Pfizer, Inc.

Introduction

American pharmaceutical corporation

Headquartered in New York City
Worlds largest pharmaceutical company by
revenues in 2010

Products

Develops medicines for: immunology and

inflammation, oncology, cardiovascular and
metabolic diseases, neuroscience and pain.

Lipitor

Cholesterol lowering- top prescription drug 7.7

billions of 2011 by sales

History

Founded by cousins Charles Pfizer and

Charles Erhart in New York City in 1849

Prosperity years 1900-1950

becoming research-based pharmaceutical
company
In 1999 celebrates its 150th anniversary as one
of the world's premier pharmaceutical
companies
Investment in research and development
exceeds $4 billion for the first time

2000-Present
Made numerous acquisitions, including
of Warner-Lambert in 2000, Pharmacia in 2003
and Wyeth in 2009

Listed on the New York Stock Exchange and

its shares have been a component of the Dow
Jones Industrial Average since April 8, 2004

The Pharmaceutical Industry

Most significant features:
a global industry with high barriers to entry
drugs have predictable life cycle
large amount of money invested in R&D
product diversity
not a lot of direct competition
patents and generic drugs
demographics and managed care

Return on Investment
ROI 2011 industry:0.10
ROI 2011= Return/Investment
= Net Income/Average Total Assets
= 10,007/191,508
=0.05
ROI 2010= 8255/203981.5=0.04
ROI 2009= 8633/162048.5=0.05
ROI 2008= 8101/113208=0.07

Return on Equity

ROE 2011 industry:0.13

ROE 2011= NI/Average Total Owners Equity
= 10,007/191,508
= 0.12

ROE 2010= 8255/89355.5= 0.09

Price/Earnings ratio
P/E 2011 industry:23.91%
P/E 2011= Market price per share/Earnings
per share
= 21.64/1.11
= 19.50%
P/E 2010= 17.51/1.03=17.00%
P/E 2009= 18.19/1.23=14.79%

Dividend Yield
DY 2011 industry:2.03%
DY=Annual dividend per share/Market price
per share of stock
Dividend yield 2011= 0.80/21.64*100
= 3.69%
Dividend yield 2010= 0.72/17.51*100=4.11%
Dividend yield 2009= 0.80/18.19*100=4.40%

Dividend Payout Ratio

DPR 2011 industry:38.48%
=Annual dividend per share/Earnings per share
DPR 2011= 0.80/1.11*100
= 72.07%
DPR 2010= 0.72/1.03*100=69.90%
DPR 2009= 0.80/1.23*100=65.04%

Preferred Dividend Coverage Ratio

= NI/ Preferred dividend requirement

Not applicable

Working Capital

Working Capital=Current Assets-Current

Liabilities
2011 industry:$7,360
2011=57728-28069=$29,659
2010=60468-28609=$31,859
2009=61670-37225=$24,445

Current Ratio

Current Ratio=Current Assets/Current

Liabilities
2011 industry:2.74%
2011=57728/28069=2.06%
2010=61013/28636=2.11%
2009=61670/37225=1.66%

Acid Test Ratio

Acid Test Ratio=Cash(including temporary

investments) + Accounts Receivable/Current
Liabilities
2011 industry:1.06%
2011-1.44%
2010-1.51%
2009-1.12%

Total Asset Turnover

Total Asset Turnover= Sales/Average total

assets
2011 industry-.59
2011=67425/191508=.35
2010=67791/203981.5=.33
2009=49934/162048.5=.31

Inventory Turnover

Inventory Turnover=COGS/Average Inventory

2011 industry:1.73
2011=10829/11971.50=.90
2010=12441/14606.50=.85
2009=6769/14593.50=.46

Number of days sales in Accounts

Receivable

Number of days sales in Accounts

Receivable=Accounts Receivable/Average
Days Sales
2011 industry:81.87 days
2011=184.73/365=73.94
2010=185.73/365=81.19
2009136.81/365=115.78

Number of days sales in Inventory

Number of days sales in

Inventory=Inventory/Average COGS per day
2011 industry:206.97 days
2011=7769/29.67=261.86
2010=8405/34.08=246.59
2009=12403/18.55=668.80

Debt Ratio

Debt=Total Liabilities/Total liabilities and

owners Equity
2011 industry:.53%
2011=105381/188002=.56%
2010=106749/195014=.55%
2009=122503/212949=.58%

Debt/Equity Ratio

Debt/Equity Ratio=Total Liabilities/Total

Owners equity*100
2011 industry:25.8%
2011= 34931/82621*100=42.27%
2010= 38410/88265*100=43.51%
2009= 43193/90446*100=47.76%

Times Interest Earned

Times Interest Earned=EBIT/Interest Expense

2011 industry:14.06
2011=19769/1731=11.42
2010=18067/1835=9.85
2009=15995/1267=12.62

Critical Success Factors

Regulated by many governments

Food and Drug Administration FDA-one of the
most risk-averse and strict agencies in the
world
Mergers opportunities

Competitive Advantage
Popular Brands that remain competitive
Xanax

Since 1980s, purchased in 2003, has generic

challengers.

