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Performance and Financial Guidance

Revenues (in billions)
2019 Actual 2019 Guidance(2) 2020 Guidance(3)
$51.8 $51.2 to $52.2 $48.5 to $50.5
Adjusted cost of sales as a % of revenues(4)
2019 Actual 2019 Guidance(2) 2020 Guidance(3)
19.4% 19.3% to 19.8% 19.9% to 20.9%
Adjusted SI&A expenses(4) (in billions)
2019 Actual 2019 Guidance(2) 2020 Guidance(3)
$14.0 $13.5 to $14.0 $12.0 to $13.0
Adjusted R&D expenses(4) (in billions)
2019 Actual 2019 Guidance(2) 2020 Guidance(3)
$8.0 $7.7 to $8.1 $8.1 to $8.5
Adjusted other (income)/deductions(4)
2019 Actual 2019 Guidance(2) 2020 Guidance(3)
$300 million of income Approximately $200 million of income Approximately $800 million of income
Effective tax rate on adjusted income(4)
2019 Actual 2019 Guidance(2) 2020 Guidance(3)
15.0% Approximately 16.0% Approximately 15.0%
Adjusted diluted EPS(4)
2019 Actual 2019 Guidance(2) 2020 Guidance(3)
$2.95 $2.94 to $3.00 $2.82 to $2.92
Footnotes
1.

Please refer to our 2019 Annual Report on Form 10-K, including the sections captioned Risk Factors and Forward- Looking Information and Factors That May Affect Future Results, for a description of the substantial risks and uncertainties related to the forward-looking statements, including our 2020 Financial Guidance, included in this Annual Review.
2.

Our 2019 financial guidance reflected the following:

  • Pfizer does not provide guidance for GAAP Reported financial measures (other than revenues) or a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP Reported financial measures on a forward-looking basis because it is unable to predict with reasonable certainty the ultimate outcome of pending litigation, unusual gains and losses, acquisition-related expenses, net gains or losses on investments in equity securities and potential future asset impairments without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on GAAP Reported results for the guidance period.
  • Did not assume the completion of any business development transactions not completed as of September 29, 2019.
  •  Included revenues and expenses associated with Pfizer’s Consumer Healthcare business through July 31, 2019 as well as Pfizer’s pro rata share of anticipated earnings from the Consumer Healthcare Joint Venture (JV) with GSK from August 1, 2019, which is recorded on a quarterly basis in Adjusted other (income)/deductions. Pfizer records its share of the JV’s anticipated earnings on a one-quarter lag; therefore, 2019 financial guidance for Adjusted other (income)/ deductions and Adjusted diluted EPS reflected Pfizer’s share of two months of the JV’s earnings that were generated in third-quarter 2019, which were recorded by Pfizer in fourth-quarter 2019.
  •  Reflected an anticipated negative revenue impact of $2.1 billion due to recent and expected generic and biosimilar competition for certain products that have recently lost or were anticipated to soon lose patent protection.
  • Exchange rates assumed were a blend of the actual exchange rates in effect through third-quarter 2019 and mid- October 2019 rates for the remainder of the year. Reflected the anticipated unfavorable impact of approximately $1.4 billion on revenues and approximately $0.10 on Adjusted diluted EPS as a result of changes in foreign exchange rates relative to the U.S. dollar compared to foreign exchange rates from 2018.
  • Guidance for Adjusted diluted EPS assumed diluted weighted-average shares outstanding of approximately 5.7 billion shares, which reflected the weighted-average impact of share repurchases totaling $8.9 billion completed in 2019.
3.

The 2020 financial guidance for Total Company (i) is as of January 28, 2020, (ii) is not being updated or reaffirmed in connection with this Annual Review, and (iii) reflects the following:

  • Reflects a full year of revenue and expense contributions from Biopharma and Upjohn, and excludes any impact from the pending Upjohn combination with Mylan N.V. Please refer to the Financial Review––Our Financial Guidance for 2020––2020 Financial Guidance for New Pfizer and ––2020 Financial Guidance for Upjohn sections of our 2019 Financial Report, which was filed as Exhibit 13 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, for (i) our 2020 guidance for New Pfizer reflecting a full-year 2020 pro-forma view of the company assuming the pending Upjohn combination with Mylan was completed at the beginning of 2020, and assumes, among other things, $12 billion of net proceeds from Upjohn to be retained by Pfizer, which Pfizer will use to repay its own existing indebtedness, and (ii) our 2020 guidance for Upjohn reflecting the inclusion of revenues and expenses associated with Meridian Medical Technologies, Inc. and Mylan-Japan, which were previously recorded in Pfizer’s Biopharma business.
  • Pfizer does not provide guidance for GAAP Reported financial measures (other than revenues) or a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP Reported financial measures on a forward-looking basis because it is unable to predict with reasonable certainty the ultimate outcome of pending litigation, unusual gains and losses, acquisition-related expenses, net gains or losses on investments in equity securities and potential future asset impairments without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on GAAP Reported results for the guidance period.
  • Does not assume the completion of any business development transactions not completed as of December 31, 2019, including any one-time upfront payments associated with such transactions.
  • Includes Pfizer’s pro rata share of the Consumer Healthcare JV anticipated earnings, which is recorded in Adjusted other (income)/deductions on a one-quarter lag. Therefore, 2020 financial guidance for Adjusted other (income)/ deductions and Adjusted diluted EPS reflects Pfizer’s share of the JV’s earnings that were generated in fourth-quarter 2019 (to be recorded by Pfizer in first-quarter 2020) as well as Pfizer’s share of the JV’s projected earnings during the first three quarters of 2020.
  • Reflects an anticipated negative revenue impact of $2.4 billion due to recent and expected generic and biosimilar competition for certain products that have recently lost or are anticipated to soon lose patent protection.
  • Exchange rates assumed are as of mid-January 2020. Reflects the anticipated unfavorable impact of approximately $0.2 billion on revenues and approximately $0.01 on Adjusted diluted EPS as a result of changes in foreign exchange rates relative to the U.S. dollar compared to foreign exchange rates from 2019.
  • Adjusted diluted EPS guidance assumes diluted weighted-average shares outstanding of approximately 5.65 billion shares, which assumes no share repurchases in 2020.
4.

Adjusted income and its components and Adjusted diluted EPS are defined as reported U.S. GAAP net income(5) and its components and reported diluted EPS(5) excluding purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items (some of which may recur, such as gains on the completion of joint venture transactions, restructuring charges, legal charges or net gains and losses on investments in equity securities, but which management does not believe are reflective of ongoing core operations). Adjusted cost of sales, Adjusted selling, informational and administrative (SI&A) expenses, Adjusted research and development (R&D) expenses and Adjusted other (income)/deductions are income statement line items prepared on the same basis as, and therefore components of, the overall Adjusted income measure. As described in the Financial Review––Non-GAAP Financial Measure (Adjusted Income) section of our 2019 Financial Report, which was filed as Exhibit 13 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, management uses Adjusted income, among other factors, to set performance goals and to measure the performance of the overall company. Because Adjusted income is an important internal  measurement for Pfizer, management believes that investors’ understanding of our performance is enhanced by disclosing this performance measure. Pfizer reports Adjusted income, certain components of Adjusted income, and Adjusted diluted EPS in order to portray the results of the company’s major operations––the discovery, development, manufacture, marketing and sale of prescription medicines and vaccines––prior to considering certain income statement elements. Reconciliations of certain U.S. GAAP Reported to Non-GAAP Adjusted information for 2019 are provided in the Financial Review section of our 2019 Financial Report, which was filed as Exhibit 13 to our Annual Report on Form 10-K for the year ended December 31, 2019. The Adjusted income and its components and Adjusted diluted EPS measures are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS. Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS are Non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, are limited in their usefulness to investors. Because of their non-standardized definitions, Non-GAAP Adjusted income and its components (unlike U.S.GAAP net income and its components) and Non-GAAP Adjusted diluted EPS (unlike U.S. GAAP diluted EPS) may not be comparable to the calculation of similar measures of other companies. Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS are presented solely to permit investors to more fully understand how management assesses performance.
5.

Reported net income is defined as net income attributable to Pfizer Inc., in accordance with U.S. GAAP and reported diluted EPS is defined as reported diluted EPS attributable to Pfizer Inc. common shareholders in accordance with U.S. GAAP.