Financial Analysis

Contingencies and Certain Commitments We and certain of our subsidiaries are subject to numerous contingencies arising in the ordinary course of business, including tax and legal contingencies, guarantees and indemnifications. The following outlines our legal contingencies, guarantees and indemnifications. For a discussion of our tax contingencies, see Note 5D . A. Legal Proceedings Our legal contingencies include, but are not limited to, the following: Patent litigation, which typically involves challenges to the coverage and/or validity of patents on various products, processes or dosage forms. An adverse outcome could result in loss of patent protection for a product, a significant loss of revenues from a product or impairment of the value of associated assets. We are the plaintiff in the majority of these actions. Product liability and other product-related litigation related to current or former products, which can include personal injury, consumer fraud, off-label promotion, securities, antitrust and breach of contract claims, among others, and often involves highly complex issues relating to medical causation, label warnings and reliance on those warnings, scientific evidence and findings, actual, provable injury and other matters. Commercial and other asserted or unasserted matters, which can include acquisition-, licensing-, intellectual property-, collaboration- or co-promotion-related and product-pricing claims and environmental claims and proceedings, and can invo …

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Share-Based Payments Our compensation programs can include share-based payment awards with their value determined by reference to the fair value of our shares and can consist of the grant of shares or options to acquire shares or similar arrangements. The level of our share-based awards are based on competitive survey data and/or industry peer groups used for compensation purposes, and is allocated between different long-term incentive award vehicles, generally in the form of Total Shareholder Return Units (TSRUs), Restricted Stock Units (RSUs), Portfolio Performance Shares (PPSs), Performance Share Awards (PSAs) and stock options, as determined by the Compensation Committee of our BOD. The Amended and Restated 2019 Stock Plan (2019 Plan) replaced and superseded the original 2019 Stock Plan (Original Plan). The 2019 Plan provides for 320 million shares to be authorized for grants plus any shares remaining available for grant under the Original Plan as of April 25, 2024 (the carryforward shares). Awards granted under the 2019 Plan reduce the shares available for future grants as follows: RSUs count as three shares, and PPSs and PSAs count as six shares (three shares times 2 (the maximum potential payout)), while TSRUs and stock options count as one share. As of December 31, 2025, 313 million shares were available for future award. Although not required to do so, we have used authorized and unissued shares and, to a lesser extent, treasury stock to satisfy our obligations under …

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Identifiable Intangible Assets, Net and Goodwill A. Identifiable Intangible Assets The following summarizes the components of Identifiable intangible assets : As of December 31, 2025 As of December 31, 2024 (MILLIONS) Gross Carrying Amount Accumulated Amortization Identifiable Intangible Assets, Net Gross Carrying Amount Accumulated Amortization Identifiable Intangible Assets, Net Finite-lived intangible assets Developed technology rights (a) $ 100,630 $ (70,172) $ 30,458 $ 99,397 $ (65,044) $ 34,353 Brands (b) 1,035 (1,035) 1,277 (992) 285 Licensing agreements and other 2,341 (1,289) 1,052 2,724 (1,513) 1,210 104,006 (72,496) 31,510 103,397 (67,549) 35,848 Indefinite-lived intangible assets IPR&D (c) 21,760 21,760 18,893 18,893 Licensing agreements and other (d) 460 460 670 670 22,221 22,221 19,563 19,563 Identifiable intangible assets $ 126,227 $ (72,496) $ 53,731 $ 122,961 $ (67,549) $ 55,411 (a) The increase in the gross carrying amount primarily reflect the transfer of $600 million and $590 million from IPR&D to developed technology rights for Padcev and talazoparib (Talzenna), respectively, as well as the impact of foreign exchange, partially offset by impairments of $560 million (see Note 4 ). (b) The decrease in the gross carrying amount reflects an impairment of $240 million (see Note 4 ). (c) The increase in the gross carrying amount primarily reflects $8.0 billion for the acquisition of Metsera (see Note 2A ), partially offset by impairments of $3.9 billion …

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Tax Matters As a result of the prospective adoption of ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09) , certain tables are presented in a different format not comparable to prior year disclosures, and certain data contained within the tables may be presented differently than in prior years. A. Taxes on Income from Continuing Operations Components of Income from continuing operations before provision/(benefit) for taxes on income include: Year Ended December 31, (MILLIONS) 2025 2024 2023 United States $ 776 $ (637) $ (4,411) International 6,744 8,660 5,469 Income from continuing operations before provision/(benefit) for taxes on income ( a), (b) $ 7,520 $ 8,023 $ 1,058 (a) 2025 v. 2024 The domestic income in 2025 versus the domestic loss in 2024 is primarily attributable to a reduction in operating expenses and restructuring charges, partially offset by higher asset impairment and legal charges. The decrease in the international income in 2025 versus international income in 2024 is primarily attributable to higher asset impairment charges. For 2025, the data in this table conforms to the updated income tax disclosure guidance in accordance with ASU 2023-09. (b) 2024 v. 2023 The reduction in the domestic loss in 2024 versus the domestic loss in 2023 is primarily attributable to increased revenues offset by higher restructuring charges and asset impairment charges. The increase in the international income is primarily attributable to …

