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Summary of the financial reports for Pfizer/Wyeth from 2003-2013 First, some definitions: -Sales/revenue: Some companies report total sales only, some total revenue only and some itemize total sales then add extra revenue. I use total revenue whenever it’s an option. -Profit: Net income after taxes. Many companies will add or subtract money from taxes or other revenue/fees from discontinued items to that net income. In such cases I’ll use net income attributable to that company for profit. -Research includes research and development and purchased in-process research. -Marketing is usually listed as marketing/sales/informational/advertising/administrative. I realize that some companies lump other things in that budget that wouldn’t be strictly considered marketing (like ongoing litigation costs) but, it was the company’s choice to lump those costs in their marketing budget so there’s not much I can do about it. Anyway, much of what pharmaceutical companies call research is really just marketing so all figures should be taken with a grain of salt. -Revisions: When a figure is revised in a subsequent report I normally use the revised figure. This can be challenging when, for example, frequent revisions occur over multiple years (see Pfizer). In general, I did my best to use the numbers that I felt most accurately reflected the actual revenues, profits and expenditures of these companies. Pfizer bought Wyeth pharmaceuticals in 2009. Just as with the Merck/Schering Plough merger, I decided to combine Pfizer’s and Wyeth’s finances from 2003-2008 as though they’d been one company all along. Also, as with the Merck/Schering Plough merger, I could not find any financial statement for Wyeth for 2009 so I have no record of their revenues of expenses for that year. Of all the financial statements I went over, Pfizer’s were easily the most perplexing. Most of the pharmaceutical records had some revisions for certain past years which normally weren’t huge. Often, other companies provided clear explanations of why the numbers from the past reports were revised as well. Pfizer had significant downward revisions in their revenues and expenses going back as far as five years in five of their eleven reports. They revised the numbers for all past reports in 2004, 2006, 2011, 2012 and 2013. The total in downward revisions for revenue was nearly $30 billion; meaning the revised revenues were $30 billion less than what was initially reported. I could find no clear explanation in their reports for most of these revisions either. Expenses in these reports were revised downward with the revenues but, for some reason, profits (net income) remained virtually untouched by this $30 billion loss in expected revenue. I admit, I’m not an accountant but how it’s possible to lose $30 billion in revenue without any effect on profits I can’t imagine. I only used revisions that occurred up to two years after the initial reports. This is because the reports only go back two years for information on marketing and US revenue so I wasn’t able to revise those figures any further back than that. Revising some of the figures without revising others could change the relative proportions of the figures and proportional spending is a fundamental point of my argument. Now the composite numbers for Pfizer from 2003-2013: Total Revenue (Sales):! ! ! Total Profit:! ! ! ! ! Total Spent on Research:! ! ! Total Spent on Marketing:! ! ! US Revenue:!! ! ! ! Revenue from All Other Countries:! $568 Billion $122 Billion $96 Billion $172 Billion $266 Billion $302 Billion And the composite numbers for Wyeth from 2003-2008: Total Revenue (Sales):! ! ! Total Profit:! ! ! ! ! Total Spent on Research:! ! ! Total Spent on Marketing:! ! ! US Revenue:!! ! ! ! Revenue from All Other Countries:! $118 Billion $20 Billion $17 Billion $37 Billion $63 Billion $54 Billion Profit vs. Total Spent on Research & Marketing Millions of Dollars 300000 225000 150000 75000 0 Profits Pfizer Marketing Research Wyeth Figure 1: Total amount Pfizer and Wyeth earned in profit (net income after taxes) from 2003-2013 compared to how much they spent on research and marketing. Proportional Allocation of Revenue Profits 21% Other 32% Research 16% Marketing 31% Figure 2: the proportion of Pfizer/Wyeth’s total revenue that was allocated toward research, marketing and profits Yearly Data for Pfizer Millions of Dollars 30000 22500 15000 7500 0 2003 2004 2005 Profits 2006 2007 2008 Research 2009 2010 2011 2012 2013 Marketing Figure 3: Pfizer’s profit compared with amount spent on research and marketing each year from 2003-2013 Yearly Data for Wyeth Millions of Dollars 7000 5250 3500 1750 0 2003 2004 Profits 2005 2006 Research 2007 2008 Marketing Figure 4: Wyeth’s profit compared with amount spent on research and marketing each year from 2003-2008 Proportion of Revenue from US vs. All Other Countries 52% USA Figure 5 48% All Others Total Revenue for Pfizer/Wyeth Each Year Millions of Dollars 80000 60000 40000 20000 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Figure 6: The revenue for 2009 is missing because I have no information about Wyeth’s revenue for that year.