PFIZER REPORTS FOURTH-QUARTER AND FULL-YEAR 2020 RESULTS AND RELEASES 5-YEAR PIPELINE METRICS

• Upjohn Business⁽¹⁾ Now Accounted for as a Discontinued Operation for All Periods Presented, Excluded from Adjusted⁽²⁾ Results
• Full-Year 2020 Revenues of $41.9 Billion, Which Now Exclude Upjohn⁽¹⁾, Reflect 3% Operational Growth; When the Impact from Consumer Healthcare⁽¹⁾ and the $154 Million of Sales of BNT162b2 are Excluded, Full-Year 2020 Revenues Grew 8% Operationally
  • Operational Growth Primarily Driven by Strong Performances from Vyndaqel/Vyndamax, Eliquis, Oncology Biosimilars, Ibrance, Prevenar 13 Outside of the U.S., Inlyta, Xeljanz and Xtandi
• Fourth-Quarter 2020 Revenues of $11.7 Billion, Reflecting 11% Operational Growth; Excluding Sales of BNT162b2, Revenues Grew 9% Operationally
• Full-Year 2020 Reported Diluted EPS⁽³⁾ of $1.71, Adjusted Diluted EPS⁽²⁾ of $2.22; Fourth-Quarter 2020 Reported Diluted EPS⁽³⁾ of $0.10, Adjusted Diluted EPS⁽²⁾ of $0.42
• Raises Full-Year 2021 Guidance⁽⁴⁾ for Adjusted Diluted EPS⁽²⁾ to a range of $3.10-$3.20 and Provides 2021 Financial Guidance⁽⁴⁾ for Other Adjusted⁽²⁾ Income Statement Line Items
• Achieved Clinical Trial Success Rates of 48% in Phase 1, 52% in Phase 2, 85% in Phase 3 and an End-to-End Clinical Success Rate of 21%, All of Which Exceeded the Industry Averages⁽⁵⁾

NEW YORK–(BUSINESS WIRE)–Pfizer Inc. (NYSE: PFE) reported financial results for fourth-quarter 2020 and full-year 2020, raised 2021 guidance⁽⁴⁾ for Adjusted diluted EPS⁽²⁾ and provided 2021 financial guidance⁽⁴⁾ for other Adjusted⁽²⁾ income statement line items, including details regarding the expected contributions to 2021 performance from BNT162b2, the Pfizer-BioNTech SE (BioNTech) COVID-19 vaccine.

EXECUTIVE COMMENTARY

Dr. Albert Bourla, Chairman and Chief Executive Officer, stated: “2020 has been a transformational year, not only for Pfizer, but also in the life of every patient in every community that we serve. As a company, we saw the culmination of Pfizer’s decade-long conversion into a pure-play, science and innovation-focused company. Right away, our ability to move quickly and utilize cutting-edge science to help address the world’s most important medical challenges was put to the test by the COVID-19 pandemic. Our record-breaking success at developing a vaccine against COVID-19, along with our partner BioNTech, is just one example of what we believe this new Pfizer is capable of achieving. As the world looks forward to 2021 with renewed hope for better days ahead, we also look forward with renewed confidence and resolve in our ability to fulfill our purpose, to deliver breakthroughs that change patients’ lives.”

Frank D’Amelio, Chief Financial Officer and Executive Vice President, Global Supply, stated: “I am very pleased with how our company performed in 2020, and particularly in the fourth quarter, where we achieved double digit operational revenue growth driven by a wide range of products and geographies, including growth within all of our therapeutic areas. I was also pleased that Pfizer completed the transaction to combine Upjohn with Mylan to form Viatris in the fourth quarter, which I believe positions both Pfizer and Viatris for a bright future. I feel confident in our ability to continue to perform well and deliver on our commitments in 2021 and beyond, both to our patients and to our shareholders.”

Results for the fourth quarter and full-year 2020 and 2019⁽⁶⁾ are summarized below.