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Leases We lease real estate, fleet, and equipment for use in our operations. Our leases generally have lease terms of 1 to 30 years, some of which include options to terminate or extend leases for up to 5 to 10 years or on a month-to-month basis. We include options that are reasonably certain to be exercised as part of the determination of lease terms. We may negotiate termination clauses in anticipation of any changes in market conditions, but generally these termination options have not been exercised. Residual value guarantees are generally not included within our operating leases with the exception of some fleet leases. In addition to base rent payments, the leases may require us to pay directly for taxes and other non-lease components, such as insurance, maintenance and other operating expenses, which may be dependent on usage or vary month-to-month. Variable lease payments amounted to $453 million in 2025, $517 million in 2024 and $444 million in 2023. We elected the practical expedient to not separate non-lease components from lease components in calculating the amounts of ROU assets and lease liabilities for all underlying asset classes. We determine if an arrangement is a lease at inception of the contract and we perform the lease classification test as of the lease commencement date. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating leas …

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New Accounting Standards Adopted in 2025 In the fourth quarter of 2025, we adopted a new accounting standard which requires enhanced disclosures primarily related to existing rate reconciliation and income taxes paid information. The standard was applied prospectively. As this accounting standard only impacts disclosures, the adoption did not impact our consolidated financial statements. See Note 5 . In the third quarter of 2025, we early adopted a new accounting standard, which adds a scope exception to exclude from derivative accounting non-exchange-traded contracts with variables (referred to as underlyings) that are based on operations or activities specific to one of the parties to the contract. This new scope exception may apply to certain R&D funding arrangements. When adopted early in an interim reporting period, application of the standard is required as of the beginning of the current annual reporting period. We had no contracts or embedded features that were accounted for as derivatives but are no longer accounted for as derivatives as a result of applying the new standard. The adoption of this new accounting standard had no impact to our consolidated financial statements. …

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Pension and Postretirement Benefit Plans and Defined Contribution Plans The majority of our employees worldwide are eligible for retirement benefits provided through defined benefit pension plans, defined contribution plans or both. In the U.S., we sponsor both IRC-qualified and supplemental (non-qualified) defined benefit plans and defined contribution plans. A qualified plan meets the requirements of certain sections of the IRC, and, generally, contributions to qualified plans are tax deductible. A qualified plan typically provides benefits to a broad group of employees with restrictions on discriminating in favor of highly compensated employees with regard to coverage, benefits and contributions. A supplemental (non-qualified) plan provides additional benefits to certain employees. In addition, we provide medical insurance benefits to certain retirees and their eligible dependents through our postretirement plans. A. Components of Net Periodic Benefit Cost/(Credit) and Changes in Other Comprehensive Income/(Loss) Pension Plans Postretirement Plans U.S. International Year Ended December 31, (MILLIONS) 2025 2024 2023 2025 2024 2023 2025 2024 2023 Service cost $ $ $ $ 104 $ 87 $ 85 $ 17 $ 14 $ 12 Interest cost 529 553 589 293 312 287 25 23 21 Expected return on plan assets (735) (832) (778) (329) (322) (304) (57) (51) (44) Amortization of prior service cost/(credit) 1 2 4 4 (88) (113) (119) Actuarial (gains)/losses (a) (59) 396 (410) (201) 33 102 18 144 51 Curtailments (10) ( …

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Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives A. Realigning Our Cost Base Program In the fourth quarter of 2023, we announced that we launched a multi-year, enterprise-wide cost realignment program that aims to realign our costs with our longer-term revenue expectations. In the second quarter of 2025, we identified additional productivity opportunities to further reduce costs primarily in SI&A, driven in large part by enhanced digital enablement, including automation and AI, and simplification of business processes. We expect costs associated with these components of the program to be incurred through 2027 and to total approximately $4.7 billion, representing primarily cash expenditures for severance, implementation, exit, and digital enablement costs, as well as non-cash asset write downs of which $3.1 billion is associated with our Biopharma segment. Additionally, in connection with our efforts to simplify the structure and sharpen the focus of our R&D organization, in the first quarter of 2025, we expanded this program after having identified additional opportunities to drive improvements in productivity and operational efficiencies through enhanced digital enablement, including automation and AI, and simplification of business processes. We expect costs to implement these initiatives to be incurred through 2026 and to total approximately $600 million, primarily representing cash expenditures for seve …

