Pfizer 2000 Annual Report 2000 Annual Report Life is our life’s work “I want to grow old with my husband. Thanks to Pfizer, I have a better chance.“ Life is our life’s work Pfizer Inc 235 East 42nd Street New York, NY 10017-5755 212 573 2323 www.pfizer.com © Pfizer 2001. All rights reserved Our Values About Pfizer Integrity Pfizer Inc discovers, develops, manufactures, and markets leading Innovation prescription medicines for Respect for People humans and animals, as well as many of the world’s best-known Customer Focus consumer products. Pfizer had Teamwork global revenues of $29.6 billion in 2000. Pfizer plans to make a Leadership research and development invest- Partnerships offer hope A world of ideas on public policy. ment of about $5 billion in 2001. in sub-Saharan Africa discoveries, and assign those rights to and the Bill and Melinda Gates Performance By Henry A. McKinnell others. This practice – known as “com- Foundation – seeks to eliminate the Community pulsory licensing” – has longer-term con- world’s leading cause of preventable he health care crisis in sub- sequences that are highly destructive. blindness. The donation of Pfizer’s Saharan Africa is one of the great If governments weaken intellectual antibiotic Zithromax is only one facet of T human tragedies of our lifetimes. property rights in this way, they risk this broad-based campaign. These are not The magnitude of this crisis has led to a undermining both the ability and willing- isolated programs. Since 1996, research- valuable debate on how best to provide ness of pharmaceutical companies to based pharmaceutical companies have health care to those suffering from the discover new cures and treatments. They committed more than $1.2 billion to epidemics that are ravaging that region. also discourage the technology transfer long-term programs to fight diseases in The key is partnership. Through partner- that is essential to raise the quality of sub-Saharan Africa and in other lesser- ships, we can replace the destructive health care in the developing countries. developed areas. These partnerships are cycle of poverty and disease with not the perfect solution, but they point a virtuous cycle of investment and Through partnerships, we the way, and their potential can be greatly health. To do so requires a new model can replace the destructive magnified, given that we are entering a of cooperation among governments, golden age of pharmaceutical research. private industry, and nongovernmental cycle of poverty and disease Over the past two decades, drug compa- Financial Highlights organizations (NGOs). with a virtuous cycle of nies have invested billions in R&D Each partner has a critical role to investment and health. programs to discover more than 40 Year ended December 31 play. From national governments, for new medicines and new indications % Change example, partnerships derive their political Governments in the developed world aimed at the diseases that plague (millions, except per share data) 2000 1999 1998 00/99 99/98 will. In South Africa, President Mbeki’s have an equally important role to play sub-Saharan Africa. Many more are on government provides political will to through “burden-sharing.” The richer the way. A survey of pharmaceutical Revenues $29,574 $27,376 $23,231 8 18 Income from continuing operations before provision for support Pfizer’s Diflucan program, a countries, by agreeing to pay a fair share companies in late 2000 found 103 AIDS taxes on income and minority interests 5,781 6,945 4,397 (17) 58 novel public/private alliance to ease the of the costs of innovation in the market- drugs either in clinical trials, or awaiting Provision for taxes on income 2,049 1,968 1,163 4 69 suffering of AIDS patients. In Botswana place, can make it possible for drug FDA approval. These medicines will be Discontinued operations – net of tax 8 (20) 1,401 ** and Senegal, Merck has formed a part- companies to provide products affordably added to the 64 existing treatments. In Net income 3,726 4,952 4,633 (25) 7 nership with the Harvard AIDS Institute in the poorer regions. Governments, 1987, there was only one. Research and development expenses 4,435 4,036 3,305 10 22 and the Bill and Melinda Gates therefore, must choose policies wisely, In ensuring access to these new Property, plant, and equipment additions 2,191 2,493 1,951 (12) 28 Cash dividends paid 2,197 1,820 1,501 21 21 Foundation to promote AIDS prevention with an eye to the short-term and long- medicines, the watchword should be and expand access to care; and in the term benefits of their citizens and the “partnership,” with governments and Diluted earnings per common share .59 .78 .73 (24) 7 Accelerating Access Initiative, a group global impact of their actions. industry ready to show that access and Cash dividends paid per common share .36 .30 2/3 .25 1/3 17 