared to 2014, primarily reflects a decrease in royalty-
related income, partially offset by an increase in our equity income from certain equity-method investments.
2014 vs. 2013:
• Revenues decreased 3% in 2014, compared to 2013. Foreign exchange had an unfavorable impact of 1% on GIP revenues in 2014,
compared to 2013. Revenues decreased by 2% operationally in 2014, compared to 2013, primarily due to the following operational factors:
the expiration of the co-promotion term of the collaboration agreement for Enbrel in the U.S. and Canada on October 31, 2013 (down
approximately $1.4 billion in 2014); and
loss of exclusivity for Lyrica in Canada in February 2013 (a decline of approximately $67 million in 2014),
partially offset by:
strong operational growth from Lyrica, primarily in the U.S. and Japan, and Enbrel outside the U.S. and Canada, as well as the
performance of recently launched products, including Eliquis, primarily in the U.S. and most other developed markets, and Xeljanz
primarily in the U.S. (a combined increase of approximately $1.1 billion in 2014).
Total GIP revenues from emerging markets were $1.6 billion in 2014.
• Cost of sales as a percentage of Revenues increased 0.6 percentage points in 2014, compared to 2013, due to the loss of Enbrel alliance
revenue after October 31, 2013 when the co-promotion term of the collaboration agreement for Enbrel in the U.S. and Canada expired as
well as an unfavorable change in product mix. The increase in Cost of sales primarily reflects an unfavorable change in product mix.
• Selling, informational and administrative expenses increased 13% in 2014 compared to 2013, reflecting increased investment in recently
launched products and certain in-line products.
• Research and development expenses increased 31% in 2014 compared to 2013, reflecting incremental investment in late-stage pipeline
products.
• The favorable change in Other (income)/deductions––net of 93% in 2014, compared to 2013, primarily reflects an increase in royalty-related
income, primarily due to royalties earned on sales of Enbrel in the U.S. and Canada after October 31, 2013. As noted above, on that date,
the co-promotion term of the collaboration agreement for Enbrel in the U.S. and Canada expired, and Pfizer became entitled to royalties for
a 36-month period thereafter.
Global Vaccines, Oncology and Consumer Healthcare Operating Segment
Global Vaccines, Oncology and Consumer Healthcare Revenues
Year Ended December 31, % Change
(MILLIONS OF DOLLARS) 2015 2014 2013 15/14 14/13
Global Vaccines $ 6,454 $4,480 $3,965 44 13
Consumer Healthcare 3,395 3,446 3,342 (1) 3
Global Oncology 2,954 2,218 1,978 33 12
Total VOC $ 12,803 $10,144 $9,285 26 9
2015 vs. 2014:
• Revenues increased 26% in 2015, compared to 2014, which includes an increase of 34% operationally in 2015.
Global Vaccines Revenues increased 44% in 2015, compared to 2014, reflecting an operational increase in revenues of 51% in 2015.
The increase was primarily due to an increase of 87% in 2015 in Prevnar family revenue in the U.S., primarily driven by continued strong
uptake of Prevnar 13 among adults following the positive recommendation from ACIP for use in adults aged 65 and older in the third
quarter of 2014. International revenues increased 18% operationally in 2015, driven by the Prevenar family, which grew 9% operationally
in 2015, compared to 2014, primarily reflecting Prevenar’s inclusion in additional national immunization programs in certain emerging
markets. International revenues were also favorably impacted by the inclusion in 2015 of revenues associated with the acquisition of
Baxter’s portfolio of marketed vaccines in Europe.