UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549_____________________________________________

FORM 10-K_____________________________________________

(Mark One)

ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-3619

_____________________________________________

PFIZER INC.(Exact name of registrant as specified in its charter)

_____________________________________________

Delaware 13-5315170

(State or other jurisdiction of

incorporation or organization)

(I.R.S . Employer

Identification Number)

235 East 42nd Street 10017-5755

New York, New York

(Address of principal executive offices)

(Zip Code)

(212) 733-2323(Registrant’s te lephone number, including area code)

_____________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange

on which registered

Common Stock, $.05 par value New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:None

_____________________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities ExchangeAct of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every InteractiveData File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232-405 of this chapter) during the preceding 12 months(or for such shorter period that the registrant was required to submit and post such files.) Yes ý No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not becontained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of thisForm 10-K or any amendment to this Form 10-K. ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reportingcompany. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Accelerated filer ¨

Large accelerated filer ý Non-accelerated filer ¨ Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the closing price as of thelast business day of the registrant’s most recently completed second fiscal quarter, June 29, 2012, was approximately $172 billion. The registranthas no non-voting common stock.

The number of shares outstanding of the registrant’s common stock as of February 21, 2013 was 7,189,061,853 shares of common stock, allof one class.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the 2012 Annual Report to Shareholders Parts I, II and IV

Portions of the Proxy Statement for the 2013 Annual Meeting of Shareholders Part III

TABLE OF CONTENTS

Page

PART I 1

ITEM 1. BUSINESS 1

General 1

Pfizer Website 2

Operating Segments 2

Biopharmaceutical Products 4

Other Products 5

Research and Development 6

International Operations 7

Marketing 8

Patents and Intellectual Property Rights 8

Competition 11

Raw Materials 13

Government Regulation and Price Constraints 13

Environmental Law Compliance 20

Tax Matters 20

Employees 20

Disclosure Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 20

ITEM 1A. RISK FACTORS 22

ITEM 1B. UNRESOLVED STAFF COMMENTS 32

ITEM 2. PROPERTIES 32

ITEM 3. LEGAL PROCEEDINGS 33

ITEM 4. MINE SAFETY DISCLOSURES 33

EXECUTIVE OFFICERS OF THE COMPANY 34

PART II 37

ITEM 5. MARKET FOR THE COMPANY’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS ANDISSUER PURCHASES OF EQUITY SECURITIES 37

ITEM 6. SELECTED FINANCIAL DATA 37

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS 37

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 37

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 38

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIALDISCLOSURE 38

ITEM 9A. CONTROLS AND PROCEDURES 38

ITEM 9B. OTHER INFORMATION 38

PART III 39

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 39

ITEM 11. EXECUTIVE COMPENSATION 39

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED

STOCKHOLDER MATTERS 39

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 39

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 39

PART IV 40

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 40

15(a)(1) Financial Statements 40

15(a)(2) Financial Statement Schedules 40

15(a)(3) Exhibits 40

PART I

ITEM 1. BUSINESS

General

Pfizer Inc. is a research-based, global biopharmaceutical company. We apply science and our global resources to improvehealth and well-being at every stage of life. We strive to set the standard for quality, safety and value in the discovery, developmentand manufacturing of medicines for people and animals. Our diversified global healthcare portfolio includes human and animalbiologic and small molecule medicines and vaccines, as well as many of the world’s best-known consumer products. Every day, wework across developed and emerging markets to advance wellness, prevention, treatments and cures that challenge the most feareddiseases of our time. We also collaborate with healthcare providers, governments and local communities to support and expandaccess to reliable, affordable healthcare around the world. Our revenues are derived from the sale of our products, as well as throughalliance agreements, under which we co-promote products discovered by other companies (Alliance revenues). The majority of ourrevenues come from the manufacture and sale of biopharmaceutical products.

The Company was incorporated under the laws of the State of Delaware on June 2, 1942. Unless the context requiresotherwise, references to “Pfizer,” “the Company,” “we,” “us” or “our” in this Annual Report on Form 10-K for the fiscal year endedDecember 31, 2012 (2012 Form 10-K) refer to Pfizer Inc. and its subsidiaries. References to developed markets in this 2012 Form 10-Kinclude the United States (U.S.), Western Europe, Japan, Canada, Australia, Scandinavia, South Korea, Finland and New Zealand;and references to emerging markets in this 2012 Form 10-K include the rest of the world, including, among other countries, China,Brazil, Mexico, Turkey, Russia and India.

In July 2011, we announced our decision to explore strategic alternatives for our Animal Health and Nutrition businesses.

On February 6, 2013, an initial public offering (IPO) of our subsidiary, Zoetis Inc. (Zoetis), was completed, pursuant to whichwe sold 99.015 million shares of Zoetis in exchange for the retirement of approximately $2.5 billion of Pfizer commercial paper issuedon January 10, 2013. The IPO represented approximately 19.8% of the total outstanding Zoetis shares. On February 1, 2013, Zoetisshares began trading on the New York Stock Exchange under the symbol “ZTS.” Prior to and in connection with the IPO, Zoetiscompleted a $3.65 billion senior notes offering and we transferred to Zoetis substantially all of the assets and liabilities of our AnimalHealth business. For additional details, see the Notes to Consolidated Financial Statements— Note 19A. Subsequent Events: ZoetisDebt Offering and Initial Public Offering in our 2012 Financial Report, as well as Other Products — Animal Health below.

We may in the future make a tax-free distribution to our shareholders of all or a portion of our remaining equity interest inZoetis, which may include one or more distributions effected as a dividend to all Pfizer shareholders, one or more distributions inexchange for Pfizer shares or other securities, or any combination thereof. We will consider all alternatives to maximize the after-taxreturn for our shareholders, including a tax-free distribution to our shareholders. If pursued, any disposition would be subject tovarious conditions, including receipt of any necessary regulatory or other approvals and the existence of satisfactory marketconditions.

On November 30, 2012, we completed the sale of our Nutrition business to Nestlé for $11.85 billion in cash. For additionalinformation, see the Notes to Consolidated Financial Statements — Note 2B. Acquisitions, Divestitures, CollaborativeArrangements and Equity-Method Investments: Divestitures in our 2012 Financial Report, as well as Other Products — Nutritionbelow.

On August 1, 2011, we completed the sale of our Capsugel business for approximately $2.4 billion in cash. For additionalinformation, see the Notes to Consolidated Financial Statements — Note 2B. Acquisitions, Divestitures, CollaborativeArrangements and Equity-Method Investments: Divestitures in our 2012 Financial Report.

On January 31, 2011, we acquired King Pharmaceuticals, Inc. (King) and, in accordance with our domestic and internationalreporting periods, our consolidated financial statements for the year ended December 31, 2011 reflect approximately 11 months ofKing’s U.S. operations and approximately ten months of King’s international operations. For additional information, see the Notes toConsolidated Financial Statements — Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-MethodInvestments: Acquisitions in our 2012 Financial Report.

If we decide to fully separate Zoetis, then, following such separation, we will be a global biopharmaceutical company with aninnovative core (our Primary Care, Specialty Care and Oncology business units) and a value core (our Established

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Products business unit) in developed markets, with different cost structures and operating drivers. Our Emerging Markets businessunit has a geographic focus that includes both the innovative and value cores in those markets. The innovative core includes aportfolio of innovative, largely patent-protected, in-line products and an R&D organization focused on continuing to build a robustpipeline of highly differentiated product candidates in areas of unmet medical needs. The value core includes a portfolio of productsthat have lost exclusivity or are approaching the loss of exclusivity that help meet the global need for less expensive, qualitymedicines. In addition, we have a complementary Consumer Healthcare business with several well-known brands.

For a further discussion of our strategy and our business development initiatives, see the Overview of Our Performance,Operating Environment, Strategy and Outlook — Our Strategy and — Our Business Development Initiatives sections of theManagement’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) in our 2012 Financial Report.

Pfizer Website

This 2012 Form 10-K, our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to those reportsfiled or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act), areavailable on our website (www.pfizer.com) , in text format and, where applicable, in interactive data file format , as soon asreasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (SEC).

Throughout this 2012 Form 10-K, we “incorporate by reference” certain information from other documents filed or to be filedwith the SEC, including our Proxy Statement for the 2013 Annual Meeting of Shareholders (2013 Proxy Statement) and the 2012Financial Report, portions of which are filed as Exhibit 13 to this 2012 Form 10-K, and which also will be contained in Appendix A toour 2013 Proxy Statement (2012 Financial Report). The SEC allows us to disclose important information by referring to it in thatmanner. Please refer to such information. Our 2012 Annual Report to Shareholders consists of the 2012 Financial Report and theCorporate and Shareholder Information attached to the 2013 Proxy Statement. Our 2012 Financial Report will be available on ourwebsite (www.pfizer.com) on or about February 28, 2013. Our 2013 Proxy Statement will be available on our website(www.pfizer.com) on or about March 14, 2013.

Information relating to corporate governance at Pfizer, including our Corporate Governance Principles; Director QualificationStandards; Pfizer Policies on Business Conduct (for all of our employees, including our Chief Executive Officer, Chief FinancialOfficer and Principal Accounting Officer); Code of Business Conduct and Ethics for our Directors; information concerning ourDirectors; ways to communicate by e-mail with our Directors; Board Committees; Committee Charters; the Lead IndependentDirector Charter; and transactions in Pfizer securities by Directors and Officers; as well as Chief Executive Officer and Chief FinancialOfficer certifications, are available on our website (www.pfizer.com) . We will provide any of the foregoing information withoutcharge upon written request to our Corporate Secretary, Pfizer Inc., 235 East 42nd Street, New York, NY 10017-5755. Informationrelating to shareholder services, including the Computershare Investment Program, book-entry share ownership and direct depositof dividends, is also available on our website (www.pfizer.com) .

The information contained on our website does not constitute a part of this 2012 Form 10-K.

Operating Segments

We manage our operations through five operating segments — Primary Care; Specialty Care and Oncology; EstablishedProducts and Emerging Markets; Animal Health; and Consumer Healthcare. As of the third quarter of 2012, the Animal Health andConsumer Healthcare business units are no longer managed as a single operating segment. Each operating segment hasresponsibility for its commercial activities and for certain research and development activities related to in-line products and in-process research and development (IPR&D) projects that generally have achieved proof-of-concept.

We regularly review our segments and the approach used by management to evaluate performance and allocate resources.Generally, products are transferred to the Established Products business unit in the beginning of the fiscal year following loss ofpatent protection or marketing exclusivity.

A description of each of our five operating segments follows:

• Primary Care operating segment — includes revenues from human prescription pharmaceutical products primarilyprescribed 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,

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genitourinary, major depressive disorder, pain, respiratory and smoking cessation. Examples of products in thissegment in 2012 include Celebrex , Chantix/Champix , Eliquis , Lipitor (in certain European Union (EU) countries andin Australia and New Zealand), Lyrica , Premarin , Pristiq and Viagra . All revenues for these products are allocatedto the Primary Care business unit, except those generated in emerging markets and those that are managed by theEstablished Products business unit.

Beginning in 2012, sales of Lipitor in the U.S., Canada, South Korea and Japan were reported in our Established Productsbusiness unit and beginning in 2013, sales of Lipitor in Australia and most of developed Europe are being reported in ourEstablished Products business unit.

• Specialty Care and Oncology operating segment — comprises the Specialty Care business unit and the Oncologybusiness unit.

· Specialty Care — includes revenues from human prescription pharmaceutical products primarily prescribed byphysicians who are specialists, and may include products in the following therapeutic and disease areas: anti-infectives, endocrine disorders, hemophilia, inflammation, ophthalmology, pulmonary arterial hypertension,specialty neuroscience and vaccines. Examples of products in this business unit in 2012 include BeneFIX ,Enbrel , Genotropin , Geodon (outside the U.S.), the Prevnar/Prevenar family, ReFacto AF , Revatio(outside the U.S.), Tygacil , Vfend (outside the U.S. and South Korea), Vyndaqel (outside the U.S.), Xalatan(outside the U.S., Canada and South Korea), Xeljanz (in the U.S.), Xyntha and Zyvox . All revenues for theseproducts are allocated to the Specialty Care business unit, except those generated in emerging markets andthose that are managed by the Established Products business unit.

· Oncology — includes revenues from human prescription pharmaceutical products addressing oncology andoncology-related illnesses. The products in this business unit in 2012 include Inlyta , Sutent , Torisel ,Xalkori , Mylotarg (in Japan) and Bosulif (in the U.S.). All revenues for these products are allocated to theOncology business unit, except those generated in emerging markets and those that are managed by theEstablished Products business unit.

• Established Products and Emerging Markets operating segment — comprises the Established Products business unitand the Emerging Markets business unit.

· Established Products — includes revenues from human prescription pharmaceutical products that have lostpatent protection or marketing exclusivity in certain countries and/or regions. Typically, products aretransferred to this business unit in the beginning of the fiscal year following loss of patent protection ormarketing exclusivity. However, in certain situations, products may be transferred to this business unit at adifferent point than the beginning of the fiscal year following loss of patent protection or marketingexclusivity in order to maximize their value. This business unit also excludes revenues generated in emergingmarkets. Examples of products in this business unit in 2012 include Arthrotec , Effexor , Lipitor (in the U.S.,Canada, South Korea and Japan), Medrol , Norvasc , Protonix , Relpax , Vfend (in the U.S. and South Korea),Xalatan (in the U.S., Canada and South Korea) and Zosyn/Tazocin .

· Emerging Markets — includes revenues from all human prescription pharmaceutical products sold in emergingmarkets, including Asia (excluding Japan and South Korea), Latin America, the Middle East, Eastern Europe,Africa, Turkey and Central Europe.

• Animal Health operating segment — includes worldwide revenues from products and services to prevent and treatdisease in livestock and companion animals, including anti-infectives, vaccines, parasiticides, medicinal feed additives,other pharmaceutical products and other non-pharmaceutical products.

• Consumer Healthcare operating segment — includes worldwide revenues from non-prescription products in thefollowing therapeutic categories: dietary supplements, pain management, respiratory and personal care. Productsmarketed by Consumer Healthcare include Advil , Caltrate , Centrum , ChapStick , Emergen-C , Preparation H andRobitussin .

For a further discussion of our operating segments, including certain costs that are not allocated to our operating segmentresults, as well as comparative segment information for 2012, 2011 and 2010, see the Notes to Consolidated Financial Statements —Note 18. Segment, Geographic and Other Revenue Information, including the tables therein captioned Selected income statementinformation, Geographic Information and Significant Product Revenues in our 2012 Financial Report and the

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table captioned Revenues by Segment and Geographic Area in the MD&A in our 2012 Financial Report, which are incorporated byreference.

Our businesses are heavily regulated in most of the countries in which we operate. In the U.S., the principal authorityregulating our operations is the U.S. Food and Drug Administration (FDA). The FDA regulates the safety and efficacy of theproducts we offer and our research, quality, manufacturing processes, product promotion, advertising and product labeling. Similarregulations exist in most other countries, and in many countries the government also regulates our prices. See GovernmentRegulation and Price Constraints below.

Biopharmaceutical Products

Our biopharmaceutical business is comprised of the following five business units: Primary Care, Specialty Care, Oncology,Established Products and Emerging Markets. For further information regarding these business units, see Operating Segmentsabove, and for a discussion of certain of our key biopharmaceutical products, including Lyrica , Lipitor , Enbrel , Prevnar13/Prevenar 13 , Celebrex , Viagra , Norvasc , Zyvox , Sutent , and the Premarin family, see the Analysis of the ConsolidatedStatements of Income — Biopharmaceutical — Selected Product Descriptions section of the MD&A in our 2012 Financial Report.

Revenues from biopharmaceutical products contributed approximately 87% of our total revenues in 2012, 88% of our totalrevenues in 2011 and 90% of our total revenues in 2010.

We recorded direct product sales of more than $1 billion for each of 10 biopharmaceutical products in 2012, each of 12biopharmaceutical products in 2011 and each of 15 biopharmaceutical products in 2010. These products represented 49% of ourrevenues from biopharmaceutical products in 2012, 56% of our revenues from biopharmaceutical products in 2011 and 60% of ourrevenues from biopharmaceutical products in 2010. See Item 1A. Risk Factors — Dependence on Key In-Line Products below.

Worldwide revenues from biopharmaceutical products in 2012 were $51.2 billion, a decrease of 11% compared to 2011,primarily due to the decrease of $7.6 billion in operational revenues from Lipitor , Geodon , Xalatan , Caduet , Aromasin and Detrol, and lower Alliance revenues for Aricept , all due to the loss of exclusivity in certain markets, and from lower Alliance revenues forSpiriva due to the final-year terms of our collaboration agreements in certain European countries, Canada and Australia; lowerrevenues for Effexor and Zosyn/Tazocin ; and the unfavorable impact of foreign exchange of $1.3 billion, or 2%. This decrease waspartially offset by an increase in operational revenues in developed markets for certain biopharmaceutical products, particularlyLyrica , Celebrex , and Enbrel , and in revenues from emerging markets.

Geographically, in the U.S., revenues from biopharmaceutical products decreased 17% in 2012 compared to 2011, primarilyreflecting lower revenues from Lipitor , Geodon , Caduet , Xalatan and Aromasin , all due to the loss of exclusivity; lower Alliancerevenues due to loss of exclusivity of Aricept 5mg and 10mg tablets in November 2010; and lower revenues from Effexor , Zosyn andDetrol/Detrol LA . The impact of these adverse factors was partially offset by the strong performance of certain otherbiopharmaceutical products, lower reductions related to rebates and the lower reduction in revenues related to the Patient Protectionand Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (commonly referred to as the AffordableCare Act, or ACA).

For additional information regarding the impact of the ACA on our revenues, see the Overview of Our Performance, OperatingEnvironment, Strategy and Outlook — Our Operating Environment — U.S. Healthcare Legislation section of the MD&A in our2012 Financial Report.

In our international markets, revenues from biopharmaceutical products decreased 7% in 2012 compared to 2011, primarily dueto the loss of exclusivity of Lipitor in most of developed Europe and the unfavorable impact of foreign exchange of 3%.Operationally, revenues decreased 4% in 2012 compared to 2011. In addition to Lipitor , the decrease in operational revenues wasdriven by Xalatan/Xalacom , Aricept and Aromasin , all due to the loss of exclusivity in certain markets, as well as lower Alliancerevenues, primarily due to the loss of exclusivity of Aricept in many major European markets and lower revenues for Spiriva incertain European countries, Canada and Australia (reflecting the final-year terms of our Spiriva collaboration agreements relating tothose countries), as well as lower revenues for Norvasc and Effexor . The impact of these adverse factors was partially offset by thestrong operational growth of Lyrica , Prevnar 13/Prevenar 13 and Enbrel .

During 2012, international revenues from biopharmaceutical products represented 62% of total revenues frombiopharmaceutical products, compared to 59% in 2011.

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For additional information, see the Analysis of the Consolidated Statements of Income — Biopharmaceutical Revenuessection of the MD&A in our 2012 Financial Report.

Other Products

Animal Health

Our Animal Health operating segment is a market leader in nearly all of the major regions in which it operates. It discovers,develops, manufactures and commercializes animal health medicines and vaccines, with a focus on both livestock and companionanimals.

On February 6, 2013, an IPO of our subsidiary Zoetis was completed, pursuant to which we sold 99.015 million shares of Zoetisin exchange for the retirement of approximately $2.5 billion of Pfizer commercial paper issued on January 10, 2013. The IPOrepresented approximately 19.8% of the total outstanding Zoetis shares. On February 1, 2013, Zoetis shares began trading on theNew York Stock Exchange under the symbol “ZTS.” Prior to and in connection with the IPO, Zoetis completed a $3.65 billion seniornotes offering and we transferred to Zoetis substantially all of the assets and liabilities of our Animal Health business. For additionaldetails see the Notes to Consolidated Financial Statements — Note 19A. Subsequent Events: Zoetis Debt Offering and Initial PublicOffering in our 2012 Financial Report.

We will continue to consolidate Zoetis as we have retained control over the entity, and we will reflect amounts attributable tononcontrolling interests for the divested portion. The net assets, operations and cash flows that comprise Zoetis are not the same asthose of the Animal Health operating segment.

Revenues from Animal Health products were approximately $4.3 billion in 2012, an increase of 3% compared to 2011, reflectinghigher operational revenues of 6%, partially offset by the unfavorable impact of foreign exchange of 3%. Operational revenues fromAnimal Health products were favorably impacted by the solid performance in both the livestock and companion animal portfolios.

Major categories and product lines in the Animal Health business include:

• Anti-infectives: products that prevent, kill or slow the growth of bacteria, fungi or protozoa. Examples of products in thiscategory include Draxxin , Terramycin , Clavamox / Synulox , and the Ceftiofur line;

• Vaccines: biological preparations that prevent diseases of the respiratory, gastrointestinal and reproductive tracts orinduce a specific immune response. Examples of products in this category include the Bovishield line, Improvac , andVanguard ;

• Parasiticides: products that prevent or eliminate external and internal parasites, such as fleas, ticks and worms. Examples ofproducts in this category include Cydectin , Dectomax , and Revolution ;

• Medicinal feed additives: products that provide medicines, nutrients and probiotics to livestock; and

• Other pharmaceutical products and other non-pharmaceutical products: complementary products, such as pain andsedation, oncology and antiemetic products. Examples of products in this category include Palladia and Rimadyl .

Consumer Healthcare

Based on 2012 revenues, our Consumer Healthcare operating segment is the fifth-largest branded multi-national, over-the-counter (OTC), healthcare products business in the world and sells two of the ten largest selling OTC healthcare brands ( Centrumand Advil ) in the world. Consumer Healthcare revenues totaled $3.2 billion for 2012, an increase of 6% compared to 2011, reflectinghigher operational revenues of 8%, partially offset by the unfavorable impact of foreign exchange of 2%. The operational revenueincrease was primarily due to the addition of products from the acquisitions of the consumer healthcare business of FerrosanHolding A/S (Ferrosan) in December 2011 and Alacer Corp. (Alacer) in February 2012, discussed below. The Consumer Healthcareoperating segment holds strong positions in various geographic markets, with its highest revenue volume in the U.S., Canada,China, Germany, Italy, Brazil and Australia.

Major categories and product lines in our Consumer Healthcare business include:

• Dietary supplements: Centrum brands (including Centrum , Centrum Silver , Centrum Men’s and Women’s , CentrumSpecialist , Centrum Flavor Burst , and Centrum Kids ), Caltrate , and Emergen-C ;

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• Pain management: Advil brands (including Advil , Advil PM , Advil Liqui-Gels , Children’s Advil , Infants’ Advil , andAdvil Migraine) , and ThermaCare ;

• Respiratory: Robitussin , Advil Cold & Sinus , Advil Congestion Relief , and Dimetapp ; and

• Personal care: ChapStick and Preparation H.

On August 13, 2012, we announced that we entered into an agreement with AstraZeneca for the global OTC rights for Nexium, a leading prescription drug currently approved to treat the symptoms of gastroesophageal reflux disease. Under the terms of theagreement, we acquired the exclusive global rights to market Nexium for OTC indications, which are subject to regulatory approval.In February 2012, we completed our acquisition of Alacer, a company that manufactures, markets and distributes Emergen-C , a lineof effervescent, powdered drink mix vitamin supplements that is the largest-selling branded vitamin C line in the U.S. In December2011, we completed our acquisition of the consumer healthcare business of Ferrosan, a Danish company engaged in the sale ofscience-based consumer healthcare products, including dietary supplements and lifestyle products, primarily in the Nordic regionand the emerging markets of Russia and Central and Eastern Europe. For additional information, see the Notes to ConsolidatedFinancial Statements — Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:Acquisitions in our 2012 Financial Report and the Overview of Our Performance, Operating Environment, Strategy and Outlook —Our Business Development Initiatives section of the MD&A in our 2012 Financial Report.

For additional information regarding the revenues of our Animal Health and Consumer Healthcare operating segments, see theAnalysis of the Consolidated Statements of Income — Other Product Revenues section of the MD&A in our 2012 Financial Report.

Nutrition

On November 30, 2012, we completed the sale of our Nutrition business to Nestlé for $11.85 billion in cash. Pfizer Nutrition wasa business that sold infant nutritionals, including infant milk formula brands for newborns and toddlers, in certain markets outsidethe U.S. and Canada. For additional information, see the Notes to Consolidated Financial Statements — Note 2B. Acquisitions,Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures in our 2012 Financial Report.

Research and Development

Innovation by our research and development (R&D) operations is very important to our success. As a result, and alsobecause we are predominantly a human health company, the vast majority of our research and development spending is associatedwith human health products, compounds and activities. Our goal is to discover, develop and bring to market innovative productsthat address major unmet medical needs. We spent $7.9 billion in 2012, $9.1 billion in 2011 and $9.5 billion in 2010 on research anddevelopment.

Biopharmaceutical R&D

We conduct research internally and also through contracts with third parties, through collaborations with universities andbiotechnology companies and in cooperation with other pharmaceutical firms. We also seek out promising compounds andinnovative technologies developed by third parties to incorporate into our discovery and development processes or projects, aswell as our product lines, through collaborations, alliance and license agreements, acquisitions and other arrangements.

Drug discovery and development is time-consuming, expensive and unpredictable. According to the Pharmaceutical Researchand Manufacturers of America (PhRMA), out of 5,000-10,000 screened compounds, only 250 enter preclinical testing, five enterhuman clinical trials and one is approved by the FDA. The process from early discovery or design to development to regulatoryapproval can take more than 10 years. Drug candidates can fail at any stage of the process, and candidates may not receiveregulatory approval even after many years of research.

As of year-end 2012, we had 276 projects in research and development, ranging from discovery through registration, of which78 programs are in Phase 1 through registration, with the remainder of the projects in pre-clinical development. At year-end 2012, ourPhase 3 portfolio contained 17 programs. Development of a single compound is often pursued as part of multiple different programs.While these new candidates may or may not eventually receive regulatory approval, new drug candidates entering clinicaldevelopment phases are the foundation for future products.

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In addition to discovering and developing new products, our research operations seek to add value to our existing productsby improving their effectiveness and by discovering new uses or indications for them.

Information concerning several of our drug candidates in development, as well as supplemental filings for existing products, isset forth in the Analysis of the Consolidated Statements of Income — Product Developments — Biopharmaceutical section of theMD&A in our 2012 Financial Report, which is incorporated by reference.

Our competitors also devote substantial funds and resources to research and development. We also compete againstnumerous small biotechnology companies in developing potential drug candidates. The extent to which our competitors aresuccessful in their research could result in erosion of the sales of our existing products and potential sales of products indevelopment, as well as unanticipated product obsolescence. See Item 1A. Risk Factors — Competitive Products below.

We continue to closely evaluate our global research and development function and pursue strategies intended to improveinnovation and overall productivity in R&D by prioritizing areas that we believe have the greatest scientific and commercial promise,utilizing appropriate risk/return profiles, and focusing on areas that we believe have the highest potential to deliver value in the nearterm and over time. To that end, our research primarily focuses on five high-priority areas that have a mix of small and largemolecules — immunology and inflammation; oncology; cardiovascular and metabolic diseases; neuroscience and pain; andvaccines. In addition to reducing the number of disease areas of focus, we have realigned and reduced our research anddevelopment footprint, and outsourced certain functions that do not drive competitive advantage for Pfizer. For additionalinformation, see the Overview of Our Performance, Operating Environment, Strategy and Outlook — Our Strategy section of theMD&A in our 2012 Financial Report.

For additional information regarding our R&D operations, see the Analysis of the Consolidated Statements of Income —Research and Development section of the MD&A in our 2012 Financial Report.

International Operations

We have significant operations outside the United States. For the developed markets, these operations for humanpharmaceutical products are managed through the same business units as our U.S. operations (i.e., Primary Care, Specialty Care,Oncology and Established Products). Our operations in emerging markets for human pharmaceutical products are managed throughthe Emerging Markets business unit within the Established Products and Emerging Markets segment. Our Animal Health andConsumer Healthcare operating segments manage their operations worldwide.

Revenues from operations outside the U.S. of $35.9 billion accounted for 61% of our total revenues in 2012. Revenuesexceeded $500 million in each of 16 countries outside the U.S. in 2012 and 2011, and in each of 17 countries outside the U.S. in 2010.The U.S. is our largest national market, comprising 39% of total revenues in 2012, 41% of total revenues in 2011 and 44% of totalrevenues in 2010. Japan is our second-largest national market, with 10% of total revenues in 2012, 9% of total revenues in 2011 and8% of total revenues in 2010.

For a geographic breakdown of revenues, see the table captioned Geographic Information in the Notes to ConsolidatedFinancial Statements — Note 18. Segment, Geographic and Other Revenue Information in our 2012 Financial Report, and the tablecaptioned Revenues by Segment and Geographic Area in the MD&A in our 2012 Financial Report. Those tables are incorporated byreference.

Our international businesses are subject, in varying degrees, to a number of risks inherent in carrying on business in othercountries. These include, among other things, currency fluctuations, capital and exchange control regulations, expropriation andother restrictive government actions. See Item 1A. Risk Factors — Risks Affecting International Operations below. Ourinternational businesses are also subject to government-imposed constraints, including laws and regulations on pricing,reimbursement, and access to our products. See Government Regulation and Price Constraints below for a discussion of thesematters.

Depending on the direction of change relative to the U.S. dollar, foreign currency values can increase or decrease the reporteddollar value of our net assets and results of operations. In 2012, both revenues and net income were unfavorably impacted byforeign exchange in general, as foreign currency movements relative to the U.S. dollar decreased our revenues and net income inmany countries. While we cannot predict with certainty future changes in foreign exchange rates or the effect they will have on us,we attempt to mitigate their impact through operational means and by using various financial instruments, depending upon marketconditions. For additional information, see the Notes to Consolidated Financial Statements — Note 7E. Financial Instruments:Derivative Financial Instruments and Hedging Activities in our 2012 Financial Report, as well as the

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Forward-Looking Information and Factors That May Affect Future Results — Financial Risk Management section of the MD&Ain our 2012 Financial Report. Those sections of our 2012 Financial Report are incorporated by reference.

Marketing

In our global biopharmaceutical businesses, we promote our products to healthcare providers and patients. Through ourmarketing organizations, we explain the approved uses, benefits and risks of our products to healthcare providers, such as doctors,nurse practitioners, physician assistants, pharmacists, hospitals, Pharmacy Benefit Managers (PBMs), Managed Care Organizations(MCOs), employers and government agencies. We also market directly to consumers in the U.S. through direct-to-consumeradvertising that communicates the approved uses, benefits and risks of our products while motivating people to have meaningfulconversations with their doctors. In addition, we sponsor general advertising to educate the public on disease awareness,prevention and wellness, important public health issues, and our patient assistance programs.

Our biopharmaceutical businesses include five human health, customer-focused business units: Primary Care, Specialty Care(including vaccines), Oncology, Established Products and Emerging Markets. We operate in customer-focused business unitswithin our biopharmaceutical businesses to better meet the diverse needs of physicians, patients and our customers while seekingto maximize value for our Company and our shareholders.

Our U.S. Primary Care operations are structured into regional units in order to create a more flexible organization to identifyand address local market dynamics and customer needs. Our structure is designed to align the sales, marketing, and medicalfunctions to work closely to meet the needs of key customer groups while seeking to ensure common coordination, focus andaccountability across the organizations.

Our prescription pharmaceutical products are sold principally to wholesalers, but we also sell directly to retailers, hospitals,clinics, government agencies and pharmacies, and in the case of Prevnar 13 , directly to individual provider offices in the U.S. Weseek to gain access to healthcare authority, PBM and MCO formularies. Formularies are lists of approved medicines available tomembers that are tiered according to co-pay amounts and reimbursed by the respective PBM or MCO. We also work with MCOs,PBMs, employers and other healthcare providers to assist them with disease management, patient education and other tools thathelp their medical treatment routines.

During 2012, Pfizer revenues from our three largest biopharmaceutical wholesalers were as follows:

• McKesson, Inc. — 12% of our total revenues (and 28% of our total U.S. revenues);

• Cardinal Health, Inc. — 9% of our total revenues (and 23% of our total U.S. revenues); and

• AmerisourceBergen Corporation — 7% of our total revenues (and 17% of our total U.S. revenues).

Sales to these wholesalers were concentrated in the biopharmaceutical businesses. In addition, our Consumer Healthcareoperating segment generates a significant portion of its sales from several large customers, the loss of any one or more of whichcould have a material adverse effect on the Consumer Healthcare operating segment.

Each of our global Animal Health and Consumer Healthcare operating segments utilizes its own sales and marketingorganizations to promote its products, and each occasionally uses distributors in smaller markets.

Our Animal Health operating segment’s advertising and promotions are generally targeted to veterinary healthcareprofessionals, livestock producers and pet owners. Animal Health products are sold directly to veterinarians and livestockproducers, as well as through distributors and retail outlets.

Our Consumer Healthcare operating segment’s advertising and promotions are generally disseminated to consumers throughtelevision, print, digital and other media advertising, as well as through in-store promotion. Consumer Healthcare products are soldthrough a wide variety of channels, including distributors, pharmacies, retail chains and grocery and convenience stores.

Patents and Intellectual Property Rights

Our products are sold around the world under brand-name, logo and certain product design trademarks that we consider, inthe aggregate, to be of material importance. Trademark protection continues in some countries for as long as the mark is used and, inother countries, for as long as it is registered. Registrations generally are for fixed, but renewable, terms.

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We own or license a number of U.S. and foreign patents. These patents cover pharmaceutical and other products and theiruses, pharmaceutical formulations, product manufacturing processes and intermediate chemical compounds used in manufacturing.

Patents for individual products extend for varying periods according to the date of patent filing or grant and the legal term ofpatents in the various countries where patent protection is obtained. The actual protection afforded by a patent, which can varyfrom country to country, depends upon the type of patent, the scope of its coverage and the availability of legal remedies in thecountry. Further, patent term extension may be available in many major countries to compensate for a regulatory delay in approval ofthe product. For additional information, see Government Regulation and Price Constraints — Intellectual Property below.

In the aggregate, our patent and related rights are of material importance to our businesses in the U.S. and most othercountries. Based on current product sales, and considering the vigorous competition with products sold by others, the patent rightswe consider most significant in relation to our business as a whole, together with the year in which the U.S. basic product patentexpires (including, where applicable, the additional six-month pediatric exclusivity period and/or the granted patent term extension),are those for the drugs set forth in the table below. The basic patents for these products in other large markets may expire in thesame, earlier or later years.

Drug U.S. Basic Product Patent Expiration Year (1)(2)(3)

Detrol 2012 (2)

Viagra 2012 (3)

Celebrex 2014

Zyvox 2015

Lyrica 2018

Bosulif 2019

Chantix 2020

Inlyta 2020

Xeljanz 2020

Sutent 2021

Eliquis 2023

Xalkori 2029

(1) With respect to the products in this table, the corresponding European and Japanese patent expiration dates are

generally within one year before or after the U.S. dates indicated, except as follows:

• With respect to Japan, the patent expiration year for Celebrex is 2019, for Zyvox is 2019, for Lyrica is 2022, forChampix is 2022, and for Sutent is 2024. For Detrol , post-marketing surveillance in Japan extends until 2014.

• With respect to major European markets, the patent expiration year for Xalkori is 2025. For Lyrica , regulatoryexclusivity in Europe extends until 2014.

(2) As a result of certain patent litigation settlements, we expect generic competition for Detrol LA to commence in the U.S.

no earlier than January 1, 2014, except in limited circumstances, and no later than March 1, 2014.

(3) In some instances, there are later-expiring patents relating to our products directed to particular forms or compositions,

to methods of manufacturing, or to use of the drug in the treatment of particular diseases or conditions. For example, in

addition to the basic product patent covering Viagra , it is also covered by a U.S. method-of-treatment patent which,

including the six-month pediatric exclusivity period associated with Revatio which has the same active ingredient as

Viagra , expires in 2020. However, in some cases, such patents may not protect our drug from generic competition after the

expiration of the basic patent.

We co-promote Aricept with Eisai Co., Ltd. (Eisai). We lost exclusivity for Aricept 5mg and 10mg tablets in the U.S. inNovember 2010, and in the majority of European markets in February 2012 and April 2012. We expect to lose exclusivity for theAricept 23mg tablet in the U.S. in July 2013. For additional information, including a description of certain of our other co-

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promotion agreements and their expiration dates, see the Analysis of the Consolidated Statements of Income — Biopharmaceutical— Selected Product Descriptions and the Overview of Our Performance, Operating Environment, Strategy and Outlook — TheLoss or Expiration of Intellectual Property Rights sections of the MD&A in our 2012 Financial Report and Item 1A. Risk Factors —Dependence on Key In-Line Products below.

We lost exclusivity for Lipitor in the U.S. in November 2011. Lipitor lost exclusivity in Japan in June 2011, Australia in April2012 and most of developed Europe in March 2012 and May 2012. In the U.S., Europe, Japan and Australia, Lipitor now faces multi-source generic competition. In other international markets, Lipitor has lost exclusivity in certain countries and will lose exclusivity atvarious times in other countries.

We lost exclusivity for Xalatan in the U.S. in March 2011. We lost exclusivity for Xalatan and Xalacom in the majority ofEuropean markets in January 2012. We lost exclusivity for Geodon in the U.S. in March 2012. We lost exclusivity in the U.S. inSeptember 2012 for Revatio tablet, and in June 2012 for Detrol immediate release ( Detrol IR ). We lost exclusivity for Detrol in mostEuropean markets in September 2012. Aromasin , Effexor/Effexor XR (extended-release formulation of Effexor ), Zosyn , Protonix ,Norvasc and Vfend tablets are examples of other Pfizer products that face generic competition in the U.S. We also lost exclusivity forCaduet in the U.S. in November 2011, and in the majority of European markets in March and May 2012.

For additional information, see the Overview of Our Performance, Operating Environment, Strategy and Outlook — The Lossor Expiration of Intellectual Property Rights section of the MD&A in our 2012 Financial Report.

Companies have filed applications with the FDA seeking approval of products that we believe infringe our patents covering,among other products, Viagra , Lyrica , Sutent , Rapamune , EpiPen , Torisel , Pristiq , and Embeda extended-release capsules .

The expiration of a basic product patent or loss of patent protection resulting from a legal challenge normally results insignificant competition from generic products against the originally patented product and can result in a significant reduction inrevenues for that product in a very short period of time. In some cases, however, we can continue to obtain commercial benefits fromproduct manufacturing trade secrets; patents on uses for products; patents on processes and intermediates for the economicalmanufacture of the active ingredients; patents for special formulations of the product or delivery mechanisms; and conversion of theactive ingredient to OTC products.

Biotechnology Products

Our biotechnology products, including BeneFIX , ReFacto , Xyntha, Enbrel and the Prevnar/Prevenar family, may facecompetition from biosimilars (also referred to as “follow-on biologics”). Such biosimilars would reference biotechnology productsapproved under the U.S. Public Health Service Act. Additionally, the FDA has approved a biosimilar recombinant human growthhormone that referenced our biotechnology product, Genotropin, which was approved under the U.S. Federal Food, Drug andCosmetic Act.

Abbreviated legal pathways for the approval of biosimilars exist in certain international markets and, since the passage of theACA, a framework for such approval exists in the U.S. The regulatory implementation of these ACA provisions is ongoing andexpected to take several years. However, the FDA has begun to clarify its expectations for approval via the biosimilar pathway withthe issuance of three draft guidance documents in February 2012. See Government Regulation and Price Constraints — Biosimilarsfor additional information on the ACA’s approval framework for biosimilars.

In Europe, the European Commission has granted marketing authorizations for several biosimilars pursuant to a set of generaland product class-specific guidelines for biosimilar approvals issued over the past few years, and in Japan the regulatory authorityhas granted marketing authorizations for certain biosimilars, including somatropin (the recombinant human growth hormone in ourGenotropin product), pursuant to a guideline for biosimilar approvals issued in 2009.

If competitors are able to obtain marketing approval for biosimilars referencing our biotechnology products, ourbiotechnology products may become subject to competition from biosimilars, with attendant competitive pressure, and pricereductions could follow. Expiration or successful challenge of applicable patent rights could trigger this competition, assuming anyrelevant exclusivity period has expired. However, unlike small molecule generics, biologics currently have additional barriers to entryrelated to the manufacture of such products, and biosimilars are not necessarily identical to the reference products. Therefore,generic competition with respect to biologics may not be as significant. As part of our business strategy, we are developingbiosimilar medicines using our expertise in biologics and our regulatory, commercial and manufacturing strengths. As such, a better-defined biosimilars approval pathway will assist us in pursuing approval of our own biosimilar products in the U.S. See Item 1A. RiskFactors — Biotechnology Products below.

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We may face more litigation with respect to the validity and/or scope of patents relating to our biotechnology products withsubstantial revenue. Likewise, as we enter the biosimilars area and seek to launch products, patents may be asserted against us.

International

One of the main limitations on our operations in some countries outside the U.S. is the lack of effective intellectual propertyprotection for our products. Under international and U.S. free trade agreements in recent years, global protection of intellectualproperty rights has been improving. The World Trade Organization Agreement on Trade Related Aspects of Intellectual Property(WTO-TRIPs) required participant countries to amend their intellectual property laws to provide patent protection forpharmaceutical products by 2005, with an extension until 2016 for least-developed countries. A number of countries have madeimprovements. We have experienced significant growth in our businesses in some of those countries. We include further patentprotection improvement among the factors we consider for continued business expansion in other participant countries. Foradditional information, see Government Regulation and Price Constraints — Intellectual Property below.

Competition

Our businesses are conducted in intensely competitive and often highly regulated markets. Many of our human prescriptionpharmaceutical products face competition in the form of branded or generic drugs that treat similar diseases or indications. Theprincipal forms of competition include efficacy, safety, ease of use, and cost effectiveness. Though the means of competition varyamong product categories and business groups, demonstrating the value of our products is a critical factor for success in all of ourprincipal businesses.

Our competitors include other worldwide research-based drug companies, smaller research companies with more limitedtherapeutic focus, and generic drug and consumer healthcare manufacturers. We compete with other companies that manufactureand sell products that treat diseases or indications similar to those treated by our major products.

This competition affects our core product business, which is focused on applying innovative science to discover and marketproducts that satisfy unmet medical needs and provide therapeutic improvements. Our emphasis on innovation is underscored byour multi-billion-dollar investment in research and development, as well as our business development transactions, both designed toresult in a strong product pipeline. Our investment in research does not stop with drug approval; we continue to invest in furtherunderstanding the value of our products for the conditions they treat, as well as potential new applications. We seek to protect thehealth and well-being of patients by striving to ensure that medically sound knowledge of the benefits and risks of our medicines isunderstood and communicated to patients, physicians and global health authorities. We also seek to continually enhance theorganizational effectiveness of all of our biopharmaceutical functions, including coordinating support for our salespersons’ effortsto accurately and ethically launch and promote our products to our customers.

Operating conditions have become more challenging under the mounting global pressures of competition, industry regulationand cost containment. We continue to take measures to evaluate, adapt and improve our organization and business practices tobetter meet customer and public needs. We have taken an industry-leading role in evolving our approaches to U.S. direct-to-consumer advertising; interactions with, and payments to, healthcare professionals; and medical education grants. We alsocontinue to sponsor programs to address patient affordability and access barriers, as we strive to advance fundamental healthsystem change through support for better healthcare solutions.

While our Animal Health operating segment is a market leader in nearly all of the major regions and sectors in which itoperates, it faces competition from other animal health businesses, including those that are business units of other largepharmaceutical companies. The principal drivers of competition vary depending on the particular region, species, product categoryor individual product, and may include new product development, quality, price, service and effective promotion to veterinaryprofessionals, pet owners and livestock producers.

Our Consumer Healthcare operating segment faces competition from OTC business units in other major pharmaceutical andconsumer packaged goods companies, as well as retailers who carry their own private label brands. Our competitive position isaffected by several factors, including, among others, the amount and effectiveness of our and our competitors’ promotionalresources; customer acceptance; product quality; our and our competitors’ introduction of new products, ingredients, claims,dosage forms, or other forms of innovation; and pricing, regulatory and legislative matters (such as product labeling, patient accessand prescription to OTC switches).

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Managed Care Organizations

The growth of MCOs in the U.S. has been a major factor in the competitive makeup of the healthcare marketplace.Approximately 260 million people in the U.S. now participate in some form of managed care. Because of the size of the patientpopulation covered by MCOs, the marketing of prescription drugs to them and the PBMs that serve many of those organizationscontinues to grow in importance.

MCOs can include medical insurance companies, medical plan administrators, health maintenance organizations, alliances ofhospitals and physicians and other physician organizations (e.g., staff or group model health maintenance organizations). Thepurchasing power of MCOs has increased in recent years due to the growing numbers of patients enrolled in MCOs. At the sametime, those organizations have been consolidating into fewer, even larger entities. This consolidation enhances both theirpurchasing strength and importance to us.

The growth of MCOs has increased pressure on drug prices. One objective of MCOs is to contain and, where possible, reducehealthcare expenditures. MCOs typically use formularies, volume purchases and long-term contracts to negotiate discounts frompharmaceutical providers. Also, MCOs use their purchasing power and their ability to influence market share and volume ofprescription drugs to negotiate for lower supplier prices. They also emphasize primary and preventive care, out-patient treatmentand procedures performed at doctors’ offices and clinics. Hospitalization and surgery, typically the most expensive forms oftreatment, are carefully managed. Since the use of certain drugs can reduce the need for hospitalization, professional therapy, oreven surgery, such drugs can become favored first-line treatments for certain diseases.

As discussed above under Marketing , MCOs and PBMs typically develop formularies, which are lists of approved medicinesavailable to members that are tiered according to co-pay amounts and reimbursed by the respective PBM or MCO. Formulariestypically are based on the prices and therapeutic benefits, or a combination of the two, of the available products. Due to theirgenerally lower cost, generic medicines typically are placed in lowest cost tiers. The breadth of the products covered by formulariescan vary considerably from one MCO to another, and many formularies include alternative and competitive products for treatment ofparticular medical problems. MCOs use a variety of means to encourage patients’ use of products listed on their formularies.

Exclusion of a product from a formulary or other MCO-implemented restrictions can significantly impact drug usage in theMCO patient population. Consequently, pharmaceutical companies compete to gain access to formularies for their products. Uniqueproduct features, such as greater efficacy, better patient ease of use, or fewer side effects, are generally beneficial to achievingaccess to formularies. However, lower overall cost of therapy is also an important factor. We have been generally, although notuniversally, successful in having our major products included on MCO formularies.

The impact that MCOs have on drug prices and volumes has increased as a result of their role in negotiating on behalf ofMedicare beneficiaries in connection with the Medicare Outpatient Prescription Drug Benefit, Medicare Part D, which took effectJanuary 1, 2006. MCOs and PBMs negotiate directly with pharmaceutical manufacturers on behalf of the federal government forproduct access on Medicare Prescription Drug Plans’ (PDPs) formularies. We have been generally, although not universally,successful in having our major products that are used by the senior population included on the formularies of the Medicare PDPs.

Generic Products

One of the biggest competitive challenges that we face is from generic pharmaceutical manufacturers. Upon the expiration orloss of patent protection for a product, especially a small molecule product, we can lose the major portion of revenues for thatproduct in a very short period of time. Several such competitors make a regular practice of challenging our product patents beforetheir expiration. Unlike us, generic competitors often operate without large research and development expenses, as well as withoutcosts of conveying medical information about products to the medical community. In addition, the FDA approval process exemptsgenerics from costly and time-consuming clinical trials to demonstrate their safety and efficacy, allowing generic manufacturers torely on the safety and efficacy data of the innovator product. Generic products need only demonstrate a level of availability in thebody equivalent to that of the innovator product. This means that generic competitors can market a competing version of ourproduct after the expiration or loss of our patent and often charge much less.

In addition, our patent-protected products can face competition in the form of generic versions of competitors’ brandedproducts that lose their market exclusivity.

As noted above, MCOs that focus primarily on the immediate cost of drugs often favor generics over brand-name drugs.Many governments also encourage the use of generics as alternatives to brand-name drugs in their healthcare programs,

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including Medicaid in the U.S. Laws in the U.S. generally allow, and in some cases require, pharmacists to substitute, for brand-namedrugs, generic drugs that have been rated under government procedures to be therapeutically equivalent to brand-name drugs. Thesubstitution must be made unless the prescribing physician expressly forbids it. In the U.S., Pfizer’s Greenstone subsidiary andPfizer Injectables sell generic versions of Pfizer’s, as well as certain competitors’, solid oral dose and sterile injectable pharmaceuticalproducts, respectively, upon loss of exclusivity, as appropriate.

Raw Materials

Raw materials essential to our businesses are purchased worldwide in the ordinary course of business from numeroussuppliers. In general, these materials are available from multiple sources. No serious shortages or delays of raw materials wereencountered in 2012, and none are expected in 2013. However, select materials have, from time to time, increased in price due toshort-term imbalances between supply and demand. We have successfully secured the materials necessary to meet our requirementsin these circumstances, but generally at higher prices than those historically paid.

Government Regulation and Price Constraints

In the United States

General. Pharmaceutical companies are subject to extensive regulation by national, state and local agencies in the countries inwhich they do business. Of particular importance in the U.S. is the FDA, which has jurisdiction over our biopharmaceutical productsand administers requirements covering the testing, safety, effectiveness, manufacturing, labeling, marketing, advertising and post-marketing surveillance of these products. The FDA also regulates our Consumer Healthcare and Animal Health products. Otherfederal agencies, including the U.S. Department of Agriculture and the U.S. Drug Enforcement Administration, also regulate some ofour products.

In addition, many of our activities are subject to the jurisdiction of other federal regulatory and enforcement departments andagencies, such as the Department of Health and Human Services (HHS) Office of the Inspector General, the Federal TradeCommission (FTC) (which also has the authority to regulate the advertising of consumer healthcare products, including OTC drugsand dietary supplements), the Department of Justice (DOJ) and the SEC. Individual states, acting through their attorneys general,have become active as well, seeking to regulate the marketing of prescription drugs under state consumer protection and falseadvertising laws.

We are subject to possible administrative and legal proceedings and actions by these various governmental bodies. See theNotes to Consolidated Financial Statements — Note 17. Commitments and Contingencies in our 2012 Financial Report. Such actionsmay involve product seizures and other civil and criminal sanctions.

Healthcare Reform. In March 2010, the ACA was enacted in the U.S. The provisions of the ACA are effective on variousdates. The principal provisions affecting the biopharmaceutical industry include:

• an increase, from 15.1% to 23.1%, in the minimum rebate on branded prescription drugs sold to Medicaid beneficiaries(effective January 1, 2010);

• extension of Medicaid prescription drug rebates to drugs dispensed to enrollees in certain Medicaid managed careorganizations (effective March 23, 2010);

• expansion of the types of institutions eligible for the “Section 340B discounts” for outpatient drugs provided to hospitalsserving a disproportionate share of low-income individuals and meeting the qualification criteria under Section 340B of thePublic Health Service Act of 1944 (effective January 1, 2010);

• discounts on branded prescription drug sales to Medicare Part D participants who are in the Medicare “coverage gap,” alsoknown as the “doughnut hole” (effective January 1, 2011); and

• a fee payable to the federal government (which is not deductible for U.S. income tax purposes) based on our prior-calendar-year share relative to other companies of branded prescription drug sales to specified government programs (effective January1, 2011, with the total fee to be paid each year by the pharmaceutical industry increasing annually through 2018).

As of February 2013, the Congressional Budget Office estimates that the ACA will result in the coverage of 27 millionpreviously uninsured individuals by 2017. Approximately half of this would occur through an expansion of the Medicaid program.Effective in 2014, individuals with incomes below 133% of the federal poverty level (FPL) would be eligible for Medicaid. Theremainder would be covered with private sector coverage, either through their employers or new state-based Health InsuranceExchanges (Health Insurance Exchanges). With limited exceptions, individuals who fail to purchase health

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insurance will pay a penalty, which is an obligation commonly referred to as the individual mandate. Individuals with incomesbetween 100%-400% of the FPL will be eligible for subsidies to help pay for coverage.

The U.S. Supreme Court reached a decision in June 2012 that upheld all provisions of the ACA with the exception of theMedicaid expansion. Now, states can choose not to expand their Medicaid populations without losing federal funding for theirexisting Medicaid populations. The Congressional Budget Office estimates that the new state flexibility is likely to result in sixmillion fewer new Medicaid enrollees than were initially expected to enroll as a result of the eligibility expansion and that half ofthese people are expected to gain coverage through Health Insurance Exchanges, and the remaining three million are likely to remainuninsured.

The ACA specifies certain benefits and services that must be covered for health insurers to qualify to participate in the HealthInsurance Exchanges. The general categories of benefits and services that must be covered include: ambulatory patient services;emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, includingbehavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventiveand wellness services and chronic disease management; and pediatric services including oral and vision care. Regulators haveprovided additional guidance to states on the types of benefits and services that must be covered.

Expanding insurance coverage and other costs are expected to result in a relatively modest gain in overall pharmaceuticalindustry sales, as the newly insured are principally young and relatively healthy. At the same time, the rebates, discounts, taxes andother costs associated with the ACA are a significant cost to the industry.

The ACA created the Independent Payment Advisory Board (IPAB), a 15-member panel appointed by the President, subjectto Senate confirmation. The IPAB is charged with developing proposals to “reduce the per capita rate of growth in Medicarespending” in the event that the actual Medicare per capita growth rate exceeds a specified target. Unless Congress acts to alter theproposals, the proposals will be automatically implemented. However, the IPAB cannot directly ration care, raise premiums, increasecost sharing, or otherwise restrict benefits or modify eligibility. If the IPAB fails to act, the Secretary of HHS is directed to preparesuch proposals. The IPAB is prohibited by statute from making payment reductions to certain sectors such as hospitals and homehealth agencies, which increases the risk that the IPAB will propose to limit access to pharmaceutical treatments or mandate pricecontrols for our products.

The ACA also established the Patient Centered Outcomes Research Institute (PCORI), a federally funded, private, non-profitcorporation empowered to fund and disseminate comparative effectiveness research (CER) and build infrastructure for improvedoutcomes analysis. PCORI has no authority to impose formulary changes directly in government-funded health programs. However,we expect that due to the PCORI, as well as the underlying market demand for data-driven differentiation, CER studies will havegrowing influence on access. Overseeing and managing the PCORI is an advisory board drawn from multiple and varied stakeholderorganizations, including the pharmaceutical industry. Pfizer’s Chief Medical Officer currently serves as an industry representative onthe advisory board.

Changes in Marketing Activity Disclosure . The ACA expands the government’s investigative and enforcement authorityand increases the penalties for fraud and abuse, including amendments to both the False Claims Act and the Anti-Kickback Statuteto make it easier to bring suit under these statutes. The ACA also allocates additional resources and tools for the government topolice healthcare fraud, with expanded subpoena power for HHS, additional funding to investigate fraud and abuse across thehealthcare system, and expanded use of Recovery Audit Contractors for enforcement.

After significant delays, starting in 2013, pharmaceutical manufacturers will be required to record any transfers of value madeto doctors and teaching hospitals and to disclose such data to HHS, with the initial disclosure to HHS due no later than March 31,2013. Data collection and reporting will begin with the issuance of final guidance or regulations anticipated before the end of the firstquarter of 2013. In addition to civil penalties for failure to report transfers of value to physicians or teaching hospitals, there will becriminal penalties if a manufacturer intentionally makes false statements in such reports. The payment data across biopharmaceuticaland medical device companies will be posted by HHS on a publicly available website. This increased access to such data by fraudand abuse investigators, industry critics and media will draw attention to our collaborations with reported entities and willimportantly provide opportunities to underscore the critical nature of our collaborations for developing medicine and exchangingscientific information. This national payment transparency effort, industry commitment to uphold voluntary codes of conduct (suchas the updated PhRMA Code on Interactions with Healthcare Professionals and PhRMA Guiding Principles Direct to ConsumerAdvertisements About Prescription Medicines ) and rigorous internal training and compliance efforts will complement existing lawsand regulations to help ensure ethical collaboration and truthful product communications.

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Medicare. Medicare Part D went into effect on January 1, 2006. Elderly and disabled beneficiaries have access to the Medicaredrug benefit through private plans approved by the federal government. Beneficiaries with low incomes and modest assets areeligible for assistance with Medicare Part D plan premiums and cost sharing. Nationally, the share of such beneficiaries withcomprehensive drug coverage increased from 59% in 2005 to over 90% in 2011. Medicare beneficiaries report high levels ofsatisfaction, with an overwhelming majority saying the program works well. In addition, the program costs less than originallyexpected.

The ACA made some important changes to the drug benefit, which include, in particular, phasing out the coverage gap by2020. Prior to the ACA, beneficiaries who reached a certain level of spending on prescription medications (the Medicare Part Dcoverage gap or “doughnut hole”) had to pay 100% of the cost of their drugs until personal out-of-pocket spending reached a levelqualifying them for catastrophic coverage. The Medicare Part D Coverage Gap Discount Program uses public and private funding torelieve the financial burden facing beneficiaries who fall into this coverage gap. Beginning in 2011, branded pharmaceuticalcompanies paid 50% of the cost of the branded drugs in the gap and the government paid 7% of the cost of the generic drugs in thegap. As a result, rather than paying 100% of the total cost of their drugs when they reached the coverage gap, enrollees paid 50% ofthe total cost of branded drugs and 93% of the total cost of generic drugs. The contribution from the government for generic drugsgrew to 14% in 2012, and will grow steadily over time until reaching 75% in 2020. In addition, starting in 2013, the 50% discount frombranded pharmaceutical companies will be supplemented by a contribution from the government, which will also grow steadily overtime until reaching 25% in 2020. That means that by 2020, enrollees will pay only 25% of the cost of their branded and generic drugsin the gap.

Biosimilars. The ACA also created a framework for the approval of biosimilars (also known as follow-on biologics) followingthe expiration of 12 years of exclusivity for the innovator biologic, with a potential six-month pediatric extension. Under the ACA,biosimilar applications may not be submitted until four years after the approval of the reference, innovator biologic. The FDA isresponsible for implementation of the legislation, which will require the FDA to address such key topics as the type and extent ofdata needed to establish biosimilarity; the data required to achieve interchangeability compared to biosimilarity; the namingconvention for biosimilars; the tracking and tracing of adverse events; and the acceptability of data using a non-U.S. licensedcomparator to demonstrate biosimilarity and/or interchangeability with a U.S.-licensed reference product. The FDA has begun toaddress some of these issues with the February 2012 release of three draft guidance documents. Specifically, the FDA has clarifiedthat biosimilar applicants may use a non-U.S. licensed comparator in certain studies to support a demonstration of biosimilarity to aU.S.-licensed reference product.

Medicaid and Related Matters. Federal law requires branded pharmaceutical companies to provide rebates to state Medicaidagencies. The ACA brought about major changes in the Medicaid program. Collectively, the measures (i) increased federal rebatespaid by manufacturers on branded drugs within the traditional Medicaid program from 15.1% to 23.1%, and for generic drugs from11% to 13% of Average Manufacturer Price (AMP); (ii) expanded Medicaid drug rebates to cover drugs provided through managedMedicaid plans; and (iii) changed the rebate rates for line extensions or new formulations of solid oral dosage form drugs. Post-implementation of ACA, the Centers for Medicare and Medicaid Services (CMS) withdrew its former, detailed AMP-calculationrules, and new CMS AMP guidance was published in proposed rule form in January 2012. A final rule is expected in mid-2013. Thelaw also creates a federal upper limit under the Medicaid program for generic drugs at 175% of AMP. In addition, the law expandedthe types of entities eligible for the “Section 340B discounts” for outpatient drugs that began in 2010.

The majority of states use preferred drug lists to restrict access to certain medicines to Medicaid beneficiaries. Restrictionsexist for some Pfizer products in certain states. Access in the Medicaid managed care program is typically determined by the healthplans providing coverage for Medicaid recipients contracting for the provision of services in the state. Given states’ current andpotential ongoing fiscal crises, a growing number of states are considering a variety of cost-control strategies, including capitatedmanaged care plans that typically contain cost by restricting access to certain treatments.

The ACA expands Medicaid coverage in 2014. The Congressional Budget Office estimates between seven and 13 millionadditional people will be enrolled in Medicaid by 2014.

We also must give discounts or rebates on purchases or reimbursements of pharmaceutical products by certain other federaland state agencies and programs. See the discussion regarding rebates in the Analysis of the Consolidated Statements of Income —Revenues — Overview section of the MD&A in our 2012 Financial Report and in the Notes to Consolidated Financial Statements —Note 1G. Basis of Presentation and Significant Accounting Policies: Revenues in our 2012 Financial Report, which are incorporatedby reference.

PDUFA Reauthorization. The Prescription Drug User Fee Act (PDUFA) was first enacted in 1992 to provide the FDA withadditional resources to speed the review of important new medicines. Prior to PDUFA, inadequate funding of the FDA drug reviewprocess led to a backlog of application reviews and lengthy review times. PDUFA revolutionized the review

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process for new drugs and biologics without compromising high approval standards for demonstration of product safety, qualityand efficacy. PDUFA expires every five years and must be reauthorized by Congress. PDUFA IV expired on September 30, 2012, andwas renewed as Title I of the FDA Safety and Innovation Act (FDASIA). In addition to PDUFA V, FDASIA included a range ofprovisions important to the industry, including new user fee requirements for biosimilar products and generics. The PDUFA Vreauthorization reflected months of discussion between the FDA, industry and other stakeholders such as patient groups andconsumers. The current PDUFA V agreement focuses on improving the efficiency and predictability of the review process,strengthening the agency regulatory science base and enhancing benefit-risk assessment and post-approval safety surveillance.

Budget Control Act of 2011 . In August 2011, the federal Budget Control Act of 2011 (the Budget Control Act) was enacted inthe U.S. The Budget Control Act includes provisions to raise the U.S. Treasury Department’s borrowing limit, known as the debtceiling, and provisions to reduce the federal deficit by $2.4 trillion between 2012 and 2021. Deficit-reduction targets include $900billion of discretionary spending reductions associated with HHS and various agencies charged with national security, but thosediscretionary spending reductions do not include programs such as Medicare and Medicaid or direct changes to pharmaceuticalpricing, rebates or discounts. The Office of Management and Budget (OMB) is responsible for identifying the remaining $1.5 trillionof deficit reductions, which will be divided evenly between defense and non-defense spending. Under this OMB review process,Social Security, Medicaid, Veteran Benefits and certain other spending categories are excluded from consideration, but reductions inpayments to Medicare providers may be made, although any such reductions are prohibited by law from exceeding 2% of theoriginally budgeted amount. Additionally, certain payments to Medicare Part D plans, such as low-income subsidy payments, areexempt from reduction. While we do not know the specific nature of the spending reductions under the Budget Control Act that willaffect Medicare, we do not expect that those reductions will have a material adverse impact on our results of operations. However,any significant spending reductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs that maybe implemented, and/or any significant additional taxes or fees that may be imposed on us, as part of any broader deficit-reductioneffort or legislative replacement for the Budget Control Act, could have an adverse impact on our results of operations.

