PFIZER INC | 2013 | FY | 3


. Segment, Geographic and Other Revenue Information

A. Segment Information

We regularly review the approach used by management to evaluate performance and allocate resources throughout the company. At the beginning of our fiscal year 2014, our commercial operations were restructured. Prior to that restructuring, we managed our operations through four operating segments––Primary Care, Specialty Care and Oncology, Established Products and Emerging Markets, and Consumer Healthcare. Each operating segment had responsibility for its commercial activities and for certain research and development activities related to in-line products and IPR&D projects that generally had achieved proof-of-concept. Generally, products were transferred to the Established Products unit in the beginning of the fiscal year following loss of patent protection or marketing exclusivity.

Operating Segments

A description of each of our four operating segments follows:
Primary Care operating segment––included revenues and earnings, as defined by management, from prescription pharmaceutical products primarily prescribed by primary-care physicians, and included products in the following therapeutic and disease areas: Alzheimer’s disease, cardiovascular (excluding pulmonary arterial hypertension), erectile dysfunction, genitourinary, major depressive disorder, pain, respiratory and smoking cessation. Examples of products in this unit in 2013 included Celebrex, Chantix/Champix, Eliquis, Lyrica, Premarin, Pristiq and Viagra (outside Canada and South Korea). All revenues and earnings for such products were allocated to the Primary Care unit, except those generated in Emerging Markets and those that were managed by the Established Products unit.
Specialty Care and Oncology operating segment––comprised the Specialty Care business unit and the Oncology business unit.
Specialty Care––included revenues and earnings, as defined by management, from prescription pharmaceutical products primarily prescribed by physicians who are specialists, and included products in the following therapeutic and disease areas: anti-infectives, endocrine disorders, hemophilia, inflammation, ophthalmology, pulmonary arterial hypertension, specialty neuroscience and vaccines. Examples of products in this unit in 2013 included BeneFIX, Enbrel, Genotropin, Geodon (outside the U.S.), the Prevnar family of products, ReFacto AF, Revatio (outside the U.S.), Tygacil, Vfend (outside the U.S. and South Korea), Vyndaqel, Xalatan (outside the U.S., Canada, South Korea, developed Europe, Australia and New Zealand), Xeljanz, Xyntha and Zyvox. All revenues and earnings for such products were allocated to the Specialty Care unit, except those generated in Emerging Markets and those that were managed by the Established Products unit.
Oncology––included revenues and earnings, as defined by management, from prescription pharmaceutical products addressing oncology and oncology-related illnesses. The products in this unit in 2013 included Inlyta, Sutent, Torisel, Xalkori, Mylotarg (in Japan), Bosulif (in the U.S. and EU) and Aromasin (in Japan and South Korea). All revenues and earnings for such products were allocated to the Oncology unit, except those generated in Emerging Markets and those that were managed by the Established Products unit.
Established Products and Emerging Markets operating segment––comprised the Established Products business unit and the Emerging Markets business unit.
Established Products––included revenues and earnings, as defined by management, from prescription pharmaceutical products that had lost patent protection or marketing exclusivity in certain countries and/or regions. Typically, products were transferred to this unit in the beginning of the fiscal year following loss of patent protection or marketing exclusivity. However, in certain situations, products were transferred to this unit at a different point than the beginning of the fiscal year following loss of patent protection or marketing exclusivity in order to maximize their value. This unit also excluded revenues and earnings generated in Emerging Markets. Examples of products in this unit in 2013 included Arthrotec, Effexor, Geodon (in the U.S.), Lipitor, Medrol, Norvasc, Protonix, Relpax, Vfend (in the U.S. and South Korea), Xalatan (in the U.S., Canada, South Korea, developed Europe, Australia and New Zealand), Zosyn/Tazocin and Viagra (in Canada and South Korea).
Emerging Markets––included revenues and earnings, as defined by management, from all prescription pharmaceutical products sold in Emerging Markets, including Asia (excluding Japan and South Korea), Latin America, the Middle East, Eastern Europe, Africa, Turkey and Central Europe.
Consumer Healthcare operating segment–– includes worldwide revenues and earnings, as defined by management, from non-prescription products in the following therapeutic categories: dietary supplements, pain management, respiratory and personal care. Products marketed by Consumer Healthcare include Advil, Caltrate, Centrum, ChapStick, Emergen-C, Preparation H and Robitussin.
 