21 Shareholders’ equity per common share 2.58 2.28 2.06 13 11 of pharmaceutical companies have joined If governments provide the will, the innovation are not antithetical concepts. It Weighted average shares – diluted 6,368 6,317 6,362 1 (1) with UN agencies, the World Bank, and private sector provides the way, securing is time to expand our partnerships to a Number of common shares outstanding 6,314 6,218 6,220 2 – governments to provide AIDS/HIV expanded access to resources. These wider range of governments, companies, Percentages may reflect rounding adjustments. prevention, care, and treatment in resources include not only medicines, but NGOs, and others committed to global All financial data throughout this report have been restated to reflect the merger with Warner-Lambert Company on June 19, 2000, which was accounted for as a pooling of interests. Senegal and Uganda. also the tools of prevention and education. health. Together, we can and must con- Pre-merger cash dividends paid per common share are those of Pfizer. *Calculation not meaningful. Political will finds expression in The role of NGOs and agencies is to front humanity’s killers. more than a willingness to forge new provide needed expertise and capabili- Dr. Henry A. McKinnell is CEO of Pfizer Inc. alliances. It is also evident in the creation ties, particularly at the field level. From This article is adapted from his remarks at the 2001 of an economic and social climate where these organizations, our partnerships World Economic Forum in Davos, Switzerland. It innovation can take root and flourish, draw expertise for improving and appears in the Pfizer Forum, an advertising series including the protection of private and expanding medical infrastructure and sponsored in the interest of encouraging public discus- intellectual property. Facing large-scale accurately measuring results. sion on policy questions and featuring a wide range of medical emergencies, some governments As a prime example, the International views from leading experts. have been tempted to seize the patents Trachoma Initiative – funded by Pfizer, that drug companies hold to their the Edna McConnell Clark Foundation, www.pfizer.com 73 About the Cover Contents Stacey Kelly has been married for a little more 2 To Our Shareholders Chairman Bill Steere discusses Pfizer’s performance in 2000, than a year, but is look- the most momentous year in our history. ing forward to many more anniversaries. 4 A Conversation with Hank McKinnell Our new CEO and incoming Chairman answers questions Read her story on about Pfizer’s future. page 13. 7 The Lives We Touch Pfizer employees share in their own words the positive impact our medicines have had on their lives and the lives of those they care about. 8 Ginger Young is giving back the support once given to her by her mother, who is now coping with Alzheimer’s disease. 9 Bob Wiles was so inspired by the role a Pfizer medicine played in saving his daughter’s life, he came to work for us. 10 Ehsan Homman-Loudiye has witnessed a Pfizer medicine begin to conquer a centuries-old scourge. 12 Virginia Smith watched her mother recover her will to live 8 following a crippling bout of depression. 14 Norimasa Harada takes great joy in seeing his father and young son build a relationship that spans the generations. 9 16 Dawn Schiller-Verdi has seen her once-ailing dog Bobby become healthier and happier, despite arthritis. 17 Gregory Harrison dedicates himself to making our medicines available to those in need. 18 Jan Baklund helped an old skiing buddy regain his ability to 10 hit the slopes. 20 Review of Operations 12 An in-depth look at how our current products performed in 2000 and some of the promising new products in our pipeline. 30 Financial Review 40 Management’s Report 41 Audit Committee’s Report and Independent Auditors’ Report 14 42 Consolidated Statement of Income 16 43 Consolidated Balance Sheet 44 Consolidated Statement of Shareholders’ Equity 45 Consolidated Statement of Cash Flows 46 Notes to Consolidated Financial Statements 17 68 Quarterly Consolidated Financial Data (Unaudited) 69 Financial Summary (1990-2000) 18 70 Directors, Committees, and Officers 72 Corporate and Shareholder Information 73 Hank McKinnell discusses ways to “replace the destructive cycle of poverty and disease with a virtuous cycle of investment and health” in sub-Saharan Africa. 1 McKinnell, previously Pfizer’s President and Chief To Our Shareholders Operating Officer. In April of 2001, I will conduct my tenth and final annual shareholder meeting as Chairman of the Board, after which I will also turn that post over to Hank. I have been privileged to lead Pfizer during a decade of dramatic growth. Between 1991 and 2000, our wo thousand was a remarkable year for Pfizer and company increased its R&D investment sevenfold, and Tfor our shareholders.