Federal Debt Ceiling. Enforcement of the U.S. federal debt ceiling has been suspended through May 18, 2013. If the U.S.federal government fails to suspend enforcement of the debt ceiling beyond May 18, 2013 or to increase the debt ceiling and, as aresult, is unable to satisfy its financial obligations, including under Medicare, Medicaid and other publicly funded or subsidizedhealth programs, our results of operations could be adversely impacted.

Outside the United States

We encounter similar regulatory and legislative issues in most other countries. In Europe, Canada, Japan, China, South Koreaand some other international markets, governments provide healthcare at low direct cost to consumers and regulate pharmaceuticalprices or patient reimbursement levels to control costs for the government-sponsored healthcare system. This internationalpatchwork of price regulation has led to different prices and some third-party trade in our products between countries.

Europe. The approval of new drugs across the EU may be achieved using the Mutual Recognition Procedure/DecentralizedProcedure or EU Commission/European Medicines Agency (EMA) Centralized Procedure. These procedures apply in the EUmember states, plus the European Economic Area countries, Norway and Iceland. The use of these procedures generally provides amore rapid and consistent approval process across the member states than was the case when the approval processes wereoperating independently within each country.

Since the EU does not have jurisdiction over patient reimbursement or pricing matters in its member states, we continue towork with individual countries on such matters across the region.

The world economy in 2012 faced ongoing challenges and, in particular, continuing uncertainty around the solvency ofgovernments. As a result, global growth has remained low, with many EU countries experiencing a second recession in recent years.One of the consequences of the economic challenges for almost all world economies has been an increase in public debt as aproportion of gross domestic product, arising from increased government spending and reduced tax receipts. For many developedeconomies, particularly in Europe, this has exacerbated existing fiscal imbalances and has created doubt in investment markets aboutthe sustainability of public debt levels in a number of European countries, further raising the cost of borrowing, with the result thatfinancial support has been necessary from the EU to Greece, Portugal, Ireland and Spain and from the International Monetary Fundin the cases of Greece, Portugal and Ireland. Stringent austerity measures have been implemented in many European countries withthe aim of closing the fiscal gap, in particular in Spain and Italy.

Under these macroeconomic conditions, Pfizer continues to face widespread downward pressures on international pricing andreimbursement, particularly in developed European markets, Japan and in certain emerging markets. all of which have a

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large government share of pharmaceutical spending and are facing a difficult fiscal environment. Specific pricing pressures in 2012included measures to reduce pharmaceutical prices and expenditures in Spain, Italy, France, Greece, Ireland, Portugal and Japan.

Formal processes of international reference pricing (IRP) between EU countries add to the regional impact of price cuts inindividual countries. Price variations also have arisen from exchange rate fluctuations between the euro and other Europeancurrencies, and these also are exacerbated by international reference pricing systems. The downward pricing pressure resulting fromthis dynamic can be expected to continue as a result of reforms to IRP policies, emergency measures targeting pharmaceuticals insome European countries and ongoing exchange rate turbulence.

In January 2007, a new EU Regulation on Medicines for Pediatric Use became effective. This introduced obligations onpharmaceutical companies to conduct research on their medicines for children and, subject to various conditions, offered thepossibility of incentives for so doing, including exclusivity extensions. The aim of this regulation is to improve the health of childrenin the EU through high-quality research, stimulating the development of new medicines, creating infrastructure to enable authorizeduse and improving the information on medicines for children. A Pediatric Committee was created within the EMA to providescientific opinions and input on development plans for medicines for use with children. In line with this regulation, Pfizer isconducting a number of pediatric research programs for its in-line and development products.

In July 2012, new pharmacovigilance legislation came into force in the EU, which included many new and revised requirementsthat impact Pfizer’s global safety system. Key changes include the establishment of a new Pharmacovigilance Risk AssessmentCommittee within the EMA, with wide responsibility for reviewing and making recommendations on product safety issues for the EUauthorities. Accordingly, it will be possible for regulators in the EU to require pharmaceutical companies to conduct post-authorization efficacy studies, both at the time of approval and at any time afterwards in light of scientific developments. There arealso additional requirements to include statements in product labeling with regard to adverse drug reaction reporting and additionalmonitoring of products. The new legislation also introduces significantly greater transparency of the safety review process.

The new legislation forms part of a three-part “pharmaceutical package” to amend the existing EU pharmaceutical legislation.The second part, the Falsified Medicines Directive, is a Directive aimed at preventing falsified medicines from entering into the legalsupply chain. Notably, the Directive imposes new obligations on all parties in the distribution chain, including importers, traders,manufacturers, distributors, and any operator who repackages a product. Member states must transpose the Directive into nationallaw and apply its provisions from January 2013 onwards. The Directive also provides the legal basis of a number of implementationmeasures to be adopted by the European Commission. Most of these implementation measures are expected to be adopted between2013 and 2014 and will not be applicable until three years after the date of publication. The third part of the package concerned theprovision of information on prescription medicines to patients, which proved controversial and has been discontinued.

Transparency is a key theme and priority for the European Commission and EMA in the pharmaceutical area, particularly withregard to clinical trial results and data submitted for marketing authorization in the EU. Recently, the EMA has disclosedsignificantly more of such data, upon request, than in previous years, and the EMA announced its intention to publish additionaldata in the future.

At the end of the third quarter of 2010, the Commissioner for Industry and Entrepreneurship of the European Commissionannounced the launch of a process on corporate responsibility in the pharmaceutical industry. The process, which is expected toofficially conclude in mid-April 2013, included three independent platforms: (i) transparency and ethics in the sector; (ii) access tomedicines in Africa; and (iii) access to medicines in Europe in the context of pricing and reimbursement. No specific outcomes haveyet been determined following the work undertaken by the platforms, but these discussions are likely to drive requests for futurechange, for example, on transparency and ethics in the pharmaceutical area.

Canada . Health Canada (HC) is the government agency that provides regulatory and marketing approval for drugs andtherapeutic products in Canada. In October 2012, the Federal Minister of Health announced the government’s intention to (i) re-introduce the Legislative and Regulatory Modernization (LRM) regulatory framework (which was originally presented to Parliamentin October 2010) and (ii) introduce “Orphanet” to Canada. Orphanet is an international consortium of countries that seeks to improvethe diagnosis, care and treatment of patients with rare disorders. The upcoming LRM regulatory framework is the most significantdrug regulatory system reform in Canada in over 50 years and is expected to overhaul Canada’s Food and Drugs Act andRegulations. The LRM supports a “lifecycle” regulatory approach and is focused on strengthening evidence-based decision-making, good regulatory planning, licensing, post-licensing, accountability, authority and enforcement. Through this framework, HCintends to improve the market authorization process and implement necessary regulatory frameworks.

Introductory “non-excessive” prices and price increases are controlled by the federal Patented Medicines Prices ReviewBoard. However, reimbursement is under provincial jurisdiction. As provinces continue to face budget pressure from growing

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healthcare expenditures, many provincial governments have developed pricing and purchasing strategies (including product listingagreements and a pan-Canadian purchasing alliance initiative) to obtain better drug prices. The private sector is also attempting toexert its negotiating power on drug manufacturers.

The 2004 Federal Provincial Territorial (FPT) Health Accord that sets out the Canada Health Transfers payment (abudgetary mechanism, that provides for funding to provincial governments by the federal government), plus commitments on healthpolicy initiatives expires on March 31, 2014. In advance of the 2014 expiration of the FPT Health Accord, the federal governmentannounced, in December 2011, a new funding framework that confirms its health transfer funding policy until 2024, and, assumingCanada achieves its projected gross domestic product growth target of 3%, provides for funding growth of 6% annually through2016-2017.

Asia. The regulatory environment in Asia presents multiple issues for companies trying to achieve simultaneous globaldevelopment and registration (i.e., marketing products at the same time as in the U.S., Europe, Canada and elsewhere). While eachcountry in Asia has its unique regulatory concerns, there are a number of regulatory issues that are common among the majority ofcountries in Asia. For example, with the exception of Japan, health authorities in Asia generally require marketing approval by arecognized regulatory authority (e.g., the U.S. FDA) before they begin to conduct their application review process and/or issue theirfinal approval. Proof of reference country approval is usually satisfied by submitting a Certificate of Pharmaceutical Product, a legaldocument that is issued by the competent health authority certifying that the company’s product has satisfied its country’sregistration requirements and manufacturing standards. Often, this requirement delays marketing authorization in Asia by 12-15months following marketing authorization in the U.S. and Europe.

Another common regulatory issue in Asia is the requirement for local clinical data in the country’s population in order toreceive final marketing approval. Each of Japan, China, South Korea, Taiwan, India and Vietnam has regulations that in some formrequire clinical studies in the country (e.g., China requires a prescribed number of Chinese patients regardless of the product,therapeutic area or disease population). Although some agencies have shown flexibility based on scientific rationale related toethnicity assessments, it is not uncommon for companies to be required to duplicate costly clinical trials in Asia pursuant to theseregulations. This can further add to marketing approval delays compared to the U.S. and Europe. Additionally, similar requirementsfor local clinical data exist outside of Asia in countries such as Mexico and Russia, where we try to ensure their inclusion in globalclinical studies, where feasible, or conduct additional studies there, which further delays marketing authorization in those countries.

In Japan, the government is aiming to reduce the drug lag (i.e., drugs are often launched in Japan years after the EU and U.S.markets) in a two-pronged approach: reducing regulatory agency review times and establishing a new pilot pricing premium. Thepilot pricing premium provides a financial incentive for drug development in Japan. While economic conditions and governmentdebt levels continue to put pressure on healthcare costs resulting in cost containment (particularly in the off-patent sector), therecent extension of the pilot pricing premium for innovative products is encouraging.

In South Korea, the national health insurance deficit prompted the government to make significant price cuts in the off-patentsector, effective April 2012. We continue to work with a committee established by the government to improve the pricing system forinnovative new drugs.

The controlling regulatory agency in China is the State Food and Drug Administration (SFDA). SFDA’s scope ofresponsibilities is similar to that of the FDA and EMA. Two key agencies within SFDA are the Center for Drug Evaluation (CDE) andthe National Institutes for Food and Drug Control (NIFDC). The CDE, which is analogous to the FDA’s Center for Drug Evaluationand Research, is primarily responsible for the technical review of product applications, including clinical trial applications and newdrug applications, and drafting technical guidance documents. NIFDC is the quality testing arm of SFDA, responsible for the testingof pharmaceuticals, biologics and medical devices nationwide.

China’s regulatory system is unique in many ways, and its drug development and registration requirements are not alwaysconsistent with international standards. As a result, it is not uncommon to see treatments entering the market in China two to fiveyears after first marketing in the U.S. and Europe. There are three main contributing elements for this delay: (i) clinical trialauthorization approval times that are five to 10 times longer than international standards and add greater than 12 months todevelopment time; (ii) significant local Chinese patient number requirements for biologic products, regardless of productcharacteristics or disease prevalence; and (iii) although the SFDA has improved its framework for more transparency, a formalagency consultation structure, which would enable manufacturers to better align with the agency on the complexities of its drugdevelopment requirements and policies, has not been established.

Intellectual Property . While the global intellectual property environment has improved following WTO-TRIPS, our futurebusiness growth depends on further progress in intellectual property protection (see Patents and Intellectual Property Rightsabove). In emerging market countries in particular, governments have used intellectual property policies as a tool for

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reducing the price of imported medicines, as well as to protect their national pharmaceutical industries. There is considerablepolitical pressure to weaken existing intellectual property protection and resist implementation of any further protection, which hasled to policies such as more restrictive standards and more difficult procedures for patenting biopharmaceutical inventions,restrictions on patenting certain types of inventions (e.g., new medical treatment methods) and failure to implement effectiveregulatory data protection. Our industry advocacy efforts focus on seeking a more balanced business environment for foreignmanufacturers.

In December 2012, the EU approved an EU Patent Package, which was agreed to by 25 out of 27 EU member states (excludingItaly and Spain, which opted out but which are free to opt back in). This will create a Unitary EU patent, i.e., a uniform patent withequal effect that will be granted, transferred, and enforced in a unitary way through participating member states. Patent grants willcontinue to be granted through the existing European Patent Office, but a new court system will be set up to enforce such patentsand hear revocation actions. The central Division of the new court will be in Paris, although a section based in London will hearchemical and pharmaceutical cases. The new regime reduces the translation requirement, should allow patentees to obtain pan-European injunctions and damages, and should reduce forum-shopping in Europe for patent holders seeking to enforce theirpatents, as well as generic manufacturers alleging patent invalidity or non-infringement. The EU Patent Package will enter into forceon January 1, 2014 or, after 13 European countries have ratified it, whichever is later.

Canada’s intellectual property regime for drugs provides some level of patent protection and data exclusivity, but is generallyperceived to be less predictable than the intellectual property regimes of comparable countries. Through intense negotiations as partof the Canada/EU Comprehensive Economic & Trade Agreement (CETA), the Canadian intellectual property regime may be furtherenhanced by EU demands to align their respective intellectual property regimes. Canada recently joined the Trans-Pacific TradePartnership (TPP), and it is expected that more pressure to improve its intellectual property regime will arise if nothing results fromthe CETA agreement.

In China, the intellectual property environment has improved, although effective enforcement and adequate legal remediesremain areas of concern. The government has taken steps to protect intellectual property rights in conformity with World TradeOrganization (WTO) provisions, and several companies, including Pfizer, have established research and development centers inChina due to increased confidence in China’s intellectual property environment. Despite this, China remained on the U.S.Department of Commerce Priority Watch List for 2012. Further, the standards for patentability in China remain more restrictive thanin other major markets, including the U.S., Europe and Japan. Also, while a framework exists for protecting patents for 20 years,enforcement mechanisms are often lacking or inconsistent, such as the absence of effective patent linkage mechanisms andpreliminary injunctions, impractical evidentiary burdens, and heightened sufficiency standards used to invalidate patents at theenforcement stage.

Additionally, true regulatory data protection remains elusive in China. The Center for Drug Evaluation provides protectionagainst reliance on data by generic applicants for a fixed period of time. Following its WTO accession in 2001, China revised its lawsto incorporate concepts from the WTO-TRIPS, and China’s relevant laws establish a six-year period of protection against unfaircommercial use of undisclosed test and other data of products containing a new chemical ingredient. However, the currentregulations are ambiguous as to how data protection is implemented in practice in China. For example, certain key concepts such as“new chemical ingredient” and “unfair commercial use” are undefined.

In Brazil and other Latin American countries, backlogs at patent agencies have presented challenges for the protection ofcertain products. The lack of regulatory data protection and difficulties in protecting certain types of inventions, such as newmedical uses of drug products, may limit the commercial lifespan of some pharmaceutical products.

In India, policies favoring compulsory licensing of patents, the increasing tendency of the Indian Patent Office to revokepharmaceutical patents in opposition proceedings, and restrictive standards for patentability of pharmaceutical products have madeit difficult to protect many of our inventions. India and other countries such as Israel maintain a system of pre-grant patentoppositions that delay the granting of patents and add an additional challenge in our ability to protect our products throughpatents.

In South Korea, the laws and regulations for the patent-regulatory approval linkage system were finalized and implemented aspart of the United States-Korea Free Trade Agreement in 2012. The Korean patent-regulatory approval linkage system includesbiologics.

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Environmental Law Compliance

Most of our operations are affected by national, state and/or local environmental laws. We have made, and intend to continueto make, the expenditures necessary for compliance with applicable laws. We also are cleaning up environmental contamination frompast industrial activity at certain sites. See the Notes to Consolidated Financial Statements — Note 17. Commitments andContingencies in our 2012 Financial Report. As a result, we incurred capital and operational expenditures in 2012 for environmentalcompliance purposes and for the clean-up of certain past industrial activity as follows:

• environment-related capital expenditures — $27 million; and

• other environment-related expenses — $157 million.

While capital expenditures or operating costs for environmental compliance, including compliance with potential legislationand potential regulation related to climate change, cannot be predicted with certainty, we have no reason to believe they will have amaterial effect on our capital expenditures or competitive position.

While there can be no assurance that physical risks to our facilities and supply chain due to climate change will not occur inthe future, we have reviewed the potential for these risks and have concluded that, because of our facility locations and our existingdistribution networks, we do not believe these risks are material in the near term.

Tax Matters

The discussion of tax-related matters in the Notes to Consolidated Financial Statements — Note 5. Tax Matters in our 2012Financial Report, is incorporated by reference.

Employees

In our innovation-intensive business, our employees are vital to our success. We believe we have good relationships with ouremployees. As of December 31, 2012, we employed approximately 91,500 people in our operations throughout the world, includingapproximately 9,300 people in our Animal Health operations.

Disclosure Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012

Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (ITRSHRA) requires disclosure by publiccompanies of certain transactions involving the Government of Iran or other entities and individuals targeted by certain U.S.sanctions administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC). In some instances,ITRSHRA requires companies to disclose these types of transactions, even if they were permissible under U.S. law or wereconducted by a non-U.S. affiliate in accordance with the local law under which such entity operates.

As a global biopharmaceutical company, we conduct business in multiple jurisdictions throughout the world. During 2012, ouractivities included supplying life-saving medicines, nutritional supplements and other medical products (Pfizer products) for patientand consumer use in Iran and Syria. U.S. law allows us to seek and rely on licenses issued by OFAC to supply Pfizer products tocustomers in these countries, for both human and animal use. We ship these Pfizer products pursuant to such licenses, and weconduct our activities in accordance with our internal policies, which follow requirements set forth in the laws of the U.S. and otherapplicable jurisdictions. We will continue our global activities to improve the health and well-being of humans and animals in amanner consistent with applicable laws and our internal policies.

To our knowledge, none of our activities during 2012 are required to be disclosed pursuant to ITRSHRA, with the followingpossible exceptions:

(1) Pursuant to U.S. government authorizations, during 2012, our Animal Health business unit, through a non-U.S. affiliate,shipped Pfizer products to authorized customers in Iran. These shipments were backed by letters of credit issued by BankTejarat to a non-U.S. company acquired by Pfizer in 2011. The letters of credit were issued by Bank Tejarat and the Pfizerproducts were shipped to customers in Iran prior to the Bank’s designation as a Specially Designated National (SDN) underExecutive Order 13382. After Bank Tejarat’s designation, Pfizer’s non-U.S. affiliate sought payment from Bank Tejarat bypresenting shipping documentation to the non-U.S. affiliate’s bank in Europe

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and, as a result, subsequently received certain payments. Not all funds related to these transactions have been receivedfrom Bank Tejarat. Where required, we have requested U.S. government authorization to process the funds received and tobe received. For funds received in 2012, our estimated gross revenues associated with these transactions were euro222,962. Other than as set forth in the Notes to Consolidated Financial Statements — Note 18. Segment, Geographic andOther Revenue Information , including the tables therein captioned Selected income statement information, GeographicInformation and Significant Product Revenues in our 2012 Financial Report and in the table captioned Revenues bySegment and Geographic Area in the MD&A in our 2012 Financial Report, we do not allocate net profit on a country-by-country or activity-by-activity basis and, thus, cannot provide specific net profits ascribable to this activity. Pfizer’s netprofits attributable to these transactions in 2012 were a fraction of the gross revenues.

(2) Pursuant to U.S. government authorizations, during 2012, our Emerging Markets business unit, through a non-U.S. affiliate,shipped Pfizer products to authorized customers in Iran. The shipments were backed by letters of credit issued by BankTejarat prior to its designation as an SDN under Executive Order 13382. As a result of the shipments, which also occurredprior to Bank Tejarat’s designation, Pfizer’s non-U.S. affiliate sought payment from Bank Tejarat by presenting shippingdocumentation to the non-U.S. affiliate’s bank in Europe. In some cases, the presentation of documents occurred beforeBank Tejarat’s designation, and in other cases after such designation. Not all funds related to these transactions have beenreceived from Bank Tejarat. We have received U.S. government authorization for several of the foregoing transactions withBank Tejarat and, where required, have requested U.S. government authorization for the other transactions with BankTejarat. For funds received in 2012, our estimated gross revenues associated with these transactions were euro 397,071. Asnoted above, we do not allocate net profits on a country-by-country or activity-by-activity basis and, thus, cannot providespecific net profits ascribable to this activity. Pfizer’s net profits attributable to these transactions in 2012 were a fraction ofthe gross revenues.

(3) Pursuant to U.S. government authorizations, during 2012, our Emerging Markets business unit, through a non-U.S. affiliate,shipped Pfizer products to an authorized customer in Syria. These shipments were backed by a letter of credit issued bySyria International Islamic Bank (SIIB) prior to SIIB’s designation as an SDN under Executive Order 13382. As a result ofthe shipment, which occurred prior to SIIB’s designation as an SDN, Pfizer’s non-U.S. affiliate sought payment from SIIBby presenting shipping documentation to the non-U.S. affiliate’s bank in Europe. Both the presentation of documents andthe resulting payment occurred after SIIB was designated as an SDN. Where required, we have requested U.S. governmentauthorization to process the funds received. Our estimated gross revenues in 2012 associated with this transaction wereeuro 315,960. As noted above, we do not allocate net profits on a country-by-country or activity-by-activity basis and,thus, cannot provide specific net profits ascribable to this activity. Pfizer’s net profits attributable to this transaction in2012 were a fraction of the gross revenues.

We have informed our customers that, in connection with future transactions with Pfizer, Bank Tejarat, SIIB and any otherbanks designated as SDNs under Executive Order 13382 are not to be used.

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ITEM 1A. RISK FACTORS

The statements in this Section describe the major risks to our business and should be considered carefully. In addition, thesestatements constitute our cautionary statements under the Private Securities Litigation Reform Act of 1995.

Our disclosure and analysis in this 2012 Form 10-K and in our 2012 Annual Report to Shareholders contain forward-looking statements that set forth anticipated results based on management’s plans and assumptions. From time to time, we alsoprovide forward-looking statements in other materials we release to the public, as well as oral forward-looking statements. Suchforward-looking statements involve substantial risks and uncertainties. We have tried, wherever possible, to identify suchstatements by using words such as “will,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,”“forecast”, “goal”, “objective” and other words and terms of similar meaning, or by using future dates in connection with anydiscussion of, among other things, our anticipated future operating or financial performance, business plans and prospects, in-line products and product candidates, strategic reviews, capital allocation, business-development plans and plans relating toshare repurchases and dividends. In particular, these include statements relating to future actions, business plans and prospects,prospective products or product approvals, future performance or results of current and anticipated products, sales efforts,expenses, interest rates, foreign exchange rates, the outcome of contingencies, such as legal proceedings, plans relating to sharerepurchases and dividends, government regulation and financial results, including, in particular, the financial guidance set forthin the Overview of Our Performance, Operating Environment, Strategy and Outlook — Our Financial Guidance for 2013 sectionof the MD&A in our 2012 Financial Report and the anticipated costs and cost reductions set forth in the Analysis of theConsolidated Statements of Income — Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives section of the MD&A in our 2012 Financial Report.

We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent inour plans and assumptions. Achievement of anticipated results is subject to substantial risks, uncertainties and inaccurateassumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate,actual results could vary materially from past results and those anticipated, estimated or projected. You should bear this in mindas you consider forward-looking statements, and you are cautioned not to put undue reliance on forward-looking statements.

We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, futureevents or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Form 10-Qand 8-K reports and our other filings with the SEC. Also note that we provide the following cautionary discussion of risks,uncertainties and possibly inaccurate assumptions relevant to our businesses. These are factors that, individually or in theaggregate, may cause our actual results to differ materially from expected and historical results. We note these factors forinvestors as permitted by the Private Securities Litigation Reform Act of 1995. You should understand that it is not possible topredict or identify all such factors. Consequently, you should not consider the following to be a complete discussion of allpotential risks or uncertainties.

U.S. Healthcare Reform/Healthcare Legislation

As mentioned above under Government Regulation and Price Constraints , the ACA was enacted by Congress in March2010 and its provisions become effective on various dates. We expect that the rebates, discounts, taxes and other costs resultingfrom the ACA over time will have a significant effect on our expenses and profitability in the future. See the discussion under theOverview of Our Performance, Operating Environment, Strategy and Outlook — Our Operating Environment — U.S. HealthcareLegislation section of the MD&A in our 2012 Financial Report and in Item 1. Business under the caption Government Regulationand Price Constraints . Furthermore, the IPAB created by the ACA to reduce the per capita rate of growth in Medicare spending,could potentially limit access to certain treatments or mandate price controls for our products. Moreover, expanded governmentinvestigative authority may increase the costs of compliance with new regulations and programs. We also face the uncertainties thatmight result from any modification, repeal or invalidation of any of the provisions of the ACA.

U.S. Deficit Reduction and Debt Ceiling Actions

As discussed above under Government Regulation and Price Constraints — Budget Control Act of 2011 , while we do notknow the specific nature of the spending reductions under the Budget Control Act that will affect Medicare, we do not expect thatthose reductions will have a material adverse impact on our results of operations. However, any significant spending reductionsaffecting Medicare, Medicaid or other publicly funded or subsidized health programs that may be implemented,

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and/or any significant additional taxes or fees that may be imposed on us, as part of any broader deficit-reduction effort orlegislative replacement to the Budget Control Act, could have an adverse impact on our results of operations.

Similarly, as discussed above under Government Regulation and Price Constraints — Federal Debt Ceiling , the possiblefailure of the U.S. federal government to suspend enforcement of the federal debt ceiling beyond May 18, 2013 or to increase thefederal debt ceiling, and any resulting inability of the federal government to satisfy its financial obligations, including makingpayments under Medicare, Medicaid and other publicly funded or subsidized health programs could have an adverse impact on ourresults of operations.

Pricing Pressures and Government Regulation

U.S. and foreign governmental regulations mandating price controls and limitations on patient access to our products impactour business, and our future results could be adversely affected by changes in such regulations or policies. In the U.S., many of ourbiopharmaceutical products are subject to increasing pricing pressures. Such pressures have increased as a result of the 2003Medicare Modernization Act (2003 MMA) due to the enhanced purchasing power of the private sector plans that negotiate onbehalf of Medicare beneficiaries. In addition, if the 2003 MMA or the ACA were amended to impose direct governmental pricecontrols and access restrictions, it would have a significant adverse impact on our business. Furthermore, MCOs, as well asMedicaid and other government agencies, continue to seek price discounts. Some states have implemented, and other states areconsidering, price controls or patient access constraints under the Medicaid program, and some states are considering price-controlregimes that would apply to broader segments of their populations that are not Medicaid-eligible. Other matters also could be thesubject of U.S. federal or state legislative or regulatory action that could adversely affect our business, including, among others,changes in patent laws, restrictions on U.S. direct-to-consumer advertising, limitations on interactions with healthcare professionals,or the use of comparative effectiveness methodologies that could be implemented in a manner that focuses primarily on costdifferences and minimizes the therapeutic differences among pharmaceutical products and restricts access to innovative medicines.Further, there continue to be legislative proposals to amend U.S. laws to allow the importation into the U.S. of prescription drugs,which can be sold at prices that are regulated by the governments of various foreign countries. In addition to well-documentedsafety concerns, such as the increased risk of counterfeit products entering the supply chain, such importation could impactpharmaceutical prices in the U.S.

The prohibition against the use of federal funds for reimbursement of erectile dysfunction medications by the Medicaidprogram, which became effective January 1, 2006, and the similar federal funding prohibition for the Medicare Part D program, whichbecame effective January 1, 2007, has had an adverse effect on our business. Any prohibitions on the use of federal funds forreimbursement of other classes of drugs in the future may also have an adverse effect.

We encounter similar regulatory and legislative issues in most other countries. In Europe, Canada, China, South Korea andsome other international markets, governments provide healthcare at low direct cost to consumers and regulate pharmaceuticalprices or patient reimbursement levels to control costs for government-sponsored healthcare systems. In particular, there weregovernment-mandated price reductions for certain biopharmaceutical products in Japan and certain European and emerging marketcountries in 2012, and we anticipate continuing pricing pressures in Japan, Europe and emerging markets in 2013. This internationalpatchwork of price regulation has led to different prices and some third-party trade in our products between countries. As a result, itis expected that pressures on the pricing component of operating results will continue. The adoption of restrictive price controls innew jurisdictions or more restrictive ones in existing jurisdictions, failure to obtain timely or adequate government-approved pricingor formulary placement where required for our products or obtaining such pricing or placement at unfavorable pricing could alsoadversely impact revenue. In our vaccines business, we participate in a tender process in many countries for participation in nationalimmunization programs. Failure to secure participation in national immunization programs or to obtain acceptable pricing in thetender process could adversely affect our business.

Managed Care Trends

MCOs and other private insurers frequently adopt their own payment or reimbursement reductions. Consolidation amongMCOs has increased the negotiating power of these entities. Private third-party payers, as well as governments, increasingly employformularies to control costs by negotiating discounted prices in exchange for formulary inclusion. Failure to obtain timely oradequate pricing or formulary placement for our products or obtaining such pricing or placement at unfavorable pricing couldadversely impact revenue. In addition to formulary tier co-pay differentials, private health insurance companies and self-insuredemployers have been raising co-payments required from beneficiaries, particularly for branded pharmaceuticals and biotechnologyproducts. Private health insurance companies also are increasingly imposing utilization management tools, such as requiring priorauthorization for a branded product if a generic product is available or requiring the patient to first fail on one or more genericproducts before permitting access to a branded medicine. As the U.S. payer market

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concentrates further and as more drugs become available in generic form, biopharmaceutical companies may face greater pricingpressure from private third-party payers, who will continue to drive more of their patients to use lower cost generic alternatives.

Generic Competition

Competition from manufacturers of generic drugs is a major challenge for us around the world, and the loss or expiration ofintellectual property rights can have a significant adverse effect on our revenues. Upon the expiration or loss of patent protectionfor one of our products, or upon the “at-risk” launch (despite pending patent infringement litigation against the generic product) bya generic manufacturer of a generic version of one of our patented products, we can lose the major portion of revenues for thatproduct in a very short period of time, which can adversely affect our business. As discussed above, a number of our currentproducts are expected to face significantly increased generic competition over the next few years.

Also, the patents covering several of our medicines, including Viagra , Lyrica , Sutent , Rapamune , EpiPen , Torisel , Pristiqand Embeda extended-release capsules are being challenged by generic manufacturers. In addition, our patent-protected productsmay face competition in the form of generic versions of competitors’ branded products that lose their market exclusivity.

Competitive Products

We cannot predict with accuracy the timing or impact of the introduction of competitive products or their possible effect onour sales. Products that compete with ours, including some of our best-selling medicines, are launched from time to time.Competitive product launches have occurred in recent years, and certain potentially competitive products are in various stages ofdevelopment, some of which have been filed for approval with the FDA and with regulatory authorities in other countries.

Dependence on Key In-Line Products

We recorded direct product revenues of more than $1 billion for each of 10 biopharmaceutical products in 2012: Lyrica ,Lipitor , Enbrel , Prevnar 13/Prevenar 13 , Celebrex , Viagra , Norvasc , Zyvox , Sutent , and the Premarin family. Those productsaccounted for 49% of our total biopharmaceutical revenues in 2012. If these products or any of our other major products were tobecome subject to problems such as loss of patent protection, changes in prescription growth rates, material product liabilitylitigation, unexpected side effects, regulatory proceedings, publicity affecting doctor or patient confidence, pressure from existingcompetitive products, changes in labeling or, if a new, more effective treatment should be introduced, the adverse impact on ourrevenues could be significant. As noted, patents covering several of our best-selling medicines have recently expired or will expire inthe next few years (including some of our billion-dollar and previously billion-dollar products such as Lipitor and Xalatan/Xalacom), and patents covering a number of our best-selling medicines are the subject of pending legal challenges. In addition, our revenuescould be significantly impacted by the timing and rate of commercial acceptance of key new products.

Further, our Alliance revenues will be adversely affected by the termination or expiration of collaboration agreements that wehave entered into and that we may enter into from time to time. For example, our rights to Aricept in Japan returned to Eisai inDecember 2012; our collaboration with Boehringer Ingelheim for Spiriva expires on a country-by-country basis between 2012 and2016, including the expiration in certain EU markets, Canada and Australia in 2012; our U.S. and Canada collaboration agreement withAmgen Inc. (Amgen) for Enbrel will expire in October 2013 (our exclusive rights to Enbrel outside the U.S. and Canada will not beaffected by the expiration of the co-promotion agreement with Amgen); and our collaboration agreement with EMD Serono Inc.(Serono) to co-promote Rebif in the U.S. will expire either at the end of 2013 or the end of 2015, depending on the outcome ofpending litigation between us and Serono concerning the interpretation of the agreement. See the Analysis of the ConsolidatedStatements of Income — Biopharmaceutical — Selected Product Descriptions and Overview of Our Performance, OperatingEnvironment, Strategy and Outlook — The Loss or Expiration of Intellectual Property Rights sections of the MD&A in our 2012Financial Report for additional information on the expirations of these agreements.

Research and Development Investment

The discovery and development of safe, effective new products, and the development of additional uses for existing products,are necessary for the continued strength of our business. Our product lines must be replenished over time in order to offset revenuelosses when products lose their exclusivity, as well as to provide for revenue and earnings growth. Our growth potential depends inlarge part on our ability to identify and develop new products or new indications for existing products

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that address unmet medical needs and receive reimbursement from payers, either through internal research and development orthrough collaborations, acquisitions, joint ventures or licensing or other arrangements with third parties. However, balancing currentgrowth and investment for the future remains a major challenge. Our ongoing investments in new product introductions and inresearch and development for new products and existing product extensions could exceed corresponding sales growth. This couldproduce higher costs without a proportional increase in revenues.

Additionally, our research and development investment plans and resources may not be correctly matched between scienceand markets, and failure to invest in the right technology platforms, therapeutic segments, product classes, geographic marketsand/or in-licensing and out-licensing opportunities in order to deliver a robust pipeline could adversely impact the productivity ofour pipeline. Further, even if the areas with the greatest market attractiveness are identified, the science may not work for any givenprogram despite the significant investment required for research and development.

In 2011, we announced a focus on fewer disease areas where we believe we can deliver the greatest medical and commercialsuccess, as well as the implementation of our R&D footprint reduction by moving forward on our productivity initiatives. There canbe no assurance that this strategy will deliver the desired result in the targeted timeframe or at all, which could affect profitability inthe future.

Development, Regulatory Approval and Marketing of Products

The outcome of the lengthy and complex process of identifying new compounds and developing new products is inherentlyuncertain and involves a high degree of risk. Drug discovery and development is time-consuming, expensive and unpredictable. Theprocess from early discovery or design to development to regulatory approval can take many years. Drug candidates can fail at anystage of the process. There can be no assurance as to whether or when we will receive regulatory approval for new products or fornew indications or dosage forms for existing products. Decisions by regulatory authorities regarding labeling, ingredients and othermatters could adversely affect the availability or commercial potential of our products, and there is no assurance that any of our latestage pipeline products will receive regulatory approval and/or be commercially successful or that recently approved products willbe approved in other markets and/or be commercially successful. There is also a risk that we may not adequately address existingregulatory agency findings concerning the adequacy of our regulatory compliance processes and systems or implement sustainableprocesses and procedures to maintain regulatory compliance and to address future regulatory agency findings, should they occur.

There are many considerations that can affect the marketing of our products around the world. Regulatory delays, the inabilityto successfully complete or adequately design and implement clinical trials within the anticipated quality, time and cost guidelines orin compliance with applicable regulatory expectations, claims and concerns about safety and efficacy, new discoveries, patentdisputes and claims about adverse side effects are a few of the factors that can adversely affect the realization of research anddevelopment and product-related, forward-looking statements. Further, claims and concerns about safety and efficacy can result in anegative impact on product sales, product recalls or withdrawals, and/or consumer fraud, product liability and other litigation andclaims. Also, increasing regulatory scrutiny of drug safety and efficacy, with regulatory authorities increasingly focused on productsafety and the risk/benefit profile of products as they relate to already-approved products, has resulted in a more challenging,expensive and lengthy regulatory approval process due to requests for, among other things, additional clinical trials prior togranting approval or increased post-approval requirements, such as risk evaluation and mitigation strategies (see Post-ApprovalData below).

In addition, failure to put in place adequate controls and/or resources for effective collection, reporting and management ofadverse events from clinical trials and post-marketing surveillance (see Post-Approval Data below), in compliance with current andevolving regulatory requirements could result in risks to patient safety, regulatory actions and risks to product sales.

Post-Approval Data

As a condition to granting marketing approval of a product, the FDA may require a company to conduct additional clinicaltrials. The results generated in these Phase IV trials could result in loss of marketing approval, changes in product labeling, and/ornew or increased concerns about the side effects or efficacy of a product. The Food and Drug Administration Amendments Act of2007 (the FDAAA) gave the FDA enhanced post-market authority, including the explicit authority to require post-market studiesand clinical trials, labeling changes based on new safety information, and compliance with FDA-approved risk evaluation andmitigation strategies. The FDA’s exercise of its authority under the FDAAA has in some cases resulted, and in the future couldresult, in delays or increased costs during product development, clinical trials and regulatory review, increased costs to comply withadditional post-approval regulatory requirements and potential restrictions on sales of approved products. Non-U.S. regulatoryagencies often have similar authority and may impose comparable costs. For

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example, a post-marketing study as part of a post-approval commitment to marketing authorization is becoming more common inChina, where the SFDA requires additional clinical data in the Chinese population in order to further assess the safety and efficacyof a product, sometimes independent of the level of global clinical data available. Post-marketing studies, whether conducted by usor by others and whether mandated by regulatory agencies or voluntary, and other emerging data about marketed products, such asadverse event reports, may also adversely affect sales of our products. Further, the discovery of significant problems with a productsimilar to one of our products that implicate (or are perceived to implicate) an entire class of products could have an adverse effecton sales of the affected products. Accordingly, new data about our products, or products similar to our products, could negativelyimpact demand for our products due to real or perceived side effects or uncertainty regarding efficacy and, in some cases, couldresult in updated labeling, restrictions on use, product withdrawal or recall. Furthermore, new data and information, includinginformation about product misuse, may lead government agencies, professional societies, practice management groups ororganizations involved with various diseases to publish guidelines or recommendations related to the use of our products or the useof related therapies or place restrictions on sales. Such guidelines or recommendations may lead to lower sales of our products.

Patent Protection

Our long-term success largely depends on our ability to market technologically competitive products. We rely and expect tocontinue to rely on a combination of intellectual property, including patent, trademark, trade dress, copyright, trade secret anddomain name protection laws, as well as confidentiality and license agreements with our employees and others, to protect ourintellectual property and proprietary rights. If we fail to obtain and maintain adequate intellectual property protection, we may not beable to prevent third parties from launching generic versions of our products, using our proprietary technologies or from marketingproducts that are very similar or identical to ours. Our currently pending or future patent applications may not result in issuedpatents, or be granted on a timely basis. Similarly, any term extensions that we seek may not be granted on a timely basis, if at all. Inaddition, our issued patents may not contain claims sufficiently broad to protect us against third parties with similar technologies orproducts or provide us with any competitive advantage, including exclusivity in a particular product area. The scope of our patentclaims also may vary between countries, as individual countries have distinctive patent laws. We may be subject to challenges bythird parties regarding our intellectual property, including, among others, claims regarding validity, enforceability, scope andeffective term.

Our ability to enforce our patents also depends on the laws of individual countries and each country’s practice with respect to

enforcement of intellectual property rights, and the extent to which certain sovereigns may seek to engage in a policy of routine

compulsory licensing of pharmaceutical intellectual property as a result of local political pressure or in the case of national

emergencies. In addition, mechanisms exist in much of the world permitting some form of challenge by competitors or generic drug

marketers to our patents prior to, or immediately following, the expiration of any regulatory exclusivity, and generic companies are

increasingly employing aggressive strategies, such as “at risk” launches to challenge our patent rights. Further, if we are unable to

maintain our existing license agreements or other agreements pursuant to which third parties grant us rights to intellectual property,

including because such agreements expire or are terminated, our operating results and financial condition could be materially

adversely affected.

Likewise, in the U.S. and other countries, we currently hold issued trademark registrations and have trademark applicationspending, any of which may be the subject of a governmental or third party objection, which could prevent the maintenance orissuance of the same. As our products mature, our reliance on our trademarks to differentiate us from our competitors increases andas a result, if we are unable to prevent third parties from adopting, registering or using trademarks and trade dress that infringe,dilute or otherwise violate our trademark rights, our business could be materially adversely affected. We actively seek to protect ourproprietary information, including our trade secrets and proprietary know-how, by requiring our employees, consultants, otheradvisors and other third parties to execute proprietary information and confidentiality agreements upon the commencement of theiremployment, engagement or other relationship. Despite these efforts and precautions, we may be unable to prevent a third partyfrom copying or otherwise obtaining and using our trade secrets or our other intellectual property without authorization, and legalremedies in some countries may not adequately compensate us for the damages caused by such unauthorized use. Further, othersmay independently and lawfully develop substantially similar or identical products that circumvent our intellectual property bymeans of alternative designs or processes or otherwise.

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Biotechnology Products

As discussed above in Patents and Intellectual Property and Government Regulation and Price Constraints — Biosimilars ,abbreviated legal pathways for the approval of biosimilars exist in certain international markets and, since the passage of the ACA, aframework for such approval exists in the U.S. If competitors are able to obtain marketing approval for biosimilars referencing ourbiotechnology products, our biotechnology products may become subject to competition from biosimilars, with attendantcompetitive pressure. The expiration or successful challenge of applicable patent rights could trigger this competition, assuming anyrelevant exclusivity period has expired. We may face more litigation with respect to the validity and/or scope of patents relating toour biotechnology products with substantial revenue.

We are developing biosimilar medicines. The developing pathway for registration and approval of biosimilar products in theU.S. could diminish the value of our past and future investments in biosimilars. Other risks related to our development of biosimilarsinclude the potential for steeper than anticipated price erosion due to increased competitive intensity, coupled with high costsassociated with clinical development or intellectual property challenges that may preclude timely commercialization of our potentialbiosimilar products. There is also a risk of lower prescriptions of biosimilars due to potential concerns over comparability withinnovator medicines.

Research Studies

Decisions about research studies made early in the development process of a drug candidate can have a substantial impact onthe marketing strategy and payer reimbursement possibilities once the drug receives approval. For example, more detailed studiescan lead to approval for a broader set of indications that may impact the marketing and payer reimbursement process, but eachadditional indication must be balanced against the time and resources required to demonstrate benefit and the potential delays toapproval of the primary indication. We try to plan clinical trials prudently and to reasonably foresee challenges, but there is noguarantee that an optimal balance between speed, trial conduct and desired outcome will be achieved each time. The quality of ourdecisions in this area could affect our future results.

Foreign Exchange and Interest Rate Risk

Significant portions of our revenues and earnings, as well as our substantial international net assets, are exposed to changesin foreign exchange rates. 61% of our total 2012 revenues were derived from international operations, including 26% from the Europeregion and 21% from the Japan and the rest of Asia region. As we operate in multiple foreign currencies, including the euro, theJapanese yen, the U.K. pound, the Chinese renminbi, the Canadian dollar and approximately 100 other currencies, changes in thosecurrencies relative to the U.S. dollar will impact our revenues and expenses. If the U.S. dollar weakens against a specific foreigncurrency, our revenues will increase, having a positive impact, and our overall expenses will increase, having a negative impact, onnet income. Likewise, if the U.S. dollar strengthens against a specific foreign currency, our revenues will decrease, having a negativeimpact, and our overall expenses will decrease, having a positive impact, on net income. Therefore, significant changes in foreignexchange rates, including the impact of possible currency devaluations in countries experiencing high inflation rates, can impact ourresults and our financial guidance.

In addition, our interest-bearing investments and borrowings are subject to risk from changes in interest rates and foreignexchange rates. These risks and the measures we have taken to help contain them are discussed in the Forward-LookingInformation and Factors That May Affect Future Results — Financial Risk Management section of the MD&A in our 2012Financial Report. For additional details, see the Notes to Consolidated Financial Statements — Note 7E. Financial Instruments:Derivative Financial Instruments and Hedging Activities in our 2012 Financial Report. Those sections of our 2012 Financial Reportare incorporated by reference.

Notwithstanding our efforts to foresee and mitigate the effects of changes in fiscal circumstances, we cannot predict withcertainty changes in currency and interest rates, inflation or other related factors affecting our businesses.

Risks Affecting International Operations

Our international operations also could be affected by currency fluctuations, capital and exchange controls, expropriation andother restrictive government actions, changes in intellectual property legal protections and remedies, trade regulations andprocedures and actions affecting approval, production, pricing, and marketing of, reimbursement for and access to our products, aswell as by political unrest, unstable governments and legal systems and inter-governmental disputes. Any of these changes couldadversely affect our business.

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Many emerging markets have experienced growth rates in excess of the world’s largest markets, leading to an increasedcontribution to the industry’s global performance. As a result, we have been employing strategies to grow in emerging markets.However, there is no assurance that our strategies in emerging markets will be successful or that these countries will continue tosustain these growth rates. In addition, some emerging market countries may be particularly vulnerable to periods of financialinstability or significant currency fluctuations or may have limited resources for healthcare spending, which, as discussed above,can adversely affect our results.

Specialty Pharmaceuticals

Specialty pharmaceuticals are medicines that treat rare or life-threatening conditions that typically have smaller patientpopulations. The growing availability and use of innovative specialty pharmaceuticals, combined with their relative higher cost ascompared to other types of pharmaceutical products, has generated payer interest in developing cost-containment strategiestargeted to this sector. While the impact on us of payers’ efforts to control access to and pricing of specialty pharmaceuticals hasbeen limited to date, our growing portfolio of specialty products, combined with the increasing use of health technology assessmentin markets around the world, and the deteriorating finances of certain governments, may lead to a more significant adverse businessimpact in the future.

Animal Health

The Animal Health operating segment may be impacted by, among other things, emerging restrictions and bans on the use of

antibacterials in food-producing animals; perceived adverse effects on human health linked to the consumption of food derived from

animals that utilize our products; increased regulation or decreased governmental support relating to the raising, processing or

consumption of food-producing animals; an outbreak of infectious disease carried by animals; adverse weather conditions and the

availability of natural resources; adverse global economic conditions; and failure of the R&D, acquisition and licensing efforts to

generate new products. See Global Economic Conditions below.

Consumer Healthcare

The Consumer Healthcare operating segment may be impacted by economic volatility, the timing and severity of the cough,cold and flu season, generic or store brand competition affecting consumer spending patterns and market share gains ofcompetitors’ branded products or generic store brands. In addition, regulatory and legislative outcomes regarding the safety,efficacy or unintended uses of specific ingredients in our Consumer Healthcare products may require withdrawal and/orreformulation of certain products (e.g., cough/cold products). See Global Economic Conditions below.

Global Economic Conditions

In addition to industry-specific factors, we, like other businesses, continue to face the effects of the challenging economicenvironment, which have impacted our biopharmaceutical operations in the U.S. and Europe, including the countries that use theeuro, affecting the performance of products such as Lyrica , Enbrel , Prevnar 13/Prevenar 13 and Celebrex , and in a number ofemerging markets. We believe that patients, experiencing the effects of the challenging economic environment, including highunemployment levels, and increases in co-pays, sometimes switch to generic products, delay treatments, skip doses or use lesseffective treatments to reduce their costs. Challenging economic conditions in the U.S. also have increased the number of patients inthe Medicaid program, under which sales of pharmaceuticals are subject to substantial rebates and, in many states, to formularyrestrictions limiting access to brand-name drugs, including ours. In addition, we continue to experience pricing pressure in variousmarkets around the world, including in developed European markets, Japan and in a number of emerging markets, with government-mandated reductions in prices for certain biopharmaceutical products and government-imposed access restrictions in certaincountries.

The challenging global economic environment has not had, nor do we anticipate it will have, a material impact on our liquidityor capital resources. Due to our significant operating cash flows, financial assets, access to capital markets and available lines ofcredit and revolving credit agreements, we continue to believe that we have the ability to meet our liquidity needs for the foreseeablefuture. As market conditions change, we continue to monitor our liquidity position. However, there can be no assurance that ourliquidity or capital resources will not be affected by possible future changes in global financial markets and global economicconditions.

Other potential impacts of these challenging economic conditions include declining sales; increased costs; changes in foreignexchange rates; a decline in the value of, or a lower rate of return on, our financial assets and pension plan investments, which mayrequire us to increase our pension funding obligations; adverse government actions; delays or failures

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in the performance of customers, suppliers, and other third parties on whom we may depend for the performance of our business;and the risk that our allowance for doubtful accounts may not be adequate.

Outsourcing

We outsource certain services to third parties in areas including transaction processing, accounting, information technology,manufacturing, clinical trial execution, non-clinical research, safety services and other areas. For example, during 2012, weimplemented the transfer of approximately 200 on-going clinical trials to two strategic partners (clinical research organizations orCROs), and any issues with either or both of these CROs may adversely impact the progression of our clinical trial programs.Outsourcing of services to third parties could also expose us to sub-optimal quality of service delivery, which may result in misseddeadlines, supply disruptions, non-compliance or reputational harm, all with potential negative implications for our results.

We continue to pursue a multi-year initiative to outsource some transaction-processing activities within certain accountingprocesses and are migrating to a consistent enterprise resource planning system across the organization. These are enhancementsof ongoing activities to support the growth of our financial shared service capabilities and standardize our financial systems. If anydifficulties in the migration to or in the operation of the new system were to occur, they could adversely affect our operations,including, among other ways, through a failure to meet demand for our products, or adversely affect our ability to meet our financialreporting obligations.

Interactions with Healthcare Professionals and Government Officials

Risks and uncertainties apply where we provide something of value to a healthcare professional and/or government official,which, if found to be improper, could potentially result in government enforcement actions and penalties. These risks may increaseas non-U.S. jurisdictions adopt new anti-bribery laws and regulations.

Difficulties of Our Wholesale Distributors

In 2012, our largest wholesale distributor accounted for approximately 12% of our total revenue (and 28% of our total U.S.revenue), and our top three wholesale distributors accounted for approximately 28% of our total revenue (and 68% of our total U.S.revenue). If one of our significant wholesale distributors should encounter financial or other difficulties, such distributor mightdecrease the amount of business that it does with us, and we might be unable to collect all the amounts that the distributor owes uson a timely basis or at all, which could negatively impact our results of operations.

Product Manufacturing and Marketing Risks

Difficulties or delays in product manufacturing or marketing could affect future results through regulatory actions, shut-downs, approval delays, withdrawals, recalls, penalties, supply disruptions or shortages, reputational harm, product liability,unanticipated costs or otherwise. Examples of such difficulties or delays include, but are not limited to, the inability to increaseproduction capacity commensurate with demand; the failure to predict market demand for, or to gain market acceptance of, approvedproducts; the possibility that the supply of incoming materials may be delayed or become unavailable and that the quality ofincoming materials may be substandard and not detected; the possibility that we may fail to maintain appropriate quality standardsthroughout the internal and external supply network and/or comply with current Good Manufacturing Practices and other applicableregulations; or risk to supply chain continuity as a result of natural or man-made disasters at our facilities or at a supplier or vendor.

Counterfeit Products

A counterfeit medicine is one that has been deliberately and fraudulently mislabeled as to its identity and source. Acounterfeit Pfizer medicine, therefore, is one manufactured by someone other than Pfizer, but which appears to be the same as anauthentic Pfizer medicine. Counterfeit medicines pose a risk to patient health and safety because of the conditions under which theyare manufactured — in unregulated, unlicensed, uninspected and often unsanitary sites — as well as the lack of regulation of theircontents. Failure to mitigate the threat of counterfeit medicines, which is exacerbated by the complexity of our supply chain, couldadversely impact our business, by, among other things, causing the loss of patient confidence in the Pfizer name and in the integrityof our medicines.

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Cost and Expense Control/Unusual Events/Intangible Assets and Goodwill

Growth in costs and expenses, changes in product, segment and geographic mix and the impact of acquisitions, divestitures,restructurings, product withdrawals, recalls and other unusual events that could result from evolving business strategies, evaluationof asset realization and organizational restructuring could adversely affect future results. Such risks and uncertainties include, inparticular, our ability to realize the projected benefits of our cost-reduction and productivity initiatives, including those related toour research and development function.

In addition, our consolidated balance sheet contains significant amounts of intangible assets, including goodwill. For IPR&Dassets, the risk of failure is significant, and there can be no certainty that these assets will ultimately yield successful products. Thenature of the biopharmaceutical business is high-risk and requires that we invest in a large number of projects in an effort to achievea successful portfolio of approved products. Our ability to realize value on these significant investments is often contingent upon,among other things, regulatory approvals and market acceptance. As such, we expect that many of these IPR&D assets will becomeimpaired and be written off at some time in the future. For goodwill, we have seven reporting units with associated goodwill balancesand, while we do not believe that the risk of goodwill impairment for any of our reporting units is significant at this time, all reportingunits can confront events and circumstances that can lead to a goodwill impairment charge (such as, among other things,unanticipated competition, an adverse action or assessment by a regulator, a significant adverse change in legal matters or in thebusiness climate and/or a failure to replace the contributions of products that lose exclusivity).

Changes in Laws and Accounting Standards

Our future results could be adversely affected by changes in laws and regulations, including, among others, changes inaccounting standards, taxation requirements (including tax rate changes, new tax laws and revised tax law and regulatoryinterpretations, including changes affecting the taxation by the U.S. of income earned outside the U.S. that may result from pendingand possible future proposals), competition laws, privacy laws and environmental laws in the U.S. and other countries.

Terrorist Activity

Our future results could be adversely affected by changes in business, political and economic conditions, including the costand availability of insurance, due to the threat of terrorist activity in the U.S. and other parts of the world and related U.S. militaryaction overseas.

Legal Proceedings

We and certain of our subsidiaries are involved in various patent, product liability, consumer, commercial, securities, antitrust,environmental, employment and tax litigations and claims, government investigations and other legal proceedings that arise fromtime to time in the ordinary course of our business. Litigation is inherently unpredictable, and excessive verdicts do occur. Althoughwe believe we have substantial defenses in these matters, we could in the future incur judgments, enter into settlements of claims orrevise our expectations regarding the outcomes of certain matters, and such developments could have a material adverse effect onour results of operations in the period in which the amounts are accrued and/or our cash flows in the period in which the amountsare paid.

Our activities relating to the sale and marketing and the pricing of our products are subject to extensive regulation under theU.S. Federal Food, Drug, and Cosmetic Act, the Medicaid Drug Rebate Program, the U.S. Foreign Corrupt Practices Act (FCPA) andother federal and state statutes, including those discussed elsewhere in this 2012 Form 10-K, as well as anti-kickback and falseclaims laws, and similar laws in foreign jurisdictions. Like many companies in our industry, we have from time to time receivedinquiries and subpoenas and other types of information demands from government authorities, and been subject to claims and otheractions related to our business activities brought by governmental authorities, as well as by consumers and private payers. In someinstances, we have incurred significant expense, civil payments, fines and other adverse consequences as a result of these claims,actions and inquiries. For example, these claims, actions and inquiries may relate to alleged failures to accurately interpret or identifyor prevent non-compliance with the laws and regulations associated with the dissemination of product information (approved andunapproved), potentially resulting in government enforcement and damage to our reputation. This risk may be heightened by digitalmarketing, including social media, mobile applications and blogger outreach.

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In connection with the resolution of certain U.S. government investigations concerning various products in September 2009,we entered into a Corporate Integrity Agreement (CIA) with the Office of the Inspector General of the U.S. Department of Health andHuman Services, which is effective through December 31, 2014. In connection with the resolution of our FCPA matters in August2012, one of our subsidiaries entered into a Deferred Prosecution Agreement (DPA) with the U.S. Department of Justice, which has aterm of approximately two years. In the CIA and DPA, we agreed to implement and/or maintain certain compliance program elementsto promote compliance with federal healthcare program and FDA requirements, and anti-bribery and anti-corruption and otherapplicable laws. A material failure to comply with the CIA or DPA could result in severe sanctions against us.

Patent claims include challenges to the coverage and/or validity of our patents on various products or processes. Althoughwe believe we have substantial defenses to these challenges with respect to all our material patents, there can be no assurance as tothe 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, whichcould lead to a significant loss of sales of that drug and could materially affect future results of operations.

Business Development Activities

We expect to continue to enhance our in-line products and product pipeline through acquisitions, licensing and alliances. Seethe Overview of Our Performance, Operating Environment, Strategy and Outlook — Our Business Development Initiatives sectionof the MD&A in our 2012 Financial Report, which is incorporated by reference. However, these enhancement plans are subject tothe availability and cost of appropriate opportunities and competition from other pharmaceutical companies that are seeking similaropportunities and our ability to successfully identify, structure and execute transactions.

Information Technology and Security

Significant disruptions of information technology systems or breaches of information security could adversely affect ourbusiness. We rely to a large extent upon sophisticated information technology systems to operate our business. In the ordinarycourse of business, we collect, store and transmit large amounts of confidential information, and it is critical that we do so in asecure manner to maintain the confidentiality and integrity of such confidential information. We also have outsourced significantelements of our operations to third parties, including significant elements of our information technology infrastructure, and as aresult we are managing many independent vendor relationships with third parties who may or could have access to our confidentialinformation. The size and complexity of our information technology systems, and those of our third party vendors with whom wecontract, make such systems potentially vulnerable to service interruptions. The size and complexity of our and our vendors’systems and the large amounts of confidential information that is present on them also makes them potentially vulnerable to securitybreaches from inadvertent or intentional actions by our employees or vendors, or from attacks by malicious third parties. We andour vendors could be susceptible to third party attacks on our information security systems, which attacks are of ever increasinglevels of sophistication and are made by groups and individuals with a wide range of motives and expertise, including criminalgroups, “hactivists,” and others. While we have invested heavily in the protection of data and information technology, there can beno assurance that our efforts will prevent service interruptions or security breaches in our systems that could adversely affect ourbusiness operations and/or result in the loss of critical or sensitive information, and any such interruption or breach could result infinancial, legal, business and reputational harm to us.

Failure to Realize the Anticipated Benefits of Strategic Initiatives and Acquisitions

Our future results may be affected by (i) the impact of, and our ability to successfully execute, any strategic alternative we maydecide to pursue with regard to our remaining ownership stake in Zoetis, as well as any other corporate strategic initiatives we maypursue in the future, and (ii) our ability to realize the projected benefits of any acquisitions, divestitures or other initiatives we maypursue in the future.

31

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

In 2012, we continued to consolidate our operations to achieve efficiencies and to dispose of excess space. Presently, we have654 owned and leased properties, amounting to approximately 51 million square feet, down from a total of approximately 59 millionsquare feet at the end of 2011. Our goal is to continue with further consolidation in 2013.

In addition to our 654 properties, there are approximately 170 properties that relate to our Animal Health operating segment,amounting to approximately 2 million square feet, including properties relating to veterinary medicine research and developmentoperations (which have been transferred to our subsidiary Zoetis in connection with the IPO) in Kalamazoo, MI, San Diego, CA,Charles City, IA, College Park, MD, Lincoln, NE, and Durham, NC in the U.S.; Victoria, British Columbia in Canada; Louvain-la-Neuve and Zaventem, Belgium; Olot, Spain; Sao Paulo and Guarulhos, Brazil; Melbourne, Australia; Mumbai and New Delhi, India;and Jilin, China.

Pfizer’s corporate headquarters are in New York City. With the exception of the Specialty Care business unit (which isheadquartered in Collegeville, Pennsylvania), our biopharmaceutical units also are headquartered in New York City. Our otherbusiness units are headquartered in Madison, New Jersey.

In 2012, we successfully disposed of surplus space, exiting or reducing our real estate space in certain locations in the U.S.,Europe, and Asia. Further, active marketing of properties for sale is continuing in a number of locations.

Our biopharmaceutical and other businesses expect to continue to own and lease space around the world for sales andmarketing, customer service and administrative support functions. In many locations, these businesses will be co-located to achievesynergies and operational efficiencies.

Our Worldwide R&D facilities support our R&D organizations around the world, with heavy concentration in North America.In 2012, we continued with the implementation of our previously announced R&D facility changes, including the sale of ourSandwich, U.K. site with a lease back of space for Clinical Supplies Research and Manufacturing, and completion of the moves ofour Cardiovascular, Metabolic and Endocrine Disease (CVMED) and Neuroscience research units from our research campus inGroton, CT to Cambridge, MA.

Our Pfizer Global Supply (PGS) Division is headquartered in various locations, with leadership teams primarily in New York, NYand in Peapack, NJ. PGS operates 84 plants around the world (25 of which relate to our Animal Health operating segment), whichmanufacture products for our commercial divisions. Locations with major manufacturing facilities include Belgium, China, Germany,Ireland, Italy, Japan, Puerto Rico, Singapore and the U.S. Our Global Supply Division’s plant network strategy is expected to result inthe exit of eight of these sites over the next several years. PGS also operates multiple distribution facilities around the world.

In general, we believe that our properties are well-maintained, adequate and suitable for their current requirements and for ouroperations in the foreseeable future. See the Notes to Consolidated Financial Statements — Note 9. Property, Plant and Equipmentin our 2012 Financial Report, which provides amounts invested in land, buildings and equipment and which is incorporated byreference. See also the discussion in the Notes to Consolidated Financial Statements — Note 15. Lease Commitments in our 2012Financial Report, which is also incorporated by reference.

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ITEM 3. LEGAL PROCEEDINGS

Certain legal proceedings in which we are involved are discussed in the Notes to Consolidated Financial Statements — Note17. Commitments and Contingencies in our 2012 Financial Report, which is incorporated by reference.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

33

EXECUTIVE OFFICERS OF THE COMPANY

The executive officers of the Company are set forth in this table. Each holds the office or offices indicated until his or hersuccessor is chosen and qualified at the regular meeting of the Board of Directors to be held on the date of the 2013 Annual Meetingof Shareholders. Each of the executive officers is a member of the Pfizer Executive Leadership Team.

