Pfizer 2006 Annual Report Download - page 10

8 2006 Financial Report
Financial Review
Pfizer Inc and Subsidiary Companies
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In September 2004, we completed the acquisition of Campto/
Camptosar (irinotecan), from sanofi-aventis for $525 million in
cash (including transaction costs). In 2004, in connection with
the acquisition, as part of our final purchase price allocation,
we recorded $445 million of developed technology rights,
which have been allocated to our Pharmaceutical segment.
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In February 2004, we completed the acquisition of all the
outstanding shares of Esperion Therapeutics, Inc. (Esperion), a
biopharmaceutical company, for $1.3 billion in cash (including
transaction costs). In 2004, in connection with the acquisition,
as part of our final purchase price allocation, we recorded
$920 million in Acquisition-related in-process research and
development charges, and $239 million of Goodwill, which
has been allocated to our Pharmaceutical segment.
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In 2004, we also completed several other small acquisitions. The
total purchase price associated with these transactions was
approximately $430 million in cash (including transaction costs).
In connection with these transactions, we recorded $151 million
in Acquisition-related in-process research and development
charges, and $206 million in intangible assets, primarily brands
(indefinite-lived) and developed technology rights, all of which
have been allocated to our Pharmaceutical segment.
In early 2007, we acquired Embrex, Inc., which possesses a unique
vaccine delivery system known as Inovoject, which enables baby
chicks to be vaccinated while inside their eggs, and BioRexis
Pharmaceutical Corp., a privately-held biopharmaceutical company
with a number of diabetes candidates and a novel technology
platform for developing new protein drug candidates. These
transactions are not reflected in our consolidated financial
statements as of December 31, 2006.
Dispositions
We evaluate our businesses and product lines periodically for
strategic fit within our operations. As of December 31, 2006, we
sold the following businesses:
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In the fourth quarter of 2006, we sold our Consumer Healthcare
business for $16.6 billion, and recorded a gain of approximately
$10.2 billion ($7.9 billion, net of tax) in Gains on sales of
discontinued operations—net of tax in the consolidated
statement of income for 2006. This business was composed of:
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substantially all of our former Consumer Healthcare segment;
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other associated amounts, such as purchase-accounting
impacts, acquisition-related costs and restructuring and
implementation costs related to our Adapting to Scale (AtS)
productivity initiative that were previously reported in the
Corporate/Other segment; and

certain manufacturing facility assets and liabilities, which
were previously part of our Pharmaceutical or Corporate/
Other segment but were included in the sale of the Consumer
Healthcare business. The net impact to the Pharmaceutical
segment was not significant.
The results of this business are included in Income from
discontinued operations—net of tax for all periods presented.
See Notes to Consolidated Financial Statements—Note 3.
Discontinued operations.
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In the third quarter of 2005, we sold the last of three European
generic pharmaceutical businesses, which we had included in
our Pharmaceutical segment, for 4.7 million euro
(approximately $5.6 million). This business became a part of
Pfizer in April 2003 in connection with our acquisition of
Pharmacia. We recorded a loss of $3 million ($2 million, net of
tax) in Gains on sales of discontinued operations—net of tax in
the consolidated statement of income for 2005.
•
In the first quarter of 2005, we sold the second of three
European generic pharmaceutical businesses, which we had
included in our Pharmaceutical segment, for 70 million euro
(approximately $93 million). This business became a part of
Pfizer in April 2003 in connection with our acquisition of
Pharmacia. We recorded a gain of $57 million ($36 million, net
of tax) in Gains on sales of discontinued operations—net of tax
in the consolidated statement of income for 2005. In addition,
we recorded an impairment charge of $9 million ($6 million, net
of tax) related to the third European generic business in Income
from discontinued operations—net of tax in the consolidated
statement of income for 2005.
•
In the fourth quarter of 2004, we sold the first of three
European generic pharmaceutical businesses, which we had
included in our Pharmaceutical segment, for 53 million euro
(approximately $65 million). This business became a part of
Pfizer in April 2003 in connection with our acquisition of
Pharmacia. In addition, we recorded an impairment charge of
$61 million ($37 million, net of tax), relating to a European
generic business which was later sold in 2005, and is included
in Income from discontinued operations—net of tax in the
consolidated statement of income for 2004.
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In the third quarter of 2004, we sold certain non-core consumer
product lines marketed in Europe by our former Consumer
Healthcare business for 135 million euro (approximately $163
million) in cash. The majority of these products were small
brands sold in single markets only and included certain products
that became a part of Pfizer in April 2003 in connection with
the acquisition of Pharmacia. We recorded a gain of $58 million
($41 million, net of tax) in Gains on sales of discontinued
operations—net of tax in the consolidated statement of income
for 2004.
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In the second quarter of 2004, we sold our surgical ophthalmic
business, which we had included in our Pharmaceutical
segment, for $450 million in cash. This business became a part
of Pfizer in April 2003 in connection with our acquisition of
Pharmacia. The results of this business were included in Income
from discontinued operations—net of tax.
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In the second quarter of 2004, we sold our in-vitro allergy and
autoimmune diagnostics testing (Diagnostics) business, which
we had included in the Corporate/Other segment, for $575
million in cash. This business became a part of Pfizer in April
2003 in connection with our acquisition of Pharmacia. The
results of this business were included in Income from
discontinued operations—net of tax.
Our Expectations for 2007 and 2008
While our revenue and income will likely continue to be tempered
in the near term due to patent expirations and other factors, we will