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.