Name Age Position

Ian C. Read

59

Chairman and Chief Executive Officer since December 2011. President and Chief ExecutiveOfficer from December 2010 until December 2011. Senior Vice President, Group President ofthe Worldwide Biopharmaceutical Businesses (Primary Care, Specialty Care, Oncology,Established Products and Emerging Markets), from 2006 through December 2010. Sincejoining Pfizer in 1978 as an operational auditor, Mr. Read has held various positions ofincreasing responsibility in pharmaceutical operations. He worked in Latin Americathrough 1995, holding positions including Chief Financial Officer, Pfizer Mexico, andCountry Manager, Pfizer Brazil. In 1996, Mr. Read was appointed President of Pfizer’sInternational Pharmaceuticals Group, with responsibility for Latin America and Canada. Hebecame Executive Vice President, Europe in 2000, was named a Corporate Vice President in2001, and assumed responsibility for Canada, in addition to Europe, in 2002. Mr. Read laterbecame accountable for operations in both the Africa/Middle East region and LatinAmerica as well. Currently a Director of Kimberly-Clark Corporation. Serves on the Boardsof Pharmaceutical Research and Manufacturers of America (PhRMA), and the Partnershipfor New York City. Our Director since December 2010.

Olivier Brandicourt

57

President and General Manager, Pfizer Emerging Markets and Established Products sinceJune 2012. President and General Manager of Pfizer Primary Care from 2009 until June 2012.In early 2009, served as President and General Manager of Pfizer Specialty Care. SeniorVice President and General Manager of U.S. Pratt Business Unit from 2007 until 2008.Managing Director of the United Kingdom/Ireland Pfizer subsidiary from 2004 to 2007.

Frank A. D’Amelio

55

Executive Vice President, Business Operations and Chief Financial Officer since December2010. Senior Vice President and Chief Financial Officer from September 2007 untilDecember 2010. Prior to joining Pfizer he was Senior Executive Vice President ofIntegration and Chief Administrative Officer of Alcatel-Lucent from November 2006 untilAugust 2007. Chief Operating Officer of Lucent Technologies from January 2006 untilNovember 2006. Chairman and Director of Zoetis. Director of Humana, Inc. and Chair ofthe Humana Audit Committee. He is a Director of the Independent College Fund of NewJersey.

Mikael Dolsten

54

President of Worldwide Research and Development since December 2010. Senior VicePresident; President of Worldwide Research and Development from May 2010 untilDecember 2010. Senior Vice President; President of Pfizer BioTherapeutics Research &Development Group from October 2009 until May 2010. He was Senior Vice President ofWyeth and President, Wyeth Research from June 2008 until October 2009. He was aPrivate Equity Partner at Orbimed Advisors, LLC from January 2008 until June 2008. Dr.Dolsten was Global Head, Corporate Division Pharma Research and Discovery, ofBoehringer Ingelheim Corporation from 2003 to 2007.

34

Name Age Position

Geno J. Germano

52

President and General Manager, Pfizer Specialty Care and Oncology since December 2010.President and General Manager, Specialty Care from October 2009 until December 2010.President, U.S. Pharmaceuticals and Women’s Health Care Unit, Wyeth Pharmaceuticalsfrom 2008 through October 2009. President and General Manager, U.S. PharmaceuticalBusiness Unit, Wyeth Pharmaceuticals from 2007 through 2008. Executive Vice Presidentand General Manager, Pharmaceutical Business Unit, Wyeth Pharmaceuticals from 2004through 2007. Currently a Director of Zoetis, Member of the Board of Trustees for AlbanyCollege of Pharmacy and Health Sciences and Member of the Board of Directors of BIO –Biotechnology Industry Organization.

Charles H. Hill III

57

Executive Vice President, Worldwide Human Resources since December 2010. Senior VicePresident, Human Resources for Worldwide Biopharmaceuticals Businesses from 2008through December 2010. Vice President, Human Resources, Worldwide PharmaceuticalOperations from 2004 through 2008. Currently a Director of Zoetis and Chair of the ZoetisCompensation Committee.

Douglas M. Lankler

47

Executive Vice President, Chief Compliance and Risk Officer since February 2011.Executive Vice President, Chief Compliance Officer from December 2010 until February2011. Senior Vice President and Chief Compliance Officer from January 2010 untilDecember 2010. Senior Vice President, Deputy General Counsel and Chief ComplianceOfficer from August 2009 until January 2010. Senior Vice President, Associate GeneralCounsel and Chief Compliance Officer from October 2006 until August 2009. Prior toOctober 2006, Mr. Lankler held various positions of increasing responsibility within thePfizer Legal Division.

Freda C. Lewis-Hall

58

Executive Vice President, Chief Medical Officer since December 2010. Senior VicePresident, Chief Medical Officer from May 2009 until December 2010. Previously, she wasChief Medical Officer and Executive Vice President, Medicines Development at VertexPharmaceuticals from June 2008 until May 2009. Dr. Lewis-Hall was Senior Vice President,U.S. Pharmaceuticals, Medical Affairs for Bristol-Myers Squibb Company from 2003 untilMay 2008.

Anthony J. Maddaluna

60

Executive Vice President; President, Pfizer Global Supply since January 2013. President,Pfizer Global Supply from 2011 until December 2012. Senior Vice President, Strategy &Supply Network Transformation from 2009 until December 2010. Vice President, Strategy &Supply Network Transformation from 2008 until 2009. Vice President and Team Leader,Europe from 1998 until 2008 including responsibility for global logistics and strategicplanning from 2005 through 2008. Mr. Maddaluna held a number of positions ofincreasing responsibility in manufacturing before being named General Manager of PfizerPharmaceuticals Inc. in Puerto Rico from 1994 until 1998. Mr. Maddaluna represents Pfizeron the National Association of Manufacturers (NAM) and is a member of the NAMExecutive Committee. Mr. Maddaluna joined Pfizer in 1975.

Laurie J. Olson

49

Executive Vice President, Strategy, Portfolio and Commercial Operations since July 2012.Senior Vice President - Strategy and Portfolio Management from 2011 until July 2012.Senior Vice President - Portfolio Management and Analytics from 2008 until 2010. Sincejoining Pfizer in 1987 as an Analyst in the Company's marketing research organization, Ms.Olson has served in a variety of marketing leadership positions with increasingresponsibility in both the Company’s U.S. and global commercial organizations.

35

Name Age Position

Amy W. Schulman

52

Executive Vice President and General Counsel since December 2010 and Business Unit

Lead, Consumer Healthcare for Pfizer since August 2012. Executive Vice President and

General Counsel; President and General Manager, Nutrition from December 2010 untilNovember 2012. Senior Vice President and General Counsel from June 2008 until December2010. Ms. Schulman was a partner at the law firm of DLA Piper from 1997 until joiningPfizer in June 2008. Currently a Director of Zoetis and Chair of the Zoetis CorporateGovernance Committee, Member of the Board of Directors of Wesleyan University and theBrooklyn Academy of Music.

Sally Susman

51

Executive Vice President, Policy, External Affairs and Communications of Pfizer sinceDecember 2010. Senior Vice President, Policy, External Affairs and Communications fromDecember 2009 until December 2010. Senior Vice President and Chief CommunicationsOfficer from February 2008 until December 2009. Prior to joining Pfizer, Ms. Susman heldsenior level positions at The Estee Lauder Companies, including Executive Vice Presidentfrom 2004 to January 2008.

John D. Young

48

President and General Manager, Pfizer Primary Care since June 2012. Primary CareBusiness Unit’s Regional President for Europe and Canada from 2009 until June 2012. UKCountry Manager from 2007 until 2009. Since joining Pfizer in 1987, Mr. Young has held anumber of positions of increasing responsibility in sales and marketing managementbefore being appointed Country Manager for Australia/New Zealand in 2004.

36

PART II

ITEM 5. MARKET FOR THE COMPANY’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECURITIES

The principal market for our Common Stock is the New York Stock Exchange (NYSE). Our stock is also listed on the NYSEEuronext Brussels Exchange, the London Stock Exchange and the SIX Swiss Stock Exchange, as well as various United Statesregional stock exchanges. Additional information required by this item is incorporated by reference from the table captionedQuarterly Consolidated Financial Data (Unaudited) in our 2012 Financial Report.

The following table provides certain information with respect to our purchases of shares of the Company’s Common Stockduring the fourth fiscal quarter of 2012:

Issuer Purchases of Equity Securities (a)

Period

Total Number of Shares Purchased

(b)

AveragePrice

Paid per Share (b)

Total Number ofShares Purchased as

Part of Publicly Announced Plan (a)

ApproximateDollar Value ofShares that May

Yet Be Purchased Under the Plan (a)

October 1, 2012ThroughOctober 28, 2012 36,961,538 $ 25.33 36,902,797 $ 14,264,821,207

October 29, 2012ThroughNovember 30, 2012 52,404,279 $ 24.39 51,587,525 $ 13,007,534,929

December 1, 2012ThroughDecember 31, 2012 47,745,688 $ 25.30 47,491,654 $ 11,805,897,162

Total 137,111,505 $ 24.96 135,981,976

_____________________ (a) On December 12, 2011, we announced that the Board of Directors had authorized a $10 billion share-purchase plan (the

December 2011 Stock Purchase Plan). On November 1, 2012, we announced that the Board of Directors had authorized anadditional $10 billion share-purchase plan, which became effective on November 30, 2012.

(b) In addition to amounts purchased under the December 2011 Stock Purchase Plan, these columns reflect the followingtransactions during the fourth fiscal quarter of 2012: (i) the surrender to Pfizer of 1,078,047 shares of common stock to satisfytax withholding obligations in connection with the vesting of restricted stock and restricted stock units issued to employees;(ii) the open market purchase by the trustee of 32,674 shares of common stock in connection with the reinvestment ofdividends paid on common stock held in trust for employees who were granted performance share awards and who deferredreceipt of such awards; and (iii) the surrender to Pfizer of 18,808 shares of common stock to satisfy tax withholdingobligations in connection with the vesting of performance share awards issued to employees.

ITEM 6. SELECTED FINANCIAL DATA

Information required by this item is incorporated by reference from the discussion under the heading Financial Summary inour 2012 Financial Report.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS

Information required by this item is incorporated by reference from the discussion under the heading Financial Review in our2012 Financial Report.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information required by this item is incorporated by reference from the discussion under the Forward-Looking Informationand Factors That May Affect Future Results — Financial Risk Management section of the MD&A in our 2012 Financial Report.

37

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Information required by this item is incorporated by reference from the Report of Independent Registered Public AccountingFirm on the Consolidated Financial Statements in our 2012 Financial Report and from the consolidated financial statements, relatednotes and supplementary data in our 2012 Financial Report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIALDISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls

As of the end of the period covered by this 2012 Form 10-K, we carried out an evaluation, under the supervision and with theparticipation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of ourdisclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on thisevaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures areeffective in alerting them in a timely manner to material information required to be disclosed in our periodic reports filed with the SEC.

Internal Control over Financial Reporting

Management’s report on the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f)and 15d-15(f) under the Exchange Act), and the related report of our independent registered public accounting firm, are included inour 2012 Financial Report under the headings Management’s Report on Internal Control Over Financial Reporting and Report ofIndependent Registered Public Accounting Firm on Internal Control Over Financial Reporting , respectively, and areincorporated by reference.

Changes in Internal Controls

During our most recent fiscal quarter, there has not been any change in our internal control over financial reporting (as suchterm is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely tomaterially affect, our internal control over financial reporting. However, we do wish to highlight some changes which, taken together,are expected to have a favorable impact on our controls over a multi-year period. We continue to pursue a multi-year initiative tooutsource some transaction-processing activities within certain accounting processes and are migrating to a consistent enterpriseresource planning system across the organization. These are enhancements of ongoing activities to support the growth of ourfinancial shared service capabilities and standardize our financial systems. None of these initiatives is in response to any identifieddeficiency or weakness in our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

Not applicable.

38

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information about our Directors is incorporated by reference from the discussion under the heading Proposals RequiringYour Vote — Item 1 — Election of Directors in our 2013 Proxy Statement. Information about compliance with Section 16(a) of theExchange Act is incorporated by reference from the discussion under the heading Securities Ownership — Section 16(a) BeneficialOwnership Reporting Compliance in our 2013 Proxy Statement. Information about the Pfizer Policies on Business Conductgoverning our employees, including our Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer, and theCode of Business Conduct and Ethics governing our Directors, is incorporated by reference from the discussions under theheadings Governance of the Company — Governance Information — Pfizer Policies on Business Ethics and Conduct and — Codeof Conduct for Directors in our 2013 Proxy Statement. Information regarding the procedures by which our stockholders mayrecommend nominees to our Board of Directors is incorporated by reference from the discussion under the headings Governance ofthe Company — Governance Information — Criteria for Board Membership and Requirements for Submitting Proxy Proposalsand Nominating Directors in our 2013 Proxy Statement. Information about our Audit Committee, including the members of theCommittee, and our Audit Committee financial experts, is incorporated by reference from the discussion under the headingGovernance of the Company — Board and Committee Information — The Audit Committee in our 2013 Proxy Statement. Thebalance of the information required by this item is contained in the discussion entitled Executive Officers of the Company in Part I ofthis 2012 Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

Information about Director and executive compensation is incorporated by reference from the discussion under the headingsGovernance of the Company — Compensation of Non-Employee Directors ; Executive Compensation ; and Governance of theCompany — Board and Committee Information — Compensation Committee — Compensation Committee Interlocks and InsiderParticipation in our 2013 Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDER MATTERS

Information required by this item is incorporated by reference from the discussion under the headings ExecutiveCompensation — Equity Compensation Plan Information and Securities Ownership in our 2013 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information about certain relationships and transactions with related parties is incorporated by reference from the discussionunder the headings Related Person Transactions; Indemnification — Transactions with Related Persons in our 2013 ProxyStatement. Information about director independence is incorporated by reference from the discussion under the headingGovernance of the Company — Governance Information — Director Independence in our 2013 Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Information about the fees for professional services rendered by our independent registered public accounting firm in 2012and 2011 is incorporated by reference from the discussion under the heading Proposals Requiring Your Vote — Item 2 —Ratification of Independent Registered Public Accounting Firm — Audit and Non-Audit Fees in our 2013 Proxy Statement. OurAudit Committee’s policy on pre-approval of audit and permissible non-audit services of our independent registered publicaccounting firm is incorporated by reference from the discussion under the heading Proposals Requiring Your Vote — Item 2 —Ratification of Independent Registered Public Accounting Firm — Policy on Audit Committee Pre-Approval of Audit andPermissible Non-Audit Services of Independent Registered Public Accounting Firm in our 2013 Proxy Statement.

39

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

15(a)(1) Financial Statements. The following consolidated financial statements, related notes, report of independentregistered public accounting firm and supplementary data from our 2012 Financial Report are incorporated by reference into Item 8 ofPart II of this 2012 Form 10-K:

• Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements

• Consolidated Statements of Income

• Consolidated Statements of Comprehensive Income

• Consolidated Balance Sheets

• Consolidated Statements of Equity

• Consolidated Statements of Cash Flows

• Notes to Consolidated Financial Statements

• Quarterly Consolidated Financial Data (Unaudited)

15(a)(2) Financial Statement Schedules. Schedules are omitted because they are not required or because the information isprovided elsewhere in the financial statements. The financial statements of unconsolidated subsidiaries are omitted because,considered in the aggregate, they would not constitute a significant subsidiary.

15(a)(3) Exhibits. These exhibits are available upon request. Requests should be directed to our Corporate Secretary, PfizerInc., 235 East 42nd Street, New York, NY 10017-5755. The exhibit numbers preceded by an asterisk (*) indicate exhibits filed with this2012 Form 10-K. All other exhibit numbers indicate exhibits filed by incorporation by reference. Exhibit numbers 10.1 through 10.24are management contracts or compensatory plans or arrangements.

3.1

Our Restated Certificate of Incorporation dated April 12, 2004, is incorporated by reference from our 10-Q report forthe period ended March 28, 2004 (File No. 001-03619).

3.2

Amendment dated May 1, 2006 to Restated Certificate of Incorporation dated April 12, 2004, is incorporated byreference from our 10-Q report for the period ended July 2, 2006 (File No. 001-03619).

3.3

Our By-laws, as amended April 22, 2010, are incorporated by reference from our 10-Q report for the period endedApril 4, 2010 (File No. 001-03619).

4.1

Indenture, dated as of January 30, 2001, between us and The Chase Manhattan Bank, is incorporated by referencefrom our 8-K report filed on January 30, 2001 (File No. 001-03619).

4.2

First Supplemental Indenture, dated as of March 24, 2009, between us and The Bank of New York Mellon(successor to JPMorgan Chase Bank, N.A. (formerly JPMorgan Chase Bank, formerly The Chase Manhattan Bank)),as Trustee, to Indenture dated as of January 30, 2001, is incorporated by reference from our 10-Q report for theperiod ended June 28, 2009 (File No. 001-03619).

4.3

Second Supplemental Indenture, dated as of June 2, 2009, between us and The Bank of New York Mellon(successor to JPMorgan Chase Bank, N.A. (formerly JPMorgan Chase Bank, formerly The Chase Manhattan Bank)),as Trustee, to Indenture dated as of January 30, 2001, is incorporated by reference from our 8-K report filed on June3, 2009 (File No. 001-03619).

4.4

Indenture, dated as of April 10, 1992, between Wyeth and The Bank of New York Mellon (as successor toJPMorgan Chase Bank, N.A.), as Trustee, is incorporated by reference from Wyeth’s Registration Statement onForm S-3 (File No. 33-57339), filed on January 18, 1995.

4.5

Supplemental Indenture, dated as of October 13, 1992, between Wyeth and The Bank of New York Mellon (assuccessor to JPMorgan Chase Bank, N.A.), as Trustee, is incorporated by reference from Wyeth’s RegistrationStatement on Form S-3 (File No. 33-57339), filed on January 18, 1995.

4.6

Fifth Supplemental Indenture, dated as of December 16, 2003, between Wyeth and The Bank of New York Mellon(as successor to JPMorgan Chase Bank, N.A.), as Trustee, is incorporated by reference from Wyeth’s 2003 10-Kreport (File No. 001-01225).

40

4.7

Sixth Supplemental Indenture, dated as of November 14, 2005, between Wyeth and The Bank of New York Mellon(as successor to JPMorgan Chase Bank, N.A.), as Trustee, is incorporated by reference from Wyeth’s 8-K reportfiled on November 15, 2005 (File No. 001-01225).

4.8

Seventh Supplemental Indenture, dated as of March 27, 2007, between Wyeth and The Bank of New York Mellon(as successor to JPMorgan Chase Bank, N.A.), as Trustee, is incorporated by reference from Wyeth’s 8-K reportfiled on March 28, 2007 (File No. 001-01225).

4.9

Eighth Supplemental Indenture, dated as of October 30, 2009, between Wyeth, us and The Bank of New YorkMellon (as successor to JPMorgan Chase Bank, formerly The Chase Manhattan Bank), as Trustee, to Indenturedated as of April 10, 1992 (as amended on October 13, 1992), is incorporated by reference from our 8-K report filedon November 3, 2009 (File No. 001-03619).

4.10

Except as set forth in Exhibits 4.1-9 above, the instruments defining the rights of holders of long-term debtsecurities of the Company and its subsidiaries have been omitted. 1

10.1

2001 Stock and Incentive Plan is incorporated by reference from our Proxy Statement for the 2001 Annual Meetingof Shareholders (File No. 001-03619).

10.2

Pfizer Inc. 2004 Stock Plan, as Amended and Restated is incorporated by reference from our 2011 10-K Report (FileNo. 001-03619).

10.3

Form of Stock Option Grant Notice and Summary of Key Terms is incorporated by reference from our 10-Q report forthe period ended September 26, 2004 (File No. 001-03619).

10.4

Form of Performance-Contingent Share Award Grant Notice is incorporated by reference from our 10-Q report forthe period ended September 26, 2004 (File No. 001-03619).

*10.5 Form of Executive Grant Letter.

10.6

Amended and Restated Nonfunded Supplemental Retirement Plan, together with all material Amendments isincorporated by reference from our 2011 10-K Report (File No. 001-03619).

*10.7 Amended and Restated Nonfunded Deferred Compensation and Supplemental Savings Plan.

*10.8 Executive Annual Incentive Plan.

*10.9 Amended and Restated Deferred Compensation Plan.

10.10

Non-Employee Directors’ Retirement Plan (frozen as of October 1996) is incorporated by reference from our 1996 10-K report (File No. 001-03619).

10.11

Restricted Stock Plan for Non-Employee Directors is incorporated by reference from our 1996 10-K report (File No.001-03619).

10.12

Amended and Restated Wyeth Supplemental Employee Savings Plan (effective as of January 1, 2005), together withall material Amendments is incorporated by reference from our 2011 10-K Report (File No. 001-03619).

10.13

Amended and Restated Wyeth Supplemental Executive Retirement Plan (effective as of January 1, 2005), togetherwith all material Amendments is incorporated by reference from our 2011 10-K Report (File No. 001-03619).

10.14

Wyeth Directors’ Deferral Plan (as amended through December 15, 2007) is incorporated by reference from Wyeth’s2007 10-K report (File No. 001-01225).

10.15

The form of Indemnification Agreement with each of our non-employee Directors is incorporated by reference fromour 1996 10-K report (File No. 001-03619).

1 We agree to furnish to the SEC, upon request, a copy of each instrument with respect to issuances of long-term debt of the

Company and its subsidiaries.

41

10.16

The form of Indemnification Agreement with each of the Named Executive Officers identified in our 2013 ProxyStatement is incorporated by reference from our 1997 10-K report (File No. 001-03619).

10.17

Letter to Frank A. D’Amelio regarding replacement pension benefit dated August 22, 2007 is incorporated byreference from our 8-K report filed on August 22, 2007 (File No. 001-03619).

10.18

Executive Severance Plan is incorporated by referenced from our 8-K report filed on February 20, 2009 (File No. 001-03619).

10.19

Annual Retainer Unit Award Plan (for Non-Employee Directors) (frozen as of March 1, 2006) as amended, isincorporated by reference from our 2008 10-K report (File No. 001-03619).

10.20

Nonfunded Deferred Compensation and Unit Award Plan for Non-Employee Directors, as amended, is incorporatedby reference from our 10-Q report for the period ended July 3, 2011 (File No. 001-03619).

10.21

Form of Special Award Letter Agreement is incorporated by reference from our 8-K report filed on October 28, 2009(File No. 001-03619).

10.22

Offer Letter to G. Mikael Dolsten, dated April 6, 2009, is incorporated by reference from our 10-Q report for theperiod ended April 3, 2011 (File No. 001-03619).

10.23

Offer Letter to Geno J. Germano, dated April 6, 2009, is incorporated by reference from our 10-Q report for the periodended April 3, 2011 (File No. 001-03619).

10.24

Warner-Lambert Company 1996 Stock Plan, as amended, is incorporated by reference from Warner-Lambert's 199910-K report (File No. 001-03608).

*12 Computation of Ratio of Earnings to Fixed Charges.

*13

Portions of the 2012 Financial Report, which, except for those sections incorporated by reference, are furnishedsolely for the information of the SEC and are not to be deemed “filed.”

*21 Subsidiaries of the Company.

*23 Consent of KPMG LLP, Independent Registered Public Accounting Firm.

*24 Power of Attorney (included as part of signature page).

*31.1 Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2 Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*32.1

Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906of the Sarbanes-Oxley Act of 2002.

*32.2

Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906of the Sarbanes-Oxley Act of 2002.

*101.INS XBRL Instance Document

*101.SCH XBRL Taxonomy Extension Schema

*101.CAL XBRL Taxonomy Extension Calculation Linkbase

*101.LAB XBRL Taxonomy Extension Label Linkbase

*101.PRE XBRL Taxonomy Extension Presentation Linkbase

*101.DEF XBRL Taxonomy Extension Definition Document

42

SIGNATURES

Under the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report was signed on behalf of theRegistrant by the authorized person named below.

Pfizer Inc.

Dated: February 28, 2013 By: /s/ M ATTHEW L EPORE

Matthew LeporeVice President and Corporate Secretary,Chief Counsel – Corporate Governance

We, the undersigned directors and officers of Pfizer Inc., hereby severally constitute Amy W. Schulman and Matthew Lepore,and each of them singly, our true and lawful attorneys with full power to them and each of them to sign for us, in our names in thecapacities indicated below, any and all amendments to this Annual Report on Form 10-K filed with the Securities and ExchangeCommission.

Under the requirements of the Securities Exchange Act of 1934, this report was signed by the following persons on behalf ofthe Registrant and in the capacities and on the date indicated.

Signature Title Date

/ S / I AN C. R EAD

Ian C. Read

Chairman, Chief Executive Officer and Director(Principal Executive Officer)

February 28, 2013

/ S / F RANK A. D’A MELIO

Frank A. D’Amelio

Executive Vice President, Business Operations andChief Financial Officer (Principal Financial Officer)

February 28, 2013

/ S / L ORETTA V. C ANGIALOSI

Loretta V. Cangialosi

Senior Vice President—Controller(Principal Accounting Officer)

February 28, 2013

/ S / D ENNIS A. A USIELLO

Dennis A. Ausiello

Director

February 28, 2013

/ S / M. A NTHONY B URNS

M. Anthony Burns

Director

February 28, 2013

/ S / W. D ON C ORNWELL

W. Don Cornwell

Director

February 28, 2013

/ S / F RANCES D. F ERGUSSON

Frances D. Fergusson

Director

February 28, 2013

/ S / W ILLIAM H. G RAY, IIIWilliam H. Gray, III

Director

February 28, 2013

/ S / H ELEN H. H OBBS

Helen H. Hobbs

Director

February 28, 2013

43

Signature Title Date

/ S / C ONSTANCE J. H ORNER

Constance J. Horner

Director

February 28, 2013

/ S / S UZANNE N ORA JOHNSON

Suzanne Nora Johnson

Director

February 28, 2013

/ S / J AMES M. K ILTS

James M. Kilts

Director

February 28, 2013

/ S / G EORGE A. L ORCH

George A. Lorch

Director

February 28, 2013

/ S / J OHN P. M ASCOTTE

John P. Mascotte

Director

February 28, 2013

/ S / S TEPHEN W. S ANGER

Stephen W. Sanger

Director

February 28, 2013

/ S / M ARC T ESSIER -L AVIGNE

Marc Tessier-Lavigne

Director

February 28, 2013

44

Exhibit 10.5

PFIZER LOGO

May 2012

«FIRST_NAME» «LAST_NAME»«ADDRESS1»«ADDRESS2»«ADDRESS3»«ADDRESS4»«CITY», «STATE» «POSTAL»«COUNTRY»

Dear «FIRST_NAME»:

On behalf of all our stakeholders, I want to thank you for the important role you play in Pfizer’s continued success. I am pleased toinform you that on February 23, 2012, Pfizer’s Compensation Committee of the Board of Directors approved the following grantunder Pfizer’s Executive Long-Term Incentive Program (“Program”).

Award TypeGrantPrice

Shares (#) Dates

5-Year Total Shareholder Return Units(“5-YR TSRUs”)

$21.03 «M_5Yr_TSRU» Grant Date – February 23, 2012Vesting Date* – February 23, 2015Settlement Date – February 23, 2017

7-Year Total Shareholder Return Units(“7-YR TSRUs”)

$21.03 «M_7Yr_TSRU» Grant Date – February 23, 2012Vesting Date* – February 23, 2015Settlement Date – February 23, 2019

Performance Share Awards (“PSAs”) N/A «PFE_PS» Grant Date – February 23, 2012Vesting Date* – February 23, 2015Performance Period: January 1, 2012 throughDecember 31, 2014

Restricted Stock Units (“RSUs”) N/A «RSU» Grant Date – February 23, 2012Vesting Date* – February 23, 2015

*This is also referred to as the date the restrictions lapse.

The enclosed Points of Interest document provides you with more detailed information about your grant and contains generalinformation about the Program, applicable income tax consequences, and points of contact. This long-term incentive grant isgoverned by the terms and conditions set forth in this letter, the Points of Interest document and the Pfizer Inc 2004 Stock Plan, asamended and restated. It is important for you to read these materials, and it is recommended that you consult a qualified financial ortax advisor before making any decisions regarding the disposition of the stock resulting from the vesting of these awards.

These awards help you build ownership in Pfizer and a greater stake in the Company’s future success. I have great confidence inPfizer’s future, and I look forward to working with you toward that future.

Sincerely,

Ian C. ReadChairman andChief Executive Officer

Exhibit 10.7

PFIZER INC NONFUNDED DEFERRED COMPENSATION AND SUPPLEMENTAL SAVINGS PLAN

Amended and Restated as of January 1, 2012

SECTION 1 . CONTINUATION AND PURPOSE OF THE PLAN .

1.1 Continuation . There is hereby continued for the benefit of Members an unfunded plan of deferred compensationknown as the “Pfizer Inc Nonfunded Deferred Compensation and Supplemental Savings Plan.”

1.2 Purpose . The purpose of this Plan is to provide a means by which an Eligible Employee may, in certaincircumstances, elect to defer receipt of a portion of his “Regular Earnings,” and such other deferrals as determined by the Companyin accordance with Section 4.2.

1.3 Description of the Plan . The Plan became effective July 1, 1983, was amended and restated effective February 1, 2002,and was again amended and restated effective January 1, 2008, except as otherwise provided herein, to reflect: (i) the merger ofPharmacia Savings Plus Plan into the Plan, and (ii) the enactment of Code Section 409A and corresponding regulations, and (iii)certain other administrative design changes. The provisions of this restated and amended Plan shall govern Accounts on and afterJanuary 1, 2008 except with respect to Grandfathered Amounts. Except as specifically otherwise provided herein, the GrandfatheredAmounts for Members who were Participants in the Pharmacia Savings Plus Plan on December 31, 2004 shall be governed by theprovisions of the Pharmacia Savings Plus Plan as amended and restated effective July 1, 2002; the Grandfathered Amounts withrespect to Members in this Plan on December 31, 2004, shall be governed by the provisions of this Plan as amended and restatedeffective February 1, 2002; and, for the period from January 1, 2005 through December 31, 2007 the provisions of this amended andrestated Plan shall govern, except to the extent the provisions of this Plan are inconsistent with the administrative practices, policies,election forms and participant communications designed for reasonable good faith compliance with Code Section 409A during thatinterim period, which are incorporated herein by reference. The Plan was further amended and restated effective January 1, 2012(except where provided otherwise) (i) to reflect the implementation of the Retirement Savings Contribution under the Pfizer SavingsPlan that is eligible to be contributed to the Plan for a Member, effective January 1, 2011, and (ii) to provide that Members in thePfizer Savings Plan for Residents of Puerto Rico are eligible to participate in the Plan as a result of the enactment of the InternalRevenue Code for a New Puerto Rico and certain other clarifying amendments.

For purposes of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, the Plan shall be treated as twoseparate, unfunded plans. One plan shall be an “excess benefit plan” within the meaning of Section 3(36) of ERISA, and shall becomprised of accruals under the Plan that are made solely because of the applicable limitations under Section 415 of the Code, plusearnings thereon. All other accruals under the Plan, plus earnings thereon, shall be treated as made under a separate “top-hat” planmaintained by the Company primarily for the purpose of providing deferred compensation to a select group of management or highlycompensated employees, within the meanings of Sections 201(a)(2), 301(a)(3) and 401(a)(1) of ERISA. The Company shall be able toseparately account for excess benefit plan accruals and earnings thereon, top-hat plan accruals and earnings thereon, and SpecialAccruals and earnings thereon.

SECTION 2 . DEFINITIONS .

The following words and phrases as used in this Plan have the following means:

2.1 Account . The term “Account” shall mean a Member’s individual account(s), as described in Section 5.1 of the Plan.

2.2 Annual Enrollment . The term “Annual Enrollment” shall mean the time period, as determined by the Committee in itssole and absolute discretion, prior to the beginning of a Plan Year in which Eligible Employees can elect to enroll or change theirdeferral elections under the Plan with respect to Regular Earnings expected to be earned in the next succeeding Plan Year.Notwithstanding the foregoing, the Annual Enrollment period for any Plan Year shall not extend beyond December 31 st of the PlanYear immediately preceding the Plan Year that the election is with respect to.

2.3 Beneficiary . The term “Beneficiary” means the beneficiary on file for this Plan, or if none is on file, the person orentity who is the “Beneficiary” under the Qualified Plan, and with respect to Grandfathered Amounts under the Pharmacia SavingsPlus Plan, the person or entity who is the “beneficiary” under the rules of that plan.

2.4 Board of Directors . The term “Board of Directors” means the Board of Directors of the Company.

2.5 Code . The term “Code” means the Internal Revenue Service Code of 1986, as amended.

2.6 Committee . The term “Committee” means the Committee, as described in the Qualified Plan, or any other person orentity that the Committee has authorized to act on its behalf under the Plan.

2.7 Company . The term “Company” means Pfizer Inc, a Delaware corporation, and any successor corporation.

2.8 Controlled Group. The term “Controlled Group” means the Company and any other entity with which the Companywould be considered a single employer under Code section 414 (b) or (c), provided that, in applying Code sections 1563(a)(1), (2)and (3) and for purposes of determining a controlled group of corporations under section 414(b), "50 percent " shall be used insteadof "80 percent", and in applying Treas. Reg. section 1.414(c)-2 for purposes of determining trades or businesses that are undercommon control for purposes of Code section 414(c), "50 percent" shall be used instead of "80 percent" each place it appears inTreas. Reg. section 1.414(c)-2. In addition, solely for purposes of determining a Separation from Service, the foregoing sentence shallbe applied by using 30 percent instead of 50 percent.

2.9 Disability . Prior to January 1, 2012, the term “Disability” means a disability where the Employee is unable to engage inany substantial gainful activity by reason of any medically determinable physical or mental impairment that (i) can be expected toresult in death or can be expected to last for a continuous period of not less than twelve (12) months or is receiving incomereplacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of theCompany by reason of any medically determinable physical or mental impairment that can be expected to result in death or can beexpected to last for a continuous period of not less than 12 months, and (ii) also satisfies the requirements of a "Disability" asdefined under the Qualified Plan.

Effective as of January 1, 2012, a Member will be considered to have incurred a “Disability” for all purposes under the Planif the Member’s Disability as set forth in the preceding paragraph relates to an illness, injury or impairment for which the Memberwas on an approved leave of absence in accordance with a Company short-term disability program and such leave commenced priorto January 1, 2012 (including if such Member subsequently returns to work and then goes out on another approved leave relating tothe same illness, injury or impairment as of or after January 1, 2012).

2.10 Eligible Employee . The term “Eligible Employee” means any “Member” as defined under a Qualified Plan who:

(i) (a) in the year he or she first becomes eligible to participate in the Plan (as determined in accordance with consistentrules established by the Committee in its sole and absolute discretion and in accordance with Section 409A) in any month of thatyear: (1) is projected to receive Compensation (as defined in the Qualified Plan) for that Plan Year in excess of the limitation ofSection 401(a)(17) of the Code or Section 1081.01(a)(12) of the PR Code or whose account under the Qualified Plan is projected to becredited during that Plan Year with “annual additions,” as defined in Section 415(c)(2) of the Code or Section 1081.01(a)(11) of the PRCode equal to the maximum permitted under Section 415(c)(1)(A) of the Code or Section 1081.01(a)(11) of the PR Code, respectively;and (2) who is an employee of an Employer who: (A) has reached the point in time when he or she has been projected to haveCompensation (as defined in the Qualified Plan) in excess of the Limitation under Section 401(a)(17) of the Code or Section 1081.01(a)(12) of the PR Code, or (B) has reached the point in time when he or she has Compensation (as defined in the Qualified Plan) equal tothe amount of Compensation at which point he or she was projected to reach the Section 415(c)(2) or Section 1081.01(a)(11) of thePR Code Limitation on annual additions under the Qualified Plan; or (b) in any subsequent year an Eligible Employee who in anyprior year was an Eligible Employee under the Plan and who the Company determines in an Annual Enrollment (based on elections ineffect and salary projections on the last business day of the calendar year of the Annual Enrollment (or as otherwise determinedbased on consistent rules established by the Committee in its sole and absolute discretion and in accordance with Section 409A) isexpected to have annualized Compensation for the subsequent Plan Year in excess of the limitation of Section 401(a)(17) of the Codeor Section 1081.01(a)(12) of the PR Code, or is expected in the next succeeding Plan Year to have his or her Account under theQualified Plan credited with annual additions in excess of the maximum amount permitted under Section 415(c)(1)(A) of the Code orSection 1081.01(a)(11) of the PR Code and who is an Employee and has an election to defer Excess Regular Earnings under the Planin effect at the time he or she had been projected to reach the limitation under Section 401(a)(17) or Section 1081.01(a)(12) of the PRCode or Section 415(c)(1)(A) of the Code or Section 1081.01(a)(11) of the PR Code;

(ii) who receives a Retirement Savings Contribution under a Qualified Plan for that Plan Year and (A) is projected to receiveCompensation in excess of the Limitations of Section 401(a)(17) of the Code or Section 1081.01(a)(12) of the PR Code, or (B) whoseAccount under a Qualified Plan is projected to be credited during that Plan Year with annual additions in excess of the maximumamount permitted under Section 415(c)(1)(A) of the Code or Section 1081.01(a)(11) of the PR Code, or

(iii) any other person who is a member of a select group of management or highly compensated employees of the Companyand who is designated by the Committee or an authorized officer of the Company (or his or her delegate) as an Eligible Employee toreceive accruals under the Plan in accordance with Article 4.

2.11 ELT . The term “ELT” means the Chief Executive Officer of the Company and the team composed of his or her directreports or any of their properly authorized delegates.

2.12 Employer . The term “Employer” means the Company and any other member of the Controlled Group which is also an“Associate Company” under the Qualified Plan.

2.13 Employer Accrual . The term “Employer Accrual” means the amounts described in Section 4.1.

2.14 Excess Regular Earnings . The term “Excess Regular Earnings” means:

(i) with respect to the first year that an Eligible Employee is eligible to participate in the Plan (as determined in accordancewith consistent rules established by the Committee in its sole and absolute discretion and in accordance with Section 409A), (a) theportion of an Eligible Employee’s Regular Earnings

earned after the point in time when the Eligible Employee was projected to exceed the Limitation on compensation taken into accountunder Section 401(a)(17) of the Code or Section 1081.01(12) of the PR Code, (b) all Regular Earnings that the Eligible Employeereceives after the point in time that the Eligible Employee was projected to exceed the Limitation on contributions to definedcontribution plans under Section 415(c)(1)(A) of the Code or Section 1081.01(11) of the PR Code, to the extent not included in (a)above, (c) any bonus elected to be deferred under the Pfizer Inc Deferred Compensation Plan, in accordance with the rules underthat Plan and Section 409A, or (d) any other compensation determined by the Committee to be Excess Regular Earnings for purposesof this Plan; and,

(ii) for an Eligible Employee who was an Eligible Employee in the immediately preceding prior Plan Year or who is not in hisor her first year of eligibility to participate in the Plan, (a) the portion of Regular Earnings earned during a Plan Year that based on theEligible Employee’s Qualified Plan elections and Compensation (as defined in the Qualified Plan) in effect during the last businessday of the calendar year of the Annual Enrollment (or as otherwise determined based on consistent rules established by theCommittee in its sole and absolute discretion and in accordance with Section 409A) were projected to exceed the Limitation oncompensation taken into account under Section 401(a)(17) of the Code or Section 1081.01(a)(12) of the PR Code, (b) all RegularEarnings that the Member has received after the point in time that the Member was projected to become subject to the Limitation oncontributions to defined contribution plans under Section 415(c)(1)(A) of the Code or Section 1081.01(a)(11) of the PR Code, to theextent not included in (a) above, (c) any bonus eligible to be deferred under the Pfizer Inc Deferred Compensation Plan, inaccordance with the rules under that Plan and Section 409A, or (d) any other compensation determined by the Committee to beExcess Regular Earnings for purposes of this Plan.

2.15 Excess Regular Earnings Deferrals . The term “Excess Regular Earnings Deferrals” means the portion of a Member’sExcess Regular Earnings that the Member elects to defer under the terms of the Plan.

2.16 Grandfathered Amounts . The term “Grandfathered Amounts” shall mean the portion of the Member’s Account thatreflects the amount that was earned and vested (within the meaning of Section 409A of the Code and regulations thereunder) underthe Plan prior to 2005 (and earnings thereon), or with respect to Accounts transferred from the Pharmacia Savings Plus Plan, theportion of the Member’s Account that reflects the amount that was earned and vested (within the meaning of Section 409A of theCode and regulations thereunder) under the Pharmacia Savings Plus Plan prior to 2005 (and earnings thereon).

2.17 Key Employee . The term “Key Employee” means an Employee treated as a “specified employee” as of his or herSeparation from Service under Section 409A(a)(2)(B)(i) of the Code, i.e. , a key employee (as defined in Section 416(i) of the Codewithout regard to paragraph (5) thereof) of the Company or its affiliates. Key Employees shall be determined in accordance withSection 409A using an identification date of February 28 th in any year . A listing of Key Employees as of an identification date shallbe effective for the 12-month period beginning on the March 1 following the identification date ..

2.18 Limitation(s) . The term “Limitation(s)” means the limitation on contributions to defined contribution plans underSection 415(c)(1)(A) of the Code or Section 1081.01(a)(11) of the PR Code, and on compensation taken into account under Section401(a)(17) of the Code or Section 1081.01(a)(12) of the PR Code, and with respect to Eligible Employees who are a select group ofmanagement or highly compensated employees, within the meanings of Sections 201(a)(2) and 401(a)(1) of ERISA and are eligible todefer their bonuses under the Pfizer Deferred Compensation Plan, such other Code or Qualified Plan limits that prevent the deferredbonuses as being recognized as Regular Earnings under the Qualified Plan.

2.19 Member . The term Member means an Eligible Employee who has Excess Regular Earnings Deferrals or a RetirementSavings Contribution made to the Plan or is otherwise credited with an Employer Accrual.

2.20 Payment Option . The term “Payment Option” means the following forms of payment under which an EligibleEmployee may elect to receive amounts credited to his Account upon his Separation from Service with the Controlled Group: (i)single sum payable in the January following the Member’s Separation from Service with the Controlled Group, or (ii) substantiallyequal annual installment payments over a period of two (2) to twenty (20) years, with the first installment to be paid the Januaryfollowing the Member’s Separation from Service. Where payment of the Account is made in installment payments, the firstinstallment shall be a fraction of the value of the Member’s Account as of the applicable valuation date, the numerator of which isone (1) and the denominator of which is the total number of installments remaining to be paid at that time. Each subsequentinstallment shall be calculated in the same manner, except that the denominator shall be reduced by the number of installments thathave been paid previously. Unless otherwise provided under this Plan, including in the event of death, Disability and or a paymentdue to Unforeseeable Emergency, if a payment election is not timely made in accordance with the requirements of Section 409A theMember shall be deemed to have elected to receive payment of his or her Account in a single lump sum payment to be paid in theJanuary following the Member’s Separation from Service. Notwithstanding anything in this Section 2.20 or the Pharmacia SavingsPlus Plan to the contrary, effective January 1, 2007, the Account of any Member who has Separated from Service and is no longerliving at the time his benefits commence shall be paid in a single lump sum the January following the Member’s death, provided,however, that payment of Grandfathered Amounts to Beneficiaries under the Pharmacia Savings Plus Plan shall be governed underthe terms of that plan.

2.21 Pfizer Deferred Compensation Plan . The term “Pfizer Deferred Compensation Plan” shall mean the Pfizer Inc DeferredCompensation Plan, a bonus deferral program, or its successor.

2.22 Pfizer Match Fund . The term “Pfizer Match Fund” shall mean the investment fund known as the Pfizer Match Fundunder a Qualified Plan, or its successor.

2.23 Pharmacia Savings Plus Plan . The term Pharmacia Savings Plus Plan means the Pharmacia Savings Plus + Plan,effective July 1, 1999, as subsequently amended and restated effective July 1, 2002 which was merged into this Plan effectiveJanuary 1, 2008.

2.24 Plan . The term “Plan” means this “Pfizer Inc Nonfunded Deferred Compensation and Supplemental Savings Plan,”as set forth herein and as amended from time to time.

2.25 Plan Year . The term “Plan Year” means the calendar year.

2.26 Prior Plan . The term “Prior Plan” means: (i) with respect to Grandfathered Amounts attributable to the Plan, the Planas in effect on October 3, 2004, which has not been materially modified (attached hereto as Exhibit A), and (ii) with respect toGrandfathered Amounts attributable to the Pharmacia Savings Plus Plan, the Pharmacia Savings Plus Plan as in effect on October 3,2004, which has not been materially modified (attached hereto as Exhibit B).

2.27 PR Code . The term “PR Code” means the Internal Revenue Code for a New Puerto Rico , (also known as the NewPuerto Rico Tax Code of 2011) as may be amended from time to time.

2.28 Qualified Military Service . The term “ Qualified Military Service ” means any service in the uniformed services (asdefined in chapter 43 of title 38, United States Code) where the Eligible Employee’s right to reemployment is protected by law.

2.29 Qualified Plan . The term “Qualified Plan” means the Pfizer Savings Plan, the Pfizer Savings Plan for Residents ofPuerto Rico, and the Searle Puerto Rico Savings Plan 1165(e) as each may be amended from time to time.

2.30 Regular Earnings . The term “Regular Earnings” shall have the meaning given such term under a Qualified Plan. ForEligible Employees who are eligible to defer their bonus under the Pfizer

Deferred Compensation Plan, the term “Regular Earnings” shall also include such deferred amounts as determined by the Committee.

2.31 Retirement . The term “Retirement” means a termination of employment with an Employer after the Eligible Employeehas attained either (i) age 65, or (ii) age 55 with at least 10 Years of Service (as determined in accordance with the Qualified Planpursuant to which the Member received his or her Retirement Savings Contributions).

2.32 Retirement Savings Contribution. The term “Retirement Savings Contribution” means the automatic Companycontribution made to a Retirement Savings Eligible Employee’s Account under a Qualified Plan in accordance therewith.

2.33 Retirement Savings Eligible Employee. The term “Retirement Savings Eligible Employee” means an Eligible Employeeeligible in accordance with a Qualified Plan for a Retirement Savings Contribution.

2.34 Section 409A . The term “Section 409A” shall mean Section 409A of the Code and the regulations and otherguidance issued thereunder by the U.S. Treasury or Internal Revenue Service.

2.35 Separation from Service . The term “Separation from Service” or “Separates from Service” means a “separation fromservice” within the meaning of Section 409A.

2.36 Special Accrual . The term “Special Accrual” means a special lump sum accrual amount made pursuant to a WrittenAgreement as provided for in Section 4.2 of the Plan.

2.37 Unforeseeable Emergency . The term “Unforeseeable Emergency” means a severe financial hardship to the Memberresulting from an illness or accident of the Member, the Member’s spouse, or dependent (as defined in Section 152(a) of the Code);the Member’s loss of property due to casualty; or other similar extraordinary and unforeseeable circumstances arising as a result ofevents beyond the Member’s control, within the meaning of Section 409A. Withdrawals for Unforseeable Emergencies are onlyavailable to Members who were Participants in, and with respect to the portion of a Member’s Account that was credited under, thePharmacia Savings Plus Plan (as adjusted for earnings and losses) on December 31, 2007 and other than Grandfathered Amountsthat are governed under the distribution rules of that Prior Plan.

2.38 Written Agreement . The term “Written Agreement” shall have the meaning ascribed to it in Section 4.2.

SECTION 3 . PARTICIPATION .

3.1 Designation of Eligible Employees . The Committee in its sole and absolute discretion will designate as EligibleEmployees those employees who satisfy the terms of Section 2.10 and are eligible to participate in the Plan.

3.2 Election to Make Excess Regular Earnings Deferrals .

(a) Initial Election . An Eligible Employee may elect to begin making Excess Regular Earnings Deferrals by filing anelection with the Committee or its authorized designee in accordance with this Section 3.2 and the requirements of Section 409A andany rules established by the Committee. Deferral elections for Excess Regular Earnings Deferrals in the year in which an employeefirst becomes eligible to participate in the Plan (as determined in accordance with consistent rules established by the Committee inits sole and absolute discretion and in accordance with Section 409A) may be made within 30 days of his or her first becomingeligible to participate in the Plan or another account balance plan required to be aggregated with this Plan under Section 409A,provided that such elections shall apply only with respect to Regular Earnings received subsequent to the date of receipt of electionby the Committee and with such paycheck as

determined administratively practicable by the Committee. If no such election is made, an Eligible Employee may not make ExcessRegular Earnings Deferrals to the Plan in the year he or she first becomes eligible to participate in the Plan (as determined inaccordance with consistent rules established by the Committee in its sole and absolute discretion and in accordance with Section409A) but may make Excess Regular Earnings Deferrals in subsequent Plan Years to the extent he/or she submits a proper and timelyelection to do so under the Plan during a subsequent Annual Enrollment and consistent with rules established by the Committee inits sole and absolute discretion and in accordance with Section 409A.

(b) Subsequent Elections . For Plan Years after the first Plan Year in which the Eligible Employee participates in the Plan,an Eligible Employee may make Excess Regular Earnings Deferrals to the Plan to the extent he/or she submits a proper and timelyelection to do so under the Plan during an Annual Enrollment ending prior to such Plan Year (or at such other time as the Committeeshall permit for Employees who are treated (and eligible to be treated) as in their first year of eligibility under uniform rulesestablished by the Committee in accordance with Section 409A).

3.3 Amendment or Suspension of Election . Except as otherwise provided in this Section 3.3, once made, a Member maynot change his or her existing Excess Regular Earnings Deferrals election under this Plan during the Plan Year until the next AnnualEnrollment. Notwithstanding the foregoing, if a Member receives a hardship withdrawal under the Qualified Plan, incurs a Disabilityor obtains a distribution under Section 6.4 on account of an Unforeseeable Emergency during a year, his or her Excess RegularEarnings Deferral election shall be cancelled.

3.4 Amount of Elections . Each election for Excess Regular Earnings Deferrals to the Plan filed by an Eligible Employeemust specify the amount of Excess Regular Earnings Deferrals in a whole percentage from 1% to 20% of the Member’s ExcessRegular Earnings (from 1% to 15% for Members located in Puerto Rico) unless the Committee establishes a lesser percentage for thePlan Year.

3.5 Retirement Savings Contributions . Effective for Plan Years beginning on or after January 1, 2011, any RetirementSavings Eligible Employee who receives a Retirement Savings Contribution under a Qualified Plan that is projected to be in excess ofany applicable Limitations, shall become a Member under the Plan and such excess Retirement Savings Contributions shall becredited to his or her Account under the Plan.

Retirement Savings Contributions shall be subject to a vesting schedule as set forth below:

(a) General . A Member shall become 100% vested in his Retirement Savings Contributions upon the attainment of3 Years of Service (as determined in accordance with the Qualified Plan pursuant to which such Member’s Retirement SavingsContributions were made).

Notwithstanding the foregoing, a Member shall become 100% vested in his Retirement Savings Contributions in the event ofhis or her Retirement, Disability or death (including death while serving Qualified Military Service); provided that effectiveJanuary 1, 2012, “Disability” shall also include for purposes of this Section 3.5(a) only, a Member’s Separation from Servicedue to the failure to return to work after the expiration of short term disability benefits, or because his position is filled whilehe is on an approved leave of absence while receiving short term disability benefits.

(b) Forfeiture of Nonvested Contributions . The nonvested portion of a Member’s Account shall be forfeited uponthe occurrence of the earlier of: (i) the date upon which the Member takes a complete distribution of his or her Account, or (ii)the date upon which the Member incurs five consecutive One-Year Periods of Severance (as determined in accordance withthe Qualified Plan pursuant to which such Member’s Retirement Savings Contributions were made).

(c) Vesting for Zoetis and Nutritionals Employees . Notwithstanding the foregoing, (i) effective as of the “ZoetisBenefits Date” (as such term is defined in Appendix B hereto), any Member

employed by Zoetis Inc, shall become 100% vested in his Retirement Savings Contributions Account, and (ii) effective as ofthe “Nestle Closing Date” (as such term is defined in Appendix A hereto) any Nestle Employee who is not vested in his or herRetirement Savings Account shall become 100% vested.

SECTION 4 . EMPLOYER ACCRUALS .

4.1 General Rule .

An Employer Accrual will be credited to a Member’s Account with respect to the eligible portion of Excess RegularEarnings Deferrals of such Member at the Member’s applicable percentage rate of “Matching Contributions” with respect to “After-Tax Contributions,” “Before-Tax Contributions,” and Roth 401(k) Contributions under the Qualified Plan. The Employer Accrualshall be credited as soon as practicable following the payroll period for which the Excess Regular Earnings Deferrals are made. AnEmployer Accrual (based on the Member’s matching contribution formula under the Qualified Plan) also will be credited to theAccount of a Member who elects to defer a percent of his or her bonus that otherwise would have been deferred under the PfizerDeferred Compensation Plan, subject to the requirements of Section 409A. Such Employer Accrual shall be credited as soon aspractical following the payroll period in which the bonus is deferred. In no event shall a Special Accrual be subject to EmployerAccruals under this Section 4.1. Notwithstanding anything in this Section 4.1 to the contrary, for purposes of any distribution orwithdrawal under the Plan, except as otherwise provided under Section 5.4, the amounts distributed or withdrawn shall be valued asof the last business day of the calendar quarter preceding the calendar quarter of the distribution or withdrawal.

4.2 Special Accrual for Recruitment Purposes

Effective September 1, 2007, the Company may, in its sole and absolute discretion, credit an amount to the Account of anEligible Employee, provided that a member of the ELT approves such credit (but such ELT member cannot approve such credit forhim or herself).

(a) This credit to the Eligible Employee's Account shall be made at the time, and subject to any restrictions, specified inthe written agreement or agreement that is evidenced in a writing from the ELT member (the “Written Agreement”), with the EligibleEmployee. At such time, the Eligible Employee shall become a Member if he is not already a Member. Such Written Agreementcannot include any election on the part of the Eligible Employee unless such election satisfies the requirements of Code section409A and the election provisions have been approved by the ELT member or a member of the Committee.

(b) Such credit shall be invested as specified in the Written Agreement, or, if no such investment election is specified, asprovided in accordance with Section 5.4 of the Plan except that no portion of this credit shall be considered Employer Accruals thatare subject to a deemed investment in the Pfizer Match Fund. No portion of this credit is eligible for an Employer Accrual under thePlan unless an Employer Accrual for such credit is expressly provided for under the terms of the Written Agreement.

(c) Such credit, as adjusted for any investment gains or losses, shall be paid in accordance with Sections 5.2, 6.1 and 6.2of the Plan or as otherwise determined under the Written Agreement; provided that nothing herein (other than if the WrittenAgreement specifies to the contrary) shall be interpreted so not as to afford the opportunity for the Member to change his time andform of payment election in accordance with Section 409A if such right has been so provided by the ELT member and approved bythe Committee.

SECTION 5 . INDIVIDUAL ACCOUNT .

5.1 Creation of Accounts . The Company will maintain an Account under the Plan in the name of each Member. EachMember’s Account will be credited with the amount of the Member’s Excess Regular

Earnings Deferrals, Employer Accruals, Retirement Savings Contributions, Special Accruals and will be adjusted for earnings andlosses thereon.

5.2 Payment Option Election . Except with respect to a Special Accrual and to the extent otherwise provided: (a) in aWritten Agreement or (b) in this Section 5.2, at the time a Member is first eligible to elect to make Excess Regular Earnings Deferralsunder the Plan or has a Retirement Savings Contribution credited to his or her Account under the Plan, the Member shall elect theparticular Payment Option that is to apply to amounts credited to the Member’s Account (other than Grandfathered Amounts). For aPayment Option election to be effective, it must be made (i) within 30 days of the date the Employee is first eligible to participate inthe Plan (as determined in accordance with consistent rules established by the Committee in its sole and absolute discretion and inaccordance with Section 409A). Notwithstanding the foregoing: (1) any Member who has a Special Accrual under the Plan who hasa right to elect a form of payment pursuant to the Written Agreement and as approved by an ELT member and the Committee shallonly have 30 days from the date of initial eligibility (whether that date is with respect to the Special Accrual or with respect to theExcess Regular Earnings Deferrals, whichever is earlier) to elect his or her Payment Option for all non-Grandfathered amounts whichhe or she has the right to elect a Payment Option for under the Plan; and (2) any Eligible Employee who becomes eligible toparticipate in an account balance plan that must be aggregated with the Plan under Section 409A of the Code before he or sheotherwise would become eligible to participate in this Plan has 30 days from the date he or she first becomes eligible to participate insuch other plan to elect his or her Payment Option under the Plan. In the absence of a timely election (except as otherwise may berequired pursuant to a Written Agreement), the Member shall be deemed to have made a Payment Option to receive his or herAccount under the Plan in a single lump sum payment in the January after his or her Separation from Service (other than with respectto Grandfathered Amounts). In addition, unless otherwise provided pursuant to a Written Agreement (and as approved by an ELTmember and the Committee) a Member shall be deemed to have made a Payment Option election to receive the portion of his or herAccount attributable to his or her Special Accrual under the Plan in a single lump sum payment in the January after his or herSeparation from Service. Except as provided in Section 5.3 below, or if payment is subsequently re-deferred in accordance withSection 6.8 and subject to the rules on Key Employee payments as provided in Section 6.5, any Payment Option election made ordeemed made under the Plan shall apply with respect to a Member’s entire Account under the Plan (except with respect toGrandfathered Amounts).

5.3 Exceptions to Binding Payment Option Election . Notwithstanding any Payment Option elected (or deemed elected):(i) if the value of a Member’s account on the last business day of the calendar year of the Member’s Separation from Service(excluding Grandfathered Amounts credited to the Member’s Account) is $10,000 or less the Member’s Payment Option electionshall be paid in a lump sum in the January following the Member’s termination; (ii) if a Member incurs a Disability, the Member’sAccount (except with respect to Grandfathered Amounts which shall be payable under the terms of that Prior Plan) shall be paid inaccordance with the Payment Option the January after the Member has been determined to have incurred a Disability; (iii) if aMember who was a Participant in the Pharmacia Savings Plus Plan requests a distribution on account of an UnforeseeableEmergency the portion of the Member’s Account attributable to amounts accrued under the Pharmacia Savings Plus Plan (asadjusted for earnings and losses and other than Grandfathered amounts, which shall be paid in accordance with the terms of thatPrior Plan) to the extent requested on account of the Unforeseeable Emergency shall be paid in a lump sum the next business dayafter the Unforeseeable Emergency (in accordance with uniform rules established by the Committee and in accordance with 409A);(iv) if a Member ceases to be an Eligible Employee and subsequently becomes eligible to participate in the Plan, he or she may electa new Payment Option that shall apply with respect to any amounts credited to his or her Accounts under the Plan after the date ofhis or her re-eligibility (provided the Employee becomes an Eligible Employee in a different calendar year than the year in which he orshe ceased to be an Eligible Employee), and if no such election the portion of the Account accrued with respect to the new eligibilityperiod shall be paid in a single lump sum in the January after Separation from Service (or as otherwise required in this Section 5.3);(v) if a Member has a Special Accrual under the Plan any Payment Option election made or deemed made by the Member inaccordance with Section 5.2, the exceptions to the Payment Option elected as provided for in this Section 5.3 (or Section 6.8) shallnot apply to amounts attributable to the Special Accrual unless otherwise provided in the terms of the

Written Agreement as approved by an ELT member and the Committee; and (vi) if a Member dies before distribution of his or herentire Account, the Payment Option election shall be cancelled and the entire account (except with respect to GrandfatheredAmounts under the Pharmacia Savings Plus Plan which shall be paid pursuant to the terms of that plan) shall be paid in a singlelump sum distribution the January following the Member’s death. Effective January 1, 2007, the immediately preceding sentenceshall also apply with respect to amounts accrued under the Pharmacia Savings Plus Plan (as adjusted for earnings and losses) otherthan Grandfathered Amounts under that plan.

5.4 Investments . All Excess Regular Earnings Deferrals and Retirement Savings Contributions will be credited with anamount equal to the amount which would have been earned had such amounts been actually invested in one or more of the “Funds”(other than the Pfizer Match Fund available for investment under the Qualified Plan, as the Member may be defaulted into or electfrom time to time, in one percent (1%) increments. To the extent no investment election is provided with respect to a Special Accrualwhen such Special Accrual is credited to the Plan or otherwise, the Special Accrual shall be deemed to be invested in the defaultfund under the Plan. The portion of the Member’s Account attributable to Employer Accruals shall be deemed to be invested in thePfizer Match Fund. Rules similar to those which govern the Qualified Plan shall apply for purposes of determining the value of thedeemed investments (but based on this Plan’s valuation dates) and the timing, frequency and permissibility of investment transfers.No provision of this Plan shall require the Company or any other Employer to actually invest any amount in any “Fund” or in anyother investment vehicle. The Plan is an unfunded plan that is not subject to the funding requirements of ERISA, meaning that thereare no actual investments held in a trust. The Accounts represent unsecured obligations of the Company, and no funds are set asidefrom the Company’s general assets to cover such Accounts. The Plan is subject to the full faith and credit of the Company, andMembers would be general creditors in the event of the Company’s insolvency. Except as otherwise provided in this Section,distributions and withdrawals from the Plan are valued as of the last business day of the calendar quarter preceding the calendarquarter of the distribution. Withdrawals on account of an Unforeseeable Emergency are valued as of the last business day of themonth preceding the day that the withdrawal request is received. Payments that would otherwise be made but are delayed onaccount of a Member being a Key Employee are valued on the distribution date.

With respect to a Member subject to Section 16 of the Securities Exchange Act of 1934, an election to transfer a portion ofhis Account into, or out of, the Pfizer company stock funds, shall be permitted only if the Member has not elected during theimmediately preceding six (6) months to transfer out of, or into, such funds within this Plan, any Pfizer company stock funds underthe Qualified Plan or the unit account within any compensation plan maintained by the Company for the benefit of its non-employeedirectors.

SECTION 6 . DISTRIBUTION OF ACCOUNTS .

6.1 Distribution of Benefits . Unless otherwise specifically provided for in the Plan, distribution of a Member’sGrandfathered Amounts shall be paid in accordance with the distribution provisions of the Prior Plans. Except as otherwise providedin this Section and the Plan, a Member shall be paid the balance of his Account following his or her Separation of Service inaccordance with the Payment Option or Payment Options elected (or deemed elected by the Member) by the Member as permittedunder the Plan. A Member may have different Payment Option elections with respect to the portions of his or her Account, forexample, for a Special Accrual or for a Member who was ineligible or a period of time and subsequently became eligible and waspermitted or deemed to have made a new Payment Option election under the Plan with respect to future accruals under the Plan andin accordance with Section 409A.

6.2. Benefits Subject to Withholding . The benefits payable under this Plan shall be subject to the deduction of anyfederal, state, or local income taxes, employment taxes or other taxes which are required to be withheld from such payments byapplicable laws and regulations. Any employment taxes owed by the Member with respect to any deferral, accrual or benefit payableunder this Plan may be withheld from other compensation of the Member in the year in which such tax liability accrues.

6.3 Disability . Notwithstanding any elected Payment Option or deemed elected Payment Option (made or deemed made),if the Member incurs a Disability under the Plan, the balance of the Member’s Account shall be paid in accordance with the PaymentOption elected the January following the Disability, except with respect to Grandfathered Amounts shall be payable in accordancewith the terms of that Prior Plan.

6.4 Distributions on Account of Unforeseeable Emergency . Notwithstanding any elected Payment Option or deemedelected Payment Option made (or deemed made) by a Member who was a Participant in the Pharmacia Savings Plus Plan, upon theoccurrence of an Unforeseeable Emergency, a Member may withdraw all or any portion of his or her Account balance attributable toamounts accrued under the Pharmacia Savings Plus Plan (as adjusted for earnings and losses) provided that the amounts distributedwith respect to an Unforeseeable Emergency (including any Grandfathered Amounts distributed under the rules of the PharmaciaSavings Plus Plan) may not exceed the amounts necessary to satisfy such Unforeseeable Emergency plus amounts necessary to paytaxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may berelieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Member’s assets (to the extentthe liquidation of such assets would not itself cause severe financial hardship) or by cessation of deferrals under the Plan.Distributions of Grandfathered Amounts for a hardship or unforeseeable emergency shall be governed by the terms of the Prior Plan.

6.5 Delay for Key Employees . Notwithstanding anything in the Plan to the contrary, distributions (other thandistributions of Grandfathered Amounts) may not be made to a Key Employee upon a Separation from Service before the date whichis six (6) months after the date of the Key Employee's Separation from Service (or, if earlier, the date of death of the Key Employee).Any payments that would otherwise be made during this period of delay shall be accumulated and paid on the day that is six (6)months following the Member’s Separation from Service (or, if earlier, the January following the Member’s death).

6.6 Distributions upon Death . Notwithstanding any elected Payment Option or deemed elected Payment Option made (ordeemed made) by the Member, if a Member dies before distribution of his or her Account balance has begun any remaining balanceshall be distributed in a lump sum payment to the Member’s Beneficiary the January following the calendar year in which theMember’s death occurs. Effective January 1, 2007, the immediately preceding sentence also applies with respect to amounts accruedunder the Pharmacia Savings Plus Plan (as adjusted for earnings and losses) other than Grandfathered Amounts under that plan.

6.7 Change in Control . Notwithstanding any provision in the Plan or the Pharmacia Savings Plus Plan to the contrary, aMember’s Payment Option election or a Member’s deemed Payment Option election, for Member’s who were Participants in thePharmacia Savings Plus Plan and with respect to amounts accrued under the Pharmacia Savings Plus Plan on or after January 1, 2005(as adjusted for earnings and losses) only, such portion of the Member’s Account under the Plan shall be distributed in animmediate lump sum payment upon the occurrence of a Change in Control that is a “Change in Control Event.” For these amounts a“Change in Control Event” means an event described in Code section 409A(a)(2)(A)(v) or otherwise under Section 409A. Withrespect to Grandfathered amounts under the Pharmacia Savings Plus Plan, Change in Control shall have the meaning defined in thatPrior Plan and such Grandfathered Amounts distributed in accordance with the terms of that Prior Plan.

6.8 Redeferrals . Notwithstanding any elected Payment Option or deemed elected Payment Option made (or deemedmade), except with respect to Special Accruals for which the Member was not provided with a redeferral option under the WrittenAgreement, a Member may make one or more subsequent elections to change form of a distribution for a deferred amount, providedthat such an election shall be effective only if the following conditions are satisfied:

(a) The election may not take effect for at least twelve (12) months;

(b) The election must be made at least twelve (12) months before payments would have otherwise begun;and

(c) In the case of an election to change the form of a distribution upon a Member’s Separation fromService, a distribution may not be made earlier than at least five (5) years from the date the distribution (or, with respect toinstallments, the first scheduled installment) would have otherwise been made.

Members who have elected to receive their distribution (or portion thereof) in installments may not change the correspondingelection once their installment distributions have begun.

Members who pursuant to a Written Agreement are permitted to specify a Payment Option with respect to a Special Accrual shallalso have the redeferral rights provided in this Section 6.8 except as otherwise provided in the Written Agreement.

6.9 Effect of Taxation . If a portion of the Member’s Account balance is includible in income under Section 409A, suchportion shall be distributed immediately to the Member.

6.10 Permitted Delays . Notwithstanding the foregoing, any payment on account of a Member under the Plan shall bedelayed upon the Committee's reasonable anticipation of one or more of the following events:

(a) The Company's deduction with respect to such payment would be eliminated by application of Code section162(m); or

(b) The making of the payment would violate federal securities laws or other applicable law;

provided, that any payment delayed pursuant to this Section 6.10 shall be paid in accordance with Section 409A.

SECTION 7 . NATURE OF INTEREST OF MEMBER .

Participation in this Plan will not create, in favor of any Member, any rights or lien in or against any of the assets of theCompany or any Employer, and all amounts of Excess Regular Earnings, Retirement Savings Contributions, Special Accruals andEmployer Accruals deferred hereunder shall at all times remain an unrestricted asset of the Company or the Employer. A Member’srights to benefits payable under the Plan are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge,or encumbrance. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed tocreate a trust of any kind, or a fiduciary relationship, between any Employer and a Member or any person, and the Company’s andeach Employer’s promise to pay benefits hereunder shall at all times remain unfunded as to the Member.

SECTION 8 . BENEFICIARY DESIGNATION .

A Member’s beneficiary under this Plan will automatically be the same as such Member’s beneficiary under the QualifiedPlan unless a separate designation of beneficiary form for this Plan has been properly filed with the Committee or its authorizeddesignee in accordance with any rule established by the Committee and received prior to the death of the Member. In the absence ofa designation of specific beneficiary under either the Qualified Plan or this Plan, which beneficiary survives the Member, upon theMember’s death, except to the extend as may otherwise be provided with respect to amounts attributable to accruals made under thePharmacia Savings Plus Plan prior to January 1, 2007 (including Grandfathered Amounts) which shall be governed by the terms ofthat Plan, payment of his Account shall be made to the Member’s estate in a lump sum in the January following the Member’s death.

SECTION 9 . ADMINISTRATION .

9.1 Committee . This Plan will be administered by the Committee.

9.2 Powers of the Committee . The Committee’s powers under this Plan are the same as are described in the Qualified Planand include, but are not limited to, the power:

(a) to determine who are Eligible Employees for purposes of participation in the Plan;

(b) to interpret the terms and provisions of the Plan and the Prior Plans and to determine any and all questionsarising under the Plan or Prior Plans, including without limitation, the right to remedy possible ambiguities, inconsistencies,or omissions by a general rule or particular decision; and

(c) to adopt rules consistent with the Plan or Prior Plans.

9.3 Claims Procedure . Effective January 1, 2008, this Section 9.3 and Section 9.4 shall apply with respect to a Member’sentire Account under the Plan including Grandfathered Amounts under this Plan and the Pharmacia Savings Plus Plan. Any requestby a Member or any other person for any benefit alleged to be due under the Plan shall be known as a “Claim” and the Member orother person making a Claim, or the authorized representative of either, shall be known as a “Claimant.” The Committee has solediscretion to determine whether a communication from an individual shall be a Claim for purposes of this Section 9.3 and Section 9.4.To the extent of their responsibility to review benefit claims or to review the denial of benefit claims, the Committee and the reviewershall have full authority to interpret and apply, in their discretion, the provisions of the Plan. The decisions of the Committee andreviewer shall be final and binding upon any and all Claimants, including, but not limited to, Members and their Beneficiaries, andany other individuals making a Claim or requesting review of a Claim through or under them, and shall be afforded the maximumdeference permitted by law. A Member may not maintain a court action over a disputed claim until he or she has exhausted thePlan’s claims procedures.

Claimant may submit a written application to the Committee for payment of any benefit that he believes may be due himunder the Plan, in accordance with Plan procedures. Such application shall include a general description of the benefit which theClaimant believes is due, the reasons the Claimant believes such benefit is due and any information as the Committee mayreasonably request. The Committee will process the Claimant’s application within ninety (90) days of the receipt of the Claim by theCommittee unless special circumstances require an extension of time for processing the Claim. In such event, written notice of theextension shall be furnished to the Claimant prior to the termination of the initial ninety (90) day period but in no event shall theextension exceed a period of ninety (90) days from the end of such initial period. The notice shall indicate the special circumstancesrequiring an extension of time and the date by which the Plan expects to render the final decision. If the Committee has notdetermined the Claimant’s eligibility for a Plan benefit within this ninety (90) day period (one hundred eighty (180) day period ifcircumstances require an extension of time), the Claim is deemed denied. A Claim is considered approved only if such approval ismemorialized by the Committee in writing.

If a Claim is denied in whole or in part, the notice of denial shall set forth (i) the specific reason or reasons for the denial, (ii)specific reference to the pertinent Plan provisions on which the denial is based, (iii) a description of any additional material orinformation necessary for the Claimant to perfect the Claim and an explanation of why such material or information is necessary, (iv)an explanation of the Plan’s claim review procedure, and (v) an explanation that, if an adverse determination is made on review, theClaimant may have a right to bring civil action under Section 502(a) of ERISA. Within sixty (60) days of the receipt of a notice ofdenial of a Claim in whole or in part or a deemed denial, a Claimant (i) may request a review upon written application to the

Committee, (ii) may review documents pertinent to the Claim, and (iii) may submit issues and comments in writing to the Committee.The Claimant shall be provided upon request and free of charge, reasonable access to all documents, records and other informationrelevant to the Claimant’s Claim for benefits.

The Committee will review a Claim for which a request for review has been made and render a decision not laterthan sixty (60) days after receipt of a request for review; provided, however, that if special circumstances require extension of a timefor processing, a decision shall be rendered no later than one hundred and twenty (120) days after receipt of the request for review.Written notice of any such extension shall be furnished to the Claimant within sixty (60) days after receipt of request for review. TheCommittee’s decision shall be in writing and shall set forth (i) the specific reason or reasons for the denial on review, (ii) specificreference to the pertinent Plan provisions on which the denial on review is based, (iii) an explanation that the Claimant is entitled toreceive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevantto the Claimant’s Claim for benefits, and (iv) an explanation that if an adverse determination is made on review, the Claimant mayhave the right to bring a civil action under Section 502(a) of ERISA. If the decision on review is not furnished within the applicabletime, the Claim shall be deemed denied on review.

9.4 Limitation on Period for Filing Claims . No claim for benefits based upon a claim that contributions were not properlymade under this Plan shall be approved under this Plan, and no action may be brought for benefits under this Plan pursuant to thedenial of such a claim pursuant to Section 9.3 of this Plan, unless such claim for benefits is duly filed under Section 9.3 of this Planno later than the last day of the second Plan Year beginning after the Plan Year in which the claim alleges that the contributionsshould have been credited.

SECTION 10 . NO EMPLOYMENT RIGHTS .

No provisions of the Plan or any action taken by the Company, the Board of Directors, the Committee, or any of theirproperly authorized representatives shall give any person any right to be retained in the employ of any Employer, and the right andpower of the Company or any Employer to dismiss or discharge any Member is specifically reserved.

SECTION 11 . AMENDMENT, SUSPENSION, AND TERMINATION .

The Board of Directors or its authorized designee shall have the rights to amend, suspend, or terminate the Plan at any time,except that the Committee may make non-substantive administrative changes to this Plan so as to conform with or take advantage ofgovernmental requirements, statutes or regulations. Except as provide in the next sentence, no amendment, modification ortermination shall, without the consent of a Member, adversely affect the amount of the Member’s benefits in his or her Account asof the date of such amendment, modification or termination. Upon termination of the Plan, distribution of the balances in Accountsshall be made to Members and Beneficiaries in the manner and at the time described in the Plan (or the Prior Plan) unless the Boardof Directors of the Company or its designee determines in its sole and absolute discretion that all such amounts shall be distributedupon termination and in accordance with the requirements under Section 409A. Upon termination of the Plan, no further deferrals ofeligible compensation shall be permitted; however, earnings, gains and losses shall continue to be credited to Account balances inaccordance with the Plan until the Account balances are fully distributed.

In the event the Plan is terminated, the Committee shall continue to administer the Plan in accordance with the relevantprovisions thereof until the Member’s benefits have been paid hereunder. Notwithstanding the foregoing, no amendment of the Planshall apply to Grandfathered Amounts, unless the amendment specifically provides that it applies to such amounts. The purpose ofthis restriction is to prevent a Plan amendment from resulting in an inadvertent “material modification” to Grandfathered Amounts.

SECTION 12 . PROVISIONS GOVERNED BY CODE SECTION 409A

Notwithstanding anything herein to the contrary, the terms of the Plan are intended to, and shall be interpreted and appliedso as to, comply in all respects with the provisions of Section 409A. Any provision of this Plan governing the timing or form ofpayment of benefits hereunder may be modified by the Plan Administrator if, and to the extent deemed necessary or advisable, tocomply with Section 409A including, but not limited to, a 6-month delay in payment to a Key Employee, which shall be paid asprovided in Section 6.5. Nothing in this Section shall be construed as an admission that any of the benefits payable under this Plan(or any predecessor Plan) constitutes “deferred compensation” subject to the provisions of Section 409A.

Pfizer Supplemental Savings Plan as in effect on 12/31/04. Except as otherwise specifically provided for in the Plan, the provisions ofthis Plan shall apply to Grandfathered Amounts covered under the Pfizer Supplemental Savings Plan on 12/31/2004.

PFIZER INC NONFUNDED DEFERRED COMPENSATION AND SUPPLEMENTAL SAVINGS PLAN

Amended and Restated as of February 1, 2002

SECTION 1 CONTINUATION AND PURPOSE OF THE PLAN .

1.1 Continuation . There is hereby continued for the benefit of Members an unfunded plan of deferred compensationknown as the “Pfizer Inc Nonfunded Deferred Compensation and Supplemental Savings Plan.”

1.2 Purpose . The purpose of this Plan is to provide a means by which an Eligible Employee may, in certaincircumstances, elect to defer receipt of a portion of his “Regular Earnings.” The Plan also provides that the Company will, in certaininstances, credit the Account of a Member with Employer Accruals.

1.3 Description of the Plan . The Plan became effective July 1, 1983 and is amended and restated effective February 1,2002, except as otherwise provided herein. For purposes of the Employee Retirement Income Security Act of 1974 (“ERISA”), asamended, the Plan shall be treated as two separate, unfunded plans. One plan shall be an “excess benefit plan” within the meaningof Section 3(36) of ERISA, and shall be comprised of accruals under the Plan that are made solely because of the applicablelimitations under Section 415 of the Code, plus earnings thereon. All other accruals under the Plan, plus earnings thereon, shall betreated as made under a separate “top-hat” plan maintained by the Company primarily for the purpose of providing deferredcompensation to a select group of management or highly compensated employees, within the meanings of Sections 201(a)(2) and401(a)(1) of ERISA. Separate accounts shall be maintained under the Plan for each Member, as applicable, to account for excessbenefit plan accruals and earnings, and top-hat plan accruals and earnings.

SECTION 2 . DEFINITIONS .

The following words and phrases as used in this Plan have the following means:

2.1 Account . The term “Account” shall mean a Member’s individual account(s), as described in Section 5 of the Plan.

2.2 Board of Directors . The term “Board of Directors” means the Board of Directors of the Company.

2.3 Code . The term “Code” means the Internal Revenue Service Code of 1986, as amended.

2.4 Committee . The term “Committee” means the Committee, as described in the Qualified Plan, or any other person orentity that the Committee has authorized to act on its behalf under the Plan.

2.5 Company . The term “Company” means Pfizer Inc, a Delaware corporation, and any successor corporation.

2.6 Controlled Group . The term “Controlled Group” means the Company and any other entity in which the Companyowns directly or indirectly 30 percent or more of the value or voting power.

2.7 Eligible Employee . The term “Eligible Employee” means any “Member” under the Qualified Plan (i) who receivesRegular Earnings for any Plan Year in excess of the limitation of Section

401(a)(17) of the Code, (ii) whose account under the Qualified Plan is credited with “annual additions,” as defined in Section 415(c)(2) of the Code, during any Plan Year equal to the maximum permitted under Section 415(c)(1)(A) of the Code, (iii) who is otherwisecredited with Employer Accruals, or (iv) who is a member of a select group of management or highly compensated employees and isdesignated as an Eligible Employee by the Committee.

2.8 Employer . The term “Employer” means the Company and any other member of the Controlled Group which is also an“Associate Company” under the Qualified Plan.

2.9 Employer Accrual . The term “Employer Accrual” means the amounts described in Section 4.

2.10 Excess Regular Earnings . The term “Excess Regular Earnings” means (i) the portion of a Member’s Regular Earningsearned during a Plan Year that exceeds the Limitation on compensation taken into account under Section 401(a)(17) of the Code, (ii)all Regular Earnings earned after the Member becomes subject to the Limitation on contributions to defined contribution plansunder Section 415(c)(1)(A) of the Code, to the extent not included in (i) above, (iii) a bonus deferred under the Pfizer Inc DeferredCompensation Plan, or (iv) any other compensation determined by the Committee to be compensation for purposes of this Plan .

2.11 Excess Regular Earnings Deferrals . The term “Excess Regular Earnings Deferrals” means the portion of a Member’sExcess Regular Earnings that the Member elects to defer under the terms of the Plan.

2.12 Limitation(s) . The term “Limitation(s)” means the limitation on contributions to defined contribution plans underSection 415(c)(1)(A) of the Code, and on compensation taken into account under Section 401(a)(17) of the Code.

2.13 Member . The term Member means an Eligible Employee who elects to have Excess Regular Earnings Deferrals madeto the Plan or is otherwise credited with an Employer Accrual.

2.14 Payment Options . The term “Payment Option” means the following forms of payment under which a Member mayelect to receive amounts credited to his Account upon his termination of employment with the Controlled Group: (i) single sumpayable as soon as practicable following the end of the Plan Year in which the Member terminates employment with the ControlledGroup, or (ii) substantially equal annual installment payments over a period of two to twenty years commencing as soon aspracticable following the end of the Plan Year in which the Member terminates employment with the Controlled Group. Wherepayment of the Account is made in installment payments, the first installment shall be a fraction of the value of the Member’sAccount as of the applicable valuation date, the numerator of which is one (1) and the denominator of which is the total number ofinstallments remaining to be paid at that time. Each subsequent installment shall be calculated in the same manner, except that thedenominator shall be reduced by the number of installments that have been paid previously.

2.15 Plan . The term “Plan” means the “Pfizer Inc Nonfunded Deferred Compensation and Supplemental Savings Plan,” asset forth herein and as amended from time to time.

2.16 Plan Year . The term “Plan Year” means the calendar year.

2.17 Qualified Plan . The term “Qualified Plan” means the Pfizer Savings Plan, as amended from time to time.

2.18 Regular Earnings . The term “Regular Earnings” shall have the meaning given such term under the Qualified Plan.

SECTION 3 . PARTICIPATION .

3.1 Designation of Eligible Employees . The Committee in its sole and absolute discretion will designate as EligibleEmployees those employees who satisfy the terms of Section 2.7 and are eligible to participate in the Plan. The Committee in its soleand absolute discretion may terminate the designation of an employee as an Eligible Employee at any time.

3.2 Election to Make Excess Regular Earnings Deferrals . An Eligible Employee may elect at any time after becomingeligible to begin making Excess Regular Earnings Deferrals by filing an election with the Committee or its authorized designee inaccordance with this Section 3 and any rules established by the Committee. Such election will be effective on a prospective basisbeginning with the payroll period that occurs as soon as administratively practicable following receipt of the election by theCommittee or its authorized designee.

3.3 Amendment or Suspension of Election . Members may change (including, suspend) their existing Excess RegularEarnings Deferrals election under this Plan during the Plan Year by filing a new election in accordance with the prescribedadministrative guidelines. Such new election will be effective on a prospective basis beginning with the payroll period that occurs assoon as administratively practicable following receipt of the election by the Committee or its authorized designee. A Member shallnot be permitted to make up suspended Excess Regular Earnings Deferrals, and during any period in which a Member’s ExcessRegular Earnings Deferrals are suspended, the Employer Accruals under the Plan with respect to Excess Regular Earnings Deferralsshall also be suspended. A Member who receives a hardship withdrawal under the Qualified Plan shall be suspended from makingExcess Regular Earnings Deferrals hereunder for a period of six (6) months from the date of such withdrawal.

3.4 Amount of Elections . Each election filed by an Eligible Employee must specify the amount of Excess RegularEarnings Deferrals in a whole percentage from 1% to 20% of the Member’s Excess Regular Earnings unless the Committeeestablishes a lesser percentage for the Plan Year; provided, however, that, with respect to an Eligible Employee who is also eligibleto participate in the Qualified Plan, the rate of Excess Regular Earnings Deferrals hereunder for any payroll period shall not exceedthe rate at which the Member was contributing to the Qualified Plan on a combined pre-tax and post-tax basis for the current year.

SECTION 4 . EMPLOYER ACCRUALS .

4.1 General Rule .

An Employer Accrual will be credited to a Member’s Account with respect to the eligible portion of Excess RegularEarnings Deferrals of such Member at the applicable rate of “Matching Contributions” with respect to “After-Tax Contributions”and “Before-Tax Contributions” under the Qualified Plan. The Employer Accrual shall be credited as soon as practicable followingthe payroll period for which the Excess Regular Earnings Deferrals are made. The eligible portion of a Member’s Excess RegularEarnings Deferrals shall be limited to six percent (6%) of such Excess Regular Earnings for each payroll period. In addition, anEmployer Accrual will be credited as of the end of each Plan Year to a Member’s Account equal to the difference between (i) theamount that would have been credited to the Member’s account under the Qualified Plan as a “Matching Contribution,” includingAdditional Contribution, if any, if the Limitations were not applicable to the Member under the Qualified Plan during such Plan Yearand (ii) the “Matching Contributions,” including Additional Contributions, if any, actually credited to the Member’s account underthe Qualified Plan during such Plan Year. Lastly, an Employer Accrual will be credited to the Account of a Member who elects todefer his bonus under the Warner-Lambert Company Incentive Compensation Plan (“ICP”). The amount of such Employer Accrualwill be equal to the product of: (i) six percent (6%) of the bonus deferred under the ICP, and (ii) the applicable rate of “MatchingContributions” with respect to “After-Tax Contributions” and “Before-Tax Contributions” under the Qualified Plan. The EmployerAccrual shall be credited as soon as practical following the payroll period in which the bonus is deferred.

4.2 Special Employer Accrual for Certain Former Warner-Lambert Employees .

In the case of any Eligible Employee who (i) was an “Eligible Participant” under the Warner-Lambert Savings and StockPlan as in effect on January 31, 2002 (the “Warner-Lambert Plan”), (ii) is a participant under the Warner-Lambert EnhancedSeverance Plan on May 15, 2003, (iii) has completed at least three years of Plan membership (including Warner-Lambert Planmembership) under the Qualified Plan as of May 15, 2003, and (iv) was an Eligible Employee on May 15, 2003, an Employer Accrualshall be credited to such Eligible Employee’s Account in an amount equal to the difference between (a) and (b) below:

(a) the “Matching Contribution” which would have been made to the Eligible Employee’s account under theQualified Plan with respect to the period June 1, 2002 through May 15, 2003 if such “Matching Contribution” had been based on theterms of Article 5 of the Warner-Lambert Plan, assuming an additional matching contribution rate of 65%; and

(b) the “Matching Contribution” actually made to the Eligible Employee’s account under the Qualified Plan withrespect to the period June 1, 2002 through May 15, 2003.

This Employer Accrual shall be credited as soon as practicable following the payroll period which includes May 15, 2003.

4.3 Special Employer Accrual for Certain Former Agouron Employees .

In the case of any Eligible Employee who (i) was an “Eligible Employee” under the Agouron Pharmaceuticals, Inc. 401(k)Plan as in effect on January 31, 2002 (the “Agouron Plan”), (ii) was a participant under the Warner-Lambert Enhanced SeverancePlan on May 15, 2003, and (iii) was an Eligible Employee on May 15, 2003, an Employer Accrual shall be credited to such EligibleEmployee’s Account in an amount equal to the difference between (a) and (b) below:

(a) the “Matching Contribution” which would have been made to the Eligible Employee’s account under theQualified Plan with respect to the period June 1, 2002 through May 15, 2003 if such “Matching Contribution” had been based on theterms of Article 6.4 of the Agouron Plan, assuming an additional matching contribution rate of 35%; and

(b) the “Matching Contribution” actually made to the Eligible Employee’s Account under the Qualified Plan withrespect to the period June 1, 2002 through May 15, 2003.

This Employer Accrual shall be credited as soon as practicable following the payroll period which includes May 15, 2003.

SECTION 5 . INDIVIDUAL ACCOUNT .

5.1 Creation of Accounts . The Company will maintain an Account under the Plan in the name of each Member. EachMember’s Account will be credited with the amount of the Member’s Excess Regular Earnings Deferrals, Employer Accruals, andwill be adjusted for earnings and losses thereon. In the case of Members covered under both the “excess benefit” and “top-hat”portions of the Plan, separate accounts will be maintained to reflect the Members’ interest in each such portion of the Plan.

5.2 Payment Account Option Election . Each Member shall elect the particular Payment Option that is to apply toamounts credited to the Member’s Account. In order for a Payment Option election to be effective, it must be made (i) no later thanninety (90) days (one hundred and eighty (180) days for employment terminations on or after January 1, 2003) prior to the date theMember terminates employment with the Controlled Group, and (ii) in a taxable year preceding the taxable year in which paymentwould otherwise be made or commence. In the absence of a timely election, payment of the Member’s Account will be made inaccordance with the most recent Payment Option election which satisfies the requirements of the immediately preceding sentence or,in the absence of any such Payment Option election, in five (5) substantially equal annual installments commencing as soon aspracticable

following the end of the Plan Year in which the Member terminates employment with the Controlled Group. The foregoingnotwithstanding, in any case where the value of the Member’s Plan Account is less than ten percent (10%) of the value of theMember’s interest in both the Plan and the Qualified Plan, payment of the Member’s Account shall be made in a lump sum as soonas practicable following the end of the Plan Year in which the Member terminates employment with the Controlled Group. Upon aMember becoming “Disabled,” as determined under the Qualified Plan, the balance of the Member’s Account shall be paid in a lumpsum as soon as practicable after such determination is made.

5.3 Investments . All Excess Regular Earnings Deferrals will be credited with an amount equal to the amount which wouldhave been earned had such amounts been actually invested in one or more of the “Funds” (other than the Pfizer Match Fund)available for investment under the Qualified Plan, as the Member may elect from time to time, in one percent (1%) increments. Theportion of the Member’s Account attributable to Employer Accruals shall be deemed to be invested in the Pfizer Match Fund. Rulessimilar to those which govern the Qualified Plan shall apply for purposes of determining the value of the deemed investments andthe timing, frequency and permissibility of investment transfers, except that no diversification of Employer Accruals which aredeemed to be invested in the Pfizer Match Fund shall be permitted. No provision of this Plan shall require the Company or any otherEmployer to actually invest any amount in any “Fund” or in any other investment vehicle. The Plan is an unfunded plan that is notsubject to the funding requirements of ERISA, meaning that there are no actual investments held in a trust. The Accounts representunsecured obligations of the Company, and no funds are set aside from the Company’s general assets to cover such Accounts. ThePlan is subject to the full faith and credit of the Company, and Members would be general creditors in the event of the Company’sinsolvency.

With respect to a Member subject to Section 16 of the Securities Exchange Act of 1934, an election to transfer a portion ofhis Account into, or out of, the “Pfizer Company Stock Fund” shall be permitted only if the Member has not elected during theimmediately preceding six months to transfer out of, or into, such Fund within this Plan, the Pfizer Company Stock Fund under theQualified Plan or the unit account within the Pfizer Inc Nonfunded Deferred Compensation and Unit Award Plan for Non-EmployeeDirectors, the Pfizer Inc Retainer Units Award Plan for Non-Employee Directors, or the Pfizer Inc Deferred Compensation Plan.

SECTION 6 . PAYMENT .

6.1 Payment of Benefits . A Member shall be paid the balance of his Account following termination of employment inaccordance with the Payment Option elected by the Member. Upon the death of a Member, the Member’s beneficiary shall be paidthe balance of the Member’s Account in a lump sum as soon as practicable after the death of the Member.

6.2. Benefits Subject to Withholding . The benefits payable under this Plan shall be subject to the deduction of anyfederal, state, or local income taxes, employment taxes or other taxes which are required to be withheld from such payments byapplicable laws and regulations. Any employment taxes owed by the Member with respect to any deferral, accrual or benefit payableunder this Plan may be withheld from other compensation of the Member in the year in which such tax liability accrues.

SECTION 7 . NATURE OF INTEREST OF MEMBER .

Participation in this Plan will not create, in favor of any Member, any rights or lien in or against any of the assets of theCompany or any Employer, and all amounts of Excess Regular Earnings deferred hereunder shall at all times remain an unrestrictedasset of the Company or the Employer. A Member’s rights to benefits payable under the Plan are not subject in any manner toanticipation, alienation, sale, transfer, assignment, pledge, or encumbrance. Nothing contained in this Plan, and no action takenpursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship, between anyEmployer and a Member or any person, and the Company’s and each Employer’s promise to pay benefits hereunder shall at all timesremain unfunded as to the Member.

SECTION 8 . BENEFICIARY DESIGNATION .

A Member’s beneficiary under this Plan will automatically be the same as such Member’s beneficiary under the QualifiedPlan unless a separate designation of beneficiary form for this Plan has been properly filed with the Committee or its authorizeddesignee in accordance with any rule established by the Committee. In the absence of a designation of specific beneficiary undereither the Qualified Plan or this Plan, which beneficiary survives the Member, upon the Member’s death, payment of his Accountshall be made to his estate in a lump sum as soon as practicable.

SECTION 9 . ADMINISTRATION .

9.1 Committee . This Plan will be administered by the Committee.

9.2 Powers of the Committee . The Committee’s powers under this Plan are the same as are described in the Qualified Planand include, but are not limited to, the power:

(i) to determine who are Eligible Employees for purposes of participation in the Plan;

(ii) to interpret the terms and provisions of the Plan and to determine any and all questions arising under thePlan, including without limitation, the right to remedy possible ambiguities, inconsistencies, or omissionsby a general rule or particular decision; and

(iii) to adopt rules consistent with the Plan.

9.3 Claims Procedure . The Committee shall make, in its sole discretion, all determinations arising in the administration,construction or interpretation of the Plan including the right to construe disputed or doubtful Plan terms and provisions, and anysuch determination shall be conclusive and binding on all persons, except as otherwise provided by law. Any claim by a Member orany other person for any benefit alleged to be due under the Plan shall be made in writing to the Committee. Within 90 days of thefiling of such claim, unless special circumstances require an extension of such period, such person will be given notice in writing ofthe approval or denial of the claims. If the claim is denied, the notice will set forth the reason for the denial, the Plan provisions onwhich the denial is based, an explanation of what other material or information, if any, is needed to perfect the claim, and anexplanation of the claims review procedure. The claimant may request a review of such denial within 60 days of the date of receipt ofsuch denial by filing notice in writing with the Committee. The claimant will have the right to review pertinent Plan documents and tosubmit issues and comments in writing. The Committee will respond in writing to a request for review within 60 days of receiving it,unless special circumstances require an extension of such period. The Committee, in its discretion, may request a meeting to clarifyany matters deemed appropriate.

9.4 Limitation on Period for Filing Claims . No claim for benefits based upon a claim that contributions were not properlymade under this Plan shall be approved under this Plan, and no action may be brought for benefits under this Plan pursuant to thedenial of such a claim pursuant to Section 9.3 of this Plan, unless such claim for benefits is duly filed under Section 9.3 of this Planno later than the last day of the second Plan Year beginning after the Plan Year in which the claim alleges that the contributionsshould have been credited.

SECTION 10 . NO EMPLOYMENT RIGHTS .

No provisions of the Plan or any action taken by the Company, the Board of Directors, the Committee, or any of theirproperly authorized representatives shall give any person any right to be retained in the employ of any Employer, and the right andpower of the Company or any Employer to dismiss or discharge any Member is specifically reserved.

SECTION 11 . AMENDMENT, SUSPENSION, AND TERMINATION .

The Board of Directors or its authorized designee shall have the rights to amend, suspend, or terminate the Plan at any time,except that the Committee may make non-substantive administrative changes to this Plan so as to conform with or take advantage ofgovernmental requirements, statutes or regulations. No amendment, modification or termination shall, without the consent of aMember, adversely affect the amount of the Member’s benefits in his or her Account as of the date of such amendment,modification or termination. Any modification, amendment or termination may accelerate the time at which any Member is entitled toa distribution. In the event the Plan is terminated, the Committee shall continue to administer the Plan in accordance with therelevant provisions thereof until the Member’s benefits have been paid hereunder.

Pharmacia Savings Plus Plan as in effect on 12/31/04. Except as otherwise specifically provided for in the Plan, the provisions of thisPlan shall apply to Grandfathered Amounts transferred from the Pharmacia Savings Plus Plan

Pharmacia Savings Plus+Plan

Amended & Restated Effective as of July 1, 2002

PURPOSE

In recognition of the services provided by certain key employees, the Board of Directors of Pharmacia & Upjohn, Inc.(“P&U”) adopted a deferred compensation plan (the “Plan”) to make additional retirement benefits and increased financial security,on a tax-deferred basis, available to those individuals, effective July 1, 1999. Under the Plan, P&U provided a vehicle that will allowadditional future compensation to be paid to key employees so that such employees may be retained and their productive effortsencouraged.

Effective September 22, 1999, the Board of Directors of P&U amended and restated the Plan to permit a new Affiliate,Sugen, Inc., to join the Plan as a “Company” and permit its Eligible Employees, as defined below, to make an Incentive Deferral, asdefined below, as well as other forms of Compensation Deferrals, as defined below, when and if eligible.

On March 31, 2000, the Board of Directors of P&U amended and restated the Plan to reflect the transaction by which P&Ubecame a wholly-owned subsidiary of Pharmacia Corporation (“Pharmacia”). On December 7, 2000, the Board of Directors ofPharmacia amended the Plan to (i) require deferral under this Plan of any incentive compensation earned under the PharmaciaCorporation Cash Long-Term Incentive Plan and (ii) permit deferral under this Plan of benefits payable under the PharmaciaCorporation Key Executive Pension Plan or payment under any other individual contractual pension arrangements for keyexecutives at the Participant’s election. The Plan was subsequently amended to reflect the Company’s adoption of the PharmaciaCorporation Long-Term Performance Share Unit Incentive Plan, effective January 1, 2002.

Effective July 1, 2002, the Plan was amended to conform to Pharmacia’s Retirement Choice Program by including a“restoration” arrangement and a “bonus deferral” arrangement. Also effective July 1, 2002, the Plan was amended to assume theobligations of the Pharmacia Corporation ERISA Parity Savings and Investment Plan and to make certain other changes relating to aChange in Control of Pharmacia. Accordingly, the Plan, as amended and restated as of the Amendment Effective Date, as definedbelow, now reads as follows:

DEFINITIONS

Account . “Account” means, with respect to a Participant, the account established on the books of the Company pursuantto Section 5.1 and recording the benefit due to the Participant under the Plan.

Affiliate . “Affiliate” means any firm, partnership, or corporation that directly or indirectly through one or moreintermediaries, controls, is controlled by, or is under common control with Pharmacia. “Affiliate” also includes any otherorganization similarly related to Pharmacia that is designated as such by the Board.

Base Salary . “Base Salary” means the sum of an Eligible Employee’s W-2 compensation paid by the Company to theEligible Employee including any pre-tax deferrals and benefits deducted from gross income including, but not limited to, anyamounts that are excluded from gross income under section 125, 402(e)(3), or 132(f) of the Code and any deferrals under this Plan.“Base Salary” shall exclude any one-time or other special bonuses, moving and relocation expenses, stock options, or severancepayments.

Base Salary Deferral . “Base Salary Deferral” means the portion of a Participant’s Base Salary that the Participant haselected to defer pursuant to Article 4.

Bonus . “Bonus” means any bonus or other incentive compensation awarded by the Company to the Eligible Employeeunder such plans as specifically refer to this Plan and under such other plans as Pharmacia’s Senior Vice President HumanResources may from time to time designate.

Bonus Deferral . “Bonus Deferral” means the portion of a Participant’s Bonus that the Participant has elected to deferpursuant to Article 4.

Beneficiary . “Beneficiary” means the person or persons designated as such in accordance with Section 10.3.

Board . “Board” means the Board of Directors of Pharmacia.

Cause . “Cause” means, if applicable to the Participant, the definition of that term used in the written employmentagreement between the Participant and the Company or an Affiliate as in effect on the date of the Participant’s termination ofemployment or in the Company’s Change in Control Severance Benefit Plan. Otherwise, the term “Cause” shall mean (i) a materialbreach by the Participant of the Participant’s duties and responsibilities (other than as a result of incapacity due to physical ormental illness) which is demonstrably willful and deliberate on the part of the Participant, which is committed in bad faith or withoutreasonable belief that such breach is in the best interests of the Company or an Affiliate, and which is not remedied within 30 daysafter receipt of written notice from the Company or an Affiliate specifying such breach; or (ii) the Participant’s conviction of a felonywhich is materially and demonstrably injurious to the Company or an Affiliate.

Change in Control . “Change in Control” means:

(1) the acquisition by any individual, entity, or group (a “Person”), including any “person” within the meaning of Section13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of beneficiary ownership within themeaning of Rule 13d-3 promulgated under the Exchange Act, of 33% or more of either (i) the then outstanding shares of CommonStock of Pharmacia (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstandingsecurities of Pharmacia entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”):provided, however, that the following acquisitions of Outstanding Company Common Stock or Outstanding Company VotingSecurities shall not constitute a Change in Control: (A) any acquisition by Pharmacia, (B) any acquisition by an employee benefitplan (or related trust) sponsored or maintained by Pharmacia or any corporation controlled by Pharmacia, or (C) any acquisition byany corporation pursuant to a reorganization, merger, or consolidation involving Pharmacia, if, immediately after such reorganization,merger, or consolidation, each of the conditions described in clauses (i), (ii), and (iii) of subsection (3) of this Section shall besatisfied; and provided further that, for purposes of clause (A), if any Person (other than Pharmacia or any employee benefit plan (orrelated trust) sponsored or maintained by Pharmacia or any corporation controlled by Pharmacia) shall become the beneficial ownerof 33% or more of the Outstanding Company Common Stock or 33% or more of the Outstanding Company Voting Securities byreason of any acquisition of Outstanding Company Common Stock or Outstanding Company Voting Securities by Pharmacia andsuch Person shall, after such acquisition by Pharmacia, becomes the beneficial owner of any additional shares of the OutstandingCompany Stock or any additional Outstanding Voting Securities and such beneficial ownership is publicly announced, suchadditional beneficial ownership shall constitute Change in Control;

(2) individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason toconstitute at least a majority of such Board; provided, however, that any individual who becomes a director of Pharmaciasubsequent to the date hereof whose election, or nomination for election by Pharmacia’s stockholders, was approved by the vote ofat least three-quarters of the directors then comprising

the Incumbent Board (either by a specific vote or by approval of the proxy statement of Pharmacia in which such person is named asa nominee for director, without objection to such nomination) shall be deemed to have been a member of the Incumbent Board; andprovided further, that no individual who was initially elected as a director of Pharmacia as a result of an actual or threatened electioncontest, as such terms are used in Rule 14a‑11 of Regulation 14A promulgated under the Exchange Act, or any other actual orthreatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall be deemed to have been amember of the Incumbent Board;

(3) approval by the stockholders of Pharmacia of a reorganization, merger, or consolidation involving Pharmacia unless, inany such case, immediately after such reorganization, merger, or consolidation, (i) more than 50% of the then outstanding shares ofcommon stock of the corporation resulting from such reorganization, merger, or consolidation and more than 50% of the combinedvoting power of the then outstanding securities of such corporation entitled to vote generally in the election of directors is thenbeneficially owned, directly or indirectly, by all or substantially all of the individuals or entities who were the beneficial owners,respectively, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior tosuch reorganization, merger, or consolidation and in substantially the same proportions relative to each other as their ownership,immediately prior to such reorganization, merger, or consolidation, of the Outstanding Company Common Stock and theOutstanding Company Voting Securities, as the case may be, (ii) no Person (other than Pharmacia, any employee benefit plan (orrelated trust) sponsored or maintained by Pharmacia or the corporation resulting from such reorganization, merger, or consolidation(or any corporation controlled by Pharmacia), or any Person which beneficially owned, immediately prior to such reorganization,merger, or consolidation, directly or indirectly, 33% or more of the Outstanding Company Common Stock or the OutstandingCompany Voting Securities, as the case may be) beneficially owns, directly or indirectly, 33% or more of the then outstanding sharesof common stock of such corporation or 33% or more of the combined voting power of the then outstanding securities of suchcorporation entitled to vote generally in the election of directors, and (iii) at least a majority of the members of the board of directorsof the corporation resulting from such reorganization, merger, or consolidation were members of the Incumbent Board at the time ofthe execution of the initial agreement or action of the Board providing for such reorganization, merger, or consolidation; or

(4) (i) approval by the stockholders of Pharmacia of a plan of complete liquidation or dissolution of Pharmacia or (ii) thesale or other disposition of all or substantially all of the assets of Pharmacia other than to a corporation with respect to which,immediately after such sale or other disposition, (A) more than 50% of the then outstanding shares of common stock thereof andmore than 50% of the combined voting power of the then outstanding securities thereof entitled to vote generally in the election ofdirectors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were thebeneficial owners, respectively, of the Outstanding Company Common Stock and the Outstanding Company Voting Securitiesimmediately prior to such sale or other disposition and in substantially the same proportions relative to each other as theirownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and the OutstandingCompany Voting Securities, as the case may be, (B) no Person (other than Pharmacia, any employee benefit plan (or related trust)sponsored or maintained by Pharmacia or such corporation (or any corporation controlled by Pharmacia), or any Person whichbeneficially owned, immediately prior to such sale or other disposition, directly or indirectly, 33% or more of the OutstandingCompany Common Stock or the Outstanding Company Voting Securities, as the case may be) beneficially owns, directly orindirectly, 33% or more of the then outstanding shares of common stock thereof entitled to vote generally in the election ofdirectors, and (C) at least a majority of the members of the board of directors thereof were members of the Incumbent Board at thetime of the execution of the initial agreement or action of the Board providing for such sale or other disposition (or were approveddirectly or indirectly by the Incumbent Board).

CIC Consummation . “CIC Consummation” means the consummation of a transaction approved by stockholders asdescribed in paragraphs (3) or (4) of the definition of Change in Control.

Code . “Code” means the Internal Revenue Code of 1986, as amended from time to time.

Committee . “Committee” means the Compensation Committee appointed by the Board which shall administer the Plan andwhich also may act for the Company or the Board in making decisions and performing specified duties under the Plan. TheCommittee may delegate any or all of its duties under the Plan in which case the term “Committee” shall apply to the Committee’sdelegate to the same extent as it would have applied to the Committee.

Company . “Company” means Pharmacia and any Affiliate that is authorized by the Board to adopt the Plan and to cover itsEligible Employees and whose designation as such has become effective upon acceptance of such status by the board of directorsof the Affiliate. An Affiliate may revoke its acceptance of such designation at any time, but until such acceptance has been revoked,all the provisions of the Plan and amendments thereto shall apply to the Eligible Employees of the Affiliate. In the event thedesignation is revoked by the board of directors of an Affiliate, the Plan shall be deemed terminated only with respect to suchAffiliate.

Company Contributions . “Company Contributions” means those matching contributions credited to the Participant’sAccount by the Company at a rate equal to the matching contribution rate under the Savings Plan applicable to the Participant.“Company Contributions” shall be deemed to have been made in phantom shares of the Voting Securities valued on the basis of theclosing price of the Voting Securities on the principal exchange on which the Voting Securities are traded on the day the CompanyContribution is credited to the Participant’s Account.

Compensation Deferral . “Compensation Deferral” means that portion of Base Salary and/or Bonus as to which a Participanthas made an irrevocable election to defer receipt until the Plan Year following the Participant’s Termination Date, except as otherwisespecifically provided herein.

Disabled . “Disabled” means a mental or physical condition that qualifies a Participant for total and permanent disabilitybenefits under a Company sponsored long term disability plan.

Earnings Crediting Options . “Earnings Crediting Options” means the deemed investment options selected by theParticipant from time to time pursuant to which deemed earnings are credited to the Participant’s Account.

Effective Date . “Effective Date” means the effective date of the Plan which is July 1, 1999. “Amendment Effective Date”means July 1, 2002.

Eligible Employee . “Eligible Employee” means, with respect to the “bonus deferral” portion of the Plan, an Employee whois eligible to participate in the Savings Plan and whose annualized rate of Base Salary, determined at the time of enrollment, exceedsthe compensation limit of section 401(a)(17) of the Code, as in effect from time to time. “Eligible Employee” means, with respect tothe “restoration” portion of the Plan, either an Employee who meets the definition of Eligible Employee in the preceding sentence oran Employee whose annualized rate of Base Salary, determined at the time of enrollment, exceeds the compensation limit of section401(a)(17) of the Code, as in effect from time to time, when combined with the Employee’s most recently paid Bonus. “EligibleEmployee” means with respect to the “rollover” portion of the Plan, an Employee who meets the definition in the preceding sentenceand who is eligible for a rollover as described in Section 6.3.

Employee . “Employee” means any individual employed by the Company on a regular, full-time basis (in accordance withthe personnel policies and practices of the Employer), including citizens of the United States employed outside of their homecountry and resident aliens employed in the United States; provided, however, that to qualify as an “Employee” for purposes of thePlan, the individual must be a member of a group of “key management or other highly compensated employees” within the meaningof Sections 201, 301, and 401 of the Employee Retirement Income Security Act of 1974, as amended.

Enrollment Agreement . “Enrollment Agreement” means the authorization form, which an Eligible Employee files with theCommittee to participate under Article 4 of the Plan.

Participant . “Participant” means an Eligible Employee who has filed a completed and executed Enrollment Agreement withthe Committee or its designee or is otherwise automatically participating in the Plan in accordance with the provisions of Article 4 orby reason of a “rollover” pursuant to Section 6.3. In the event of the death or incompetency of a Participant, the term shall mean hispersonal representative or guardian. An individual shall remain a Participant until that individual has received full distribution of allamounts credited to the Participant’s Account.

Pharmacia . “Pharmacia” means Pharmacia Corporation and any successor by merger or otherwise.

Plan . “Plan” means this plan, called the Pharmacia Savings Plus+Plan, as amended from time to time.

Plan Year . “Plan Year” means the 12 month period beginning on each January 1 and ending on the following December 31except that the first Plan Year of this amended and restated Plan shall begin on the Amended Effective Date and end on thefollowing December 31.

Retirement Date . “Retirement Date” means the date that the Participant attains age 50.

Rollover Deferral . “Rollover Deferral” means the amount credited to the Participant under this Plan pursuant to Section 6.3.

Savings Plan . “Savings Plan” means the Pharmacia Savings Plan, as it may be amended from time to time, and anysuccessor thereof.

Termination Date . “Termination Date” means the date of termination of a Participant’s service with the Company and itsAffiliates and shall be determined without reference to any compensation continuation arrangement or severance benefitarrangement that may be applicable.

Voting Securities . “Voting Securities” means the common securities of Pharmacia, which carry the right to vote generally inthe election of directors.

ADMINISTRATION OF THE PLAN AND DISCRETION

3.1 Subject to the terms of the Plan, the Committee shall have full power and authority to interpret the Plan, to prescribe,amend, and rescind any rules, forms, and procedures as it deems necessary or appropriate for the proper administration of the Planand to make any other determinations and to take any other such actions as it deems necessary or advisable in carrying out itsduties under the Plan. All action taken by the Committee arising out of, or in connection with, the administration of the Plan or anyrules adopted thereunder, shall, in each case, lie within its sole discretion, and shall be final, conclusive, and binding upon theCompany, the Board, all Employees, all Beneficiaries of Employees, and all persons and entities having an interest therein.

3.2 The Committee may adjust the phantom shares of Voting Securities to reflect a change in corporate capitalization(such as a stock split or stock dividend), or a corporate transaction (such as a merger, consolidation, separation, reorganization, orpartial or complete liquidation), or to reflect equitably the occurrence of any extraordinary event, any change in applicableaccounting rules or principles, any change in Pharmacia’s method of accounting, any change in applicable law, any change due to amerger, consolidation, acquisition, reorganization, combination of shares, or other changes in Pharmacia’s corporate structure orshare, or any other change of similar nature.

3.3 The Company shall indemnify and hold harmless each member of the Committee from any and all claims, losses,damages, expenses (including counsel fees), and liability (including any amounts paid in settlement of any claim or any other matterwith the consent of the Board) arising from any act or omission of such member, except when the same is due to gross negligence orwillful misconduct.

3.4 Any decisions, actions, or interpretations to be made under the Plan by the Company, the Board, or the Committeeshall be made in its respective sole discretion, not as a fiduciary and need not be uniformly applied to similarly situated individualsand shall be final, binding, and conclusive on all persons interested in the Plan.

PARTICIPATION

4.1 Election to Participate . Each Eligible Employee shall be offered the opportunity to participate in the portion orportions of the Plan for which he is eligible on an annual basis or as otherwise determined by the Committee. An Eligible Employeemay enroll in the Plan for a Plan Year by filing a completed and fully executed Enrollment Agreement with the Committee or itsdesignee by the last day of November of the preceding year for which the election is to be effective or such other time as theCommittee determines (for the Plan Year beginning on the Amendment Effective Date, the executed Enrollment Agreement shall bedue no later than June 20, 2002 or such other time as the Committee determines). For an Eligible Employee who begins employmentwith the Company after the end of the enrollment period, such Eligible Employee shall have 31 days after being hired to file acompleted and fully executed Enrollment Agreement with the Committee or its designee. Participation in this Plan shall be automaticfor any Eligible Employee with a Rollover Deferral.

(a) Restoration Portion . With respect to the “restoration” portion of the Plan, each active Participant shallirrevocably elect on an Enrollment Agreement (i) whether to convert his or her pre-tax deferrals under the Savings Plan to after-taxdeferrals under the Savings Plan upon reaching the annual elective deferral limit under section 402(g) of the Code; (ii) if theParticipant does elect to convert pre-tax deferrals under the Savings Plan to after-tax deferrals under the Savings Plan, whether toconvert the after-tax deferrals under the Savings Plan to pre-tax deferrals under the Plan upon reaching either the annual additionlimit under section 415 of the Code or the annual compensation limit under section 401(a)(17) of the Code; and (iii) if the Participanthas otherwise elected to make after-tax deferrals under the Savings Plan, whether to convert these after-tax deferrals to pre-taxdeferrals under the Plan upon reaching either the annual elective deferral limit under section 402(g) of the Code, the annual additionlimit under section 415 of the Code, or the annual compensation limit under section 401(a)(17) of the Code.

(b) Bonus Deferral Portion . With respect to the “bonus deferral” portion of the Plan, an active Participant shallirrevocably elect on an Enrollment Agreement (i) whether to defer all or a percentage of his or her Bonus under the Plan, and (ii)whether to defer an additional percentage of his or her Base Salary under the Plan over and above the amount deferred under the“restoration” portion of the Plan. Any amount elected to be deferred under the Plan shall be made in whole percentages.

(c) Rollover Portion . With respect to the “rollover” portion of the Plan each Participant shall elect on anEnrollment Agreement the Earnings Crediting Options for his or her Account if the Participant does not already have an election ineffect. Until such election is provided, the Committee shall determine the Earnings Crediting Options applicable to the Participant’sAccount.

The Committee may establish minimum or maximum amounts that may be deferred under this Section and may change suchstandards from time to time. Any such limits shall be communicated by the Committee to the Participants prior to the commencementof a Plan Year. Each Eligible Employee shall also provide in the Enrollment Agreement such other information as the Committee shallrequire.

4.2 Company Contributions . The Company shall credit to each Participant’s Account a Company Contribution basedupon the amount of the Participant’s Base Salary Deferral and/or Bonus Deferral. Company Contributions shall be credited asfrequently as determined by the Committee acting on behalf of the Company. Unless otherwise determined by the Committee,Participants who participate in Option 1 under Pharmacia’s Retirement Choice Program shall receive a dollar for dollar matchingcontribution on a payroll period basis for each dollar that they defer under the Plan up to 5% of their Compensation and Participantswho participate in Option 2 under Pharmacia’s Retirement Choice Program shall receive an age-weighted matching contributionidentical to the matching contribution offered under the Savings Plan up to 5% of their Compensation.

ACCOUNTS

5.1 Creation of Accounts . The Committee shall establish and maintain separate Accounts with respect to eachParticipant. The amount of the Participant’s Compensation Deferral and Rollover Deferral shall be credited by the Company to theParticipant’s Account no later than the first day of the month following the month in which such Compensation would otherwisehave been paid and immediately upon rollover pursuant to Section 6.3. The Participant’s Account shall be reduced by the amount ofpayments made by the Company to the Participant or the Participant’s Beneficiary pursuant to this Plan.

5.2 Compensation Deferrals . A Participant’s Account shall be credited with Compensation Deferrals in the followingamount and manner:

(a) Restoration Portion . If a Participant elects to convert his or her pre-tax deferrals under the Savings Plandirectly to pre-tax deferrals under the Plan upon reaching the annual elective deferral limit under section 402(g) of the Code, theParticipant’s Base Salary Deferrals shall commence on the date on which the attainment of the annual elective deferral limit undersection 402(g) of the Code would have been reached if the Participant’s before-tax contribution rate under the Savings Plan that wasin effect on the last day of the applicable enrollment period remained in effect throughout the remainder of the Plan Year. Theamount of such Base Salary Deferrals shall be equal to the total percentage of Compensation that the Participant has elected to deferas pre-tax and after-tax deferrals under the Savings Plan. If a Participant elects to convert his or her pre-tax deferrals under theSavings Plan to after-tax deferrals under the Savings Plan upon reaching the annual elective deferral limit under section 402(g) of theCode, the Participant’s Base Salary Deferrals shall commence on the date on which the attainment of the annual addition limit undersection 415 of the Code or the annual compensation limit under section 401(a)(17) of the Code would have been reached if theParticipant’s before and after-tax contribution rates under the Savings Plan that were in effect on the last day of the applicableenrollment period remained in effect throughout the remainder of the Plan Year. The amount of such Base Salary Deferrals shall beequal to the percentage that the Participant has elected to defer as before-tax and after-tax deferrals under the Savings Plan.

(b) Bonus Deferral Portion . If a Participant has elected to defer all or a portion of his or her Bonus, theParticipant’s Bonus Deferral shall commence on the date that the Participant would otherwise have received such Bonus in anamount equal to the percentage elected by the Participant. If a Participant has elected to make additional Base Salary Deferrals underthe “bonus deferral” portion of the Plan, the Participant’s additional Base Salary Deferrals shall commence on the date on which theattainment of the annual elective deferral limit under section 402(g) of the Code, the annual addition limit under section 415 of theCode, or the annual compensation limit under section 401(a)(17) of the Code would have been reached if the Participant’s before andafter-tax contribution rates under the Savings Plan that were in effect on the last day of the applicable enrollment period remained ineffect throughout the remainder of the Plan Year in an amount equal to the percentage that the Participant has elected to defer underthe “bonus deferral” portion of the Plan. The combined maximum amount that a Participant may defer under the Plan and the SavingsPlan shall be 80% of the Participant’s Base Salary.

5.3 Earnings on Accounts . A Participant’s Account shall be credited with earnings in accordance with the EarningsCrediting Options elected by the Participant from time to time. Participants may allocate the sums credited to their Account amongthe Earnings Crediting Options available under the Plan only in whole percentages; provided, however, that the CompanyContribution shall be deemed to be invested, and shall remain, in phantom shares of Voting Securities until the Participant reachesage 50. No Rollover Deferral shall be required to be deemed invested in phantom shares of Voting Securities. The deemed rate ofreturn, positive or negative, credited under each Earnings Crediting Option is based upon the actual investment performance of thecorresponding investment portfolios of the Savings Plan, or such other investment fund(s) as the Committee may designate fromtime to time, and shall equal the total return of such investment fund net of asset based charges, including, without limitation, moneymanagement fees, fund expenses, mortality and expense risk insurance contract charges, and such other administrative expenses asthe Committee determines should be charged to the Participants’ Accounts. The Committee reserves the right, on a prospectivebasis, to add or delete Earnings Crediting Options; provided, however, that, following a CIC Consummation, the Committee (a) maynot alter the Earnings Crediting Options (except to the extent that a change is made to the corresponding investment portfolios ofthe Savings Plan or, if such Plan is terminated, the comparable plan in which Employees of the Company are eligible to participate)and (b) may not increase any of the expenses charged to a Participant’s Account except to the extent such expenses apply to thecorresponding investment portfolio maintained under the Savings Plan and are charged to Participants in that plan.

5.4 Earnings Crediting Options . Notwithstanding that the rates of return credited to Participants’ Account under theEarnings Crediting Options are based upon the actual performance of the corresponding portfolios of Savings Plan, or such otherinvestment funds as the Committee may designate, the Company shall not be obligated to invest any Compensation deferred byParticipants under this Plan, Company Contributions, or any other amounts, in such portfolios or in any other investment funds.

5.5 Changes in Earnings Crediting Options . A Participant may change the Earnings Crediting Options to which theParticipant’s Account is deemed to be allocated with whatever frequency is determined by the Committee which shall not be lessthan four times per Plan Year. Each such change may include (a) reallocation of the Participant’s existing Account in wholepercentages and/or (b) change in investment allocation of amounts to be credited to the Participant’s Account in the future, as theParticipant may elect. Following a CIC Consummation, the Committee shall not reduce the frequency of permitted changes.

5.6 Valuation of Accounts . The value of a Participant’s Account as of any date shall equal the amounts theretoforecredited to such Account, including any earnings (positive or negative) deemed to be earned on such Account in accordance withSection 5.3 through the day preceding such date, less the amounts deducted from such Account.

5.7 Statement of Account . The Committee shall provide to each Participant, not less frequently than quarterly, astatement setting forth in reasonable detail the balance standing to the credit of each Participant in the Participant’s Account andthe amount credited to and debited from such Account since the prior statement.

DISTRIBUTION OF ACCOUNTS

6.1 Distribution . Benefits shall be distributed in the Plan Year following (i) the Participant’s Retirement or (ii) the PlanYear in which occurs the Participant’s Termination Date, other than on account of death or becoming Disabled, as follows:

(a) Benefits Upon Retirement . In the case of a Participant whose Service with the Employer terminates on orafter his Retirement Date, the Participant’s Account shall be distributed in one of the following methods, as elected by theParticipant in writing either in the Enrollment Agreement or in a separate election made at least three months prior to the beginningof the Plan Year in which distribution is to

occur: (i) in a lump sum; or (ii) in annual installments not in excess of 15, as elected by the Participant. Any lump-sum benefit payablein accordance with this paragraph shall be paid in, but not later than January 31 of the Plan Year following the Plan Year in whichoccurs the Participant’s Retirement Date valued as of the last business day of the Plan Year preceding the date of payment. Annualinstallment payments, if any, shall commence not later than January 31 of the Plan Year following the Plan Year in which occurs theParticipant’s Retirement and each remaining installment shall be paid no later than each January 31 thereafter. Each such installmentshall be in an amount equal to (i) the value of the Participant’s Account as of the last business day of the Plan Year preceding thedate of payment, divided by (ii) the number of annual installment payments elected by the Participant in the Enrollment Agreementor election form that remain to be paid. A Participant may change the election regarding the manner of payment of the Participant’sAccount at any time prior to the October 1 preceding the Plan Year in which occurs the later of the Participant’s Retirement Date andhis or her Termination Date. If a Participant has made a timely election but his Termination Date occurs prior to the end of the PlanYear in which the election was made, then payment will be made pursuant to his or her prior election unless the Participant’sTermination Date is after a CIC Consummation (in which case the Participant’s most recent election shall be given effect). Suchelection may also specify that payment shall be made or commence as of the beginning of any later Plan Year (but not beyond thePlan Year in which the Participant attains age 65) in the event of a CIC Consummation prior to the Participant’s Termination Date.

(b) Benefits Upon Termination of Employment . In the case of a Participant whose Termination Date occurs priorto the Participant’s Retirement Date, other than on account of becoming Disabled or by reason of death, the Participant’s Accountshall be distributed in a lump sum by January 31 of the Plan Year following the Participant’s Termination Date valued as of the lastbusiness day of the Plan Year preceding the date of payment; provided, however, that, following a CIC Consummation, if theParticipant’s termination is not for Cause the Participant’s Account shall be distributed in (i) a lump sum or (ii) annual installmentsnot in excess of 15, as elected by the Participant and such lump sum shall be paid or such installments shall commence as of thebeginning of any later Plan Year (but not later than January 31 of such year) selected by the Participant (but not beyond the PlanYear in which the Participant attains age 65). Any such election as to method and timing of payments following a CIC Consummationshall be made at least twelve (12) months prior to the date payment is to be made or commence, otherwise payments shall be made inone lump sum as specified in the first sentence of this paragraph (b); provided, however, that any such election made beforeOctober 1, 2002, shall be given effect if the Participant’s Termination Date is after a CIC Consummation.