Our chief operating decision maker used the revenues and earnings of the four operating segments, among other factors, for performance evaluation and resource allocation. For the operating segments that comprised more than one business unit, a single segment manager had responsibility for those business units.

Other Costs and Business Activities
 
Certain costs are not allocated to our operating segment results, such as costs associated with the following:
Worldwide Research and Development, which is generally responsible for research projects until proof-of-concept is achieved and then for transitioning those projects to the appropriate business unit for possible clinical and commercial development. R&D spending may include upfront and milestone payments for intellectual property rights. This organization also has responsibility for certain science-based and other platform-services organizations, which provide technical expertise and other services to the various R&D projects. Worldwide Research and Development is also responsible for facilitating all regulatory submissions and interactions with regulatory agencies, including all safety-event activities.
Pfizer Medical, which is responsible for the provision of medical information to healthcare providers, patients and other parties, transparency and disclosure activities, clinical trial results publication, grants for healthcare quality improvement and medical education, partnerships with global public health and medical associations, regulatory inspection readiness reviews, internal audits of Pfizer-sponsored clinical trials and internal regulatory compliance processes.
Corporate, representing platform functions (such as worldwide technology, finance, global real estate operations, human resources, legal, compliance, worldwide procurement, and worldwide public affairs and policy), interest income and expense and certain compensation and other corporate costs. Other unallocated costs represent overhead expenses associated with our manufacturing and commercial operations not directly attributable to an operating segment.
Certain transactions and events such as (i) purchase accounting adjustments, where we incur expenses associated with the amortization of fair value adjustments to inventory, intangible assets and property, plant and equipment; (ii) acquisition-related activities, where we incur costs for restructuring, integration, implementation and executing the transaction; and (iii) certain significant items, which include non-acquisition-related restructuring costs, as well as costs incurred for legal settlements, asset impairments and disposals of assets or businesses, including, as applicable, any associated transition activities.

Segment Assets

We manage our assets on a total company basis, not by operating segment, as many of our operating assets are shared (such as our plant network assets) or commingled (such as accounts receivable, as many of our customers are served by multiple operating segments). Therefore, our chief operating decision maker does not regularly review any asset information by operating segment and, accordingly, we do not report asset information by operating segment. Total assets were approximately $172 billion as of December 31, 2013 and approximately $186 billion as of December 31, 2012.

Selected income statement information
The following table provides selected income statement information by reportable segment:
 
 
Revenues
 
Earnings(a)
 
Depreciation and
Amortization(b)
 
 
Year Ended December 31,
 
Year Ended December 31,
 
Year Ended December 31,
(MILLIONS OF DOLLARS)
 
2013

 
2012

 
2011(c)

 
2013

 
2012

 
2011(c)

 
2013

 
2012

 
2011(c)

Reportable Segments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Primary Care(d)
 
$
13,272

 
$
15,558

 
$
22,670

 
$
7,981

 
$
9,613

 
$
15,001

 
$
155

 
$
244

 
$
249

Specialty Care and Oncology
 
14,934

 
15,461

 
16,568

 
10,350

 
10,499

 
10,789

 
351

 
403

 
427

Established Products and Emerging Markets(e)
 
19,672

 
20,195

 
18,509

 
11,159

 
11,217

 
9,417

 
390

 
408

 
430

Total reportable segments
 
47,878

 
51,214

 
57,747

 
29,490

 
31,329

 
35,207

 
896

 
1,055

 
1,106

Consumer Healthcare and other business activities(f)
 
3,574

 
3,443

 
3,288

 
(2,005
)
 
(2,397
)
 
(2,608
)
 
166

 
190

 
223

Reconciling Items:
 