OVERALL RESULTS

($ in millions, except per share amounts)	Fourth-Quarter							Full-Year
	2020		2019		Change			2020		2019		Change
Revenues	$ 11,684		$ 10,449		12%			$ 41,908		$ 41,172		2%
Reported Net Income/(Loss)(3)	594		(337)		*			9,616		16,273		(41%)
Reported Diluted EPS/(LPS)(3)	0.10		(0.06)		*			1.71		2.87		(40%)
Adjusted Income(2)	2,366		2,055		15%			12,506		10,817		16%
Adjusted Diluted EPS(2)	0.42		0.36		14%			2.22		1.91		16%
* Indicates calculation not meaningful.

REVENUES

($ in millions)	Fourth-Quarter								Full-Year
	2020		2019		% Change				2020		2019		% Change
					Total	Oper.							Total	Oper.
Internal Medicine	$ 2,308		$ 2,282		1%	1%			$ 9,003		$ 8,790		2%	3%
Oncology	3,024		2,466		23%	21%			10,867		9,014		21%	21%
Hospital	2,220		2,056		8%	7%			7,961		7,772		2%	3%
Vaccines	2,001		1,708		17%	16%			6,575		6,504		1%	2%
Inflammation & Immunology	1,267		1,251		1%	—			4,567		4,733		(4%)	(3%)
Rare Disease	865		686		26%	24%			2,936		2,278		29%	29%
Biopharmaceutical Products	$ 11,684		$ 10,449		12%	11%			$ 41,908		$ 39,090		7%	8%
Consumer Healthcare(1) Products	—		—		—	—			—		2,082		(100%)	(100%)
Total Revenue	$ 11,684		$ 10,449		12%	11%			$ 41,908		$ 41,172		2%	3%

Revenues and expenses associated with the Upjohn Business⁽¹⁾ for all periods presented have been recategorized as discontinued operations and excluded from Adjusted⁽²⁾ results. Pfizer’s Meridian subsidiary, the manufacturer of EpiPen and other auto-injector products, which had been reported within the results of the Upjohn Business⁽¹⁾_, is now included within the Hospital therapeutic area for all periods presented.

Following the completion of the spin-off of the Upjohn Business⁽¹⁾ in the fourth quarter of 2020, we now operate as a single focused innovative biopharmaceutical company engaged in the discovery, development, manufacturing, marketing, sales and distribution of biopharmaceutical products worldwide.

Acquisitions and other business development activities completed in 2019 and 2020 impacted financial results in the periods presented⁽¹⁾. Some amounts in this press release may not add due to rounding. All percentages have been calculated using unrounded amounts. References to operational variances pertain to period-over-period growth rates that exclude the impact of foreign exchange rates⁽⁷⁾.

2021 FINANCIAL GUIDANCE⁽⁴⁾⁽⁸⁾

Financial guidance reflects management’s current expectations for operational performance, foreign exchange rates as well as management’s current projections as to the severity, duration and global macroeconomic impact of the COVID-19 pandemic.

Key guidance assumptions included in these projections broadly reflect a continued recovery in macroeconomic and healthcare activity throughout 2021 as more of the population becomes vaccinated against COVID-19. These assumptions are guided by the trajectory of current infection rates in many parts of the world and the expected timeline for broad access to effective vaccines.

Pfizer raised its guidance range for Adjusted Diluted EPS⁽²⁾ provided on January 12, 2021 due primarily to additional refinements of its COVID-19 vaccine revenue forecast and is providing for the first time 2021 financial guidance for other income statement line items. Current 2021 financial guidance is presented below.

Revenues	$59.4 to $61.4 billion
Adjusted Cost of Sales(2) as a Percentage of Revenues	32.0% to 33.0%
Adjusted SI&A Expenses(2)	$11.0 to $12.0 billion
Adjusted R&D Expenses(2)	$9.2 to $9.7 billion
Adjusted Other (Income)/Deductions(2)	Approximately $2.2 billion of income
Effective Tax Rate on Adjusted Income(2)	Approximately 15.0%
Adjusted Diluted EPS(2)	$3.10 to $3.20
	(previously $3.00 to $3.10)

The midpoint of the guidance range for revenues represents 44% growth from 2020 revenues, including an expected $1.4 billion, or 3%, favorable impact from changes in foreign exchange rates. The midpoint of the updated guidance range for Adjusted diluted EPS⁽²⁾ reflects a 42% increase over 2020 actual results, including an expected $0.09, or 4%, benefit due to favorable changes in foreign exchange rates.