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Segment, Geographic and Other Revenue Information A. Segment Information We manage our commercial operations through three operating segments, each led by a single manager: Biopharma, PC1 and Pfizer Ignite. Biopharma is engaged in the discovery, development, manufacture, marketing, sale and distribution of biopharmaceutical products worldwide. PC1 is our contract development and manufacturing organization and a leading supplier of specialty active pharmaceutical ingredients. Pfizer Ignite is an offering that provides strategic guidance and end-to-end R&D services to select innovative biotech companies that align with Pfizers R&D focus areas. Biopharma is the only reportable segment. Pfizers CODM is the Chairman and Chief Executive Officer. Our CODM uses the revenues and earnings of the operating segments, among other factors, for performance evaluation and resource allocation. The CODM uses segment revenues and earnings in the annual budgeting process when setting strategic goals for the company and considers periodic budget-to-actual variances in segment revenues and earnings when assessing performance of the segments and making decisions about allocating resources to the operating segments. By analyzing segment financial results, the CODM can discern trends, which can inform decisions that align with the companys goals and objectives, and help ensure r isks are managed appropriately. We regularly review our operating segments and the approach used by management to e …

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Equity A. Common Stock Purchases We have authorization to purchase our common stock through privately negotiated transactions or in the open market as circumstances and prices warrant. Purchased shares under a share-purchase plan, which is authorized by our BOD, are available for general corporate purposes. In December 2018, the BOD authorized a $10 billion share repurchase program to be utilized over time and share repurchases commenced thereunder in the first quarter of 2019. We did not purchase shares of our common stock under our publicly announced share-purchase plan in any of the periods presented. Our remaining share-purchase authorization was $3.3 billion as of December 31, 2025. B. Preferred Stock We have 27 million authorized shares of preferred stock without par value; no shares of preferred stock were issued or outstanding as of December 31, 2025 and 2024.

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Contingencies and Certain Commitments We and certain of our subsidiaries are subject to numerous contingencies arising in the ordinary course of business, including tax and legal contingencies, guarantees and indemnifications. The following outlines our legal contingencies, guarantees and indemnifications. For a discussion of our tax contingencies, see Note 5B . A. Legal Proceedings Our legal contingencies include, but are not limited to, the following: Patent litigation, which typically involves challenges to the coverage and/or validity of patents on various products, processes or dosage forms. An adverse outcome could result in loss of patent protection for a product, a significant loss of revenues from a product or impairment of the value of associated assets. We are the plaintiff in the majority of these actions. Product liability and other product-related litigation related to current or former products, which can include personal injury, consumer fraud, off-label promotion, securities, antitrust and breach of contract claims, among others, and often involves highly complex issues relating to medical causation, label warnings and reliance on those warnings, scientific evidence and findings, actual, provable injury and other matters. Commercial and other asserted or unasserted matters, which can include acquisition-, licensing-, intellectual property-, collaboration- or co-promotion-related and product-pricing claims and environmental claims and proceedings, and can invo …

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Identifiable Intangible Assets, Net and Goodwill A. Identifiable Intangible Assets The following summarizes the components of Identifiable intangible assets : June 28, 2026 December 31, 2025 (MILLIONS) Gross Carrying Amount Accumulated Amortization Identifiable Intangible Assets, Net Gross Carrying Amount Accumulated Amortization Identifiable Intangible Assets, Net Finite-lived intangible assets Developed technology rights (a) $ 100,799 $ (72,512) $ 28,287 $ 100,630 $ (70,172) $ 30,458 Brands 1,035 (1,035) 1,035 (1,035) Licensing agreements and other 2,364 (1,378) 986 2,341 (1,289) 1,052 104,198 (74,925) 29,273 104,006 (72,496) 31,510 Indefinite-lived intangible assets IPR&D (a) 17,320 17,320 21,760 21,760 Licensing agreements and other 460 460 460 460 17,780 17,780 22,221 22,221 Identifiable intangible assets $ 121,978 $ (74,925) $ 47,053 $ 126,227 $ (72,496) $ 53,731 (a) The gross carrying amounts a s of June 28, 2026 reflect impairments of $3.8 billion in IPR&D assets and $525 million in developed technology rights (see Note 4 ). The gross carrying amounts also reflect a transfer of $580 million from IPR&D to developed technology rights for Tukysa (tucatinib) . B. Goodwill As a result of the organizational changes to the commercial structure within the Biopharma operating segment effective in the first quarter of 2026 (see Note 13A ), our goodwill is required to be reallocated amongst impacted reporting units. The reallocation of goodwill is a complex process t …