 

 
 

 
 
 
 

 
 

 
 
 
 
 
 
 
 
Corporate
 

 

 

 
(5,800
)
 
(6,112
)
 
(7,317
)
 
382

 
485

 
540

Purchase accounting adjustments(g)
 

 

 

 
(4,344
)
 
(4,905
)
 
(6,672
)
 
4,487

 
4,988

 
5,476

Acquisition-related costs(h)
 

 

 

 
(376
)
 
(946
)
 
(1,913
)
 
124

 
273

 
614

Certain significant items(i)
 
132

 

 

 
(692
)
 
(5,039
)
 
(4,255
)
 
167

 
300

 
614

Other unallocated(j)
 

 

 

 
(557
)
 
(688
)
 
(961
)
 
84

 
103

 
128

 
 
$
51,584

 
$
54,657

 
$
61,035

 
$
15,716

 
$
11,242

 
$
11,481

 
$
6,306

 
$
7,394

 
$
8,701

(a) 
Income from continuing operations before provision for taxes on income.
(b) 
Certain production facilities are shared. Depreciation is allocated based on estimates of physical production. Amounts here relate solely to the depreciation and amortization associated with continuing operations.
(c) 
For 2011, includes King commencing on the acquisition date of January 31, 2011.
(d) 
Revenues and Earnings from the Primary Care segment decreased for 2013 as compared to the prior year, and Earnings as a percentage of revenues for 2013 also declined, primarily due to the loss of exclusivity of Lipitor in developed Europe and Australia; the subsequent shift in the reporting of Lipitor in those major markets to the Established Products business unit; the losses of exclusivity of certain other products in various markets; lower Alliance revenues from Spiriva due to the ongoing expiration of the Spiriva collaboration in certain countries; and the termination of the co-promotion agreement for Aricept in Japan in December 2012. Revenues and Earnings from the Primary Care segment decreased for 2012 as compared to 2011, and Earnings as a percentage of revenues also declined, primarily due to the loss of exclusivity of Lipitor in most major markets, and the subsequent shift in the reporting of Lipitor in those major markets to the Established Products business unit.
(e) 
Revenues and Earnings from the Established Products and Emerging Markets segment decreased in 2013 as compared to the prior year, primarily due to the continued erosion of branded Lipitor in the U.S. and Japan, partially offset by the addition of products in certain markets that shifted to the Established Products unit from other business units beginning January 1, 2013 and strong volume growth in China. Revenues and Earnings from the Established Products and Emerging Markets segment increased in 2012 as compared to 2011, primarily due to additional products losing exclusivity and moving to the Established Products unit and increased operational sales in emerging markets, partially offset by unfavorable foreign exchange. Earnings as a percentage of revenue in 2012 increased due to the change in the mix of products.
(f) 
Other business activities includes the revenues and operating results of Pfizer CentreSource, our contract manufacturing and bulk pharmaceutical chemical sales operation, and the R&D costs managed by our Worldwide Research and Development organization and our Pfizer Medical organization.
(g) 
Purchase accounting adjustments include certain charges related to the fair value adjustments to inventory, intangible assets and property, plant and equipment.
(h) 
Acquisition-related costs can include costs associated with acquiring, integrating and restructuring newly acquired businesses, such as transaction costs, integration costs, restructuring charges and additional depreciation associated with asset restructuring. For additional information, see Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives.
(i) 
Certain significant items are substantive, unusual items that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis.
For Revenues in 2013, certain significant items represent revenues related to our transitional manufacturing and supply agreements with Zoetis. For additional information, see Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures.
For Earnings in 2013, certain significant items includes: (i) patent litigation settlement income of $1.3 billion, (ii) the gain associated with the transfer of certain product rights to our equity-method investment in China of $459 million, (iii) income related to our transitional manufacturing and supply agreements with Zoetis of $16 million, (iv) restructuring charges and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $1.3 billion, (v) certain asset impairments and related charges of $1.1 billion, (vi) other charges of $83 million, (vii) net charges for certain legal matters of $21 million and (viii) costs associated with the separation of Zoetis of $18 million. For additional information, see Note 2D. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Equity-Method Investments, Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives and Note 4. Other (Income)/Deductions––Net.
For Earnings in 2012, certain significant items includes: (i) net charges for certain legal matters of 2.2 billion, (ii) restructuring charges and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $1.8 billion, (iii) certain asset impairment charges of $875 million, (iv) costs associated with the separation of Zoetis of $125 million and (v) other charges of $19 million. For additional information see Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives and Note 4. Other (Income)/Deductions––Net.
For Earnings in 2011, certain significant items includes: (i) restructuring charges and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $2.5 billion (ii) certain asset impairment charges of $827 million, (iii) charges for certain legal matters of $822 million, (iv) other charges of $69 million and (v) costs associated with the separation of Zoetis of $35 million (see Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives and Note 4. Other (Income)/Deductions––Net for additional information).
(j) 
Includes overhead expenses associated with our manufacturing and commercial operations not directly attributable to an operating segment.

