Our Values Table of Contents
Integrity 2 Letter to Shareholders
5 Creating the World’s Fastest-Growing
Innovation Pharmaceutical Company
8 Our Market-Leading Medicines
Respect for People 12 Our Global Presence
16 Our Commitment to R&D
Customer Focus 18 Review of Operations
27 Our Community Activities
Teamwork 28 Financial Review
37 Management’s Report
38 Audit Committee’s Report and
Leadership
Independent Auditors’ Report
39 Consolidated Statement of Income
Performance 40 Consolidated Balance Sheet
41 Consolidated Statement of Shareholders’ Equity
Community 42 Consolidated Statement of Cash Flows
43 Notes to Consolidated Financial Statements
61 Quarterly Consolidated Financial Data (Unaudited)
62 Financial Summary (1989 -1999)
63 Directors, Committees, and Officers
64 Corporate and Shareholder Information
65 Ensuring Access to Innovative Medicines
Financial Highlights
Year ended December 31
% Change
(millions, except per share data) 1999 1998 1997 99/98 98/97
Total revenues $16,204 $13,544 $11,055 20 23
Income from continuing operations before provision for
taxes on income and minority interests 4,448 2,594 2,867 71 (10)
Provision for taxes on income 1,244 642 775 94 (17)
Discontinued operations – net of tax (20) 1,401 131 – 972
Net income 3,179 3,351 2,213 (5) 51
Research and development expenses 2,776 2,279 1,805 22 26
Property, plant and equipment additions 1,561 1,198 878 30 36
Cash dividends paid 1,148 976 881 18 11
Diluted earnings per common share .82 .85 .57 (4) 50
Cash dividends paid per common share .30 2/3 .25 1/3 .22 2/3 21 12
Shareholders’ equity per common share 2.36 2.33 2.10 1 11
Weighted average shares – diluted 3,884 3,945 3,909 (2) 1
Number of common shares outstanding 3,847 3,883 3,883 (1) –
(thousands)
Number of shareholders 147 105 87 40 21
Number of employees 51 46 41 11 12
Percentages may reflect rounding adjustments.
All data throughout this report have been restated to reflect the 1999 three-for-one stock split in the form of a 200% stock dividend.
About Pfizer About the Cover
Pfizer Inc is a research-based global pharmaceutical company. We discover, In Santa Ana, California, Dale and Arlene Post enjoy an outing with
develop, manufacture, and market innovative medicines for humans and their family, including daughter Jody, grandchildren Spencer and Emily,
animals. In 1999, Pfizer celebrated its 150th anniversary. and best friend Keeler. Both Dale and Arlene suffer from atrial fibrilla-
tion, a common form of irregular heartbeat, and rely on Tikosyn to
treat it. Approved in 1999, Tikosyn is the latest addition to Pfizer’s
broad cardiovascular portfolio.
During the 1990s, 1999
Pfizer’s revenues $16.2 billion
grew by 284%.
Our growth has outpaced the
industry every year for the past
decade, and was more than double
the average in 1999.
1989
$4.2 billion
To Our Shareholders
F
or Pfizer and our shareholders,
1999 was an exceptional year,
capping a decade of extraordinary Pfizer’s exceptional performance
achievement. We ended the century has substantially benefited our shareholders.
on a high note — including our share of Our stock split four times in the 1990s:
the sales generated by our copromotion three times on a two-for-one basis —
activities, Pfizer became the world’s in 1991, 1995, and 1997 — and on a
number one pharmaceutical company in three-for-one basis in 1999. This achieve-
prescription sales. ment is unprecedented in Pfizer’s history
Over the last decade, our prescription and unequaled by any company in our
pharmaceutical revenue has quintupled, peer group.
our investment in R&D has sextupled, In January of 1999, we announced a
our reported net income has more than first-quarter dividend of 22 cents (7.33
quadrupled, and the price of our stock cents adjusted for the three-for-one stock
has increased more than ten times. The split), a 16% increase over 1998. This year,
growth of our pharmaceutical revenue we increased the first-quarter dividend to
exceeded that of the industry every year 9 cents, up 23% (adjusted for the three-
throughout the last decade, and in 1999, for-one stock split) over the same quarter
it more than doubled the industry rate. the year before.
In 1999, total revenues topped $16.2 Driven by the success of our innovative
billion, up 20% over 1998. Excluding the in-line and alliance products, Pfizer
impact of a charge taken in the third Pharmaceuticals Group’s revenues
quarter related to Trovan inventories, of increased 22% to $14.9 billion. In 1999,
certain significant prior-year charges, and Pfizer became the only company to have
of the 1998 divestiture of the Medical participated in all three of the industry’s
Technology Group, net income increased latest record-breaking launches. In 1997,
by 29% to almost $3.4 billion, and in concert with Warner-Lambert, the
diluted earnings per share increased by company that discovered Lipitor, we
30% to 87 cents. launched this innovative lipid-lowering
agent. In 1998, we introduced Pfizer’s
Viagra, the world’s leading treatment for
erectile dysfunction. In February 1999,
2
along with G.D. Searle & Co., the
pharmaceutical division of Monsanto
Company, we launched Celebrex, one of Despite challenging market conditions,
the world’s leading treatments for arthritis, our Animal Health Group’s sales increased
which was discovered by Searle. 2% to $1.3 billion. These results were
We set another record in 1999 when fueled by the increasing popularity of
Pfizer became the only company in our Rimadyl, a treatment for the relief of
industry to have seven medicines, including pain and inflammation associated with
those we copromote, each achieve annual osteoarthritis in dogs; and by the launch of
sales of $1 billion or more. The five medi- Revolution, Pfizer’s new,
cines discovered by Pfizer in this group — innovative antiparasitic We set another record in 1999
Norvasc, Zoloft, Zithromax, Viagra, and for dogs and cats —
when Pfizer became the only
Diflucan — grew at a combined annual hailed by many as the
rate of 18%. Norvasc, with yearly sales most successful launch company in our industry to have
exceeding $3 billion, maintained its in the history of the seven medicines — including those
position as the world’s number one anti- animal health industry.
hypertensive. Zoloft continued to be a Building on the we copromote — each achieve
leading antidepressant worldwide. strong base provided by annual sales of $1 billion or more.
Zithromax retained its rank as the most- our innovative pharma-
prescribed branded oral antibiotic in the ceuticals for humans and animals, Pfizer
United States. Viagra remained the world’s is forging ahead with an aggressive R&D Total Revenues (millions of dollars)
leading treatment for erectile dysfunction, program. In 1999, we invested almost
Total revenues have
and Diflucan held the lead as the world’s $2.8 billion in R&D, a 22% increase over increased at a
compound annual
largest-selling prescription antifungal. 1998. We currently have more than 200 growth rate of 19%
$16,204
Unfortunately, we also experienced a projects in discovery and development for over the past 5 years. $13,544
disappointment with Trovan. Although humans and animals, and this year, we $11,055
$9,864
this unique antibiotic has saved thousands expect to invest approximately $3.2 billion $8,684
of lives, rare cases of unanticipated severe in R&D.
liver injury associated with it resulted in To accommodate our extensive number
our relabeling Trovan in the United States of projects in discovery and development,
exclusively for use in serious infections and to provide the necessary support for 95 96 97 98 99
in institutional settings, and in its suspen- our in-line products, we have expanded
sion in Europe. our research centers in Groton, Connecticut;
In early October of 1999, the U.S. Sandwich, England; and Nagoya, Japan. R&D Expenses (millions of dollars)
Food and Drug Administration (FDA) We have also added to our field forces — Research and
approved Tikosyn, Pfizer’s new medicine which are the key link between our development expenses
have increased at a $2,776
for atrial fibrillation, and we anticipate research laboratories and the practicing compound annual
growth rate of 22%
launching it in the first quarter of this year. physician. Since 1994, we have doubled over the past 5 years.
$2,279
A few weeks later, we received an approv- the number of our sales representatives $1,805
$1,567
able letter from the FDA for Relpax, our in the United States, and in our industry’s $1,340
innovative remedy for migraines. In most prestigious survey, more than
December, Pfizer’s antidepressant Zoloft 10,000 doctors nationwide have recognized
became the first medicine approved by the the outstanding quality and training of
FDA for the treatment of posttraumatic our sales force by ranking it number one 95 96 97 98 99
stress disorder, and by midyear, we expect overall for five consecutive years.
to refile our application for Zeldox, our Pfizer is advancing in every area. Our
novel antipsychotic drug. fundamentals are strong. Our pipeline is
broad and deep, and our field forces are
second to none. Our company is increasingly
3
recognized as a world leader in the busi-
ness community. In 1999, Forbes selected
Pfizer “Company of the Year,” and Working
Mother ranked Pfizer one of the “100 Best
Companies for Working Mothers.” Just
last month, Fortune named Pfizer one of
the “100 Best Companies to Work For” Obviously, one of the most important
and number one in our industry, and events of 1999 was Pfizer’s proposal to
Business Week ranked Pfizer’s board as one acquire Warner-Lambert. As you know, a
of the 25 best in the world. few weeks ago, we announced that Pfizer
Pfizer takes an active role in corporate and Warner-Lambert, the two fastest-
governance, public policy debates, and growing major companies in our industry,
support of the community. In the current would join forces to create what I believe
discussions over Medicare, we have strongly will be the best pharmaceutical company
supported prescription drug coverage for in the world. The page following this
elderly Americans who do not have access letter explains in greater detail how this
to pharmaceuticals. The statement on acquisition will benefit both you and the
page 65 suggests the measures that we shareholders of Warner-Lambert.
believe would provide the necessary cover- As we look toward a bright future,
age and also enable our industry to carry I would like to say a word about succession
out the R&D that saves, protects, and planning, which I believe is one of a
enhances lives. Chairman’s most important duties. For
Commitment to the community at me, this has been made easier by the
every level is one of Pfizer’s eight core extraordinary quality of senior managers
values, and I believe that it grows natu- at Pfizer. On May 27, 1999, our board
rally out of our humanitarian mission. This elected Dr. Henry A. McKinnell president
commitment also plays an indispensable and chief operating officer of Pfizer Inc.
role in promoting our outstanding perfor- He has done a superb job of managing
mance. It helps us hire and retain the best our acquisition of Warner-Lambert and
people. It helps us motivate our employees. of planning the integration of our two
It enhances our company’s reputation and companies. Simultaneously, the board
improves our relations with the public, elected Dr. John Niblack vice chairman
as well as with doctors, patients, and of our company.
others in the medical community. This As Pfizer enters the twenty-first
commitment also produces the kind of century, we have never been stronger and
trust and goodwill that are invaluable in our prospects have never been brighter.
dealing with regulatory agencies and In 1999, we celebrated 150 years of
government officials. excellence and innovation — a proud
legacy that the outstanding people of
Pfizer are well prepared to take into the
next millennium.
William C. Steere, Jr.
Chairman of the Board and
Chief Executive Officer
February 14, 2000
4
Creating the World’s Fastest-Growing
Pharmaceutical Company
W
ith net income growth of 20% per The combined pharmaceutical product lines of
year anticipated for 2000 to 2002 as the two companies represent significant depth
a stand-alone company, Pfizer was and breadth, including seven billion-dollar prod-
in a strong position to continue our ucts. The new Pfizer will receive all revenues
successes of the 1990s. However, in late 1999, a from Lipitor, which is expected to achieve sales
unique opportunity arose that would allow us in 2000 in excess of $5 billion. The company
to achieve even faster earnings growth. Pfizer will also have a significant presence in consumer
made a bid in November 1999, subsequently health care, confectionery products, and animal
revised in February 2000, to merge with medicines. The combined R&D operations will
Warner-Lambert, the only major pharmaceutical have a worldwide scientific staff of more than
company growing faster than we were. 12,000 and $4.7 billion in anticipated annual
Under terms of the agreement, Pfizer expenditures in 2000, the largest investment
will exchange 2.75 shares of Pfizer voting in the industry. We expect the combined
common stock for each outstanding share of company will have anticipated annual cost
Warner-Lambert voting stock. Approved by savings and efficiencies of $1.6 billion by 2002
the boards of both companies, the merger ($200 million of these savings are expected to
agreement is conditional upon the use of be achieved in 2000, $1 billion in 2001, and
pooling-of-interests $1.6 billion in 2002). Diluted earnings per
Pfizer and Warner-Lambert accounting, qualifying as a share of the combined company over that
represent a new competitive tax-free reorganization, the period are expected to accelerate from 20% for
approval of shareholders of Pfizer alone to 25% for Pfizer combined with
standard for our industry.
both companies, and the Warner-Lambert. These earnings projections
usual regulatory approvals. It is expected to include the $1.6 billion of cost savings phased
close in mid-2000. in over this time period, but do not include
The new company will retain the name sales opportunities achievable by bringing
Pfizer Inc. Up to eight independent directors together the two organizations, anticipated
from Warner-Lambert’s board of directors will restructuring charges and transaction fees of
be invited to join Pfizer’s board. Mr. Steere will $1.7 billion to $2.2 billion, and the termination
be chairman and chief executive officer, and fee paid by Warner-Lambert to American
Dr. McKinnell will be president and chief Home Products Corporation.
operating officer. Three members of the The new Pfizer will have the industry’s
Warner-Lambert management team will join broadest range of products that treat diseases
Pfizer’s Corporate Management Committee. associated with cardiovascular risks, a signifi-
Corporate headquarters will remain in New cantly expanded program in treating central
York. The worldwide and U.S. pharmaceutical nervous system disorders, a vastly expanded
division headquarters will also be in New York. portfolio of products for infectious diseases,
The Warner-Lambert Consumer Health Care and important medicines in women’s health.
Division, along with the other consumer The Pfizer and Warner-Lambert organiza-
businesses and selected additional functions, tions will work together in a spirit of collabora-
will be located at Warner-Lambert’s offices in tion and mutual respect to capitalize on the
Morris Plains, New Jersey. extraordinary opportunity now before us. The
The new Pfizer will have annual revenues combined talents of Pfizer and Warner-Lambert
in 2000 of approximately $31 billion, including people will make us not just bigger, but better.
$24 billion in prescription pharmaceutical sales. 5
By 2025, the number
in the
will double to
6
Athletes race toward the finish notion of an “Olympics for older
line in the 200-meter dash at people” would have been
the Pfizer-sponsored Senior unthinkable. Today, thanks in
Games. Held in Orlando, Florida, part to pharmaceutical
the 1999 event brought companies like Pfizer, millions
of peopletogether 12,000 men and
women ranging in age from
50 to 99. Not so long ago, the
of people realize that growing
old doesn’t have to mean
slowing down.
world age 65 and over
800 million.
7
G
ood health is the key to a good For example, several of the medicines
life. To do the things you love to we offer treat risk factors for heart disease,
do. To be productive at work. To one of the world’s leading killers. Backed
see your children have children. by award-winning patient and physician
Pfizer is committed to the pursuit of education programs, these drugs are helping
medicines that help ensure good health, millions of people “get to goal” — be it
and our products treat some of the world’s lower blood pressure (Norvasc), lower
most widespread diseases and conditions. cholesterol (Lipitor), or controlled blood
Pfizer medicines keep millio sugar levels (Glucotrol XL). Both Norvasc
and Lipitor had 1999 revenues in
excess of $3 billion,
ranking
them among the
world’s most successful
medicines of any kind.
Zoloft is a leading treatment
for depression, which is estimated to affect
more than 10% of the world’s population
— about 600 million people. In 1999,
Zoloft was approved for posttraumatic
stress disorder (PTSD), a debilitating
What could be better than winning the World
Series? For New York Yankee second baseman
Chuck Knoblauch, it was having the chance
to share that victory with his father, Ray, a
victim of Alzheimer’s disease. “In the 1998
season, my dad came out to the stadium and
took great joy in watching me play,”
Knoblauch says. “I’m not sure he would have
been able to do that if he wasn’t taking
Aricept. That’s why I’m happy to be working
with Pfizer and Eisai on an awareness
campaign stressing the need for early
diagnosis and treatment.” Discovered
and developed by Eisai Co., Ltd.,
and copromoted by Pfizer,
Aricept is the world’s leading
Alzheimer’s medicine.
8
condition triggered by exposure to an
extreme traumatic event. Approximately
half of all people will experience, witness, or
learn about such an event during their
lifetime; 10% to 20% of these people will Seven of the medicines we offer generated
develop PTSD.
1999 revenues of over $1 billion. No other
ons healthy pharmaceutical company has such a powerful
product portfolio.
throughout their lives.
Arthritis is another common condition
Global statistics are difficult to come by, but the high prevalence in
that Pfizer is helping to combat. In 1999,
the United States of many diseases — and the fact that so many
G.D. Searle & Co. and Pfizer introduced who suffer from them remain undiagnosed and untreated —
Celebrex, which delivers relief from underscores the importance of the work we are doing:
arthritis pain, inflammation, and stiffness. • One in four has high blood pressure.
Powered by an excellent efficacy and side- • One in three has high cholesterol.
effect profile, Celebrex set a new record as • One in sixteen has diabetes.
• One in six will suffer from depression.
the most successful U.S. product launch
• One in six has arthritis.
in industry history. • One in ten over age 65 has Alzheimer’s disease.
Building on our years of expertise in • Four in ten have allergies.
livestock products, Pfizer has also • Half of all men 40 to 70 years old will experience
established leadership in the fast-growing erectile dysfunction.
category of medicines for pets. The bond
between people and their pets is extremely
powerful. A Gallup poll of dog owners, Carole Gatti has owned and
for example, showed that 92% consider operated Florida’s Winstar
their pet to be a member of the family. Farm since 1988. She
relies on Pfizer’s animal
Pfizer’s newest companion animal medicine
health products to
is Revolution (marketed as Stronghold in care for the horses
Europe), the first and only product that she boards, as well
protects dogs and cats from both internal as for her own pets,
and external parasites, including heart- including dachshunds
worms and fleas, with just a single monthly Odie and Samantha.
topically applied dose. This unique medi-
cine has enjoyed one of the most successful
launches in animal health industry history.
9
By 2003,rising
global pharmaceutical
than it is today.
10
demand will create a
market one third larger
The subways of Tokyo are the overall Japanese market for
bursting with energy, even as 70 straight months. In fact,
Japan wrestles with caring for Pfizer now ranks as the number
what is the world’s most rapidly one non-Japanese-owned
aging population. Pfizer began pharmaceutical company.
doing business in Japan more The 1999 introduction of Viagra
than 40 years ago, and today it and the Alzheimer’s medicine
ranks as our second-largest Aricept, coupled with our plans
market, accounting for over to launch several new medi-
$1.2 billion in annual revenues. cines over the next few years,
In December, Pfizer Japan should ensure continued
achieved its “Super 70” goal — strong growth for Pfizer in this
growing revenues faster than important market.
11
T
he desire to live a healthy, produc-
tive life knows no borders. Pfizer
was one of the first in the industry
to recognize the tremendous
potential for success outside our home
country, and we now do business in more The following year, Aricept was intro-
than 150 countries. duced in Europe, where a similar strategy
While each market is unique, we yielded equally strong results. In 1999,
have been working to share best practices Aricept was launched in Japan, and Pfizer
on a global basis. In 1997, for example, and Eisai teams there met with their
we launched the Alzheimer’s medicine counterparts from France and the United
Aricept in the United States, along with States to learn from their success. The end
our copromotion partner Eisai. Aricept result is that well over a million people
quickly became the country’s most widely around the world have now been helped
prescribed Alzheimer’s treatment, as we by this powerful medicine.
worked to educate patients, physicians, and In 1998, Pfizer launched Viagra in the
advocacy groups about this effective treat- United States, triggering what can only be
ment for a terrible disease. described as a global phenomenon. For all
Pfizer brings good health
to every corn In 1999, Pfizer celebrated its 150th anniver-
sary as an American company and marked a
number of international milestones as well.
Forty-five years in France, Sweden, the
Philippines, and the Netherlands. Forty years
in Finland, Norway, and Portugal. Thirty-five
years in Korea, Singapore, and Malaysia. Ten
years in China — where DanLong Feng, who
works closely with the media and govern-
ment, was Pfizer’s first employee. Today, a
decade later, she is excited about the role
Pfizer is playing in bringing better health
care to her country. “More than 1.2 billion
people live here,” she says. “And they are
just as interested in living healthy lives as
people in every other part of the world.”
12
While “direct-to-consumer” advertising for
prescription pharmaceuticals is increasingly
common in the United States, it is still a new
concept in many other parts of the world.
Pfizer has pioneered the use of such ads to
raise awareness about erectile dysfunction, a
the attention, however, Viagra and erectile condition that affects an estimated 100 million
men and their partners worldwide. By show-
dysfunction (ED) are still frequently
casing the many faces of ED, Pfizer has taken
misunderstood. Pfizer has been educating this condition out of the shadows and given
men, doctors, and insurers that ED is a men the knowledge — and the courage —
common and treatable condition and one they need to seek treatment.
that can often be traced to even more serious
medical problems, such as high blood
pressure, high cholesterol, and diabetes.
This strategy, conceived and executed
globally, enabled Viagra to top the billion
dollar sales mark in 1999, its first full Italy
year on the market. More importantly, it
has helped more than six million men
and their partners in the United States
recapture an important part of their lives.
Brazil
rner of the world.
We are a truly global company,
doing business in more than
150 countries. In 1999, our
revenues exceeded $100 million
in 12 different countries outside
the United States.
United States
13
The sequencing
will increase the number
The odds against bringing an drug discovery and is still there machine that analyzes cells at
innovative new medicine to today. By forging alliances with a rate of 10,000 per second and
market are daunting. New tech- leading biotech companies and sorts out only those that react to
nologies are improving the investing in new facilities of our a specific compound.This allows
likelihood of success, however, own, we are redefining the R&D us to identify promising new drug
and that is good news for process. At our Discovery Tech- targets roughly eight times faster
pharmaceutical companies and nology Center in Cambridge, than conventional methods.
patients alike. Pfizer has long Massachusetts, scientist Mark
14 been on the cutting edge of Roth uses a state-of-the-art
of the human genome
of drug targets
from 500 to 10,000.
15
Our pipeline is full of exciting candidates,
including several medicines in late-stage
development with peak annual sales
potential of more than $1 billion.
Pfizer is leading the
T
remendous strides have been
way to a h
made against dozens of diseases
during the past several decades,
but much work remains to be
done. While we celebrate victories over
twentieth-century scourges like smallpox and we have assembled the strongest, most
and polio, we also watch with concern consistently productive global research and
the growing global ranks of those con- development operation in the industry to
fronting other dreaded illnesses, such do it. In the next few years alone, we expect
as diabetes and cancer. to launch as many as six new medicines
Pfizer is committed to discovering the to treat diseases and conditions affecting
wonder drugs of the twenty-first century, hundreds of millions of people.
At our research campus in
Groton, Connecticut, senior
scientist Barbara Foster is
part of a growing team of
Pfizer researchers working
to discover new cancer med-
icines. Pfizer has several
promising candidates in its
pipeline to prevent and treat
this disease. “Because we all
know colleagues and friends
whose cancer did not
respond to current therapies,
we take the challenge of
finding effective new drugs
very seriously,” Foster says.
“Every day we come to
work wanting to win. Our
scientists take great pride in
doing their best, and in
doing so, we inspire each
other to meet the challenge
before us.”
16
We have new chemical entities in early
development to treat these conditions:
Relpax, for example, our new medicine
to treat migraine headaches, is currently Alzheimer’s Disease Head Trauma
Anxiety Infection
under regulatory review. Relpax has Arthritis Ischemic Reperfusion Injury
demonstrated powerful pain relief in Asthma Lipid Modulation
Benign Prostatic Hyperplasia Migraine
comparative trials against the current market Bone Restoration Nicotine Addiction
leader. Because of this, we believe Relpax Cancer Obesity
will be welcome news to the world’s 240 Chronic Obstructive Pulmonary Disease Osteoporosis
Depression Pain
million migraine sufferers — 85% of Dermal Scarring Sleep Disorders
whom are not treated with a prescription Diabetes Stroke
Erectile Dysfunction Transplant Rejection
medicine, despite the incapacitating nature Frailty Wound Healing
of these headaches.
a healthier tomorrow.
We are equally optimistic about the for many of our currently marketed
prospects for a new “inhaled insulin” tech- medicines. Zithromax, for example, has
nology to treat diabetes that we are devel- been a very successful antibiotic for many
oping in collaboration with Aventis Pharma years. Today, Pfizer scientists are also
and Inhale Therapeutic Systems, Inc. The studying whether Zithromax might be
global incidence of diabetes is growing effective in preventing cardiac events in
rapidly, yet most people with the disease post-heart-attack patients.
are either undiagnosed or not adequately Looking farther into the future, Pfizer
controlling their blood sugar levels. This has more drug candidates in early develop-
new patient-friendly treatment option ment than ever before. They cover a broad
provides the means by which patients may range of therapeutic areas, including cancer,
better manage their diabetes and improve post-menopausal disorders, frailty, and brain
control of this debilitating disease. injury caused by stroke or trauma.
Inhaled insulin minimizes the need for Pfizer also leads the world in R&D
painful and inconvenient insulin injections dedicated to animal health. Our pipeline
and thus removes the psychological barrier of product candidates, which has tripled
to adequate administration of insulin. in number in the last three years, exploits
Clinical trials have shown inhaled novel gene therapies and vaccine technolo-
insulin to be effective in and of itself as gies and benefits from synergies with our
well as in conjunction with oral medicines. human health research. Between now and
Phase III studies are now under way at 120 2005, we estimate that our animal health
sites worldwide, and Pfizer and Aventis division will expand rapidly.
Pharma are constructing a state-of-the-art
insulin plant in Frankfurt, Germany.
To further drive near-term growth, we
are exploring new uses and formulations
17
Review of the proposed merger with Warner-Lambert,
we expect further profit margin expansion, 16%
Operations revenue growth, and 20% earnings per share
growth in 2000.
Pfizer set records in each of the past three
years with the most successful product launches in
pharmaceutical history — Lipitor, Viagra, and
Celebrex. These three young blockbusters joined
P
fizer completed its rise to the top of the seven strong growth products — Norvasc, Zoloft,
worldwide pharmaceutical rankings in Zithromax, Diflucan, Zyrtec, Aricept, and
1999. Culminating a decade of extraordi- Glucotrol XL — to produce total company
nary growth, the company’s sales of revenue growth of 20% to $16.2 billion in 1999.
prescription drugs, including our share of the Each of these 10 products is number one or
sales of copromoted products, were the highest number two in its field, with U.S. patent protection
in the industry. until at least 2004.
Pfizer’s performance is characterized not Our pipeline of new products shows great
only by size, but also by superior growth. In 1999, promise. One new product, Tikosyn, was approved
Pfizer had 20% revenue growth, the highest by the FDA, and another, Relpax, received an
among the world’s top 10 pharmaceutical approvable letter. We intend to refile Zeldox by
companies. Our pharmaceutical revenue growth midyear, and filings of four other candidates are
exceeded that of the industry every year this expected by 2002. These seven late-stage prod-
decade, and in 1999 was more than two times ucts include four with peak annual sales potential
the industry rate. of a billion dollars or more — Relpax, Zeldox,
Our profit margins expanded in 1999, as valdecoxib, and inhaled insulin — and two others —
we leveraged substantial recent investments in Vfend and darifenacin — with sales potential
sales, marketing, and R&D. For Pfizer, excluding approaching this level. In addition, we anticipate
20 filings for supplemental indications or presenta-
tions of marketed products during this period. In
Worldwide Revenues of Therapeutic Lines and Major Products total, our pipeline of human medicines has more
% Change than 90 programs in development to treat diseases
(millions of dollars) 1999 1998 1997 99/98 98/97
such as osteoporosis, frailty, cancer, head trauma,
stroke, diabetes, asthma, and erectile dysfunction.
Worldwide Pharmaceuticals $14,859 $ 12,230 $ 9,726 + 22 + 26
Cardiovascular Diseases 4,635 4,186 3,806 + 11 + 10 Cardiovascular Diseases
Norvasc 3,030 2,575 2,217 + 18 + 16
Cardura 794 688 626 + 15 + 10
Although substantial progress has been made
Procardia XL 521 714 822 - 27 - 13 in recent decades, cardiovascular diseases (CVD)
Infectious Diseases 3,145 2,822 2,475 + 11 + 14 remain the leading cause of death in the developed
Zithromax 1,333 1,041 821 + 28 + 27 world. Of the 2.3 million American deaths
Diflucan 1,002 916 881 + 9 + 4 every year, more than 41% are primarily attribut-
Unasyn 349 327 346 + 7 - 5
Sulperazon 158 133 139 + 19 - 4
able to CVD, and more than 60% have CVD as
Central Nervous System Disorders 2,156 1,924 1,553 + 12 + 24 a contributing cause.
Zoloft 2,034 1,836 1,507 + 11 + 22 Mortality rates from coronary heart disease
Diabetes 297 273 234 + 9 + 17 and stroke have been cut in half in the past
Glucotrol XL 262 226 175 + 16 + 29 20 years, in part due to improved treatment of
Viagra 1,033 788 – + 31 –
Allergy 557 422 273 + 32 + 55
hypertension. However, improvements have
Zyrtec/Reactine 552 416 265 + 33 + 57 stopped in recent years, and many of the 50 million
Arthritis/Inflammation 222 234 271 - 5 - 14 Americans afflicted by hypertension go undiag-
Feldene 179 201 236 - 11 - 15 nosed or inadequately treated. The NHANES III
Alliance Revenue 2,071 867 316 + 139 + 175 survey, for example, concluded that fewer than
Consumer Health Care 561 526 584 + 7 - 10
70% of hypertensive patients were aware of their
Percentages may reflect rounding adjustments. condition, fewer than 55% were receiving
Certain prior year data have been reclassified to conform to the current year presentation. treatment, and fewer than 30% had their blood
pressure under control.
18
Pfizer markets Norvasc, the world’s largest-
selling medicine for hypertension and angina.
Sales of Norvasc increased 18% to over $3.0 billion
in 1999. Since its introduction in 1990, Norvasc
has had more than 12 billion patient days of
therapy worldwide. Its success has been driven by
its outstanding efficacy, once-daily dosing, consis-
tent 24-hour control of hypertension and angina,
and excellent safety and tolerability. It is the
only drug in its class that can be safely used by
congestive heart failure patients.
The results of more than 190 clinical trials
support Norvasc’s profile. For example, in the
PREVENT clinical
trial, a three-year
study involving 825
patients with coro-
“It’s made
nary artery disease,
patients receiving a real difference Jessica Vance is a busy woman. She is a self-
employed event planner who enjoys painting,
hiking, dancing, and spending time with her
Norvasc experi-
enced significantly
fewer cardiovascular
in my life.” four grandchildren. Like millions of others, however, Jessica has high
blood pressure. Diagnosed in 1992, she tried several different antihyper-
tensives, but none worked for her until she began taking Norvasc in 1998.
procedures or events, such as angioplasties, bypass
“It’s made a real difference in my life,” Jessica says. “I can concentrate on
surgeries, and hospitalizations for severe angina or
building my business and doing the things I love without having to worry
heart failure, compared to those receiving placebo.
about my health all the time.”
Pfizer is currently undertaking a two-year,
3,000-patient study, CAMELOT, comparing
Norvasc with the ACE inhibitor enalapril in the Sales of Procardia XL for hypertension and
reduction of cardiovascular events and the angina declined 27% to $521 million, due in part
progression of atherosclerosis in patients with to doctors’ increasing emphasis on Norvasc.
coronary artery disease. Norvasc is also being Sales of Cardura, an alpha blocker offering
studied in the largest trial ever undertaken in clinicians and patients a unique, cost-effective
hypertension, the five-year, 43,000-patient option for treating hypertension and benign
ALLHAT trial begun in 1994 under the auspices prostatic hyperplasia (BPH), increased 15% to
of the National Heart, Lung, and Blood Institute. $794 million in 1999. Studies have found that
The five-year, 18,000-patient ASCOT clinical more than 40% of men diagnosed with BPH also
trial will test whether Norvasc and other newer have hypertension. Cardura can be used to treat
antihypertensive therapies can show reduced rates patients with BPH who also have hyperlipidemia,
of heart attacks compared with older therapies. insulin resistance, and diabetes. Cardura patients
ASCOT will also examine whether combination of in the PREDICT trial, a one-year, 1,089-patient
the lipid-lowering agent Lipitor with Norvasc study, experienced significantly better relief of
reduces the rates of heart attacks. BPH symptoms than patients on finasteride. An
extended-release formulation, Cardura XL, which
has been launched in some European countries,
may reduce the need for dose titration.
Blood cholesterol levels are an important and
underappreciated risk factor for heart disease.
Studies have shown that a 1% decrease in
cholesterol levels leads to a 2% decrease in the
risk of heart disease.
19
Lipitor is the most-prescribed cholesterol-
lowering product in the United States, receiving
more than 43% of weekly new prescriptions for all
cholesterol-lowering agents. Worldwide sales of
Lipitor, discovered and developed by the Parke-
Davis Division of Warner-Lambert and copromoted
by Pfizer, totaled $3.7 billion in 1999.
In clinical studies, Lipitor, as an adjunct to
diet, has demonstrated the ability to significantly The American Stroke Association estimates
reduce cholesterol levels. In fact, 72% of Lipitor that 600,000 Americans suffer a stroke every
patients studied reached their National Cholesterol year, more than one quarter of whom die.
Education Program goal for LDL cholesterol on Neutrophil inhibitory factor (NIF), a biological
the 10 mg starting dose. discovered by Corvas that is produced by the
In the AVERT trial, Lipitor demonstrated a canine hookworm, may be useful in preventing
36% reduction in the combined incidence of brain damage that occurs in stroke. Pfizer is
cardiovascular events, such as death, nonfatal conducting Phase II clinical trials of this com-
heart attack, bypass surgery, revascularization, pound and, pending their success, may accelerate
and worsening angina, compared with patients this product’s development.
receiving angioplasty followed by usual care.
Pfizer and Warner-Lambert are continuing Diabetes
a broad clinical program for Lipitor. The TNT People with diabetes are two to four times more
(Treating to New Targets) trial is a five-year likely than non-diabetics to have heart disease
study enrolling 8,600 patients at 250 sites to or suffer a stroke. Worldwide, the incidence of
determine whether there are further benefits diabetes is estimated to grow from 175 million
to using higher doses of Lipitor to bring LDL today to 240 million people in the next decade.
cholesterol below current guidelines. Glucotrol XL, Pfizer’s oral treatment for
Pfizer and Warner-Lambert have also begun Type 2 diabetes, stimulates the pancreas to release
development programs for a single product that insulin, with convenient once-daily dosing, no
combines the active ingredients of Lipitor and weight gain, and no adverse effects on blood
Norvasc. In the United States, 27 million patients lipids. Sales in 1999 rose 16% to $262 million.
suffer from both high blood pressure and high We are developing an inhalable form of
cholesterol. With only about 15% of these insulin in collaboration with Aventis Pharma and
patients being treated for both conditions, a vast Inhale Therapeutic Systems. Our clinical data in
number of patients may benefit from a single Type 1 diabetics show this patient-friendly
combination therapy. insulin delivery system to be as effective as subcu-
Pfizer will add to its cardiovascular product taneous injections of short-acting insulin. In Type
line with the first-quarter 2000 launch of 2 diabetes, we are demonstrating that inhaled
Tikosyn. This product is indicated for conversion insulin can be used as monotherapy or as an
to, and maintenance of, normal sinus rhythm in adjunct to oral hypoglycemic agents. The prod-
highly symptomatic patients with atrial fibrilla- uct, expected to be the first of its kind to reach
tion (AF)/atrial flutter of greater than one week the market, is in Phase III clinical trials, with a
duration. Pfizer has developed a comprehensive regulatory filing expected in 2001.
program to educate institutions and health care Pfizer is also pursuing an innovative approach
professionals on the required in-hospital initiation to treatment of Type 2 diabetes with the develop-
of the drug and use of its unique dosing algorithm. ment of CP-368,296. This compound inhibits the
Patients with AF suffer from rapid and irregular enzyme responsible for the release of glucose into
heartbeats in the upper chambers of the heart. the blood from stored glycogen in the liver.
Many experience debilitating chest pain, short- Clinical trials indicate that CP-368,296 causes a
ness of breath, fatigue, and anxiety. highly significant dose-dependent decrease in fast-
ing morning glucose levels after two weeks of
administration without the accompanying risk
of hypoglycemia.
20
Infectious Diseases
Pfizer’s Zithromax is the most-prescribed brand-
name oral antibiotic in the United States. Diflucan, the world’s best-selling prescrip-
Worldwide sales grew 28% to $1.3 billion in tion antifungal product, achieved 9% growth in
1999, driven by the product’s broad efficacy, sales to over $1.0 billion in 1999. This robust
compliance advantages, favorable side-effect profile, growth after 12 years on the market reflects the
and a good-tasting liquid formulation for children. unique properties of Diflucan and the growing
Zithromax treats most respiratory infections in medical need that it continues to fulfill. It treats
adults and children with once-daily dosing for
just three to five days. It is also used for skin As a working mother at Pfizer, Nancy Knowles
infections in adults, middle ear infections and understands the challenge of balancing the
strep pharyngitis in children, and a broad range demands of career and family — especially when
of other illnesses. one of her children is sick. Seen here at the
The 3,500-patient WIZARD study is testing “Pfizer Kids” child care center in New York City
whether 600 mg of Zithromax taken once weekly with Carly and Sean, Nancy says, “Sean’s ear
reduces cardiac events in post-heart-attack infection was really slowing him down. Zithromax
patients with atherosclerosis who are positive for has him laughing again.” Zithromax’s efficacy
previous Chlamydia presence. Chlamydia has been and convenient once-a-day-for-five-days dosing
observed in arterial plaques, where it may con- has helped it become the most-prescribed
tribute to plaque instability, rupture, and heart branded oral antibiotic in the
attack. Zithromax’s unique long tissue half-life
and high antichlamydial potency make it the
United States. Family-friendly
measures like our child “Zithromax
ideal agent for this condition. A new indication
for treatment of Mycobacterium avium complex and
a three-day dosing regimen for the U.S. market
care center contributed to
Pfizer being named one of
the “100 Best Companies
has Sean laughing
are also in advanced development.
again.”
to Work For” by Fortune magazine and one of the
“100 Best Companies for Working Mothers” by
Working Mother magazine.
21
Central Nervous System Disorders
While diseases of the central nervous system can
be difficult to recognize, they have devastating
effects on people’s lives. About 18 million people
systemic fungal infections, often present in in the United States suffer from depression at any
critically ill AIDS, cancer, transplant, and other given time, and up to 25% of women and up to
immunocompromised patients. Such infections 12% of men in the United States will experience
are difficult to diagnose and, if not treated early, a major depression during their lives. Pfizer’s
can result in high mortality. Diflucan is also Zoloft treats depression and panic disorder as well
effective as an oral treatment for vaginal candidi- as obsessive-compulsive disorder in adults and
asis and other non-life-threatening infections. children with strong efficacy and a favorable
Pfizer is completing clinical testing of Vfend safety and tolerability profile. The results of
(voriconazole), a powerful antifungal that it outcomes research studies have demonstrated that
expects to file with regulatory authorities during Zoloft patients have lower discontinuation rates
2000. The compound is targeted to treat a broad and better treatment compliance in comparison to
range of patients for invasive infections, includ- some other antidepressants.
ing aspergillosis and candidiasis. In 1999, Zoloft became the second Pfizer-
Sales of Trovan were $86 million in 1999. developed product to achieve $2 billion in annual
In June 1999, based on reports of rare liver side sales. An oral liquid dosage form, which provides
effects, European medical authorities suspended more convenient dosing in children and patients
the European Union licenses of Trovan for 12 who have difficulty swallowing pills, and an indi-
months. In the rest of the world, including the cation for posttraumatic stress disorder (PTSD)
United States, the use of Trovan is limited to were approved by the FDA in December 1999.
serious infections in institutionalized patients. Approximately 8% of the population will suffer
from PTSD at some point in their lifetimes.
Pfizer is also testing Zoloft for social phobia and
pediatric depression.
“It was a long,
“Today I’m better, hard road,” says
Lyn Whitten,
Approximately 10% of people over 65 suffer
from Alzheimer’s disease, including 4 million
Americans. Aricept has been taken by more
a lot better.” reflecting upon
the past few years of her life. “But today
I’m better, a lot better.” Lyn is one of more
than a million patients with mild-to-moderate
Alzheimer’s disease to enhance or maintain cogni-
tion. Discovered and developed by Eisai Co.,
than a million uninsured patients who have
Ltd., and copromoted by Pfizer,
received the most advanced Pfizer
the product preserves levels of
medicines at no charge through our
a neurotransmitter in the
Sharing the Care program. Following
brain. Total worldwide sales
the loss of a good job in California’s
grew 49% to $551 million
aerospace industry and the
in 1999. Together with
death of her mother, Lyn found
our partner Eisai, we
herself battling severe depres-
recently concluded
sion and anxiety, struggling to
make ends meet, and wonder-
ing where to turn for help. She
has been taking the antide-
pressant Zoloft for about a
year, and is gradually
getting her life back on
track. “I owe thanks to
the many people who
have helped me
along the way,” she
says. “I feel truly
blessed.”
22
two landmark one-year studies that demonstrate
Aricept’s benefit in maintaining patient function
and delaying institutionalization. It is also the
subject of a three-year, 720-patient study
designed to investigate whether Aricept can delay each year in the United States. Pfizer’s Phase II
the onset of Alzheimer’s disease in patients with compound CP-101,606 shows promise as a
mild cognitive impairment. treatment for brain trauma. If pivotal trials are
Clinical development of Zeldox, for the successful, this candidate has the potential for
manifestation of psychosis, advanced in 1999. accelerated development.
One psychotic disorder, schizophrenia, affects
approximately 1% of the world’s population. It is Metabolic Disorders
characterized by symptoms such as hallucinations, The National Institutes of Health estimate that
delusions, social withdrawal, and cognitive 10 million Americans suffer from osteoporosis,
impairment. Zeldox is effective in treating a a disease characterized by deterioration of bone
broad spectrum of symptoms, both in the short mass. The Pfizer-developed compound lasofoxifene
and long term, causing little or no weight gain has shown promise in prevention and treatment
and having a favorable effect on blood lipids. It of osteoporosis, lowering of harmful blood lipids,
has a unique intramuscular form for initiation of and prevention of breast cancer. In Phase II clinical
therapy for control of acute exacerbations. trials, 0.25 mg of lasofoxifene increased bone
Following consultation with the FDA, after mineral density in the lumbar spine more than
the agency issued a non-approvable letter for 60 mg of raloxifene after six months. Lasofoxifene
Zeldox, we undertook a unique clinical trial to also lowered LDL cholesterol by 25%.
characterize the modest electrocardiogram (ECG) Loss of bone and muscle mass throughout life
changes that were seen with the drug. Data from can lead to frailty and greatly reduced quality of
this trial and the clinical development program life in the elderly. CP-424,391, a Phase II Pfizer
support the absence of a significant risk associated compound, has demonstrated good efficacy, safety,
with the ECG changes seen with Zeldox. We and tolerability in increasing levels of the growth
anticipate refiling our new drug application for hormone that preserves bone and muscle mass.
Zeldox by midyear.
Migraine is one of the most common Arthritis
medical problems, experienced by 18% of women About one person in six suffers from arthritis.
and 6% of men. In spite of the incapacitating Rheumatoid arthritis (RA) affects about 1% of
nature of migraines — symptoms of which the population and results when the immune sys-
include severe headache pain, nausea, and sensitivity tem attacks a person’s own joints. Osteoarthritis
to light or sound — the vast majority of sufferers (OA) results from wear and tear on the joints.
have never been diagnosed or treated with pre- Celebrex, a new pharmaceutical copromoted
scription medicines. by Pfizer and the G.D. Searle division of
In October 1999, Pfizer received an approvable Monsanto Company, which discovered the drug,
letter from the FDA for Relpax, our new treatment relieves the pain, inflammation, and stiffness of
for migraine. Clinical data show that within an OA and RA. In clinical trials, Celebrex was shown
hour of taking an oral dose of Relpax, up to 40% to be as effective as the maximum recommended
of patients with moderate or severe migraine dose of the prescription-strength nonsteroidal
experience significant or complete headache relief, anti-inflammatory drug (NSAID) naproxen in
and up to 70% of patients experience relief treating arthritis pain and inflammation. Celebrex
within two hours. The Relpax clinical program works by inhibiting the enzyme cyclo-oxygenase-2
consisted of seven controlled clinical trials, three of (COX-2), which plays a role in arthritis pain and
which compared Relpax to the current leading inflammation, without inhibiting cyclo-oxygenase-1
prescription treatment for migraine. (COX-1), which helps maintain the stomach lining.
Brain trauma from motor vehicle accidents, NSAIDs in general inhibit both COX enzymes, so
sports injuries, and other causes results in about they treat arthritis pain and inflammation, but
300,000 hospitalizations and 50,000 deaths may damage the stomach lining, potentially leading
to ulcers in some patients.
23
“I just love seeing Ed
be himself again.” In New York’s Central Park, Ed and Shaila Small
enjoy an afternoon of ice skating. The Smalls have
always been extremely active people, but Ed’s
arthritic knee was beginning to slow him down.
He began taking Celebrex in February 1999 and
has been feeling better ever since. “I am the
director of a track and field center during the
week and keep busy during my days off, too,” Ed
says. “If my knee is holding me back, I can’t live
my life.” Shaila noticed the difference Celebrex
made right away. “I could see how hard it was for
him to deal with the pain,” she says. “I just love
seeing Ed be himself again.”
Cancer
Cancer is the second leading cause of death in
the United States, with 1.2 million new cases
and 600,000 deaths every year.
In December 1999, the FDA approved
Celebrex as the first COX-2 specific inhibitor
approved for treatment of familial adenomatous
polyposis (FAP), a rare and devastating genetic
disease characterized by the development of
hundreds to thousands of polyps in the colon and
rectum. Left untreated, virtually all patients with
FAP develop colorectal cancer by age 40 to 50.
Celebrex is being tested for several other cancers.
Erectile Dysfunction
The 1998 launch of Viagra for erectile dysfunction
(ED) was one of the most talked-about medical
advances of our time. The product made further
progress in 1999, with a worldwide rollout and
sales topping $1 billion. Since launch, physicians
have written more than 17 million prescriptions
for Viagra for more than 6 million patients in the
United States alone. More than 150 million
tablets have been dispensed worldwide.
Viagra allows many men with ED to achieve
With sales of $1.5 billion in 1999, Celebrex erections in response to sexual stimulation. It
was the most successful drug launch in pharma- improves erections in up to 82% of men who take
ceutical industry history. In its first year, more it, is effective in a broad range of patients, and
than 19 million prescriptions were written for offers the convenience of a pill. At the 1999 annual
Celebrex worldwide. meeting of the American Urological Association,
Pfizer and G.D. Searle & Co. are actively Pfizer reported that 93% of 401 patients who
engaged in a program to broaden the clinical pro- participated in a Viagra study remained satisfied
file of Celebrex, including potential new uses for with the drug after two years.
treatment of pain and several types of cancer.
In addition, Pfizer and Searle are testing the
second-generation compound valdecoxib for
treatment of RA, OA, and pain.
24
The division is also working today to plan
Allergy for future switches of prescription-only medicines
Pfizer’s antihistamine Zyrtec, marketed as Reactine to over-the-counter (OTC) brands. With experience
in Canada, provides strong, rapid, and long-lasting gained by the successful OTC switch of Reactine
relief for seasonal and perennial allergies and hives in Canada and Diflucan One in the United
with once-daily dosing. Sales in the United States Kingdom, Pfizer is well positioned to expand its
and Canada grew 33% to $552 million in 1999. OTC portfolio in coming years.
In two clinical studies conducted in an artificially
controlled pollen environment, Zyrtec began Animal Health
working in about one hour, compared to about Pfizer’s Animal Health Group (AHG) is a
three hours for Claritin. In a survey of 623 allergy global supplier of animal medicines unmatched
sufferers, 93% wanted fast relief most. Zyrtec is in product-line or geographic breadth. AHG
the only prescription antihistamine approved for revenues grew 2% to $1.3 billion in 1999.
children as young as two years old. Zyrtec syrup The $1.3 billion worldwide pet antiparasitic
is the most-prescribed antihistamine syrup in the market consists of medicines for external parasites
United States. A formulation with a decongestant such as fleas and ticks, treatments for gastroin-
is in advanced development. testinal worms, and heartworm preventatives.
Revolution, marketed as Stronghold in Europe, is
Urology the first product to treat all three problems, and
More than 50 million people in the United States, its U.S. launch was one of the most successful in
Europe, and Japan suffer from overactive bladder, a the history of animal health. This once-a-month,
condition characterized by increased frequency and simple-to-administer topical liquid protects
urgency of bladder activity and incontinent events.
Pfizer expects its compound darifenacin to provide
a therapeutic profile superior to the therapies What moves at 180 miles-per-hour and gets the red out
currently available. Darifenacin progressed into even faster? It’s the new Visine-sponsored race car, which
Phrase III testing during 1999. is tearing up tracks across America in 2000 as part of the
“Visine helps me stay
NASCAR Busch
Consumer Health Care Grand National
Pfizer’s Consumer Health Care Group (CHC)
markets a broad range of self-medication products.
CHC sales, which are reflected in pharmaceutical focused on the
sales, increased 7% in 1999 to $561 million.
Six of CHC’s nine major brands — including
BenGay for the pain of minor arthritis and muscle
checkered flag.”