(c) Benefits Upon Change in Control . Within six months after a Change in Control, or if the Committeedetermines that a Change in Control is imminent, but in no event after a CIC Consummation, the Committee may determine todistribute a Participant’s Account in a lump sum by January 31 of the Plan Year following the Change in Control or the date of theCommittee’s decision regarding the imminency of the Change in Control valued as of the last business day of the Plan Yearpreceding the date of payment.

(d) Post Change in Control Elections . Any election as to the time of payment made by a Participant pursuant toparagraphs 6.3(a) or (b) above that would take effect after a CIC Consummation may be changed by the Participant subject to thefollowing limitations: (1) the election must be made at least twelve (12) months prior to the date that payment was scheduled to bemade, (2) the election can be made only to further defer payment to the beginning of a Plan Year that is at least two (2) years later.After a Participant’s Termination Date, he shall be entitled to no more than three (3) such elections to defer payment.

6.2 Form of Distributions . Any distribution made to or on behalf of a Participant from the Participant’s Account shall bein cash except that, to the extent the Account is deemed invested in phantom shares of Voting Securities, a Participant may elect, inthe manner prescribed by the Committee, to receive Voting Securities. Where a distribution will be in an amount that is less than theentire balance of any such Account, the distribution shall be made pro rata from each of the Earnings Crediting Options to whichsuch Account is then allocated.

6.3 Rollovers . Any distribution that is payable from or amount credited to any Eligible Employee under the PharmaciaSupplemental Pension Plan, the Pharmacia Key Executive Pension Plan, the Pharmacia Annual Incentive Plan, the Pharmacia CashLong-Term Incentive Plan, the Pharmacia Long-Term Performance Share Unit Incentive Plan, any individual contractual pensionarrangements, any arrangement or plans that expressly provide for deferral pursuant to this Plan and such other plans as may befrom time to time designated by Pharmacia’s Senior Vice President Human Resources may be or shall be further deferred under thisPlan in the manner set forth in such plans and in accordance with procedures established from time to time by the Committee or itsdelegate. All such amounts shall be credited to the Participant’s Account as Rollover Deferrals.

6.4 Pharmacia Corporation ERISA Parity Savings and Investment Plan . Effective July 1, 2002, this Plan shall assume allrights and obligations of the Pharmacia Corporation ERISA Parity Savings and Investment Plan (the “Parity Plan”). Any amountaccrued under the Parity Plan shall be payable exclusively under this Plan in accordance with this Plan’s terms and provisions. Theamount credited to a Participant’s account under the Parity Plan as of July 1, 2002 shall be the opening balance of a Participant’sAccount under this Plan on such date. Any participants under the Parity Plan who have commenced receiving distributions underthe Parity Plan prior to July 1, 2002 shall be entitled to continue receiving the same form of distribution that they have been receivingunder the Parity Plan.

DISABILITY

In the event a Participant becomes Disabled, the Participant’s right to make any further deferrals under this Plan shallterminate as of the date for which the Participant first receives long-term disability benefits from the Company. A Participant whobecomes Disabled shall be entitled to elect, within 90 days after receiving the first long-term disability benefit, but in any event priorto the end of the current Plan Year, to be treated as a Participant who has attained his or her Retirement Date, in which case theprovisions of Section 6.1(a) shall be applicable, or else shall be treated as not having incurred a Termination Date until theParticipant would otherwise have attained his or her Retirement Date in which case the provisions of Section 6.1(a) shall beapplicable when the Participant would otherwise have actually been eligible under that provision. The Participant’s Account shallcontinue to be credited with earnings in accordance with Section 5.3 until such Account is fully distributed.

OTHER WITHDRAWALS

A Participant may, by written request on a form provided by the Committee, withdraw all or any portion of any of hisAccounts as of the end of any calendar quarter, provided that the Participant shall forfeit 10% of the amount withdrawn as a penalty.Such penalty shall not apply if (a) the Participant provides the Company with written notice of withdrawal (which shall beirrevocable) at least one year prior to the year in which payment to the Participant is to be made, (b) such payment is for theParticipant’s entire Account and (c) the Participant’s Base Salary Deferrals and Bonus Deferrals shall be suspended for one calendaryear.

SURVIVOR BENEFITS

9.1 Death of Participant Prior to the Commencement of Benefits . In the event of a Participant’s death prior to thecommencement of benefits in accordance with Article 6, benefits shall be paid to the Participant’s Beneficiary, as determined underSection 10.3, as provided in Section 8.2 in lieu of any benefits otherwise payable under the Plan to or on behalf of such Participant.

9.2 Survivor Benefits . In the case of a Participant who dies prior to the commencement of benefits pursuant to Section6.1, distribution of such Account shall be made, as elected by the Participant in

the Enrollment Agreement or as may have been changed by the Participant, (a) in a lump sum as soon as practicable following theParticipant’s death (subject to the Beneficiary’s rights to obtain payment in accordance with Articles 8 and 10), or (b) in the mannerand at such time as such Account would otherwise have been distributed in accordance with Section 6.1(a) had the Participant livedand retired on the earliest possible date. The amount of any lump sum benefit payable in accordance with this Section shall equal thevalue of such Account as of the last business day of the calendar month immediately preceding the date on which such benefit ispaid. The amount of any annual installment benefit payable in accordance with this Section shall equal (a) the value of suchAccount as of the last business day of the calendar month immediately preceding the date on which such installment is paid,divided by (b) the number of annual installments remaining to be paid pursuant to the election of the Participant in the EnrollmentAgreement or as may have been changed by the Participant.

9.3 Death of Participant After Benefits Have Commenced . In the event a Participant dies after annual installment benefitspayable under Section 6.1 from the Participant’s Account has commenced, but before the entire balance of such Account has beenpaid, any remaining installments shall continue to be paid to the Participant’s Beneficiary, as determined under Section 10.3, at suchtimes and in such amounts as they would have been paid to the Participant had he survived, subject to such Beneficiary’s rights toobtain payment in accordance with Articles 8 and 10.

EMERGENCY BENEFIT

In the event that the Committee, upon written request of a Participant, determines that the Participant has suffered an“unforeseeable emergency” (or any similar circumstance under which a payment would be permitted, without causing the impositionof federal income taxes on Participant Accounts that have not been paid, pursuant to Revenue Procedure 92-65 or any successorRevenue Procedure, Revenue Ruling, regulation or other applicable administrative determination issued by the Internal RevenueService), the Company shall pay to the Participant from the Participant’s Account, as soon as practicable following suchdetermination, an amount necessary to meet the emergency, after deduction of any and all taxes as may be required pursuant toSection 11.8 (the “Emergency Benefit”), based on the value of the Participant’s Account as of the last business day of the monthpreceding the date of the distribution.

MISCELLANEOUS

11.1 Amendment and Termination . The Plan may be amended, suspended, discontinued, or terminated at any time byaction of the Board or its delegate; provided, however, that no such amendment, suspension, discontinuance, or termination shallreduce or in any manner adversely affect the rights of any Participant or Beneficiary with respect to benefits that are payable or maybecome payable under the Plan based upon the balance of the Participant’s Accounts as of the effective date of such amendment,suspension, discontinuance, or termination. After a CIC Consummation, no amendment to the Plan may be made to this Section,Sections 5.3, 5.5, 5.7, 6.1, 6.2, 6.3 or 11.11, or Articles 8, 9 or 10; provided, however, that changes may be made to Section 6.1 but onlyto the extent such changes are necessary, in the Committee’s reasonable judgment, upon the advice of nationally recognized legalcounsel, to fulfill the intent of this Plan to defer federal income taxation of Participants with respect to their Accounts until suchAccounts are paid in accordance with the terms of the Plan.

11.2 Claims Procedure .

(a) Claim . A person who believes that he is being denied a benefit to which he is entitled under the Plan(hereinafter referred to as a “Claimant”) may file a written request for such benefit with the Committee, setting forth the claim.

(b) Claim Decision . Upon receipt of a claim, the Committee shall advise the Claimant that a reply will beforthcoming within ninety days and shall, in fact, deliver such reply within such period. The Committee may, however, extend thereply period for an additional ninety days for reasonable cause.

If the claim is denied in whole or in part, the Claimant shall be provided a written opinion, using language calculated to beunderstood by the Claimant, setting forth:

(i) The specific reason or reasons for such denial;

(ii) The specific reference to pertinent provisions of this Agreement on which such denial is based;

(iii) A description of any additional material or information necessary for the Claimant to perfect hisclaim and an explanation why such material or such information is necessary;

(iv) Appropriate information as to the steps to be taken if the Claimant wishes to submit the claim forreview; and

(v) The time limits for requesting a review under subsection (c) and for review under subsection (d)hereof, including a statement of the Claimant’s right to bring a civil action under section 502(a) of the EmployeeRetirement Income Security Act of 1974, as amended (“ERISA”) following an adverse benefit determination onreview.

(c) Request for Review . Within sixty days after the receipt by the Claimant of the written opinion describedabove, the Claimant may request in writing that the Committee review the determination of the Committee. The Claimant or his dulyauthorized representative may, but need not, review the pertinent documents and submit written documents, records, comments andother information related to the claim for consideration by the Committee and shall be entitled to review, upon request withoutcharge, copies of documents, records and all other information relevant to his claim. If the Claimant does not request a review of theinitial determination within such sixty-day period, the Claimant shall be barred and estopped from challenging the determination.

(d) Review of Decision . ithin sixty days after the Committee’s receipt of a request for review, the Committeeshall review the initial determination. After considering all materials presented by the Claimant, the Committee shall render a writtenopinion, written in a manner calculated to be understood by the Claimant, setting forth the specific reasons for the decision, specificreferences to the pertinent provisions of this Agreement on which the decision is based, informing the Claimant of his right toreceive, upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevantto his benefits, and informing the Claimant of his right to bring a civil action under section 502(a) of ERISA. If special circumstancesrequire that the sixty day time period be extended, the Committee shall so notify the Claimant and shall render the decision as soonas possible, but no later than one hundred twenty days after receipt of the request for review.

11.3 Designation of Beneficiary . Each Participant may designate a Beneficiary or Beneficiaries (which Beneficiary may bean entity other than a natural person) to receive any payments which may be made following the Participant’s death. Suchdesignation may be changed or canceled at any time without the consent of any such Beneficiary. Any such designation, change orcancellation must be made in a form approved by the Committee and shall not be effective until received by the Committee, or itsdesignee. If no Beneficiary has been named, or the designated Beneficiary or Beneficiaries shall have predeceased the Participant,the Beneficiary shall be the Participant’s estate. If a Participant designates more than one Beneficiary, the interests of suchBeneficiaries shall be paid in equal shares, unless the Participant has specifically designated otherwise.

11.4 Limitation of Participant’s Right . Nothing in this Plan shall be construed as conferring upon any Participant anyright to continue in the employment of the Company, nor shall it interfere with the rights of the Company to terminate theemployment of any Participant and/or to take any personnel action affecting any Participant without regard to the effect which suchaction may have upon such Participant as a recipient or prospective recipient of benefits under the Plan. Any amounts payablehereunder shall not be deemed salary or other compensation to a Participant for the purposes of computing benefits to which theParticipant may be entitled under any other arrangement established by the Employer for the benefit of its employees.

11.5 Obligations to Company . If a Participant becomes entitled to a distribution of benefits under the Plan, and if at suchtime the Participant has outstanding any debt, obligation, or other liability representing an amount owing to the Employer, then theEmployer may offset such amount owed to it against the amount of benefits otherwise distributable. Such determination shall bemade by the Committee.

11.6 Nonalienation of Benefits . Except as expressly provided herein, no Participant or Beneficiary shall have the power orright to transfer (otherwise than by will or the laws of descent and distribution), alienate, or otherwise encumber the Participant’sinterest under the Plan. The Company’s obligations under this Plan are not assignable or transferable except to (a) any corporationor partnership which acquires all or substantially all of the Company’s assets or (b) any corporation or partnership into which theCompany may be merged or consolidated. The provisions of the Plan shall inure to the benefit of each Participant and theParticipant’s Beneficiaries, heirs, executors, administrators, or successors in interest.

11.7 Protective Provisions . Each Participant shall cooperate with the Employer by furnishing any and all informationreasonably requested by the Employer in order to facilitate the payment of benefits hereunder. If a Participant refuses to cooperate,the Employer shall have no further obligation to the Participant under the Plan, other than payment to such Participant of the thencurrent balance of the Participant’s Account in accordance with his prior elections.

11.8 Withholding Taxes . The Company may make such provisions and take such action as it may deem necessary orappropriate for the withholding of any taxes which the Company is required by any law or regulation of any governmental authority,whether federal, state or local, to withhold in connection with any benefits under the Plan, including, but not limited to, thewithholding of appropriate sums from any amount otherwise payable to the Participant (or his Beneficiary). Each Participant,however, shall be responsible for the payment of all individual tax liabilities relating to any such benefits.

11.9 Unfunded Status of Plan . The Plan is intended to constitute an “unfunded” plan of deferred compensation forParticipants. Benefits payable hereunder shall be payable out of the general assets of the Company, and no segregation of anyassets whatsoever for such benefits shall be made. Notwithstanding any segregation of assets or transfer to a grantor trust, withrespect to any payments not yet made to a Participant, nothing contained herein shall give any such Participant any rights to assetsthat are greater than those of a general creditor of the Company. In the event that the Committee determines that a Change in Controlis imminent, the Committee shall cause the Company to create and fund a grantor trust of the Company that shall serve as thevehicle for paying all benefits due under the Plan and the amount contributed by the Company shall be the amount the Committeedetermines would then be due if the Plan were to terminate and all benefits were then to be paid in lump sum. If a Change in Controlshall not have occurred within six months of such contribution by the Company, the Board may adopt a resolution to the effect thata Change in Control is not imminent and, in that event, up to all amounts contributed to the Trust and all earnings thereon, shall berepaid to the Company at the direction of the Board.

11.10 Severability . If any provision of this Plan is held unenforceable, the remainder of the Plan shall continue in fullforce and effect without regard to such unenforceable provision and shall be applied as though the unenforceable provision werenot contained in the Plan.

11.11 Governing Law . The Plan shall be construed in accordance with and governed by the laws of the state of NewJersey, without reference to the principles of conflict of laws, to the extent not preempted

by ERISA; provided, however, that upon a CIC Consummation any court or tribunal that adjudicates any dispute, controversy orclaim arising between a Participant and the Committee, its delegate, the Company or an Affiliate (or any successor to either), relatingto or concerning the provisions of this Plan, will apply a de novo standard of review to any determinations made by such person.Such de novo standard shall apply notwithstanding the grant of full discretion hereunder to any such person or characterization ofany decision as final, binding or conclusive on any party.

11.12 Headings . Headings are inserted in this Plan for convenience of reference only and are to be ignored in theconstruction of the provisions of the Plan.

11.13 Gender, Singular, and Plural . All pronouns and any variations thereof shall be deemed to refer to the masculine,feminine, or neuter, as the identity of the person or persons may require. As the context may require, the singular may read as theplural and the plural as the singular.

11.14 Notice . Any notice or filing required or permitted to be given to the Committee under the Plan shall be sufficient ifin writing and hand delivered, or sent by registered or certified mail, to the Human Resources Department, or to such other entity asthe Committee may designate from time to time. Such notice shall be deemed given as to the date of delivery, or, if delivery is madeby mail, as of the date shown on the postmark on the receipt for registration or certification.

Exhibit 10.8

Pfizer Inc. Executive Annual Incentive Plan

I PURPOSE

The purpose of the Pfizer Inc. Executive Annual Incentive Plan (the "Plan") is to attract and retain highly qualified individuals; toobtain from each the best possible performance; to establish performance goals based on objective criteria; to further underscorethe importance of achieving business objectives for the short and long term; and to include in such individual’s compensationpackage an annual incentive component which is tied directly to the achievement of those objectives. Such component is intendedto qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the"Code"), and would be deductible by the Company. In addition, each annual incentive award earned under the Plan on or afterJanuary 1, 2005, the receipt of which is not otherwise deferred under an eligible Plan of the Company in accordance with Section409A of the Code, is intended to be exempt from Section 409A as a “short-term deferral” of compensation.

II DEFINITIONS

For the purposes of the Plan, the following terms shall have the following meanings:

ADJUSTED NET INCOME: Income before cumulative effect of accounting changes as shown on the audited ConsolidatedStatement of Income of the Company; provided, however, that if income before cumulative effect of accounting changes isnot shown on such Statement, then Adjusted Net Income shall mean net income as shown on such Statement.

AWARDS: The annual incentive awards made pursuant to the Plan.

BOARD OF DIRECTORS: The Board of Directors of Pfizer Inc.

COMMITTEE: The Executive Compensation Committee of the Board of Directors or any successor thereto. The Committeeshall consist solely of two or more "outside directors" within the meaning of Section 162(m) of the Code.

COMPANY: Pfizer Inc. and its subsidiary Companies.

ELIGIBLE EMPLOYEE: An employee who is a member of the Company’s Corporate Management Committee.

Grandfathered Benefits: Plan benefits that were earned and vested as of December 31, 2004 within the meaning of Section409A. Grandfathered Benefits are subject to the distribution rules in effect prior to the amendment of the Plan Effective onJanuary 1, 2008.

SECTION 409A: Section 409A of the Code and the regulations and other guidance issued thereunder by the U.S. Treasuryor Internal Revenue Service.

III EFFECTIVE DATE; TERM

The Plan is effective as of January 1, 1997, subject to approval by the affirmative vote of a majority of shares voting at theCompany’s 1997 Annual Meeting of Shareho lders, and shall remain in effect until such time as it shall be terminated by theCommittee.

IV AMOUNTS AVAILABLE FOR AWARDS

Awards with respect to any taxable year of the Company shall not exceed the limitations specified in Section VI of the Plan.

V ELIGIBILITY FOR AWARDS

The Committee may grant an award to an Eligible Employee if there is positive Adjusted Net Income.

The Committee shall give consideration to the contribution made by the Eligible Employee to achievement of the Company'sestablished objectives and such other matters as it shall deem relevant.

In the discretion of the Committee, Awards may be made to Eligible Employees who have retired or whose employment hasterminated after the beginning of the year for which an Award is made, subject to Section VIII regarding the timing of payment andthe Committee’s certification as to the achievement of the established objectives for such performance period, or to the designee orestate of an Eligible Employee who died during such period.

VI DETERMINATION OF AMOUNTS OF AWARDS

The Committee has sole authority to determine the amount of any Award. The maximum Award payable to an individual is .30%(three tenths of one percent) of Adjusted Net Income for such year. The Committee has authority to exercise discretion within theabove maximum in determining the amount of individual Awards.

VII FORM OF AWARDS

Awards under the Plan shall be made in cash subject to the limitations set forth in Section VI.

VIII PAYMENT OF AWARDS

Awards may be made at any time following the end of the Company’s taxable year; provided, however, that no Awards shall bemade until the Committee receives a report from the Company’s independent auditors stating the amount of Adjusted Net Incomefor the year. The Committee shall certify, in writing, that the amount of any such Award does not exceed the limitation under SectionVI. Notwithstanding the foregoing, any Award earned during the taxable year commencing January 1, 2005 or later, the receipt ofwhich is not otherwise deferred under an eligible Plan of the Company in accordance with Section 409A, shall be paid prior to the 15th day of the 3 rd month of the taxable year immediately following the taxable year in which the Award was earned, and as such shallbe exempt from Section 409A as a “short-term deferral” of compensation.

IX SPECIAL AWARDS AND OTHER PLANS

Nothing contained in the Plan shall prohibit the Company from establishing other special awards or incentive compensation plansproviding for the payment of incentive compensation to employees (including Eligible Employees).

X ADMINISTRATION, AMENDMENT AND INTERPRETATION OF THE PLAN

The Committee shall administer the Plan. The Committee shall have full power to construe and interpret the Plan, establish andamend rules and regulations for its administration, and perform all other acts relating to the Plan, including the delegation ofadministrative responsibilities, that it believes reasonable and proper and in conformity with the purposes of the Plan.

The Committee shall have the right to amend the Plan from time to time or to repeal it entirely or to direct the discontinuance ofAwards either temporarily or permanently; provided, however, that (i) no amendment of the Plan shall operate to annul, without theconsent of the Eligible Employee, an Award already made hereunder, and (ii) no amendment of the Plan that changes the maximumAward determined payable to any Eligible Employee, as set forth in Section VI, or materially amends the definition of Adjusted NetIncome shall be effective before approval by the affirmative vote of a majority of shares voting at a meeting of the shareholders ofthe Company.

Any decision made, or action taken, by the Committee arising out of or in connection with the interpretation and/or administration ofthe Plan shall be final, conclusive and binding on all persons affected thereby.

Notwithstanding the foregoing, no amendment of the Plan shall apply to Awards that were earned and vested (within the meaning ofSection 409A) under the Plan prior to January 1, 2005, unless the amendment specifically provides that it applies to such amounts.The purpose of this restriction is to prevent a Plan amendment from resulting in an inadvertent "material modification" to amountsthat are Grandfathered Benefits.

XI RIGHTS OF ELIGIBLE EMPLOYEES

Neither the Plan, nor the adoption or operation of the Plan, nor any documents describing or referring to the Plan (or any part hereof)shall confer upon any employee any right to continue in the employ of the Company.

No individual to whom an Award has been made or any other party shall have any interest in the cash or any other asset of theCompany prior to such amount being paid.

No right or interest of any Eligible Employee in the Plan shall be assignable or transferable, or subject to any claims of any creditoror subject to any lien.

XII MISCELLANEOUS

All Awards under the Plan are subject to withholding, where applicable, for federal, state and local taxes.

Any provision of the Plan that is prohibited or unenforceable shall be ineffective to the extent of such prohibition orunenforceability without invalidating the remaining provisions of the Plan.

The Plan and the rights and obligations of the parties to the Plan shall be governed by, and construed and interpreted in accordancewith, the law of the State of Delaware (without regard to principles of conflicts of law). Notwithstanding anything herein to thecontrary, the terms of the Plan are intended to, and shall be interpreted and applied so as to ensure that the Plan provides only forthe “short-term deferral” of compensation and as such shall be exempt from 409A. Any provision of this Plan governing the timingor form of payment of benefits hereunder may be modified by the Committee if, and to the extent deemed necessary or advisable, toensure such exemption from Section 409A. Nothing in this Section XII shall be construed as an admission that any of the benefitspayable under this Plan constitute “deferred compensation” subject to the provisions of Section 409A.

Exhibit 10.9

Pfizer Inc Deferred Compensation Plan,as Amended and Restated, effective January 1, 2008

Article 1. Purpose

1.1 Pfizer Inc, a Delaware corporation (the “Company”), established, effective as of December 1, 1997, a deferredcompensation plan for key employees as described herein, which shall be known as the “Pfizer Deferred Compensation Plan” (the“Plan”). The Plan is hereby amended and restated as of January 1, 2008 to continue to permit eligible Employees to defer receipt ofcertain compensation pursuant to the terms and provisions set forth below. The Plan is intended (1) to comply with Section 409A (asdefined below) (except with respect to amounts covered by Appendix A), and (2) to be “a plan which is unfunded and is maintainedby an employer primarily for the purpose of providing deferred compensation for a select group of management or highlycompensated employees” within the meaning of sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. Notwithstanding any otherprovision of this Plan, this Plan shall be interpreted, operated and administered in a manner consistent with these intentions.

1.2 Purpose. The purpose of the Plan is to provide certain key employees of the Company with the opportunity tovoluntarily defer a portion of their compensation, subject to the terms of the Plan. By adopting the Plan, the Company desires toenhance its ability to attract and retain key employees.

Article 2. Definitions

Whenever used herein, the following terms when capitalized shall have the meaning set forth below:

“Account” means a bookkeeping account established by the Company for each Participant electing to defer eligibleCompensation under the Plan.

“Affiliate” means any corporation or other entity that is treated as a single employer with the Company under section 414of the Code.

“Award” means the Annual Incentive Plan Award or the Global Performance Plan Award based on an assessment ofperformance, payable by the Company to a Participant for the Participant’s services during a given calendar year of the Companyunder the Pfizer Inc Executive Annual Incentive Plan, Pfizer Inc Annual Incentive Plan or the Pfizer Inc Global Performance Plan, asmay be in effect from time to time or the Short-Term Shift Award payable by the Company pursuant to the Company’s ExecutiveLong-term Incentive Program. Awards shall be deemed earned only upon formal announcement thereof by the Company.

“Board” or “Board of Directors” means the Board of Directors of the Company

“Change in Control” shall mean the occurrence of any of the following events:

i at any time during a two-year period, at least a majority of the Company’s Board of Directors shall cease to consistof “Continuing Directors” (meaning directors of the Company who either were directors at the beginning of suchtwo-year period or who subsequently became directors and whose election, or nomination for election by theCompany’s stockholders, was approved by a majority of the then Continuing Directors); or

ii any “person” or “group” (as determined for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934),except any majority-owned subsidiary of the Company or any employee benefit plan of the Company or any trustor investment manager thereunder, shall have acquired “beneficial ownership” (as determined for purposes ofSecurities and Exchange Commission (“SEC”) Regulation 13d-3) of shares of Common Stock of the Companyhaving 15% or more of the voting power of all outstanding shares of capital stock of the Company, unless suchacquisition

is approved by a majority of the directors of the Company in office immediately preceding such acquisition; or

iii a merger or consolidation occurs to which the Company is a party, whether or not the Company is the survivingcorporation, in which outstanding shares of Common Stock of the Company are converted into shares of anothercompany (other than a conversion into shares of voting common stock of the successor corporation or a holdingcompany thereof representing 80% of the voting power or all capital stock thereof outstanding immediately afterthe merger or consolidation) or other securities (of either the Company or another company) or cash or otherproperty; or (iv) the sale of all, or substantially all, of the Company’s assets occurs; or (v) the stockholders of theCompany approve a plan of complete liquidation of the Company.

“Code” means the Internal Revenue Code of 1986, as amended.

“Committee” means the Compensation Committee of the Board or the Executive Leadership Team , as appropriate, and anysuccessor thereto or properly authorized delegee thereof.

“Company” means Pfizer Inc, a Delaware corporation (including any and all subsidiaries), and any successor thereto.

“Compensation” means the gross Salary, Awards, Long-Term Incentive Awards, and other payments which may be eligiblefor deferral under the Plan, which are payable to a Participant with respect to services performed while working during a specifiedperiod, not including compensation earned for services outside of the U.S. (unless on temporary assignment of 30 days or less) andremaining on a U.S. payroll.

“Deferral Election Form” means a written form provided by the Committee pursuant to which an eligible Employee may electto defer amounts under the Plan.

“Disability” means when a Participant (1) is unable to engage in any substantial gainful activity by reason of any medicallydeterminable physical or mental impairment which can be expected to result in death or can be expected to last for a continuousperiod of not less than 12 months, (2) is, by reason of any medically determinable physical or mental impairment which can beexpected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving incomereplacement benefits for a period of not less than three months under an accident and health plan that covers Employees.

“Employee” means a salaried employee of the Company . who has been selected for participation under Section 4.1.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“Federal Long-term Rate” means the 30-year constant maturity U.S. Treasury Rate from the Federal Reserve Bank for theprevious month.

“Grandfathered Benefits” means Plan benefits that were earned and vested as of December 31, 2004 within the meaning ofSection 409A. Grandfathered Benefits are subject to the distribution rules in effect prior to this amendment and restatement that aresummarized on Exhibit A.

“Key Employee” means an Employee treated as a “specified employee” as of his or her Separation from Service under CodeSection 409A(a)(2)(B)(i), i.e., a key employee (as defined in Code section 416(i) without regard to paragraph (5) thereof) of theCompany or its Affiliates if the Company’s stock is publicly traded on an established securities market or otherwise. Key Employeesshall be determined in accordance with Section 409A and applicable guidance thereunder. Key Employees shall also include thosekey employees who are eligible for the Company’s Executive Long-Term Incentive Program as “specified employees” for the 12month period following the specified employee effective date, if not already included pursuant to the foregoing. Key Employeesshall be determined in

accordance with Section 409A using a December 31 identification date and the listing of Key Employees as of any suchidentification date shall be effective for the 12-month period beginning on the effective date following the identification date.Notwithstanding the foregoing, the Committee may, under the alternative permissible methods allowable under Section 409A, adoptan alternative identification and effective date for purposes of determining which employees are Key Employees.

“Long-Term Incentive Award Payouts” means payouts of any Performance-Contingent Share Awards, Performance ShareAwards, or Restricted Stock Units in cash or shares of Company stock.

“Participant” means an eligible Employee who has elected to participate in the Plan and make deferrals under Article IV.

“Salary” means all regular, basic wages, before reduction for amounts deferred pursuant to the Plan or any other plan of theCompany, payable in cash to a Participant for services to be rendered during the calendar year, exclusive of any Awards, Long-TermIncentive Awards, other special fees, awards, or incentive compensation, allowance, or amounts designated by the Company aspayment toward or reimbursement of expenses.

“Section 409A” means Section 409A of the Code and the regulations and other guidance issued thereunder by the U.S.Treasury or Internal Revenue Service.

“Separation from Service” means a “separation from service” within the meaning of Section 409A.

“Unforeseeable Emergency” means a severe financial hardship to a Participant resulting from an illness or accident of theParticipant, the Participant’s spouse, or a dependent (as defined in Code section 152(a)) of the Participant, loss of the Participant’sproperty due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond thecontrol of the Participant.

Article 3. Administration

3.1 Authority of the Committee . The Plan shall initially be administered by the Committee. Subject to the terms of thisPlan, the Committee may appoint a successor committee to administer the Plan.

Subject to the provisions herein, the Committee shall have the exclusive discretion to select Employees for participation inthe Plan; to determine the terms and conditions of each Employee’s participation in the Plan; to make, in its sole discretion, alldeterminations arising in the administration, construction or interpretation of the Plan including the right to construe disputed ordoubtful Plan terms and provisions, and any such determination shall be conclusive and binding on all persons, except as otherwiseprovided by law; to construe and interpret any agreement or instrument entered into under the Plan; to establish, amend, or waiverules and regulations for the Plan’s administration; to amend (subject to the provisions of Article 9 herein) the terms and conditionsof the Plan and any agreement entered into under the Plan; and to make other determinations which may be necessary or advisablefor the administration of the Plan. Subject to the terms of the Plan, the Committee may delegate any or all of its authority grantedunder the Plan to one or more executives of the Company.

3.2 Claims Procedure . If a request for benefits by a Participant or beneficiary is wholly or partially denied, theCommittee will provide such claimant written notice setting forth the denial. A review procedure is available upon written notice ofthe denial of the claim, and includes the right to examine pertinent documents and submit issues and comments in writing to theCommittee. The decision on review will be made within 90 days after receipt of the request for review, unless circumstances warrantan extension of time not to exceed an additional 90 days, and shall be in writing. If a decision on review is not made within suchperiod, the Participant’s claim shall be deemed denied.

3.3 Decisions Binding . All determinations and decisions of the Committee as to any disputed question arising underthe Plan shall be final, conclusive and binding on all parties.

Article 4. Eligibility and Participation

4.1 Eligibility . Employees eligible to participate in the Plan include solely those executives selected by the Committee inits sole discretion who comprise a select group of “management or highly compensated employees,” such that the Plan will qualifyfor treatment as a “Top hat” plan within the meaning of Sections 201, 301 and 401 of ERISA.

In the event a Participant no longer meets the requirements for participation in the Plan, such Participant shall become aninactive Participant, retaining all the rights described under the Plan, except the right to make any further deferrals, until such time asthe Participant again becomes an active Participant.

4.2 Participation . Participation in the Plan shall be determined annually by the Committee based upon the criteria setforth in Section 4.1 herein. Subject to Section 4.3, Employees who are chosen to participate in the Plan with respect to any given yearshall be so notified in writing in advance of any required time to properly elect deferral for such year.

4.3 Partial Year Eligibility . In the event that an Employee first becomes eligible to participate in the Plan or anotheraccount balance plan required to be aggregated with this Plan under Section 409A during a calendar year, in the sole discretion ofthe Committee, such Employee may be notified as soon as practicable in writing by the Company and provided with a “DeferralElection Form,” (or such other form approved by the Committee from time to time in accordance with Section 409A for the purpose ofmaking elections to defer Compensation under the Plan) which must be completed by the Employee as set forth in Section 5.2 herein.

4.4 No Right to Participate . No Employee shall have the right to be selected as a Participant, or, having been so selectedfor any given year, to be selected again as a Participant for any other year.

Article 5. Deferral Opportunity and Distributions

5.1 Amount Which May Be Deferred . A Participant may elect to defer up to one hundred percent (100%) of eligiblecomponents of Compensation, including but not limited to Salary, Awards and Long-Term Incentive Award Payouts, in any givenyear; provided, that the Committee shall have sole discretion to designate which components of Compensation are eligible fordeferral elections under the Plan in any such year, and such Compensation shall not include any stock, stock option, stockappreciation right or other equity-based compensation which is not treated as deferred compensation pursuant to Treas. Reg.§1.409A-1(a)(5) or other applicable authority. The minimum amount of any single eligible component of Compensation (other thanPerformance Share Awards) which may be deferred in any given year is ten percent (10%) of each such component; provided thatthe minimum amount of Performance Share Awards that can be deferred in any year is twenty five percent (25%). In addition, anelection to defer Compensation in any given year must be expressed by each Participant in increments of ten percent (10%) of theapplicable component of Compensation, except that Performance Share Awards must be deferred in 25% increments.

5.2 Deferral Election In order to elect to defer Compensation earned during a year, an eligible Employee shall file anirrevocable Deferral Election Form with the Committee before the beginning of such year. Notwithstanding the foregoing, (1) if theCommittee determines that any component of Compensation qualifies as “performance-based compensation” under Section 409A,an eligible Employee may elect to defer a portion of such Compensation by filing a Deferral Election Form at such later time up untilthe date six months before the end of the performance period as permitted by the Committee, and (2) in the first year in which anEmployee becomes eligible to participate in this Plan or any other account balance plan required to be aggregated with this Planunder Section 409A, a deferral election may be made with respect to services to be performed subsequent to the election and withinthe same year only if such election is made within 30 days after the date the Employee first becomes eligible to participate in this orany other account balance plan required to be aggregated with this Plan under Section 409A.

Participants shall make the following irrevocable elections on each “Deferral Election Form”:

(a) The amount to be deferred with respect to each eligible component of Compensation for the specified year;

(b) The length of the deferral period with respect to each eligible component of Compensation or the date orevent upon which the Compensation is to be paid in the future, pursuant to the terms of Section 5.3 and5.4 herein;

(c) The form or method for payment of the Compensation; and

(d) The form or method for payment of the Compensation to a beneficiary in the event of the death of theParticipant as designated in Section 6.4.

5.3 Length of Deferral. Subject to the remaining Sections of this Article 5, the deferral period elected by each Participantwith respect to deferrals of Compensation for any given year will begin upon deferral and end as selected by the Participant on aDeferral Election Form from among the following choices as specified by the Committee from time to time:

(a) upon the Participant’s Separation from Service;(b) upon on a specific date identified by the Participant; or(c) the earlier of (a) or (b).

If a Participant elected to defer Compensation but fails to select a length of deferral, the Participant shall be deemed to haveelected (a), to be payable on January 31 of the year following (a). Notwithstanding anything in this Section 5.3 to the contrary, aspecified date for a deferral period must be at least one (1) year following the end of the calendar year in which the Compensation isearned and no later than five (5) years following the Participant’s retirement.

5.4. Form or Method for Payment of the Compensation . A Participant shall elect on a Deferral Election Form to have theportion of his or her Account related to amounts deferred under the Deferral Election Form (and earnings thereon) distributed in alump sum or in annual installments over a period of no less than 2, and no more than 15, years with payments commencing upon theParticipant’s Separation from Service or specified date as elected by the Participant on the Deferral Election Form. If the Participantfails to elect the form and method of payment on the Deferral Election Form, the form and method shall be a single lump sum.

5.5 Cancellation of Election for Disability or Distribution for Unforeseeable Emergency . If a Participant incurs aDisability or obtains a distribution under Section 5.3 on account of an Unforeseeable Emergency during a year, his or her deferralelection for such year shall be cancelled.

5.6 Distribution upon Separation from Service or upon a Specified Date. If a Participant has elected on a DeferralElection Form to have the portion of his or her Account related to amounts deferred under the Deferral Election Form (and earningsthereon) paid to the Participant upon a Separation from Service, upon a specified date, or upon the earlier of the specified date orSeparation from Service, then the Distribution shall commence upon such Separation from Service or the specified date, asapplicable, and be made in the manner specified in Section 5.4.

5.7 Delay for Key Employees. Notwithstanding the foregoing, distributions may not be made to a Key Employee upon aSeparation from Service before the date which is 6 months after the date of the Key Employee's Separation from Service (or, if earlier,the date of death of the Key Employee). Any payments that would otherwise be made during this period of delay shall beaccumulated and paid as of the date that is six months after the Participant’s Separation from Service (or, if earlier, the first day of themonth after the Participant’s death).

5.8 Distribution upon Disability . Notwithstanding the election made by a Participant on a Deferral Election Form underSections 5.2, 5.3 and 5.4, if a Participant incurs a Disability while in payment status, but before full distribution of his or her Accountbalance, any remaining Account balance shall continue to be distributed in

accordance with the Particpant’s election made on the Deferral Election Form under Sections 5.2, 5.3 and 5.4 hereof. If a Participantincurs a Disability prior to commencing receipt of any portion of his or her Account balance, the Participant’s Account balance shallbe distributed in accordance with the Particpant’s election made on the Deferral Election Form under Sections 5.2, 5.3 and 5.4 hereof.

5.9 Distributions upon Death . A Participant shall elect on a Deferral Election Form to have the portion of his or herAccount remaining in the Account at his or her death (and earnings thereon), distributed in either a lump sum or in a continuation ofthe installment election made on the Deferral Election Form as filed under Section 5.4, commencing upon the Participant’s death tothe Participant’s beneficiary in accordance with Section 6.4. If the Participant fails to elect the form and method of payment, the formand method shall be a continuation of the installments.

5.10 Withdrawals for Unforeseeable Emergency. Notwithstanding the election made by a Participant on a DeferralElection Form under Sections 5.2, 5.3 and 5.4, upon the occurrence of an Unforeseeable Emergency, a Participant may withdraw all orany portion of his or her Account balance provided that the amounts distributed with respect to an Unforeseeable Emergency maynot exceed the amounts necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes reasonablyanticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved throughreimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the extent the liquidationof such assets would not itself cause severe financial hardship) or by cessation of deferrals under the Plan. “UnforeseeableEmergency” means for this purpose a severe financial hardship to a Participant resulting from an illness or accident of theParticipant, the Participant’s spouse, or a dependent (as defined in Code section 152(a)) of the Participant, loss of the Participant’sproperty due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond thecontrol of the Participant.

5.11 Change in Control . Notwithstanding any provision in the Plan to the contrary or the election made by a Participanton a Deferral Election Form under Sections 5.2, 5.3 and 5.4, a Participant's Account balance under the Plan shall be distributed in animmediate lump sum payment upon the occurrence of a Change in Control that is a “Change in Control Event.” A “Change inControl Event” means an event described in Code section 409A(a)(2)(A)(v) or otherwise under Section 409A.

5.12 Timing of Payments . For purposes of Section 5.6, 5.8 and 5.9, payment will be deemed to be made upon a Separationfrom Service, Disability or death, as applicable if payment is made upon the date on which the event occurs or upon a date that iswithin 90 days of such event and the Participant does not have any control over when the payment is actually paid. For purposes ofa payment on a specified date under Section 5.6, a payment will be deemed to be made upon a specified date if payment is made onsuch date, later in the calendar year containing such specified date, or, if later, the 15 th day of the 3 rd month following such specifieddate. The Participant will have no control over when the payment is actually paid.

5.13 Changes in Time or Form of Distribution. Notwithstanding the election made by a Participant on a Deferral ElectionForm under Sections 5.2, 5.3 and 5.4, a Participant may make one or more subsequent elections to change the time or form of adistribution for a deferred amount, provided that such an election shall be effective only if the following conditions are satisfied:

(a) The election may not take effect until at least twelve (12) months after the date on which theelection is made;

(b) In the case of an election to change the time or form of a distribution under Sections 5.6, adistribution may not be made earlier than at least five (5) years from the date the distributionwould have otherwise been made; and

(c) In the case of an election to change the time or form of a distribution under Section 5.6, theelection must be made at least twelve (12) months before the date the distribution is scheduledto be paid.

5.14 Effect of Taxation . If a portion of the Participant's Account balance is includible in income under Section 409A, suchportion shall be distributed immediately to the Participant.

5.15 Permitted Delays . Notwithstanding the foregoing, any payment to a Participant under the Plan may be delayedupon the Committee's reasonable anticipation of one or more of the following events:

(a) The Company's deduction with respect to such payment would be eliminated by application ofCode section 162(m); or

(b) The making of the payment would violate Federal securities laws or other applicable law;

provided, that (i) the Company treats any such delays to similarly situated Participants on a reasonably consistent basis, (ii) noelection may be provided to a Participant with respect to the timing of such delayed payment, and (iii) any payment delayedpursuant to this Section 5.15 shall otherwise be paid in accordance with Section 409A.

5.16 Pre-2005 Deferrals . Notwithstanding the foregoing, Appendix A governs the distribution of amounts that wereearned and vested (within the meaning of Section 409A and regulations thereunder) under the Plan prior to 2005 (and earningsthereon) and are exempt from the requirements of Section 409A.

5.17 Rehires. If a Participant ceases to be eligible to participate and subsequently again becomes eligible to participate,he or she may, in the sole discretion of the Committee, make an election in accordance with Sections 5.2, 5.3 and 5.4 on a DeferralElection Form that shall apply with respect to any amounts credited to his or her Account under the Plan after the date of his or herre-eligibility (provided the Employee becomes so eligible in a different calendar year than the year in which he or she ceased to beeligible), and if no such payment election is made, the portion of the Account accrued with respect to the new eligibility period shallbe paid in accordance with the election on the Deferral Election Form for those amounts deferred prior to the Participant ceasing tobe eligible to participate.

Article 6. Deferred Compensation Accounts

6.1 Participants’ Accounts. The Company shall establish and maintain an individual bookkeeping Account for deferralsmade by each Participant under Article 5 herein. Each Account shall be credited as of the date the amount deferred otherwise wouldhave become due and payable to the Participant.

6.2 Interest on Deferred Amounts . Compensation deferred under Article 5 shall accrue, in the sole discretion of theCommittee, either (i) interest on a basis to be specified by the Committee, at a rate equal to the return choice(s) selected by theParticipant from among the alternatives specified by the Committee from time to time, or (2) dividends or dividend equivalents asdetermined by the Committee. Interest or dividends, as applicable, credited on deferred amounts (less the amount of any debits forany losses) shall be credited to the Participant's Account and paid out to Participants at the same time and in the same manner as theunderlying deferred amounts from such Account.

6.3 Charges against Accounts . There shall be charged against each Participant’s Account any payments made to theParticipant or to his or her beneficiary.

6.4 Designation of Beneficiary . Each Participant may designate a beneficiary or beneficiaries (who may be namedcontingently or successively) who, upon the Participant’s death, will receive the amounts that otherwise would have been paid tothe Participant under the Plan. All designations shall be signed by the Participant, and shall be in such form as prescribed by theCommittee. Each designation shall be effective as of the date received from the Participant by the Global Long-Term IncentiveCompensation group of the Company or its designee.

Participants may change their beneficiary designations on a form prescribed by the Committee. The payment of amountsdeferred under the Plan shall be in accordance with the last unrevoked written designation of beneficiary that has been signed bythe Participant and delivered by the Participant to the Global Long-Term Incentive Compensation group or its designee prior to theParticipant’s death.

In the event that all the beneficiaries named by a Participant pursuant to this Section 6.4 predecease the Participant, thedeferred amounts that would have been paid to the Participant or the Participant’s beneficiaries shall be paid to the Participant’sestate in a lump sum.

In the event a Participant does not designate a beneficiary, or for any reason such designation is ineffective, in whole or inpart, the amounts that otherwise would have been paid to the Participant or the Participant’s beneficiaries under the Plan shall bepaid to the Participant’s estate in a lump sum.

In the event the beneficiary of a Participant should die prior to the final payment of the deferred amounts, the amounts thatotherwise would have ben paid to such beneficiary under the Plan shall be paid to the beneficiary’s estate in a lump sum.

Article 7. Rights of Participants

7.1 Contractual Obligation. The Plan shall create a contractual obligation on the part of the Company to make paymentsfrom the Participant’s accounts when due. Payment of account balances shall be made out of the general funds of the Company.

7.2 Unsecured Interest. No Participant or party claiming an interest in deferred amounts or contributions through aParticipant shall have any interest whatsoever in any specific asset of the Company. To the extent that any party acquires a right toreceive payments under the Plan, such right shall be equivalent to that of an unsecured general creditor of the Company.

7.3 Employment. Nothing in the Plan shall interfere with nor limit in any way the right of the Company to terminate anyParticipant’s employment at any time, nor confer upon any Participant any right to continue in the employ of the Company.

Article 8. Withholding of Taxes

The Company shall withhold from an employee’s regular compensation from the Company an amount sufficient to satisfyforeign, Federal, state, and local income or other withholding tax requirements with regard to amounts deferred under the Plan.However, the Company reserves the right to institute alternative methods for satisfying the applicable income and withholding taxrequirements.

Article 9. Amendment and Termination

9.1 Amendment or Termination . The Company reserves the right to amend or terminate the Plan when, in the solediscretion of the Company, such amendment or termination is advisable, pursuant to a resolution or other action taken by theCommittee. The Plan may also be amended to the extent such amendment is required under applicable law or is required to avoidhaving amounts deferred under the Plan included in the income of Participants or beneficiaries for federal income tax purposes priorto distribution.

Notwithstanding the foregoing, no amendment of the Plan shall apply to amounts that were earned and vested (within themeaning of Section 409A) under the Plan prior to 2005, unless the amendment specifically provides that it applies to such amounts.The purpose of this restriction is to prevent a Plan amendment from resulting in an inadvertent "material modification" to amountsthat are Grandfathered Benefits.

9.2 Effect of Amendment or Termination . Except as provided in the next sentence, no amendment or termination of thePlan shall adversely affect the rights of any Participant to amounts credited to his or her

Account as of the effective date of such amendment or termination, without such Participant’s consent. Upon termination of thePlan, distribution of balances in Accounts shall be made to Participants and beneficiaries in the manner and at the time described inArticle V, unless the Company determines in its sole discretion that all such amounts shall be distributed upon termination inaccordance with the requirements under Section 409A. Upon termination of the Plan, no further deferrals of eligible Compensationshall be permitted; however, earnings, gains and losses shall continue to be credited to Account balances in accordance with thePlan until the Account balances are fully distributed.

Article 10. Miscellaneous

10.1 Notice. Any notice or filing required or permitted to be given to the Company under the Plan shall be sufficient if inwriting and hand delivered, or sent by registered or certified mail to the Global Long-Term Incentive Compensation group of theCompany. Notice to the Global Long-Term Incentive Compensation group , if mailed, shall be addressed to the principal executiveoffices of the Company. Notices shall be deemed given as of the date of delivery, or if delivery is made by mail, as of the date shownon the postmark on the receipt for registration or certification.

10.2 Nontransferability. articipants’ rights to deferred amounts and interest earned thereon under the Plan may not besold, transferred, assigned, or otherwise alienated or hypothecated other than by will or by will or by the laws of descent anddistribution. In no event shall the Company make any payment under the Plan to any assignee or creditor of a Participant.

10.3 Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality orinvalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalidprovision had not been included.

10.4 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shallinclude the feminine; the plural shall include the singular, and the singular shall include the plural.

10.5 Costs of the Plan. All costs of implementing and administering the Plan shall be borne by the Company.

10.6 Applicable Law. The plan shall be construed and enforced in accordance with the laws of the State of New York.Notwithstanding anything herein to the contrary, the terms of the Plan are intended to, and shall be interpreted and applied so as to,comply in all respects with Section 409A. Any provision of this Plan governing the timing or form of payment of benefits hereundermay be modified by the Committee if, and to the extent deemed necessary or advisable, to comply with Section. Nothing in thisSection 10.6 shall be construed as an admission that any of the benefits payable under this Plan constitutes “deferredcompensation” subject to the provisions of Section 409A.

10. 7 Successors. All obligation of the Company under the Plan shall be binding on any successor to the Company,whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all orsubstantially all of the business and/or assets of the Company.

APPENDIX A

GRANDFATHERED BENEFITS

Distribution of amounts that were earned and vested (within the meaning of Section 409A) under the Plan prior to 2005 (and

earnings thereon) and are exempt from the requirements of Section 409A shall be made in accordance with the Plan terms as in effect

on December 31, 2004 as set forth in this Appendix A.

Pfizer Inc Deferred Compensation Plan

Article 1. Purpose

1.1 Pfizer Inc, a Delaware corporation (the “Company”), hereby establishes, effective as of December 1, 1997, a deferredcompensation plan for key employees as described herein, which shall be known as the “Pfizer Deferred Compensation Plan” ( the“Plan”).

1.2 Purpose. The purpose of the Plan is to provide certain key employees of the Company with the opportunity tovoluntarily defer a portion of their compensation, subject to the terms of the Plan. By adopting the Plan, the Company desires toenhance its ability to attract and retain key employees.

Article 2. Definitions

Whenever used herein, the following terms when capitalized shall have the meaning set forth below:

a “Award” means the Annual Incentive Award based on an assessment of performance, payable by the Company to aParticipant for the Participant’s services during a given calendar year of the Company. Awards shall be deemed earned onlyupon formal announcement thereof by the Company.

b “Board” or “Board of Directors” means the Board of Directors of the Company

c “Change in Control” shall mean the occurance of any of the following events:

i at any time during a two-year period, at least a majority of the Company’s Board of Directors shall cease to consistof “Continuing Directors” (meaning directors of the Company who either were directors at the beginning of suchtwo-year period or who subsequently became directors and whose election, or nomination for election by theCompany’s stockholders, was approved by a majority of the then Continuing Directors); or

ii any “person” or “group” (as determined for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934),except any majority-owned subsidiary of the Company or any employee benefit plan of the Company or any trustor investment manager thereunder, shall have acquired “beneficial ownership” (as determined for purposes ofSecurities and Exchange Commission (“SEC”) Regulation 13d-3) of shares of Common Stock of the Companyhaving 15% or more of the voting power of all outstanding shares of capital stock of the Company, unless suchacquisition is approved by a majority of the directors of the Company in office immediately preceding suchacquisition; or

iii a merger or consolidation occurs to which the Company is a party, whether or not the Company is the survivingcorporation, in which outstanding shares of Common Stock of the Company are converted into shares of anothercompany (other than a conversion into shares of voting common stock of the successor corporation or a holdingcompany thereof representing 80% of the voting power or all capital stock thereof outstanding immediately afterthe merger or consolidation) or other securities (of either the Company or another company) or cash or otherproperty; or (iv) the

sale of all, or substantially all, of the Company’s assets occurs; or (v) the stockholders of the Company approve aplan of complete liquidation of the Company.

d “Code” means the Internal Revenue Code of 1986, as amended.

e “Committee” means the Executive Compensation Committee of the Board or the Employee Compensation and ManagementDevelopment Committee, as appropriate, and any successor thereto.

f “Company” means Pfizer Inc, a Delaware corporation (including any and all subsidiaries), and any successor thereto.

g “Compensation” means the gross Salary, Award, Long-Term Incentive Awards, and other payments which may be eligiblefor deferral under the Plan, which are payable to a Participant with respect to services performed during a specified period.

h “Disability” means a disability which would qualify the Participant for Long-Term Disability benefits under the Pfizer LongTerm Disability Plan and, as such plan may be amended from time to time.

i “Employee” means a salaried employee of the Company.

j “ERISA” means the Employee Retirement Income Security Act of 1974.

k “Federal Long-term Rate” means the 30-year constant maturity U.S. Treasury Rate from the Federal Reserve Bank for theprevious month.

l “Long-Term Incentive Awards” means Performance-Contingent Share Awards or earnings from stock option exercises.

m “Participant” means an Employee who has elected to participate in the Plan.

n “Salary” means all regular, basic wages, before reduction for amounts deferred pursuant to the Plan or any other plan of theCompany, payable in cash to a Participant for services to be rendered during the calendar year, exclusive of any Bonus,Long-Term Awards, other special fees, awards, or incentive compensation, allowance, or amounts designated by theCompany as payment toward or reimbursement of expenses.

Article 3. Administration

3.1 Authority of the Committee. The Plan shall initially be administered by the Committee. Subject to the terms of thisPlan, the Committee may appoint a successor committee to administer the Plan.

Subject to the provisions herein, the Committee shall have the exclusive discretion to select Employees for participation inthe Plan; to determine the terms and conditions of each Employee’s participation in the Plan; to make, in its sole discretion, alldeterminations arising in the administration, construction or interpretation of the Plan including the right to construe disputed ordoubtful Plan terms and provisions, and any such determination shall be conclusive and binding on all persons, except as otherwiseprovided by law; to construe and interpret any agreement or instrument entered into under the Plan; to establish, amend, or waiverules and regulations for the Plan’s administration; to amend (subject to the provisions of Article 9 herein) the terms and conditionsof the Plan and any agreement entered into under the Plan; and to make other determinations which may be necessary or advisablefor the administration of the Plan. Subject to the terms of the Plan, the Committee may delegate any or all of its authority grantedunder the Plan to one or more executives of the Company.

3.2 Claims Procedure. If a request for benefits by a Participant or beneficiary is wholly or partially denied, the Committeewill provide such claimant written notice setting forth the denial. A review procedure is available upon written notice of the denial ofthe claim, and includes the right to examine pertinent documents and

submit issues and comments in writing to the Committee. The decision on review will be made within 90 days after receipt of therequest for review, unless circumstances warrant an extension of time not to exceed an additional 90 days, and shall be in writing. If adecision on review is not made within such period, the Participant’s claim shall be deemed denied.

3.3 Decisions Binding. All determinations and decisions of the Committee as to any disputed question arising under thePlan shall be final, conclusive and binding on all parties.

Article 4. Eligibility and Participation

4.1 Eligibility. Employees eligible to participate in the Plan include key policy and decision makers of the Company, asselected by the Committee in its sole discretion. It is the intent of the Company to extend eligibility only to those executives whocomprise a select group of “management or highly compensated employees,” such that the Plan will qualify for treatment as a “Tophat” plan within the meaning of Sections 201, 301 and 401 of ERISA.

In the event a Participant no longer meets the requirements for participation in the Plan, such Participant shall become aninactive Participant, retaining all the rights described under the Plan, except the right to make any further deferrals, until such time asthe Participant again becomes an active Participant.

4.2 Participation. Participation in the Plan shall be determined annually by the Committee based upon the criteria set forthin Section 4.1 herein. Employees who are chosen to participate in the Plan in any given year shall be so notified in writing.

4.3 Partial Year Eligibility. In the event than an Employee first becomes eligible to participate in the Plan during any givenyear, such Employee shall as soon as practicable be so notified in writing by the Company and provided with an “Election to DeferForm,” which must be completed by the Employee as set forth in Section 5.2 herein; provided, however, that such Employee maymake an election to defer with respect to only that portion of his or her Compensation for such year which is to be paid after the dateof filing of the deferral election.

4.4 No Right to Participate. No Employee shall have the right to be selected as a Participant, or, having been so selectedfor any given year, to be selected again as a Participant for any other year.

Article 5. Deferral Opportunity

5.1 Amount Which May Be Deferred. A Participant may elect to defer up to one hundred percent (100%) of eligiblecomponents of Compensation, including but not limited to Salary, Award and Long-Term Awards, in any given year; provided, thatthe Committee shall have sole discretion to designate which components of Compensation are eligible for deferral elections underthe Plan in any such year. The minimum amount of any single eligible component of Compensation which may be deferred in anygiven year is ten percent (10%) of each such component. In addition, an election to defer Compensation in any given year must beexpressed by each Participant in increments of ten percent (10%) of the applicable component of Compensation.

5.2 Deferral Election. Participants shall make their elections to defer Compensation under the Plan for a given calendaryear not later than (a) thirty (30) days prior to the beginning of such calendar year or (b) if Participants are notified after thebeginning of the calendar year of their selection to participate in the plan for such calendar year or a partial calendar year, withinthirty (30) days of receipt of such notice. All deferral elections shall be irrevocable; shall relate solely to amounts earned after thefiling of a deferral election with the Committee; and shall be made on an “Election to Defer Form,” as described herein.

Participants shall make the following irrevocable elections on each “Election to Defer Form”.

(a) The amount to be deferred with respect to each eligible component of Compensation for the specified year;

(b) The length of the deferral period with respect to each eligible component of Compensation, pursuant to the terms ofSection 5.3 herein;

5.3 Length of Deferral. The deferral periods elected by each Participant with respect to deferrals of Compensation for anygiven year shall be selected from among the choices specified by the Committee. The Committee shall specify one or more deferralperiods which are at least one (1) year following the end of the calendar year in which the Compensation is earned, and no greaterthan five (5) years following retirement.

5.4 Payment of Deferred Amounts. Subject to the provisions of Section 5.5 and Section 9 of the Plan, Participants shallreceive payment of deferred amounts, together with interest earned thereon, at the end of the deferred period in a single lump-sumcash payment, unless otherwise elected. If alternative methods for receiving payments are approved by the Committee, election ofthe method of payment shall be made by the Participant within the same time periods as required in Section 5.2 of the Plan.

(a) Lump-Sum Payment. A lump sum payment shall be made in cash within sixty (60) days of the end of the deferral periodby the Participant, as described in Sections 5.2 and 5.3 herein.

(b) Installment Payments. If approved by the Committee, Participants may elect payout in annual installments, with aminimum number of installments of two (2), and a maximum of fifteen (15). The initial payment shall be made in cash within sixty (60)days after the commencement date selected by the Participant pursuant to Sections 5.2 and 5.3 herein. The remaining installmentpayments shall be made in cash each year thereafter, until the Participant’s entire deferred compensation account has been paid.Interest shall accrue on the deferred amounts in the Participant’s deferred compensation account immediately prior each suchpayment, multiplied by a fraction, the numerator of which is one (1), and the denominator of which is the number of installmentpayments remaining.

(c) Alternative Payment Schedule. If approved by the Committee, a Participant may elect an alternate payment schedule. 5.5 Change in Control. Notwithstanding any provision contained in the Plan, in the event of a Change in Control, all

participants shall be entitled to an immediate lump sum payment of their deferred amounts, together with interest earned thereon.

Article 6. Deferred Compensation Accounts

6.1 Participants’ Accounts. The Company shall establish and maintain an individual bookkeeping account for deferralsmade by each Participant under Article 5 herein. Each account shall be credited as of the date the amount deferred otherwise wouldhave become due and payable to the Participant.

6.2 Interest on Deferred Amounts. Compensation deferred under Article 5 shall accrue interest on a basis to be specifiedby the Committee, at a rate equal to the return choice(s) selected by the Participant from among the alternatives specified by theCommittee from time to time. Interest credited on deferred amounts (less the amount of any debits for any losses) shall be paid out toParticipants at the same time and in the same manner as the underlying deferred amounts.

6.3 Charges Against Accounts. There shall be charged against each Participant’s deferred compensation account anypayments made to the Participant or to his or her beneficiary.

6.4 Designation of Beneficiary. Each Participant may designate a beneficiary or beneficiaries (who may be namedcontingently or successively) who, upon the Participant’s death, will receive the amounts that otherwise would have been paid tothe Participant under the Plan. All designations shall be signed by the Participant, and shall be in such form as prescribed by theCommittee. Each designation shall be effective as of the date received from the Participant by the Senior Vice President - EmployeeResources of the Company.

Participants may change their beneficiary designations on a form prescribed by the Committee. The payment of amountsdeferred under the Plan shall be in accordance with the last unrevoked written designation of beneficiary that has been signed bythe Participant and delivered by the Participant to the Senior Vice President - Employee Resources prior to the Participant’s death.

In the event that all the beneficiaries named by a Participant pursuant to this Section 6.4 predecease the Participant, thedeferred amounts that would have been paid to the Participant or the Participant’s beneficiaries shall be paid to the Participant’sestate.

In the event a Participant does not designate a beneficiary, or for any reason such designation is ineffective, in whole or inpart, the amounts that otherwise would have been paid to the Participant or the Participant’s beneficiaries under the Plan shall bepaid to the Participant’s estate.

Article 7. Rights of Participants

7.1 Contractual Obligation. The Plan shall create a contractual obligation on the part of the Company to make paymentsfrom the Participant’s accounts when due. Payment of account balances shall be made out of the general funds of the Company.

7.2 Unsecured Interest. No Participant, or party claiming an interest in deferred amounts or contributions through aParticipant, shall have any interest whatsoever in any specific asset of the Company. To the extent that any party acquires a right toreceive payments under the Plan, such right shall be equivalent to that of an unsecured general creditor of the Company.

7.3 Employment. Nothing in the Plan shall interfere with nor limit in any way the right of the Company to terminate anyParticipant’s employment at any time, nor confer upon any Participant any right to continue in the employ of the Company.

Article 8. Withholding of Taxes

The Company shall withhold from an employee’s regular compensation from the Company an amount sufficient to satisfyforeign, Federal, state, and local income or other withholding tax requirements with regard to amounts deferred under the Plan.However, the Company reserves the right to institute alternative methods for satisfying the applicable income and withholding taxrequirements.

Article 9. Amendment and Termination

The Company hereby reserves the right to amend, modify or terminate the Plan at any time by action of the Committee.Except as described below in this Article 9, no such amendment, modification or termination shall in any material manner adverselyeffect any Participant’s rights to deferred amounts, contributions or interest earned thereon, without the consent of the Participant.

The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for a selectgroup of “management or highly compensated employees” within the meaning of Sections 201, 301 and 401 of ERISA, and thereforeto be exempt from the provisions of Parts 2,3 and 4 of Title I of ERISA. Accordingly, the Committee may terminate the Plan andcommence termination payout for all or certain Participants, or remove certain employees as Participants, if it is determined by theUnited States Department of Labor or a court of competent jurisdiction that the Plan constitutes an employee pension benefit planwithin the meaning of Section 3(2) of ERISA which is not so exempt. If payout is commenced pursuant to the operation of thisArticle 9, the payment of such amounts shall be made in a lump sum regardless of the manner selected by each Participant underSection 5.4 herein as applicable.

