We manage our operations through five operating segments––Primary Care, Specialty Care and Oncology, Established Products and Emerging Markets, Animal Health and Consumer Healthcare and Nutrition. Each operating segment has responsibility for its commercial activities and for certain research and development activities related to in-line products and IPR&D projects that generally have achieved proof-of-concept. Previously, we managed our operations through two operating segments–– Biopharmaceutical and Diversified. We have restated our prior period segment information to conform with the current period presentation.
We regularly review our segments and the approach used by management to evaluate performance and allocate resources.
Operating Segments
A description of each of our five operating segments follows:
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Primary Care operating segment––includes revenues and earnings, as defined by management, from human pharmaceutical products primarily prescribed by primary-care physicians, and may include products in the following therapeutic and disease areas: Alzheimer’s disease, cardiovascular (excluding pulmonary arterial hypertension), erectile dysfunction, genitourinary, major depressive disorder, pain, respiratory and smoking cessation. Examples of products in this unit include Celebrex, Chantix/Champix, Lipitor, Lyrica, Premarin, Pristiq and Viagra. All revenues and earnings for such products are allocated to the Primary Care unit, except those generated in Emerging Markets and those that are managed by the Established Products unit.•
Specialty Care and Oncology operating segment––comprises the Specialty Care business unit and the Oncology business unit. – Specialty Care––includes revenues and earnings, as defined by management, from most human pharmaceutical products primarilyprescribed by physicians who are specialists, and may include products in the following therapeutic and disease areas: anti- infectives, endocrine disorders, hemophilia, inflammation, multiple sclerosis, ophthalmology, pulmonary arterial hypertension, specialty neuroscience and vaccines. Examples of products in this unit include BeneFIX, Enbrel, Genotropin, Geodon, the Prevnar/ Prevenar franchise, Rebif, ReFacto AF, Revatio, Xalatan , Xyntha and Zyvox. All revenues and earnings for such products are allocated to the Specialty Care unit, except those generated in Emerging Markets and those that are managed by the Established Products unit.
– Oncology––includes revenues and earnings, as defined by management, from human prescription pharmaceutical products addressing oncology and oncology-related illnesses. Examples of products in this unit include Aromasin, Sutent, Torisel and Xalkori. All revenues and earnings for such products are allocated to the Oncology unit, except those generated in Emerging Markets and those that are managed by the Established Products unit.
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Established Products and Emerging Markets operating segment––comprises the Established Products business unit and the Emerging Markets business unit.– Established Products––generally includes revenues and earnings, as defined by management, from human prescription pharmaceutical products that have lost patent protection or marketing exclusivity in certain countries and/or regions. Typically, products are transferred to this unit in the beginning of the fiscal year following loss of patent protection or marketing exclusivity. In certain situations, products may be transferred to this unit at a different point than the beginning of the fiscal year following loss of patent protection or marketing exclusivity in order to maximize their value. This unit also excludes revenues and earnings generated in Emerging Markets. Examples of products in this unit include Arthrotec, Effexor, Medrol, Norvasc, Protonix, Relpax and Zosyn/ Tazocin.
– Emerging Markets––includes revenues and earnings, as defined by management, from all human prescription pharmaceutical products sold in Emerging Markets, including Asia (excluding Japan and South Korea), Latin America, Middle East, Africa, Central and Eastern Europe and Turkey.
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Animal Health and Consumer Healthcare operating segment—comprises the Animal Health business unit and the Consumer Healthcare business unit.– Animal Health––includes worldwide revenues and earnings, as defined by management, from products and services to prevent and treat disease in livestock and companion animals, including vaccines, parasiticides and anti-infectives.
– Consumer Healthcare––generally includes worldwide revenues and earnings, as defined by management, from non-prescription products in the following therapeutic categories: dietary supplements, pain management, respiratory and personal care. Products marketed by Consumer Healthcare include Advil, Caltrate, Centrum, ChapStick, Preparation H and Robitussin.
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Nutrition operating segment––generally includes revenues and earnings, as defined by management, from a full line of infant and toddler nutritional products sold outside of the U.S. and Canada.Our chief operating decision maker uses the revenues and earnings of the five operating segments, among other factors, for performance evaluation and resource allocation. For the operating segments that comprise more than one business unit, a single segment manager has responsibility for those business units.
Other Costs and Business Activities
Certain costs are not allocated to our operating segment results, such as costs associated with the following:
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Worldwide Research and Development (WRD), which is generally responsible for human health research projects until proof-of-concept is achieved and then for transitioning those projects to the appropriate business unit for possible clinical andcommercial development. R&D spending may include upfront and milestone payments for intellectual property rights. This organization also has responsibility for certain science-based platform services, which provide technical expertise and other services to the various research and development projects.
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Pfizer Medical, which is responsible for all human-health-related regulatory submissions and interactions with regulatory agencies. This organization is also responsible for the collection, evaluation and reporting of all safety event information related to our human health products and for conducting clinical trial audits and readiness reviews and for providing Pfizer-related medical information to healthcare providers.•
Corporate, which is responsible for platform functions such as finance, global real estate operations, human resources, legal, compliance, science and technology, worldwide procurement, worldwide public affairs and policy and worldwide technology. These costs also include compensation costs and other miscellaneous operating expenses not charged to our operating segments, as well as interest income and expense.•
Certain transactions and events such as (i) purchase accounting adjustments, where we incur expenses associated with theamortization of fair value adjustments to inventory, intangible assets and property, plant and equipment; (ii) acquisition-related activities, where we incur costs for restructuring, integration, implementation and executing the transaction; and (iii) certain significant items, which include non-acquisition-related restructuring costs, as well as costs incurred for legal settlements, asset impairments and sales of assets or businesses.