Series. A second car,
sponsored by Viagra,
is racing on NASCAR’s Winston Cup circuit. NASCAR auto
aches, and Visine eye care products, which
provide fast relief for redness, dryness, and now racing is the fastest-growing spectator sport in the world.
allergies — are number one in their category. One fan of Visine is driver Matt Kenseth, who especially
Other CHC brands include Cortizone anti-itch likes the brand’s newest formulation, Visine Tears. “My eyes
products, Desitin diaper rash products, Unisom can get pretty dry, especially when we race in places like
sleep aids, RID head lice treatments, Barbasol Arizona and California,” he says. “Visine
shaving cream, and Plax pre-brushing dental rinse. helps me stay focused on the checkered flag.”
25
provides relief from acute
“Ezra and Ivan are
Lisa Neuman owns two dogs and cares for
dozens more every day as a veterinarian at and chronic pain associated
the Miracle with osteoarthritis. A new
more than just my dogs. Mile Animal
Clinic in Ft.
chewable form provides the
pet owner with greater con-
venience of administration.
They’re my friends.”
Myers,
Florida. “I know how important it is to Other important Pfizer
keep pets healthy,” she says. “Ezra and companion animal products
Ivan are more than just my dogs. They’re my friends.” Dr. Neuman include Vanguard vaccines
protects them from harmful parasites — inside and out — with for canine enteric disease,
Revolution, a new Pfizer medicine developed specifically for dogs Leukocell vaccines for feline
and cats. “As a veterinarian, it’s great to be able to prescribe a single leukemia, Clavamox anti-
product that does so many things so effectively. It’s great as a pet infectives, and Anipryl for
owner, too. One spot of Revolution a month on the back of their Cushing’s disease and
necks, and these guys are good to go.” Cognitive Dysfunction
Syndrome in dogs.
against internal and external parasites, including AHG produces leading antiparasitics, vaccines,
heartworm, fleas, and ear mites in both dogs and and anti-infectives for cattle, swine, and poultry.
cats; American dog ticks and sarcoptic mange in Dectomax, AHG’s largest-selling product, pro-
dogs; and hookworm and roundworm in cats. tects cattle, swine, and sheep from both internal
There are nearly 53 million dogs and nearly 60 and external parasites, providing the broadest
million cats in the United States alone. More than spectrum of control available. It can be adminis-
half of all dogs and three-quarters of all cats are tered either by injection or topically. RespiSure/
not adequately protected against these parasites. Stellamune vaccines help prevent a type of
Since its introduction in 1997, nearly 5 mil- pneumonia and the related problems of slow
lion arthritic dogs worldwide have been treated weight gain, decreased feed efficiency, and lack
with Rimadyl. About 15% of all dogs suffer of uniformity in size in swine.
from osteoarthritis, a condition characterized by
worsening pain, stiffness, and lameness. Rimadyl
26
A Helping Hand
I
n country after country, through the
donations of our medicines and the
volunteer efforts of our employees, Pfizer
is bringing improved health — and
renewed hope — to those in need.
In the United States, Pfizer’s largest
philanthropic program is Sharing the
Care, through which uninsured patients
receive our innovative medicines at
no charge.
“I speak on behalf of all governors
when I say we are proud of Sharing the
Care and its commitment to helping
more than a million of the nation’s medically
“My own son is blind,
Phat Tran, left,
underserved lead healthier, more productive lives,” and Chieck
said Thomas Carper, governor Kieta work at
of Delaware and 1999 chairman
of the National Governors’
Association, which is partnering
so I understand Pfizer’s plant in Brooklyn, New York, where our
trachoma-fighting antibiotic Zithromax is manu-
how precious sight is.”
factured for ship-
with Pfizer on the program. ment around the
Access to medicines is no less of an issue world. Tran is a
outside the United States, a fact tragically native of Vietnam, Kieta of Mali—two of the five devel-
illustrated by trachoma, a disease that has already the wake of natural oping nations that Pfizer is working with to eliminate
claimed the sight of 6 million people — mostly disasters in Turkey, this blinding disease. “You can tell when people have
women and children — and threatens a staggering Taiwan, Venezuela, trachoma,” says Kieta, who recently returned to Mali
540 million more. and the United States.for a visit. “Their eyes are open, but they cannot see.
In 1998, Pfizer joined with the Edna Aiding refugees in There’s great satisfaction in knowing you are making
McConnell Clark Foundation to found the war-torn Kosovo and a medicine that will help people in your homeland.”
International Trachoma Initiative. One of the Indonesia. Bringing Tran agrees. “My own son is blind, so I understand how
cornerstones of the program is Pfizer’s donation smiles to the faces ofprecious sight is,” he says. “I’m very proud to be a
of the antibiotic Zithromax to five developing sick children around part of a company that is helping to fight blindness
countries where the disease is endemic. We have the world. Visiting around the world.”
already provided more than a million doses of this classrooms to inspire
powerful medicine, which has proven to be the the scientists of tomorrow.
most effective way to combat trachoma. As one Pfizer employee said after a day of
“The donation of Zithromax will help us to volunteering with his family at a children’s
reduce significantly the number of new trachoma hospital in Atlanta, Georgia: “My eight-year-old
cases in Morocco and save the sight of many son was impressed that Pfizer does more than
of our citizens,” said Dr. Abdelwahed El Fassi, just make medicines for sick people; we also
Morocco’s Minister of Public Health. help people by being there when needed. I
In addition to large-scale programs, Pfizer think that sums up who we are better than just
employees continue to find hundreds of ways to about anything.”
make the world a better place. Providing relief in 27
Financial Review
Proposed Merger with Warner-Lambert Company inventories. Our 1998 operating results reflect:
• the sale of our Medical Technology Group (MTG)
On February 7, 2000, we announced an agreement to merge
• the recording of certain significant charges associated
with Warner-Lambert Company (Warner-Lambert). Under
with adjustments to asset values, the exiting of certain
terms of the merger agreement, which has been approved by
product lines, plant rationalizations, severance payments,
the Board of Directors of both Pfizer and Warner-Lambert,
co-promotion payments to Searle, a contribution to The
we will exchange 2.75 shares of Pfizer voting common stock
Pfizer Foundation and other miscellaneous charges
for each outstanding share of Warner-Lambert voting common
stock in a tax-free transaction valued at $98.31 per Warner- Analysis of the Consolidated Statement of Income
Lambert share, or an equity value of $90 billion based on the
closing price of our stock on February 4, 2000 of $35.75 per % Change
share. Customary and usual provisions will be made for (millions of dollars) 1999 1998 1997 99/98 98/97
outstanding options and warrants. Net sales $14,133 $12,677 $10,739 11 18
The combined company, which will be called Pfizer Inc, Alliance revenue 2,071 867 316 139 175
is expected to have (excluding any impact of anticipated
Total revenues 16,204 13,544 11,055 20 23
restructuring charges and transaction fees of $1.7 billion to Cost of sales 2,528 2,094 1,776 21 18
$2.2 billion): Selling, informational and
• compounded annual revenue growth of 13% and earnings administrative expenses 6,351 5,568 4,401 14 27
growth of 25% through 2002 % of total revenues 39.2% 41.1% 39.8%
• $4.7 billion in annual research and development expenses R&D expenses 2,776 2,279 1,805 22 26
in 2000 % of total revenues 17.1% 16.8% 16.3%
• anticipated annual cost savings and efficiencies of Other deductions — net 101 1,009 206 (90) 391
$1.6 billion by 2002 ($200 million of these savings are Income from continuing
expected to be achieved in 2000, $1 billion in 2001 and operations before taxes $ 4,448 $ 2,594 $ 2,867 71 (10)
$1.6 billion in 2002) % of total revenues 27.5% 19.2% 25.9%
• diluted earnings per share of $.98 on a pro forma basis in Taxes on income $ 1,244 $ 642 $ 775 94 (17)
Effective tax rate 28.0% 24.8% 27.0%
2000, $1.27 for 2001 and $1.56 for 2002 (these numbers
Income from continuing
include the $1.6 billion of cost savings phased in over this operations $ 3,199 $ 1,950 $ 2,082 64 (6)
time period, but do not include any increased sales from % of total revenues 19.7% 14.4% 18.8%
collaborative activities and the $1.8 billion termination Discontinued
fee paid by Warner-Lambert to American Home operations — net of tax (20) 1,401 131 — 972
Products Corporation) Net income $ 3,179 $ 3,351 $ 2,213 (5) 51
This transaction is subject to customary conditions, % of total revenues 19.6% 24.7% 20.0%
including the use of pooling-of-interests accounting, qualifying
Percentages may reflect rounding adjustments.
as a tax-free reorganization, shareholder approval at both
companies and usual regulatory approvals. The transaction is Total Revenues
expected to close in mid-2000.
The following financial review reflects the results of Total revenues increased 20% or $2,660 million in 1999 and
operations and financial condition of Pfizer and does not consider 23% or $2,489 million in 1998. Revenue increases in both
the impact of the proposed merger with Warner-Lambert. years were primarily due to sales volume growth of our in-line
products and revenue generated from product alliances
Overview of Consolidated Operating Results (alliance revenue).
Revenue growth in 1999 was not significantly impacted
In 1999, total revenues grew 20% to $16,204 million, reflecting
by foreign exchange. Total revenues grew by 26% in 1998
the strong worldwide demand for our in-line products, as well
excluding the impact of foreign exchange.
as our alliance products. Our operating results in 1999 were
impacted by the recording of a charge to write off certain Trovan
28
Pfizer Inc and Subsidiary Companies
introduction of Viagra accounts for 12 percentage points of the
Elements of Total Revenue Growth 1998 U.S. growth. Pharmaceutical revenue growth in 1999 was
not significantly impacted by foreign exchange. In 1998,
Volume has been the major pharmaceutical revenue grew 29% excluding the impact of
24.8%
contributor to total revenue foreign exchange. The currency impact on the 1998 revenue
growth in each of the last growth reflects the strengthening of the dollar relative to the
three years. 19.6%
Japanese yen, as well as several European and other Asian
14.0% currencies.
In 1999, we had seven products, including alliance
products, with sales to third parties in excess of $1 billion each.
Volume The five Pfizer-discovered products in this group — Norvasc,
Price 1.2% 1.6% Zoloft, Zithromax, Viagra and Diflucan — grew at a combined
0.5%
Currency annual rate of 18% in 1999 and are patent-protected well into
(0.5)% this decade, or beyond.
(3.5)% (3.5)%
Net Sales — Major Pharmaceutical Products
99 98 97
% Increase
(millions of dollars) 1999 1998 1997 99/98 98/97
Percentage Change in Total Revenues
Cardiovascular Diseases: $4,635 $4,186 $3,806 11 10
Norvasc 3,030 2,575 2,217 18 16
Analysis of % Change
Total % Cardura 794 688 626 15 10
Change Volume Price Currency
Infectious Diseases: 3,145 2,822 2,475 11 14
Pharmaceutical
Zithromax 1,333 1,041 821 28 27
1999 vs. 1998 21.5 21.1 0.5 (0.1)
Diflucan 1,002 916 881 9 4
1998 vs. 1997 25.8 28.1 1.0 (3.3)
Animal Health Central Nervous System
1999 vs. 1998 2.4 4.9 1.2 (3.7) Disorders: 2,156 1,924 1,553 12 24
1998 vs. 1997 (1.1) 0.6 2.4 (4.1) Zoloft 2,034 1,836 1,507 11 22
Total
Viagra 1,033 788 — 31 —
1999 vs. 1998 19.6 19.6 0.5 (0.5)
1998 vs. 1997 22.5 24.8 1.2 (3.5) Allergy: 557 422 273 32 55
Zyrtec/Reactine 552 416 265 33 57
Certain prior year data have been reclassified to conform to the current year
presentation.
Total Revenues by Business Segment
(% of total revenue) Pharmaceutical Animal Health In June 1999, the European Union’s Committee for
8% 10% 12% Proprietary Medicinal Products suspended the European Union
(EU) licenses of the oral and intravenous formulations of our
antibiotic Trovan for 12 months. In the rest of the world,
including the U.S., the use of Trovan is limited to serious
infections in institutionalized patients. As a result of these
92% 88%
limitations, Trovan net sales declined to $86 million in 1999
90%
1999 1998 1997 from $160 million in 1998. See “Cost of sales” for a discussion
(millions of dollars)
of a charge recorded in 1999 to write off certain Trovan
inventories.
% Change % Change % Change
99/98 98/97 97/96
Alliance revenue was $2,071 million in 1999, reflecting
$14,859 22 $12,230 26 $ 9,726 13 revenue associated with the co-promotion of Lipitor, Aricept
1,345 2 1,314 (1) 1,329 9
and our new alliance product, Celebrex.
Total $16,204 20 $13,544 23 $11,055 12 In February 1999, we launched Celebrex with G.D. Searle
& Co. (Searle), the pharmaceutical division of Monsanto
Company, which discovered and developed the drug. Celebrex
Pharmaceutical revenues increased 22% to $14,859 million in is used for the relief of symptoms of adult rheumatoid arthritis
1999 and 26% to $12,230 million in 1998. In the U.S. market, and osteoarthritis. During 1999, Celebrex achieved total global
revenue growth was 21% in 1999 and 38% in 1998, while sales of approximately $1.5 billion.
international growth was 22% in 1999 and 10% in 1998. The
29
Pfizer Inc and Subsidiary Companies
Together with our alliance partner, the Parke-Davis Net sales decreased 1% in 1998 due to a weak livestock
Division of Warner-Lambert, the company that discovered and market in the U.S. and poor Asian economies.
developed Lipitor, we co-promote this product in most major
world markets. During 1999, Lipitor achieved third-party sales Total Revenues by Country
of approximately $3.7 billion.
(% of total revenue) United States Japan All Other Countries
These alliances allow us to co-promote or license these 8% 7% 9%
products for sale in certain countries. Under the co-promotion 31% 32% 36%
agreements, these products are marketed and promoted with
our alliance partners. We provide cash, staff and other resources
to sell, market, promote and further develop these products.
Revenue from co-promotion agreements is reported in the
61% 61% 55%
Statement of Income as Alliance revenue. 1999 1998 1997
Certain alliance agreements include additional provisions (millions of dollars)
that enable our product alliance partners the right to negotiate % Change % Change % Change
to co-promote certain specified Pfizer-discovered products. 99/98 98/97 97/96
$ 9,896 21 $ 8,205 35 $ 6,089 17
Rebates under Medicaid and related state programs 1,249 32 943 (1) 949 3
reduced revenues by $146 million in 1999, $150 million in 5,059 15 4,396 9 4,017 7
1998 and $99 million in 1997. The 1998 increase in rebates
Total $16,204 20 $13,544 23 $11,055 12
reflects growth of in-line products and the introduction in
1998 of two products — Trovan and Viagra. We also provided
to the federal government legislatively mandated discounts of Revenues were in excess of $100 million in each of 12
$95 million in 1999, $105 million in 1998 and $88 million countries outside the U.S. in 1999. The U.S. was the only
in 1997. Performance-based contracts also provide rebates to country to contribute more than 10% to total revenues.
several customers as a result of the increasing influence of
managed care groups on the pricing of our products. Percentage Change in Geographic Total Revenues
by Business Segment
In the fourth quarter of 1999, we sold the Bain de Soleil
sun care product line for $26 million in cash to Schering- % Change in Total Revenues
Plough HealthCare Products, Inc. Proceeds from the sale U.S. International
approximated the total of the carrying value of net assets 99/98 98/97 99/98 98/97
associated with this product line and selling costs. The sale of
Pharmaceutical 21 38 22 10
Bain de Soleil will not have a material impact on our future
Animal Health 14 3 (7) (4)
results of operations. Total 21 35 18 8
Animal Health net sales increased 2% to $1,345 million
in 1999 and decreased 1% to $1,314 million in 1998. Excluding Product Developments
the impact of foreign exchange, net sales increased 6% in 1999 We continue to invest in R&D to provide future sources
and 3% in 1998. The increase in net sales in 1999 was due to: of revenue through the development of new products, as well
• the performance of the companion animal business as through additional uses for existing in-line and alliance
partially offset by products. Certain significant regulatory actions by, and filings
• the continuing weakness in the livestock market in the pending with, the U.S. Food and Drug Administration (FDA)
U.S. and Europe follow:
• the decision of the European Commission to ban certain
antibiotic feed additives, including Stafac (virginiamycin) U.S. FDA Approvals
in the EU after June 30, 1999
Product Indication Date Approved
We do not expect the ban on sales of virginiamycin to have Zoloft Posttraumatic stress disorder (PTSD) December 1999
a material effect on our future results of operations. Zoloft Oral liquid dosage form December 1999
Sales of companion animal products increased by 30% in Celebrex Familial adenomatous polyposis December 1999
1999 primarily due to the launch of Revolution and the growth (a rare and devastating hereditary
of Rimadyl. Revolution was approved in the U.S. in July 1999 disease that, left untreated, almost
always leads to colorectal cancer)
as the first and only topically applied medication for dogs and
Tikosyn Atrial fibrillation October 1999
cats that is effective against heartworm, fleas and many other
parasites. Rimadyl is a treatment for the relief of pain and
inflammation associated with osteoarthritis in dogs.
30
Pfizer Inc and Subsidiary Companies
Zoloft is the first and only medicine to receive FDA Ongoing or planned clinical trials for new product
approval for the treatment of PTSD. development programs include:
We have developed a comprehensive program to educate
Product Indication
institutions and health care professionals on the required in-
hospital initiation and dosing regimen for Tikosyn. We expect lasofoxifene Prevention and treatment of osteoporosis
Prevention of breast cancer
to launch Tikosyn in the U.S. in the first quarter of 2000, and Reduction of risk of coronary heart disease
it will be available to those prescribers and hospitals that have
Vfend (voriconazole) Serious systemic fungal infections
participated in this educational program.
darifenacin Overactive bladder
Pending U.S. New Drug Applications
inhaled insulin Diabetes
Product Indication Date Filed valdecoxib (under Osteoarthritis
co-development Rheumatoid arthritis
Relpax Migraine headaches October 1998
with Searle) Pain
Zeldox Psychotic disorders — December 1997
intramuscular dosage form
Zeldox Psychotic disorders — March 1997 Additional product development programs are in various
oral dosage form stages of discovery.
In 1998, we entered into worldwide agreements with
In October 1999, we received an approvable letter from the Aventis Pharma to manufacture insulin and co-develop and
FDA for Relpax for the treatment of migraines. Regulatory co-promote inhaled insulin. Under the agreements, Aventis
review is continuing in Europe. Pharma and Pfizer will contribute expertise in the development
We received a non-approvable letter from the FDA and production of insulin products, as well as selling and
for Zeldox in 1998. Analysis and interpretation of the results marketing resources. We bring to the alliance our development
of a recently completed study on the effects of Zeldox will be of inhaled insulin from our collaboration with Inhale
included in an amended New Drug Application, which Therapeutic Systems, Inc. Together with Aventis Pharma we
we expect to file by midyear 2000. are building a new insulin manufacturing plant in Frankfurt,
Ongoing or planned clinical trials for additional uses and Germany, to support the product currently in development.
dosage forms for our currently marketed products include: We have decided not to pursue further development of
ezlopitant for the treatment of chemotherapy-induced nausea
Product Indication
and vomiting in cancer patients, as well as Alond for the
Norvasc Pediatric hypertension treatment of diabetic neuropathy.
Zithromax Decrease cardiovascular risk in patients with
atherosclerosis (a process in which fatty substances are Costs and Expenses
deposited within blood vessels) caused by certain
infections In 1999, we substantially completed the actions under the
Treatment of mycobacterium avium complex restructuring plans announced in 1998.
Accelerated dosing regimen (three-day treatment)
In 1998, we recorded charges for the restructuring in
Viagra Female sexual arousal disorder addition to charges for certain asset impairments. These pre-tax
Zoloft Pediatric depression charges were recorded in the 1998 Statement of Income as
Social phobia follows:
Zyrtec Decongestant formulation
Pediatric (millions of dollars) Total COS* SI&A* R&D OD*
Lipitor Broad cardiovascular-care clinical program Restructuring charges $177 $68 $17 $1 $ 91
Aricept Oral liquid dosage form Asset impairments 213 18 — — 195
Celebrex Sporadic adenomatous polyposis * COS — Cost of sales; SI&A — Selling, informational and administrative expenses; OD —
Pain Other deductions — net.
Together with Warner-Lambert, we are jointly exploring
potential Lipitor line extensions and product combinations and
other areas of mutual interest. This includes a program to
develop a combination product that contains the cholesterol-
lowering and antihypertensive medications in Lipitor and
Norvasc — two of the world’s most widely prescribed medicines.
31
Pfizer Inc and Subsidiary Companies
The components of the 1998 restructuring charges follow: SI&A increased 14% in 1999 and 27% in 1998. These
increases reflect support for previously introduced products and
Utilization
new products. Such support included substantial global
(millions of dollars) Charges in 1998 1998 1999 Beyond investments, begun in 1998, in our pharmaceutical sales force,
Property, plant including the creation of a new U.S. primary-care sales force
and equipment $ 49 $ 49 $— $— and a new U.S. specialty sales force dedicated to rheumatology.
Write-down of intangibles 44 44 — — In addition, personnel increases in other specialty sales forces
Employee termination costs 40 12 28 — in the U.S. and the expansion of international sales forces
Other 44 11 17 16
contributed to the increase in SI&A. Our past investments in
Total $177 $116 $45 $16 SI&A are enabling us to maximize the financial return realized
from our products.
As a result of the restructuring, our workforce was reduced
by approximately 500 manufacturing, sales and corporate R&D increased 22% in 1999 and 26% in 1998. These
personnel. In 1998, restructuring charges of $90 million are expenditures were necessary to support the advancement of
reflected in the pharmaceutical segment and $87 million are in potential drug candidates in all stages of development
the animal health segment. (from initial discovery through final regulatory approval). In
In 1998, we recorded an impairment charge of 2000, we expect total R&D spending to be about $3.2 billion.
$110 million in the pharmaceutical segment to adjust See “Proposed Merger with Warner-Lambert Company” for the
intangible asset values, primarily goodwill and trademarks, expected R&D spending in 2000 of a combined Pfizer/Warner-
related to consumer health care product lines. These charges Lambert entity.
resulted from significant changes in the marketplace and a Other deductions —net decreased 90% in 1999 due to
revision of our strategies. the absence of certain significant charges recorded in 1998 of
As noted in our discussion of revenues, our animal health $883 million.
antibiotic feed additive Stafac was banned throughout the EU, Other deductions — net increased substantially in 1998
resulting in 1998 asset impairment charges of $103 million primarily due to:
($85 million to adjust intangible asset values, primarily • asset impairments — $195 million
goodwill and trademarks, and $18 million to adjust the • restructuring charges — $91 million
carrying value of machinery and equipment in the • co-promotion payments to Searle for rights to
pharmaceutical segment). Celebrex — $240 million
In 1999, revenues declined approximately $41 million • a contribution to The Pfizer Foundation —
as a result of exiting certain product lines. In 1999, as a result $300 million
of the restructuring activities and the asset impairments, • legal settlements involving the brand-name prescription
we realized cost savings of approximately $39 million and a drug antitrust litigation — $57 million
reduction in amortization and depreciation expense of partially offset by
approximately $12 million. • an increase in interest income on the investment of cash
Cost of sales increased 21% in 1999 and 18% in 1998. generated from operations and the divestiture of MTG
Based on our evaluation of the actions noted in our discussion • foreign exchange effects
of revenues, we determined that it was unlikely that certain Our overall effective tax rate was 28.1% in 1999 and
Trovan inventories of finished goods, bulk, work-in-process 35.4% in 1998. This decrease was due mainly to the 1998 gain
and raw materials will be used. Accordingly, in the third on the disposal of MTG being recognized in jurisdictions with
quarter of 1999, we recorded a charge of $310 million in Cost of higher tax rates.
sales to write off Trovan inventories in excess of the amount The effective tax rate for continuing operations was 28.0%
required to support expected sales. Also included in Cost of sales in 1999 and 24.8% in 1998. Significant charges in both 1999
for 1999 is a benefit of $6.6 million related to the change in and 1998 were recorded in jurisdictions with higher tax rates.
accounting for the cost of inventories from the “Last-in, first- However, the level of these charges was greater in 1998 than in
out” method to the “First-in, first-out” method. Excluding the 1999. Excluding these charges in 1999 and 1998, the effective
Trovan inventory charge and the benefit related to the tax rate was 28.4% in 1999 and 28.0% in 1998. This increase
accounting change for inventories in 1999 and the asset in 1999 was primarily due to the mix of income by country.
impairments and restructuring charges in 1998, cost of sales We have received and are protesting assessments from the
increased 11%, comparable to the increase in 1999 net sales. Belgian tax authorities. For additional details, see note 9,
Excluding the 1998 asset impairments and restructuring “Taxes on Income,” beginning on page 49.
charges, cost of sales increased 13% in 1998 as compared to an
increase in net sales of 18%.
32
Pfizer Inc and Subsidiary Companies
Discontinued Operations Financial Condition, Liquidity and
In 1999, we agreed to pay a fine of $20 million to settle Capital Resources
antitrust charges involving our former Food Science Group. Our net financial asset position as of December 31 was as
This charge is reflected in Discontinued operations — net of tax. follows:
For additional details, see note 18, “Litigation,” beginning on
page 54. (millions of dollars) 1999 1998 1997
During 1998, we exited the medical devices business with Financial assets* $6,436 $5,835 $3,034
the sale of our remaining MTG businesses: Short- and long-term debt 5,526 3,256 2,976
• Howmedica to Stryker Corporation in December for Net financial assets $ 910 $2,579 $ 58
$1.65 billion in cash
* Consists of cash and cash equivalents, short-term loans and investments, and long-
• Schneider to Boston Scientific Corporation in September term loans and investments.
for $2.1 billion in cash
• American Medical Systems to E.M. Warburg, Pincus & Selected Measures of Liquidity and
Co., LLC, in September for $130 million in cash Capital Resources
• Valleylab to U.S. Surgical Corporation in January for
$425 million in cash 1999 1998 1997
The net proceeds from these divestitures were used for Cash and cash equivalents and
general corporate purposes, including the repayment of short-term loans and
commercial paper borrowings. Net income of these businesses investments (millions of dollars)* $4,715 $4,079 $1,704
Working capital (millions of dollars) 2,006 2,739 2,448
up to the date of their divestiture and divestiture gains are
Current ratio 1.22:1 1.38:1 1.49:1
included in Discontinued operations — net of tax.
Shareholders’ equity per
common share** $ 2.36 $ 2.33 $ 2.10
Net Income
* Cash is managed jurisdictionally and is not always available to be used in every
Net income for 1999 decreased 5% from 1998. Diluted location throughout the world. When necessary, we utilize short-term borrowings for
earnings per share were $.82 and decreased by 4% from 1998. various corporate purposes.
Excluding the impact of the 1999 Trovan inventory charge and ** Represents shareholders’ equity divided by the actual number of common shares
outstanding (which excludes treasury shares and those held by the employee benefit
certain significant charges and discontinued operations in 1998, trusts).
net income increased by 29% in 1999 over 1998. On that same
basis, diluted earnings per share were $.87 in 1999 and The decrease in working capital from 1998 to 1999 was
increased by 30% over 1998. The 1998 pre-tax significant primarily due to the following:
charges related to: • Decrease in Inventories — due to the writeoff of Trovan
• asset impairments — $213 million inventory
• restructuring charges — $177 million • Increase in Short-term borrowings — primarily to fund
• co-promotion payments to Searle — $240 million common stock purchases of $2.5 billion
• contribution to The Pfizer Foundation — $300 million offset by
• other, which is primarily related to legal settlements — • Net increase in Cash and cash equivalents and Short-term
$126 million investments — mainly from profits earned overseas
• Increase in Accounts receivable — resulting from growth in
sales volume and higher alliance revenue receivables due to
sales growth of alliance products and the launch of
Celebrex in February 1999
• Decrease in Income taxes payable
33
Pfizer Inc and Subsidiary Companies
The increase in working capital from 1997 to 1998 was divestitures, partially offset by tax benefits associated with
primarily due to the following: charges for asset impairment, restructuring, co-promotion
• Increase in Cash and cash equivalents and Short-term payments to Searle and the contribution to The Pfizer
investments — due to the receipt of cash from the MTG Foundation
divestiture • higher compensation related accruals
• Increase in Accounts receivable — due to the alliance revenue reduced by
receivables and growth in sales volume • higher receivable and inventory levels related to new
• Increase in Inventories — due to higher pharmaceutical products
inventory levels as a result of new products
offset by Net cash used in investing activities in 1999 changed
• Decrease in Net assets of discontinued operations — due to the primarily due to:
sale of the MTG businesses • the absence of proceeds from the sale of MTG which
• Increase in Short-term borrowings — due to an increase in occurred in 1998
funding for common stock purchases at a higher average • increased purchases of property, plant and equipment
price net of repayments made with cash received from the in 1999
MTG divestiture
• Increase in Dividends payable — related to the first-quarter Net cash used in investing activities decreased in 1998
1999 dividend declared in December 1998 primarily due to:
• Increase in Income taxes payable — primarily due to changes • proceeds from the sale of the MTG businesses, some of
in operations and the divestiture of the MTG businesses which accounts for our increase in short-term investments
• Increase in Other current liabilities — primarily due to reduced by
accrued charges associated with the divestiture of the • increased long-term investments
MTG businesses and our plan to exit certain product lines • increased purchases of property, plant and equipment
The decline in the current ratio from 1998 to 1999 was Net cash used in financing activities decreased in 1999
primarily due to higher short-term borrowings due to an primarily due to:
increase in funding for common stock purchases. The increase • increased short-term borrowings for common stock
in shareholders’ equity per common share in 1998 was purchases
primarily due to growth in net income. reduced by
• higher dividend payments to our shareholders
Summary of Cash Flows
Net cash used in financing activities increased in 1998
(millions of dollars) 1999 1998 1997 primarily due to:
Cash provided by/(used in): • the increase in common stock purchases at a
Operating activities $ 3,076 $ 3,282 $ 1,580 higher average price
Investing activities (2,768) (335) (963) • higher dividend payments to our shareholders
Financing activities (1,127) (2,277) (981) reduced by
Discontinued operations (20) 4 118 • more cash received from employee stock option exercises
Effect of exchange-rate changes on
cash and cash equivalents 26 1 (27)
Under the current share-purchase program begun in
Net (decrease)/increase in cash September 1998, we are authorized to purchase up to
and cash equivalents $ (813) $ 675 $ (273)
$5 billion of our common stock. In 1999, we purchased
approximately 65.6 million shares of our common stock in
Net cash provided by operating activities decreased in the open market for approximately $2.5 billion. Since the
1999 primarily due to: beginning of this program, we have purchased 80.4 million
• higher receivable levels related to increased sales and shares of our common stock for approximately $3 billion. In
alliance revenue September 1998, we completed a program under which we
• higher taxes paid purchased 79.2 million shares of our common stock at a total
reduced by cost of $2 billion. Purchased shares are available for general
• higher income from continuing operations corporate purposes.
Net cash provided by operating activities increased in We have available lines of credit and revolving-credit
1998 primarily due to: agreements with a select group of banks and other financial
• higher taxes payable associated with sales growth of intermediaries. Major unused lines of credit totaled
existing and new products as well as the MTG approximately $1.5 billion at December 31, 1999.
34
Pfizer Inc and Subsidiary Companies
Our short-term debt has been rated P1 by Moody’s geographic location. PIBE continues to have S&P’s highest
Investors Services (Moody’s) and A-1+ by Standard and Poor’s short-term rating of A-1+.
(S&P). Also, our long-term debt has been rated Aaa by The net income of PIBE is affected by changes in market
Moody’s and AAA by S&P for the past 14 years. Moody’s and interest rates because of repricing and maturity mismatches
S&P are the major corporate debt-rating organizations and between its interest-sensitive assets and liabilities. PIBE is
these are their highest ratings. currently asset sensitive (more assets than liabilities repricing
in a given period) and, therefore, we expect that in an
Cash Dividends Paid Per Common Share environment of increasing interest rates, net income would
increase. PIBE’s asset and liability management reflects its
(dollars)
liquidity, interest-rate outlook and general market conditions.
The 1999 cash dividends paid
represented the 32nd consecutive $.30 2/3 For additional details regarding our banking operation, see
year of dividend increases. note 3, “Financial Subsidiaries,” beginning on page 44.
$.25 1/3
$.22 2/3 Forward-Looking Information and
$.20 Factors That May Affect Future Results
$.17 1/3
The Securities and Exchange Commission encourages
companies to disclose forward-looking information so that
investors can better understand a company’s future prospects
and make informed investment decisions. This annual
report and other written and oral statements that we make
from time to time contain such forward-looking statements
95 96 97 98 99
that set out anticipated results based on management’s
plans and assumptions. We have tried, wherever possible, to
identify such statements by using words such as “anticipate,”
Dividends on Common Stock “estimate,” “expects,” “projects,” “intends,” “plans,” “believes”
and words and terms of similar substance in connection with
Our dividend payout ratio, which represents cash dividends any discussion of future operating or financial performance.
paid per common share divided by diluted earnings per We cannot guarantee that any forward-looking statement
common share, was approximately 37% in 1999, 30% in 1998 will be realized, although we believe we have been prudent in
and 40% in 1997. In 1999, excluding the effect on net income of our plans and assumptions. Achievement of future results is
the Trovan inventory charge, the dividend payout ratio was subject to risks, uncertainties and inaccurate assumptions.
approximately 35%. In 1998, excluding the effects on net Should known or unknown risks or uncertainties materialize, or
income of discontinued operations and charges for asset should underlying assumptions prove inaccurate, actual results
impairment, restructuring, co-promotion payments to Searle and could vary materially from those anticipated, estimated or
the contribution to The Pfizer Foundation, the dividend payout projected. Investors should bear this in mind as they consider
ratio was 38%. In December 1999, the Board of Directors forward-looking statements.
declared a first-quarter 2000 dividend of $.09. The first-quarter We undertake no obligation to publicly update forward-
2000 cash dividend will mark the 33rd consecutive year of looking statements, whether as a result of new information,
quarterly dividend increases. future events or otherwise.
Banking Operation Certain risks, uncertainties and assumptions are discussed
here and under the heading entitled “Cautionary Factors That
Our international banking operation, Pfizer International May Affect Future Results” in Item 1 of our annual report on
Bank Europe (PIBE), operates under a full banking license Form 10-K for the year ended December 31, 1999, which will
from the Central Bank of Ireland. The results of its operations be filed at the end of March 2000.
are included in Other deductions — net. Prior to the filing of Form 10-K, you should refer to the
PIBE extends credit to financially strong borrowers, discussion under the same heading in our quarterly report on
largely through U.S. dollar loans made primarily for short and Form 10-Q for the quarter ended October 3, 1999, and to the
medium terms, with floating interest rates. Generally, loans extent incorporated by reference therein, in our Form 10-K
are made on an unsecured basis. When deemed appropriate, filing for 1998. This discussion of potential risks and
guarantees and certain covenants may be obtained as a uncertainties is by no means complete but is designed to
condition to the extension of credit. highlight important factors that may impact our outlook.
To reduce credit risk, PIBE has established credit approval
guidelines, borrowing limits and monitoring procedures. Competition and the Health Care Environment
Credit risk is further reduced through an active policy of In the U.S., many pharmaceutical products are subject to
diversification with respect to borrower, industry and increasing pricing pressures, which could be significantly
impacted by the current national debate over Medicare reform.
35
Pfizer Inc and Subsidiary Companies
If the Medicare program provided outpatient pharmaceutical • foreign receivables, payables, debt and loans — changes in
coverage for its beneficiaries, the federal government, through its exchange rates
enormous purchasing power under the program, could demand In our sensitivity analysis, we assumed that the change
discounts from pharmaceutical companies that may implicitly in one currency’s rate relative to the U.S. dollar would not have
create price controls on prescription drugs. On the other hand, an effect on other currencies’ rates relative to the U.S. dollar.
a Medicare drug reimbursement provision may increase the All other factors were held constant.
volume of pharmaceutical drug purchases, offsetting at least in If there were an adverse change in foreign exchange rates
part these potential price discounts. In addition, managed care of 10%, the expected effect on net income related to
organizations, institutions and other government agencies our financial instruments would be immaterial. For additional
continue to seek price discounts. Government efforts to reduce details, see note 4-D, “Derivative Financial Instruments —
Medicare and Medicaid expenses are expected to increase the use Accounting Policies,” on page 46.
of managed care organizations. This may result in managed care
influencing prescription decisions for a larger segment of the Interest Rate Risk
population. International operations are also subject to price and Our U.S. dollar interest-bearing investments, loans and
market regulations. As a result, it is expected that pressures on borrowings are subject to interest rate risk. We invest and
pricing and operating results will continue. borrow primarily on a short-term or variable-rate basis. We are
also subject to interest rate risk on Japanese yen and on euro
Financial Risk Management short-term borrowings. Under certain market conditions,
The overall objective of our financial risk management interest rate swap contracts are used to adjust interest-sensitive
program is to seek a reduction in the potential negative assets and liabilities.
earnings effects from changes in foreign exchange and interest Our financial instrument holdings at year-end were
rates arising in our business activities. We manage these analyzed to determine their sensitivity to interest rate changes.
financial exposures through operational means and by using The fair values of these instruments were determined by net
various financial instruments. These practices may change as present values.
economic conditions change. In our sensitivity analysis, we used the same change in
interest rate for all maturities. All other factors were held
Foreign Exchange Risk constant. If interest rates increased by 10%, the expected effect
A significant portion of our revenues and earnings are exposed on net income related to our financial instruments would be
to changes in foreign exchange rates. Where practical, we seek immaterial.
to relate expected local currency revenues with local currency
costs and local currency assets with local currency liabilities. International Markets
Generally, we do not use financial instruments for trading Thirty-nine percent of our 1999 revenues arise from
activities. international operations and we expect revenue and net income
Foreign exchange risk is also managed through the use of growth in 2000 to be impacted by changes in foreign
foreign currency forward-exchange contracts. These contracts exchange rates.
are used to offset the potential earnings effects from short-term Revenues from Asia comprised approximately 11% of total
foreign currency assets and liabilities that arise during revenues in 1999, including 8% from Japan.
operations. For additional details on foreign exchange
exposures, see note 4-D, “Derivative Financial Instruments — European Currency
Instruments Outstanding,” on page 47. A new European currency (euro) was introduced in January
In addition, foreign currency put options are purchased to 1999 to replace the separate currencies of 11 individual
reduce a portion of the potential negative effects on earnings countries. The major changes during its first year of existence
related to certain of our significant anticipated intercompany have occurred in the banking and financial sectors. The impact
inventory purchases for up to one year. These purchased options at the commercial and retail level has been limited but is
hedge Japanese yen versus the U.S. dollar. expected to increase during the next two years through
Also, under certain market conditions, we protect December 31, 2001, when the separate currencies will cease to
against possible declines in the reported net assets of our exist. We are modifying systems and commercial arrangements
subsidiaries in Japan and in countries that are a member of the to deal with the new currency, including the availability of
European Monetary Union. We do this through currency swaps dual currency processes to permit transactions to be
and borrowing in Japanese yen and borrowing in euros. denominated in the separate currencies, as well as the euro. The
Our financial instrument holdings at year-end were cost of this effort is not expected to have a material effect on
analyzed to determine their sensitivity to foreign exchange rate our businesses or results of operations. We continue to evaluate
changes. The fair values of these instruments were determined the economic and operational impact of the euro, including its
as follows: impact on competition, pricing and foreign currency exchange
• forward-exchange contracts and currency swaps — net risks. There is no guarantee, however, that all problems have
present values been foreseen and corrected, or that no material disruption will
• purchased foreign currency options — foreign exchange occur in our businesses.
option pricing model
36
Pfizer Inc and Subsidiary Companies
Tax Legislation Litigation, Tax and Environmental Matters
Pursuant to the Small Jobs Protection Act of 1996 (the Act), Claims have been brought against us and our subsidiaries for
Section 936 of the Internal Revenue Code (the U.S. possessions various legal and tax matters. In addition, our operations are
corporation income tax credit) was repealed for tax years subject to international, federal, state and local environmental
beginning after December 31, 1995. The Act allows us to laws and regulations. It is possible that our cash flows and
continue using the credit against the tax arising from results of operations could be affected by the one-time impact
manufacturing income earned in a U.S. possession for an of the resolution of these contingencies. We believe that
additional 10-year period. The amount of manufacturing the ultimate disposition of these matters to the extent not
income eligible for the credit during this additional period is previously provided for will not have a material impact on our
subject to a cap based on income earned prior to 1996 in the financial condition, results of operations or cash flows, except
U.S. possession. This 10-year extension period does not apply where specifically commented on in note 18, “Litigation,”
to investment income earned in a U.S. possession, the credit on beginning on page 54 and note 9, “Taxes on Income,”
which expired as of July 1, 1996. The Act does not affect the beginning on page 49.
amendments made to Section 936 by the 1993 Omnibus
Budget Reconciliation Act, which provided for a five-year
phase-down of the U.S. possession tax credit from 100% to
40%. In addition, the Act permitted the extension of the R&D
tax credit through June 30, 1998. In 1998, this credit was
again extended to June 30, 1999, and in 1999, it was further
extended to June 30, 2004.
Recently Issued Accounting Standards Management’s Report
In June 1999, the Financial Accounting Standards Board We prepared and are responsible for the financial statements
issued Statement of Financial Accounting Standards (SFAS) that appear on pages 39 to 61. These financial statements are
No. 137, Accounting for Derivative Instruments and Hedging in conformity with generally accepted accounting principles
Activities — Deferral of the Effective Date of FASB Statement and, therefore, include amounts based on informed judgments
No. 133. This pronouncement requires us to adopt SFAS and estimates. We also accept responsibility for the preparation
No. 133, Accounting for Derivative Instruments and Hedging of other financial information that is included in this
Activities, on January 1, 2001. SFAS No. 133 requires a document.
company to recognize all derivative instruments as assets or We have designed a system of internal control to:
liabilities in its balance sheet and measure them at fair value. • safeguard the Company’s assets,
We do not expect the adoption of SFAS No. 133 to have a • ensure that transactions are properly authorized, and
material impact on our financial position, results of operations • provide reasonable assurance, at reasonable cost, of the
or cash flows. integrity, objectivity and reliability of the financial
information.
Year 2000 An effective internal control system has inherent
We have not experienced any operational problems as a result limitations no matter how well designed and, therefore, can
of Year 2000 issues, and Year 2000 had no material effect on provide only reasonable assurance with respect to financial
our revenues. Although the transition from 1999 to 2000 did statement preparation. The system is built on a business ethics
not adversely impact our company, there can be no assurances policy that requires all employees to maintain the highest
that we will not experience any negative effects or disruptions ethical standards in conducting Company affairs. Our system
in our businesses in the future as a result of Year 2000 issues. of internal control includes:
The total cost of our Year 2000 Program was • careful selection, training and development of financial
$130 million, of which we incurred $94 million in 1999, managers,
$31 million in 1998 and $5 million in 1997. These costs were • an organizational structure that segregates responsibilities,
expensed as incurred, except for capitalizable hardware of • a communications program which ensures that the
approximately $8 million in 1999, $4 million in 1998 and Company’s policies and procedures are well understood
$1 million in 1997 and were funded through operating cash throughout the organization, and
flows. Such costs did not include normal system upgrades and • an extensive program of internal audits, with prompt
replacements. Immaterial costs may be incurred in 2000 to follow-up, including reviews of separate operations and
address remaining non-critical Year 2000 issues. functions around the world.
37
Pfizer Inc and Subsidiary Companies
Our independent certified public accountants, management present, to discuss the results of their
KPMG LLP, have audited the annual financial statements in examinations, the evaluations of the Company’s internal
accordance with generally accepted auditing standards. The controls, and the overall quality of the Company’s financial
independent auditors’ report expresses an informed judgment reporting. In reliance on the reviews and discussions referred
as to the fair presentation of the Company’s reported operating to above, the Committee recommended to the Board of
results, financial position and cash flows. Their judgment is Directors, and the Board has approved, that the audited
based on the results of auditing procedures performed and financial statements be included in the Company’s Annual
such other tests that they deemed necessary, including their Report on Form 10-K for the year ended December 31, 1999,
consideration of our internal control structure. for filing with the Securities and Exchange Commission. The
We consider and take appropriate action on recom- Committee and the Board also have recommended, subject to
mendations made by KPMG LLP and our internal auditors. shareholder approval, the selection of the Company’s
We believe that our system of internal control is effective independent auditors.
and adequate to accomplish the objectives discussed above.
G. B. Harvey, Chair, Audit Committee
W. C. Steere, Jr., Principal Executive Officer February 14, 2000
D. L. Shedlarz, Principal Financial Officer
L. V. Cangialosi, Principal Accounting Officer
February 14, 2000
Independent Auditors’ Report
To the Shareholders and Board of Directors of Pfizer Inc:
Audit Committee’s Report
The Audit Committee reviews the Company’s financial We have audited the accompanying consolidated balance sheets
reporting process on behalf of the Board of Directors. of Pfizer Inc and subsidiary companies as of December 31,
Management has the primary responsibility for the financial 1999, 1998 and 1997 and the related consolidated statements
statements and the reporting process, including the system of income, shareholders’ equity and cash flows for each of the
of internal controls. In this context, the Committee has met years then ended. These consolidated financial statements are
and held discussions with management and the independent the responsibility of the Company’s management. Our
auditors. Management represented to the Committee that the responsibility is to express an opinion on these consolidated
Company’s consolidated financial statements were prepared in financial statements based on our audits.
accordance with generally accepted accounting principles, and We conducted our audits in accordance with generally
the Committee has reviewed and discussed the consolidated accepted auditing standards. Those standards require that we
financial statements with management and the independent plan and perform the audit to obtain reasonable assurance
auditors. The Committee discussed with the independent about whether the consolidated financial statements are
auditors matters required to be discussed by Statement free of material misstatement. An audit includes examining,
of Auditing Standards No. 61 (Communication With Audit on a test basis, evidence supporting the amounts and
Committees). In addition, the Committee has discussed with disclosures in the consolidated financial statements. An
the independent auditors, the auditors’ independence from the audit also includes assessing the accounting principles
Company and its management, including the matters in the used and significant estimates made by management, as
written disclosures required by the Independence Standards well as evaluating the overall consolidated financial
Board Standard No. 1 (Independence Discussions with Audit statement presentation. We believe that our audits provide
Committees). The Committee discussed with the Company’s a reasonable basis for our opinion.
internal and independent auditors the overall scope and plans In our opinion, the consolidated financial statements
for their respective audits. The Committee meets with the referred to above present fairly, in all material respects, the
internal and independent auditors, with and without financial position of Pfizer Inc and subsidiary companies at
December 31, 1999, 1998 and 1997, and the results of their
operations and their cash flows for each of the years then ended,
in conformity with generally accepted accounting principles.
New York, NY
February 14, 2000
38
Pfizer Inc and Subsidiary Companies
Consolidated Statement of Income
Year ended December 31
(millions, except per share data) 1999 1998 1997
Net sales $14,133 $12,677 $10,739
Alliance revenue 2,071 867 316
Total revenues 16,204 13,544 11,055
Costs and expenses:
Cost of sales 2,528 2,094 1,776
Selling, informational and administrative expenses 6,351 5,568 4,401
Research and development expenses 2,776 2,279 1,805
Other deductions Ñ net 101 1,009 206
Income from continuing operations before provision
for taxes on income and minority interests 4,448 2,594 2,867
Provision for taxes on income 1,244 642 775
Minority interests 5 2 10
Income from continuing operations 3,199 1,950 2,082
Discontinued operations Ñ net of tax (20) 1,401 131
Net income $ 3,179 $ 3,351 $ 2,213
Earnings per common share Ñ basic
Income from continuing operations $ .85 $ .51 $ .55
Discontinued operations Ñ net of tax (.01) .37 .04
Net income $ .84 $ .88 $ .59
Earnings per common share Ñ diluted
Income from continuing operations $ .82 $ .49 $ .53
Discontinued operations Ñ net of tax Ñ .36 .04
Net income $ .82 $ .85 $ .57
Weighted average shares Ñ basic 3,775 3,789 3,771
Weighted average shares Ñ diluted 3,884 3,945 3,909
See Notes to Consolidated Financial Statements which are an integral part of these statements.
39
Pfizer Inc and Subsidiary Companies
Consolidated Balance Sheet
December 31
(millions, except per share data) 1999 1998 1997
Assets
Current Assets
Cash and cash equivalents $ 739 $ 1,552 $ 877
Short-term investments 3,703 2,377 712
Accounts receivable, less allowance for doubtful accounts:
1999 Ñ $68; 1998 Ñ $67; 1997 Ñ $35 3,864 2,914 2,220
Short-term loans 273 150 115
Inventories
Finished goods 650 697 442
Work in process 711 890 808
Raw materials and supplies 293 241 211
Total inventories 1,654 1,828 1,461
Prepaid expenses and taxes 958 1,110 637
Net assets of discontinued operations Ñ Ñ 1,420
Total current assets 11,191 9,931 7,442
Long-term loans and investments 1,721 1,756 1,330
Property, plant and equipment, less accumulated depreciation 5,343 4,415 3,793
Goodwill, less accumulated amortization:
1999 Ñ $129; 1998 Ñ $109; 1997 Ñ $90 763 813 989
Other assets, deferred taxes and deferred charges 1,556 1,387 1,437
Total assets $20,574 $18,302 $14,991
Liabilities and ShareholdersÕ Equity
Current Liabilities
Short-term borrowings, including current portion of long-term debt $ 5,001 $ 2,729 $ 2,251
Accounts payable 951 971 660
Dividends payable 349 285 Ñ
Income taxes payable 869 1,162 729
Accrued compensation and related items 669 614 456
Other current liabilities 1,346 1,431 898
Total current liabilities 9,185 7,192 4,994
Long-term debt 525 527 725
Postretirement benefit obligation other than pension plans 346 359 394
Deferred taxes on income 301 197 127
Other noncurrent liabilities 1,330 1,217 818
Total liabilities 11,687 9,492 7,058
ShareholdersÕ Equity
Preferred stock, without par value; 12 shares authorized, none issued Ñ Ñ Ñ
Common stock, $.05 par value; 9,000 shares authorized;
issued: 1999 Ñ 4,260; 1998 Ñ 4,222; 1997 Ñ 4,165 213 210 207
Additional paid-in capital 5,416 5,506 3,101
Retained earnings 13,396 11,439 9,349
Accumulated other comprehensive expense (399) (234) (85)
Employee benefit trusts (2,888) (4,200) (2,646)
Treasury stock, at cost:
1999 Ñ 413; 1998 Ñ 339; 1997Ñ 283 (6,851) (3,911) (1,993)
Total shareholdersÕ equity 8,887 8,810 7,933
Total liabilities and shareholdersÕ equity $20,574 $18,302 $14,991
See Notes to Consolidated Financial Statements which are an integral part of these statements.
40
Pfizer Inc and Subsidiary Companies
Consolidated Statement of ShareholdersÕ Equity
Accum.
Employee
Additional Other Com-
Common Stock Benefit Trusts Treasury Stock
Paid-In Retained prehensive
(millions) Shares Par Value Capital Shares Fair Value Shares Cost Earnings Inc./(Exp.) Total
Balance January 1, 1997 1,378 $ 69 $1,693 (36) $(1,488) (87) $(1,482) $ 8,017 $ 145 $6,954
Restatement for the 1999 stock split 2,756 138 (138) (72) Ñ (175) Ñ Ñ Ñ Ñ
Balance January 1, 1997, as restated 4,134 207 1,555 (108) (1,488) (262) (1,482) 8,017 145 6,954
Comprehensive income:
Net income 2,213 2,213
Other comprehensive expense Ñ
net of tax:
Currency translation adjustment (253) (253)
Net unrealized gain on available-
for-sale securities 20 20
Minimum pension liability 3 3
Total other comprehensive expense (230) (230)
Total comprehensive income 1,983
Cash dividends declared (881) (881)
Stock option transactions 29 Ñ 343 13 68 411
Purchases of common stock (34) (586) (586)
Employee benefit trusts
transactions Ñ net 1,177 1 (1,158) Ñ 7 26
Other 2 Ñ 26 26
Balance December 31, 1997 4,165 207 3,101 (107) (2,646) (283) (1,993) 9,349 (85) 7,933
Comprehensive income:
Net income 3,351 3,351
Other comprehensive expense Ñ
net of tax:
Currency translation adjustment (74) (74)
Net unrealized loss on available-
for-sale securities (2) (2)
Minimum pension liability (73) (73)
Total other comprehensive expense (149) (149)
Total comprehensive income 3,202
Cash dividends declared (1,261) (1,261)
Stock option transactions 55 3 745 Ñ (18) 730
Purchases of common stock (58) (1,912) (1,912)
Employee benefit trusts
transactions Ñ net 1,633 5 (1,554) 2 12 91
Other 2 Ñ 27 27
Balance December 31, 1998 4,222 210 5,506 (102) (4,200) (339) (3,911) 11,439 (234) 8,810
Comprehensive income:
Net income 3,179 3,179
Other comprehensive expense Ñ
net of tax:
Currency translation adjustment (222) (222)
Net unrealized gain on available-
for-sale securities 81 81
Minimum pension liability (24) (24)
Total other comprehensive expense (165) (165)
Total comprehensive income 3,014
Cash dividends declared (1,222) (1,222)
Stock option transactions 35 3 526 Ñ (16) 513
Purchases of common stock (66) (2,500) (2,500)
Employee benefit trusts
transactions Ñ net (735) 13 1,312 (8) (424) 153
Other 3 Ñ 119 119
Balance December 31, 1999 4,260 $213 $5,416 (89) $(2,888) (413) $ (6,851) $13,396 $(399) $8,887
See Notes to Consolidated Financial Statements which are an integral part of these statements.
41
Pf i z e r I n c a n d S u b s i d i a r y C o m p a n i e s
Consolidated Statement of Cash Flows
Year ended December 31
(millions of dollars) 1999 1998 1997
Operating Activities
Income from continuing operations $ 3,199 $ 1,950 $2,082
Adjustments to reconcile income from continuing operations
to net cash provided by operating activities:
Depreciation and amortization 542 489 428
Trovan inventory write-off 310 Ñ Ñ
Asset impairments and restructuring charges Ñ 323 Ñ
Deferred taxes and other 286 22 83
Changes in assets and liabilities, net of effect of businesses divested:
Accounts receivable (978) (765) (477)
Inventories (240) (439) (350)
Prepaid and other assets 68 (350) (128)
Accounts payable and accrued liabilities 61 628 (63)
Income taxes payable (179) 951 (54)
Other deferred items 7 473 59
Net cash provided by operating activities 3,076 3,282 1,580
Investing Activities
Purchases of property, plant and equipment (1,561) (1,198) (878)
Proceeds from disposals of property, plant and equipment 71 79 47
Purchases net of maturities of short-term investments (8,633) (5,845) (221)
Proceeds from redemptions of short-term investments 7,309 4,209 28
Proceeds from sales of businesses Ñ net 26 3,059 21
Purchases of long-term investments (322) (752) (74)
Other investing activities 342 113 114
Net cash used in investing activities (2,768) (335) (963)
Financing Activities
Repayments of long-term debt (4) (202) (269)
Increase in short-term debt Ñ net 2,083 402 325
Proceeds from stock issuances 62 Ñ Ñ
Purchases of common stock (2,500) (1,912) (586)
Cash dividends paid (1,148) (976) (881)
Stock option transactions and other 380 411 430
Net cash used in financing activities (1,127) (2,277) (981)
Net cash (used in)/provided by discontinued operations (20) 4 118
Effect of exchange-rate changes on cash and cash equivalents 26 1 (27)
Net (decrease)/increase in cash and cash equivalents (813) 675 (273)
Cash and cash equivalents at beginning of year 1,552 877 1,150
Cash and cash equivalents at end of year $ 739 $ 1,552 $ 877
Supplemental Cash Flow Information
Cash paid during the period for:
Income taxes $ 1,293 $ 1,073 $ 809
Interest 238 155 149
See Notes to Consolidated Financial Statements which are an integral part of these statements.
42
Pfizer Inc and Subsidiary Companies
Notes to Consolidated Financial Statements
1 Significant Accounting Policies D — Long-Lived Assets
Long-lived assets include:
A — Consolidation and Basis of Presentation • property, plant and equipment — These assets are recorded
The consolidated financial statements include the parent at original cost and increased by the cost of any significant
company and all significant subsidiaries, including those improvements after purchase. We depreciate the cost
operating outside the U.S. Balance sheet amounts for the evenly over the assets’ estimated useful lives. For tax
international operations are as of November 30 of each year and purposes, accelerated depreciation methods are used as
income statement amounts are for the full-year periods ending allowed by tax laws.
on the same date. Substantially all unremitted earnings of • goodwill — Goodwill represents the difference between the
international subsidiaries are free of legal and contractual purchase price of acquired businesses and the fair value of
restrictions. All significant transactions among our businesses their net assets when accounted for by the purchase
have been eliminated. We made certain reclassifications to the method. We amortize goodwill evenly over periods not
1998 and 1997 financial statements to conform to the 1999 exceeding 40 years. The average amortization period is
presentation. 37 years.
In preparing the financial statements, we must use some • other intangible assets — Other intangible assets are
estimates and assumptions that may affect reported amounts included in Other assets, deferred taxes and deferred charges.
and disclosures. Estimates are used when accounting for We amortize these assets evenly over their estimated
depreciation, amortization, employee benefits and asset useful lives.
valuation allowances. We are also subject to risks and
uncertainties that may cause actual results to differ from We review long-lived assets to assess recoverability from
estimated results, such as changes in the health care future operations using undiscounted cash flows. When
environment, competition, foreign exchange and legislation. necessary, we record charges for impairments of long-lived
“Forward-Looking Information and Factors That May Affect assets for the amount by which the present value of future cash
Future Results,” beginning on page 35, discusses these and flows exceeds the carrying value of these assets.
other uncertainties.
E — Foreign Currency Translation
B — Cash Equivalents For most international operations, local currencies are
Cash equivalents include items almost as liquid as cash, such as considered their functional currencies. We translate assets and
certificates of deposit and time deposits with maturity periods liabilities to their U.S. dollar equivalents at rates in effect at
of three months or less when purchased. If items meeting this the balance sheet date and record translation adjustments in
definition are part of a larger investment pool, we classify them Shareholders’ Equity. We translate Statement of Income accounts
as Short-term investments. at average rates for the period. Transaction adjustments are
C — Inventories recorded in Other deductions —net.
We value inventories at cost or fair value, if lower. Cost is For operations in highly inflationary economies, we
determined as follows: translate the balance sheet items as follows:
• finished goods and work-in-process at average actual cost • monetary items (that is, assets and liabilities that will
• raw materials and supplies at average or latest actual cost be settled for cash) at rates in effect at the balance sheet
date, with translation adjustments recorded in Other
In 1999, we changed the method of determining the cost deductions —net
of all of our remaining inventories previously on the “Last-in, • non-monetary items at historical rates (that is, those
first-out” (LIFO) method to the “First-in, first-out” (FIFO) rates in effect when the items were first recorded)
method. Those inventories consisted of U.S. sourced
pharmaceuticals and part of the animal health inventories. We
believe that the change in accounting for inventories from
LIFO to FIFO is preferable because inventory costs are stable
and substantially unaffected by inflation. The change in the
method of inventory costing resulted in a pre-tax benefit of
$6.6 million included in Cost of sales for 1999.
43
Pfizer Inc and Subsidiary Companies
F — Product Alliances In 1997, we sold Strato/Infusaid to Horizon Medical
We have agreements to promote pharmaceutical Products and Arrow International for $21 million in cash.
products developed by other companies. Alliance revenue
represents revenue recorded under these co-promotion The contractual net assets identified as part of the
agreements and is derived from the sale of products. The disposition of Valleylab, Schneider, AMS and Howmedica are
revenue is earned when our co-promotion partners ship the recorded as Net assets of discontinued operations at December 31,
related goods and the sale is consummated with a third party. 1997. The net cash flows of our discontinued operations are
Such revenue is based in most cases upon a percentage of our reported as Net cash (used in)/provided by discontinued operations.
co-promotion partners’ net sales. Selling, informational and Net assets of discontinued operations consisted of the
administrative expenses in most cases includes other expenses for following:
selling and marketing these products.
We have license agreements in certain foreign countries (millions of dollars) 1997
for these products. When products are sold under license Net current assets $ 397
agreements, we record Net sales instead of Alliance revenue and Property, plant and equipment — net 383
record related costs and expenses in the appropriate caption in Other net noncurrent assets
and liabilities 640
the Statement of Income.
Net assets of discontinued operations $1,420
G — Stock-Based Compensation
In accordance with Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation, we Discontinued operations —net of tax were as follows:
elected to account for our stock-based compensation under (millions of dollars) 1999 1998 1997
Accounting Principles Board Opinion No. 25, Accounting for
Net sales $ — $1,160 $1,449
Stock Issued to Employees.
The exercise price of stock options granted equals the Pre-tax income/(loss) $(20) $ 92 $ 232
market price on the date of grant. In general, there is no Provision for taxes on income — 57 93
recorded expense related to stock options. Income/(loss) from operations of
discontinued businesses — net of tax (20) 35 139
H — Advertising Expense
We record advertising expense as follows: Pre-tax gain/(loss) on disposal of
discontinued businesses — 2,504 (11)
• production costs as incurred
Provision/(benefit) for taxes on
• costs of radio time, television time and space in
gain/(loss) — 1,138 (3)
publications are deferred until the advertising first occurs
Gain/(loss) on disposal of discontinued
businesses — net of tax — 1,366 (8)
Advertising expense totaled $1,310 million in 1999,
$1,139 million in 1998, and $898 million in 1997. Discontinued operations — net of tax $(20) $1,401 $ 131
2 Discontinued Operations 3 Financial Subsidiaries
In 1999, we agreed to pay a fine of $20 million to settle Our financial subsidiaries include Pfizer International Bank
antitrust charges involving our former Food Science Group, Europe (PIBE) and a small captive insurance company. PIBE
divested in 1996. For additional details, see note 18, periodically adjusts its loan portfolio to meet its business
“Litigation.” needs. Information about these subsidiaries follows:
In 1998, we completed the sale of the Medical Technology
Group (MTG) segment. Accordingly, the consolidated financial Condensed Balance Sheet
statements and related notes reflect the results of operations (millions of dollars) 1999 1998 1997
and net assets of the MTG businesses — Valleylab, Schneider,
Cash and interest-bearing deposits $114 $103 $115
American Medical Systems (AMS), Howmedica and
Loans — net 380 433 408
Strato/Infusaid — as discontinued operations. We completed the Other assets 13 15 8
sales of:
Total assets $507 $551 $531
• Howmedica to Stryker Corporation in December for
$1.65 billion in cash Certificates of deposit and
• Schneider to Boston Scientific Corporation in September other liabilities $ 24 $ 97 $ 73
for $2.1 billion in cash Shareholders’ equity 483 454 458
• AMS to E.M. Warburg, Pincus & Co., LLC in September Total liabilities and
for $130 million in cash shareholders’ equity $507 $551 $531
• Valleylab to U.S. Surgical Corporation in January for
$425 million in cash
44
Pfizer Inc and Subsidiary Companies
Condensed Statement of Income The contractual maturities of the held-to-maturity and
available-for-sale debt securities as of December 31, 1999, were
(millions of dollars) 1999 1998 1997
as follows:
Interest income $27 $30 $29
Interest expense (2) (2) (2) Years
Other income — net 8 1 13 Over 1 Over 5
(millions of dollars) Within 1 to 5 to 10 Over 10 Total
Net income $33 $29 $40
Held-to-maturity
debt securities:
4 Financial Instruments Corporate debt $3,590 $ 34 $ — $— $3,624
Most of our financial instruments are recorded in the Certificates of deposit 443 2 — — 445
Other — 2 8 9 19
Balance Sheet. Several “derivative” financial instruments
Available-for-sale
are “off-balance-sheet” items. debt securities:
A — Investments in Debt and Equity Securities Certificates of deposit — 370 75 — 445
Information about our investments follows: Corporate debt — 91 150 — 241
Total debt securities $4,033 $499 $233 $9 $4,774
(millions of dollars) 1999 1998 1997 Available-for-sale
Trading securities $ 113 $ 99 $ — equity securities 290
Trading securities 113
Amortized cost and fair value of
held-to-maturity debt securities:* Total investments $5,177
Corporate debt 3,624 2,306 626
Certificates of deposit 445 670 655 B — Short-Term Borrowings
Municipals — — 56 The weighted average effective interest rate on short-term
Other 19 21 104 borrowings outstanding at December 31 was 4.3% in 1999,
Total held-to-maturity debt securities 4,088 2,997 1,441 3.7% in 1998 and 2.9% in 1997. We had approximately
Cost and fair value of available-for-sale
$1.5 billion available to borrow under lines of credit at
debt securities* 686 686 686 December 31, 1999.
Cost of available-for-sale equity C — Long-Term Debt
securities 60 54 81
Gross unrealized gains 230 106 106 (millions of dollars) 1999 1998 1997
Gross unrealized losses — (8) (4) Floating-rate unsecured notes $491 $491 $686
Fair value of available-for-sale equity Other borrowings and mortgages 34 36 39
securities 290 152 183 Total long-term debt $525 $527 $725
Total investments $5,177 $3,934 $2,310 Current portion not included above $ 2 $ 4 $ 4
* Gross unrealized gains and losses are not significant.
The floating-rate unsecured notes mature on various dates
These investments are in the following captions in the from 2001 to 2005 and bear interest at a defined variable rate
Balance Sheet: based on the commercial paper borrowing rate. The weighted
(millions of dollars) 1999 1998 1997
average interest rate was 6.1% at December 31, 1999. These
notes minimize credit risk on certain available-for-sale debt
Cash and cash equivalents $ 443 $ 660 $ 636
securities that may be used to satisfy the notes at maturity. In
Short-term investments 3,703 2,377 712
September 1998, we repaid $195 million of the outstanding
Long-term loans and investments 1,031 897 962
floating-rate unsecured notes prior to their scheduled maturity
Total investments $5,177 $3,934 $2,310 by using the proceeds from the issuance of short-term
commercial paper.
Long-term debt outstanding at December 31, 1999,
matures as follows:
After
(millions of dollars) 2001 2002 2003 2004 2004
Maturities $131 $161 $— $— $233
45
Pfizer Inc and Subsidiary Companies
D — Derivative Financial Instruments Other deductions —net includes:
Purpose • changes in the fair value of foreign exchange contracts
“Forward-exchange contracts,” “currency swaps” and and changes in foreign currency assets and liabilities
“purchased currency options” are used to reduce exposure to • payments under swap contracts to offset, primarily,
foreign exchange risks. Also, “interest rate swap” contracts are interest expense or, to a lesser extent, net foreign
used to adjust interest rate exposures. exchange losses
• amortization of discounts or premiums on currencies
Accounting Policies sold under forward-exchange contracts
We consider derivative financial instruments to be “hedges”
(that is, an offset of foreign exchange and interest rate risks) Our criteria to qualify for hedge accounting are:
when certain criteria are met. Under hedge accounting Foreign currency instruments must:
for a purchased currency option, its impact on earnings is • relate to a foreign currency asset, liability or an
deferred until the recognition of the underlying hedged item anticipated transaction that is probable and whose
(inventory) in earnings. We recognize the earnings impact characteristics and terms have been identified
of the other instruments during the terms of the contracts, • involve the same currency as the hedged item
along with the earnings impact of the items they offset. • reduce the risk of foreign currency exchange
Purchased currency options are recorded at cost and movements on our operations
amortized evenly to operations through the expected inventory
delivery date. Gains at the transaction date are included in the Interest rate instruments must:
cost of the related inventory purchased. • relate to an asset or a liability
As interest rates change, we accrue the difference • change the character of the interest rate by converting
between the debt interest rates recognized in the Statement a variable rate to a fixed rate or vice versa
of Income and the amounts payable to or receivable from
counterparties under interest rate swap contracts. Likewise, The following table summarizes the exposures hedged
amounts arising from currency swap contracts are accrued as or offset by the various instruments we use:
exchange rates change.
Maximum Maturity in Years
The financial statements include the following items
related to derivative and other financial instruments serving as Instrument Exposure 1999 1998 1997
hedges or offsets: Forward-exchange Foreign currency
Prepaid expenses and taxes includes: contracts assets and liabilities .5 .5 .5
• purchased currency options Currency swaps Net investments 4 5 —
Loans .3 1 2
Other current liabilities includes: Purchased Inventory purchases
• fair value of forward-exchange contracts currency options and sales .9 1 1
• net amounts payable related to interest rate swap
Interest rate swaps Debt interest 4 5 1
contracts
Other noncurrent liabilities includes:
• net amounts payable related to currency
swap contracts
Accumulated other comprehensive expense includes changes in
the:
• foreign exchange translation of currency swaps and
foreign debt
• fair value of forward-exchange contracts for net
investment hedges
46
Pfizer Inc and Subsidiary Companies
Instruments Outstanding The Japanese yen for U.S. dollar currency swaps require
The notional amounts of derivative financial instruments, that we make interim payments of a fixed rate of 1.1% on the
except for currency swaps, do not represent actual amounts Japanese yen payable and have interim receipts of a variable
exchanged by the parties, but instead represent the amount rate based on a commercial paper rate on the U.S. dollar
of the item on which the contracts are based. receivable. These currency swaps replaced $625 million
The notional amounts of our foreign currency and interest of Japanese yen debt, which previously served as a hedge
rate contracts follow: of our net investments in Japan, as well as related interest
rate swaps.
(millions of dollars) 1999 1998 1997
The Japanese yen and Swiss franc interest rate swaps
Foreign currency contracts: effectively fixed the interest rate on floating rate debt as
Commitments to sell foreign follows:
currencies, primarily in exchange • the Japanese yen debt at 1.4% in 1999, 1998 and 1997
for U.S. dollars:
• the Swiss franc debt at 2.1% in 1997
Euro* $1,050 $ — $ —
U.K. pounds 781 482 548
Japanese yen 412 298 224 The floating interest rates were based on “LIBOR” rates
Irish punt* 91 61 107 related to the contract currencies. In connection with the sale
Australian dollars 76 98 59 of the Schneider Swiss subsidiary in 1998, we terminated the
German marks* 39 50 158 Swiss franc interest rate swap contracts and ceased borrowing
Netherlands guilders* — 316 4 Swiss francs.
French francs* — 216 134
Other currencies 192 201 240 E — Fair Value
Commitments to purchase foreign The following methods and assumptions were used to estimate
currencies, primarily in exchange the fair value of derivative and other financial instruments at
for U.S. dollars: the balance sheet date:
Euro* 339 — — • short-term financial instruments (cash equivalents,
U.K. pounds 101 53 60 accounts receivable and payable, forward-exchange
Irish punt* 50 532 92 contracts, short-term investments and borrowings) —
German marks* 47 67 73
cost approximates fair value because of the short maturity
Netherlands guilders* — 156 4
Swiss francs — 8 187
period
Other currencies 196 144 136 • loans —cost approximates fair value because of the short
interest reset period
Total forward-exchange contracts $3,374 $2,682 $2,026
• long-term investments, long-term debt, forward-exchange
Currency swaps: contracts and purchased currency options—fair value is
Japanese yen $ 829 $ 754 $ — based on market or dealer quotes
U.K. pounds 40 40 40
• interest rate and currency swap agreements—fair value is
Total currency swaps $ 869 $ 794 $ 40 based on estimated cost to terminate the agreements
Purchased currency options, (taking into account broker quotes, current interest
primarily for U.S. dollars: rates and the counterparties’ creditworthiness)
Japanese yen $ 393 $ 364 $ 198
German marks — — 130 The differences between fair and carrying values of our
French francs — — 46
derivative and other financial instruments were not material at
Belgian francs — — 29
December 31, 1999, 1998 and 1997, except for a difference of
Other currencies 30 25 61
$230 million at December 31, 1999 for available-for-sale
Total purchased currency options $ 423 $ 389 $ 464 equity securities.
Interest rate swap contracts:
F — Credit Risk
Japanese yen $ 353 $ 321 $ 814
Swiss francs — — 405
We periodically review the creditworthiness of counterparties
to foreign exchange and interest rate agreements and do not
Total interest rate swaps $ 353 $ 321 $1,219
expect to incur a loss from failure of any counterparties
*On January 1, 1999, members of the European Monetary Union were permitted to use to perform under the agreements. In general, there is no
the new currency, the euro, or their old currency.
requirement for collateral from customers. There are
no significant concentrations of credit risk related to our
financial instruments. No individual counterparty credit
exposure exceeded 10% of our consolidated Shareholders’ Equity
at December 31, 1999.
47
Pfizer Inc and Subsidiary Companies
5 Comprehensive Income 7 Property, Plant and Equipment
Changes in accumulated other comprehensive income/ The major categories of property, plant and equipment follow:
(expense) follow:
Useful
Net Accumulated Lives
Unrealized Other Com- (millions of dollars) (years) 1999 1998 1997
Currency Gain/(Loss) on Minimum prehensive Land — $ 174 $ 151 $ 126
Translation Available-For- Pension Income/
Buildings 331⁄3 2,008 1,669 1,534
(millions of dollars) Adjustment Sale Securities Liability (Expense)*
Machinery and
Balance equipment 8–20 3,040 2,685 2,459
January 1, Furniture, fixtures
1997 $ 174 $ 40 $ (69) $ 145 and other 3–121⁄ 2 1,618 1,383 1,232
Period change (253) 20 3 (230) Construction in
Balance progress — 1,197 956 516
December 31, 8,037 6,844 5,867
1997 (79) 60 (66) (85) Less: accumulated
Period change (74) (2) (73) (149) depreciation 2,694 2,429 2,074
Balance Total property, plant
December 31, and equipment $5,343 $4,415 $3,793
1998 (153) 58 (139) (234)
Period change (222) 81 (24) (165)
8 Other Deductions — Net
Balance
December 31, The components of other deductions —net follow:
1999 $(375) $139 $(163) $(399)
(millions of dollars) 1999 1998 1997
* Income tax benefit for other comprehensive expense was $76 million in 1997,
$116 million in 1998 and $33 million in 1999. Interest income $(301) $ (185) $(156)
Interest expense 236 143 149
6 Inventories Interest expense capitalized (13) (7) (2)
Net interest income (78) (49) (9)
In June 1999, the European Union’s Committee for Proprietary
Co-promotion payments to Searle — 240 —
Medicinal Products suspended the European Union licenses of
Contribution to The
the oral and intravenous formulations of Trovan for 12 months. Pfizer Foundation — 300 —
Based on our evaluation of these events and related matters, we Legal settlements involving the
determined that it was unlikely that certain Trovan inventories brand-name prescription drug
of finished goods, bulk, work-in-process, and raw materials will antitrust litigation 2 57 —
be used. Accordingly, in the third quarter of 1999, we recorded Amortization of goodwill and other
a charge of $310 million ($205 million after-tax, or $.05 after- intangibles 43 45 48
tax per diluted share) in Cost of sales to write off Trovan Net exchange (gains)/losses (20) (16) 26
Other, net 154 432 141
inventories in excess of the amount required to support
expected sales. Other deductions — net $ 101 $1,009 $ 206
In 1999, we substantially completed the actions under the
restructuring plans announced in 1998.
In 1998, we recorded charges for the restructuring in
addition to charges for certain asset impairments. The
components of these pre-tax charges follow:
(millions of dollars) Total COS* SI&A* R&D OD*
Restructuring charges $177 $68 $17 $1 $ 91
Asset impairments 213 18 — — 195
* COS —Cost of sales; SI&A —Selling, informational and administrative expenses; OD —
Other deductions-net.
48
Pfizer Inc and Subsidiary Companies
The components of the 1998 restructuring charges follow: In 1998, our animal health antibiotic feed additive, Stafac,
was banned, effective in mid-1999, throughout the European
Utilization
Union, resulting in asset impairment charges of $103 million
(millions of dollars) Charges in 1998 1998 1999 Beyond ($85 million was to adjust intangible asset values, primarily
Property, plant goodwill and trademarks, and $18 million was to adjust the
and equipment $ 49 $ 49 $— $— carrying value of machinery and equipment in the
Write-down of intangibles 44 44 — — pharmaceutical segment).
Employee termination costs 40 12 28 —
Other 44 11 17 16 9 Taxes on Income
Total $177 $116 $45 $16 Income from continuing operations before taxes consisted of
the following:
These charges resulted from a review of our global
operations to increase efficiencies and return on assets, thereby (millions of dollars) 1999 1998 1997
resulting in plant and product line rationalizations. In addition United States $2,557 $1,184 $1,215
to the disposition of our MTG businesses, we exited certain International 1,891 1,410 1,652
product lines including certain lines associated with our animal Total income from continuing
health business and certain of our fermentation operations. operations before taxes $4,448 $2,594 $2,867
We wrote off assets related to the product lines we exited,
including inventory, intangible assets—primarily goodwill—as The provision for taxes on income from continuing
well as certain buildings, machinery and equipment which we operations consisted of the following:
do not plan to use or sell.
As a result of the restructuring, our work force was (millions of dollars) 1999 1998 1997
reduced by approximately 500 manufacturing, sales and United States:
corporate personnel. Employee termination costs represent Taxes currently payable:
payments for severance, outplacement counseling fees, medical Federal $ 621 $ 344 $344
and other benefits and a $5 million noncash charge for the State and local 38 24 9
acceleration of nonvested employee stock options. Deferred income taxes (72) (162) (23)
Other restructuring charges consist of charges for Total U.S. tax provision 587 206 330
inventory for product lines we have exited—$12 million, International:
contract termination payments—$9 million, facility closure Taxes currently payable 606 550 462
costs—$7 million and environmental remediation costs Deferred income taxes 51 (114) (17)
associated with the disposal of certain facilities—$16 million. Total international tax provision 657 436 445
In 1998, we recorded an impairment charge of
Total provision for taxes on income $1,244 $ 642 $775
$110 million in the pharmaceutical segment to adjust
intangible asset values, primarily goodwill and trademarks,
related to consumer health care product lines. These charges Amounts are reflected in the preceding tables based on the
resulted from significant changes in the marketplace and a location of the taxing authorities. As of December 31, 1999, we
revision of our strategies, including: have not made a U.S. tax provision of approximately
• the decision to redeploy resources from personal care and $1.9 billion for approximately $8.2 billion of unremitted
minor brands to over-the-counter switches of prescription earnings of our international subsidiaries. These earnings are
products expected, for the most part, to be reinvested overseas.
• the withdrawal of one of our major over-the-counter We operate a manufacturing subsidiary in Puerto Rico
products in Italy that benefits from a Puerto Rican incentive grant in effect
• an acquired product line which experienced declines through the end of 2002. Under this grant, we are partially
in market share exempt from income, property and municipal taxes. For further
information on U.S. taxation of Puerto Rican operations, see
“Tax Legislation” on page 37.
49
Pfizer Inc and Subsidiary Companies
Reconciliation of the U.S. statutory income tax rate to our A valuation allowance is recorded because some items
effective tax rate for continuing operations follows: recorded as foreign deferred tax assets may not be deductible
or creditable. The “foreign tax credit carryforwards” were
(percentages) 1999 1998 1997 generated from dividends paid or deemed to be paid by
U.S. statutory income tax rate 35.0 35.0 35.0 subsidiaries to the parent company between 1997 and 1999. We
Effect of partially tax-exempt can carry these credits forward for five years from the year of
operations in Puerto Rico (1.5) (2.2) (1.8) actual payment and apply them to certain U.S. tax liabilities.
Effect of international operations (4.8) (5.5) (5.0)
The Internal Revenue Service (IRS) has completed and
All other — net (0.7) (2.5) (1.2)
closed its audits of our tax returns through 1992. The IRS
Effective tax rate for continuing completed its audits in January 2000 of our tax returns for
operations 28.0 24.8 27.0 1993 through 1995. We are awaiting the agent’s final report for
those years. We do not expect any material adjustments to be
Deferred taxes arise because of different treatment between proposed.
financial statement accounting and tax accounting, known as In November 1994, Belgian tax authorities notified Pfizer
“temporary differences.” We record the tax effect of these Research and Development Company N.V./S.A. (PRDCO),
temporary differences as “deferred tax assets” (generally items an indirect, wholly owned subsidiary of our company, of a
that can be used as a tax deduction or credit in future periods) proposed adjustment to the taxable income of PRDCO for
and “deferred tax liabilities” (generally items that we received fiscal year 1992. The proposed adjustment arises from an
a tax deduction for, but have not yet been recorded in the assertion by the Belgian tax authorities of jurisdiction with
Statement of Income). respect to income resulting primarily from certain transfers
The tax effects of the major items recorded as deferred tax of property by our non-Belgian subsidiaries to the Irish branch
assets and liabilities are: of PRDCO. In January 1995, PRDCO received an assessment
from the tax authorities for additional taxes and interest of
1999 1998 1997
Deferred Tax Deferred Tax Deferred Tax
approximately $432 million and $97 million, respectively,
relating to these matters. In January 1996, PRDCO received
(millions of dollars) Assets Liabs. Assets Liabs. Assets Liabs.
an assessment from the tax authorities, for fiscal year 1993, for
Prepaid/deferred items $ 361 $ 197 $ 411 $ 169 $ 252 $189 additional taxes and interest of approximately $86 million and
Inventories 471 109 322 72 218 60 $18 million, respectively. The additional assessment arises from
Property, plant and
the same assertion by the Belgian tax authorities of jurisdiction
equipment 22 514 39 433 30 350
Employee benefits 544 131 391 97 297 113
with respect to all income of the Irish branch of PRDCO.
Restructurings and Based upon the relevant facts regarding the Irish branch of
special charge* 244 — 301 — 133 — PRDCO and the provisions of the Belgian tax laws and the
Foreign tax credit written opinions of outside counsel, we believe that the
carryforwards 181 — 117 — 159 — assessments are without merit.
Other carryforwards 165 — 97 — 135 — We believe that our accrued tax liabilities are adequate for
Unremitted earnings — 335 — 335 — — all years.
All other 121 170 169 73 119 76
Subtotal 2,109 1,456 1,847 1,179 1,343 788 10 Benefit Plans
Valuation allowance (27) — (30) — (27) —
Our pension plans cover most employees worldwide. Our
Total deferred taxes $2,082 $1,456 $1,817 $1,179 $1,316 $788 postretirement plans provide medical and life insurance
Net deferred tax asset $ 626 $ 638 $ 528 benefits to retirees and their eligible dependents.
* Includes tax effect of the 1991 charge for potential future Shiley C/C heart valve
Information regarding our pension and postretirement
fracture claims. benefit obligation follows:
These amounts, netted by taxing location, are in the Pension Postretirement
following captions in the Balance Sheet: (percentages) 1999 1998 1997 1999 1998 1997
(millions of dollars) 1999 1998 1997 Weighted-average
assumptions:
Prepaid expenses and taxes $ 744 $ 809 $ 425 Discount rate:
Other assets, deferred taxes and U.S. plans 7.5 6.8 7.0 7.5 6.8 7.0
deferred charges 183 26 230 International plans 5.1 5.3 5.9
Deferred taxes on income (301) (197) (127) Rate of compensation
Net deferred tax asset $ 626 $ 638 $ 528 increase:
U.S. plans 4.5 4.5 4.5
International plans 3.7 3.4 3.9
50
Pfizer Inc and Subsidiary Companies
The following tables present reconciliations of the benefit The components in the balance sheet consist of:
obligation of the plans; the plan assets of the pension plans and
Pension Postretirement
the funded status of the plans:
(millions of dollars) 1999 1998 1997 1999 1998 1997
Pension Postretirement
Prepaid benefit cost $ 537 $ 504 $ 499 $ — $ — $ —
(millions of dollars) 1999 1998 1997 1999 1998 1997 Accrued benefit
Change in benefit liability (655) (562) (362) (346) (359) (394)
obligation Intangible asset 79 71 53 — — —
Benefit obligation at Accumulated other
beginning of year $3,177 $2,674 $2,130 $ 286 $ 287 $ 285 comprehensive
Service cost 169 151 105 7 10 7 income 317 249 143 — — —
Interest cost 192 181 145 18 20 19 Net amount
Employee recognized $ 278 $ 262 $ 333 $(346) $(359) $(394)
contributions 9 6 6
Plan amendments 13 15 274 2 — —
Information related primarily to International plans:
Plan net (gains)/losses 87 354 240 (30) (3) (7)
Foreign exchange Pension
impact 28 36 (103)
Acquisitions — — 3 — — — (millions of dollars) 1999 1998 1997
Divestitures (42) (26) — — — — Pension plans with an accumulated benefit
Curtailments — (26) (1) — (10) — obligation in excess of plan assets:
Settlements (1) (10) (1) — — — Fair value of plan assets $400 $323 $294
Benefits paid (221) (178) (124) (20) (18) (17) Accumulated benefit obligation 752 693 553
Benefit obligation at Pension plans with a benefit obligation in
end of year $3,411 $3,177 $2,674 $ 263 $ 286 $ 287 excess of plan assets:
Fair value of plan assets $496 $435 $422
Change in Benefit obligation 949 901 774
plan assets
Fair value of plan
assets at beginning
At December 31, 1999, the major U.S. pension plan held
of year $3,194 $2,793 $2,410 approximately 6.8 million shares of our common stock with a
Actual return on plan fair value of approximately $220 million. The Plan received
assets 464 530 491 approximately $2 million in dividends on these shares in 1999.
Company The assumptions used and the annual cost related to these
contributions 76 63 50 plans follow:
Employee
contributions 9 6 6 Pension Postretirement
Foreign exchange
(percentages) 1999 1998 1997 1999 1998 1997
impact 26 3 (57)
Acquisitions — — 1 Weighted average
Divestitures (34) (23) — assumptions:
Settlements (1) (13) (1) Expected return on
Benefits paid (206) (165) (107) plan assets:
U.S. plans 10.0 10.0 10.0
Fair value of plan
International plans 7.3 8.1 7.5
assets at end of year $3,528 $3,194 $2,793
(millions of dollars)
Funded status:
Plan assets in excess Service cost $169 $ 151 $ 105 $ 7 $ 10 $ 7
of/(less than) Interest cost 192 181 145 18 20 19
benefit Expected return on
obligation $ 117 $ 17 $ 119 $(263) $(286) $(287) plan assets (275) (249) (208)
Unrecognized: Amortization of:
Net transition asset (4) (4) (10) — — — Prior service costs/
Net (gains)/ (gains) 19 24 34 (18) (24) (24)
losses (75) 1 (86) (56) (26) (24) Net transition asset (5) (6) (5) — — —
Prior service Net losses/(gains) 12 10 2 — (1) (1)
costs/(gains) 240 248 310 (27) (47) (83) Curtailments and
settlements— net* — 28 — — (22) —
Net amount
recognized $ 278 $ 262 $ 333 $(346) $(359) $(394) Net periodic benefit
cost/(gain) $112 $ 139 $ 73 $ 7 $(17) $ 1
* Includes approximately $12 million of special termination pension benefits for certain
MTG employees in 1998.
51
Pfizer Inc and Subsidiary Companies
An average increase of 6.9% in the cost of health care 13 Preferred Stock Purchase Rights
benefits was assumed for 2000 and is projected to decrease over
Preferred Stock Purchase Rights have a scheduled term
the next five years to 5.2% and to then remain at that level.
through October 2007, although the term may be extended or
A 1% change in the medical trend rate assumed for
the Rights may be redeemed prior to expiration. One right was
postretirement benefits would have the following effects
issued for each share of common stock issued by our company.
at December 31, 1999:
These rights are not exercisable unless certain change-in-
(millions of dollars) 1% Increase 1% Decrease control events transpire, such as a person acquiring or
Total of service and interest
obtaining the right to acquire beneficial ownership of 15% or
cost components $ 1 $ (1) more of our outstanding common stock or an announcement of
Postretirement benefit obligation 13 (12) a tender offer for at least 30% of our stock. The rights are
evidenced by corresponding common stock certificates and
We have savings and investment plans for most employees automatically trade with the common stock unless an event
in the U.S., Puerto Rico, the U.K. and Ireland. Employees may transpires that makes them exercisable. If the rights become
contribute a portion of their salaries to the plans and we match exercisable, separate certificates evidencing the rights will be
a portion of the employee contributions. Our contributions distributed and each right will entitle the holder to purchase a
were $50 million in 1999, $48 million in 1998 and $43 million new series of preferred stock at a defined price from our
in 1997. company. The preferred stock, in addition to preferred
dividend and liquidation rights, will entitle the holder to vote
11 Lease Commitments with the company’s common stock.
The rights are redeemable by us at a fixed price until
We lease properties for use in our operations. In addition to
10 days, or longer as determined by the Board, after
rent, the leases require us to pay directly for taxes, insurance,
certain defined events, or at any time prior to the expiration of
maintenance and other operating expenses, or to pay higher
the rights.
rent when operating expenses increase. Rental expense, net
We have reserved 3.0 million preferred shares to be issued
of sublease income, was $158 million in 1999, $131 million in
pursuant to these rights. No such shares have yet been issued.
1998 and $127 million in 1997. This table shows future
At the present time, the rights have no dilutive effect on the
minimum rental commitments under noncancellable leases
earnings per common share calculation.
at December 31, 1999:
After
14 Employee Benefit Trusts
(millions of dollars) 2000 2001 2002 2003 2004 2004 In 1993, we sold 120 million shares of treasury stock to the
Lease commitments $54 $45 $40 $29 $27 $286 Pfizer Inc. Grantor Trust in exchange for a $600 million note.
The Trust was established primarily to fund our employee
12 Common Stock benefit plans. In February 1999, the Trust transferred 10
million shares to us to satisfy the balance due on its note and
We effected a three-for-one stock split of our common stock in contributed its remaining 90 million shares to the newly
the form of a 200% stock dividend in 1999 and a two-for-one established Pfizer Inc. Employee Benefit Trust (EBT). The
split of our common stock in the form of a 100% stock Grantor Trust was then dissolved and the shares of the EBT
dividend in 1997. All share and per share information in this will now be used to fund employee benefit plans. The Balance
report reflects both splits. Per share data may reflect rounding Sheet reflects the fair value of the shares owned by the EBT as a
adjustments as a result of the three-for-one split. reduction of Shareholders’ Equity.
Under the current share-purchase program begun in
September 1998, we are authorized to purchase up to $5 billion
of our common stock. In 1999, we purchased approximately
65.6 million shares of our common stock in the open market at
an average price of $38 per share. Since the beginning of this
program, we have purchased 80.4 million shares of our
common stock for approximately $3 billion. In September
1998, we completed a program under which we purchased
79.2 million shares of our common stock at a total cost of
$2 billion. In 1998, we purchased approximately 57.8 million
shares of our common stock at an average price of $33 per share
under these share-purchase programs. Of the 57.8 million
shares repurchased in 1998, 14.8 million shares were
repurchased under the share-purchase program which started in
September 1998, for a total cost of $525 million.
52
Pfizer Inc and Subsidiary Companies
15 Earnings Per Share The following table summarizes information concerning
options outstanding under the Plan at December 31, 1999:
The weighted average common shares used in the
computations of basic earnings per common share and earnings (thousands
per common share assuming dilution were as follows: of shares) Options Outstanding Options Exercisable
Weighted
(millions, except per share data) 1999 1998 1997 Average Weighted Weighted
Number Remaining Average Number Average
Earnings:
Range of Outstanding Contractual Exercise Exercisable Exercise
Income from continuing operations $3,199 $1,950 $2,082 Exercise Prices at 12/31/99 Term (years) Price at 12/31/99 Price
Discontinued operations— net of tax (20) 1,401 131
$ 0 – $10 85,308 4.0 $ 6.40 84,401 $ 6.38
Net income $3,179 $3,351 $2,213 10 – 15 36,677 6.6 12.42 34,439 12.42
Basic: 15 – 20 35,486 7.7 18.34 21,145 18.35
Weighted average number of 20 – 40 48,730 8.7 35.18 14,114 35.18
common shares outstanding 3,775 3,789 3,771 over 40 66,904 9.2 42.07 — —
Earnings per common share
Income from continuing operations $ .85 $ .51 $ .55 The following table summarizes the activity for the Plan:
Discontinued operations— net of tax (.01) .37 .04
Under Option
Net income $ .84 $ .88 $ .59
Shares Weighted
Diluted: Available for Average Exercise
Weighted average number of (thousands of shares) Grant Shares Price Per Share
common shares outstanding 3,775 3,789 3,771 Balance January 1, 1997 105,042 259,284 $ 7.21
Common share equivalents— Granted (42,612) 42,612 18.35
stock options and stock issuable Exercised — (46,983) 5.38
under employee compensation plans 109 156 138 Cancelled 1,959 (2,016) 12.89
Weighted average number of Balance December 31, 1997 64,389 252,897 9.39
common shares and common Granted (52,860) 52,860 35.21
share equivalents 3,884 3,945 3,909 Exercised — (54,888) 7.04
Earnings per common share Cancelled 1,212 (1,257) 19.91
Income from continuing operations $ .82 $ .49 $ .53 Balance December 31, 1998 12,741 249,612 15.32
Discontinued operations— net of tax — .36 .04 Authorized 165,000 — —
Net income $ .82 $ .85 $ .57 Granted (67,963) 67,963 42.07
Exercised — (41,524) 9.57
Cancelled 2,928 (2,946) 35.41
Options to purchase 115 million shares were outstanding
during 1999 but were not included in the computation of Balance December 31, 1999 112,706 273,105 22.63
diluted earnings per share because the options’ exercise prices Options granted in 1999 include options for 450 shares granted to every eligible
were greater than the average market price of the common employee worldwide in celebration of our 150th Anniversary.
shares. The tax benefits related to certain stock option transactions were $228 million in 1999,
$274 million in 1998 and $88 million in 1997.
16 Stock Option and Performance Awards
The weighted-average fair value per stock option granted
We may grant stock options to any employee, including was $13.57 for 1999 options, $11.31 for 1998 options and $5.59
officers, under our Stock and Incentive Plan. Options are for the 1997 options. We estimated the fair values using the
exercisable after five years or less, subject to continuous Black-Scholes option pricing model, modified for dividends
employment and certain other conditions and expire 10 years and using the following assumptions:
after the grant date. Once exercisable, the employee can
purchase shares of our common stock at the market price on 1999 1998 1997
the date we granted the option. Expected dividend yield 1.02% 1.02% 1.76%
The Plan also allows for stock appreciation rights, Risk-free interest rate 5.26% 5.23% 6.23%
stock awards and performance awards. In 1999, shareholders Expected stock price volatility 25.98% 26.29% 25.56%
approved amendments to increase the shares available in Expected term until exercise (years) 5.75 5.75 5.50
the Plan and to extend its term through 2008.
53
Pfizer Inc and Subsidiary Companies
The following table summarizes results as if we had 18 Litigation
recorded compensation expense for the 1999, 1998 and 1997
The Company is involved in a number of claims and
option grants:
litigations, including product liability claims and litigations
(millions of dollars, except per share data) 1999 1998 1997 considered normal in the nature of its businesses. These include
Net income:
suits involving various pharmaceutical and hospital products
As reported $3,179 $3,351 $2,213 that allege either reaction to or injury from use of the product.
Pro forma 2,750 3,149 2,087 In addition, from time to time the Company is involved in, or
Basic earnings per share: is the subject of, various governmental or agency inquiries or
As reported $ .84 $ .88 $ .59 investigations relating to its businesses.
Pro forma .73 .83 .55 In 1999, the Company pleaded guilty to one count of price
Diluted earnings per share: fixing of sodium erythorbate from July 1992 until December
As reported $ .82 $ .85 $ .57
1994, and one count of market allocation of maltol from
Pro forma .71 .80 .53
December 1989 until December 1995, and paid a total fine of
$20 million. The activities at issue involved the Company’s
The Performance-Contingent Share Award Program former Food Science Group, a division that manufactured food
was established effective in 1993 to provide executives and additives and that the Company divested in 1996. The
other key employees the right to earn common stock awards. Department of Justice has stated that no further antitrust
We determine the award payouts after the performance period charges will be brought against the Company relating to the
ends, based on specific performance criteria. Under the former Food Science Group, that no antitrust charges will be
Program, up to 120 million shares may be awarded. We brought against any current director, officer or employee of the
awarded approximately 2,276,000 shares in 1999, Company for conduct related to the products of the former
approximately 1,959,000 shares in 1998 and approximately Food Science Group, and that none of the Company’s current
1,347,000 shares in 1997. At December 31, 1999, program directors, officers or employees was aware of any aspect of the
participants had the right to earn up to 12.3 million additional activity that gave rise to the violations. Five purported class
shares. Compensation expense related to the Program was action suits involving these products have been filed against
$64 million in 1999, $202 million in 1998 and $74 million the Company; two in California State Court, and three in New
in 1997. York Federal Court. The Company does not believe that this
We entered into two forward-purchase contracts in 1998 plea and settlement, or civil litigation involving these
and on maturity they were extended. These contracts offset the products, will have a material effect on its business or results of
potential impact on net income of our liability under the operations.
Program. At settlement date we will, at the option of the On June 9, 1997, the Company received notice of the
counterparty to the contract, either receive our own stock or filing of an Abbreviated New Drug Application (ANDA) by
settle the contracts for cash. Other contract terms are as Mylan Pharmaceuticals for a sustained-release nifedipine
follows: product asserted to be bioequivalent to Procardia XL. Mylan’s
Maximum Maturity notice asserted that the proposed formulation does not infringe
in Years relevant licensed Alza and Bayer patents and thus that approval
Number of Shares (thousands) Per Share 1999 1998 of their ANDA should be granted before patent expiration. On
3,000 $33.73 — .9 July 18, 1997, the Company, together with Bayer AG and Bayer
3,017 33.75 .9 — Corporation, filed a patent-infringement suit against Mylan
Pharmaceuticals Inc. and Mylan Laboratories Inc. in the United
The financial statements include the following items States District Court for the Western District of Pennsylvania
related to these contracts: with respect to Mylan’s ANDA. Suit was filed under Bayer
Prepaid expenses and taxes includes: AG’s U.S. Patent No. 5,264,446, licensed to the Company,
• fair value of these contracts relating to nifedipine of a specified particle size range. Mylan
Other deductions—net includes: has filed its answer denying infringement and a scheduling
• changes in the fair value of these contracts order has been entered. On December 17, 1999, Mylan received
final approval from the FDA for its 30 mg. extended-release
17 Insurance nifedipine tablet. On March 16, 1999, the United States
We maintain insurance coverage adequate for our needs. Under District Court granted Mylan’s motion to file an amended
our insurance contracts, we usually accept self-insured answer and antitrust counterclaims. All discovery on the
retentions appropriate for our specific business risks. antitrust counterclaims is stayed pending resolution of the
patent misuse claims. On March 29, 1999, Mylan filed a
motion for summary judgment based on an adverse decision
against Bayer in Bayer’s litigation against Elan Pharmaceutical
Research Corp. which involved the same nifedipine particle size
54
Pfizer Inc and Subsidiary Companies
patent. Discovery has been essentially completed and the complete discovery of parties and fact witnesses and February
parties dispositive motions were filed by an extended deadline 29, 2000, to complete discovery of expert witnesses. On
of July 19, 1999, including Pfizer and Bayer’s summary December 20, 1999, the court extended the date to complete
judgment motion seeking to dismiss Mylan’s patent misuse fact discovery to January 28, 2000, and that of expert discovery
defenses and counterclaims. On December 13, 1999, Mylan to March 15, 2000. A status conference with the court is
filed its opposition to plaintiffs’ motion for summary judgment scheduled for March 17, 2000.
dismissing Mylan’s patent misuse defense and counterclaim, On April 2, 1998, the Company received notice from Lek
and Bayer and the Company filed their opposition to Mylan’s U.S.A. Inc. of its filing of an ANDA for a 60 mg. formulation
motion for summary judgment of non-infringement. The of nifedipine alleged to be bioequivalent to Procardia XL. On
parties reply memoranda in support of their motions were filed May 14, 1998, Bayer and Pfizer commenced suit against Lek for
on December 28, 1999. infringement of Bayer’s U.S. Patent No. 5,264,446, as well as
On or about February 23, 1998, Bayer AG received notice for infringement of a second Bayer patent, No. 4,412,986
that Biovail Laboratories Incorporated had filed an ANDA for a relating to combinations of nifedipine with certain polymeric
sustained-release nifedipine product asserted to be materials. On September 14, 1998, Lek was served with the
bioequivalent to one dosage strength (60 mg.) of Procardia XL. summons and complaint. Plaintiffs amended the complaint on
The notice was subsequently received by the Company as well. November 10, 1998, limiting the action to infringement of
The notice asserts that the Biovail product does not infringe U.S. Patent 4,412,986. On January 19, 1999, Lek filed a motion
Bayer’s U.S. Patent No. 5,264,446. On March 26, 1998, the to dismiss the complaint alleging infringement of U.S. Patent
Company received notice of the filing of an ANDA by Biovail 4,412,986. Pfizer responded to this motion and oral argument
Laboratories of a 30 mg. dosage formulation of nifedipine has been held in abeyance pending a settlement conference. In
alleged to be bioequivalent to Procardia XL. On April 2, 1998, September 1999, a settlement agreement was entered into
Bayer and Pfizer filed a patent-infringement action against among the parties staying this litigation until the expiration of
Biovail, relating to their 60 mg. nifedipine product, in the U.S. Patent No. 4,412,986 on November 2, 2000.
United States District Court for the District of Puerto Rico. On February 10, 1999, the Company received a notice from
On May 6, 1998, Bayer and Pfizer filed a second patent Lek U.S.A. of its filing of an ANDA for a 90 mg. formulation
infringement action in Puerto Rico against Biovail under the of nifedipine alleged to be bioequivalent to Procardia XL. On
same patent with respect to Biovail’s 30 mg. nifedipine March 25, 1999, Bayer and Pfizer commenced suit against Lek
product. These actions have been consolidated for discovery and for infringement of the same two Bayer patents originally
trial. On April 24, 1998, Biovail Laboratories Inc. brought suit asserted against Lek’s 60 mg. formulation. This case was also
in the United States District Court for the Western District of the subject of a settlement conference. In September, 1999, a
Pennsylvania against the Company and Bayer seeking a settlement agreement was entered into among the parties
declaratory judgment of invalidity of and/or non-infringement staying this litigation until the expiration of U.S. patent No.
of the 5,264,446 nifedipine patent as well as a finding of 4,412,986 on November 2, 2000.
violation of the antitrust laws. Biovail has also moved to On November 9, 1998, Pfizer received an ANDA notice
transfer the patent infringement actions from Puerto Rico to letter from Martec Pharmaceutical, Inc. for generic versions (30
the Western District of Pennsylvania. Pfizer has opposed this mg., 60 mg., 90 mg.) of Procardia XL. On or about December
motion to transfer and on June 19, 1998, moved to dismiss 18, 1998, Pfizer received a new ANDA certification letter
Biovail’s declaratory judgment action and antitrust action in stating that the ANDA had actually been filed in the name of
the Western District of Pennsylvania, or in the alternative, to Martec Scientific, Inc. On December 23, 1998, Pfizer brought
stay the action pending the outcome of the infringement an action against Martec Pharmaceutical, Inc. and Martec
actions in Puerto Rico. On January 4, 1999, the District Court Scientific, Inc. in the Western District of Missouri for
in Pennsylvania granted Pfizer’s motion for a stay of the infringement of Bayer’s patent relating to nifedipine of a
antitrust action pending the outcome of the infringement specific particle size. On January 26, 1999, a second complaint
actions in Puerto Rico. On January 29, 1999, the District was filed against Martec Scientific in the Western District of
Court in Puerto Rico denied Biovail’s motion to transfer the Missouri based on Martec’s new ANDA certification letter.
patent infringement actions from Puerto Rico to the Western Martec filed its response to this complaint on February 26,
District of Pennsylvania. On April 12, 1999, Biovail filed a 1999. A hearing to determine claim scope is scheduled for
motion for summary judgment also based in part on the June 1, 2000.
summary judgment motion granted to Elan in the Bayer v. Pfizer filed suit on July 8, 1997, against the FDA in the
Elan litigation in the Northern District of Georgia. Pfizer and United States District Court for the District of Columbia,
Bayer’s response was filed on April 26, 1999. On September 20, seeking a declaratory judgment and injunctive relief enjoining
1999, the United States District Court in Puerto Rico denied the FDA from processing Mylan’s ANDA or any other ANDA
Biovail’s motion for summary judgment without prejudice to submission referencing Procardia XL that uses a different
their refiling after completion of discovery in the Procardia XL extended-release mechanism. Pfizer’s suit alleges that extended-
patent-infringement litigation. The court set an expedited release mechanisms that are not identical to the osmotic pump
discovery schedule with a deadline of December 30, 1999, to mechanism of Procardia XL constitute different dosage forms
55
Pfizer Inc and Subsidiary Companies
requiring the filing and approval of suitability petitions under On May 19, 1999, Abbott Laboratories filed an action
the Food Drug and Cosmetics Act before the FDA can accept against the Company in the United States District Court of the
an ANDA for filing. Mylan intervened in Pfizer’s suit. On Northern District of Illinois alleging that the Company’s use,
March 31, 1998, the U.S. District Judge granted the sale or manufacture of trovafloxacin infringes Abbott’s United
government’s motion for summary judgment against the States Patent No. 4,616,019 claiming naphthyriding antibiotics
Company. On July 16, 1999, the D.C. Court of Appeals and seeking a permanent injunction and damages. An answer
dismissed the appeal on the ground that since the FDA had not denying these allegations was filed on June 9, 1999. Discovery
approved any ANDA referencing Procardia XL that uses a is in progress.
different extended-release mechanism than the osmotic pump On December 17, 1999, the Company received notice of
mechanism of Procardia XL, it was premature to maintain this the filing of an ANDA by Zenith Goldline Pharmaceuticals
action, stating that Pfizer has the right to bring such an action for 50 mg. and 100 mg. tablets of sertraline hydrochloride
if, and when, the FDA approves such an ANDA. Subsequent to alleged to be bioequivalent to Zoloft. Zenith has certified to
FDA’s final approval of Mylan’s ANDA, on December 18, 1999 the FDA that it will not engage in the manufacture, use or sale
Pfizer filed suit against FDA in the United States District of sertraline hydrochloride until the expiration of Pfizer’s U.S.
Court for the District of Delaware. The suit alleges that FDA Patent 4,536,518, which covers sertraline per se and expires
unlawfully approved Mylan’s 30 mg. extended release product December 30, 2005. Zenith has also alleged in its certification
because FDA had not granted an ANDA suitability petition to the FDA that the manufacture, use and sale of Zenith’s
reflecting a difference in dosage form from Procardia XL. product will not infringe Pfizer’s U.S. Patent 4,962,128, which
On March 31, 1999, the Company received notice from covers methods of treating an anxiety-related disorder or
TorPharm of its filing, through its U.S. agent Apotex Corp., of Pfizer’s U.S. Patent 5,248,699, which covers a crystalline
an ANDA for 1 mg., 2 mg., 4 mg. and 8 mg. tablets alleged to polymorph of sertraline hydrochloride. These patents expire in
be bioequivalent to Cardura (doxazosin mesylate). The notice November 2009 and August 2012, respectively. On January 28,
letter alleges that Pfizer’s patent on doxazosin is invalid in view 2000, the Company filed a patent infringement action against
of certain prior art references. Following a review of these Zenith Goldline and its parent Ivax Corporation in the United
allegations, suit was filed in the United States District Court States District Court for the District of New Jersey for
for the Northern District of Illinois against TorPharm and infringement of the ’128 and ’699 patents.
Apotex Corp. on May 14, 1999. The defendants requested a 90- On February 1, 2000, the Company received notice of the
day period in which to file their answer. The request was filing of an ANDA by Novopharm Limited for 50 mg, 100 mg,
granted and TorPharm/Apotex’s answer was filed by August 150 mg and 200 mg tablets of fluconazole alleged to be
19, 1999. Discovery is in progress. On June 2, 1999, FDA was bioequivalent to DIFLUCAN. Novopharm has certified to the
notified that given the patent litigation and pursuant to FDA its position that the Company’s U.S. Patent 4,404,216,
provisions of the Federal Food Drug and Cosmetic Act, the which covers fluconazole, is invalid. This patent expires in
FDA may not approve the TorPharm application for thirty January 2004. The Company is evaluating Novopharm’s notice.
months from filing or resolution of the litigation. In pre-existing litigation between Pioneer Hi-Bred
On May 5, 1999, the Company filed an action against Sibia International, Inc. and DeKalb Genetics Corporation in the
Neurosciences, Inc. in the United States District Court for the United States District Court for the Southern District of Iowa,
District of Delaware seeking a declaratory judgment that two the court granted on October 8, 1999 Pioneer’s motion to add
Sibia patents claiming reporter gene drug screening assays are additional parties, including Pfizer Inc. and Monsanto Co. (the
invalid, not infringed by the Company, and unenforceable due present owner of DeKalb Genetics Corporation), as codefendant
to Sibia’s misuse of its patent rights in seeking certain license parties. The amended complaint, which claims violations of the
terms. On May 27, 1999, Sibia Neurosciences, Inc. filed an federal Lanham Act and Iowa state law stemming from the
answer to the Company’s declaratory judgment action in which codefendants’ alleged use of Pioneer’s corn seed germplasm in
Sibia denies that a prior case or controversy existed, but admits the development of competitive corn seed products, was served
that a case or controversy does now exist regarding at least one on the Company on October 19. The Company filed its answer
patent in suit, denies the invalidity, unenforceability and non- on December 15, 1999.
infringement of the patents in suit, and asserts various On September 22, 1999, the jury in a trademark-
jurisdictional and equitable defenses, affirmative defenses, and infringement litigation brought against the Company by
lack of standing by the Company to assert patent misuse. Sibia Trovan Ltd. and Electronic Identification Devices, Ltd. relating
Neurosciences also filed a counterclaim alleging willful to use of the TROVAN mark for trovafloxacin issued a verdict
infringement by the Company of one of the patents in suit. A in favor of the plaintiffs with respect to liability, holding that
reply to that counterclaim denying Sibia’s allegation has been the Company had infringed Trovan Ltd.’s mark and had acted
filed. The parties submitted a joint status report to the court in bad faith. Following a further damage trial, on October 12,
on December 14, 1999, in which the parties agreed to complete 1999, the jury awarded Trovan Ltd. a total of $143 million in
fact discovery by August 21, 2000, and commence trial on
January 8, 2001.
56
Pfizer Inc and Subsidiary Companies
damages, comprised of $5 million actual damages, $3 million responsible party or participant with respect to several waste
as a reasonable royalty and $135 million in punitive damages. site matters in foreign jurisdictions. Such claims have been
The court held a hearing on December 27, 1999, on whether to made by the filing of a complaint, the issuance of an
award the plaintiffs profits based on the Company’s sales of administrative directive or order, or the issuance of a notice or
Trovan and, if so, the amount of same. The Company’s motion demand letter. These claims are in various stages of
for mistrial remains outstanding. administrative or judicial proceedings. They include demands
As previously disclosed, a number of lawsuits and claims for recovery of past governmental costs and for future
have been brought against the Company and Shiley investigative or remedial actions. In many cases, the dollar
Incorporated, a wholly owned subsidiary, alleging either amount of the claim is not specified. In most cases, claims have
personal injury from fracture of 60° or 70° Shiley Convexo been asserted against a number of other entities for the same
Concave (“C/C”) heart valves, or anxiety that properly recovery or other relief as was asserted against the Company.
functioning implanted valves might fracture in the future, or The Company is currently participating in remedial action at a
personal injury from a prophylactic replacement of a number of sites under federal, state, local and foreign laws.
functioning valve. To the extent possible with the limited amount of
In an attempt to resolve all claims alleging anxiety that information available at this time, the Company has evaluated
properly functioning valves might fracture in the future, the its responsibility for costs and related liability with respect to
Company entered into a settlement agreement in January 1992 the above sites and is of the opinion that the Company’s liability
in Bowling v. Shiley, et al., a case brought in the United States with respect to these sites should not have a material adverse
District Court for the Southern District of Ohio, that effect on the financial position or the results of operations of the
established a worldwide settlement class of people with C/C Company. In arriving at this conclusion, the Company has
heart valves and their spouses, except those who elected to considered, among other things, the payments that have been
exclude themselves. The settlement provided for a Consultation made with respect to the sites in the past; the factors, such as
Fund of $90 million, which was fixed by the number of claims volume and relative toxicity, ordinarily applied to allocate
filed, from which valve recipients received payments that are defense and remedial costs at such sites; the probable costs to be
intended to cover their cost of consultation with cardiologists paid by the other potentially responsible parties; total projected
or other health care providers with respect to their valves. The remedial costs for a site, if known; existing technology; and the
settlement agreement established a second fund of at least $75 currently enacted laws and regulations. The Company
million to support C/C valve-related research, including the anticipates that a portion of these costs and related liability will
development of techniques to identify valve recipients who may be covered by available insurance.
have significant risk of fracture, and to cover the unreimbursed Through the early 1970s, Pfizer Inc. (Minerals Division)
medical expenses that valve recipients may incur for certain and Quigley Company, Inc. (“Quigley”), a wholly owned
procedures related to the valves. The Company’s obligation as subsidiary, sold a minimal amount of one construction product
to coverage of these unreimbursed medical expenses is not and several refractory products containing some asbestos. These
subject to any dollar limitation. Following a hearing on the sales were discontinued thereafter. Although these sales
fairness of the settlement, it was approved by the court on represented a minor market share, the Company has been
August 19, 1992, and all appeals have been exhausted. named as one of a number of defendants in numerous lawsuits.
Generally, the plaintiffs in all of the pending heart valve These actions, and actions related to the Company’s sale of talc
litigations seek money damages. Based on the experience of the products in the past, claim personal injury resulting from
Company in defending these claims to date, including exposure to asbestos-containing products, and nearly all seek
insurance proceeds and reserves, the Company is of the opinion general and punitive damages. In these actions, the Company
that these actions should not have a material adverse effect on or Quigley is typically one of a number of defendants, and both
the financial position or the results of operations of the are members of the Center for Claims Resolution (the “CCR”),
Company. Litigation involving insurance coverage for the a joint defense organization of sixteen defendants that is
Company’s heart valve liabilities has been resolved. defending these claims. The Company and Quigley are
The Company’s operations are subject to federal, state, responsible for varying percentages of defense and liability
local and foreign environmental laws and regulations. Under payments for all members of the CCR. A number of cases
the Comprehensive Environmental Response Compensation and alleging property damage from asbestos-containing products
Liability Act of 1980, as amended (“CERCLA” or “Superfund”), installed in buildings have also been brought against the
the Company has been designated as a potentially responsible Company, but most have been resolved.
party by the United States Environmental Protection Agency As of January 29, 2000, there were 57,328 personal injury
with respect to certain waste sites with which the Company claims pending against Quigley and 26,890 such claims
may have had direct or indirect involvement. Similar against the Company (excluding those that are inactive or have
designations have been made by some state environmental been settled in principle), and 68 talc cases against the
agencies under applicable state Superfund laws. Such Company.
designations are made regardless of the extent of the Company’s The Company believes that its costs incurred in defending
involvement. There are also claims that the Company may be a and ultimately disposing of the asbestos personal injury claims,
57
Pfizer Inc and Subsidiary Companies
as well as the property damage and talc claims, will be largely The Federal Trade Commission opened an investigation
covered by insurance policies issued by several primary focusing on the pricing practices at issue in the above
insurance carriers and a number of excess carriers that have pharmacy antitrust litigation. In July 1996, the Commission
agreed to provide coverage, subject to deductibles, exclusions, issued a subpoena for documents to the Company, among
retentions and policy limits. Litigation against excess insurance others, to which the Company responded. A second subpoena
carriers seeking damages and/or declaratory relief to secure was issued to the Company for documents in May 1997 and the
their coverage obligations has now been largely resolved, Company again responded. We are not aware of any further
although claims against several of such insureds do remain activity.
pending. Based on the Company’s experience in defending the FDA administrative proceedings relating to Plax are
claims to date and the amount of insurance coverage available, pending, principally an industry-wide call for data on all anti-
the Company is of the opinion that the actions should not plaque products by the FDA. The call-for-data notice specified
ultimately have a material adverse effect on the financial that products that have been marketed for a material time and
position or the results of operations of the Company. to a material extent may remain on the market pending FDA
In 1993, the Company was named, together with review of the data, provided the manufacturer has a good faith
numerous other manufacturers of brand-name prescription belief that the product is generally recognized as safe and
drugs and certain companies that distribute brand-name effective and is not misbranded. The Company believes that
prescription drugs, in suits in federal and state courts brought Plax satisfied these requirements and prepared a response to the
by various groups of retail pharmacy companies, alleging that FDA’s request, which was filed on June 17, 1991. This filing, as
the manufacturers violated the Sherman Act by agreeing not to well as the filings of other manufacturers, is still under review
give retailers certain discounts and that the failure to give such and is currently being considered by an FDA Advisory
discounts violated the Robinson Patman Act. A class action Committee. The Committee has issued a draft report
was brought on the Sherman Act claim, as well as additional recommending that plaque removal claims should not be
actions by approximately 3,500 individual retail pharmacies permitted in the absence of data establishing efficacy against
and a group of chain and supermarket pharmacies (the gingivitis. The process of incorporating the Advisory
“individual actions”) on both the Sherman Act and Robinson Committee recommendations into a final monograph is
Patman Act claims. A retailer class was certified in 1994 (the expected to take several years. If the draft recommendation is
“Federal Class Action”). In 1996, fifteen manufacturer ultimately accepted in the final monograph, although it would
defendants, including the Company, settled the Federal Class have a negative impact on sales of Plax, it will not have a
Action. The Company’s share was $31.25 million, payable in material adverse effect on the sales, financial position or
four annual installments without interest. Trial began in operations of the Company.
September 1998 for the class case against the non-settlers, and On January 15, 1997, an action was filed in Circuit Court,
the District Court also permitted the opt-out plaintiffs to add Chambers County, Alabama, purportedly on behalf of a class of
the wholesalers as named defendants in their cases. The District consumers, variously defined by the laws or types of laws
Court dismissed the case at the close of the plaintiffs’ evidence. governing their rights and encompassing residents of up to 47
The plaintiffs appealed and, on July 13, 1999, the Court of states. The complaint alleges that the Company’s claims for
Appeals upheld most of the dismissal but remanded on one Plax were untrue, entitling them to a refund of their purchase
issue, while expressing doubts that the plaintiffs could prove price for purchases since 1988. A hearing on Plaintiffs’ motion
any damages. to certify the class was held on June 2, 1998. We are awaiting
Retail pharmacy cases also have been filed in state courts the Court’s decision. The Company believes the complaint is
in five states, and consumer class actions were filed in state without merit.
courts in fourteen states and the District of Columbia alleging Since December 1998, four actions have been filed, in state
injury to consumers from the failure to give discounts to retail courts in Houston, San Francisco, Chicago and New Orleans,
pharmacy companies. purportedly on behalf of statewide (California) or nationwide
In addition to its settlement of the retailer Federal Class (Houston, Chicago and New Orleans) classes of consumers who
Action (see above), the Company has also settled several major allege that the Company’s and other manufacturers’ advertising
opt-out retail cases, and along with other manufacturers: (1) has and promotional claims for Rid and other pediculicides were
entered into an agreement to settle all outstanding consumer untrue, entitling them to refunds, other damages and/or
class actions (except Alabama, California and North Dakota), injunctive relief. The Houston case has been voluntarily
which settlement is going through the approval process in the dismissed and proceedings in the San Francisco, Chicago and
various courts in which the actions are pending; and (2) has New Orleans cases are still in early stages of the proceedings.
entered into an agreement to settle the California consumer The Company believes the complaints are without merit.
case, which has been approved by the Court there. In December, 1999 and January, 2000, two suits were filed
The Company believes that these brand-name prescription in California state courts against the Company and other
drug antitrust cases, which generally seek damages and certain manufacturers of zinc oxide-containing powders. The first suit
injunctive relief, are without merit. was filed by the Center for Environmental Health and the
second was filed by an individual plaintiff on behalf of a
58
Pfizer Inc and Subsidiary Companies
purported class of purchasers of baby powder products. The of a purported class of people whose dogs had suffered injury or
suits generally allege that the label of Desitin powder violates death after ingesting Rimadyl, an antiarthritic medication for
California’s “Proposition 65” by failing to warn of the presence older dogs. The suit, which was filed in state court in South
of lead, which is alleged to be a carcinogen. In January, 2000, Carolina, is in the early pretrial stages. The Company believes
the Company received a notice from a California environmental it is without merit.
group alleging that the labeling of Desitin ointment and During 1998, the Company completed the sale of all of the
powder violates Proposition 65 by failing to warn of the businesses and companies that were part of the Medical
presence of cadmium, which is alleged to be a carcinogen. Technology Group. As part of the sale provisions, the Company
Several other manufacturers of zinc oxide-containing topical has retained responsibility for certain items, including matters
baby products have received similar notices. The Company related to the sale of MTG products sold by the Company
believes that the labeling for Desitin complies with applicable before the sale of the MTG businesses. A number of cases have
legal requirements. been brought against Howmedica Inc. (some of which also
In April 1996, the Company received a Warning Letter name the Company) alleging that P.C.A. one-piece acetabular
from the FDA relating to the timeliness and completeness of hip prostheses sold from 1983 through 1990 were defectively
required post-marketing reports for pharmaceutical products. designed and manufactured and pose undisclosed risks to
The letter did not raise any safety issue about Pfizer drugs. The implantees. These cases have now been resolved. Between 1994
Company has been implementing remedial actions designed to and 1996, seven class actions alleging various injuries arising
remedy the issues raised in the letter. During 1997, the from implantable penile prostheses manufactured by American
Company met with the FDA to apprise them of the scope and Medical Systems were filed and ultimately dismissed or
status of these activities. A review of the Company’s new discontinued. Thereafter, between late 1996 and early 1998,
procedures was undertaken by FDA in 1999. The Company and approximately 700 former members of one or more of the
Agency met to review the findings of this review and agreed purported classes, represented by some of the same lawyers who
that commitments and remedial measures undertaken by the filed the class actions, filed individual suits in Circuit Court in
Company related to the Warning Letter have been Minneapolis alleging damages from their use of implantable
accomplished. The Company agreed to keep the Agency penile prostheses. Most of these claims, along with a number of
informed of its activities as it continues to modify its processes filed and unfiled claims from other jurisdictions, have now
and procedures. been resolved. The Company believes that most if not all of
During May and June, 1999, the FDA and the European these cases are without merit.
Union’s Committee for Proprietary Medicinal Products (CPMP) In June 1993, the Ministry of Justice of the State of Sao
reconsidered the approvals to market Trovan, a broad-spectrum Paulo, Brazil, commenced a civil public action against the
antibiotic, following post-market reports of severe adverse liver Company’s Brazilian subsidiary, Laboratorios Pfizer Ltda.
reactions to the drug. On June 9, the Company announced (“Pfizer Brazil”) asserting that during a period in 1991 Pfizer
that, regarding the marketing of Trovan in the United States, it Brazil withheld sale of the pharmaceutical product Diabinese
had agreed to restrict the indications, limit product in violation of antitrust and consumer protection laws. The
distribution, make certain other labeling changes and to action sought the award of moral, economic and personal
communicate revised warnings to health care professionals in damages to individuals and the payment to a public reserve
the United States. On July 1, Pfizer received the opinion of the fund. In February 1996, the trial court issued a decision
CPMP recommending a one-year suspension of the licenses to holding Pfizer Brazil liable. The trial court’s opinion also
market Trovan in the European Union. The CPMP opinion has established the amount of moral damages for individuals who
been finalized in a Final Decision by the European might make claims later in the proceeding and set out a
Commission. Since June, 1999, three suits and several claims formula for calculating the payment into the public reserve
have been received by the Company alleging liver injuries due fund which could have resulted in a sum of approximately $88
to the ingestion of Trovan. The majority of these claims have million. Pfizer Brazil appealed this decision. In September
been resolved without litigation. In June and July, 1999, two of 1999, the appeals court issued a ruling upholding the trial
the lawsuits were filed in the Circuit Court, Hampton County, court’s decision as to liability. However, the appeals court
South Carolina on behalf of a purported class of all persons who decision overturned the trial court’s decision concerning
received Trovan, seeking compensatory and punitive damages damages, ruling that criteria to apply in the calculation of
and injunctive relief. One of the suits, seeking injunctive relief, damages, both as to individuals and as to payment of any
has been dismissed. No substantitive proceedings have yet amounts to the reserve fund, should be established only in a
occurred in the other suit and the Company believes that it is later stage of the proceeding. The Company believes that this
not properly maintainable as a class action, and will defend action should not have a material adverse effect on the financial
against it accordingly. position or the results of operations of the Company.