Article 10. Miscellaneous

10.1 Notice. Any notice or filing required or permitted to be given to the Company under the Plan shall be sufficient if inwriting and hand delivered, or sent by registered or certified mail to the Senior Vice President - Employee Resources of the Company.Notice to the Senior Vice President - Employee Resources, if mailed, shall be addressed to the principal executive offices of theCompany. Notices shall be deemed given as of the date of delivery, or if delivery is made by mail, as of the date shown on thepostmark on the receipt for registration or certification.

10.2 Nontransferability. Participants’ rights to deferred amounts and interest earned thereon under the Plan may not besold, transferred, assigned, or otherwise alienated or hypothecated other than by will or by will or by the laws of descent anddistribution. In no event shall the Company make any payment under the Plan to any assignee or creditor of a Participant.

10.3 Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality orinvalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalidprovision had not been included.

10.4 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shallinclude the feminine; the plural shall include the singular, and the singular shall include the plural.

10.5 Costs of the Plan. All costs of implementing and administering the Plan shall be borne by the Company.

10.6 Applicable Law. The plan shall be construed and enforced in accordance with the laws of the State of New York.

10.7 Successors. All obligation of the Company under the Plan shall be binding on any successor to the Company,whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all orsubstantially all of the business and/or assets of the Company.

Exhibit 12

PFIZER INC. AND SUBSIDIARY COMPANIESCOMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

Year Ended December 31,

(IN MILLIONS, EXCEPT RATIOS) 2012 2011 2010 2009 2008

Determination of earnings:

Income from continuing operations before provision for taxes on

income, noncontrolling interests and cumulative effect of a

change in accounting principles $ 12,080 $ 12,304 $ 9,471 $ 10,723 $ 9,520

Less:

Net income attributable to noncontrolling interests 28 40 31 9 22

Income attributable to Pfizer Inc. 12,052 12,264 9,440 10,714 9,498

Add:

Fixed charges 1,640 1,813 1,930 1,358 647

Total earnings as defined $ 13,692 $ 14,077 $ 11,370 $ 12,072 $ 10,145

Fixed charges:

Interest expense (a) $ 1,524 $ 1,681 $ 1,797 $ 1,232 $ 516

Preferred stock dividends (b) 4 5 6 7 8

Rents (c) 112 127 127 119 123

Fixed charges 1,640 1,813 1,930 1,358 647

Capitalized interest 41 50 36 34 46

Total fixed charges $ 1,681 $ 1,863 $ 1,966 $ 1,392 $ 693

Ratio of earnings to fixed charges 8.1 7.6 5.8 8.7 14.6

(a)

Interest expense includes amortization of debt premium, discount and expenses. Interest expense does not include interest related to uncertain tax

positions of $268 million for 2012; $343 million for 2011; $389 million for 2010; $337 million for 2009; and $333 million for 2008.(b) Preferred stock dividends related to our Series A convertible perpetual preferred stock held by an Employee Stock Ownership Plan Trust.(c) Rents included in the computation consist of one-third of rental expense, which we believe to be a conservative estimate of an interest factor in

our leases, which are not material.

All financial information before 2012 reflects Capsugel (the sale of which closed on August 1, 2011) as a discontinued operation. The financialinformation for the years ended December 31, 2012, 2011, 2010 and 2009 reflects the Nutrition business, which was acquired in 2009 and which theCompany sold on November 30, 2012, as a discontinued operation.

Financial ReviewPfizer Inc. and Subsidiary Companies

EXHIBIT 13

Pfizer Inc. 2012 Financial Report

Financial ReviewPfizer Inc. and Subsidiary Companies

INTRODUCTION

Our Financial Review is provided to assist readers in understanding the results of operations, f inancial condition and cash f low s of Pfizer Inc.(the Company). It should be read in conjunction w ith the Consolidated Financial Statements and Notes to Consolidated Financial Statements. Thediscussion in this Financial Review contains forw ard-looking statements that involve substantial risks and uncertainties. Our actual results coulddiffer materially from those anticipated in these forw ard-looking statements as a result of various factors, such as those discussed in Part 1,Item 1A, “Risk Factors” of our 2012 Annual Report on Form 10-K and in the “Forw ard-Looking Information and Factors That May Affect FutureResults”, “Our Operating Environment” and “Our Strategy” sections of this Financial Review .

The Financial Review is organized as follow s:

• Overview of Our Performance, Operating Environment, Strategy and Outlook . This section, beginning on page 2, provides information aboutthe follow ing: our business; our 2012 performance; our operating environment; our strategy; our business development initiatives, such asacquisitions, dispositions, licensing and collaborations; and our f inancial guidance for 2013.

• Significant Accounting Policies and Application of Critical Accounting Estimates . This section, beginning on page 10, discusses thoseaccounting policies and estimates that w e consider important in understanding Pfizer’s consolidated f inancial statements. For additionaldiscussion of our accounting policies, see Notes to Consolidated Financial Statements— Note 1. Basis of Presentation and SignificantAccounting Policies .

• Analysis of the Consolidated Statements of Income. This section begins on page 15, and consists of the follow ing sections:

◦ Revenues. This sub-section, beginning on page 15, provides an analysis of our revenues and products for the three years endedDecember 31, 2012, including an overview of research and development expenses and important biopharmaceutical productdevelopments.

◦ Costs and Expenses . This sub-section, beginning on page 28, provides a discussion about our costs and expenses.

◦ Provision for Taxes on Income. This sub-section, beginning on page 33, provides a discussion of items impacting our tax provisions.

◦ Discontinued Operations. This sub-section, on page 34, provides an analysis of the f inancial statement impact of our discontinuedoperations.

◦ Adjusted Income . This sub-section, beginning on page 34, provides a discussion of an alternative view of performance used bymanagement.

• Analysis of the Consolidated Statements of Comprehensive Income. This section, on page 38, provides a discussion of changes in certaincomponents of other comprehensive income.

• Analysis of the Consolidated Balance Sheets. This section, beginning on page 38, provides a discussion of changes in certain balance sheetaccounts.

• Analysis of the Consolidated Statements of Cash Flows. This section, beginning on page 39, provides an analysis of our consolidated cashflow s for the three years ended December 31, 2012.

• Analysis of Financial Condition, Liquidity and Capital Resources . This section, beginning on page 40, provides an analysis of selectedmeasures of our liquidity and of our capital resources as of December 31, 2012 and December 31, 2011, as w ell as a discussion of ouroutstanding debt and other commitments that existed as of December 31, 2012. Included in the discussion of outstanding debt is a discussionof the amount of f inancial capacity available to help fund Pfizer’s future activities.

• New Accounting Standards . This section, on page 44, discusses accounting standards that w e have recently adopted, as w ell as those thatrecently have been issued, but not yet adopted.

• Forward-Looking Information and Factors That May Affect Future Results . This section, beginning on page 44, provides a description of therisks and uncertainties that could cause actual results to differ materially from those discussed in forw ard-looking statements presented inthis Financial Review relating to, among other things, our anticipated f inancial and operating performance, business plans and prospects, in-line products and product candidates, strategic review s, capital allocation, business-development plans, and plans relating to sharerepurchases and dividends. Such forw ard-looking statements are based on management’s current expectations about future events, w hichare inherently susceptible to uncertainty and changes in circumstances. Also included in this section are discussions of Financial RiskManagement and Legal Proceedings and Contingencies.

2012 Financial Report

1

Financial ReviewPfizer Inc. and Subsidiary Companies

OVERVIEW OF OUR PERFORMANCE, OPERATING ENVIRONMENT, STRATEGY AND OUTLOOK

Our Business

Our mission is to apply science and our global resources to improve health and w ell-being at every stage of life. We strive to set the standard forquality, safety and value in the discovery, development and manufacturing of medicines for people and animals. Our diversif ied global healthcareportfolio includes human and animal biologic and small molecule medicines and vaccines, as w ell as many of the w orld’s best-know n consumerproducts. Every day, w e w ork across developed and emerging markets to advance w ellness, prevention, treatments and cures that challengethe most feared diseases of our time. We also collaborate w ith healthcare providers, governments and local communities to support and expandaccess to reliable, affordable healthcare around the w orld. Our revenues are derived from the sale of our products, as w ell as through allianceagreements, under w hich w e co-promote products discovered by other companies (Alliance revenues).

The majority of our revenues come from the manufacture and sale of biopharmaceutical products. The biopharmaceutical industry is highlycompetitive and w e face a number of industry-specif ic challenges, w hich can signif icantly impact our results. These factors include, amongothers: the loss or expiration of intellectual property rights, the regulatory environment and pipeline productivity, pricing and access pressures,and increasing competition among branded products. (For more information about these challenges, see the “Our Operating Environment” sectionof this Financial Review .)

The f inancial information included in our consolidated f inancial statements for our subsidiaries operating outside the United States (U.S.) is as ofand for the year ended November 30 for each year presented.

References to developed markets include the U.S., Western Europe, Japan, Canada, Australia, Scandinavia, South Korea, Finland and NewZealand; and references to Emerging Markets include the rest of the w orld, including, among other countries, China, Brazil, Mexico, Turkey,Russia and India.

On February 6, 2013, an initial public offering (IPO) of our subsidiary, Zoetis Inc. (Zoetis), w as completed, pursuant to w hich w e sold 99.015million shares of Zoetis in exchange for the retirement of approximately $2.5 billion of Pfizer commercial paper issued on January 10, 2013. TheIPO represented approximately 19.8% of the total outstanding Zoetis shares. On February 1, 2013, Zoetis shares began trading on the New YorkStock Exchange under the symbol "ZTS." Prior to and in connection w ith the IPO, Zoetis completed a $3.65 billion senior notes offering and w etransferred to Zoetis substantially all of the assets and liabilities of our Animal Health business. (For additional information, see Notes toConsolidated Financial Statements–– Note 19A. Subsequent Events: Zoetis Debt Offering and Initial Public Offering. )

On November 30, 2012, w e completed the sale of our Nutrition business to Nestlé for $11.85 billion in cash and recognized a gain ofapproximately $4.8 billion, net of tax, in Gain/(loss) on sale of discontinued operations––net of tax . The operating results of this business arereported as Income/(loss) from discontinued operations––net of tax in our consolidated statements of income for all periods presented. Inaddition, in our consolidated balance sheet as of December 31, 2011, the assets and liabilities associated w ith this discontinued operation areclassif ied as Assets of discontinued operations and other assets held for sale and Liabilities of discontinued operations , as appropriate. (Foradditional information, see Notes to Consolidated Financial Statements–– Note 2B. Acquisitions, Divestitures, Collaborative Arrangements andEquity-Method Investments: Divestitures and see the “Our Business Development Initiatives” and “Discontinued Operations” sections of thisFinancial Review .)

On August 1, 2011, w e completed the sale of our Capsugel business for approximately $2.4 billion in cash and recognized a gain of approximately$1.3 billion, net of tax, in G ain/(loss) on sale of discontinued operations––net of tax . The operating results of this business are reported asIncome/(loss) from discontinued operations––net of tax in our consolidated statements of income for the years ended December 31, 2011 andDecember 31, 2010. (For additional information, see Notes to Consolidated Financial Statements–– Note 2B. Acquisitions, Divestitures,Collaborative Arrangements and Equity-Method Investments: Divestitures and see the “Our Business Development Initiatives” and “DiscontinuedOperations” sections of this Financial Review .)

The assets, liabilities, operating results and cash f low s of acquired businesses, such as King Pharmaceuticals, Inc. (King) (acquired onJanuary 31, 2011), are included in our results on a prospective basis only commencing from the acquisition date. As such, our consolidatedfinancial statements for the year ended December 31, 2011 reflect approximately 11 months of King’s U.S. operations and approximately 10months of King’s international operations. (For additional information about these acquisitions, see Notes to Consolidated Financial Statements––Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions and see the “Our BusinessDevelopment Initiatives” section of this Financial Review .)

Our 2012 Performance

Revenues decreased 10% in 2012 to $59.0 billion , compared to $65.3 billion in 2011 , w hich reflects an operational decline of $4.8 billion or 8%,primarily the result of the loss of exclusivity of Lipitor in most major markets, including the U.S. on November 30, 2011 and most of developed

Europe in March and May 2012, and the unfavorable impact of foreign exchange of $1.5 billion, or 2%. Lipitor and other product losses ofexclusivity, as w ell as the f inal-year terms of our collaboration agreements in certain markets for Spiriva, negatively impacted revenues byapproximately $7.7 billion, or 12%, in 2012 compared to 2011.

2

2012 Financial Report

Financial ReviewPfizer Inc. and Subsidiary Companies

The follow ing table provides the signif icant impacts on revenues for 2012 as compared to 2011 :

2012 v. 2011

(MILLIONS OF DOLLARS) Increase/

(Decrease) %

Change

Lipitor (a) $ (5,629) (59)

Geodon/Zeldox (a) (669) (65)

Xalatan/Xalacom (a) (444) (36)

Caduet (a) (280) (52)

Effexor (253) (37)

Zosyn/Tazocin (152) (24)

Aromasin (a) (151) (42)

Aricept (b) (124) (28)

Detrol/Detrol LA (a) (122) (14)

Celebrex 196 8

Lyrica 465 13

Alliance revenues (a) (138) (4)

All other biopharmaceutical products (c) 525 7

Animal Health products 115 3

Consumer Healthcare products 184 6

(a)

Lipitor and Caduet lost exclusiv ity in the U.S. in Nov ember 2011 and v arious other major markets in 2011 and 2012. Xalatan lost exclusiv ity in the U.S. in March 2011

and in the majority of European markets in January 2012. Aromasin lost exclusiv ity in the U.S. in April 2011, in the majority of European markets in July 2011 and in

Japan in Nov ember 2011. Geodon lost exclusiv ity in the U.S. in March 2012. Detrol immediate release (Detrol IR) lost exclusiv ity in the U.S. in June 2012. Detrol lost

exclusiv ity in most European markets in September 2012. We lost exclusiv ity f or Aricept 5mg and 10mg tablets, which are included in Alliance rev enues, in the U.S.

in Nov ember 2010 and in the majority of European markets in February 2012 and April 2012. Lower rev enues f or Spiriv a in certain European countries, Canada and

Australia ref lect f inal-y ear terms of our collaboration agreements in those markets.(b) Represents direct sales under license agreement with Eisai Co., Ltd.(c)

Includes the “All other” category included in the Revenues — Major Biopharmaceutical Products table presented in this Financial Rev iew, which includes sales of

generic atorv astatin.

Income from continuing operations w as $9.5 billion in 2012 compared to $8.4 billion in 2011 , primarily reflecting, among other items:

• a settlement w ith the U.S. Internal Revenue Service and the resolution of certain foreign tax audits in 2012, all of w hich related tomultiple tax years, w hich resulted in a tax benefit of approximately $1.1 billion and $310 million, respectively, representing tax andinterest (see further discussion in Notes to Consolidated Financial Statements–– Note 5A. Tax Matters: Taxes on Income fromContinuing Operations );

• purchase accounting charges that w ere approximately $1.8 billion (pre-tax) low er in 2012 than 2011;

• acquisition-related costs that w ere approximately $1.0 billion (pre-tax) low er in 2012 than 2011; and

• charges related to our non-acquisition related cost-reduction and productivity initiatives that w ere approximately $645 million (pre-tax)low er in 2012 than 2011,

partially offset by:

• the loss of exclusivity of Lipitor, as w ell as certain other products, resulting in low er revenues and associated expenses (see also "TheLoss or Expiration of Intellectual Property Rights" section of this Financial Review );

• charges for certain legal matters that w ere approximately $1.4 billion (pre-tax) higher in 2012 than 2011 (see further discussion in the“Costs and Expenses––Other Deductions––Net” section of this Financial Review and Notes to Consolidated Financial Statements––Note 4. Other Deductions––Net ); and

• charges in 2012 associated w ith the separation of Zoetis of $325 million (pre-tax) (see further discussion in the “Costs andExpenses––Selling, Informational and Administrative (SI&A) Expenses" and "Other Deductions––Net” sections of this Financial Review

and Notes to Consolidated Financial Statements–– Note 4. Other Deductions––Net ).

Also, see the “Discontinued Operations” section of this Financial Review .

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Our Operating Environment

U.S. Healthcare Legislation

Principal Provisions Affecting Us

In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (together, theU.S. Healthcare Legislation, and also know n as the Affordable Care Act), w as enacted in the U.S. In June 2012, the U.S. Supreme Court upheldthe constitutionality of the requirement in the U.S. Healthcare Legislation for Americans to have insurance (called the individual mandate) (foradditional information, see the “Government Regulation and Price Constraints” section of our 2012 Annual Report onForm 10-K). This legislation has resulted in both current and longer-term impacts on us, as discussed below .

Certain provisions of the U.S. Healthcare Legislation became effective in 2010 or in 2011, w hile other provisions w ill become effective on variousdates. The principal provisions affecting us provide for the follow ing:

• an increase, from 15.1% to 23.1%, in the minimum rebate on branded prescription drugs sold to Medicaid beneficiaries (effective January 1,2010);

• extension of Medicaid prescription drug rebates to drugs dispensed to enrollees in certain Medicaid managed care organizations (effectiveMarch 23, 2010);

• expansion of the types of institutions eligible for the “Section 340B discounts” for outpatient drugs provided to hospitals serving adisproportionate share of low -income individuals and meeting the qualif ication criteria under Section 340B of the Public Health Service Act of1944 (effective January 1, 2010);

• discounts on branded prescription drug sales to Medicare Part D participants w ho are in the Medicare “coverage gap,” also know n as the“doughnut hole” (effective January 1, 2011); and

• a fee payable to the federal government (w hich is not deductible for U.S. income tax purposes) based on our prior-calendar-year sharerelative to other companies of branded prescription drug sales to specif ied government programs (effective January 1, 2011, w ith the totalfee to be paid each year by the pharmaceutical industry increasing annually through 2018).

Impacts to our 2012 Results

We recorded the follow ing amounts in 2012 as a result of the U.S. Healthcare Legislation:

• $593 million recorded as a reduction to Revenues, related to the higher, extended and expanded rebate provisions and the Medicare“coverage gap” discount provision; and

• $336 million recorded in Selling, informational and administrative expenses , related to the fee payable to the federal government referred toabove.

Impacts to our 2011 Results

We recorded the follow ing amounts in 2011 as a result of the U.S. Healthcare Legislation:

• $648 million recorded as a reduction to Revenues, related to the higher, extended and expanded rebate provisions and the Medicare“coverage gap” discount provision; and

• $248 million recorded in Selling, informational and administrative expenses , related to the fee payable to the federal government referred toabove.

Other Impacts

• Individual Mandate —The financial impact of U.S. healthcare reform may be affected by certain additional developments over the next fewyears, including pending implementation guidance relating to the U.S. Healthcare Legislation and certain healthcare reform proposals. Inaddition, the U.S. Healthcare Legislation requires that, except in certain circumstances, individuals obtain health insurance beginning in 2014,and it also provides for an expansion of Medicaid coverage in 2014. It is expected that, as a result of these provisions, there w ill be asubstantial increase in the number of Americans w ith health insurance beginning in 2014, a signif icant portion of w hom w ill be eligible forMedicaid. We anticipate that this w ill increase demand for pharmaceutical products overall. How ever, because of the substantial mandatoryrebates w e pay under the Medicaid program and because a signif icant percentage of the Americans w ho w ill be included in the coverageexpansion are expected to be young, w e do not anticipate that implementation of the coverage expansion w ill generate signif icant additionalrevenues for Pfizer. In June 2012, the U.S. Supreme Court upheld the constitutionality of all provisions of the U.S. Healthcare Legislation, w iththe exception of the provisions concerning Medicaid expansion; as a result of the Court's ruling regarding Medicaid, states can choose not to

expand their Medicaid populations w ithout losing federal funding for their existing Medicaid populations. The Congressional Budget Off iceestimates that the new state f lexibility is likely to result in six million few er new Medicaid enrollees than w ere initially expected to enroll as aresult of the eligibility expansion and that half of these people are expected to gain coverage through Health Insurance Exchanges, and theremaining three million are likely to remain uninsured.

• Biotechnology Products— The U.S. Healthcare Legislation also created a framew ork for the approval of biosimilars (also know n as follow -on biologics) follow ing the expiration of 12 years of exclusivity for the innovator biologic, w ith a potential six-month pediatric extension.Under the U.S. Healthcare Legislation, biosimilars applications may not be submitted until four years after the approval of the reference,

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innovator biologic. The U.S. Food and Drug Administration (FDA) is responsible for implementation of the legislation, w hich w ill require the

FDA to address such key topics as the type and extent of data needed to establish biosimilarity; the data required to achieve

interchangeability compared to biosimilarity; the naming convention for biosimilars; the tracking and tracing of adverse events; and the

acceptability of data using a non-U.S. licensed comparator to demonstrate biosimilarity and/or interchangeability w ith a U.S.-licensed

reference product. The FDA has begun to address some of these issues w ith the February 2012 release of three draft guidance documents.

Specif ically, the FDA has clarif ied that biosimilar applicants may use a non-U.S. licensed comparator in certain studies to support a

demonstration of biosimilarity to a U.S.-licensed reference product. If competitors are able to obtain marketing approval for biosimilars

referencing our biotechnology products, our biotechnology products may become subject to competition from biosimilars, w ith attendant

competitive pressure, and price reductions could follow . Expiration or successful challenge of applicable patent rights could trigger this

competition, assuming any relevant exclusivity period has expired. As part of our business strategy, w e are developing biosimilar medicines

using our expertise in biologics and our regulatory, commercial and manufacturing strengths. As such, a better-defined biosimilars approval

pathw ay w ill assist us in pursuing approval of our ow n biosimilar products in the U.S.

The Loss or Expiration of Intellectual Property Rights

As is inherent in the biopharmaceutical industry, the loss or expiration of intellectual property rights can have a signif icant adverse effect on ourrevenues. Many of our products have multiple patents that expire at varying dates, thereby strengthening our overall patent protection. How ever,once patent protection has expired or has been lost prior to the expiration date as a result of a legal challenge, w e lose exclusivity on theseproducts, and generic pharmaceutical manufacturers generally produce similar products and sell them for a low er price. This price competitioncan substantially decrease our revenues for products that lose exclusivity, often in a very short period of time. While small molecule products areimpacted in such a manner, biologics currently have additional barriers to entry related to the manufacture of such products and, unlike smallmolecule generics, biosimilars are not necessarily identical to the reference products. Therefore, generic competition w ith respect to biologicsmay not be as signif icant. A number of our current products are expected to face signif icantly increased generic competition over the next fewyears.

Our f inancial results in 2012 and our f inancial guidance for 2013, as applicable, reflect the impact of the loss of exclusivity of various productsand the expiration of certain alliance product contract rights discussed below (see the “Our Financial Guidance for 2013” section of this FinancialReview ). Specif ically:

• Lipitor in the U.S. –– We lost exclusivity for Lipitor in the U.S. in November 2011. The entry of multi-source generic competition in the U.S.

began in May 2012, w ith attendant increased competitive pressures. Through the end of 2011, sales of Lipitor in the U.S. w ere reported in

our Primary Care business unit. Beginning in 2012, sales of Lipitor in the U.S. w ere reported in our Established Products business unit.

Lipitor in international markets—Lipitor lost exclusivity in Japan in June 2011 (w ith generic competition occurring in November 2011), Australiain April 2012 and most of developed Europe in March 2012 and May 2012. In Europe, Japan and Australia, Lipitor now faces multi-sourcegeneric competition. In other international markets, Lipitor has lost exclusivity in certain countries and w ill lose exclusivity at various times inother countries.

Prior to loss of exclusivity, sales of Lipitor in each market except for those in Emerging Markets, are reported in our Primary Care businessunit. Typically, as of the beginning of the f iscal year follow ing loss of exclusivity in a market, sales of Lipitor in that market, except for thosein Emerging Markets, are reported in our Established Products business unit. Sales of Lipitor in the U.S. and Japan have been reported in ourEstablished Products business unit since January 1, 2012, and sales of Lipitor in developed Europe began to be reported in our EstablishedProducts business unit on January 1, 2013.

• Other recent loss of exclusivity impacts—In the U.S., w e lost exclusivity for Vfend tablets in February 2011, for Xalatan in March 2011 andfor Geodon in March 2012. The basic U.S. patent (including the six-month pediatric exclusivity period) for Protonix expired in January 2011.The basic patent for Vfend tablets in Brazil expired in January 2011. We lost exclusivity for Aromasin in the U.S. in April 2011, in the majorityof European markets in July 2011 and in Japan in November 2011. We lost exclusivity for Xalatan and Xalacom in the majority of Europeanmarkets in January 2012. We lost exclusivity for Aricept in the majority of European markets in February 2012 and April 2012. Caduet lostexclusivity in the U.S. in November 2011 and in the majority of European markets in March and May 2012. We lost exclusivity in the U.S. inSeptember 2012 for Revatio tablet, and in June 2012 for Detrol IR. Detrol lost exclusivity in most European markets in September 2012.

In addition, w e expect to lose exclusivity for various other products in various markets over the next few years. For additional information,including w ith regard to the expiration of the patents for various products in the U.S., European Union (EU) and Japan, see the “Patents andIntellectual Property Rights” section of our 2012 Annual Report on Form 10-K.

We w ill continue to aggressively defend our patent rights w henever w e deem appropriate. For a discussion of certain recent developments w ithrespect to patent litigation, see Notes to Consolidated Financial Statements— Note 17. Commitments and Contingencies .

In Alliance revenues, w e expect to be negatively impacted by the follow ing over the next few years:

• Aricept—Our rights to Aricept in Japan returned to Eisai Co., Ltd. in December 2012. We expect to lose exclusivity for the Aricept 23mg tabletin the U.S. in July 2013.

• Spiriva—Our collaboration w ith Boehringer Ingelheim (BI) for Spiriva expires on a country-by-country basis betw een 2012 and 2016,including the expiration in certain EU markets and Canada and Australia in 2012, w hich adversely impacted our 2012 results. We expect toexperience a graduated decline in revenues from Spiriva through 2016.

• Enbrel—Our U.S. and Canada collaboration agreement w ith Amgen Inc. for Enbrel w ill expire in October 2013. While w e are entitled toroyalties for 36 months thereafter, w e expect that those royalties w ill be signif icantly less than our current share of Enbrel profits from U.S.and Canada sales. Outside the U.S. and Canada, our exclusive rights to Enbrel continue in perpetuity.

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• Rebif—Our collaboration agreement w ith EMD Serono Inc. (Serono) to co-promote Rebif in the U.S. w ill expire either at the end of 2013 or theend of 2015, depending on the outcome of pending litigation betw een Pfizer and Serono concerning the interpretation of the agreement. Webelieve that w e are entitled to a 24-month extension of the agreement to the end of 2015. Serono believes that w e are not entitled to theextension and that the agreement w ill expire at the end of 2013. In October 2011, the Philadelphia Court of Common Pleas sustained ourpreliminary objections and dismissed Serono’s complaint, and Serono has appealed the decision to the Superior Court of Pennsylvania. Foradditional information, see Notes to Consolidated Financial Statements–– Note 17. Commitments and Contingencies .

Pipeline Productivity and Regulatory Environment

The discovery and development of safe, effective new products, as w ell as the development of additional uses for existing products, arenecessary for the continued strength of our businesses. We are confronted by increasing regulatory scrutiny of drug safety and eff icacy, evenas w e continue to gather safety and other data on our products, before and after the products have been launched. Our product lines must bereplenished over time in order to offset revenue losses w hen products lose their exclusivity, as w ell as to provide for revenue and earningsgrow th. We devote considerable resources to research and development (R&D) activities. These activities involve a high degree of risk and maytake many years, and w ith respect to any specif ic research and development project, there can be no assurance that the development of anyparticular product candidate or new indication for an in-line product w ill achieve desired clinical endpoints and safety profile, w ill be approved byregulators or w ill be successful commercially. We continue to closely evaluate our global research and development function and pursuestrategies intended to improve innovation and overall productivity in R&D by prioritizing areas that w e believe have the greatest scientif ic andcommercial promise, utilizing appropriate risk/return profiles and focusing on areas that w e believe have the highest potential to deliver value inthe near term and over time.

During the development of a product, w e conduct clinical trials to provide data on the drug’s safety and eff icacy to support the evaluation of itsoverall benefit-risk profile for a particular patient population. In addition, after a product has been approved and launched, w e continue to monitorits safety as long as it is available to patients, and post-marketing trials may be conducted, including trials requested by regulators and trials thatw e do voluntarily to gain additional medical know ledge. For the entire life of the product, w e collect safety data and report potential problems tothe FDA. The FDA and regulatory authorities in other jurisdictions may evaluate potential safety concerns and take regulatory actions in response,such as updating a product’s labeling, restricting the use of a product, communicating new safety information to the public, or, in rare cases,removing a product from the market.

Pricing and Access Pressures

Governments, managed care organizations and other payer groups continue to seek increasing discounts on our products through a variety ofmeans, such as leveraging their purchasing pow er, implementing price controls, and demanding price cuts (directly or by rebate actions). Inparticular, w e continue to face w idespread dow nw ard pressures on international pricing and reimbursement, particularly in developed Europeanmarkets, Japan and in certain emerging markets, all of w hich have a large government share of pharmaceutical spending and are facing a diff icultf iscal environment. Specif ic pricing pressures in 2012 included measures to reduce pharmaceutical prices and expenditures in Spain, Italy,France, Greece, Ireland, Portugal and Japan. Also, health insurers and benefit plans continue to limit access to certain of our medicines byimposing formulary restrictions in favor of the increased use of generics. In prior years, Presidential advisory groups tasked w ith reducinghealthcare spending have recommended and legislative changes have been proposed that w ould allow the U.S. government to directly negotiateprices w ith pharmaceutical manufacturers on behalf of Medicare beneficiaries, w hich w e expect w ould restrict access to and reimbursement forour products. There also continue to be legislative proposals to amend U.S. law s to allow the importation into the U.S. of prescription drugs fromoutside the U.S., w hich can be sold at prices that are regulated by the governments of various foreign countries. If importation of medicines isallow ed, an increase in cross-border trade in medicines subject to foreign price controls in other countries could occur and negatively impact ourrevenues.

In August 2011, the federal Budget Control Act of 2011 (the Budget Control Act) w as enacted in the U.S. The Budget Control Act includesprovisions to raise the U.S. Treasury Department’s borrow ing limit, know n as the debt ceiling, and provisions to reduce the federal deficit by $2.4trillion betw een 2012 and 2021. Deficit-reduction targets include $900 billion of discretionary spending reductions associated w ith the Departmentof Health and Human Services and various agencies charged w ith national security, but those discretionary spending reductions do not includeprograms such as Medicare and Medicaid or direct changes to pharmaceutical pricing, rebates or discounts. The Office of Management andBudget (OMB) is responsible for identifying the remaining $1.5 trillion of deficit reductions, w hich w ill be divided evenly betw een defense and non-defense spending. Under this OMB review process, Social Security, Medicaid, Veteran Benefits and certain other spending categories areexcluded from consideration, but reductions in payments to Medicare providers may be made, although any such reductions are prohibited by lawfrom exceeding 2% of the originally budgeted amount. Additionally, certain payments to Medicare Part D plans, such as low -income subsidypayments, are exempt from reduction. While w e do not know the specif ic nature of the spending reductions under the Budget Control Act that w illaffect Medicare, w e do not expect that those reductions w ill have a material adverse impact on our results of operations. How ever, anysignif icant spending reductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs that may be implemented,and/or any signif icant additional taxes or fees that may be imposed on us, as part of any broader deficit-reduction effort or legislative replacementfor the Budget Control Act, could have an adverse impact on our results of operations.

Enforcement of the U.S. federal debt ceiling has been suspended through May 18, 2013. If the U.S. federal government fails to suspendenforcement of the debt ceiling beyond May 18, 2013 or to increase the debt ceiling and, as a result, is unable to satisfy its f inancial obligations,including under Medicare, Medicaid and other publicly funded or subsidized health programs, our results of operations could be adverselyimpacted.

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Competition Among Branded Products

Many of our products face competition in the form of branded products, w hich treat similar diseases or indications. These competitive pressurescan have an adverse impact on our results of operations.

The Global Economic Environment

In addition to the industry-specif ic factors discussed above, w e, like other businesses, continue to face the effects of the challenging economicenvironment, w hich have impacted our biopharmaceutical operations in the U.S. and Europe, including the countries that use the euro, affectingthe performance of products such as Lyrica, Enbrel, Prevnar 13/Prevenar 13 and Celebrex, and in a number of emerging markets. We believe thatpatients, experiencing the effects of the challenging economic environment, including high unemployment levels, and increases in co-pays,sometimes sw itch to generic products, delay treatments, skip doses or use less effective treatments to reduce their costs. Challenging economicconditions in the U.S. also have increased the number of patients in the Medicaid program, under w hich sales of pharmaceuticals are subject tosubstantial rebates and, in many states, to formulary restrictions limiting access to brand-name drugs, including ours. In addition, w e continue toexperience pricing pressure in various markets around the w orld, including in developed European markets, Japan and in a number of emergingmarkets, w ith government-mandated reductions in prices for certain biopharmaceutical products and government-imposed access restrictions incertain countries.

Signif icant portions of our revenues and earnings are exposed to changes in foreign exchange rates. We seek to manage our foreign exchangerisk in part through operational means, including managing same-currency revenues in relation to same-currency costs and same-currencyassets in relation to same-currency liabilities. Depending on market conditions, foreign exchange risk also is managed through the use ofderivative f inancial instruments and foreign currency debt. As w e operate in multiple foreign currencies, including the euro, the Japanese yen, theU.K. pound, the Chinese renminbi, the Canadian dollar and approximately 100 other currencies, changes in those currencies relative to the U.S.dollar w ill impact our revenues and expenses. If the U.S. dollar w eakens against a specif ic foreign currency, our revenues w ill increase, having apositive impact, and our overall expenses w ill increase, having a negative impact, on net income. Likew ise, if the U.S. dollar strengthens against aspecif ic foreign currency, our revenues w ill decrease, having a negative impact, and our overall expenses w ill decrease, having a positive impacton net income. Therefore, signif icant changes in foreign exchange rates can impact our results and our f inancial guidance.

Despite the challenging f inancial markets, Pfizer maintains a strong f inancial position. Due to our signif icant operating cash f low s, f inancial assets,access to capital markets and available lines of credit and revolving credit agreements, w e continue to believe that w e have the ability to meet ourliquidity needs for the foreseeable future. Our long-term debt is rated investment grade by both Standard & Poor’s (S&P) and Moody’s InvestorsService. As market conditions change, w e continue to monitor our liquidity position. We have taken and w ill continue to take a conservativeapproach to our f inancial investments. Both short-term and long-term investments consist primarily of high-quality, highly liquid, w ell-diversif ied,available-for-sale debt securities. For further discussion of our f inancial condition, see the “Analysis of Financial Condition, Liquidity and CapitalResources” section of this Financial Review .

Our Strategy

We believe that our medicines provide signif icant value for both healthcare providers and patients, not only from the improved treatment ofdiseases but also from a reduction in other healthcare costs, such as emergency room or hospitalization costs, as w ell as improvements inhealth, w ellness and productivity. We continue to actively engage in dialogues about the value of our products and how w e can best w ork w ithpatients, physicians and payers to prevent and treat disease and improve outcomes. We w ill w ork w ithin the current legal and pricing structures,as w ell as continue to review our pricing arrangements and contracting methods w ith payers, to maximize access to patients and minimize anyadverse impact on our revenues.

On November 30, 2012, w e completed the sale of our Nutrition business to Nestlé. On February 6, 2013, w e completed the sale of approximately19.8% of our ow nership stake in Zoetis through an initial public offering. We may in the future make a tax-free distribution to our shareholders ofall or a portion of our remaining equity interest in Zoetis, w hich may include one or more distributions effected as a dividend to all Pfizershareholders, one or more distributions in exchange for Pfizer shares or other securities, or any combination thereof. We w ill consider allalternatives to maximize the after-tax return for our shareholders, including a tax-free distribution to our shareholders. If pursued, any dispositionw ould be subject to various conditions, including receipt of any necessary regulatory or other approvals and the existence of satisfactory marketconditions.

If w e decide to fully separate Zoetis, then, follow ing such separation, Pfizer w ill be a global biopharmaceutical company w ith an innovative core(our Primary Care, Specialty Care and Oncology units) and a value core (our Established Products unit) in developed markets, w ith different coststructures and operating drivers. Our Emerging Markets unit has a geographic focus that includes both the innovative and value cores in thosemarkets. The innovative core includes a portfolio of innovative, largely patent-protected, in-line products and an R&D organization focused oncontinuing to build a robust pipeline of highly differentiated product candidates in areas of unmet medical needs. The value core includes aportfolio of products that have lost exclusivity or are approaching the loss of exclusivity that help meet the global need for less expensive, qualitymedicines. In addition, w e have a complementary Consumer Healthcare business w ith several w ell-know n brands.

In response to the challenging operating environment, w e have taken and continue to take many steps to strengthen our Company and betterposition ourselves for the future. We believe in a comprehensive approach to our challenges—organizing our business to maximize research,development and commercial opportunities, improving the performance of our innovative core, making the right capital allocation decisions, andprotecting our intellectual property.

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We continue to closely evaluate our global research and development function and pursue strategies intended to improve innovation and overallproductivity in R&D by prioritizing areas that w e believe have the greatest scientif ic and commercial promise, utilizing appropriate risk/returnprofiles and focusing on areas that w e believe have the highest potential to deliver value in the near term and over time. To that end, our researchprimarily focuses on f ive high-priority areas that have a mix of small and large molecules—immunology and inflammation; oncology; cardiovascularand metabolic diseases; neuroscience and pain; and vaccines. In addition to reducing the number of disease areas of focus, w e have realignedand reduced our research and development footprint and outsourced certain functions that do not drive competitive advantage for Pfizer. Foradditional information, see the “Our Financial Guidance for 2013” and “Costs and Expenses—Restructuring Charges and Other Costs Associatedw ith Acquisitions and Cost-Reduction/Productivity Initiatives” sections of this Financial Review .

While a signif icant portion of R&D is done internally, w e continue to seek to expand our pipeline by entering into agreements w ith other companiesto develop, license or acquire promising compounds, technologies or capabilities. Collaboration, alliance and license agreements and acquisitionsallow us to capitalize on these compounds to expand our pipeline of potential future products. In addition, collaborations and alliances allow us toshare risk and to access external scientif ic and technological expertise.

For information about our pending new drug applications (NDA) and supplemental f ilings, see the “Revenues—Product Developments—Biopharmaceutical” section of this Financial Review .

We continue to build on our broad portfolio of businesses through various business development transactions. See the “Our BusinessDevelopment Initiatives” section of this Financial Review for information on our recent transactions and strategic investments that w e believecomplement our businesses.

We continue to aggressively defend our patent rights against increasingly aggressive infringement w henever appropriate (see Notes toConsolidated Financial Statements— Note 17. Commitments and Contingencies ), and w e w ill continue to support efforts that strengthenw orldw ide recognition of patent rights w hile taking necessary steps to ensure appropriate patient access. In addition, w e w ill continue to employinnovative approaches to prevent counterfeit pharmaceuticals from entering the supply chain and to achieve greater control over the distributionof our products, and w e w ill continue to participate in the generics market for our products, w henever appropriate, once they lose exclusivity.

We remain focused on achieving an appropriate cost structure for the Company. For information regarding our cost-reduction and productivityinitiatives, see the “Costs and Expenses—Restructuring Charges and Other Costs Associated w ith Acquisitions and Cost-Reduction/ProductivityInitiatives” section of this Financial Review .

Our strategy also includes directly enhancing shareholder value through dividends and share repurchases. On December 17, 2012, our Board ofDirectors declared a f irst-quarter 2013 dividend of $0.24 per share, an increase from the $0.22 per-share quarterly dividend paid during 2012.Also, on November 30, 2012, a new $10 billion share repurchase plan, to be utilized over time, became effective.

Our Business Development Initiatives

We are committed to capitalizing on grow th opportunities by advancing our ow n pipeline and maximizing the value of our in-line products, as w ellas through various forms of business development, w hich can include alliances, licenses, joint ventures, dispositions and acquisitions. We viewour business development activity as an enabler of our strategies, and w e seek to generate profitable revenue grow th and enhance shareholdervalue by pursuing a disciplined, strategic and f inancial approach to evaluating business development opportunities. We are especially interested inopportunities in our f ive high-priority therapeutic areas—immunology and inflammation; oncology; cardiovascular and metabolic diseases;neuroscience and pain; and vaccines––and in emerging markets and established products. We assess our businesses and assets as part of ourregular, ongoing portfolio review process and also continue to consider business development activities for our businesses.

The most signif icant recent transactions and events are described below .

• On February 6, 2013, an initial public offering of Zoetis w as completed, pursuant to w hich w e sold 99.015 million shares of Zoetis inexchange for the retirement of approximately $2.5 billion of Pfizer commercial paper issued on January 10, 2013. The IPO representedapproximately 19.8% of the total outstanding Zoetis shares. For additional information, see Notes to Consolidated Financial Statements––Note 19A. Subsequent Events: Zoetis Debt Offering and Initial Public Offering.

• On November 30, 2012, w e completed the sale of our Nutrition business to Nestlé for $11.85 billion in cash. For additional information, seeNotes to Consolidated Financial Statements— Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-MethodInvestments: Divestitures .

• On November 27, 2012, w e completed our acquisition of NextWave Pharmaceuticals Incorporated (NextWave), a privately held, specialtypharmaceutical company. As a result of the acquisition, Pfizer now holds exclusive North American rights to Quillivant XR™ (methylphenidatehydrochloride), the f irst once-daily liquid medication approved in the U.S. for the treatment of ADHD. The total consideration for the acquisitionw as approximately $442 million. For additional information, see Notes to Consolidated Financial Statements— Note 2A. Acquisitions,

Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions .

• On October 31, 2012, our equity-method investee, ViiV Healthcare Limited (ViiV), acquired the remaining 50% of Shionogi-ViiV HealthcareLLC, its equity-method investee, from Shionogi & Co., Ltd. (Shionogi) in consideration for a 10% interest in ViiV (new ly issued shares) andcontingent consideration in the form of future royalties. For additional information, see Notes to Consolidated Financial Statements— Note 2D.Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Equity-Method Investments .

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• On September 6, 2012, Pfizer and Zhejiang Hisun Pharmaceuticals Co., Ltd., a leading Chinese pharmaceutical company, created a newcompany, Hisun Pfizer Pharmaceuticals Company Limited (HPP), to develop, manufacture and commercialize off-patent pharmaceuticalproducts in China and global markets. HPP w as established w ith registered capital of $250 million. For additional information, see Notes toConsolidated Financial Statements— Note 2D. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:Equity-Method Investments.

• On August 13, 2012, w e announced that w e entered into an agreement w ith AstraZeneca for the global over-the-counter (OTC) rights forNexium, a leading prescription drug currently approved to treat the symptoms of gastroesophageal reflux disease. We made an upfrontpayment of $250 million to AstraZeneca, and AstraZeneca is eligible to receive milestone payments of up to $550 million based on productlaunches and level of sales as w ell as royalty payments based on sales. A marketing authorization application for OTC Nexium in a 20mgtablet form w as f iled w ith the European Medicines Agency in June 2012. A new drug application f iling for OTC Nexium in the U.S. in a 20mgdelayed-release capsule is targeted for the f irst half of 2013. For additional information, see Notes to Consolidated Financial Statements—Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions .

• On March 12, 2012, Biocon and Pfizer announced the conclusion of their October 18, 2010 alliance to commercialize Biocon’s biosimilarversions of insulin and insulin analog products. The companies agreed that, due to the individual priorities for their respective biosimilarsbusinesses, each company w ould move forw ard independently.

• On February 26, 2012, w e completed our acquisition of Alacer Corp. (Alacer), a company that manufactures, markets and distributesEmergen-C, a line of effervescent, pow dered drink mix vitamin supplements that is the largest-selling branded vitamin C line in the U.S. Foradditional information, see Notes to Consolidated Financial Statements— Note 2A. Acquisitions, Divestitures, Collaborative Arrangementsand Equity-Method Investments: Acquisitions.

• On December 1, 2011, w e completed our acquisition of the consumer healthcare business of Ferrosan Holding A/S (Ferrosan), a Danishcompany engaged in the sale of science-based consumer healthcare products, including dietary supplements and lifestyle products,primarily in the Nordic region and the emerging markets of Russia and Central and Eastern Europe. Our acquisition of Ferrosan’s consumerhealthcare business strengthens our presence in dietary supplements w ith a new set of brands and pipeline products. For additionalinformation, see Notes to Consolidated Financial Statements— Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions.

• On November 30, 2011, w e completed our acquisition of Excaliard Pharmaceuticals, Inc. (Excaliard), a privately ow ned biopharmaceuticalcompany. Excaliard‘s lead compound, EXC-001, a Phase 2 compound, is an antisense oligonucleotide designed to interrupt the process ofskin f ibrosis by inhibiting expression of connective tissue grow th factor (CTGF). The total consideration for the acquisition w asapproximately $174 million. For additional information, see Notes to Consolidated Financial Statements— Note 2A. Acquisitions, Divestitures,Collaborative Arrangements and Equity-Method Investments: Acquisitions .

• In October 2011, w e entered into an agreement w ith GlycoMimetics, Inc. for their investigational compound GMI-1070. GMI-1070 is a pan-selectin antagonist currently in Phase 2 development for the treatment of vaso-occlusive crisis associated w ith sickle cell disease. GMI-1070has received Orphan Drug and Fast Track status from the FDA. Under the terms of the agreement, Pfizer received an exclusive w orldw idelicense to GMI-1070 for vaso-occlusive crisis associated w ith sickle cell disease and for other diseases for w hich the drug candidate maybe developed. GlycoMimetics is responsible for completion of the ongoing Phase 2 trial under Pfizer’s oversight, and Pfizer is responsible forall further development and commercialization. GlycoMimetics is entitled to payments up to approximately $340 million, including an upfrontpayment as w ell as development, regulatory and commercial milestones. GlycoMimetics is also eligible for royalties on any sales.

• On September 20, 2011, w e completed our cash tender offer for the outstanding shares of Icagen, Inc. (Icagen), resulting in an approximate70% ow nership of the outstanding shares of Icagen, a biopharmaceutical company focused on discovery, development andcommercialization of novel, orally-administered small molecule drugs that modulate ion channel targets. On October 27, 2011, w e acquired allof the remaining shares of Icagen. For additional information, see Notes to Consolidated Financial Statements— Note 2A. Acquisitions,Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions .

• On August 1, 2011, w e sold our Capsugel business for approximately $2.4 billion in cash. For additional information, see Notes toConsolidated Financial Statements— Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:Divestitures .

• On January 31, 2011 (the acquisition date), w e completed a tender offer for the outstanding shares of common stock of King and acquiredapproximately 92.5% of the outstanding shares for approximately $3.3 billion in cash. On February 28, 2011, w e acquired the remainingshares of King for approximately $300 million in cash. As a result, the total fair value of consideration transferred for King w as approximately$3.6 billion in cash ($3.2 billion, net of cash acquired). For additional information, see Notes to Consolidated Financial Statements— Note 2A.Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions.

• On November 8, 2010, w e consummated our partnership to develop and commercialize generic medicines w ith Laboratório Teuto BrasileiroS.A. (Teuto) a leading generics company in Brazil. As part of the transaction, w e acquired a 40% equity stake in Teuto, and entered into aseries of commercial agreements. The partnership is enhancing our position in Brazil, a key emerging market, by providing access to Teuto’sportfolio of products. Through this partnership, w e have access to signif icant distribution netw orks in rural and suburban areas in Brazil and

the opportunity to register and commercialize Teuto’s products in various markets outside Brazil. For additional information, see also Notes toConsolidated Financial Statements— Note 2D. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:Equity-Method Investments .

• On October 6, 2010, w e completed our acquisition of FoldRx Pharmaceuticals, Inc. (FoldRx), a privately held drug discovery and clinicaldevelopment company. FoldRx’s lead product candidate, Vyndaqel (tafamidis meglumine), w as approved in the EU in November 2011 and ournew drug application w as accepted for review in the U.S. in February 2012. This product is a f irst-in-class oral therapy for the treatment oftransthyretin familial amyloid polyneuropathy (TTR-FAP), a progressively fatal genetic neurodegenerative disease, for w hich

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liver transplant is the only treatment option currently available. Our acquisition of FoldRx has increased our presence in the grow ing rare

medical disease market, w hich complements our Specialty Care unit. For additional information regarding Vyndaqel (tafamidis meglumine),

see the “Product Developments—Biopharmaceutical” section of this Financial Review . The total consideration for the acquisition w as

approximately $400 million. For additional information about the acquisition, see Notes to Consolidated Financial Statements— Note 2A.

Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions .

Our Financial Guidance for 2013

We forecast 2013 revenues of $56.2 billion to $58.2 billion, Reported diluted earnings per common share (EPS) of $1.50 to $1.65 and Adjusteddiluted EPS of $2.20 to $2.30. The exchange rates assumed in connection w ith the 2013 f inancial guidance are as of mid-January 2013. For anunderstanding of Adjusted income and Adjusted diluted EPS (both non-GAAP financial measures), see the “Adjusted Income” section of thisFinancial Review .

The 2013 f inancial guidance reflects the benefit of a full-year contribution from Zoetis. We plan to update this guidance in April 2013 to reflect theimpact of the recent initial public offering (IPO) of an approximate 19.8% ow nership interest in Zoetis. For additional information on the IPO, seeNotes to Consolidated Financial Statements— Note 19A. Subsequent Events: Zoetis Debt Offering and Initial Public Offering .

The follow ing table provides a reconciliation of 2013 Adjusted income and Adjusted diluted EPS guidance to 2013 Reported net income attributableto Pfizer Inc. and Reported diluted EPS attributable to Pfizer Inc. common shareholders guidance:

Full-Year 2013 Guidance

(BILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) Net Income (a) Diluted EPS (a)

Adjusted income/adjusted diluted EPS (b) guidance ~$15.4 - $16.1 ~$2.20 - $2.30

Purchase accounting impacts of transactions completed as of December 31, 2012 (3.4) (0.49)

Acquisition-related costs (0.4 - 0.5) (0.06 - 0.07)

Non-acquisition-related restructuring costs (c) (0.5 - 0.8) (0.8 - 0.12)

Costs associated w ith the separation of Zoetis (d) (0.2) (0.2)

Reported net income attributable to Pfizer Inc./diluted EPS guidance (d) ~$10.5 - $11.6 ~$1.50 - $1.65

(a)

Does not assume the completion of any business dev elopment transactions not completed as of December 31, 2012, including any one-time upf ront pay ments

associated with such transactions, and excludes the potential ef f ects of the resolution of litigation-related matters not substantially resolv ed as of December 31,

2012 .(b) For an understanding of Adjusted income and Adjusted diluted EPS, see the “Adjusted Income” section of this Financial Rev iew.(c)

Includes amounts related to our initiativ es to reduce R&D spending, including our realigned R&D f ootprint, and amounts related to other cost-reduction and

productiv ity initiativ es. In our reconciliation between Net income attributable to Pfizer Inc. , as reported under principles generally accepted in the United States of

America (U.S. GAAP), and Adjusted income, and in our reconciliation between diluted EPS, as reported under U.S. GAAP, and Adjusted diluted EPS, these amounts

are categorized as Certain Signif icant Items (see the “Adjusted Income––Reconciliation” section of this Financial Rev iew).(d)

Reported Diluted EPS guidance includes a $0.02 unf av orable impact f or certain non-recurring costs that we expect to incur related to the separation of Zoetis,

including new branding, the creation of a standalone inf rastructure, site separation and certain legal registration and patent assignment costs.

Our 2013 f inancial guidance is subject to a number of factors and uncertainties—as described in the “Forw ard-Looking Information and FactorsThat May Affect Future Results”, “Our Operating Environment” and “Our Strategy” sections of this Financial Review and in Part I, Item 1A, “RiskFactors”, of our 2012 Annual Report on Form 10-K.

SIGNIFICANT ACCOUNTING POLICIES AND APPLICATION OF CRITICAL ACCOUNTINGESTIMATES

For a description of our signif icant accounting policies, see Notes to Consolidated Financial Statements–– Note 1. Basis of Presentation andSignificant Accounting Policies .

Of these policies, the follow ing are considered critical to an understanding of Pfizer’s Consolidated Financial Statements as they require theapplication of the most diff icult, subjective and complex judgments: (i) Acquisitions (Note 1D); (ii) Fair Value (Note 1E); (iii) Revenues (Note 1G);(iv) Asset Impairment Review s (Note 1K); (v) Benefit Plans (Note 1P); and (vi) Contingencies, including Tax Contingencies (Note 1O) and Legal

and Environmental Contingencies (Note 1Q).

Below are some of our critical accounting estimates. See also Estimates and Assumptions (Note 1C) for a discussion about the risks associatedw ith estimates and assumptions.

Acquisitions and Fair Value

For a discussion about the application of Fair Value to our recent acquisitions, see Notes to Consolidated Financial Statements— Note 2A.Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions .For a discussion about the application of Fair Value to our investments, see Notes to Consolidated Financial Statements— Note 7A. FinancialInstruments: Selected Financial Assets and Liabilities .

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For a discussion about the application of Fair Value to our benefit plan assets, see Notes to Consolidated Financial Statements–– Note 11D.Pension and Postretirement Benefit Plans and Defined Contribution Plans: Plan Assets .

For a discussion about the application of Fair Value to our asset impairment review s, see “Asset Impairment Review s” below .

Revenues

As is typical in the biopharmaceutical industry, our gross product sales are subject to a variety of deductions that are generally estimated andrecorded in the same period that the revenues are recognized and primarily represent rebates and discounts to government agencies,w holesalers, distributors and managed care organizations w ith respect to our biopharmaceutical products. See also Notes to ConsolidatedFinancial Statements–– Note 1G. Basis of Presentation and Significant Accounting Policies: Revenues for a detailed description of the nature ofour sales deductions and our procedures for estimating our obligations. For example,

• For Medicaid, Medicare and performance-based contract rebates, w e use experience ratios, w hich may be adjusted to better match ourcurrent experience or our expected future experience.

• For contractual or legislatively mandated deductions outside the U.S., w e use estimated allocation factors, based on historical payments andsome third-party reports, to project the expected level of reimbursement.

• For chargebacks, w e closely approximate actual as w e settle these deductions generally w ithin tw o to f ive w eeks after incurring the liability.

• For sales returns, w e perform calculations in each market that incorporate the follow ing, as appropriate: local returns policies and practices;returns as a percentage of sales; an understanding of the reasons for past returns; estimated shelf life by product; an estimate of theamount of time betw een shipment and return or lag time; and any other factors that could impact the estimate of future returns, such as lossof exclusivity, product recalls or a changing competitive environment.

• For sales incentives, w e use our historical experience w ith similar incentives programs to predict customer behavior.

If any of our ratios, factors, assessments, experiences or judgments are not indicative or accurate predictors of our future experience, ourresults could be materially affected. Although the amounts recorded for these sales deductions are heavily dependent on estimates andassumptions, historically, our adjustments to actual have not been material; on a quarterly basis, they generally have been less than 1.0% ofbiopharmaceutical net sales and can result in a net increase to income or a net decrease to income. The sensitivity of our estimates can vary byprogram, type of customer and geographic location. How ever, estimates associated w ith U.S. Medicaid and performance-based contract rebatesare most at-risk for material adjustment because of the extensive time delay betw een the recording of the accrual and its ultimate settlement, aninterval that can generally range up to one year. Because of this time lag, in any given quarter, our adjustments to actual can incorporate revisionsof several prior quarters.

Asset Impairment Reviews

We review all of our long-lived assets, including goodw ill and other intangible assets, for impairment indicators throughout the year and w eperform impairment testing for goodw ill and indefinite-lived assets annually and for all other long-lived assets w henever impairment indicators arepresent. When necessary, w e record charges for impairments of long-lived assets for the amount by w hich the fair value is less than thecarrying value of these assets. Our impairment review processes are described in the Notes to Consolidated Financial Statements–– Note 1K.Basis of Presentation and Significant Accounting Policies: Amortization of Intangible Assets, Depreciation and Certain Long-Lived Assets .

Examples of events or circumstances that may be indicative of impairment include:

• A signif icant adverse change in legal factors or in the business climate that could affect the value of the asset. For example, a successfulchallenge of our patent rights w ould likely result in generic competition earlier than expected.

• A signif icant adverse change in the extent or manner in w hich an asset is used. For example, restrictions imposed by the FDA or otherregulatory authorities could affect our ability to manufacture or sell a product.

• A projection or forecast that demonstrates losses or reduced profits associated w ith an asset. This could result, for example, from a changein a government reimbursement program that results in an inability to sustain projected product revenues and profitability. This also couldresult from the introduction of a competitor’s product that results in a signif icant loss of market share or the inability to achieve the previouslyprojected revenue grow th, as w ell as the lack of acceptance of a product by patients, physicians and payers. For in-process research anddevelopment (IPR&D) projects, this could result from, among other things, a change in outlook based on clinical trial data, a delay in theprojected launch date or additional expenditures to commercialize the product.

Intangible Assets Other than Goodw ill

As a result of our intangible asset impairment review w ork, w e recognized a number of impairments of intangible assets other than goodw ill.

We recorded the follow ing intangible asset impairment charges in Other deductions––net:

• In 2012 , $872 million , reflecting (i) $393 million of IPR&D assets, primarily related to compounds that targeted autoimmune and inflammatorydiseases (full w rite-off) and, to a lesser extent, compounds related to pain treatment; (ii) $175 million related to our Consumer Healthcareindefinite-lived brand assets, primarily Robitussin, a cough suppressant; (iii) $279 million related to Developed Technology Rights, a chargecomprised of impairments of various products, none of w hich individually exceeded $45 million ; and (iv) $25 million of f inite-lived brands. Theintangible asset impairment charges for 2012 reflect, among other things, the impact of new scientif ic

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f indings, updated commercial forecasts, changes in pricing, an increased competitive environment, litigation uncertainties regarding

intellectual property and declining gross margins. The impairment charges in 2012 are associated w ith the follow ing: Worldw ide Research

and Development ( $303 million ); Consumer Healthcare ( $200 million ); Primary Care ( $135 million ); Established Products ( $83 million );

Specialty Care ( $56 million ); Emerging Markets ( $56 million ) and Animal Health ( $39 million ).

• In 2011 , $851 million , the majority of w hich relates to intangible assets that w ere acquired as part of our acquisition of Wyeth. Theseimpairment charges reflect (i) $475 million of IPR&D assets, primarily related to tw o compounds for the treatment of certain autoimmune andinflammatory diseases; (ii) $193 million related to our biopharmaceutical indefinite-lived brand, Xanax; and (iii) $183 million related toDeveloped Technology Rights comprising the impairment of f ive assets. The intangible asset impairment charges for 2011 reflect, amongother things, the impact of new scientif ic f indings and an increased competitive environment. The impairment charges in 2011 are associatedw ith the follow ing: Worldw ide Research and Development ( $394 million ); Established Products ( $193 million ); Specialty Care ( $135 million); Primary Care ( $56 million ); Oncology ( $56 million ) and Animal Health ( $17 million ).

• In 2010, $1.8 billion, the majority of w hich relates to intangible assets that w ere acquired as part of our acquisition of Wyeth. Theseimpairment charges reflect (i) $945 million of IPR&D assets, primarily Prevnar 13/Prevenar 13 Adult, a compound for the prevention ofpneumococcal disease in adults age 50 and older, and Neratinib, a compound for the treatment of breast cancer; (ii) $292 million of indefinite-lived Brands, primarily related to Robitussin, a cough suppressant; and (iii) $540 million of Developed Technology Rights, primarily Thelin, aproduct that treated pulmonary hypertension, and Protonix, a product that treats erosive gastroesophageal reflux disease. These impairmentcharges, most of w hich occurred in the third quarter of 2010, reflect, among other things, the follow ing: for IPR&D assets, the impact ofchanges to the development programs, the projected development and regulatory time-frames and the risk associated w ith these assets; forBrand assets, the current competitive environment and planned investment support; and, for Developed Technology Rights, in the case ofThelin, w e voluntarily w ithdrew the product in regions w here it w as approved and discontinued all clinical studies w orldw ide, and for theothers, an increased competitive environment. The impairment charges in 2010 are generally associated w ith the follow ing: Specialty Care($708 million); Oncology ($396 million); Consumer Healthcare ($292 million); Established Products ($182 million); Primary Care ($145 million);and Worldw ide Research and Development ($54 million).

For a description of our accounting policy, see Notes to Consolidated Financial Statements–– Note 1K. Basis of Presentation and SignificantAccounting Policies: Amortization of Intangible Assets, Depreciation and Certain Long-Lived Assets .

When w e are required to determine the fair value of intangible assets other than goodw ill, w e use an income approach, specif ically the multi-period excess earnings method, also know n as the discounted cash f low method. We start w ith a forecast of all the expected net cash f low sassociated w ith the asset, w hich includes the application of a terminal value for indefinite-lived assets, and then w e apply an asset-specif icdiscount rate to arrive at a net present value amount. Some of the more signif icant estimates and assumptions inherent in this approach include:the amount and timing of the projected net cash f low s, w hich includes the expected impact of competitive, legal and/or regulatory forces on theprojections and the impact of technological risk associated w ith in-process research and development assets, as w ell as the selection of a long-term grow th rate; the discount rate, w hich seeks to reflect the various risks inherent in the projected cash f low s; and the tax rate, w hich seeks toincorporate the geographic diversity of the projected cash f low s.

While all intangible assets other than goodw ill can confront events and circumstances that can lead to impairment, in general, intangible assetsother than goodw ill that are most at risk of impairment include in-process research and development assets (approximately $700 million as ofDecember 31, 2012 ) and new ly acquired or recently impaired indefinite-lived brand assets (approximately $2.3 billion as of December 31, 2012 ).In-process research and development assets are high-risk assets, as research and development is an inherently risky activity. New ly acquiredand recently impaired indefinite-lived assets are more vulnerable to impairment as the assets are recorded at fair value and are then subsequentlymeasured at the low er of fair value or carrying value at the end of each reporting period. As such, immediately after acquisition or impairment,even small declines in the outlook for these assets can negatively impact our ability to recover the carrying value and can result in an impairmentcharge.

