Pfizer 2011 Annual Report Download - page 109

Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
subject of investigations by government authorities in certain foreign countries. The previously reported investigation in Germany
with respect to certain tax matters relating to a wholly owned subsidiary of Pfizer was resolved in December 2011 with no criminal
charges and with the payment of an amount, primarily for interest, that was not material to Pfizer.
The DOJ is conducting civil and criminal investigations regarding Wyeth’s promotional practices with respect to Protonix and its
practices relating to the pricing for Protonix for Medicaid rebate purposes. In connection with the pricing investigation, in 2009, the
DOJ filed a civil complaint in intervention in two qui tam actions that had been filed under seal in the U.S. District Court for the
District of Massachusetts. The complaint alleges that Wyeth’s practices relating to the pricing for Protonix for Medicaid rebate
purposes between 2001 and 2006 violated the Federal Civil False Claims Act and federal common law. The two qui tam actions
have been unsealed and the complaints include substantially similar allegations. In addition, in 2009, several states and the District
of Columbia filed a complaint under the same docket number asserting violations of various state laws based on allegations
substantially similar to those set forth in the civil complaint filed by the DOJ. We are exploring with the DOJ various ways to resolve
its civil and criminal investigations relating to Protonix.
The DOJ, including the U.S. Attorney’s Office for the Western District of Oklahoma, is conducting a civil and criminal investigation
with respect to Wyeth’s promotional practices relating to Rapamune. In addition, in October 2010, the DOJ was permitted to
intervene in a qui tam action, which alleges off-label promotion of Rapamune, that was pending in the U.S. District Court for the
Eastern District of Pennsylvania. In December 2010, the qui tam action was transferred to the Western District of Oklahoma, where
it was consolidated with the proceedings underway there. We are exploring with the DOJ various ways to resolve this matter.
We have received civil investigative demands and informal inquiries from the consumer protection divisions of several states
seeking information and documents concerning the promotion of Lyrica and Zyvox. We are in discussions with those states
regarding a resolution of this matter. These requests appear to relate to the same past promotional practices concerning these
products that were the subject of previously reported settlements in September 2009 with the DOJ and the Medicaid fraud control
units of various states.
GUARANTEES AND INDEMNIFICATIONS
In the ordinary course of business and in connection with the sale of assets and businesses, we often indemnify our counterparties
against certain liabilities that may arise in connection with the transaction or related to activities prior to the transaction. These
indemnifications typically pertain to environmental, tax, employee and/or product-related matters and patent-infringement claims. If
the indemnified party were to make a successful claim pursuant to the terms of the indemnification, we would be required to
reimburse the loss. These indemnifications are generally subject to threshold amounts, specified claim periods and other restrictions
and limitations. Historically, we have not paid significant amounts under these provisions and, as of December 31, 2011, recorded
amounts for the estimated fair value of these indemnifications were not significant.
PURCHASE COMMITMENTS
As of December 31, 2011, we have agreements totaling $3.8 billion to purchase goods and services that are enforceable and legally
binding and include amounts relating to advertising, information technology services, employee benefit administration services, and
potential milestone payments deemed reasonably likely to occur.
18. Segment, Geographic and Other Revenue Information
A. Segment Information
We manage our operations through five operating segments––Primary Care, Specialty Care and Oncology, Established Products
and Emerging Markets, Animal Health and Consumer Healthcare and Nutrition. Each operating segment has responsibility for its
commercial activities and for certain research and development activities related to in-line products and IPR&D projects that
generally have achieved proof-of-concept. Previously, we managed our operations through two operating segments––
Biopharmaceutical and Diversified. We have restated our prior period segment information to conform with the current period
presentation.
We regularly review our segments and the approach used by management to evaluate performance and allocate resources.
Operating Segments
A description of each of our five operating segments follows:
•Primary Care operating segment––includes revenues and earnings, as defined by management, from human pharmaceutical products
primarily prescribed by primary-care physicians, and may include products in the following therapeutic and disease areas: Alzheimer’s
disease, cardiovascular (excluding pulmonary arterial hypertension), erectile dysfunction, genitourinary, major depressive disorder,
pain, respiratory and smoking cessation. Examples of products in this unit include Celebrex, Chantix/Champix, Lipitor, Lyrica, Premarin,
Pristiq and Viagra. All revenues and earnings for such products are allocated to the Primary Care unit, except those generated in
Emerging Markets and those that are managed by the Established Products unit.
108 2011 Financial Report