Appendix A
`2010 Financial Report
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`Financial Review
`Pfizer Inc. and Subsidiary Companies
`
`Introduction
`Our Financial Review is provided to assist readers in understanding the results of operations, financial condition and cash flows of
`Pfizer Inc. (the Company). It should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated
`Financial Statements. The discussion in this Financial Review contains forward-looking statements that involve substantial risks and
`uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of
`various factors such as those discussed in Part 1, Item 1A, “Risk Factors” of our 2010 Annual Report on Form 10-K and in the
`“Forward-Looking Information and Factors That May Affect Future Results”, “Our Operating Environment” and “Our Strategy”
`sections of this Financial Review.
`
`In accordance with Pfizer’s international year-end, the financial information included in our consolidated financial statements for our
`subsidiaries operating outside the United States (U.S.) is as of and for the year ended November 30 for each year presented. On
`October 15, 2009, we completed our acquisition of Wyeth in a cash-and-stock transaction valued on that date at approximately $68
`billion. Commencing from the acquisition date, our financial statements reflect the assets, liabilities, operating results and cash flows
`of Wyeth. As a result, legacy Wyeth operations are reflected in our results of operations for the year ended December 31, 2010. In
`accordance with our domestic and international fiscal year-ends, our consolidated financial statements for the year ended
`December 31, 2009 reflect approximately two-and-a-half months of the fourth calendar quarter of 2009 in the case of Wyeth’s U.S.
`operations and approximately one-and-a-half months of the fourth calendar quarter of 2009 in the case of Wyeth’s international
`operations.
`
`The Financial Review is organized as follows:
`
`(cid:129) Overview of Our Performance, Operating Environment, Strategy and Outlook. This section, beginning on page 2, provides information
`about the following: our business; our 2010 performance; our operating environment, including the impacts and anticipated impacts of
`the U.S. healthcare legislation enacted in March 2010; our strategy, including our recently announced initiative to improve the
`innovation and overall productivity of our research and development operation; our business development initiatives, such as
`acquisitions, dispositions, licensing and collaborations; our financial guidance for 2011; and our financial targets for 2012.
`
`(cid:129) Accounting Policies. This section, beginning on page 10, discusses those accounting policies that we consider important in
`understanding Pfizer’s consolidated financial statements. For additional discussion of our accounting policies, see Notes to
`Consolidated Financial Statements—Note 1. Significant Accounting Policies.
`
`(cid:129) Acquisition of Wyeth. This section, beginning on page 15, discusses our acquisition of Wyeth, the use of fair value and the recognition
`of assets acquired and liabilities assumed in connection with our acquisition of Wyeth. For additional details related to the acquisition of
`Wyeth, see Notes to Consolidated Financial Statements—Note 2. Acquisition of Wyeth.
`
`(cid:129) Analysis of the Consolidated Statements of Income. This section begins on page 20, and consists of the following sections:
`
`O Revenues. This section, beginning on page 20, provides an analysis of our revenues and products for the three years ended
`December 31, 2010, including an overview of important product developments.
`
`O Costs and Expenses. This section, beginning on page 32, provides a discussion about our costs and expenses.
`
`O Provision for Taxes on Income. This section, beginning on page 36, provides a discussion of items impacting our tax provision for the
`periods presented and of two items that will impact our results beginning in 2011.
`
`O Adjusted Income. This section, beginning on page 37, provides a discussion of an alternative view of performance used by
`management.
`
`(cid:129) Financial Condition, Liquidity and Capital Resources. This section, beginning on page 41, provides an analysis of our consolidated
`balance sheets as of December 31, 2010 and 2009, and consolidated cash flows for each of the three years ended December 31,
`2010, 2009 and 2008, as well as a discussion of our outstanding debt and other commitments that existed as of December 31, 2010.
`Included in the discussion of outstanding debt is a discussion of the amount of financial capacity available to help fund Pfizer’s future
`activities.
`
`(cid:129) New Accounting Standards. This section, on page 45, discusses accounting standards that we recently have adopted, as well as those
`that recently have been issued but not yet adopted by us.
`
`(cid:129) Forward-Looking Information and Factors That May Affect Future Results. This section, beginning on page 45, provides a description of
`the risks and uncertainties that could cause actual results to differ materially from those discussed in forward-looking statements
`presented in this Financial Review relating to our financial and operating performance, business plans and prospects, in-line products
`and product candidates, and share-repurchase and dividend-rate plans. Such forward-looking statements are based on management’s
`current expectations about future events, which are inherently susceptible to uncertainty and changes in circumstances. Also included
`in this section are discussions of Financial Risk Management and Legal Proceedings and Contingencies.
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`2010 Financial Report
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`Financial Review
`Pfizer Inc. and Subsidiary Companies
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`Overview of Our Performance, Operating Environment, Strategy and Outlook
`
`Our Business
`
`Our mission is to apply science and our global resources to improve health and well-being at every stage of life. We strive to set the
`standard for quality, safety and value in the discovery, development and manufacturing of medicines for people and animals. Our
`diversified global healthcare portfolio includes human and animal biologic and small molecule medicines and vaccines, as well as
`nutritional products and many of the world’s best-known consumer products. Every day, we work across developed and emerging
`markets to advance wellness, prevention, treatments and cures that challenge the most feared diseases of our time. We also
`collaborate with other biopharmaceutical companies, healthcare providers, governments and local communities to support and
`expand access to reliable, affordable healthcare around the world. Our revenues are derived from the sale of our products, as well
`as through alliance agreements, under which we co-promote products discovered by other companies.
`
`Our 2010 Performance
`
`Revenues increased 36% in 2010 to $67.8 billion, compared to $50.0 billion in 2009, due to the inclusion of revenues from legacy
`Wyeth products for a full year in 2010 compared to part of the year in 2009, which favorably impacted revenues by $18.1 billion or
`37%, and the favorable impact of foreign exchange, which increased revenues by approximately $1.1 billion, or 2%, partially offset
`by the net revenue decrease from legacy Pfizer products of $1.4 billion, or 3%.
`
`The significant impacts on revenues for 2010, compared to 2009, are as follows:
`
`(MILLIONS OF DOLLARS)
`Enbrel (outside the U.S. and Canada)(a)
`Prevnar/Prevenar 13(a)
`Effexor(a), (b)
`Prevnar/Prevenar (7-valent)(a)
`Premarin family(a)
`Zosyn/Tazocin(a)
`Protonix(a)
`BeneFIX(a)
`Pristiq(a)
`ReFacto AF/Xyntha(a)
`Detrol/Detrol LA
`Camptosar(b)
`Norvasc(b)
`Lipitor(b)
`Alliance revenues(a)
`All Other Biopharmaceutical(a), (c)
`Animal Health(a)
`Consumer Healthcare(a)
`Nutrition(a)
`
`2010 vs. 2009
`INCREASE/
`(DECREASE)
`$2,896
`2,416
`1,198
`966
`827
`768
`622
`545
`384
`357
`(141)
`(215)
`(467)
`(701)
`1,159
`890
`811
`2,278
`1,676
`
`% CHANGE
`*
`*
`*
`*
`*
`*
`*
`*
`*
`*
`(12)
`(64)
`(24)
`(6)
`40
`12
`29
`*
`*
`
`(a) Reflects the inclusion of revenues from legacy Wyeth products.
`(b) Effexor lost exclusivity in the U.S. in July 2010. Lipitor lost exclusivity in Canada in May 2010, Spain in July 2010 and Brazil in August 2010 and
`faces intense competition in the U.S. and other markets from generic and branded products. Camptosar lost exclusivity in Europe in July 2009.
`Norvasc lost exclusivity in Canada in July 2009.
`(c) Relates to “All Other” category included in the Revenues—Major Biopharmaceutical Products table presented in this Financial Review.
`* Calculation not meaningful.
`
`Income from continuing operations was $8.3 billion in 2010 compared to $8.6 billion in 2009, reflecting:
`
`(cid:129) the inclusion of a full year of expenses associated with the legacy Wyeth operations in 2010, compared to part of the year in 2009;
`(cid:129) the impact of purchase accounting adjustments primarily related to the Wyeth acquisition on Cost of sales and Amortization of
`intangible assets;
`
`(cid:129) impairment charges of $2.1 billion (pre-tax) primarily related to certain intangible assets acquired as part of the Wyeth acquisition and
`one legacy Pfizer product, Thelin (see further discussion in the “Costs and Expenses––Other (Income)/Deductions––Net” section of
`this Financial Review and Notes to Consolidated Financial Statements—Note 2. Acquisition of Wyeth, Note 3B. Other Significant
`Transactions and Events: Asset Impairment Charges, Note 6. Other (Income)/Deductions––net and Note 12B. Goodwill and Other
`Intangible Assets: Other Intangible Assets);
`
`(cid:129) higher net interest expense, mainly due to the issuance of debt in connection with the acquisition of Wyeth and the addition of legacy
`Wyeth debt, as well as lower interest income due to lower interest rates coupled with lower average investment balances;
`
`(cid:129) an additional charge of $1.3 billion (pre-tax) for asbestos litigation related to our wholly owned subsidiary Quigley Company, Inc. (see
`Notes to Consolidated Financial Statements––Note 19. Legal Proceedings and Contingencies);
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`Financial Review
`Pfizer Inc. and Subsidiary Companies
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`(cid:129) lower revenues for legacy Pfizer products;
`(cid:129) a write-off of Wyeth-related inventory of $212 million (pre-tax) (which includes a purchase accounting fair value adjustment of $104
`million) (see Notes to Consolidated Financial Statements—Note 3B. Other Significant Transactions and Events: Asset Impairment
`Charges and Note 10. Inventories); and
`(cid:129) the non-recurrence of a $482 million gain recorded in 2009 related to ViiV Healthcare Limited (ViiV), a joint venture with
`GlaxoSmithKline plc (see Notes to Consolidated Financial Statements––Note3E. Other Significant Transactions and Events: Equity-
`Method Investments),
`
`partially offset by:
`(cid:129) higher revenues for legacy Wyeth products due to the inclusion of a full year of revenues from legacy Wyeth products in 2010
`compared to part of the year in 2009;
`(cid:129) a decrease in the 2010 effective tax rate (see further discussion in the “Provision for Taxes on Income” section of this Financial review);
`(cid:129) the favorable impact of foreign exchange; and
`(cid:129) lower Restructuring charges and certain acquisition-related costs.
`Our Operating Environment
`
`U.S. Healthcare Legislation
`
`Principal Provisions Affecting Us
`
`In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act
`(together, the U.S. Healthcare Legislation), was enacted in the U.S. This legislation has both current and longer-term impacts on us,
`as discussed below.
`
`Certain provisions of the U.S. Healthcare Legislation became effective in 2010 or on January 1, 2011, while other provisions will
`become effective on various dates over the next several years. The principal provisions affecting us provide for the following:
`(cid:129) an increase, from 15.1% to 23.1%, in the minimum rebate on branded prescription drugs sold to Medicaid beneficiaries (effective
`January 1, 2010);
`(cid:129) extension of Medicaid prescription drug rebates to drugs dispensed to enrollees in certain Medicaid managed care organizations
`(effective March 23, 2010);
`(cid:129) expansion of the types of institutions eligible for the “Section 340B discounts” for outpatient drugs provided to hospitals meeting the
`qualification criteria under Section 340B of the Public Health Service Act of 1944 (effective January 1, 2010);
`(cid:129) discounts on branded prescription drug sales to Medicare Part D participants who are in the Medicare “coverage gap,” also known as
`the “doughnut hole” (effective January 1, 2011); and
`(cid:129) an annual fee payable to the federal government (which is not deductible for U.S. income tax purposes) based on our prior-calendar-
`year share relative to other companies of branded prescription drug sales to specified government programs (effective January 1, 2011,
`with the total fee to be paid each year by the pharmaceutical industry increasing annually through 2018).
`
`In addition, the U.S. Healthcare Legislation includes provisions that affect the cost of certain of our postretirement benefit plans.
`Companies currently are permitted to take a deduction for federal income tax purposes in an amount equal to the subsidy received
`from the federal government related to their provision of prescription drug coverage to Medicare-eligible retirees. Under the U.S.
`Healthcare Legislation, effective for tax years beginning after December 31, 2012, companies will no longer be able to take that
`deduction. While the loss of this deduction will not take effect for a few years, under U.S. generally accepted accounting principles,
`we were required to account for the impact in the first quarter of 2010, the period when the provision was enacted into law, through a
`write-off of the deferred tax asset associated with those previously expected future income tax deductions. Other provisions of the
`U.S. Healthcare Legislation relating to our postretirement benefit plans will affect the measurement of our obligations under those
`plans, but those impacts are not expected to be significant.
`
`Current and Anticipated Financial Impacts
`
`Our revenues were adversely impacted by $289 million in 2010, compared to last year, as a result of the increase in the minimum
`rebate on branded prescription drugs sold to Medicaid beneficiaries and the extension of Medicaid prescription drug rebates to
`drugs dispensed to enrollees in certain Medicaid managed care organizations and, to a lesser extent, the expansion of the types of
`institutions eligible for the “340B discounts” for outpatient drugs.
`
`In December 2010, the Financial Accounting Standards Board (FASB) issued an accounting standard update which provides
`guidance that the annual fee based on branded prescription drug sales to specified government programs should be recorded as an
`operating expense rather than as a reduction of revenues. After consideration of this new accounting standard, we currently expect
`that the provisions of the U.S. Healthcare Legislation that became effective in 2010, together with the discounts on branded
`prescription drug sales to Medicare Part D participants who are in the Medicare “doughnut hole” that became effective on January 1,
`2011, will adversely affect revenues by approximately $600 million in 2011 and $500 million in 2012. In addition, we currently expect
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`Financial Review
`Pfizer Inc. and Subsidiary Companies
`
`that the annual fee based on branded prescription drug sales to specified government programs will adversely affect Selling,
`informational and administrative expenses by approximately $300 million in each of 2011 and 2012. These estimates are reflected in
`our 2011 financial guidance and 2012 financial targets, announced on February 1, 2011 (see the “Our Financial Guidance for 2011”
`and “Our Financial Targets for 2012” sections of this Financial Review for additional information).
`
`In 2010, our income tax expense was impacted by, among other things, the write-off, in the first quarter of 2010, of the deferred tax
`asset of approximately $270 million to account for the loss of the deduction, for tax years beginning after December 31, 2012, of an
`amount equal to the subsidy from the federal government related to our provision of prescription drug coverage to Medicare-eligible
`retirees. This write-off was recorded in Provision for taxes on income in our Consolidated Statement of Income. For additional
`information on the impact of this write-off on our effective tax rate for 2010, see the “Provision for Taxes on Income” section of this
`Financial Review.
`
`The financial impact of U.S. healthcare reform may be affected by certain additional factors over the next few years, including
`pending implementation guidance relating to the U.S. Healthcare Legislation and certain healthcare reform proposals. In addition,
`the U.S. Healthcare Legislation requires that, except in certain circumstances, individuals obtain health insurance beginning in 2014,
`and it also provides for an expansion of Medicaid coverage in 2014. It is expected that, as a result of these provisions, there will be a
`substantial increase in the number of Americans with health insurance beginning in 2014, a significant portion of whom will be
`eligible for Medicaid. We anticipate that this will increase demand for pharmaceutical products overall. However, in view of the many
`uncertainties, we are unable at this time to determine whether and to what extent sales of Pfizer prescription pharmaceutical
`products in the U.S. will be impacted.
`
`Biotechnology Products
`
`The U.S. Healthcare Legislation provides an abbreviated legal pathway to approve biosimilars (also referred to as “follow-on
`biologics”). Innovator biologics were granted 12 years of exclusivity, with a potential six-month pediatric extension. After the
`exclusivity period expires, the U.S. Food and Drug Administration (FDA) could approve biosimilar versions of innovator biologics.
`The regulatory implementation of these provisions is ongoing and expected to take several years. If competitors are able to obtain
`marketing approval for biosimilars referencing our biotechnology products, our biotechnology products may become subject to
`competition from biosimilars, with the attendant competitive pressure.
`
`The budget proposal submitted to Congress by President Obama in February 2011 includes a provision that would reduce the base
`exclusivity period for biologics from 12 years to seven years. There is no assurance that this provision will be enacted into law.
`
`Other Industry-Specific Challenges
`The majority of our revenues come from the manufacture and sale of Biopharmaceutical products. The biopharmaceutical industry is
`highly competitive and we face a number of industry-specific challenges, which can significantly impact our results. These factors
`include among others: the loss or expiration of intellectual property rights, the regulatory environment and pipeline productivity,
`pricing and access pressures, and increasing competition among branded products.
`
`The Loss or Expiration of Intellectual Property Rights––As is inherent in the biopharmaceutical industry, the loss or expiration of
`intellectual property rights can have a significant adverse effect on our revenues. Many of our products have multiple patents that
`expire at varying dates, thereby strengthening our overall patent protection. However, once patent protection has expired or has
`been lost prior to the expiration date as a result of a legal challenge, we lose exclusivity on these products, and generic
`pharmaceutical manufacturers generally produce similar products and sell them for a lower price. This price competition can
`substantially decrease our revenues for products that lose exclusivity, often in a very short period of time. While small molecule
`products are impacted in such a manner, biologics currently have additional barriers to entry related to the manufacture of such
`products and, therefore, generic competition may not be as significant. A number of our current products are expected to face
`significantly increased generic competition over the next few years.
`
`In the U.S., we lost exclusivity for Effexor XR in July 2010, Aricept 5mg and 10mg tablets in November 2010, for Protonix in January
`2011, and Vfend tablets in February 2011. We lost exclusivity for Lipitor in Canada in May 2010, Spain in July 2010 and Brazil in
`August 2010. In addition, the basic patent for Vfend tablets in Brazil expired in January 2011. We expect to lose exclusivity for
`various products over the next few years, including the following in 2011:
`(cid:129) Xalatan in the U.S. in March 2011;
`(cid:129) Aromasin in the U.S. in April 2011 and in the European Union (EU) and Japan in July 2011;
`(cid:129) Xalatan and Xalacom in the majority of major European markets in July 2011. We are pursuing a pediatric extension for Xalatan in the
`EU. If we are successful, the exclusivity period for both Xalatan and Xalacom in the majority of major European markets will be
`extended by six months to January 2012; and
`(cid:129) Lipitor and Caduet in the U.S. in November 2011 (see additional discussion below).
`We expect that we will lose exclusivity for Lipitor in the U.S. in November 2011 and, as a result, will lose the substantial portion of
`our U.S. revenues from Lipitor shortly thereafter. We have granted Watson Laboratories, Inc. (Watson) the exclusive right to sell the
`authorized generic version of Lipitor in the U.S. for a period of five years, which is expected to commence in November 2011. As
`Watson’s exclusive supplier, we will manufacture and sell generic atorvastatin tablets to Watson. In markets outside the U.S., Lipitor
`has lost exclusivity in certain countries and will lose exclusivity at various times in certain other countries. We expect to maintain a
`significant portion of the Lipitor revenues in developed markets outside the U.S. through 2011. We are pursuing a pediatric
`extension for Lipitor in the EU. If we are successful, the exclusivity period for Lipitor in the majority of major European markets will
`be extended by six months to May 2012. We do not expect that Lipitor revenues in emerging markets will be materially impacted by
`the loss of exclusivity in 2011 or over the next several years. In 2010, revenues from Lipitor were approximately $5.3 billion in the
`U.S. (approximately 18% of our total 2010 U.S. revenues) and approximately $5.4 billion in markets outside the U.S. (about 14% of
`our total 2010 international revenues, of which approximately $900 million was attributable to emerging markets).
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`Financial Review
`Pfizer Inc. and Subsidiary Companies
`
`Our financial guidance for 2011 and our financial targets for 2012 reflect the anticipated impact in those years of the loss of
`exclusivity of various products (see the “Our Financial Guidance for 2011” and “Our Financial Targets for 2012” sections of this
`Financial Review).
`
`Pipeline Productivity and Regulatory Environment––The discovery and development of safe, effective new products, as well as the
`development of additional uses for existing products, are necessary for the continued strength of our businesses. We are confronted
`by increasing regulatory scrutiny of drug safety and efficacy, even as we continue to gather safety and other data on our products,
`before and after the products have been launched. Our product lines must be replenished over time in order to offset revenue losses
`when products lose their exclusivity, as well as to provide for revenue and earnings growth. We devote considerable resources to
`research and development (R&D) activities. These activities involve a high degree of risk and may take many years, and with
`respect to any specific research and development project, there can be no assurance that the development of any particular product
`candidate or new indication for an in-line product will achieve desired clinical endpoints and safety profile or will be approved by
`regulators and lead to a successful commercial product.
`
`We received “warning letters” from the FDA in April 2010 with respect to the clinical trial for Geodon for the treatment of bipolar
`mania in children and in June 2010 with respect to the reporting of certain post-marketing adverse events relating to certain drugs.
`We are working with the FDA to address the issues raised in those letters.
`
`Pricing and Access Pressures––Governments, managed care organizations and other payer groups continue to seek increasing
`discounts on our products through a variety of means such as leveraging their purchasing power, implementing price controls, and
`demanding price cuts (directly or by rebate actions). In particular, as a result of the economic environment in Europe, the industry
`has experienced significant pricing pressures in European markets. There were government-mandated price reductions for certain
`biopharmaceutical products in certain European countries in 2010, and we anticipate continuing pricing pressures in Europe in 2011.
`Also, health insurers and benefit plans continue to limit access to certain of our medicines by imposing formulary restrictions in favor
`of the increased use of generics. In prior years, Presidential advisory groups tasked with reducing healthcare spending have
`recommended and legislative changes have been proposed that would allow the U.S. government to directly negotiate prices with
`pharmaceutical manufacturers on behalf of Medicare beneficiaries, which we expect would restrict access to and reimbursement for
`our products. There have also been a number of legislative proposals seeking to allow importation of medicines into the U.S. from
`countries whose governments control the price of medicines, despite the increased risk of counterfeit products entering the supply
`chain. If importation of medicines is allowed, an increase in cross-border trade in medicines subject to foreign price controls in other
`countries could occur and negatively impact our revenues.
`
`Competition Among Branded Products––Many of our products face competition in the form of branded products, which treat similar
`diseases or indications. These competitive pressures can have an adverse impact on our future revenues.
`
`The Overall Economic Environment
`In addition to industry-specific factors, we, like other businesses, continue to face the effects of the challenging economic
`environment, which have impacted our biopharmaceutical operations in the U.S. and Europe, affecting the performance of products
`such as Lipitor, Celebrex and Lyrica. We believe that patients, experiencing the effects of the challenging economic environment,
`including high unemployment levels, and increases in co-pays sometimes are switching to generics, delaying treatments, skipping
`doses or using less effective treatments to reduce their costs. Challenging economic conditions in the U.S. also have increased the
`number of patients in the Medicaid program, under which sales of pharmaceuticals are subject to substantial rebates and, in many
`states, to formulary restrictions limiting access to brand-name drugs, including ours. In addition, during 2010, we continued to
`experience pricing pressure as a result of the economic environment in Europe, with government-mandated reductions in prices for
`certain biopharmaceutical products in certain European countries.
`
`Despite the challenging financial markets, Pfizer maintains a strong financial position. Due to our significant operating cash flows,
`financial assets, access to capital markets and available lines of credit and revolving credit agreements, we continue to believe that
`we have the ability to meet our liquidity needs for the foreseeable future. Our long-term debt is rated high quality by both Standard &
`Poor’s and Moody’s Investors Service. As market conditions change, we continue to monitor our liquidity position. We have taken
`and will continue to take a conservative approach to our financial investments. Both short-term and long-term investments consist
`primarily of high-quality, highly liquid, well-diversified, available-for-sale debt securities. For further discussion of our financial
`condition, see the “Financial Condition, Liquidity and Capital Resources” section of this Financial Review.
`
`A significant portion of our revenues and earnings is exposed to changes in foreign exchange rates. We seek to manage our foreign
`exchange risk in part through operational means, including managing same-currency revenues in relation to same-currency costs
`and same-currency assets in relation to same-currency liabilities. Depending on market conditions, foreign exchange risk also is
`managed through the use of derivative financial instruments and foreign currency debt. As we operate in multiple foreign currencies,
`including the euro, the U.K. pound, the Japanese yen, the Canadian dollar and approximately 100 other currencies, changes in
`those currencies relative to the U.S. dollar will impact our revenues and expenses. If the U.S. dollar weakens against a specific
`foreign currency, our revenues will increase, having a positive impact, and our overall expenses will increase, having a negative
`impact, on net income. Likewise, if the U.S. dollar strengthens against a specific foreign currency, our revenues will decrease,
`having a negative impact, and our overall expenses will decrease, having a positive impact, on net income. Therefore, significant
`shifts in currencies can impact our short-term results as well as our long-term forecasts and targets.
`
`2010 Financial Report
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`Financial Review
`Pfizer Inc. and Subsidiary Companies
`
`Our Strategy
`
`We believe that our medicines provide significant value for both healthcare providers and patients, not only from the improved
`treatment of diseases but also from a reduction in other healthcare costs, such as emergency room or hospitalization costs, as well
`as improvements in health, wellness and productivity. We continue to actively engage in dialogues about the value of our products
`and how we can best work with patients, physicians and payers to prevent and treat disease and improve outcomes. We will work
`within the current legal and pricing structures, as well as continue to review our pricing arrangements and contracting methods with
`payers, to maximize access to patients and minimize any adverse impact on our revenues.
`
`In response to the challenging operating environment, we have taken and continue to take many steps to strengthen our Company
`and better position ourselves for the future. We believe in a comprehensive approach to our challenges—organizing our business to
`maximize research, development and commercial opportunities, diversifying our sources of revenue, restructuring when necessary
`to capture cost-reduction opportunities, opportunistically investing in acquisitions and collaboration arrangements and protecting our
`intellectual property. Selected highlights are as follows:
`(cid:129) We believe that our Primary Care, Specialty Care, Established Products, Oncology and Emerging Markets biopharmaceutical business
`unit structure enables us to better:
`
`O manage our products’ growth and development from proof-of-concept throughout their entire time on the market;
`
`O bring innovation to our “go to market” promotional and commercial strategies;
`
`O develop ways to further enhance the value of established products, including those that have lost or are about to lose their
`exclusivity;
`
`O expand our already substantial presence in emerging markets; and
`
`O create product-line extensions where feasible.
`(cid:129) Our Animal Health, Consumer Healthcare, Nutrition and Capsugel business units provide diverse sources of revenues.
`(cid:129) Through our PharmaTherapeutics research group (discovery of small molecules and related modalities) and BioTherapeutics research
`group (large-molecule research, including vaccines), we continue to develop and deliver innovative medicines that will benefit patients
`around the world and make the investments that we believe are necessary to serve patients’ needs