Segment Assets
We manage our assets on a total company basis, not by operating segment, as many of our operating assets are shared (such as our plant network assets) or commingled (such as accounts receivable, as many of our customers are served by multiple operating segments). Therefore, our chief operating decision maker does not regularly review any asset information by operating segment and, accordingly, we do not report asset information by operating segment. Total assets were approximately $188 billion at December 31, 2011 and approximately $195 billion at December 31, 2010.
Selected Income Statement Information
Selected income statement information follows:
(MILLIONS OF DOLLARS) REVENUES R&D EXPENSES EARNINGS(a)
DEPRECIATION & AMORTIZATION(b)
YEAR ENDED DECEMBER 31, 2011(c)
Primary Care $22,670 $1,307 $15,001 $247
Specialty Care and Oncology 16,568 1,561 10,789 419
Established Products and Emerging Markets 18,509 441 9,417 422
Animal Health and Consumer Healthcare 7,241 425 2,020 232
Total reportable segments 64,988 3,734 37,227 1,320
Nutrition and other business activities(d) 2,437 3,378 (2,793) 230
Reconciling Items:
Corporate(e) — 1,309 (7,430) 541
Purchase accounting adjustments(f) — (2) (6,801) 5,565
Acquisition-related costs(g) — 23 (1,983) 624
Certain significant items(h) — 656 (4,354) 615
Other unallocated(i) — 14 (1,104) 131
$67,425 $9,112 $12,762 $9,026
YEAR ENDED DECEMBER 31, 2010
Primary Care $23,328 $1,473 $15,773 $201
Specialty Care and Oncology 16,435 1,624 10,571 432
Established Products and Emerging Markets 18,760 452 10,100 418
Animal Health and Consumer Healthcare 6,347 428 1,569 197
Total reportable segments 64,870 3,977 38,013 1,248
Nutrition and other business activities(d) 2,187 3,743 (3,263) 242
Reconciling Items:
Corporate(e) — 1,567 (7,990) 619
Purchase accounting adjustments(f) — 26 (8,257) 5,477
Acquisition-related costs(g) — 34 (3,989) 788
Certain significant items(h) — 18 (3,964) —
Other unallocated(i) — 27 (1,268) 113
$67,057 $9,392 $9,282 $8,487
YEAR ENDED DECEMBER 31, 2009(c)
Primary Care $22,576 $1,407 $15,100 $130
Specialty Care and Oncology 8,925 1,060 4,661 269
Established Products and Emerging Markets 13,947 392 6,955 360
Animal Health and Consumer Healthcare 3,258 297 812 142
Total reportable segments 48,706 3,156 27,528 901
Nutrition and other business activities(d) 563 2,706 (2,751) 181
Reconciling Items:
Corporate(e) — 1,296 (4,657) 526
Purchase accounting adjustments(f) — 37 (3,787) 2,799
Acquisition-related costs(g) — 13 (4,025) 241
Certain significant items(h) — 56 (1,511) —
Other unallocated(i) — 560 (123) 109
$49,269 $7,824 $10,674 $4,757
(a) Income from continuing operations before provision for taxes on income.
(b) Certain production facilities are shared. Depreciation is allocated based on estimates of physical production.
(c) For 2011, includes King commencing on the acquisition date of January 31, 2011. For 2009, includes Wyeth commencing on the acquisition date of October 15, 2009.
(d) Other business activities includes the revenues and operating results of Pfizer CentreSource, our contract manufacturing and bulk pharmaceutical chemical sales operation, and the research and development costs managed by our Worldwide Research and Development organization and our Pfizer Medical organization.
(e) Corporate for R&D expenses includes, among other things, administration expenses and compensation expenses associated with our research and development activities and for Earnings includes, among other things, administration expenses, interest income/(expense), certain compensation and other costs not charged to our operating segments.
(f) Purchase accounting adjustments include certain charges related to the fair value adjustments to inventory, intangible assets and property, plant and equipment.
(g) Acquisition-related costs can include costs associated with acquiring, integrating and restructuring newly acquired businesses, such as transaction costs, integration costs, restructuring charges and additional depreciation associated with asset restructuring (see Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives for additional information).
(h) Certain significant items are substantive, unusual items that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis. Such items primarily include restructuring charges and implementation costs associated with our cost-reduction and productivity initiatives that are not associated with an acquisition, the impact of certain tax and/or legal settlements and certain asset
impairments.
(i) Includes overhead expenses associated with our manufacturing and commercial operations not directly attributable to an operating segment. In 2009, R&D expenses include approximately $550 million of Wyeth R&D expenses and Earnings include approximately $900 million of Wyeth earnings and $290 million of operating expenses incurred in Japan associated with our three biopharmaceutical operating segments, where allocation among the segments is not practicable.