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Tax Matters A. Taxes on Income/(Loss) from Continuing Operations Our effective tax rate for continuing operations was 62.4% for the second quarter of 2026, compared to 4.6% for the second quarter of 2025, and was 2.1% for the first six months of 2026, compared to (0.8)% for the first six months of 2025. The higher effective tax rate for the second quarter of 2026, compared to the second quarter of 2025, reflects a tax benefit on the pre-tax loss resulting from changes in the jurisdictional mix of earnings, primarily due to intangible asset impairments. The higher effective tax rate for the first six months of 2026, compared to the first six months of 2025, was primarily due to changes in the jurisdictional mix of earnings as well as the non-recurrence of favorable global income tax resolutions. We elected, with the filing of our 2018 U.S. Federal Consolidated Income Tax Return, to pay our initial estimated $15 billion repatriation tax liability on accumulated post-1986 foreign earnings (Transition Tax liability) over eight years through 2026. The eighth and final annual installment was paid by its April 15, 2026 due date. See Note 5A in our 2025 Form 10-K for information on our income taxes paid (net of refunds received). B. Tax Contingencies We are subject to income tax in many jurisdictions, and a certain degree of estimation is required in recording the assets and liabilities related to income taxes. All of our tax positions are subject to audit by the local taxing authori …

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Pension and Postretirement Benefit Plans The following summarizes the components of net periodic benefit cost/(credit): Pension Plans U.S. International Postretirement Plans Three Months Ended (MILLIONS) June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 Service cost $ $ $ 24 $ 26 $ 4 $ 4 Interest cost 126 133 75 72 7 6 Expected return on plan assets (186) (184) (82) (81) (16) (14) Amortization of prior service cost/(credit) 1 1 (7) (25) Actuarial (gains)/losses 4 Curtailments (6) (2) (9) Special termination benefits 4 Net periodic benefit cost/(credit) reported in income $ (56) $ (51) $ 16 $ 18 $ (14) $ (38) Pension Plans U.S. International Postretirement Plans Six Months Ended (MILLIONS) June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 Service cost $ $ $ 49 $ 50 $ 8 $ 8 Interest cost 253 265 149 143 14 13 Expected return on plan assets (374) (368) (164) (161) (31) (28) Amortization of prior service cost/(credit) 2 2 (16) (57) Actuarial (gains)/losses 4 8 Curtailments (3) (9) (7) (59) Special termination benefits 9 Net periodic benefit cost/(credit) reported in income $ (116) $ (102) $ 50 $ 26 $ (32) $ (123) The components of net periodic benefit cost/(credit) other than the service cost component are primarily included in Other (income)/deductionsnet (see Note 4 ). For the six months ended June 28, 2026, we contributed $84 million to our U.S. Pension Plans and $100 million to our International Pension Plans …

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Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives A. Realigning Our Cost Base Program In the fourth quarter of 2023, we announced that we launched a multi-year, enterprise-wide cost realignment program that aims to realign our costs with our longer-term revenue expectations. In the second quarter of 2025, we identified additional productivity opportunities to further reduce costs primarily in SI&A, driven in large part by enhanced digital enablement, including automation and AI, and simplification of business processes. We expect costs associated with these components of the program to be incurred through 2027 and to total approximately $4.7 billion, representing primarily cash expenditures for severance, implementation, exit, and digital enablement costs, as well as non-cash asset write downs of which $3.4 billion is associated with our Biopharma segment. In the third quarter of 2026, we identified additional productivity enhancements from technology and simplification efforts across our commercial, R&D and enabling functions designed to further reduce costs in SI&A. We expect one-time costs to achieve the additional savings to be incurred through 2029 and to total approximately $2.0 billion, primarily representing cash expenditures for digital enablement, implementation and severance of which $800 million is associated with our Biopharma segment. Additionally, in connection with our efforts to simplify …

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Segment, Geographic and Other Revenue Information A. Segment Information Beginning in the first quarter of 2026, we manage our commercial operations through two operating segments, each led by a single manager: Biopharma and PC1. This structure reflects our current operating model following the wind-down in 2025 of the Pfizer Ignite operating segment. Biopharma is engaged in the discovery, development, manufacture, marketing, sale and distribution of biopharmaceutical products worldwide. PC1 is our contract development and manufacturing organization and a leading supplier of specialty active pharmaceutical ingredients. Biopharma is the only reportable segment. We regularly review our operating segments and the approach used by management to evaluate performance and allocate resources. Within our Biopharma reportable segment, our commercial divisions market, sell and distribute our products, and global operating functions are responsible for the research, development, manufacturing and supply of our products. Each operating segment is supported by our global corporate enabling functions and other corporate functions. At the beginning of 2026, we made changes in our commercial organization, which included the transition of certain off-patent branded and generic sterile injectables and biosimilars primarily from the Specialty Care and Oncology product portfolios to a new Global Hospital and Biosimilars Division within our Biopharma reportable segment to support our continued foc …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing