Pfizer 2006 Annual Report Download - page 16

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14 2006 Financial Report
Financial Review
Pfizer Inc and Subsidiary Companies
•
Lower rebates for Medicaid, Medicare and performance-
based contracts due to lower sales of Zithromax, which lost
exclusivity in the U.S. in November 2005, and Zoloft, which lost
exclusivity in the U.S. in June 2006.
•
Lower performance-based contract rebates due to the expiration
of our contract with Express Scripts Inc. in December 2005.
Performance-based contracts are with managed care customers,
including health maintenance organizations and pharmacy benefit
managers, who receive rebates based on the achievement of
contracted performance terms for products. Rebates are product-
specific and, therefore, for any given year are impacted by the mix
of products sold. Chargebacks (primarily reimbursements to
wholesalers for honoring contracted prices to third parties)
reduced revenues by $1.4 billion in 2006 and $1.3 billion in both
2005 and 2004. In addition, chargebacks were impacted by the
launch of certain generic products in 2006, 2005 and 2004 by our
Greenstone subsidiary.
Our accruals for Medicaid rebates, Medicare rebates, performance-
based contract rebates and chargebacks totaled $1.5 billion as of
December 31, 2006.
Revenues by Business Segment
We operate in the following business segments:
•
Pharmaceutical
— The Pharmaceutical segment includes products that prevent
and treat cardiovascular and metabolic diseases, central
nervous system disorders, arthritis and pain, infectious and
respiratory diseases, urogenital conditions, cancer, eye
disease, endocrine disorders and allergies.
•
Animal Health
—The Animal Health segment includes products that prevent
and treat diseases in livestock and companion animals.