B. Geographic Information

Revenues exceeded $500 million in each of 12, 14 and 16 countries outside the U.S. in 2013, 2012 and 2011, respectively. The U.S. and Japan were the only countries to contribute more than 10% of total revenue in 2013 and 2012. The U.S. was the only country to contribute more than 10% of total revenue in 2011.
The following table provides revenues by geographic area:
 
 
Year Ended December 31,
(MILLIONS OF DOLLARS)
 
2013

 
2012

 
2011(a)

United States
 
$
20,274

 
$
21,313

 
$
25,277

Developed Europe(b)
 
11,739

 
12,545

 
15,221

Developed Rest of World(c)
 
8,346

 
9,956

 
10,422

Emerging Markets(d)
 
11,225

 
10,843

 
10,115

Revenues
 
$
51,584

 
$
54,657

 
$
61,035

(a) 
For 2011, includes King commencing on the acquisition date of January 31, 2011.
(b) 
Developed Europe region includes the following markets: Western Europe, Finland and the Scandinavian countries. Revenues denominated in euros were $8.9 billion in 2013, $9.4 billion in 2012 and $11.4 billion in 2011.
(c) 
Developed Rest of World region includes the following markets: Australia, Canada, Japan, New Zealand and South Korea.
(d) 
Emerging Markets region includes, but is not limited to, the following markets: Asia (excluding Japan and South Korea), Latin America, the Middle East, Eastern Europe, Africa, Turkey and Central Europe.
Long-lived assets by geographic region follow:
 
 
As of December 31,
(MILLIONS OF DOLLARS)
 
2013

 
2012

 
2011

Property, plant and equipment, net
 
 
 
 
 
 
United States
 
$
5,885

 
$
6,485

 
$
7,116

Developed Europe(a)
 
4,845

 
4,895

 
5,640

Developed Rest of World(b)
 
696

 
816

 
872

Emerging Markets(c)
 
971

 
1,017

 
1,045

Property, plant and equipment, net
 
$
12,397

 
$
13,213

 
$
14,673


(a) 
Developed Europe region includes the following markets: Western Europe, Finland and the Scandinavian countries.
(b) 
Developed Rest of World region includes the following markets: Australia, Canada, Japan, New Zealand, and South Korea.
(c) 
Emerging Markets region includes, but is not limited to, the following markets: Asia (excluding Japan and South Korea), Latin America, the Middle East, Eastern Europe, Africa, Turkey and Central Europe.

C. Other Revenue Information

Significant Customers

We sell our products primarily to customers in the wholesale sector. In 2013, sales to our three largest U.S. wholesaler customers represented approximately 12%, 9% and 8% of total revenues and, collectively, represented approximately 20% of total accounts receivable as of December 31, 2013. In 2012, sales to our three largest U.S. wholesaler customers represented approximately 13%, 10% and 8% of total revenues and, collectively, represented approximately 18% of total accounts receivable as of December 31, 2012. For both years, these sales and related accounts receivable were concentrated in our three biopharmaceutical operating segments.

