Pfizer 2010 Annual Report Download - page 35

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Financial Review
Pfizer Inc. and Subsidiary Companies
•the addition of Wyeth’s manufacturing operations; and
•the unfavorable impact of foreign exchange on cost of sales,
partially offset by:
•lower costs recorded in cost of sales related to our cost-reduction initiatives. Cost-reduction initiative charges incurred after the Wyeth
acquisition, other than additional depreciation related to asset restructuring, are included in Restructuring charges and certain
acquisition-related costs.
Selling, Informational and Administrative (SI&A) Expenses
2010 vs. 2009
SI&A expenses increased 32% in 2010, compared to 2009, primarily as a result of:
•the inclusion of Wyeth operating costs for a full year in 2010, compared to part of the year in 2009; and
•the unfavorable impact of foreign exchange of $237 million.
2009 vs. 2008
SI&A expenses increased 2% in 2009, compared to 2008, primarily as a result of:
•the addition of Wyeth’s operating costs; and
•increased investment in potential high-growth and new opportunities for existing products,
partially offset by:
•the favorable impact of foreign exchange on SI&A expenses;
•certain insurance recoveries related to legal defense costs; and
•lower costs recorded in SI&A related to our cost-reduction initiatives. Cost-reduction initiative charges incurred after the Wyeth
acquisition, other than additional depreciation related to asset restructuring, are included in Restructuring charges and certain
acquisition-related costs.
Research and Development (R&D) Expenses
2010 vs. 2009
R&D expenses increased 20% in 2010, compared to 2009, primarily as a result of:
•the inclusion of Wyeth operating costs for a full year in 2010, compared to part of the year in 2009; and
•continued investment in the late-stage development portfolio.
Foreign exchange had a minimal impact on R&D expenses during 2010.
2009 vs. 2008
R&D expenses decreased 1% in 2009, compared to 2008, primarily as a result of:
•lower purchase accounting adjustments related to intangible assets acquired in connection with our acquisition of Pharmacia
Corporation;
•the favorable impact of foreign exchange on R&D expenses; and
•lower costs recorded in R&D related to our cost-reduction initiatives. Cost-reduction initiative charges incurred after the Wyeth
acquisition, other than additional depreciation related to asset restructuring, are included in Restructuring charges and certain
acquisition-related costs,
partially offset by:
•the addition of Wyeth operating costs;
•continued investment in the late-stage development portfolio;
•business-development transactions in the Established Products unit; and
•a $150 million milestone payment to BMS in 2009 in connection with the collaboration on apixaban.
R&D expenses also include payments for intellectual property rights of $358 million in 2010, $474 million in 2009 and $377 million in
2008 (for further discussion, see the “Our Business Development Initiatives” section of this Financial Review).
2010 Financial Report 33