Pfizer 2008 Annual Report Download - page 92

Notes to Consolidated Financial Statements
Pfizer Inc and Subsidiary Companies
Environmental Matters
In January 2009, we submitted a corrective measures study report to the U.S Environmental Protection Agency with regard to
Pharmacia Corporation’s discontinued industrial chemical facility in North Haven, Connecticut.
We are a party to a number of other proceedings brought under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (CERCLA or Superfund), and other state, local or foreign laws in which the primary relief sought is
the cost of past and/or future remediation.
D. Government Investigations and Requests for Information
Like other pharmaceutical companies, we are subject to extensive regulation by national, state and local government agencies in the
U.S. and in the other countries in which we operate. As a result, we have interactions with government agencies on an ongoing
basis. Among the investigations and requests for information by government agencies are those discussed below. It is possible that
criminal charges and substantial fines and/or civil penalties could result from pending government investigations, including but not
limited to those discussed below.
In January 2009, the Company entered into an agreement in principle with the U.S. Department of Justice to resolve the previously
reported investigation regarding allegations of past “off-label” promotional practices concerning Bextra as well as certain other open
investigations. In connection with the agreement in principle, we recorded a pre-tax and after-tax charge of $2.3 billion in the fourth
quarter of 2008.
The Company has voluntarily provided the Department of Justice and the Securities and Exchange Commission with information
concerning potentially improper payments made in connection with certain sales activities outside the U.S. Certain potentially
improper payments and other matters are the subject of investigations by government authorities in certain foreign countries,
including the following: In Germany, a wholly owned subsidiary of Pfizer is the subject of a civil and criminal investigation with
respect to certain tax matters. In Italy, a wholly owned subsidiary of Pfizer is under criminal investigation by various government
authorities with respect to gifts and payments allegedly provided to certain doctors operating within Italy’s national healthcare
system. The Pfizer subsidiaries are fully cooperating in these investigations. In November 2008, final court approval was granted to
a plea bargain agreement between the prosecutor in Bari, Italy and a wholly owned subsidiary of Pfizer pursuant to which the
subsidiary paid a total of 1.5 million euros, which included a criminal penalty of 90,000 euros, to resolve allegations of improper
payments to certain doctors in the Puglia region of Italy, which includes Bari. Criminal investigations by various other government
authorities in Italy of alleged improper payments to certain doctors are continuing.
E. Guarantees and Indemnifications
In the ordinary course of business and in connection with the sale of assets and businesses, we often indemnify our counterparties
against certain liabilities that may arise in connection with the transaction or related to activities prior to the transaction. These
indemnifications typically pertain to environmental, tax, employee and/or product-related matters and patent infringement claims. If
the indemnified party were to make a successful claim pursuant to the terms of the indemnification, we would be required to
reimburse the loss. These indemnifications are generally subject to threshold amounts, specified claim periods and other restrictions
and limitations. Historically, we have not paid significant amounts under these provisions and, as of December 31, 2008, recorded
amounts for the estimated fair value of these indemnifications were not significant.
20. Segment, Geographic and Revenue Information
Business Segments
We operate in the following business segments:
•Pharmaceutical
– The Pharmaceutical segment includes products that prevent and treat cardiovascular and metabolic diseases, central nervous
system disorders, arthritis and pain, infectious and respiratory diseases, urogenital conditions, cancer, eye diseases and endocrine
disorders, among others.
•Animal Health
– The Animal Health segment includes products that prevent and treat diseases in livestock and companion animals.
For our reportable operating segments (i.e., Pharmaceutical and Animal Health), segment profit/(loss) is measured based on income
from continuing operations before provision for taxes on income and minority interests. Certain costs, such as significant impacts of
purchase accounting for acquisitions, acquisition-related costs and costs related to our cost-reduction initiatives and transition
activity associated with our former Consumer Healthcare business, are included in Corporate/Other only. This methodology is
utilized by management to evaluate our businesses.
Each segment is managed separately and offers different products requiring different marketing and distribution strategies.
We sell our products primarily to customers in the wholesale sector. In 2008, sales to our three largest U.S. wholesaler customers
represented approximately 16%, 10% and 10% of total revenues and, collectively, represented approximately 19% of accounts
receivable as of December 31, 2008. In 2007, sales to our three largest U.S. wholesaler customers represented approximately 18%,
12% and 10% of total revenues and, collectively, represented approximately 20% of accounts receivable as of December 31, 2007.
These sales and related accounts receivable were concentrated in the Pharmaceutical segment.
Revenues exceeded $500 million in each of 14 countries outside the U.S. in 2008 and in each of 12 countries outside the U.S. in
2007. The U.S. was the only country to contribute more than 10% of total revenues in each year.
90 2008 Financial Report