Robitussin

Since 1950s, continues to be a popular choice

among consumers.

Management
9 Diverse health care businesses
Each led by an executive
Executives held accountable for results
Oversee complete product life cycle
Strong Corporate Compliance
Open Door Policy
The Blue Book

Corporate Governance

Majority Director Independence

Shareholder Ability to Call Special Meetings
Corporate Compliance Program
Disclosure Committee for Financial Reporting

Building Value Globally

Business Development Opportunities
Acquisition of King Pharmaceuticals, Inc.
Framework Agreement with Zhejiang Hison
Pharmaceuticals in China.
Support a Cause
Patient Access Programs
Donations for a Cure

Industry Growth
Product Developments
Continued investment in R&D
Goal of 15-20 regulatory submissions
Emerging Markets
Example of Wyeth products resulted in 33%
revenue increase
Acquisitions

Legislation
U.S. Healthcare Legislation
Patient Protection and Affordable Care Act

Provisions affecting company

Rebates
Discounts
Fees

Resulting in Financial Impact

In 2011, a recorded reduction to revenue was 648

million.
An additional 248 million in administrative expenses
due to fees payable to Federal Government.

Loss or Expiration of
Intellectual Property Rights
Multiple Patents Set to Expire
Strengthens Patent Protection
Increases Generic Competition
Loss of exclusivity of products
Major affects on Revenue
Lipitor
Effexor

Regulatory Environment

Discovery and development of safe, effective

new products
Research and Development
Clinical Trials

Risks

Restrictions imposed by the FDA or other

regulatory agencies
Patent rights challenged
Market entry of comparable product
Government reimbursement programs

Sources

1. http://
www.pfizer.com/investors/investor_dashboar
d_tab.jsp?t=3&month=12&day=31&year=2011&su
bmit.x=23&submit.y=10
(used to find price of stock at specific day)

2.
http://www.reuters.com/finance/stocks/financi
alHighlights?symbol=PFE.N
(used to find industry averages)

Works Cited
1.

2.

3.

4.

"Financials Pfizer Inc (PFE.N)." Reuters. N.p., n.d. Web. 1 Dec.

2012.
<http://www.reuters.com/finance/stocks/financialHighlights?
symbol=PFE.N>. We used this source to look up industry ratios to
compare our ratios to.
Historical Price Lookup. N.p., n.d. Web. 1 Dec. 2012.
<http://www.pfizer.com/investors/investor_dashboard_tab.jsp?
t=3&month=12&day=31&year=2011&submit.x=23&submit.y=10
>. We used this souce to look up the stock price on any date that
we needed it to calculate ratios.
"Partnerships With Disease Foundations Open New Avenues to
Drug Discovery and Development." Pharmaceutical Company.
N.p., n.d. Web. 29 Nov. 2012. <http://www.pfizer.com/home/>.

Works cited
5. Pfizer Inc. and Subsidiary Companies. "Appendix A 2010 Financial Report." N.p.,
n.d. Web. 1 Dec. 2012.
<http://www.pfizer.com/files/annualreport/2010/financial/financial2010.pdf>.
6. Pfizer Inc. and Subsidiary Companies. "Appendix A 2011 Financial Report." N.p., n.d.
Web. 1 Dec. 2012.
<http://www.pfizer.com/files/annualreport/2011/financial/financial2011.pdf>.
7. Pfizer Inc. and Subsidiary Companies. "Pfizer Inc. 2009 Financial Report." N.p., n.d.
Web. 1 Dec. 2012.
<http://www.pfizer.com/files/annualreport/2009/financial/financial2009.pdf>.
8. "Pfizer Inc." Reuters. N.p., n.d. Web. 2 Dec. 2012.
<http://www.reuters.com/finance/stocks/overview?symbol=PFE.N>.
9. Hirt, Geoffrey A., and Stanley B. Block. Fundamentals of Investment
Management. New York, NY: MacGraw Hill Irwin, 2012. Print.
10. "Pfizer Leadership and Structure." Pfizer.com. N.p., n.d. Web. 4 Dec. 2012.
<http://www.pfizer.com/about/leadership_and_structure/leadership_structure.js
p>.

Industry averages

Pfizer Financial Statements from

Compustat with calculated ratios

Calculated industry averages from

Compustat