• Some of our indefinite-lived Consumer Healthcare brands, mainly Robitussin and Chapstick, have fair values that approximate their combinedcarrying value of about $900 million, w hich reflects impairment charges that w ere taken in the fourth quarter and f irst quarter of 2012. Theseassets continue to be at risk for future impairment. Any negative change in the undiscounted cash f low s, discount rate and/or tax rate couldresult in an impairment charge. We re-considered and confirmed the classif ication of these assets as indefinite-lived. We w ill continue toclosely monitor these assets.

• One of our indefinite-lived biopharmaceutical brands, Xanax, w as w ritten dow n to its fair value of $1.2 billion at the end of 2011. This assetcontinues to be at risk for future impairment. Any negative change in the undiscounted cash f low s, discount rate and/or tax rate could resultin an impairment charge. Xanax, w hich w as launched in the mid-1980’s and acquired in 2003, must continue to remain competitive against itsgeneric challengers or the associated asset may become impaired again. We re-considered and confirmed the classif ication of this asset asindefinite-lived. We w ill continue to closely monitor this asset.

Goodw ill

As a result of our goodw ill impairment review w ork, w e concluded that none of our goodw ill is impaired as of December 31, 2012 , and w e do notbelieve the risk of impairment is signif icant at this time.

For a description of our accounting policy, see Notes to Consolidated Financial Statements— Note 1K. Basis of Presentation and SignificantAccounting Policies: Amortization of Intangible Assets, Depreciation and Certain Long-Lived Assets .

When w e are required to determine the fair value of a reporting unit, as appropriate for the individual reporting unit, w e may use the marketapproach, the income approach or a w eighted-average combination of both approaches.

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• The market approach is a historical approach to estimating fair value and relies primarily on external information. Within the market approachare tw o methods that w e may use:

◦ Guideline public company method—this method employs market multiples derived from market prices of stocks of companies that areengaged in the same or similar lines of business and that are actively traded on a free and open market and the application of theidentif ied multiples to the corresponding measure of our reporting unit’s f inancial performance.

◦ Guideline transaction method—this method relies on pricing multiples derived from transactions of signif icant interests in companiesengaged in the same or similar lines of business and the application of the identif ied multiples to the corresponding measure of ourreporting unit’s f inancial performance.

The market approach is only appropriate w hen the available external information is robust and deemed to be a reliable proxy for the specif icreporting unit being valued; how ever, these assessments may prove to be incomplete or inaccurate. Some of the more signif icant estimatesand assumptions inherent in this approach include: the selection of appropriate guideline companies and transactions and the determinationof applicable premiums and discounts based on any differences in ow nership percentages, ow nership rights, business ow nership forms ormarketability betw een the reporting unit and the guideline companies and transactions.

• The income approach is a forw ard-looking approach to estimating fair value and relies primarily on internal forecasts. Within the incomeapproach, the method that w e use is the discounted cash f low method. We start w ith a forecast of all the expected net cash f low sassociated w ith the reporting unit, w hich includes the application of a terminal value, and then w e apply a reporting unit-specif ic discountrate to arrive at a net present value amount. Some of the more signif icant estimates and assumptions inherent in this approach include: theamount and timing of the projected net cash f low s, w hich includes the expected impact of technological risk and competitive, legal and/orregulatory forces on the projections, as w ell as the selection of a long-term grow th rate; the discount rate, w hich seeks to reflect thevarious risks inherent in the projected cash f low s; and the tax rate, w hich seeks to incorporate the geographic diversity of the projectedcash f low s.

Specif ically:

• When w e estimate the fair value of our f ive biopharmaceutical reporting units, w e rely solely on the income approach. We use the incomeapproach exclusively as many of our products are sold in multiple reporting units and as one reporting unit is geographic-based w hile theothers are product and/or customer-based. Further, the projected cash f low s from a single product may reside in up to three reporting unitsat different points in future years and the discounted cash f low method w ould reflect the movement of products among reporting units. Assuch, the use of the comparable guideline company method w as not practical or reliable. How ever, on a limited basis and as deemedreasonable, w e attempt to corroborate our outcomes w ith the market approach. For the income approach, w e use the discounted cash f lowmethod.

• When w e estimate the fair value of our Consumer Healthcare reporting unit, w e use a combination of approaches and methods. We use theincome approach and the market approach, w hich w e w eight equally in our analysis. We w eight them equally as w e have equal confidencein the appropriateness of the approaches for this reporting unit. For the income approach, w e use the discounted cash f low method and forthe market approach, w e use both the guideline public company method and the guideline transaction method, w hich w e w eight equally toarrive at our market approach value.

• When w e estimate the fair value of our Animal Health reporting unit, w e use the income approach, relying exclusively on the discounted cashflow method. We rely exclusively on the income approach as the discounted cash f low method provides a more reliable outlook of thebusiness. How ever, on a limited basis and as deemed reasonable, w e attempt to corroborate our outcomes w ith the market approach. (Seealso Notes to Consolidated Financial Statements–– Note 19A. Subsequent Events: Zoetis Debt Offering and Initial Public Offering. )

While all reporting units can confront events and circumstances that can lead to impairment, w e do not believe that the risk of goodw ill impairmentfor any of our reporting units is signif icant at this time.

Our Consumer Healthcare reporting unit has the narrow est difference betw een fair value and book value. How ever, w e estimate that it w ouldtake a signif icant negative change in the undiscounted cash f low s, the discount rate and/or the market multiples in the consumer industry for theConsumer Healthcare reporting unit goodw ill to be impaired. Our Consumer Healthcare reporting unit performance and consumer healthcareindustry market multiples are highly correlated w ith the overall economy and our specif ic performance is also dependent on our and ourcompetitors’ innovation and marketing effectiveness, and on regulatory developments affecting claims, formulations and ingredients of ourproducts.

For all of our reporting units, there are a number of future events and factors that may impact future results and that could potentially have animpact on the outcome of subsequent goodw ill impairment testing. For a list of these factors, see the “Forw ard-Looking Information and FactorsThat May Affect Future Results” section of this Financial Review .

Benefit Plans

The majority of our employees w orldw ide are covered by defined benefit pension plans, defined contribution plans or both. In the U.S., w e have

both qualif ied and supplemental (non-qualif ied) defined benefit plans, as w ell as other postretirement benefit plans, consisting primarily ofhealthcare and life insurance for retirees (see Notes to Consolidated Financial Statements— Note 1P. Basis of Presentation and SignificantAccounting Policies: Pension and Postretirement Benefit Plans and Note 11. Pension and Postretirement Benefit Plans and DefinedContribution Plans ). Beginning on January 1, 2011, for employees hired in the U.S. and Puerto Rico after December 31, 2010, w e no longer offera defined benefit plan and, instead, offer an enhanced benefit under our defined contribution plan. In addition to the standard matching contributionby the Company, the enhanced benefit provides an automatic Company contribution for such eligible employees based on age

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and years of service. Also, on May 8, 2012, w e announced to employees that as of January 1, 2018, Pfizer w ill transition its U.S. and Puerto Ricoemployees from its defined benefit plans to an enhanced defined contribution savings plan.

The accounting for benefit plans is highly dependent on actuarial estimates, assumptions and calculations, w hich result from a complex series ofjudgments about future events and uncertainties. The assumptions and actuarial estimates required to estimate the employee benefit obligationsfor the defined benefit and postretirement plans may include the discount rate; expected salary increases; certain employee-related factors, suchas turnover, retirement age and mortality (life expectancy); expected return on assets; and healthcare cost trend rates. Our assumptions reflect our historical experiences and our best judgment regarding future expectations that have been deemed reasonable bymanagement. The judgments made in determining the costs of our benefit plans can materially impact our results of operations.

The follow ing table provides the expected versus actual rate of return on plan assets and the discount rate used to determine the benefit

obligations for the U.S. qualif ied pension plans:

2012 2011 2010

Expected annual rate of return 8.5% 8.5% 8.5%

Actual annual rate of return 12.7 3.4 10.8

Discount rate 4.3 5.1 5.9

The assumption for the expected rate of return on assets for our U.S. and international plans reflects our actual historical return experience andour long-term assessment of forw ard-looking return expectations by asset classes, w hich is used to develop a w eighted-average expectedreturn based on the implementation of our targeted asset allocation in our respective plans (see Notes to Consolidated Financial Statements—Note 11D. Pension and Postretirement Benefit Plans and Defined Contribution Plans: Plan Assets for asset allocation ranges and actual assetallocations for 2012 and 2011). The expected return for our U.S. plans and the majority of our international plans is applied to the fair market valueof plan assets at each year end. Holding all other assumptions constant, the effect of a 0.5 percentage-point decline in the return-on-assetsassumption w ould increase our 2013 U.S. qualif ied pension plans’ pre-tax expense by approximately $60 million.

The discount rate used in calculating our U.S. defined benefit plan obligations as of December 31, 2012 is 4.3%, w hich represents a 0.8percentage-point decrease from our December 31, 2011 rate of 5.1%. The discount rate for our U.S. defined benefit plans is determined annuallyand evaluated and modif ied to reflect at year-end the prevailing market rate of a portfolio of high-quality corporate bond investments rated AA orbetter that w ould provide the future cash f low s needed to settle benefit obligations as they come due. For our international plans, the discountrates are set by benchmarking against investment grade corporate bonds rated AA or better, including w here there is suff icient data, a yieldcurve approach. These rate determinations are made consistent w ith local requirements. Holding all other assumptions constant, the effect of a0.1 percentage-point decrease in the discount rate assumption w ould increase our 2013 U.S. qualif ied pension plans’ pre-tax expense byapproximately $26 million and increase the U.S. qualif ied pension plans’ projected benefit obligations as of December 31, 2012 by approximately$266 million.

Contingencies

For a discussion about income tax contingencies, see Notes to Consolidated Financial Statements— Note 5D. Tax Matters: Tax Contingencies.

For a discussion about legal and environmental contingencies, guarantees and indemnif ications, see Notes to Consolidated Financial Statements—Note 17. Commitments and Contingencies .

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2012 Financial Report

Financial ReviewPfizer Inc. and Subsidiary Companies

ANALYSIS OF THE CONSOLIDATED STATEMENTS OF INCOME

Year Ended December 31, % Change

(MILLIONS OF DOLLARS) 2012 2011 2010 12/11 11/10

Revenues $ 58,986 $ 65,259 $ 65,165 (10)% — %

Cost of sales 11,334 14,076 14,788 (19)% (5)%

% of revenues 19.2% 21.6% 22.7%

Selling, informational and administrative expenses 16,616 18,832 18,973 (12)% (1)%

% of revenues 28.2% 28.9% 29.1%

Research and development expenses 7,870 9,074 9,483 (13)% (4)%

% of revenues 13.3% 13.9% 14.6%

Amortization of intangible assets 5,175 5,544 5,364 (7)% 3 %

% of revenues 8.8% 8.5% 8.2%

Restructuring charges and certain acquisition-related

costs 1,880 2,930 3,145 (36)% (7)%

% of revenues 3.2% 4.5% 4.8%

Other deductions—net 4,031 2,499 3,941 61 % (37)%

Income from continuing operations before provision

for taxes on income 12,080 12,304 9,471 (2)% 30 %

% of revenues 20.5% 18.9% 14.5%

Provision for taxes on income 2,562 3,909 1,153 (34)% 239 %

Effective tax rate 21.2% 31.8% 12.2%

Plus: Discontinued operations—net of tax 5,080 1,654 (30) 207 % *

Less: Net income attributable to noncontrolling

interests 28 40 31 (30)% 29 %

Net income attributable to Pfizer Inc. $ 14,570 $ 10,009 $ 8,257 46 % 21 %

% of revenues 24.7% 15.3% 12.7%

Percentages may reflect rounding adjustments.

* Calculation not meaningful.

Revenues-Overview

Total revenues w ere $59.0 billion in 2012 , a decrease of 10% compared to 2011 , due to:

• an operational decline of $4.8 billion, or 8%, primarily due to the loss of exclusivity of certain products, including Lipitor, in most majormarkets; and

• the unfavorable impact of foreign exchange, w hich decreased revenues by approximately $1.5 billion, or 2%.

Total revenues w ere $65.3 billion in 2011 , relatively f lat compared to 2010 . Revenues w ere impacted by:

• the favorable impact of foreign exchange, w hich increased revenues by approximately $1.9 billion, or 3%; and

• the inclusion of revenues of $1.3 billion, or 2%, from our acquisition of King,

largely offset by:

• an operational decline of $2.9 billion, or 4%, primarily due to the loss of exclusivity of certain products.

Revenues in 2012 in comparison w ith 2011 w ere negatively impacted by product losses of exclusivity, most notably Lipitor in most major markets,as w ell as the f inal-year terms of our collaboration agreements in certain markets for Spiriva. Collectively, these factors negatively impacted

revenues by approximately $7.7 billion, or 12%.

In 2012, Lyrica, Lipitor, Enbrel, Prevnar 13/Prevenar 13, Celebrex and Viagra each delivered at least $2 billion in revenues, w hile Norvasc, Zyvox,Sutent and the Premarin family each surpassed $1 billion in revenues. Lipitor lost exclusivity in Japan in June 2011 (w ith generic competitionoccurring in November 2011), the U.S. in November 2011 (w ith multi-source generic entry occurring in May 2012), Australia in April 2012 and mostof developed Europe in March 2012 and May 2012.

In 2011, Lipitor, Lyrica, Enbrel, Prevnar 13/Prevenar 13 and Celebrex each delivered at least $2 billion in revenues, w hile Viagra, Norvasc, Zyvox,Xalatan/Xalacom (Xalatan lost exclusivity in the U.S. in March 2011), Sutent, Geodon/Zeldox, and the Premarin family each surpassed $1 billion inrevenues.

In 2010, Lipitor, Enbrel, Lyrica, Prevnar 13/Prevenar 13 and Celebrex each delivered at least $2 billion in revenues, w hile Viagra, Xalatan/Xalacom,Effexor (Effexor XR lost exclusivity in the U.S. in July 2010), Norvasc, Prevnar/Prevenar (7-valent), Zyvox, Sutent, the Premarin family,Geodon/Zeldox and Detrol/Detrol LA each surpassed $1 billion in revenues.

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Financial ReviewPfizer Inc. and Subsidiary Companies

Revenues exceeded $500 million in each of 16 countries outside the U.S. in 2012 and 2011, and in each of 17 countries outside the U.S. in 2010.The U.S. and Japan w ere the only countries to contribute more than 10% of total revenue in 2012. The U.S. w as the only country to contributemore than 10% of total revenues in 2011 and 2010.

Our policy relating to the supply of pharmaceutical inventory at domestic w holesalers, and in major international markets, is to generally maintainstocking levels under one month on average and to keep monthly levels consistent from year to year based on patterns of utilization. Wehistorically have been able to closely monitor these customer stocking levels by purchasing information from our customers directly or byobtaining other third-party information. We believe our data sources to be directionally reliable but cannot verify their accuracy. Further, as w e donot control this third-party data, w e cannot be assured of continuing access. Unusual buying patterns and utilization are promptly investigated. As is typical in the biopharmaceutical industry, our gross product sales are subject to a variety of deductions, that generally are estimated andrecorded in the same period that the revenues are recognized and primarily represent rebates and discounts to government agencies,w holesalers, distributors and managed care organizations w ith respect to our pharmaceutical products. These deductions represent estimates ofthe related obligations and, as such, judgment and know ledge of market conditions and practice are required w hen estimating the impact of thesesales deductions on gross sales for a reporting period. Historically, our adjustments to actual results have not been material to our overallbusiness. On a quarterly basis, our adjustments to actual results generally have been less than 1% of biopharmaceutical net sales and can resultin either a net increase or a net decrease in income. Product-specif ic rebate charges, how ever, can have a signif icant impact on year-over-yearindividual product grow th trends.

The follow ing table provides information about certain deductions from revenues:

Year Ended December 31,

(BILLIONS OF DOLLARS) 2012 2011 2010

Medicaid and related state program rebates (a) $ 0.9 $ 1.2 $ 1.3

Medicare rebates (a) 0.7 1.4 1.3

Performance-based contract rebates (a), (b) 2.2 3.5 2.6

Chargebacks (c) 3.6 3.2 3.0

Sales allow ances (d) 4.7 4.9 4.5

Total $ 12.1 $ 14.2 $ 12.7

(a) Rebates are product-specif ic and, theref ore, f or any giv en y ear are impacted by the mix of products sold.(b)

Perf ormance-based contract rebates include contract rebates with managed care customers within the U.S., including health maintenance organizations and pharmacy

benef it managers, who receiv e rebates based on the achiev ement of contracted perf ormance terms and claims under these contracts.(c) Chargebacks primarily represent reimbursements to wholesalers f or honoring contracted prices to third parties.(d) Sales allowances primarily represent pharmaceutical rebates, discounts and price reductions that are contractual or legislativ ely mandated outside the U.S.

The total rebates, chargebacks and sales allow ances for 2012 w ere low er than 2011, primarily as a result of:

• the impact of decreased Medicaid, Medicare and performance-based contract rebates contracted for Lipitor and certain other productsthat have lost exclusivity;

• changes in product mix; and

• the impact on chargebacks of decreased sales for certain products that have lost exclusivity,

partially offset by, among other factors:

• an increase in chargebacks for our branded products as a result of increasing competitive pressures.

Our accruals for Medicaid rebates, Medicare rebates, performance-based contract rebates, sales allow ances and chargebacks w ere $3.8 billionas of December 31, 2012 and $4.8 billion as of December 31, 2011, and substantially all are included in Other current liabilities in ourConsolidated Balance Sheets.

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Revenues by Segment and Geographic Area

The follow ing table provides Worldw ide revenues by operating segment, business unit and geographic area:

Year Ended December 31, % Change

Worldwide U.S. International Worldwide U.S. International

(MILLIONS OFDOLLARS) 2012 2011 (a) 2010 2012 2011 (a) 2010 2012 2011 (a) 2010 12/11 11/10 12/11 11/10 12/11 11/10

Biopharmaceutical

rev enues:

Primary Care

Operating Segment $ 15,558 $22,670 $23,328 $ 8,191 $12,819 $13,536 $ 7,367 $ 9,851 $ 9,792 (31) (3) (36) (5) (25) 1

Specialty Care 14,151 15,245 15,021 6,206 6,870 7,419 7,945 8,375 7,602 (7) 1 (10) (7) (5) 10

Oncology 1,310 1,323 1,414 573 391 506 737 932 908 (1) (6) 47 (23) (21) 3

SC&O Operating

Segment 15,461 16,568 16,435 6,779 7,261 7,925 8,682 9,307 8,510 (7) 1 (7) (8) (7) 9

Emerging Markets 9,960 9,295 8,662 — — — 9,960 9,295 8,662 7 7 — — 7 7

Established

Products 10,235 9,214 10,098 4,738 3,627 4,501 5,497 5,587 5,597 11 (9) 31 (19) (2) —

EP&EM Operating

Segment 20,195 18,509 18,760 4,738 3,627 4,501 15,457 14,882 14,259 9 (1) 31 (19) 4 4

51,214 57,747 58,523 19,708 23,707 25,962 31,506 34,040 32,561 (11) (1) (17) (9) (7) 5

Other product

rev enues:

Animal Health 4,299 4,184 3,575 1,771 1,648 1,382 2,528 2,536 2,193 3 17 7 19 — 16

Consumer

Healthcare 3,212 3,028 2,748 1,526 1,490 1,408 1,686 1,538 1,340 6 10 2 6 10 15

Other operating

segments 7,511 7,212 6,323 3,297 3,138 2,790 4,214 4,074 3,533 4 14 5 12 3 15

Other (b) 261 300 319 81 88 103 180 212 216 (13) (6) (8) (15) (15) (2)

Total Rev enues $ 58,986 $65,259 $65,165 $23,086 $26,933 $28,855 $35,900 $38,326 $36,310 (10) — (14) (7) (6) 6

(a) For 2011, includes King commencing on the acquisition date of January 31, 2011.(b) Includes rev enues generated primarily f rom Pf izer CentreSource, our contract manuf acturing and bulk pharmaceutical chemical sales organization.

Biopharmaceutical Revenues

Revenues from biopharmaceutical products contributed approximately 87% of our total revenues in 2012 , 88% of our total revenues in 2011 and90% of our total revenues in 2010 .

We recorded direct product sales of more than $1 billion for each of 10 biopharmaceutical products in 2012 , each of 12 biopharmaceuticalproducts in 2011 and each of 15 biopharmaceutical products in 2010 . These products represent 49% of our revenues from biopharmaceuticalproducts in 2012 , 56% of our revenues from biopharmaceutical products in 2011 and 60% of our revenues from biopharmaceutical products in2010 .

2012 v. 2011

Worldw ide revenues from biopharmaceutical products in 2012 w ere $51.2 billion , a decrease of 11% compared to 2011 , primarily due to:

• the decrease of $7.6 billion in operational revenues from Lipitor, Geodon, Xalatan, Caduet, Aromasin and Detrol, and low er Alliance revenuesfor Aricept, all due to loss of exclusivity in certain markets, and from low er Alliance revenues for Spiriva due to the f inal-year terms of ourcollaboration agreements in certain European countries, Canada and Australia; low er revenues for Effexor and Zosyn/Tazocin; and

• the unfavorable impact of foreign exchange of $1.3 billion, or 2%,

partially offset by:

• an increase in operational revenues in developed markets for certain biopharmaceutical products, particularly Lyrica, Celebrex, and Enbrel,and in revenues from emerging markets.

Geographically,

• in the U.S., revenues from biopharmaceutical products decreased 17% in 2012, compared to 2011, primarily reflecting low er revenues fromLipitor, Geodon, Caduet, Xalatan and Aromasin, all due to loss of exclusivity; low er Alliance revenues due to loss of exclusivity of Aricept5mg and 10mg tablets in November 2010; and low er revenues from Effexor, Zosyn and Detrol/Detrol LA. The impact of these adversefactors w as partially offset by the strong performance of certain other biopharmaceutical products, low er reductions related to rebates andthe low er reduction in revenues related to the U.S. Healthcare Legislation.

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Financial ReviewPfizer Inc. and Subsidiary Companies

• in our international markets, revenues from biopharmaceutical products decreased 7% in 2012, compared to 2011, primarily due to the loss ofexclusivity of Lipitor in most of developed Europe and the unfavorable impact of foreign exchange of 3%. Operationally, revenues decreased4% in 2012, compared to 2011. In addition to Lipitor, the decrease in operational revenues w as driven by Xalatan/Xalacom, Aricept andAromasin, all due to loss of exclusivity in certain markets, as w ell as low er Alliance revenues, primarily due to the loss of exclusivity ofAricept in many major European markets, and low er revenues for Spiriva in certain European countries, Canada and Australia (reflecting thefinal-year terms of our Spiriva collaboration agreements relating to those countries), as w ell as low er revenues for Norvasc and Effexor.The impact of these adverse factors w as partially offset by the strong operational grow th of Lyrica, Prevnar 13/Prevenar 13 and Enbrel.

During 2012, international revenues from biopharmaceutical products represented 62% of total revenues from biopharmaceutical products,compared to 59% in 2011.

Primary Care Operating Segment

• Primary Care unit revenues decreased 31% in 2012 compared to 2011, reflecting low er operational revenues of 30%, primarily due to thelosses of exclusivity of Lipitor in most major markets, as w ell as the resulting shift in the reporting of U.S. and Japan Lipitor revenues to theEstablished Products unit beginning January 1, 2012. These factors impacted Primary Care operational revenues by approximately $5.6billion, or 25%, in 2012.

Collectively, the decline in w orldw ide revenues for Lipitor and for certain other Primary Care unit products that lost exclusivity in variousmarkets in 2012 and 2011, as w ell as the resulting shift in the reporting of certain product revenues to the Established Products unit, reducedPrimary Care unit revenues by $7.9 billion, or 35%, in comparison w ith 2011.

The impact of these declines w as slightly offset by the strong operational grow th of Lyrica in developed markets and Celebrex and Viagra inthe U.S.

Specialty Care and Oncology Operating Segment

• Specialty Care unit revenues decreased 7% compared to 2011, due to low er operational revenues of 5%, as w ell as the adverse impact offoreign exchange. Operational revenues w ere negatively impacted by the decline in the Prevnar/Prevenar family in the U.S. and developedEurope, as the pediatric catch-up dose opportunity declined signif icantly in 2012 compared to 2011, w ith few er children eligible to receive thecatch-up dose. Additionally, utilization of Prevnar/Prevenar in older adults remains modest at this time.

Specialty Care unit revenues w ere also unfavorably impacted by the losses of exclusivity of Vfend and Xalatan in the U.S. in February andMarch 2011, respectively, and the resulting shift in the reporting of Vfend and Xalatan U.S. revenues to the Established Products unitbeginning January 1, 2012, as w ell as the loss of exclusivity of Xalatan and Xalacom in the majority of European markets in January 2012,and Geodon in the U.S. in March 2012. Collectively, these developments reduced Specialty Care unit revenues by $1.1 billion, or 7%, incomparison w ith 2011.

Operational revenues w ere favorably impacted by the grow th of Benefix, Rebif, ReFacto/Xyntha, Enbrel and Zyvox.

• Oncology unit revenues decreased 1%, compared to 2011, primarily due to the unfavorable impact of foreign exchange of 3%. Operationalrevenues w ere positively impacted by the launches of Inlyta and Xalkori in the U.S. and certain other developed markets, partially offset bythe unfavorable impact of the loss of exclusivity of Aromasin in the majority of European markets in the second half of 2011 and the resultingshift in the reporting of such revenues to the Established Products unit beginning January 1, 2012. This loss of exclusivity reduced Oncologyunit revenues by $229 million, or 17%, in comparison w ith 2011.

Operational revenues w ere also favorably impacted by the grow th of Sutent, primarily in the U.S. and emerging markets.

Established Products and Emerging Markets Operating Segment

• Established Products unit revenues increased 11% compared to 2011, due to higher operational revenues of 13%, partially offset by a 2%unfavorable impact of foreign exchange. The increase in Established Products unit operational revenues in 2012 w as mainly due to the shiftin the reporting of branded Lipitor revenues in the U.S. and Japan from the Primary Care unit, totaling $1.4 billion, to the Established Productsunit beginning January 1, 2012, as w ell as recent launches of generic versions of certain Pfizer branded primary care and specialty careproducts, and by contributions from the sales of the authorized generic version of Lipitor in the U.S. by Watson Pharmaceuticals, Inc.(Watson). The agreement w ith Watson w as terminated by mutual consent in January 2013.

Operational revenues w ere unfavorably impacted by the entry of multi-source generic competition in the U.S. for donepezil (Aricept) in May2011, as w ell as the continuing decline of revenues of certain products that previously lost exclusivity and the impact of ongoing pricingpressures, primarily in South Korea and developed Europe.

• Emerging Markets unit revenues increased 7% compared to 2011, due to higher operational revenues of 12%, partially offset by a 5%unfavorable impact of foreign exchange. The increase in Emerging Markets unit operational revenues in 2012 w as primarily due to volumegrow th in China, Brazil and Russia, as a result of more targeted promotional efforts for key innovative and established products, includingLipitor, Norvasc and Lyrica.

Total revenues from established products in both the Established Products and Emerging Markets units w ere $14.4 billion, w ith $4.2 billiongenerated in emerging markets in 2012.

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2012 Financial Report

Financial ReviewPfizer Inc. and Subsidiary Companies

2011 v. 2010

Worldw ide revenues from biopharmaceutical products in 2011 w ere $57.7 billion , a decrease of 1% compared to 2010 , primarily due to:

• the decrease of $4.7 billion in operational revenues from Lipitor, Effexor, Protonix, Xalatan, Caduet, Vfend, Aromasin and Zosyn/Tazocin, andlow er Alliance revenues for Aricept, all due to loss of exclusivity in certain markets; and

• a reduction in revenues due to the U.S. Healthcare Legislation that w as $359 million larger in 2011 than in 2010,

partially offset by:

• the solid performance of Lyrica, the Prevnar/Prevenar family and Enbrel;

• the inclusion of operational revenues from legacy King products of approximately $950 million, w hich favorably impacted biopharmaceuticalrevenues by 2%; and

• the favorable impact of foreign exchange of $1.7 billion, or 3%.

Geographically,

• in the U.S., revenues from biopharmaceutical products decreased 9% in 2011, compared to 2010, reflecting low er revenues from Lipitor,Protonix, Effexor, Zosyn, Xalatan, Vfend, Caduet and Aromasin, all due to loss of exclusivity, low er Alliance revenues due to loss ofexclusivity of Aricept 5mg and 10mg tablets in November 2010 and low er revenues from Detrol/Detrol LA, as w ell as the reduction inrevenues due to the U.S. Healthcare Legislation that w as $359 million larger in 2011 than in 2010. The impact of these adverse factorsw as partially offset by the strong performance of certain other biopharmaceutical products and the addition of U.S. revenues fromlegacy King products of approximately $904 million in 2011.

• in our international markets, revenues from biopharmaceutical products increased 5% in 2011, compared to 2010, reflecting the favorableimpact of foreign exchange of 6% in 2011, partially offset by a net operational decrease. Operationally, revenues w ere favorably impactedby increases in the Prevenar family, Lyrica, Enbrel, Celebrex and Alliance revenues and unfavorably impacted by declines in Lipitor, Effexor,Norvasc and Xalatan/Xalacom. International revenues from legacy King products w ere not signif icant to our international revenues in 2011.

During 2011, international revenues from biopharmaceutical products represented 59% of total revenues from biopharmaceutical products,compared to 56% in 2010.

Primary Care Operating Segment

• Primary Care unit revenues decreased 3% in 2011 compared to 2010, due to low er operational revenues of 6%, partially offset by thefavorable impact of foreign exchange of 3%. Primary Care unit revenues w ere favorably impacted by higher revenues from certain patent-protected products, including Lyrica, Celebrex, Pristiq and Spiriva (in Alliance revenues), among others, as w ell as the addition of revenuesfrom legacy King products of $404 million, or 2%, in 2011. Operational revenues in 2011 w ere negatively impacted by the loss of exclusivityof Lipitor and Caduet in the U.S. in November 2011, Lipitor in various other developed markets during 2010, as w ell as Aricept 5mg and 10mgtablets in the U.S. in November 2010. Taken together, these losses of exclusivity reduced Primary Care unit revenues by approximately $2.1billion, or 9%, in comparison w ith 2010.

Specialty Care and Oncology Operating Segment

• Specialty Care unit revenues increased 1% compared to 2010, due to the favorable impact of foreign exchange of 3%, partially offset bylow er operational revenues of 2%. Operational revenues w ere favorably impacted by strong grow th in the Prevnar/Prevenar family andEnbrel, and unfavorably impacted by the loss of exclusivity of Vfend and Xalatan in the U.S. in February and March 2011, respectively.Collectively, these losses of exclusivity reduced Specialty Care unit revenues by $624 million, or 4%, in comparison w ith 2010.

• Oncology unit revenues decreased 6% compared to 2010, due to low er operational revenues of 10%, partially offset by the favorable impactof foreign exchange of 4%. The decrease in the Oncology unit operational revenues in 2011 w as primarily due to the transfer of Aromasin’sU.S. business to the Established Products unit effective January 1, 2011, as a result of its loss of exclusivity in April 2011. This loss ofexclusivity reduced Oncology unit revenues by $160 million, or 11%, in comparison w ith 2010.

Established Products and Emerging Markets Operating Segment

• Established Products unit revenues decreased 9% in 2011 compared to 2010, due to low er operational revenues of 13%, partially offset bya 4% favorable impact of foreign exchange. The decrease in Established Products unit operational revenues in 2011 w as mainly due to theloss of exclusivity of Effexor XR, Protonix and Zosyn in the U.S. Taken together, these losses of exclusivity decreased Established Productsunit revenues by $1.7 billion, or 17%, in comparison w ith 2010. These declines w ere partially offset by the addition of revenues from legacyKing products of $546 million, or 5%, in 2011.

• Emerging Markets unit revenues increased 7% compared to 2010, due to higher operational revenues of 5%, as w ell as a 2% favorableimpact of foreign exchange. The increase in Emerging Markets unit operational revenues in 2011 w as due to grow th in certain key innovative

brands, primarily the Prevenar family, Lyrica, Enbrel, Celebrex, Vfend and Zyvox. These increases w ere partially offset by low er revenuesfrom Lipitor, w hich lost exclusivity in Brazil in August 2010 and Mexico in December 2010, as w ell as the impact of price reductions forcertain products in certain emerging market countries. These losses of exclusivity reduced Emerging Market unit revenues by $118 million, or1%, in comparison w ith 2010.

Total revenues from established products in both the Established Products and Emerging Markets units w ere $13.0 billion, w ith $3.8 billiongenerated in emerging markets in 2011.

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Financial ReviewPfizer Inc. and Subsidiary Companies

Other Product Revenues

2012 v. 2011

Animal Health Operating Segment

• Animal Health unit revenues increased 3% in 2012, compared to 2011, reflecting higher operational revenues of 6%, partially offset by theunfavorable impact of foreign exchange of 3%. Operational revenues from Animal Health products w ere favorably impacted by the solidperformance in both the livestock and companion animal portfolios.

Consumer Healthcare Operating Segment

• Consumer Healthcare unit revenues increased 6% in 2012, compared to 2011, reflecting higher operational revenues of 8%, partially offsetby the unfavorable impact of foreign exchange of 2%. The operational revenue increase w as primarily due to the addition of products fromthe acquisitions of the consumer healthcare business of Ferrosan in December 2011 and Alacer Corp. in February 2012.

2011 v. 2010

Animal Health Operating Segment

• Animal Health unit revenues increased 17% in 2011, compared to 2010, reflecting higher operational revenues of 14% and the favorableimpact of foreign exchange of 3%. Operational revenues from Animal Health products w ere favorably impacted by approximately $329million, or 9%, due to the addition of revenues from legacy King animal health products. Legacy Pfizer products grew 7% primarily driven byimproving market conditions and resulting increased demand for products across the livestock business, as w ell as deeper marketpenetration in emerging markets. This w as partially offset by the adverse impact of required product divestitures in 2010 related to theacquisition of Wyeth.

Consumer Healthcare Operating Segment

• Consumer Healthcare unit revenues increased 10% in 2011, compared to 2010, reflecting higher operational revenues of 8% and thefavorable impact of foreign exchange of 2%. The operational revenue increase in 2011 w as primarily driven by increased sales of corebrands including Advil, Caltrate and Robitussin, as w ell as the temporary voluntary w ithdraw al of Centrum in Europe in the third quarter of2010, w hich had an adverse impact on 2010 revenues.

Revenues—Major Biopharmaceutical Products

The follow ing table provides revenue information for several of our major biopharmaceutical products:

(MILLIONS OF DOLLARS)

PRIMARY INDICATIONS

Year Ended December 31, % Change

PRODUCT 2012 2011 2010 12/11 11/10

Lyrica

Epilepsy, post-herpetic neuralgia

and diabetic peripheral

neuropathy, f ibromyalgia,

neuropathic pain due to spinal

cord injury

$ 4,158

$ 3,693

$ 3,063

13

21

Lipitor Reduction of LDL cholesterol 3,948 9,577 10,733 (59) (11)

Enbrel (Outside the U.S. and

Canada)

Rheumatoid, juvenile rheumatoid

and psoriatic arthritis, plaque

psoriasis and ankylosing

spondylitis

3,737

3,666

3,274

2

12

Prevnar 13/Prevenar 13

Vaccine for prevention of

pneumococcal disease 3,718

3,657

2,416

2

51

Celebrex

Arthritis pain and inflammation,

acute pain 2,719

2,523

2,374

8

6

Viagra Erectile dysfunction 2,051 1,981 1,928 4 3

Norvasc Hypertension 1,349 1,445 1,506 (7) (4)

Zyvox Bacterial infections 1,345 1,283 1,176 5 9

Sutent

Advanced and/or metastatic renal

cell carcinoma (mRCC), refractory

gastrointestinal stromal tumors

(GIST) and advanced pancreatic

neuroendocrine tumor

1,236

1,187

1,066

4

11

Premarin family Menopause 1,073 1,013 1,040 6 (3)

Genotropin

Replacement of human grow th

hormone 832

889

885

(6)

—

Xalatan/Xalacom

Glaucoma and ocular

hypertension 806

1,250

1,749

(36)

(29)

BeneFIX Hemophilia 775 693 643 12 8

Detrol/Detrol LA Overactive bladder 761 883 1,013 (14) (13)

Vfend Fungal infections 754 747 825 1 (9)

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Financial ReviewPfizer Inc. and Subsidiary Companies

Chantix/Champix

An aid to smoking cessation

treatment 670

720

755

(7)

(5)

Pristiq Depression 630 577 466 9 24

ReFacto AF/Xyntha Hemophilia 584 506 404 15 25

Zoloft

Depression and certain anxiety

disorders 541

573

532

(6)

8

Revatio

Pulmonary arterial hypertension

(PAH) 534

535

481

—

11

Medrol Inf lammation 523 510 455 3 12

Zosyn/Tazocin Antibiotic 484 636 952 (24) (33)

Zithromax/Zmax Bacterial infections 435 453 415 (4) 9

Effexor

Depression and certain anxiety

disorders 425

678

1,718

(37)

(61)

Prevnar/Prevenar (7-valent)

Vaccine for prevention of

pneumococcal disease 399

488

1,253

(18)

(61)

Fragmin Anticoagulant 381 382 341 — 12

Relpax

Treat the symptoms of migraine

headache 368

341

323

8

6

Rapamune Immunosuppressant 346 372 388 (7) (4)

Cardura

Hypertension/Benign prostatic

hyperplasia 338

380

413

(11)

(8)

Tygacil Antibiotic 335 298 324 12 (8)

Aricept (a) Alzheimer's disease 326 450 454 (28) (1)

Xanax XR Anxiety disorders 274 306 307 (10) —

BMP2

Development of bone and

cartilage 263

340

400

(23)

(15)

Sulperazon Antibiotic 262 218 213 20 2

Diflucan Fungal infections 259 265 278 (2) (5)

Caduet

Reduction of LDL cholesterol and

hypertension 258

538

527

(52)

2

Neurontin Seizures 235 289 322 (19) (10)

Dalacin/Cleocin Antibiotic for bacterial infections 232 192 214 21 (10)

Unasyn Injectable antibacterial 228 231 244 (1) (5)

Metaxalone/Skelaxin (b) Muscle relaxant 223 203 — 10 *

Inspra High blood pressure 214 195 157 10 24

Toviaz Overactive bladder 207 187 137 11 36

Somavert Acromegaly 197 183 157 8 17

Alliance revenues (c) Various 3,492 3,630 4,084 (4) (11)

All other (d) Various 8,289 8,584 8,118 (3) 6

(a) Represents direct sales under license agreement with Eisai Co., Ltd.(b)

Legacy King product. King’s operations are included in our f inancial statements commencing f rom the acquisition date of January 31, 2011. Theref ore, our results f or

2010 do not include King’s results of operations.(c) Enbrel (in the U.S. and Canada), Spiriv a, Rebif , Aricept and Exf orge.

(d) Includes sales of generic atorv astatin.

* Calculation not meaningf ul.

Certain amounts and percentages may reflect rounding adjustments.

Biopharmaceutical—Selected Product Descriptions

• Lyrica is indicated for the management of post-herpetic neuralgia, neuropathic pain associated w ith diabetic peripheral neuropathy, themanagement of f ibromyalgia, neuropathic pain due to spinal cord injury, and as adjunctive therapy for adult patients w ith partial onsetseizures in the U.S. For certain countries outside the U.S., Lyrica is indicated for neuropathic pain (peripheral and central), the managementof f ibromyalgia, adjunctive treatment of epilepsy and general anxiety disorder. Lyrica recorded increases in w orldw ide revenues of 13% in2012, compared to 2011. There w as strong operational performance in international markets in 2012, including Japan, w here Lyrica w aslaunched in 2010 as the f irst product approved for the peripheral neuropathic pain (NeP) indication. Internationally, Lyrica revenuesincreased 14% in 2012, compared to 2011, w ith the grow th due to a focus on enhancing the neuropathic pain diagnosis and treatment rates,the successful re-launch of the general anxiety disorder indication in the EU and physician education regarding neuropathic pain in Japan.Foreign exchange had an unfavorable impact on international revenues of 5% in 2012, compared to 2011. In the U.S., revenues increased10% in 2012, compared to 2011. Notw ithstanding these increases, U.S. revenues continue to be affected by increased competition fromgeneric versions of competitive medicines, as w ell as managed care pricing and formulary pressures.

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• Lipitor , for the treatment of elevated LDL-cholesterol levels in the blood, recorded w orldw ide revenues of $3.9 billion, a decrease of 59%,in 2012, compared to 2011 due to:

◦ the impact of loss of exclusivity in Japan in June 2011 (w ith generic competition occurring in November 2011), the U.S. (w ith genericcompetition occurring in November 2011 and multi-source generic competition occurring in May 2012), Australia in April 2012 and mostof developed Europe in March 2012 and May 2012;

▪ the continuing impact of an intensely competitive lipid-low ering market w ith competition from generics and branded products w orldw ide;and

▪ increased payer pressure w orldw ide, including the need for f lexible rebate policies.

Geographically,

◦ in the U.S., branded Lipitor revenues w ere $932 million, a decrease of 81% in 2012, compared to 2011; and

◦ in our international markets, branded Lipitor revenues w ere $3.0 billion, a decrease of 34% in 2012, compared to 2011. Foreignexchange had an unfavorable impact on international revenues of $70 million in 2012, compared to 2011.

See the “Our Operating Environment” section of this Financial Review for a discussion concerning losses of exclusivity for Lipitor in variousmarkets.

• Enbrel , for the treatment of moderate-to-severe rheumatoid arthritis, polyarticular juvenile rheumatoid arthritis, psoriatic arthritis, plaquepsoriasis and ankylosing spondylitis, a type of arthritis affecting the spine, recorded increases in w orldw ide revenues, excluding the U.S.and Canada, of 2% in 2012, compared to 2011, primarily due to the overall grow th in the anti-tumor necrosis factor (TNF) biologic market,partially offset by the unfavorable impact of foreign exchange.

Under our co-promotion agreement w ith Amgen Inc. (Amgen), w e co-promote Enbrel in the U.S. and Canada and share in the profits fromEnbrel sales in those countries, w hich w e include in Alliance revenues. Our co-promotion agreement w ith Amgen w ill expire in October2013, and, subject to the terms of the agreement, w e are entitled to a royalty stream for 36 months thereafter, w hich w e expect w ill besignif icantly less than our current share of Enbrel profits from U.S. and Canadian sales. Follow ing the end of the royalty period, w e w ill notbe entitled to any further revenues from Enbrel sales in the U.S. and Canada. Our exclusive rights to Enbrel outside the U.S. and Canada w illnot be affected by the expiration of the co-promotion agreement w ith Amgen.

• Prevnar 13/Prevenar 13 is our 13-valent pneumococcal conjugate vaccine for the prevention of various syndromes of pneumococcaldisease in infants and young children and in adults 50 years of age and older. Prevnar 13/Prevenar 13 for use in infants and young childrenis marketed in the U.S. for the prevention of invasive pneumococcal disease caused by the 13 serotypes in Prevnar 13 and otitis mediacaused by the seven serotypes in Prevnar, and in the EU and many other international markets for the prevention of invasive pneumococcaldisease, otitis media and pneumococcal pneumonia caused by the vaccine serotypes. In 2011, w e received approval of Prevnar 13/Prevenar13 for use in adults 50 years of age and older in the U.S. for the prevention of pneumococcal pneumonia and invasive pneumococcaldisease caused by the 13 serotypes in Prevnar 13, and in the EU for the prevention of invasive pneumococcal disease caused by thevaccine serotypes. To date, Prevenar 13 for use in adults 50 years of age and older has been approved in over 55 countries. On January25, 2013, the U.S. FDA granted approval for the expansion of Prevnar 13 for use in children ages 6 through 17 years for active immunizationfor the prevention of invasive disease caused by the 13 vaccine serotypes. EU approval for use in children 6 through 17 years of age w asreceived on January 7, 2013. Worldw ide revenues for Prevnar 13/Prevenar 13 increased 2% in 2012, compared to 2011. In the U.S.,revenues for Prevnar 13 decreased 2% in 2012, compared to 2011. Developed Europe Prevenar 13 revenues also w ere low er in 2012,compared to 2011. Revenues in the U.S. and developed Europe declined as the pediatric catch-up dose commercial opportunity declinedsignif icantly in 2012 compared to 2011, w ith few er children eligible to receive the catch-up dose. In addition, utilization in older adults ismodest at this time.

We currently are conducting the Community-Acquired Pneumonia Immunization Trial in Adults (CAPiTA) to fulf ill requirements in connectionw ith the FDA’s approval of the Prevnar 13 adult indication under its accelerated approval program. CAPiTA is an eff icacy trial involvingsubjects 65 years of age and older that is designed to evaluate w hether Prevnar 13 is effective in preventing the f irst episode of community-acquired pneumonia caused by the serotypes contained in the vaccine. We estimate that this event-driven trial w ill be completed in 2013. Atits regular meeting held on February 22, 2012, the U.S. Centers for Disease Control and Prevention’s Advisory Committee on ImmunizationPractices (ACIP) indicated that it w ill defer voting on a recommendation for the routine use of Prevnar 13 in adults 50 years of age and olderuntil the results of CAPiTA, as w ell as data on the impact of pediatric use of Prevnar 13 on the disease burden and serotype distributionamong adults, are available. The rate of uptake for the use of Prevnar 13 in adults 50 years of age and older has been impacted by ACIP’sdecision to defer voting on a recommendation for the routine use of Prevnar 13 in that population. At its regular meeting held on June 20,2012, ACIP voted to recommend the use of Prevnar 13 for adults 19 years of age and older w ith immuno-compromising conditions such asHIV infections, cancer, advanced kidney disease and other immuno-compromising conditions. This recommendation is based on thedisproportionate burden of invasive pneumococcal disease in this patient population.

• Celebrex , indicated for the treatment of the signs and symptoms of osteoarthritis and rheumatoid arthritis w orldw ide and for themanagement of acute pain in adults in the U.S., Japan and certain markets in the EU, recorded an increase in w orldw ide revenues of 8% in

2012, compared to 2011. Strong operational performance in the U.S. w as primarily driven by price increases, as w ell as strong marketgrow th, partially offset by continued share erosion due to ongoing generic pressures and higher rebates. How ever, Celebrex continued toslow the volume erosion due to strong Direct to Customer investment and f ield force promotion. Strong operational performance ininternational markets w as driven by volume and share grow th in Japan and emerging markets in the low back pain indication, partially offsetby low er developed Europe revenues in 2012 compared to 2011. Celebrex is supported by continued educational and promotional effortshighlighting its eff icacy and safety profile for appropriate patients.

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Financial ReviewPfizer Inc. and Subsidiary Companies

• Viagra is indicated for the treatment for erectile dysfunction. Viagra w orldw ide revenues increased 4% in 2012, compared to 2011, primarilydue to the increase in U.S. revenues, partially offset by branded and generic competitive pressure in developed Europe, other developedmarkets and emerging markets. The increase in the U.S. more than offset the decrease in international markets due to operational factors andthe adverse impact of foreign exchange.

• Norvasc , for treating hypertension, lost exclusivity in the U.S. and other major markets in 2007 and in Canada in 2009. Norvasc w orldw iderevenues decreased 7% in 2012, compared to 2011.

• Zyvox is the w orld’s best-selling branded agent among those used to treat serious Gram-positive pathogens, including methicillin-resistantstaphylococcus-aureus. Zyvox w orldw ide revenues increased 5% in 2012, compared to 2011, primarily due to grow th in both developedand emerging markets.

• Sutent is indicated for the treatment of advanced renal cell carcinoma, including metastatic renal cell carcinoma (mRCC); gastrointestinalstromal tumors after disease progression on, or intolerance to, imatinib mesylate; and advanced pancreatic neuroendocrine tumor. Sutentw orldw ide revenues increased 4% in 2012, compared to 2011, due to strong operational performance driven in the U.S. by price increasesand in other, non-European developed markets by volume grow th due to targeted marketing efforts, and in emerging markets, by increasedmarket share, partially offset by the unfavorable impact of foreign exchange. We continue to seek to drive operational revenue andprescription grow th, supported by cost-effectiveness, eff icacy and therapy management data. As of December 31, 2012, Sutent w as themost prescribed oral mRCC therapy in the U.S.

• Our Premarin family of products helps w omen address moderate-to-severe menopausal symptoms. It recorded an increase in w orldw iderevenues of 6% in 2012, compared to 2011. U.S. revenues increased 7% in 2012, compared to 2011, primarily due to favorable w holesalerinventory levels, price increases in January and July 2012, favorable rebates and the launch of multichannel marketing support in 2012.Internationally, revenues decreased 2% compared to 2011. The decline w as attributable to the unfavorable impact of foreign exchange of7% offset by the increase in operational revenues of 5%.

• Genotropin , one of the w orld’s leading human grow th hormones, is used in children for the treatment of short stature w ith grow thhormone deficiency, Prader-Willi Syndrome, Turner Syndrome, Small for Gestational Age Syndrome, Idiopathic Short Stature (in the U.S. only)and Chronic Renal Insuff iciency (outside the U.S. only), as w ell as in adults w ith grow th hormone deficiency. Genotropin is supported by abroad platform of innovative injection-delivery devices and patient-support programs. Genotropin w orldw ide revenues decreased 6%compared to 2011.

• Xalabrands consists of Xalatan , a prostaglandin, w hich is a branded agent used to reduce elevated eye pressure in patients w ith open-angle glaucoma or ocular hypertension, and Xalacom, a f ixed combination prostaglandin (Xalatan) and beta blocker (timolol) available outsidethe U.S. Xalatan/Xalacom w orldw ide revenues decreased 36% in 2012, compared to 2011. Low er revenues w ere due primarily to the lossof exclusivity in the U.S. in March 2011 and in the majority of European markets in January 2012.

• BeneFIX and ReFacto AF/Xyntha are hemophilia products using state-of-the-art manufacturing that assist patients w ith their lifelongbleeding disorders. BeneFIX is the only available recombinant factor IX product for the treatment of hemophilia B, w hile ReFacto AF/Xyntha isa recombinant factor VIII product for the treatment of hemophilia A. Both products are indicated for the control and prevention of bleeding inpatients w ith these disorders and in some countries are also indicated for prophylaxis in certain situations, such as surgery. BeneFIXrecorded an increase in w orldw ide revenues of 12% in 2012, compared to 2011, primarily as a result of increases in the U.S. due to alaunch of the new 3000 International Unit vial and price increases. ReFacto AF/Xyntha recorded an increase in w orldw ide revenues of 15%in 2012, compared to 2011, driven by the successful transition of patients to Xyntha as a result of securing a government contract inAustralia, continued patient conversion to Xyntha in the U.S., as w ell as the successful launch of the ReFacto AF dual chamber syringe inseveral European countries.

• Detrol/Detrol LA, a muscarinic receptor antagonist, is one of the leading branded medicines w orldw ide for overactive bladder. Detrol LA isan extended-release formulation taken once a day. Detrol/Detrol LA w orldw ide revenues decreased 14% in 2012, compared to 2011,primarily due to increased branded competition, a shift in promotional focus to our Toviaz product in most major markets and the loss ofexclusivity for Detrol IR in the U.S. in June 2012. Generic competition for Detrol LA in the U.S. is expected in the f irst quarter of 2014.

• Vfend is a broad-spectrum agent for treating yeast and molds. Vfend w orldw ide revenues increased 1% in 2012, compared to 2011primarily due to U.S. market grow th attributable to a fungal meningitis outbreak and double-digit grow th in Latin America and China, largelyoffset by the unfavorable impact of foreign exchange and supply constraints. International revenues increased 1% in 2012, compared to2011. Revenues in the U.S. in 2012 increased 3% compared to the same period in 2011, primarily due to the aforementioned meningitisoutbreak and low er Medicaid rebates in 2012 compared to 2011, partially offset by the loss of exclusivity of Vfend tablets and the launch ofgeneric voriconazole (generic Vfend) in February 2011.

• Chantix/Champix is an aid to smoking-cessation treatment in adults 18 years of age and older. Chantix/Champix w orldw ide revenuesdecreased 7% in 2012, compared to 2011, primarily due to negative media exposure across several key markets and macro-economicdecline, w hich decreased patient w illingness to pay out of pocket. We are continuing our educational and promotional efforts, w hich arefocused on addressing the signif icant health consequences of smoking highlighting the Chantix/Champix benefit-risk proposition, emphasizingthe importance of the physician-patient dialogue in helping patients quit smoking and identifying alternative treatment-funding models.

• Pristiq is approved for the treatment of major depressive disorder in the U.S. and in various other countries. Pristiq has also been approved

for treatment of moderate-to-severe vasomotor symptoms (VMS) associated w ith menopause in Thailand, Mexico, the Philippines and

Ecuador. Pristiq recorded an increase in w orldw ide revenues of 9% in 2012, compared to 2011, primarily due to price increases, as w ell as

market grow th, partially offset by low er prescription share in the U.S.

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Financial ReviewPfizer Inc. and Subsidiary Companies

• Revatio is for the treatment of pulmonary arterial hypertension (PAH). Worldw ide revenues remained relatively f lat in 2012, compared to2011. 2012 revenues w ere impacted by the unfavorable impact of foreign exchange, partially offset by an increased PAH aw arenessdriving earlier diagnosis in the U.S. and EU. In the U.S., Revatio tablet lost exclusivity in September 2012, and Revatio intravenous injection w illlose exclusivity in May 2013.

• Zosyn / Tazocin , our broad-spectrum intravenous antibiotic, faces generic global competition. U.S. exclusivity w as lost in September 2009.Zosyn/Tazocin recorded a decrease in w orldw ide revenues of 24% in 2012, compared to 2011.

• Effexor , an antidepressant for treating adult patients w ith major depressive disorder, generalized anxiety disorder, social anxiety disorderand panic disorder, faces generic competition in most markets. It recorded a decrease in w orldw ide revenues of 37% in 2012, compared to2011.

• Prevnar/Prevenar (7-valent), our 7-valent pneumococcal conjugate vaccine for preventing invasive, and, in certain international markets,non-invasive pneumococcal disease in infants and young children, recorded a decrease in w orldw ide revenues of 18% in 2012, comparedto 2011. Many markets have transitioned from the use of Prevnar/Prevenar (7-valent) to Prevnar 13/Prevenar 13, resulting in low er revenuesfor Prevnar/Prevenar (7-valent). We expect this trend to continue.

• Caduet is a single-pill therapy combining Lipitor and Norvasc for the prevention of cardiovascular events. Caduet w orldw ide revenuesdecreased 52% in 2012, compared to 2011, primarily due to the loss of U.S. exclusivity in November 2011.

• Xalkori, for the treatment of patients w ith locally advanced or metastatic non-small cell lung cancer (NSCLC) that is anaplastic lymphomakinase (ALK)-positive as detected by an FDA-approved test, w as approved by the FDA in August 2011. In developed markets, Xalkori hasalso been approved in Japan, South Korea, Canada and Sw itzerland, and it received conditional marketing authorization in the EU in October2012. In addition, it has been f iled or approved in more than 25 emerging markets, including China. Xalkori recorded w orldw ide revenues of$123 million in 2012, w ith 66% of those revenues generated in the U.S. market.

• Inlyta, for the treatment of patients w ith advanced renal cell carcinoma after failure of a prior systemic treatment, has been approved in theU.S., Sw itzerland, Japan, Canada, Australia, South Korea and the EU (exact indications vary by region). Inlyta recorded w orldw ide revenuesof $100 million in 2012.

• Xeljanz (in the U.S.) w as approved by the FDA in November 2012 for the treatment of adult patients w ith moderately to severely activerheumatoid arthritis w ho have had an inadequate response or intolerance to methotrexate, to be used as monotherapy or in combination w ithmethotrexate or other nonbiologic disease-modifying antirheumatic drugs.

• Alliance revenues w orldw ide decreased 4% in 2012, compared to 2011, mainly due to the loss of exclusivity for Aricept 5mg and 10mgtablets in the U.S. in November 2010 and the entry of multi-source generic competition in the U.S. in May 2011, as w ell as the loss ofexclusivity in many major European markets in February 2012, and low er revenues for Spiriva in certain European countries, Canada andAustralia due to the expiration of our collaboration w ith BI in those countries, partially offset by the strong performance of Enbrel and Rebif inthe U.S. We expect that the Aricept 23mg tablet w ill have exclusivity in the U.S. until July 2013. See the “The Loss or Expiration of IntellectualProperty Rights” section of this Financial Review for a discussion regarding the expiration of various contract rights relating to Aricept,Spiriva, Enbrel and Rebif. Eliquis (apixaban) has been jointly developed and commercialized by Pfizer and Bristol-Myers Squibb (BMS). In2012, Eliquis (apixaban) w as approved to reduce the risk of stroke and systemic embolism in patients w ith nonvalvular atrial f ibrillation in the27 countries of the EU, plus Iceland and Norw ay, Canada, Japan and the U.S., and it w as launched for that indication in the U.S. in January2013. The tw o companies share commercialization expenses and profit/losses equally on a global basis.

• Embeda —We met w ith the FDA in May 2012 to discuss our proposal for reintroduction of Embeda to the market. The required stabilityprograms are underw ay, and w e are w orking tow ard a submission w ith the FDA in the f irst half of 2013.

See Notes to Consolidated Financial Statements— Note 17. Commitments and Contingencies for a discussion of recent developmentsconcerning patent and product litigation relating to certain of the products discussed above.

Research and Development

Research and Development Operations

Innovation is critical to the success of our company and drug discovery and development is time-consuming, expensive and unpredictable,particularly for human health products. As a result, and also because w e are predominately a human health company, the vast majority of ourR&D spending is associated w ith human health products, compounds and activities.

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Financial ReviewPfizer Inc. and Subsidiary Companies

The follow ing table provides additional information by operating segment about our research and development expenses (see also Notes to

Consolidated Financial Statements–– Note 18. Segment, Geographic and Other Revenue Information ):

Research and Development Expenses

Year Ended December 31, % Change

(MILLIONS OF DOLLARS) 2012 2011 2010 12/11 11/10

Primary Care (a) $ 1,009 $ 1,307 $ 1,473 (23) (11)

Specialty Care and Oncology (a) 1,401 1,561 1,624 (10) (4)

Established Products and Emerging Markets (a) 403 441 452 (9) (2)

Other (a), (b) 693 425 428 63 (1)

Worldw ide Research and Development/Pfizer Medical (c) 2,835 3,337 3,709 (15) (10)

Corporate and Other (d) 1,529 2,003 1,797 (24) 11

Total Research and Development Expenses $ 7,870 $ 9,074 $ 9,483 (13) (4)

(a)

Our operating segments, in addition to their sales and marketing responsibilities, are responsible f or certain dev elopment activ ities. Generally , these responsibilities

relate to additional indications f or in-line products and IPR&D projects that hav e achiev ed proof -of -concept. R&D spending may include upf ront and milestone

pay ments f or intellectual property rights.(b)

Includes the Animal Health operating segment and the Consumer Healthcare operating segment. The increase in 2012 primarily relates to a $250 million pay ment to

AstraZeneca to obtain the exclusiv e global ov er-the-counter rights to Nexium.(c)

Worldwide Research and Dev elopment is generally responsible f or human health research projects until proof -of -concept is achiev ed, and then f or transitioning those

projects to the appropriate business unit f or possible clinical and commercial dev elopment. R&D spending may include upf ront and milestone pay ments f or

intellectual property rights. This organization also has responsibility f or certain science-based and other platf orm-serv ices organizations, which prov ide technical

expertise and other serv ices to the v arious R&D projects. Worldwide Research and Dev elopment is also responsible f or all human-health-related regulatory

submissions and interactions with regulatory agencies, including all saf ety ev ent activ ities. Pf izer Medical is responsible f or external af f airs relating to all therapeutic

areas, prov iding Pf izer-related medical inf ormation to healthcare prov iders, patients and other parties, and quality assurance and regulatory compliance activ ities,

which include conducting clinical trial audits and readiness rev iews. The decreases in 2012 compared to 2011 and in 2011 compared to 2010 result f rom cost sav ings

associated with the R&D productiv ity initiativ e announced on February 1, 2011 (see the “Restructuring Charges and Other Costs Associated with Acquisitions and

Cost-Reduction/Productiv ity Initiativ es” section of this Financial Rev iew).(d)

Corporate and other includes unallocated costs, primarily f acility costs, inf ormation technology , share-based compensation, and restructuring related costs. The

decrease in 2012 primarily results f rom cost sav ings associated with the R&D productiv ity initiativ e announced on February 1, 2011 and to a lesser extent f rom lower

charges relating to implementing our cost-reduction and productiv ity initiativ es (see the “Restructuring Charges and Other Costs Associated with Acquisitions and

Cost-Reduction/Productiv ity Initiativ es” section of this Financial Rev iew).

Our human health R&D spending is conducted through a number of matrix organizations––Research Units, w ithin our Worldw ide Research andDevelopment organization, are generally responsible for research assets (assets that have not yet achieved proof-of-concept); Business Unitsare generally responsible for development assets (assets that have achieved proof-of-concept); and science-based and other platform-servicesorganizations.

We take a holistic approach to our human health R&D operations and manage the operations on a total-company basis through our matrixorganizations described above. Specif ically, a single committee, co-chaired by members of our R&D and commercial organizations, is accountablefor aligning resources among all of our human health R&D projects and for ensuring that our company is focusing its R&D resources in the areasw here w e believe that w e can be most successful and maximize our return on investment. We believe that this approach also serves to maximizeaccountability and f lexibility.

Our Research Units are organized in a variety of w ays (by therapeutic area or combinations of therapeutic areas, by discipline, by location, etc.)to enhance f lexibility, cohesiveness and focus. Because of our structure, w e can rapidly redeploy resources, w ithin a Research Unit, betw eenvarious projects as necessary because the w orkforce shares similar skills, expertise and/or focus.

Our platform-services organizations, w here a signif icant portion of our R&D spending occurs, provide technical expertise and other services tothe various R&D projects, and are organized into science-based functions such as Pharmaceutical Sciences, Chemistry, Drug Safety, andDevelopment Operations, and non-science-based functions, such as Facilities, Business Technology and Finance. As a result, w ithin each ofthese functions, w e are able to migrate resources among projects, candidates and/or targets in any therapeutic area and in most phases ofdevelopment, allow ing us to react quickly in response to evolving needs.