Significant Product Revenues
The following table provides revenues by product:
 
 
Year Ended December 31,
(MILLIONS OF DOLLARS)
 
2013

 
2012

 
2011(a)

Revenues from biopharmaceutical products:
 
 
 
 
 
 
Lyrica
 
$
4,595

 
$
4,158

 
$
3,693

Prevnar family
 
3,974

 
4,117

 
4,145

Enbrel (Outside the U.S. and Canada)
 
3,774

 
3,737

 
3,666

Celebrex
 
2,918

 
2,719

 
2,523

Lipitor(b)
 
2,315

 
3,948

 
9,577

Viagra
 
1,881

 
2,051

 
1,981

Zyvox
 
1,353

 
1,345

 
1,283

Norvasc
 
1,229

 
1,349

 
1,445

Sutent
 
1,204

 
1,236

 
1,187

Premarin family
 
1,092

 
1,073

 
1,013

BeneFIX
 
832

 
775

 
693

Vfend
 
775

 
754

 
747

Genotropin
 
772

 
832

 
889

Pristiq
 
698

 
630

 
577

Chantix/Champix
 
648

 
670

 
720

Refacto AF/Xyntha
 
602

 
584

 
506

Xalatan/Xalacom
 
589

 
806

 
1,250

Detrol/Detrol LA
 
562

 
761

 
883

Zoloft
 
469

 
541

 
573

Medrol
 
464

 
523

 
510

Effexor
 
440

 
425

 
678

Zosyn/Tazocin
 
395

 
484

 
636

Zithromax/Zmax
 
387

 
435

 
453

Fragmin
 
359

 
381

 
382

Relpax
 
359

 
368

 
341

Tygacil
 
358

 
335

 
298

Rapamune
 
350

 
346

 
372

Inlyta
 
319

 
100

 

Sulperazon
 
309

 
262

 
218

Revatio
 
307

 
534

 
535

Cardura
 
296

 
338

 
380

Xalkori
 
282

 
123

 
16

Xanax/Xanax XR
 
276

 
274

 
306

Diflucan
 
242

 
259

 
265

Toviaz
 
236

 
207

 
187

Aricept(c)
 
235

 
326

 
450

Inspra
 
233

 
214

 
195

Caduet
 
223

 
258

 
538

Somavert
 
217

 
197

 
183

Neurontin
 
216

 
235

 
289

Unasyn
 
212

 
228

 
231

BMP2
 
209

 
263

 
340

Geodon
 
194

 
353

 
1,022

Depo-Provera
 
191

 
148

 
139

Aromasin
 
185

 
210

 
361

Xeljanz
 
114

 
6

 

Alliance revenues(d)
 
2,628

 
3,492

 
3,630

All other biopharmaceutical products
 
7,360

 
7,804

 
7,441

Total revenues from biopharmaceutical products
 
47,878

 
51,214

 
57,747

Other revenues:
 

 

 
 
Consumer Healthcare
 
3,342

 
3,212

 
3,028

Other(e)
 
364

 
231

 
260

Revenues
 
$
51,584

 
$
54,657

 
$
61,035


(a) 
For 2011, includes King commencing on the acquisition date of January 31, 2011.
(b) 
Lipitor lost exclusivity in Australia in April 2012, most of developed Europe in March and May 2012, the U.S. in November 2011 and various other major markets in 2011 and 2012. This loss of exclusivity reduced branded worldwide revenues by $1.7 billion in 2013, in comparison with 2012, and reduced branded worldwide revenues by $5.6 billion in 2012, in comparison with 2011.
(c) 
Represents direct sales under license agreement with Eisai Co., Ltd.
(d) 
Includes Enbrel (in the U.S. and Canada through October 31, 2013), Spiriva, Rebif, Aricept and Eliquis.
(e) 
Other represents revenues generated from Pfizer CentreSource, our contract manufacturing and bulk pharmaceutical chemical sales organization, and includes, in 2013, the revenues related to our transitional manufacturing and supply agreements with Zoetis.

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