Financial guidance for Adjusted diluted EPS⁽²⁾ is calculated using approximately 5.7 billion weighted average shares outstanding, and does not currently assume any share repurchases in 2021.

Assumptions Related to BNT162b2 Within Guidance

Given the significant impact that BNT162b2 is expected to have on the company’s overall results in 2021, Pfizer is providing additional details on the revenue and margin assumptions incorporated within the above guidance ranges. These assumptions are summarized below.

Revenues for BNT162b2	Approximately $15 billion
Adjusted Income(2) Before Tax (IBT) Margin for BNT162b2	High-20s as a Percentage of Revenues

The BNT162b2 revenue projection incorporated within Pfizer’s 2021 financial guidance primarily includes doses that are expected to be delivered in 2021 under existing contracts, and may be adjusted in the future as additional contracts are executed.

Adjusted⁽²⁾ IBT margin guidance for BNT162b2 incorporates the current expectation for revenues for the product, less anticipated Adjusted⁽²⁾ costs to manufacture, market and distribute BNT162b2, including applicable royalty expenses and a 50% gross margin split with BioNTech, as well as shared R&D expenses related to BNT162b2 and costs associated with other assets currently in development for the prevention and treatment of COVID-19. It does not include an allocation of corporate or other overhead costs.

Selected Financial Guidance Ranges Excluding BNT162b2

To demonstrate Pfizer’s performance against management’s stated long-term growth goals for its business excluding BNT162b2, Pfizer is providing 2021 revenue, Adjusted Cost of Sales⁽²⁾ as a percentage of revenues and Adjusted diluted EPS⁽²⁾ guidance ranges with BNT162b2 contributions excluded.

Revenues	$44.4 to $46.4 billion
Adjusted Cost of Sales(2) as a Percentage of Revenues	21% to 22%
Adjusted Diluted EPS(2)	$2.50 – $2.60

The midpoint of the revenue guidance range above reflects approximately 6% operational growth compared to 2020 when all revenue impacts related to BNT162b2 are excluded from both periods, which is in line with the company’s stated goal of at least a 6% revenue compound annual growth rate through 2025. The midpoint of Pfizer’s Adjusted Diluted EPS⁽²⁾ guidance range excluding BNT162b2 reflects approximately 11% operational growth compared to the prior year.

CAPITAL ALLOCATION

• During full-year 2020, Pfizer paid $8.4 billion of cash dividends, composed of quarterly dividends of $0.38 per share of common stock.
• No share repurchases were made in 2020 and no shares have been repurchased to date in 2021. As of February 2, 2021, Pfizer’s remaining share repurchase authorization is $5.3 billion. Current 2021 financial guidance does not reflect any share repurchases in 2021.
• Fourth-quarter 2020 diluted weighted-average shares outstanding used to calculate Reported⁽³⁾ and Adjusted⁽²⁾ diluted EPS was 5,662 million shares, an increase of 31 million shares compared to the prior-year quarter primarily due to shares issued for employee compensation programs.
  
   

QUARTERLY FINANCIAL HIGHLIGHTS (Fourth-Quarter 2020 vs. Fourth-Quarter 2019)

Fourth-quarter 2020 revenues totaled $11.7 billion, an increase of $1.2 billion, or 12%, compared to the prior-year quarter, reflecting operational growth of $1.1 billion, or 11%, as well as a favorable impact of foreign exchange of $100 million, or 1%. Operational growth was primarily driven by:

• Vyndaqel/Vyndamax globally, up 96% operationally, driven by the continued strong performance of the launch of the transthyretin amyloid cardiomyopathy (ATTR-CM) indication in the U.S. and Japan in 2019 and the European Union (EU) approval of the ATTR-CM indication in 2020;
• Prevnar 13/Prevenar 13, up 10% operationally, primarily driven by:
  • 36% operational growth in developed Europe, reflecting increased adult uptake in certain markets resulting from greater vaccine awareness for respiratory illnesses, including specifically pneumococcal disease, due to the COVID-19 pandemic; and
  • 11% growth in the U.S., due to the favorable impact of timing of government purchases for the pediatric indication, partially offset by a decline in the adult indication reflecting the impact of the revised Advisory Committee on Immunization Practices recommendation for the adult indication to shared clinical decision making, as well as the continued impact of a lower remaining eligible adult population;
• BNT162b2, which was granted an emergency use authorization (EUA) in the U.S. in December 2020, and which contributed $154 million in sales in the fourth quarter;
• Eliquis, up 14% operationally, led by growth in the emerging markets, developed Europe and the U.S., driven primarily by continued increased adoption in non-valvular atrial fibrillation as well as oral anti-coagulant market share gains. In the U.S., strong volume growth was partially offset by a lower net price due to an increased impact from the Medicare “coverage gap” and unfavorable channel mix;
• Ibrance globally, up 11% operationally, primarily driven by strong cyclin-dependent kinase (CDK) class penetration and Ibrance’s continued CDK leadership in metastatic breast cancer;
• Xeljanz globally, up 14% operationally, primarily driven by:
  • 13% growth in the U.S., primarily reflecting higher volumes within the rheumatoid arthritis (RA), psoriatic arthritis (PsA) and ulcerative colitis (UC) indications, driven by reaching additional patients through improvements in formulary access, partially offset by increased discounts from recently-signed contracts which were entered into in order to unlock access to additional patient lives; and
  • 16% operational growth in international markets, primarily reflecting continued uptake in the RA indication and, to a lesser extent, the UC indication in certain developed markets;
• Inlyta globally, up 41% operationally, primarily reflecting increased demand in the U.S. and developed Europe following the approvals in 2019 for combinations of certain immune checkpoint inhibitors and Inlyta for the first-line treatment of patients with advanced renal cell carcinoma; and
• Xtandi in the U.S., up 16%, primarily driven by continued strong demand in the metastatic and non-metastatic castration-resistant prostate cancer indications, as well as the metastatic castration-sensitive prostate cancer indication, which was approved in the U.S. in December 2019; as well as
• Biosimilars, which grew 86% operationally to $525 million, primarily driven by recent oncology biosimilar launches of Ruxience (rituximab), Zirabev (bevacizumab) and Trazimera (trastuzumab) in the U.S. and other global markets, as well as continued growth from Retacrit (epoetin), primarily in the U.S.,

partially offset primarily by lower revenues for:

• Chantix in the U.S., down 40%, driven by the loss of patent protection in the U.S. in November 2020, as well as a negative impact from the COVID-19 pandemic resulting in a decline in patient visits to doctors for preventative health purposes; and
• Enbrel internationally, down 18% operationally, primarily reflecting continued biosimilar competition in most developed Europe markets as well as in Brazil and Japan.

GAAP Reported⁽³⁾ Income Statement Highlights

SELECTED REPORTED COSTS AND EXPENSES⁽³⁾

($ in millions)	Fourth-Quarter								Full-Year
	2020		2019		% Change				2020		2019		% Change
					Total	Oper.							Total	Oper.
Cost of Sales(3)	$ 2,919		$ 2,087		40%	32%			$ 8,692		$ 8,251		5%	5%
Percent of Revenues	25.0	%	20.0	%	N/A	N/A			20.7	%	20.0	%	N/A	N/A
SI&A Expenses(3)	3,757		3,748		—	(1%)			11,615		12,750		(9%)	(8%)
R&D Expenses(3)	3,354		2,755		22%	21%			9,405		8,394		12%	12%
Total	$ 10,030		$ 8,590		17%	14%			$ 29,712		$ 29,396		1%	1%
Other (Income)/Deductions––net(3)	$436		$2,795		(84%)	(84%)			$669		$3,314		(80%)	(82%)
Effective Tax Rate on Reported Income(3)	(95.9%)		53.9	%					6.4	%	5.4	%

Fourth-quarter 2020 Cost of Sales⁽³⁾ as a percentage of revenues increased 5.0 percentage points compared with the prior-year quarter. The primary drivers for the increase include:

• the negative impact of changes in foreign exchange rates, which unfavorably impacted Cost of Sales⁽³⁾ more than it favorably impacted revenues in the fourth quarter of 2020;
• unfavorable changes in product mix, including increased sales of lower margin products such as BNT162b2, partially offset by the favorable impact of higher alliance revenues;
• an unfavorable year-over-year impact of cash flow hedging on inventory; and
• additional COVID-19-related expenses.

SI&A Expenses⁽³⁾ were essentially flat in fourth-quarter 2020 compared with the prior-year quarter.

Fourth-quarter 2020 R&D Expenses⁽³⁾ increased compared with the prior-year quarter, which primarily reflects, among other things, spending on Pfizer’s efforts to develop BNT162b2 and other potential vaccines and therapeutics to help prevent and treat COVID-19.

Pfizer recorded lower other deductions––net⁽³⁾ in fourth-quarter 2020 compared with the prior-year quarter, primarily driven by reductions in asset impairment charges, pension-related costs and expenses associated with certain legal matters, partially offset by higher net losses on asset disposals and lower net gains on equity securities.

Pfizer recorded a tax benefit on Reported income⁽³⁾ of $0.2 billion in the fourth quarter of 2020, compared to a tax benefit of $1.2 billion in the fourth quarter of 2019. The decrease was primarily related to the non-recurrence of the tax benefits related to certain tax initiatives associated with the implementation of a new organizational structure as well as lower tax benefits related to the impairment of intangible assets.

Adjusted⁽²⁾ Income Statement Highlights

SELECTED ADJUSTED COSTS AND EXPENSES⁽²⁾

($ in millions)	Fourth-Quarter								Full-Year
	2020		2019		% Change				2020		2019		% Change
					Total	Oper.							Total	Oper.
Adjusted Cost of Sales(2)	$ 2,891		$ 2,078		39%	31%			$ 8,592		$ 8,062		7%	6%
Percent of Revenues	24.7	%	19.9	%	N/A	N/A			20.5	%	19.6	%	N/A	N/A
Adjusted SI&A Expenses(2)	3,584		3,624		(1%)	(2%)			11,124		12,488		(11%)	(10%)
Adjusted R&D Expenses(2)	3,071		2,465		25%	24%			8,884		7,736		15%	15%
Total	$ 9,546		$ 8,167		17%	14%			$ 28,599		$ 28,285		1%	1%
Adjusted Other (Income)/Deductions––net(2)	($596)		($94)		*	*			($1,474)		($270)		*	*
Effective Tax Rate on Adjusted Income(2)	10.8	%	10.4	%					13.5	%	15.8	%
* Indicates calculation not meaningful.

Adjusted Cost of Sales⁽²⁾ as a percentage of revenues in the fourth quarter increased 4.8 percentage points compared to the prior year quarter, driven primarily by the factors listed in the Reported⁽³⁾ section above.

On a full-year basis, Adjusted Cost of Sales⁽²⁾ as a percentage of revenues increased 0.9 percentage points compared to the prior year.

A full reconciliation of Reported⁽³⁾ to Adjusted⁽²⁾ financial measures and associated footnotes can be found in the press release located at the hyperlink below.

FULL-YEAR REVENUE SUMMARY (Full-Year 2020 vs. Full-Year 2019)

Full-year 2020 revenues totaled $41.9 billion, an increase of $736 million, or 2%, compared to full-year 2019, reflecting operational growth of $1.1 billion, or 3%, and the unfavorable impact of foreign exchange of $331 million, or 1%.

Revenue Highlights

Full-year 2020 revenues for Pfizer’s biopharmaceutical therapeutic areas totaled $41.9 billion, up 8% operationally, primarily driven by strong growth for:

• Vyndaqel/Vyndamax and Eliquis globally;
• Oncology biosimilars, including the recent launches of Ruxience, Zirabev and Trazimera;
• Ibrance in the U.S. and emerging markets;
• Sterile injectables products in the U.S.;
• Prevenar 13 outside the U.S.;
• Inlyta and Xeljanz globally; and
• Xtandi in the U.S.,

partially offset primarily by lower revenues for:

• Enbrel internationally;
• Prevnar 13 in the U.S.; and
• Chantix in the U.S.

Full-year 2020 revenues for consumer healthcare products declined by $2.1 billion, or 100% operationally, reflecting the July 31, 2019 completion of the Consumer Healthcare joint venture transaction with GSK⁽¹⁾.

RECENT NOTABLE DEVELOPMENTS (Since October 27, 2020)

Product Developments

• Bavencio (avelumab) — In January 2021, EMD Serono, the biopharmaceutical business of Merck KGaA, and Pfizer announced that the European Commission (EC) approved Bavencio as monotherapy for the first-line maintenance treatment of adult patients with locally advanced or metastatic urothelial carcinoma who are progression-free following platinum-based chemotherapy.
• Lorbrena (lorlatinib) — In December 2020, Pfizer announced that the U.S. Food and Drug Administration (FDA) has accepted for Priority Review the supplemental New Drug Application (sNDA) for lorlatinib as a first-line treatment for people with anaplastic lymphoma kinase (ALK)-positive metastatic non-small cell lung cancer (NSCLC). The sNDA is based on data from the pivotal CROWN study and is being reviewed by the FDA under its Real-Time Oncology Review pilot program. The Prescription Drug User Fee Act (PDUFA) goal date for a decision by the FDA is in April 2021.
• Xalkori (crizotinib) — In January 2021, Pfizer announced that the FDA approved the sNDA for Xalkori for the treatment of pediatric patients 1 year of age and older and young adults with relapsed or refractory, systemic anaplastic large cell lymphoma that is ALK-positive.
• Xeljanz (tofacitinib)
  • In November 2020, Pfizer announced positive results from a Phase 3 investigational study evaluating the safety and efficacy of tofacitinib in adults with active ankylosing spondylitis (AS). The study met its primary and key secondary endpoint of Assessment in SpondyloArthritis International Society (ASAS) 20 and 40 response, respectively, compared to placebo at week 16. The FDA has accepted Pfizer’s application for the AS indication and the PDUFA goal date is in Q2 2021.
  • In January 2021, Pfizer announced co-primary endpoint results from ORAL Surveillance, a post-marketing required study which evaluated the safety of tofacitinib at two doses (5 mg twice daily and 10 mg twice daily) versus a TNF inhibitor (TNFi) in subjects with RA who were 50 years of age or older and had at least one additional cardiovascular risk factor. The co-primary endpoints of this study were non-inferiority of tofacitinib compared to TNFi in regard to major adverse cardiovascular events and malignancies (excluding non-melanoma skin cancer). Results showed that for these co-primary endpoints, the prespecified non-inferiority criteria were not met for the primary comparison of the combined tofacitinib doses to TNFi. Additionally, based on the prespecified secondary comparisons, there was no evidence of a difference in the primary endpoints between the two tofacitinib treatment groups. Pfizer is analyzing data beyond the co-primary endpoints and working with regulatory agencies to review the full results and analyses as they become available.

Pipeline Developments

A comprehensive update of Pfizer’s development pipeline was published today and is now available at www.pfizer.com/science/drug-product-pipeline. It includes an overview of Pfizer’s research and a list of compounds in development with targeted indication and phase of development, as well as mechanism of action for some candidates in Phase 1 and all candidates from Phase 2 through registration.

As of the end of 2020, Pfizer achieved Phase 1, Phase 2, Phase 3/registration and end-to-end clinical success rates beyond the industry averages. These metrics also demonstrate a significant improvement in Pfizer’s clinical success rate metrics compared to the same metrics from 5 years ago, leading to an end-to-end clinical success rate of 21% as of the end of 2020, up from 5% as of the end of 2015.

5-Year Clinical Trial Success Rate Improvement
Clinical Trial Success Rates (new molecular entities only)	Phase 1 (3-year avg.)	Phase 2 (5-year avg.)	Phase 3/Reg. (5-year avg.)	End-to-End Success Rate
Pfizer (through 2020)	48%	52%	85%	21%
Industry(5) (through 2019)	40%	29%	72%	8%
Pfizer (through 2015)	48%	15%	70%	5%

Contacts

Media
Amy Rose 212.733.7410

Investors
Chuck Triano 212.733.3901

Bryan Dunn 212.733.8917

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