In October 1999 the Company was sued in an action
seeking unspecified damages, costs and attorney’s fees on behalf
59
Pfizer Inc and Subsidiary Companies
19 Segment Information and Geographic Data Each separately managed segment offers different products
requiring different marketing and distribution strategies.
We operate in the following two business segments:
We sell our products primarily to customers in the
• pharmaceutical — including treatments for heart diseases,
wholesale sector. In 1999, sales to our two largest wholesalers
infectious diseases, central nervous system disorders,
accounted for 14% and 12% of total revenues. These sales were
diabetes, arthritis, erectile dysfunction and allergies, as
concentrated in the pharmaceutical segment.
well as self-medications
Revenues were in excess of $100 million in each of
• animal health — products for food animals and companion
12 countries outside the U.S. in 1999. The U.S. was the only
animals, including antibiotics, vaccines and other
country to contribute more than 10% to total revenues. The
veterinary items
following tables present segment and geographic information:
Segment Information
Animal Corporate/
(millions of dollars) Pharmaceutical Health Other Consolidated
Total revenues 1999 $14,859 $1,345 $ — $16,204
1998 12,230 1,314 — 13,544
1997 9,726 1,329 — 11,055
Segment profit 1999 4,898(1) 67 (517)(2) 4,448(3)
1998 3,574 (77) (903)(2) 2,594(3)
1997 3,129 112 (374)(2) 2,867(3)
Identifiable assets(4) 1999 9,723 2,144 8,707 20,574
1998 7,987 2,109 8,206 18,302
1997 6,464 2,197 6,330(5) 14,991
Property, plant and equipment additions(4) 1999 1,387 90 84 1,561
1998 991 97 110 1,198
1997 687 69 122 878
Depreciation and amortization(4) 1999 438 74 30 542
1998 386 82 21 489
1997 337 75 16 428
Geographic Data
All
United Other
(millions of dollars) States(6) Japan Countries Consolidated
Total revenues 1999 $9,896 $1,249 $5,059 $16,204
1998 8,205 943 4,396 13,544
1997 6,089 949 4,017 11,055
Long-lived assets 1999 3,430 487 2,750 6,667
1998 2,905 369 2,499 5,773
1997 2,910 283 2,155 5,348
(1)
Includes $310 million charge to write off Trovan inventories.
(2)
Includes interest income/(expense) and corporate expenses. Corporate also includes other income/(expense) of the financial subsidiaries (see note 3,“Financial Subsidiaries”) and
certain performance-based compensation expenses not allocated to the operating segments.
(3)
Consolidated total equals income from continuing operations before provision for taxes on income and minority interests.
(4)
Certain production facilities are shared by various segments. Property, plant and equipment, as well as capital additions and depreciation, are allocated based on physical
production. Corporate assets are primarily cash, short-term investments and long-term loans and investments.
(5)
Includes net assets of discontinued operations.
(6)
Includes operations in Puerto Rico.
20 Subsequent Event Lambert share, or an equity value of $90 billion based on the
closing price of our stock on February 4, 2000 of $35.75 per
On February 7, 2000, we announced an agreement to merge
share. Customary and usual provisions will be made for
with Warner-Lambert Company (Warner-Lambert). Under
outstanding options and warrants.
terms of the merger agreement, which has been approved by
This transaction is subject to customary conditions,
the Board of Directors of both Pfizer and Warner-Lambert, we
including the use of pooling-of-interests accounting, qualifying
will exchange 2.75 shares of Pfizer voting common stock for
as a tax-free reorganization, shareholder approval at both
each outstanding share of Warner-Lambert voting common
companies and usual regulatory approvals. The transaction is
stock in a tax-free transaction valued at $98.31 per Warner-
expected to close in mid-2000.
60
Pfizer Inc and Subsidiary
Companies
Quarterly Consolidated Financial Data (Unaudited)
Quarter
(millions of dollars, except per share data) First Second Third Fourth
1999
Net sales $3,524 $3,298 $3,423 $3,887
Alliance revenue 403 481 569 619
Total revenues 3,927 3,779 3,992 4,506
Costs and expenses 2,778 2,751 3,025 3,202
Income from continuing operations before provision
for taxes on income and minority interests 1,149 1,028 967 1,304
Provision for taxes on income 333 298 265 348
Minority interests 1 1 1 2
Income from continuing operations 815 729 701 954
Discontinued operations Ñ net of tax Ñ (20) Ñ Ñ
Net income $ 815 $ 709 $ 701 $ 954
Earnings per common share Ñ basic
Income from continuing operations $ .22 $ .19 $ .19 $ .25
Discontinued operations Ñ net of tax Ñ (.01) Ñ Ñ
Net income $ .22 $ .18 $ .19 $ .25
Earnings per common share Ñ diluted
Income from continuing operations $ .21 $ .18 $ .18 $ .25
Discontinued operations Ñ net of tax Ñ Ñ Ñ Ñ
Net income $ .21 $ .18 $ .18 $ .25
Cash dividends paid per common share $ .07 1Ú3 $ .07 1Ú3 $ .08 $ .08
Stock prices
High $ 48 11Ú64 $ 50 3Ú64 $ 40 11Ú16 $ 42 1Ú4
Low $ 36 33Ú64 $ 31 35Ú64 $ 32 $ 32 3Ú16
1998
Net sales $ 2,886 $ 3,114 $ 3,110 $ 3,567
Alliance revenue 150 198 220 299
Total revenues 3,036 3,312 3,330 3,866
Costs and expenses 2,294 2,468 2,628 3,560
Income from continuing operations before provision
for taxes on income and minority interests 742 844 702 306
Provision for taxes on income 206 249 186 1
Minority interests 1 1 1 (1)
Income from continuing operations 535 594 515 306
Discontinued operations Ñ net of tax 157 34 882 328
Net income $ 692 $ 628 $ 1,397 $ 634
Earnings per common share Ñ basic
Income from continuing operations $ .14 $ .16 $ .13 $ .08
Discontinued operations Ñ net of tax .04 .01 .24 .08
Net income $ .18 $ .17 $ .37 $ .16
Earnings per common share Ñ diluted
Income from continuing operations $ .14 $ .15 $ .13 $ .07
Discontinued operations Ñ net of tax .04 Ñ .23 .09
Net income $ .18 $ .15 $ .36 $ .16
Cash dividends paid per common share $ .06 1Ú3 $ .06 1Ú3 $ .06 1Ú3 $ .06 1Ú3
Stock prices
High $ 32 1Ú2 $ 40 37Ú64 $ 40 13Ú64 $ 42 63Ú64
Low $ 23 11Ú16 $ 32 1Ú8 $ 30 43Ú64 $ 28 43Ú64
All data reflects the 1999 three-for-one stock split.
As of January 31, 2000, there were 149,747 record holders of our common stock (symbol PFE).
61
Pfizer Inc and Subsidiary Companies
Financial Summary
Year Ended December 31
(millions, except per share data) 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
Net sales $14,133 12,677 10,739 9,864 8,684 6,825 6,080 5,816 5,352 4,757 4,220
Alliance revenue 2,071 867 316 Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ
Total revenues 16,204 13,544 11,055 9,864 8,684 6,825 6,080 5,816 5,352 4,757 4,220
Research and development 2,776 2,279 1,805 1,567 1,340 1,036 880 776 654 545 449
Other costs and expenses 8,980 8,671 6,383 5,769 5,327 4,212 3,822 3,829 3,675 3,288 3,045
Divestitures, restructuring and unusual items Ñ net(1) Ñ Ñ Ñ Ñ Ñ Ñ 741 (141) 300 Ñ Ñ
Income from continuing operations
before taxes and minority interests $ 4,448 2,594 2,867 2,528 2,017 1,577 637 1,352 723 924 726
Provision for taxes on income $ 1,244 642 775 758 609 445 106 368 141 235 171
Income from continuing operations before
cumulative effect of accounting changes $ 3,199 1,950 2,082 1,764 1,401 1,127 529 981 579 684 551
Discontinued operations Ñ net of tax (20) 1,401 131 165 172 171 129 113 143 117 130
Cumulative effect of accounting changes Ñ Ñ Ñ Ñ Ñ Ñ Ñ (283)(2) Ñ Ñ Ñ
Net income $ 3,179 3,351 2,213 1,929 1,573 1,298 658 811 722 801 681
Effective tax rate Ñ continuing operations 28.0% 24.8% 27.0% 30.0% 30.2% 28.2% 16.6% 27.2% 19.5% 25.4% 23.6%
Depreciation $ 473 420 363 309 277 236 206 209 183 167 160
Property, plant and equipment additions 1,561 1,198 878 690 635 620 575 592 505 466 388
Cash dividends paid 1,148 976 881 771 659 594 536 487 437 397 364
As of December 31
Working capital(3) $ 2,006 2,739 2,448 1,914 1,787 1,582 1,875 2,749 1,978 1,920 2,026
Property, plant and equipment Ñ net 5,343 4,415 3,793 3,456 3,113 2,747 2,320 1,994 2,061 1,808 1,565
Total assets(3) 20,574 18,302 14,991 14,251 12,339 10,797 8,986 9,346 9,387 8,782 8,099
Long-term debt 525 527 725 681 828 604 571 571 393 189 181
Long-term capital(4) 9,738 9,551 8,819 7,907 6,518 5,150 4,643 5,453 5,725 5,643 5,034
ShareholdersÕ equity 8,887 8,810 7,933 6,954 5,506 4,324 3,866 4,719 5,026 5,092 4,536
Per common share data:
Basic:
Income from continuing operations
before effect of accounting changes $ .85 .51 .55 .47 .38 .31 .14 .25 .15 .17 .14
Discontinued operations Ñ net of tax (.01) .37 .04 .05 .05 .04 .03 (.04)(2) .03 .03 .03
Net income $ .84 .88 .59 .52 .43 .35 .17 .21 .18 .20 .17
Diluted:
Income from continuing operations
before effect of accounting changes $ .82 .49 .53 .46 .37 .30 .14 .24 .14 .17 .14
Discontinued operations Ñ net of tax Ñ .36 .04 .04 .05 .05 .03 (.04)(2) .04 .03 .03
Net income $ .82 .85 .57 .50 .42 .35 .17 .20 .18 .20 .17
Market value per share (December 31) $ 32.44 41.67 24.85 13.83 10.50 6.44 5.75 6.04 7.00 3.37 2.90
Return on shareholdersÕ equity 35.9% 40.0% 29.7% 31.0% 32.0% 31.7% 15.3% 16.6% 14.3% 16.6% 15.4%
Cash dividends paid per share $ .302Ú3 .251Ú3 .222Ú3 .20 .171Ú3 .152Ú3 .14 .121Ú3 .11 .10 .091Ú3
ShareholdersÕ equity per share $ 2.36 2.33 2.10 1.85 1.48 1.18 1.04 1.21 1.27 1.29 1.14
Current ratio 1.22:1 1.38:1 1.49:1 1.36:1 1.37:1 1.35:1 1.60:1 1.92:1 1.62:1 1.67:1 1.75:1
Weighted average shares used to calculate:
Basic earnings per share amounts 3,775 3,789 3,771 3,743 3,687 3,670 3,785 3,948 3,963 3,966 3,972
Diluted earnings per share amounts 3,884 3,945 3,909 3,864 3,777 3,729 3,845 4,038 4,072 4,046 4,073
Employees of continuing operations (thousands) 51 46 41 39 37 34 33 33 35 33 33
Total revenues per employee (thousands) $ 318 292 269 256 238 202 184 177 154 145 129
All financial information reflects the divestitures of our MTG and food science businesses as discontinued operations.
We have restated all common share and per share data for the 1999, 1997, 1995 and 1991 stock splits.
(1)
Divestitures, restructuring and unusual items Ñ net includes the following:
1993 Ñ Pre-tax charges of approximately $745 million and $56 million to cover worldwide restructuring programs, as well as unusual items and a gain of
approximately $60 million realized on the sale of our remaining interest in Minerals Technologies Inc.
1992Ñ Pre-tax gain of $259 million on the sale of a business, offset by pre-tax charges of $175 million for restructuring, consolidating and streamlining.
In addition, it includes pre-tax curtailment gains of $57 million associated with postretirement benefits other than pensions of divested operations.
1991Ñ A pre-tax charge of $300 million for potential future Shiley C/C heart valve fracture claims.
(2)
Accounting changes adopted January 1, 1992: SFAS No. 106 Ñ charge of $313 million or $.08 per share; SFAS No. 109 Ñ credit of $30 million or $.01 per share.
Per share amounts of accounting changes are included in per share amounts presented for discontinued operations.
(3)
Includes net assets of discontinued operations of our MTG businesses through 1997.
(4)
Defined as long-term debt, deferred taxes on income, minority interests and shareholdersÕ equity.
62
Directors, Committees, and Officers
Pfizer’s Board of Directors is frequently recognized as one of the best in the
United States. In 1999, for example, the Pfizer Board was named one of “Five
Champion Boards” by Corporate Board Member magazine. In 2000, Business
Week magazine named the Pfizer Board to its “Top 25 Best Boards” list.
Board of Directors William C. Steere, Jr. (1) Loretta V. Cangialosi
Chairman and Chief Executive Officer – Vice President and Controller
Michael S. Brown, M.D. (4)
Pfizer Inc Gary N. Jortner
Distinguished Chair – Biomedical Sciences;
Regental Professor – University of Texas Jean-Paul Vallès, Ph.D. (2) Vice President; Senior Vice President,
Southwestern Medical Center Chairman and Chief Executive Officer – Product Development –
Minerals Technologies Inc. Pfizer Pharmaceuticals Group
M. Anthony Burns (1, 3)
Chairman and Chief Executive Officer – J. Patrick Kelly
Ryder System, Inc. Vice President; Senior Vice President,
Elected Corporate Officers Worldwide Marketing –
W. Don Cornwell (2)
Pfizer Pharmaceuticals Group
Chairman and Chief Executive Officer – William C. Steere, Jr.**
Granite Broadcasting Corporation Chairman of the Board and Chief Alan G. Levin
Executive Officer Vice President and Treasurer
George B. Harvey (2)
Former Chairman, President, and Chief Henry A. McKinnell, Ph.D.** Craig Saxton, M.D.
Executive Officer – Pitney Bowes Inc. President and Chief Operating Officer; Vice President; Executive Vice President –
President – Central Research
Constance J. Horner (1, 4)
Guest Scholar – The Brookings Pfizer Pharmaceuticals Group Mohand Sidi Said
Institution; Former Assistant to the John F. Niblack, Ph.D.** Vice President; Senior Vice President –
President of the United States Vice Chairman Pfizer Pharmaceuticals Group and Area
President, Asia/Africa/Middle East
Stanley O. Ikenberry, Ph.D. (1, 4) C. L. Clemente**
President – Executive Vice President – Corporate Frederick W. Telling, Ph.D.
American Council on Education Affairs; Secretary and Corporate Counsel Vice President – Corporate Strategic
Planning and Policy
Harry P. Kamen (4) Karen L. Katen**
Former Chairman, President, and Chief Senior Vice President; Executive Vice
Executive Officer – Metropolitan Life President – Pfizer Pharmaceuticals (1) Executive Committee*
Insurance Company Group and President – (2) Audit Committee
Thomas G. Labrecque (3) U.S. Pharmaceuticals
(3) Executive Compensation Committee
Former Chairman – Paul S. Miller** (4) Corporate Governance Committee
The Chase Manhattan Corporation Executive Vice President;
Henry A. McKinnell, Ph.D. General Counsel All directors are alternate members of the
*
President and Chief Operating Officer – George M. Milne, Jr., Ph.D.** Executive Committee
Pfizer Inc; President, Pfizer Senior Vice President; President – ** Member, Corporate Management
Pharmaceuticals Group Central Research Committee
Dana G. Mead, Ph.D. (3) William J. Robison**
Chairman – Tenneco Automotive Inc. Executive Vice President –
and Pactiv Corporation Employee Resources
John F. Niblack, Ph.D. David L. Shedlarz**
Vice Chairman – Pfizer Inc Executive Vice President –
Franklin D. Raines (2) Chief Financial Officer
Chairman and Chief Executive Officer – Brian W. Barrett
Fannie Mae Vice President; President –
Ruth J. Simmons, Ph.D. (2) Animal Health Group
President – Smith College M. Kenneth Bowler, Ph.D.
Vice President –
Federal Government Relations 63
Corporate and Shareholder Information
Stock Listings Annual Meeting of Shareholders Help Lines
Our Common Stock is listed on the New Our Annual Meeting will be held on Consumers or health care professionals
York Stock Exchange. It is also listed on the Thursday, April 27, 2000, at 10:00 a.m., who have questions about any of our
London, Paris, Brussels, and Swiss stock in The Empire State Ballroom, The medicines should call: (800) 438 1985.
exchanges. Our Common Stock is also Grand Hyatt, 42nd Street at Lexington People interested in receiving literature
traded on various United States regional Avenue, New York City. Detailed infor- about us should call: (800) PFE 4717.
stock exchanges. mation about the meeting is contained
in our Notice of Annual Meeting and The Legend of Pfizer
Shareholder Services and Programs joint proxy statement/prospectus. The Legend of Pfizer, part of a series of
All inquiries concerning shareholder corporate profiles by Jeffrey L. Rodengen,
accounts and stock transfer matters, Political Action Committee chronicles Pfizer’s evolution from a small
including direct deposit of dividends and You can receive a copy of the report of fine-chemicals company founded in 1849
the elimination of duplicate mailings of campaign contributions made by the
Annual Reports, should be directed to Company’s Political Action Committee
our Transfer Agent and Registrar: in 1999 by contacting the office of the
First Chicago Trust Company, Secretary, Pfizer Inc.
a division of EquiServe
P.O. Box 2500 1999 Environmental, Health and
Jersey City, NJ 07303-2500 Safety Report
Telephone: (800) PFE 9393 Pfizer takes great pride in its environ-
Internet: www.fctc.com mental, health and safety performance.
A new report has been published detailing
Direct Purchase Program the Company’s efforts to protect the
You may purchase your first shares of environment and provide a safe and
Pfizer directly through our Shareholder healthy workplace for employees. You
Investment Program. Other features of can receive a copy of the report by
the Program include dividend reinvest- calling (800) PFE 4717.
ment, weekly purchases of stock, and to its current position as a world
automatic monthly investments by elec- leader in pharmaceuticals. This 160-page
tronic bank debit. Contact First Chicago book includes a foreword by Pfizer
at the address given on this page for a Chairman William C. Steere, Jr., and is
Shareholder Investment Program illustrated with black-and-white and
prospectus and enrollment form. color photography. You may purchase a
copy at discount from the publisher,
Form 10-K Write Stuff Syndicate, Inc., by calling
Upon written request, we will provide (800) 900 2665, or ordering online at
without charge to each shareholder a copy www.writestuffbooks.com. Mention
of our Annual Report on Securities and Pfizer’s Annual Report to receive 15%
Exchange Commission Form 10-K for off the $39.95 cover price.
the fiscal year ended December 31, 1999.
Requests should be directed to:
Secretary
All trademarks in this publication are or have
Pfizer Inc been used by Pfizer Inc, with the exception of the
235 East 42nd Street following: Aricept is a trademark of Eisai Co., Ltd.;
New York, NY 10017-5755 Celebrex is a trademark of G.D. Searle & Co.,
a division of Monsanto Company; Lipitor is a
The report will also be available on trademark of Warner-Lambert Company.
the Securities and Exchange
Commission’s EDGAR database at Design: Conceptual Annual Reports/Hoi L. Chu, NYC.
Photography: principal, Neil Selkirk; additional,
www.sec.gov/edgarhp.htm. William Vázquez; Bruce Johnson; Stone – Chad
Ehlers; PF Sports Images.
10 %
TOTAL RECOVERED FIBER
64
Ensuring Access to Innovative Medicines
“Lifesaving drugs are an indispensable part yield new drugs to treat virtually every Canadian government’s top priority.
of modern medicine,” President Clinton disease. Heavy-handed government Frustrated with an overburdened public
said in his most recent State of the Union interference would stifle the discovery of health system, which now has surgery
address. And he’s absolutely right. those new medicines by diminishing the waiting lists stretching for months,
That’s the main reason why Americans resources available for research. many Canadians travel to the United
are spending more on pharmaceuticals. And significant resources are required. States to seek private care. While
It has little to do with higher prices for On average, it takes $500 million to bring American health care delivery is not
medicines. Pfizer’s price increases have one new drug to market. Last year alone, perfect, it is still the envy of the world.
been less than the overall rate of inflation Pfizer invested about $2.8 billion to Nonetheless, we must continue to
since 1994, accounting for discounts to discover new medicines. In the absence improve access. It must be adjusted to
federal buyers and Medicaid. What is of rigorous reinvestment, new drugs will meet the needs of those seniors who are
driving pharmaceutical spending growth be delayed or simply go undiscovered. without prescription drug coverage, but
in the United States is a significant In Canada, the government-controlled the issue is not one fundamentally of
increase in the utilization of medicines. health care system has depressed R&D prices. For its part, Pfizer has announced
Medicines such as Lipitor, Zoloft, and and resulted in significant delays in the that there will be no price increases for
Celebrex mark significant improvements approvals of innovative medicines from three of its pharmaceuticals sold in the
over previous therapies, and more and the United States. When governments set U.S. market in 2000 and only a modest
more Americans are relying on these and the price of pharmaceuticals, bureaucrats 3.1% increase for our other medicines.
dozens of other breakthrough pharmaceu- often use the
ticals to live longer and healthier lives. approval and reim- What is driving pharmaceutical
The question before the nation now bursement process
is how best to provide access to these as a cost-savings spending growth in the United
medicines for the seniors who need them.
In developing such a policy, it’s important
device by keeping
new products off
States is a significant increase in
to keep in mind that two thirds of seniors the markets. For the utilization of medicines.
already have prescription drug coverage. instance, six medi-
There’s no need to revamp a system cines recently introduced in the United Our best estimate is that these price
that’s already working for most of its States, five of which have no therapeutic changes, combined with the impact of
participants. But there is need to fine-tune alternative, are not available in Canada. discounts to federal buyers and the
it so the remaining senior population — On average, Canadians wait a full year Medicaid program, will result in an
about 13 million people — can also have longer than Americans before new effective average price increase of 2.5%,
access to all FDA-approved medicines. pharmaceuticals are approved and reim- which is equal to the December 1999
Pfizer supports a variety of approaches, bursed by the government, if they are Blue Chip Consensus forecast of the
including: approved at all. By delaying and denying change in the Consumer Price Index for
• Expanded Insurance Alternatives — access to innovative medicines, the the year 2000.
These could be developed by private Canadian health care system has narrowed We are on the threshold of a phar-
insurers with subsidies given to low- the range of medicines available to patients. maceutical revolution in the treatment of
income elderly. Yet, despite stringent government disease. By pursuing — in a spirit of
• Tax Code Changes — Credits or control, Canadians still pay about the compromise and pragmatism — proposals
deductions could subsidize the cost of same percentage of their income as that expand access while preserving
prescription drug insurance. Americans to purchase pharmaceuticals. incentives for research, the United States
• State-based Solutions — Federal While it’s true many things cost less in can provide prescription drug coverage
grants to the 50 states could provide Canada — such as fast food, a quality for seniors who need it and maintain our
funds to create drug-access programs university education, and some pharma- status as the world’s leader in pharma-
for low-income residents. ceuticals — it’s also true that Canadians ceutical innovation.
Whatever approach is adopted, it’s earn considerably less than Americans. These issues will have tremendous
essential that it preserve the research Nor have price controls improved impact on the owners of Pfizer, not only
pharmaceutical industry’s capacity to overall medical services in Canada. In a as shareholders but also as patients and
discover new medicines. Not only has recent survey, most Canadians polled taxpayers. If you’d like to learn more and
the industry significantly extended and said their nation’s health care system was find out how you can become involved,
enhanced human life, it’s now poised to “in crisis.” In another survey, 93% said fill out and return either or both of the
enter a golden age of discovery that will that improving health care should be the attached response cards.
65