Pfizer 2006 Annual Report Download - page 36

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34 2006 Financial Report
Financial Review
Pfizer Inc and Subsidiary Companies
to causation, label warnings, scientific evidence, actual damages
and other matters. Often these issues are subject to substantial
uncertainties and, therefore, the probability of loss and an
estimation of damages are difficult to ascertain. Consequently, we
cannot reasonably estimate the maximum potential exposure or
the range of possible loss in excess of amounts accrued for these
contingencies. These assessments can involve a series of complex
judgments about future events and can rely heavily on estimates
and assumptions (see Notes to Consolidated Financial
Statements—Note 1B. Significant Accounting Policies: Estimates
and Assumptions). Our assessments are based on estimates and
assumptions that have been deemed reasonable by management.
Litigation is inherently unpredictable, and excessive verdicts do
occur. Although we believe we have substantial defenses in these
matters, we could in the future incur judgments or enter into
settlements of claims that could have a material adverse effect on
our results of operations in any particular period.
Patent claims include challenges to the coverage and/or validity
of our patents on various products or processes. Although we
believe we have substantial defenses to these challenges with
respect to all our material patents, there can be no assurance as
to the outcome of these matters, and a loss in any of these cases
could result in a loss of patent protection for the drug at issue,
which could lead to a significant loss of sales of that drug and
could materially affect future results of operations.