Generally, w e do not disaggregate total R&D expense by development phase or by therapeutic area since, as described above, w e do not

manage a signif icant portion of our R&D operations by development phase or by therapeutic area. Further, as w e are able to adjust a signif icantportion of our spending quickly, as conditions change, also as described above, w e believe that any prior-period information about R&D expenseby development phase or by therapeutic area w ould not necessarily be representative of future spending.

Product Developments—Biopharmaceutical

We continue to invest in R&D to provide potential future sources of revenues through the development of new products, as w ell as throughadditional uses for in-line and alliance products. Notw ithstanding our efforts, there are no assurances as to w hen, or if , w e w ill receiveregulatory approval for additional indications for existing products or any of our other products in development.

We continue to closely evaluate our global research and development function and pursue strategies intended to improve innovation and overallproductivity in R&D by prioritizing areas that w e believe have the greatest scientif ic and commercial promise, utilizing appropriate risk/returnprofiles and focusing on areas that w e believe have the highest potential to deliver value in the near term and over time. To that end, our

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Financial ReviewPfizer Inc. and Subsidiary Companies

research primarily focuses on f ive high-priority areas that have a mix of small and large molecules—immunology and inflammation; oncology;cardiovascular and metabolic diseases; neuroscience and pain; and vaccines. In addition to reducing the number of disease areas of focus, w ehave realigned and reduced our research and development footprint and outsourced certain functions that do not drive competitive advantage forPfizer.

Our development pipeline, w hich is updated quarterly, can be found at w w w .pfizer.com/pipeline. It includes an overview of our research and alist of compounds in development w ith targeted indication, phase of development and, for late-stage programs, mechanism of action. Theinformation currently in our development pipeline is accurate as of February 28, 2013.

The follow ing series of tables provides information about signif icant regulatory actions by, and f ilings pending w ith, the FDA and regulatoryauthorities in the EU and Japan, as w ell as additional indications and new drug candidates in late-stage development.

RECENT FDA APPROVALS

PRODUCT INDICATION DATE APPROVED

Eliquis (Apixaban) (a) Prevention of stroke and systemic embolism in patients w ith nonvalvular atrial

f ibrillation

December 2012

Xeljanz (Tofacitinib) Treatment of moderate-to-severe active rheumatoid arthritis November 2012

Bosulif (Bosutinib) Treatment of previously treated chronic myelogenous leukemia September 2012

Lyrica (Pregabalin) Capsules CV Treatment of neuropathic pain due to spinal cord injury June 2012

Elelyso (Taliglucerase Alfa) (b) Treatment of adults w ith a confirmed diagnosis of type 1 Gaucher disease May 2012

Inlyta (Axitinib) Treatment of advanced renal cell carcinoma after failure of one prior systemic

therapy

January 2012

(a) This indication f or Eliquis (apixaban) was dev eloped and is being commercialized in collaboration with BMS.(b)

In Nov ember 2009, we entered into a license and supply agreement with Protalix BioTherapeutics, which prov ides us exclusiv e worldwide rights, except in Israel, todev elop and commercialize Elely so (taliglucerase alpha) f or the treatment of Gaucher disease.

PENDING U.S. NEW DRUG APPLICATIONS (NDA) AND SUPPLEMENTAL FILINGS

PRODUCT INDICATION DATE FILED*

Bazedoxifene-conjugated

estrogens

Treatment of symptoms associated w ith menopause and osteoporosis December 2012

Tafamidis meglumine (a) Treatment of transthyretin familial amyloid polyneuropathy (TTR-FAP) February 2012

Genotropin (b) Replacement of human grow th hormone deficiency (Mark VII multidose disposable

device)

December 2009

Celebrex (c) Chronic pain October 2009

Remoxy (d) Management of moderate-to-severe pain w hen a continuous, around-the-clock opioid

analgesic is needed for an extended period of time

August 2008

Spiriva (e) Respimat device for chronic obstructive pulmonary disease January 2008

Viviant (f) Osteoporosis treatment and prevention August 2006

* The dates set f orth in this column are the dates on which the FDA accepted our submissions.

(a)

In May 2012, the FDA's Peripheral and Central Nerv ous Sy stem Drugs Adv isory Committee v oted that the taf amidis meglumine data prov ide substantial ev idence of

ef f icacy f or a surrogate endpoint that is reasonably likely to predict a clinical benef it. In June 2012, the FDA issued a “complete response” letter with respect to the

taf amidis NDA. The FDA has requested the completion of a second ef f icacy study and also has asked f or additional inf ormation on the data within the current

taf amidis NDA. We are continuing to work with the FDA to def ine a path f orward.(b)

In April 2010, we receiv ed a “complete response” letter f rom the FDA f or the Genotropin Mark VII multidose disposable dev ice submission. In August 2010, wesubmitted our response to address the requests and recommendations included in the FDA letter. In April 2011, we receiv ed a second “complete response” letter f romthe FDA, requesting additional inf ormation. We are working to address the FDA's requests f or additional inf ormation.

(c)

In June 2010, we receiv ed a “complete response” letter f rom the FDA f or the Celebrex chronic pain supplemental NDA. The supplemental NDA remains pending whilewe await the completion of ongoing studies to determine next steps.

(d)

In 2005, King entered into an agreement with Pain Therapeutics, Inc. (PT) to dev elop and commercialize Remoxy . In August 2008, the FDA accepted the NDA f or

Remoxy that had been submitted by King and PT. In December 2008, the FDA issued a “complete response” letter. In March 2009, King exercised its right under the

agreement with PT to assume sole control and responsibility f or the dev elopment of Remoxy . In December 2010, King resubmitted the NDA f or Remoxy with the

FDA. In June 2011, we and PT announced that a “complete response” letter was receiv ed f rom the FDA with regard to the resubmission of the NDA. We hav e been

working to address the issues raised in the letter, which primarily relate to manuf acturing. We hav e analy zed the results f rom two, recently completed bioav ailability

studies, as well as data f rom other experiments that were conducted to optimize the f ormulation composition and analy tical methods f or Remoxy . While we hav e

gained important insights f rom this work, in the f ourth quarter of 2012 we initiated a conf irmatory bioav ailability study to assess the pharmacokinetic prof ile of

modif ied Remoxy f ormulation compositions. Preliminary results f rom the initial phase of this study are undergoing analy sis. We believ e the results of this study will

prov ide us with greater clarity as to whether or not we will be able to adequately address the questions raised in the “complete response” letter receiv ed f rom the FDA.

We continue to target a late-March 2013 meeting with the FDA to discuss our plan to address the June 2011 “complete response" letter.(e)

Boehringer Ingelheim (BI), our alliance partner, holds the NDAs f or Spiriv a Handihaler and Spiriv a Respimat. In September 2008, BI receiv ed a “complete response”

letter f rom the FDA f or the Spiriv a Respimat submission. The FDA is seeking additional data, and we are coordinating with BI, which is working with the FDA to

prov ide the additional inf ormation. A f ull response will be submitted to the FDA upon the completion of planned and ongoing studies.

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(f) Two “approv able” letters were receiv ed by Wy eth in April and December 2007 f rom the FDA f or Viv iant (bazedoxif ene), f or the prev ention of post-menopausal

osteoporosis, that set f orth the additional requirements f or approv al. In May 2008, Wy eth receiv ed an “approv able” letter f rom the FDA f or the treatment of post-

menopausal osteoporosis. The FDA is seeking additional data, and we hav e been sy stematically working through these requirements and seeking to address the

FDA's concerns. A f ull response will be prov ided to the FDA. In February 2008, the FDA adv ised Wy eth that it expects to conv ene an adv isory committee to rev iew

the pending NDAs f or both the treatment and prev ention indications af ter we submit our response to the “approv able” letters. In April 2009, Wy eth receiv ed approv al

in the EU f or CONBRIZA (the EU trade name f or Viv iant) f or the treatment of post-menopausal osteoporosis in women at increased risk of f racture. Viv iant was

also approv ed in Japan in July 2010 f or the treatment of post-menopausal osteoporosis and in South Korea in Nov ember 2011 f or the treatment and prev ention of

post-menopausal osteoporosis.

REGULATORY APPROVALS AND FILINGS IN THE EU AND JAPAN

PRODUCT DESCRIPTION OF EVENT DATE APPROVED DATE FILED*

Eliquis (Apixaban) (a) Approval in Japan for prevention of ischemic stroke and systemic

embolism in patients w ith nonvalvular atrial f ibrillation

December 2012 —

Toviaz Approval in Japan for treatment of overactive bladder December 2012 —

Eliquis (Apixaban) (a) Approval in the EU for prevention of stroke and systemic embolism

in patients w ith nonvalvular atrial f ibrillation

November 2012 —

Xalkori (Crizotinib) Conditional marketing authorization in the EU for treatment of

previously treated ALK-positive advanced non-small cell lung

cancer

October 2012 —

Inlyta (Axitinib) Approval in the EU for treatment of advanced renal cell carcinoma

after failure of prior systemic treatment

September 2012 —

Sutent Approval in Japan for treatment of pancreatic neuroendocrine

tumor

August 2012 —

Bazedoxifene-conjugated

estrogens

Application f iled in the EU for treatment of symptoms associated

w ith menopause and osteoporosis

— July 2012

Prevenar 13 Infant Application f iled in Japan for prevention of invasive pneumococcal

disease in infants and young children

— July 2012

Lyrica (Pregabalin) Approval in Japan for treatment of f ibromyalgia June 2012 —

Inlyta (Axitinib) Approval in Japan for treatment of renal cell carcinoma not

indicated for curative resection, metastatic renal cell carcinoma

June 2012 —

Xalkori (Crizotinib) Approval in Japan for treatment of ALK-positive advanced non-

small cell lung cancer

March 2012 —

Lyrica (Pregabalin) Application f iled in Japan for treatment of neuropathic pain:

peripheral neuropathic pain, central neuropathic pain

— March 2012

Tofacitinib Application f iled in Japan for treatment of rheumatoid arthritis — December 2011

Tofacitinib Application f iled in the EU for treatment of moderate-to-severe

active rheumatoid arthritis

— November 2011

Bosutinib (b) Application f iled in the EU for treatment of previously treated

chronic myelogenous leukemia

— August 2011

* For applications in the EU, the dates set f orth in this column are the dates on which the European Medicines Agency (EMA) v alidated our submissions.

(a) This indication f or Eliquis (apixaban) was dev eloped and is being commercialized in collaboration with BMS.(b)

In January 2013, the EMA's Committee f or Medicinal Products f or Human Use (CHMP) issued an opinion recommending that bosutinib be granted conditional approv al

f or treatment of prev iously treated chronic my elogenous leukemia. The initial application was f or the treatment of newly diagnosed chronic my elogenous leukemia.

LATE-STAGE CLINICAL PROGRAMS FOR ADDITIONAL USES AND DOSAGE FORMS

FOR IN-LINE AND IN-REGISTRATION PRODUCTS

PRODUCT INDICATION

Eliquis (Apixaban) For the prevention and treatment of venous thromboembolism, w hich is being developed in collaboration

w ith BMS

Inlyta (Axitinib) Oral and selective inhibitor of vascular endothelial grow th factor (VEGF) receptor 1, 2 & 3 for the treatment

of adjuvant renal cell carcinoma (Asia only)

Lyrica (Pregabalin) Peripheral neuropathic pain; CR (once-a-day) dosing

Sutent Adjuvant renal cell carcinoma

Tofacitinib A JAK kinase inhibitor for the treatment of psoriasis and ulcerative colitis

Xalkori (Crizotinib) An oral ALK and c-Met inhibitor for the treatment of ALK-positive 1st and 2nd line (supports potential full

approval in the U.S.) non-small cell lung cancer

Zithromax/chloroquine Malaria

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NEW DRUG CANDIDATES IN LATE-STAGE DEVELOPMENT

CANDIDATE INDICATION

ALO-02 A Mu-type opioid receptor agonist for the management of moderate-to-severe pain w hen a continuous,

around-the-clock opioid analgesic is needed for an extended period of time

Dacomitinib A pan-HER tyrosine kinase inhibitor for the treatment of previously treated advanced non-small cell lung

cancer

Inotuzumab ozogamicin An antibody drug conjugate, consisting of an anti-CD22 monotherapy antibody linked to a cytotoxic agent,

calicheamycin, for the treatment of aggressive Non-Hodgkin's Lymphoma and acute lymphoblastic leukemia

MnB rLP2086

(PF-05212366)

A prophylactic vaccine for prevention of Neisseria meningitidis serogroup B invasive disease in

adolescents and young adults (ages 11 - 25)

Palbociclib (PD-0332991) An oral and selective reversible inhibitor of the CDK 4 and 6 kinases for the treatment of patients w ith ER

positive, HER2 negative advanced breast cancer

Tanezumab (a) An anti-nerve grow th factor monoclonal antibody for the treatment of pain (on clinical hold)(a)

Following requests by the FDA in 2010, we suspended and subsequently terminated worldwide the osteoarthritis, chronic low back pain and painf ul diabetic peripheral

neuropathy studies of tanezumab. The FDA's requests f ollowed a small number of reports of osteoarthritis patients treated with tanezumab who experienced the

worsening of osteoarthritis leading to total joint replacement and also ref lected the FDA's concerns regarding the potential f or such ev ents in other patient populations.

In December 2010, the FDA placed a clinical hold on all other anti-nerv e growth f actor therapies under clinical inv estigation in the U.S. Studies of tanezumab in cancer

pain were allowed to continue. Extensiv e analy ses were undertaken of all total joint replacements reported in studies of tanezumab. The results of these analy ses and

the conclusions drawn were prov ided to the FDA. On March 12, 2012, the FDA's Arthritis Adv isory Committee met to discuss the f uture dev elopment of nerv e growth

f actor inhibitors, including tanezumab. The Committee v oted that there is a role f or the ongoing dev elopment of nerv e growth f actor inhibitors in conditions such as

osteoarthritis and f or the management of pain associated with conditions other than osteoarthritis f or which there are no agents with demonstrated analgesic ef f ect.

We submitted a Clinical Hold Complete Response to the FDA on July 31, 2012. On August 28, 2012, the FDA remov ed the clinical hold completely f rom the

tanezumab program f or all indications. On December 14, 2012, the FDA placed a new partial clinical hold on the dev elopment of nerv e growth f actor inhibitors,

including tanezumab. The partial clinical hold was based on peripheral nerv ous sy stem ef f ects observ ed in animal studies conducted with nerv e growth f actor

inhibitors by other companies. Current and f uture studies of tanezumab in cancer pain are not af f ected by this partial clinical hold. We intend to work with the FDA to

determine the appropriate path f orward.

Additional product-related programs are in various stages of discovery and development. Also, see the discussion in the “Our BusinessDevelopment Initiatives” section of this Financial Review .

COSTS AND EXPENSES

Cost of Sales

Year Ended December 31, % Change

(MILLIONS OF DOLLARS) 2012 2011 2010 12/11 11/10

Cost of sales $ 11,334 $ 14,076 $ 14,788 (19) (5)

2012 v. 2011

Cost of sales decreased 19% in 2012 , compared to 2011 , primarily due to:

• low er purchase accounting charges, primarily reflecting the fair value adjustments to acquired inventory from Wyeth and King that w assubsequently sold;

• low er costs related to our cost-reduction and productivity initiatives and acquisition-related costs, as w ell as the benefits generated from theongoing productivity initiatives to streamline the manufacturing netw ork;

• reduced manufacturing volumes related to products that lost exclusivity in various markets; and

• the favorable impact of foreign exchange of 3%,

partially offset by:

• an unfavorable shift in geographic, product and business mix due to products that lost exclusivity in various markets.

2011 v. 2010

Cost of sales decreased 5% in 2011 , compared to 2010 , primarily due to:

• low er purchase accounting charges, primarily reflecting the fair value adjustments to acquired inventory from Wyeth that w as subsequentlysold; and

• savings associated w ith our cost-reduction and productivity initiatives,

partially offset by:

• the addition of costs from legacy King’s operations;

• the Puerto Rico excise tax (for additional information, see the “Provision for Taxes on Income” section of this Financial Review );

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• a shift in geographic and business mix; and

• the unfavorable impact of foreign exchange of 2% in 2011.

Selling, Informational and Administrative (SI&A) Expenses

Year Ended December 31, % Change

(MILLIONS OF DOLLARS) 2012 2011 2010 12/11 11/10

Selling, informational and administrative expenses $ 16,616 $ 18,832 $ 18,973 (12) (1)

2012 v. 2011

SI&A expenses decreased 12% in 2012 , compared to 2011 , primarily due to:

• savings generated from a reduction in the f ield force and a decrease in promotional spending, both partly in response to product losses ofexclusivity;

• more streamlined corporate support functions; and

• the favorable impact of foreign exchange of 2%,

partially offset by:

• costs associated w ith the separation of Zoetis employees, net assets and operations from Pfizer.

2011 v. 2010

SI&A expenses w ere largely unchanged in 2011 , compared to 2010 , primarily due to:

• the fee provided for under the U.S. Healthcare Legislation beginning in 2011;

• the addition of legacy King operating costs; and

• the unfavorable impact of foreign exchange of 2%,

offset by:

• savings associated w ith our cost-reduction and productivity initiatives.

Research and Development (R&D) Expenses

Year Ended December 31, % Change

(MILLIONS OF DOLLARS) 2012 2011 2010 12/11 11/10

Research and development expenses $ 7,870 $ 9,074 $ 9,483 (13) (4)

2012 v. 2011

R&D expenses decreased 13% in 2012 , compared to 2011 , primarily due to:

• savings generated by the discontinuation of certain therapeutic areas and R&D programs in connection w ith our previously announced cost-reduction and productivity initiatives; and

• low er charges related to implementing our cost-reduction and productivity initiatives,

partially offset by:

• a $250 million payment to AstraZeneca to obtain the exclusive global over-the-counter rights to Nexium.

2011 v. 2010

R&D expenses decreased 4% in 2011 , compared to 2010 , primarily due to:

• savings associated w ith our cost-reduction and productivity initiatives,

partially offset by:

• higher charges related to implementing our cost-reduction and productivity initiatives;

• the addition of legacy King expenses; and

• the unfavorable impact of foreign exchange of 1%.

R&D expenses also include payments for intellectual property rights of $371 million in 2012 , $306 million in 2011 and $393 million in 2010 (forfurther discussion, see the “Our Business Development Initiatives” section of this Financial Review ).

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Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives

Year Ended December 31, % Change

(MILLIONS OF DOLLARS) 2012 2011 2010 12/11 11/10

Costs associated w ith acquisitions and cost-

reduction/productivity initiatives $ 2,855 $ 4,512 $ 3,926 (37) 15

We incur signif icant costs in connection w ith acquiring, integrating and restructuring businesses and in connection w ith our global cost-reductionand productivity initiatives. For example:

• In connection w ith acquisition activity, w e typically incur costs associated w ith executing the transactions, integrating the acquiredoperations (w hich may include expenditures for consulting and the integration of systems and processes), and restructuring the combinedcompany (w hich may include charges related to employees, assets and activities that w ill not continue in the combined company); and

• In connection w ith our cost-reduction and productivity initiatives, w e typically incur costs and charges associated w ith site closings andother facility rationalization actions, w orkforce reductions and the expansion of shared services, including the development of globalsystems.

All of our businesses and functions may be impacted by these actions, including sales and marketing, manufacturing and research anddevelopment, as w ell as groups such as information technology, shared services and corporate operations. Since the acquisition of Wyeth onOctober 15, 2009, our cost-reduction initiatives announced on January 26, 2009, but not completed as of December 31, 2009, w ere incorporatedinto a comprehensive plan to integrate Wyeth’s operations to generate cost savings and to capture synergies across the combined company. Inaddition, on February 1, 2011, among our ongoing cost reduction/productivity initiatives, w e announced a new research and productivity initiativeto accelerate our strategies to improve innovation and productivity in R&D by prioritizing areas that w e believe have the greatest scientif ic andcommercial promise, utilizing appropriate risk/return profiles and focusing on areas that w e believe have the highest potential to deliver value inthe near term and over time.

Cost-Reduction Goals

With respect to the January 26, 2009 announcements, and our acquisition of Wyeth on October 15, 2009, in the aggregate, w e achieved our cost-reduction goal by the end of 2011, a year earlier than expected, and are continuing to generate cost reductions.

With respect to the R&D productivity initiative announced on February 1, 2011, w e met our goal to achieve signif icant reductions in our annualresearch and development expenses by the end of 2012. Adjusted R&D expenses w ere $7.3 billion in 2012, and w e expect adjusted R&Dexpenses to be approximately $6.5 billion to $7.0 billion in 2013. For an understanding of adjusted research and development expenses, see the“Adjusted Income” section of this Financial Review .

In addition to these major initiatives, w e continuously monitor our organizations for cost reduction and/or productivity opportunities.

Total Costs

Through December 31, 2012, w e incurred approximately $14.8 billion (pre-tax) in cost-reduction and acquisition-related costs (excludingtransaction costs) in connection w ith the aforementioned initiatives. This $14.8 billion is a component of the $15.6 (pre-tax) billion in totalrestructuring charges incurred from the beginning of our cost-reduction and productivity initiatives in 2005 through December 31, 2012. See Notesto Consolidated Financial Statements— Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives for more information. In 2013, w e expect to incur approximately $500-$800 million (after tax) in costs inconnection w ith our ongoing cost-reduction/productivity initiatives and have reflected those costs, as w ell as the related expected costreductions of approximately $1.0 billion (pre-tax), in our 2013 f inancial guidance. See also the “Our Financial Guidance for 2013” section of thisFinancial Review .

Key Activities

The targeted cost reductions w ere achieved through the follow ing actions and w e continue to generate cost reductions through similar actions:

• The closing of duplicative facilities and other site rationalization actions Company-w ide, including research and development facilities,manufacturing plants, sales off ices and other corporate facilities. Among the more signif icant actions are the follow ing:

◦ Manufacturing: After the acquisition of Wyeth, our manufacturing sites totaled 75. Other acquisitions have added 21 manufacturing sitesand w e have subsequently exited 12 sites, resulting in 84 sites supporting continuing operations as of December 31, 2012 . Our plant

netw ork strategy w ill result in the exit of a further eight sites over the next several years. These site counts exclude f ive Nutritionbusiness-related manufacturing sites as the Nutrition business w as sold in 2012. See Notes to Consolidated Financial Statements— Note2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures for more information.

◦ Research and Development: After the acquisition of Wyeth, w e operated in 20 R&D sites and announced that w e w ould close a number ofsites. We have completed a number of site closures, including our Sandw ich, U.K. research and development facility, except for a smallpresence. In addition, in 2011, w e rationalized several other sites to reduce and optimize the overall R&D footprint. We disposed of ourtoxicology site in Catania, Italy; exited our R&D sites in Aberdeen and Gosport, U.K.; and disposed of a vacant site in

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St. Louis, MO. We still maintain laboratories in St. Louis, MO, that focus on the areas of biologics and indications discovery. We are

presently marketing for sale, lease or sale/lease-back, either a portion of or all of certain of our R&D campuses. Locations w ith R&D

operations are in the U.S., Europe, Canada and China, w ith f ive major research sites in addition to a number of specialized units. We also

re-prioritized our commitments to disease areas and have discontinued certain therapeutic areas and R&D programs as part of our R&D

productivity initiative. In 2011 and 2012 our research has primarily focused on f ive high-priority areas that have a mix of small and large

molecules—immunology and inflammation; oncology; cardiovascular and metabolic diseases; neuroscience and pain; and vaccines.

• Workforce reductions across all areas of our business and other organizational changes, primarily in the U.S. f ield force, manufacturing,R&D and corporate functions. We identif ied areas for a reduction in w orkforce across all of our businesses. In January 2009, w henPfizer and Wyeth entered into the merger agreement, the w orkforce of the tw o companies totaled approximately 130,000. We haveexceeded our original target to reduce the combined Pfizer/Wyeth w orkforce 15%, or 19,500, w ithin three years. By the end of 2011,w e achieved a reduction of 26,300, and by the end of 2012, w e achieved a reduction of 38,500. In 2012, the w orkforce declined by12,200, from 103,700 to 91,500, primarily in manufacturing, R&D and corporate functions. The aforementioned w orkforce reductionsinclude the impact of acquisitions and divestitures subsequent to the Wyeth acquisition.

• The increased use of shared services and centers of excellence.

• Procurement savings.

The follow ing table provides the components of costs associated w ith acquisitions and cost-reduction/productivity initiatives:

Year Ended December 31,

(MILLIONS OF DOLLARS) 2012 2011 2010

Transaction costs (a) $ 1 $ 30 $ 22

Integration costs (b) 405 725 1,001

Restructuring charges (c) :

Employee termination costs 997 1,794 1,062

Asset impairments 328 256 869

Exit costs 149 125 191

Restructuring charges and certain acquisition-related costs 1,880 2,930 3,145

Additional depreciation––asset restructuring, recorded in our consolidated

statements of income as follow s (d) :

Cost of sales 267 555 520

Selling, informational and administrative expenses 20 75 227

Research and development expenses 296 605 34

Total additional depreciation––asset restructuring 583 1,235 781

Implementation costs, recorded in our consolidated

statements of income as follow s (e) :

Cost of sales 31 250 —

Selling, informational and administrative expenses 129 25 —

Research and development expenses 232 72 —

Total implementation costs 392 347 —

Total costs associated w ith acquisitions and cost-reduction/productivity initiatives $ 2,855 $ 4,512 $ 3,926

(a)

Transaction costs represent external costs directly related to acquired businesses and primarily include expenditures f or banking, legal, accounting and other similar

serv ices.(b)

Integration costs represent external, incremental costs directly related to integrating acquired businesses, and primarily include expenditures f or consulting and the

integration of sy stems and processes.(c)

From the beginning of our cost-reduction and transf ormation initiativ es in 2005 through December 31, 2012 , Employee termination costs represent the expected

reduction of the workf orce by approximately 62,200 employ ees, mainly in manuf acturing, sales and research, of which approximately 51,700 employ ees hav e been

terminated as of December 31, 2012 . In 2012 , substantially all employ ee termination costs represent additional costs with respect to approximately 4,800

employ ees.

The restructuring charges in 2012 are associated with the f ollowing:

• Primary Care operating segment ( $295 million ), Specialty Care and Oncology operating segment ( $175 million ), Established Products and EmergingMarkets operating segment ( $125 million ), Animal Health operating segment ( $59 million ), Consumer Healthcare operating segment ( $45 million ),research and dev elopment operations ( $6 million income), manuf acturing operations ( $265 million ) and Corporate ( $516 million ).

The restructuring charges in 2011 are associated with the f ollowing:

• Primary Care operating segment ( $593 million ), Specialty Care and Oncology operating segment ( $220 million ), Established Products and EmergingMarkets operating segment ( $110 million ), Animal Health operating segment ( $45 million ), Consumer Healthcare operating segment ( $8 million ), researchand dev elopment operations ( $490 million ), manuf acturing operations ( $287 million ) and Corporate ( $422 million ).

The restructuring charges in 2010 are associated with the f ollowing:

• Primary Care operating segment ( $71 million ), Specialty Care and Oncology operating segment ( $197 million ), Established Products and EmergingMarkets operating segment ( $43 million ), Animal Health operating segment ( $34 million ), Consumer Healthcare operating segment ( $12 million ), researchand dev elopment operations ( $297 million ), manuf acturing operations ( $1.1 billion ) and Corporate ( $350 million ).

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(d) Additional depreciation––asset restructuring represents the impact of changes in the estimated usef ul liv es of assets inv olv ed in restructuring actions.(e) Implementation costs represent external, incremental costs directly related to implementing our non-acquisition-related cost-reduction and productiv ity initiativ es.

The follow ing table provides the components of and changes in our restructuring accruals:

(MILLIONS OF DOLLARS)

Employee

Termination

Costs

Asset

Impairment

Charges Exit Costs Accrual

Balance, January 1, 2011 $ 2,149 $ — $ 101 $ 2,250

Provision 1,794 256 125 2,175

Utilization and other (a) (1,518) (256) — (134) (1,908)

Balance, December 31, 2011 (b) 2,425 — 92 2,517

Provision 997 328 149 1,474

Utilization and other (a) (1,629) (328) (84) (2,041)

Balance, December 31, 2012 (c) $ 1,793 $ — $ 157 $ 1,950

(a) Includes adjustments f or f oreign currency translation.(b) Included in Other current liabilities ($ 1.6 billion ) and Other noncurrent liabilities ($ 930 million ).(c) Included in Other current liabilities ( $1.2 billion ) and Other noncurrent liabilities ( $731 million ).

Other Deductions—Net

Year Ended December 31, % Change

(MILLIONS OF DOLLARS) 2012 2011 2010 12/11 11/10

Other deductions—net $ 4,031 $ 2,499 $ 3,941 61 (37)

2012 v. 2011

Other deductions—net changed unfavorably by 61% in 2012 , compared to 2011 , w hich primarily reflects:

• charges for litigation-related matters that w ere approximately $1.4 billion higher in 2012 than in 2011, primarily due to a $491 million chargeresulting from an agreement-in-principle w ith the U.S. Department of Justice to resolve an investigation into Wyeth's historical promotionalpractices in connection w ith Rapamune, a $450 million settlement of a law suit by Brigham Young University related to Celebrex, and chargesrelated to Chantix litigation (for additional information, see Notes to Consolidated Financial Statements— Note 17. Commitments andContingencies ); and

• royalty-related income that w as approximately $100 million low er in 2012 than in 2011.

2011 v. 2010

Other deductions––net changed favorably by 37% in 2011 , compared to 2010 , w hich primarily reflects:

• asset impairment charges that w ere approximately $888 million higher in 2010 than in 2011, (see below ); and

• charges for litigation-related matters that w ere $939 million higher in 2010 than in 2011, w hich reflects charges recorded in 2010 forasbestos litigation related to our w holly ow ned subsidiary, Quigley Company, Inc. (for additional information, see Notes to ConsolidatedFinancial Statements— Note 17. Commitments and Contingencies ),

partially offset by:

• a low er net gain on asset disposals in 2011 than in 2010.

For information about the asset impairment charges, see the “Signif icant Accounting Policies and Application of Critical Accounting Estimates—Asset Impairment Review s” section of this Financial Review , as w ell as Notes to Consolidated Financial Statements Note 4. Other Deductions—Net and Note 10B. Goodwill and Other Intangible Assets: Other Intangible Assets.

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PROVISION FOR TAXES ON INCOME

Year Ended December 31, % Change

(MILLIONS OF DOLLARS) 2012 2011 2010 12/11 11/10

Provision for taxes on income $ 2,562 $ 3,909 $ 1,153 (34) 239

Effective tax rate on continuing operations 21.2% 31.8% 12.2%

During the third quarter of 2012, w e reached a multi-year settlement w ith the U.S. Internal Revenue Service (IRS) w ith respect to the audits of thePfizer Inc. tax returns for the years 2006 through 2008. The IRS concluded the examination of the aforementioned tax years and issued a f inalRevenue Agent's Report (RAR). We agreed w ith all the adjustments and computations contained in the RAR. As a result of settling these audityears, w e recorded a tax benefit of approximately $1.1 billion, representing tax and interest (see Notes to Consolidated Financial Statements—Note 5A. Tax Matters: Taxes on Income from Continuing Operations ).

During the fourth quarter of 2010, w e reached a multi-year settlement w ith the IRS related to issues w e had appealed w ith respect to the auditsof the Pfizer Inc. tax returns for the years 2002 through 2005, as w ell as the Pharmacia audit for the year 2003 through the date of merger w ithPfizer (April 16, 2003). The IRS concluded its examination of the aforementioned tax years and issued a f inal RAR. We agreed w ith all of theadjustments and computations contained in the RAR. As a result of settling these audit years, w e recorded a tax benefit of approximately $2.0billion, representing tax and interest (see Notes to Consolidated Financial Statements— Note 5A. Tax Matters: Taxes on Income from ContinuingOperations ).

2012 v. 2011

The low er effective tax rate in 2012 compared to 2011 is primarily the result of:

• a multi-year settlement w ith the IRS in 2012 that resulted in a tax benefit of approximately $1.1 billion, representing tax and interest; and

• the resolution of certain prior-period tax positions in 2012 w ith various foreign tax authorities, and from the expiration of certain statutes of

limitations that resulted in tax benefits of approximately $310 million, representing tax and interest,

partially offset by:

• the impact of the expiration of the U.S. research and development tax credit on December 31, 2011; and

• the non-deductibility of the 2012 legal charge related to Rapamune (see the "Other Deductions—Net" section of this Financial Review ).

For additional details about the resolution of certain tax positions, see Notes to Consolidated Financial Statements— Note 5A. Tax Matters: Taxeson Income from Continuing Operations .

2011 v. 2010

The higher effective tax rate in 2011 compared to 2010 is primarily the result of:

• the non-recurrence of a multi-year settlement w ith the IRS that resulted in a tax benefit in 2010 of approximately $2.0 billion, representing taxand interest; and

• the non-recurrence of a $460 million tax benefit, representing tax and interest, related to the resolution of certain prior-period tax positions in2010 w ith various foreign tax authorities, as w ell as from the expiration of the statutes of limitations,

partially offset by:

• the decrease and jurisdictional mix of certain impairment charges related to assets acquired in connection w ith the Wyeth acquisition; and

• the change in the jurisdictional mix of earnings.

For additional details about the resolution of certain tax positions, see Notes to Consolidated Financial Statements— Note 5A. Tax Matters: Taxeson Income from Continuing Operations .

Changes in Tax Laws and Tax Rulings

We have been granted an incentive tax ruling in Belgium, effective December 1, 2012, that provides for incentive tax rates on certain of ourBelgium earnings through 2017. The expected impact in 2013 is not signif icant and is reflected in our f inancial guidance for 2013.

On January 3, 2013, the President of the United States signed into law the American Taxpayer Relief Act of 2012 (the 2012 Act), w hich extends

the U.S. research and development tax credit for tax years 2012 and 2013, as w ell as other provisions. Given the enactment date of the 2012Act, the 2012 Act had no impact on our 2012 results. The expected impact in 2013 is not signif icant and is reflected in our f inancial guidance for2013.

On August 10, 2010, the President of the United States signed into law the Education Jobs and Medicaid Assistance Act of 2010 (the 2010 Act),w hich includes education and Medicaid funding provisions, the cost of w hich is offset w ith revenues that result from changes to certain aspectsof the tax treatment of the foreign-source income of U.S.-based companies. Given the effective dates of the various provisions of the 2010 Act, ithad no impact on our 2010 results. The 2010 Act did not have a signif icant negative impact on our results in 2011 or 2012 and is

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not expected to have a signif icant negative impact on our results in 2013. The impact of the 2010 Act is recorded in Provision for taxes onincome. The expected impact in 2013 is reflected in our f inancial guidance for 2013.

On October 25, 2010, the Governor of Puerto Rico signed into law Act 154 to modify the Puerto Rico source-of-income rules and implement anexcise tax on the purchase of products by multinational corporations and their subsidiaries from their Puerto Rico aff iliates that is effective from2011 through 2016. Act 154 had no impact on our results in 2010, since it did not become effective until 2011. Act 154 had a negative impact onour results in 2011 and 2012. Act 154 w ill continue to negatively impact our results through 2016. The impact of Act 154 is recorded in Cost ofsales and Provision for taxes on income. The expected impact in 2013 is reflected in our f inancial guidance for 2013.

DISCONTINUED OPERATIONS

For additional information about our discontinued operations, see Notes to Consolidated Financial Statements— Note 2B. Acquisitions,Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures .

The follow ing table provides the components of Discontinued operations — net of tax :

Year Ended December 31, (a)

(MILLIONS OF DOLLARS) 2012 2011 2010

Revenues $ 2,258 $ 2,673 $ 2,643

Pre-tax income/(loss) from discontinued operations 414 487 (50)

Provision/(benefit) for taxes on income (b) 117 137 (31)

Income/(loss) from discontinued operations––net of tax 297 350 (19)

Pre-tax gain/(loss) on sale of discontinued operations 7,123 1,688 (11)

Provision for taxes on income (c) 2,340 384 —

Gain/(loss) on sale of discontinued operations––net of tax 4,783 1,304 (11)

Discontinued operations—net of tax $ 5,080 $ 1,654 $ (30)

(a)

Includes the Nutrition business f or all periods presented (through Nov ember 30, 2012) and the Capsugel business f or 2011 (through August 1, 2011) and 2010 only .

The net loss in 2010 includes the impairment of an indef inite-liv ed Brand intangible asset in the Nutrition business of approximately $385 million.(b)

Includes a def erred tax expense of $24 million f or 2012 , a def erred tax benef it of $43 million f or 2011 , and a def erred tax benef it of $156 million f or 2010 . These

def erred tax prov isions include def erred income taxes related to inv estments in certain f oreign subsidiaries, resulting f rom our intention not to hold these subsidiaries

indef initely .(c)

Includes a def erred tax expense of $1.4 billion f or 2012 and $190 million f or 2011 . These def erred tax prov isions include def erred tax expense of $2.2 billion f or 2012

and $190 million f or 2011 on certain current-y ear f unds earned outside the U.S. that will not be indef initely reinv ested ov erseas.

ADJUSTED INCOME

General Description of Adjusted Income Measure

Adjusted income is an alternative view of performance used by management, and w e believe that investors’ understanding of our performance isenhanced by disclosing this performance measure. We report Adjusted income in order to portray the results of our major operations––thediscovery, development, manufacture, marketing and sale of prescription medicines for humans and animals, consumer healthcare (over-the-counter) products, and vaccines––prior to considering certain income statement elements. We have defined Adjusted income as Net incomeattributable to Pfizer Inc. before the impact of purchase accounting for acquisitions, acquisition-related costs, discontinued operations and certainsignif icant items. The Adjusted income measure is not, and should not be view ed as, a substitute for U.S. GAAP net income.

The Adjusted income measure is an important internal measurement for Pfizer. We measure the performance of the overall Company on this basisin conjunction w ith other performance metrics. The follow ing are examples of how the Adjusted income measure is utilized:

• senior management receives a monthly analysis of our operating results that is prepared on an Adjusted income basis;

• our annual budgets are prepared on an Adjusted income basis; and

• senior management’s annual compensation is derived, in part, using this Adjusted income measure. Adjusted income is one of theperformance metrics utilized in the determination of bonuses under the Pfizer Inc. Executive Annual Incentive Plan that is designed to limit thebonuses payable to the Executive Leadership Team (ELT) for purposes of Internal Revenue Code Section 162(m). Subject to the

Section 162(m) limitation, the bonuses are funded from a pool based on the achievement of three f inancial metrics, including adjusted dilutedearnings per share, w hich is derived from Adjusted income. Since 2011, this metric accounts for 40% of the bonus pool made available toELT members and other members of senior management and w ill constitute a factor in determining each of these individual’s bonus.

Despite the importance of this measure to management in goal setting and performance measurement, Adjusted income is a non-GAAP financialmeasure that has no standardized meaning prescribed by U.S. GAAP and, therefore, has limits in its usefulness to investors. Because of its non-standardized definition, Adjusted income (unlike U.S. GAAP net income) may not be comparable to the calculation of similar measures of othercompanies. Adjusted income is presented solely to permit investors to more fully understand how management assesses performance.

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We also recognize that, as an internal measure of performance, the Adjusted income measure has limitations, and w e do not restrict ourperformance-management process solely to this metric. A limitation of the Adjusted income measure is that it provides a view of our operationsw ithout including all events during a period, such as the effects of an acquisition or amortization of purchased intangibles, and does not provide acomparable view of our performance to other companies in the biopharmaceutical industry. We also use other specif ically tailored tools designedto achieve the highest levels of performance. For example, our R&D organization has productivity targets, upon w hich its effectiveness ismeasured. In addition, the earn-out of Performance Share Aw ard grants is determined based on a formula that measures our performance usingrelative total shareholder return.

Purchase Accounting Adjustments

Adjusted income is calculated prior to considering certain signif icant purchase accounting impacts resulting from business combinations and netasset acquisitions. These impacts, primarily associated w ith Pharmacia (acquired in 2003), Wyeth (acquired in 2009) and King (acquired in 2011),can include the incremental charge to cost of sales from the sale of acquired inventory that w as w ritten up to fair value, amortization related tothe increase in fair value of the acquired f inite-lived intangible assets, depreciation related to the increase/decrease in fair value of the acquiredfixed assets, amortization related to the increase in fair value of acquired debt, and the fair value changes associated w ith contingentconsideration. Therefore, the Adjusted income measure includes the revenues earned upon the sale of the acquired products w ithout consideringthe acquisition cost of those products.

Certain of the purchase accounting adjustments can occur through 20 or more years, but this presentation provides an alternative view of ourperformance that is used by management to internally assess business performance. We believe the elimination of amortization attributable toacquired intangible assets provides management and investors an alternative view of our business results by trying to provide a degree of parityto internally developed intangible assets for w hich research and development costs previously have been expensed.

How ever, a completely accurate comparison of internally developed intangible assets and acquired intangible assets cannot be achieved throughAdjusted income. This component of Adjusted income is derived solely from the impacts of the items listed in the f irst paragraph of this section.We have not factored in the impacts of any other differences in experience that might have occurred if w e had discovered and developed thoseintangible assets on our ow n, and this approach does not intend to be representative of the results that w ould have occurred in thosecircumstances. For example, our research and development costs in total, and in the periods presented, may have been different; our speed tocommercialization and resulting sales, if any, may have been different; or our costs to manufacture may have been different. In addition, ourmarketing efforts may have been received differently by our customers. As such, in total, there can be no assurance that our Adjusted incomeamounts w ould have been the same as presented had w e discovered and developed the acquired intangible assets.

Acquisition-Related Costs

Adjusted income is calculated prior to considering transaction, integration, restructuring and additional depreciation costs associated w ithbusiness combinations because these costs are unique to each transaction and represent costs that w ere incurred to restructure and integratetw o businesses as a result of the acquisition decision. For additional clarity, only transaction costs, additional depreciation and restructuring andintegration activities that are associated w ith a business combination or a net-asset acquisition are included in acquisition-related costs. We havemade no adjustments for the resulting synergies.

We believe that view ing income prior to considering these charges provides investors w ith a useful additional perspective because the signif icantcosts incurred in connection w ith a business combination result primarily from the need to eliminate duplicate assets, activities or employees––anatural result of acquiring a fully integrated set of activities. For this reason, w e believe that the costs incurred to convert disparate systems, toclose duplicative facilities or to eliminate duplicate positions (for example, in the context of a business combination) can be view ed differently fromthose costs incurred in other, more normal, business contexts.

The integration and restructuring costs associated w ith a business combination may occur over several years, w ith the more signif icant impactsending w ithin three years of the transaction. Because of the need for certain external approvals for some actions, the span of time needed toachieve certain restructuring and integration activities can be lengthy. For example, due to the highly regulated nature of the pharmaceuticalbusiness, the closure of excess facilities can take several years, as all manufacturing changes are subject to extensive validation and testing andmust be approved by the FDA and/or other global regulatory authorities.

Discontinued Operations

Adjusted income is calculated prior to considering the results of operations included in discontinued operations, as w ell as any related gains orlosses on the sale of such operations such as the sale of our Capsugel business, w hich w e sold in August 2011, and the sale of our Nutritionbusiness, w hich w e sold in November 2012. We believe that this presentation is meaningful to investors because, w hile w e review ourbusinesses and product lines for strategic f it w ith our operations, w e do not build or run our businesses w ith the intent to sell them.(Restatements due to discontinued operations do not impact compensation or change the Adjusted income measure for the compensation of therestated periods but are presented here on a restated basis for consistency across all periods.)

Certain Significant Items

Adjusted income is calculated prior to considering certain signif icant items. Certain signif icant items represent substantive, unusual items that areevaluated on an individual basis. Such evaluation considers both the quantitative and the qualitative aspect of their unusual nature. Unusual, in thiscontext, may represent items that are not part of our ongoing business; items that, either as a result of their nature or size, w e w ould not expectto occur as part of our normal business on a regular basis; items that w ould be non-recurring; or items that relate to products

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w e no longer sell. While not all-inclusive, examples of items that could be included as certain signif icant items w ould be a major non-acquisition-related restructuring charge and associated implementation costs for a program that is specif ic in nature w ith a defined term, such as thoserelated to our non-acquisition-related cost-reduction and productivity initiatives; amounts related to certain disposals of businesses, products orfacilities that do not qualify as discontinued operations under U.S. GAAP; amounts associated w ith transition service agreements in support ofdiscontinued operations after sale; certain intangible asset impairments; adjustments related to the resolution of certain tax positions; the impact ofadopting certain signif icant, event-driven tax legislation; or charges related to certain legal matters, such as certain of those discussed in Notes toConsolidated Financial Statements— Note 17. Commitments and Contingencies and in Part II—Other Information; Item 1. Legal Proceedings inour Quarterly Reports on Form 10-Q filings. Normal, ongoing defense costs of the Company or settlements of and accruals for legal matters madein the normal course of our business w ould not be considered certain signif icant items.

Reconciliation

The follow ing table provides a reconciliation of Net income attributable to Pfizer Inc. , as reported under U.S. GAAP, and Non-GAAP Adjusted

income:

Year Ended December 31, % Change

(MILLIONS OF DOLLARS) 2012 2011 2010 12/11 11/10

GAAP Reported net income attributable to Pfizer Inc. $ 14,570 $ 10,009 $ 8,257 46 21

Purchase accounting adjustments—net of tax 3,598 5,000 6,011 (28) (17)

Acquisition-related costs—net of tax 756 1,457 2,844 (48) (49)

Discontinued operations—net of tax (5,080) (1,654) 30 (207) *

Certain signif icant items—net of tax 2,632 3,027 420 (13) *

Non-GAAP Adjusted income (a) $ 16,476 $ 17,839 $ 17,562 (8) 2

(a)

The ef f ectiv e tax rate on Non-GAAP Adjusted income was 29.3% in 2012 , 29.6% in 2011 and 29.9% in 2010 . The ef f ectiv e tax rate f or 2012 compared with the prior-

y ear ref lects the impact of the change in the jurisdictional mix of earnings and the expiration of the U.S. research and dev elopment tax credit, and the f av orable

impact of the resolution of certain prior-period tax positions in 2012 with v arious f oreign tax authorities, and f rom the expiration of certain statutes of limitations.

* Calculation not meaningful.

Certain amounts and percentages may reflect rounding adjustments.

The follow ing table provides a reconciliation of Reported diluted EPS, as reported under U.S. GAAP, and Non-GAAP Adjusted diluted EPS:

Year Ended December 31, % Change

2012 2011 2010 12/11 11/10

Earnings per common share—diluted (a)

GAAP Reported income from continuing operations

attributable to Pfizer Inc. common shareholders $ 1.26 $ 1.06 $ 1.03 19 3

Income from discontinued operations—net of tax 0.68 0.21 — 224 *

GAAP Reported net income attributable to Pfizer Inc.

common shareholders 1.94 1.27 1.02 53 25

Purchase accounting adjustments—net of tax 0.48 0.64 0.74 (25) (14)

Acquisition-related costs—net of tax 0.10 0.19 0.35 (47) (46)

Discontinued operations—net of tax (0.68) (0.21) — (224) *

Certain signif icant items—net of tax 0.35 0.38 0.05 (8) *

Non-GAAP Adjusted income attributable to Pfizer Inc.

common shareholders (b) $ 2.19 $ 2.27 $ 2.18 (4) 4

(a) EPS amounts may not add due to rounding.(b)

Reported and Adjusted diluted earnings per share in 2012 and 2011 were signif icantly impacted by the decrease in the number of shares outstanding, primarily due to

the Company 's ongoing share repurchase program.

* Calculation not meaningf ul.

Certain amounts and percentages may reflect rounding adjustments.

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Adjusted income, as show n above, excludes the follow ing items:

Year Ended December 31,

(MILLIONS OF DOLLARS) 2012 2011 2010

Purchase accounting adjustments

Amortization, depreciation and other (a) $ 4,952 $ 5,523 $ 5,314

Cost of sales, primarily related to fair value adjustments of acquired inventory 5 1,230 2,822

Total purchase accounting adjustments, pre-tax 4,957 6,753 8,136

Income taxes (b) (1,359) (1,753) (2,125)

Total purchase accounting adjustments—net of tax 3,598 5,000 6,011

Acquisition-related costs

Transaction costs (c) 1 30 22

Integration costs (c) 405 725 1,001

Restructuring charges (c) 279 601 2,122

Additional depreciation—asset restructuring (d) 282 623 781

Total acquisition-related costs, pre-tax 967 1,979 3,926

Income taxes (b) (211) (522) (1,082)

Total acquisition-related costs—net of tax 756 1,457 2,844

Discontinued operations

(Income)/loss from operations—net of tax (297) (350) 19

(Gain)/loss on sale of discontinued operations (4,783) (1,304) 11

Total discontinued operations—net of tax (5,080) (1,654) 30

Certain signif icant items

Restructuring charges (e) 1,195 1,574 —

Implementation costs and additional depreciation—asset restructuring (f) 693 959 —

Certain legal matters (g) 2,191 822 1,703

Certain asset impairment charges (h) 884 856 1,752

Inventory w rite-off (i) 28 8 212

Costs associated w ith the separation of Zoetis (j) 325 35 —

Other 8 93 (102)

Total certain signif icant items, pre-tax 5,324 4,347 3,565

Income taxes (b) (2,692) (1,320) (3,145)

Total certain signif icant items—net of tax 2,632 3,027 420

Total purchase accounting adjustments, acquisition-related costs, discontinued

operations and certain signif icant items—net of tax $ 1,906 $ 7,830 $ 9,305

(a) Included primarily in Amortization of intangible assets (see Notes to Consolidated Financial Statements— Note 10. Goodwill and Other Intangible Assets ).(b)

Included in Provision for taxes on income. Income taxes includes the tax ef f ect of the associated pre-tax amounts, calculated by determining the jurisdictional location

of the pre-tax amounts and apply ing that jurisdiction’s applicable tax rate. In addition, income taxes f or Certain signif icant items in 2012 includes a $1.1 billion tax

benef it, representing tax and interest, as a result of a settlement with the IRS related to audits f or tax y ears 2006-2008. Amounts in 2010 include a $2.0 billion tax

benef it, representing tax and interest, as a result of a settlement with the IRS of certain audits cov ering tax y ears 2002-2005. See Notes to Consolidated Financial

Statements— Note 5A. Tax Matters: Taxes on Income from Continuing Operations .(c)

Included in Restructuring charges and certain acquisition-related costs (see Notes to Consolidated Financial Statements— Note 3. Restructuring Charges and Other

Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives ).(d)

Represents the impact of changes in the estimated usef ul liv es of assets inv olv ed in restructuring actions related to acquisitions. For 2012, included in Cost of sales

($267 million), Selling informational and administrative expenses ($9 million) and Research and development expenses ($6 million). For 2011, included in Cost of sales

($555 million), Selling, informational and administrative expenses ($45 million) and Research and development expenses ($23 million). For 2010, included in Cost of

sales ($520 million), Selling, informational and administrative expenses ($227 million) and Research and development expenses ($34 million).(e)

Represents restructuring charges incurred f or our cost-reduction and productiv ity initiativ es. Included in Restructuring charges and certain acquisition-related costs

(see Notes to Consolidated Financial Statements— Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity

Initiatives ).(f) Amounts primarily relate to our cost-reduction and productiv ity initiativ es (see Notes to Consolidated Financial Statements— Note 3. Restructuring Charges and

Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives ). For 2012, included in Cost of sales ($31 million), Selling, informational and

administrative expenses ($140 million) and Research and development expenses ($522 million). For 2011, included in Cost of sales ($250 million), Selling, informational

and administrative expenses ($55 million) and Research and development expenses ($654 million).(g)

Included in Other deductions—net (see the “Other Deductions—Net” section of this Financial Rev iew and Notes to Consolidated Financial Statements— Note 4.

Other Deductions—Net ) .

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(h)

Substantially all included in Other deductions—net (see the “Other Deductions—Net” section of this Financial Rev iew and Notes to Consolidated Financial Statements— Note 4. Other Deductions—Net ) .

(i) Included in Cost of sales (see also the “Costs and Expenses––Cost of Sales” section of this Financial Rev iew) .(j) Costs incurred in connection with the initial public of f ering of a 19.8% ownership stake in Zoetis. Includes expenditures f or banking, legal, accounting and similar

serv ices, as well as costs associated with the separation of Zoetis employ ees, net assets and operations f rom Pf izer, such as consulting and sy stems costs. For

2012, included in Costs of sales ($6 million), Selling, informational and administrative expenses ($194 million) and Other deductions—net ($125 million). For 2011,

substantially all included in Other deductions—net .

ANALYSIS OF THE CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Changes in the components of Accumulated other comprehensive loss reflect the follow ing:

2012

For Foreign currency translation adjustments , reflects the w eakening of several foreign currencies against the U.S. dollar, primarily the euro, theJapanese yen, the Australian dollar and the Brazilian real.

For Unrealized holding gains/(losses) on derivative financial instruments , reflects the impact of fair value adjustments. See also Notes toConsolidated Financial Statements— Note 7A. Financial Instruments: Selected Financial Assets and Liabilities .

For Benefit plans: Actuarial losses , reflects the impact of changes in actuarial assumptions and the difference betw een actual return on planassets and expected return on plan assets. See also Notes to Consolidated Financial Statements— Note 11. Pension and Postretirement BenefitPlans and Defined Contribution Plans .

2011

For Foreign currency translation adjustments , reflects the strengthening of several foreign currencies against the U.S. dollar, primarily the euro,the Japanese yen, the British pound, and the Australian dollar .

For Unrealized holding gains/(losses) on derivative financial instruments , reflects the impact of fair value adjustments. See also Notes toConsolidated Financial Statements— Note 7A. Financial Instruments: Selected Financial Assets and Liabilities .

For Benefit plans: Actuarial losses , reflects the impact of changes in actuarial assumptions and the difference betw een actual return on planassets and expected return on plan assets. See also Notes to Consolidated Financial Statements— Note 11. Pension and Postretirement BenefitPlans and Defined Contribution Plans .

2010

For Foreign currency translation adjustments , reflects the w eakening of several foreign currencies against the U.S. dollar, primarily the euro andthe British pound .

For Unrealized holding gains/(losses) on derivative financial instruments , reflects the impact of fair value adjustments. See also Notes toConsolidated Financial Statements— Note 7A. Financial Instruments: Selected Financial Assets and Liabilities .

For Benefit plans: Actuarial losses , reflects the impact of changes in actuarial assumptions and the difference betw een actual return on planassets and expected return on plan assets. See also Notes to Consolidated Financial Statements— Note 11. Pension and Postretirement BenefitPlans and Defined Contribution Plans .

ANALYSIS OF THE CONSOLIDATED BALANCE SHEETS

For information about certain of our f inancial assets and liabilities, including Cash and cash equivalents, Short-term investments, Long-terminvestments, Short-term borrowings, including current portion of long-term debt , and Long-term debt , see “Analysis of Financial Condition,Liquidity and Capital Resources” below .

For Assets of discontinued operations and other assets held for sale , the decrease reflects the sale of our Nutrition business (see Notes toConsolidated Financial Statements— Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:Divestitures ).

Many changes in our asset and liability accounts as of December 31, 2012 , compared to December 31, 2011 , reflect, among other things,increases associated w ith our acquisitions of Alacer Corp., Ferrosan Holding A/S and NextWave Pharmaceuticals, Inc. (see Notes toConsolidated Financial Statements— Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:Acquisitions ) and decreases due to the impact of foreign exchange.

For Accounts Receivable, net , see “Selected Measures of Liquidity and Capital Resources: Accounts Receivable” below .

For Property, plant and equipment, less accumulated depreciation , the change also reflects depreciation in excess of capital additions.

For Identifiable intangible assets, less accumulated amortization, the change also reflects amortization and asset impairments (see Notes toConsolidated Financial Statements— Note 4. Other Deductions—Net ).

For Accounts payable , the change also reflects an increase in Value Added Tax (VAT) payables.

For Other current liabilities and Other noncurrent liabilities , the changes also reflect a decrease in restructuring-related liabilities and the impactof low er revenues on expense levels. Other noncurrent liabilities also reflects the impact of fair value adjustments on derivative f inancialinstruments.

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For Pension benefit obligations and Postretirement benefit obligations , the changes also reflect the low ering of the discount rate, partiallyoffset by the impact of $938 million of company contributions (see Notes to Consolidated Financial Statements— Note 11. Pension andPostretirement Benefit Plans and Defined Contribution Plans ).

For Other taxes payable, the change also reflects the impact of a number of audit settlements (see Notes to Consolidated Financial Statements—Note 5A. Tax Matters: Taxes on Income from Continuing Operations ).

ANALYSIS OF THE CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31, % Change

(MILLIONS OF DOLLARS) 2012 2011 2010 12/11 11/10

Cash provided by/(used in):

Operating activities $ 17,054 $ 20,240 $ 11,454 (16) 77

Investing activities 6,154 1,843 (492) 234 *

Financing activities (15,999) (20,607) (11,174) (22) 84

Effect of exchange-rate changes on cash and cash equivalents (2) (29) (31) (93) (6)

Net increase/(decrease) in Cash and cash equivalents 7,207 1,447 (243) * *

* Calculation not meaningful.

Operating Activities

2012 v. 2011

Our net cash provided by operating activities w as $17.1 billion in 2012 , compared to $20.2 billion in 2011 . The decrease in net cash provided byoperating activities w as primarily attributable to:

• the loss of exclusivity of Lipitor, as w ell as certain other products, resulting in low er revenues and associated expenses (see also “TheLoss or Expiration of Intellectual Property Rights” section of this Financial Review ), partially offset by spending reductions resulting fromour company-w ide cost-reduction initiatives;

• payments made in connection w ith certain legal matters; and

• the timing of receipts and payments in the ordinary course of business.

2011 v. 2010

Our net cash provided by operating activities w as $20.2 billion in 2011 , compared to $11.5 billion in 2010 . The increase in net cash provided byoperating activities w as primarily attributable to:

• income tax payments made in 2010 of approximately $11.8 billion, primarily associated w ith certain business decisions executed tofinance the Wyeth acquisition, including the decision to repatriate certain funds earned outside the U.S., compared w ith $2.9 billion in2011; and

• the timing of receipts and payments in the ordinary course of business.

In 2010, the cash f low line item called Other tax accounts, net, reflects the $11.8 billion tax payment described above.

Investing Activities

2012 v. 2011

Our net cash provided by investing activities w as $6.2 billion in 2012 , compared to $1.8 billion in 2011 . The increase in net cash provided byinvesting activities w as primarily attributable to:

• net proceeds from the sale of our Nutrition business of $11.85 billion in 2012 compared to net proceeds from the sale of our Capsugelbusiness of $2.4 billion in 2011 (see Notes to Consolidated Financial Statements–– Note 2B. Acquisitions, Divestitures, CollaborativeArrangements and Equity-Method Investments: Divestitures ); and

• cash paid of $1.1 billion, net of cash acquired, for our acquisitions of Alacer, Ferrosan and NextWave in 2012 (see Notes to

Consolidated Financial Statements–– Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:

Acquisitions ), compared to $3.3 billion cash paid, net of cash acquired, in 2011, for our acquisitions of King, Icagen and Excaliard,

partially offset by:

• net purchases of investments of $3.4 billion in 2012, compared to net proceeds from redemptions and sales of investments of $4.1billion in 2011, w hich w ere primarily used to f inance our acquisition of King.

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2011 v. 2010

Our net cash provided by investing activities w as $1.8 billion in 2011 , compared to $492 million net cash used in 2010 . The increase in net cashprovided by investing activities w as primarily attributable to:

• net proceeds from redemptions, purchases and sales of investments of $4.1 billion in 2011, w hich w ere primarily used to f inance ouracquisition of King, compared to net proceeds from redemptions, purchases and sales of investments of $1.2 billion in 2010; and

• net proceeds of $2.4 billion received from the sale of Capsugel in 2011 (see Notes to Consolidated Financial Statements— Note 2B.Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures),

partially offset by:

• cash paid of $3.3 billion, net of cash acquired, for our acquisitions of King, Icagen and Excaliard in 2011, compared to $273 million paidfor our acquisitions of FoldRx, Vetnex and Synbiotics in 2010.

Financing Activities

2012 v. 2011

Our net cash used in f inancing activities w as $16.0 billion in 2012 , compared to $20.6 billion in 2011 . The decrease in net cash used in f inancingactivities w as primarily attributable to:

• net repayments of borrow ings of $1.7 billion in 2012, compared to net repayments of borrow ings of $5.5 billion in 2011;

• purchases of our common stock of $8.2 billion in 2012, compared to $9.0 billion in 2011; and

• increased proceeds from the exercise of stock options,

slightly offset by:

• higher cash dividends paid.

2011 v. 2010

Our net cash used in f inancing activities w as $20.6 billion in 2011 , compared to $11.2 billion in 2010 . The increase in net cash used in f inancingactivities w as primarily attributable to:

• net repayments of borrow ings of $5.5 billion in 2011, compared to net repayments of borrow ings of $4.2 billion in 2010; and

• purchases of our common stock of $9.0 billion in 2011, compared to $1.0 billion in 2010.

ANALYSIS OF FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

We rely largely on operating cash f low s, short-term investments, short-term commercial paper borrow ings and long-term debt to provide for ourliquidity requirements. We believe that w e have the ability to obtain both short-term and long-term debt to meet our f inancing needs for theforeseeable future. Due to our signif icant operating cash f low s as w ell as our f inancial assets, access to capital markets and available lines ofcredit and revolving credit agreements, w e further believe that w e have the ability to meet our liquidity needs for the foreseeable future, w hichinclude:

• the w orking capital requirements of our operations, including our research and development activities;

• investments in our business;

• dividend payments and potential increases in the dividend rate;

• share repurchases;

• the cash requirements associated w ith our cost-reduction/productivity initiatives;

• paying dow n outstanding debt;

• contributions to our pension and postretirement plans; and

• business-development activities.

With regard to share repurchases, the Company's new $10 billion share-purchase plan became effective on November 30, 2012. (For additionalinformation about the new share-purchase plan, see the “Share-Purchase Plans” section of this Financial Review .)

Our long-term debt is rated investment grade by both Standard & Poor’s (S&P) and Moody’s Investors Service (Moody's). See the “Credit Ratings”section below . As market conditions change, w e continue to monitor our liquidity position. We have taken and w ill continue to take a conservativeapproach to our f inancial investments. Both short-term and long-term investments consist primarily of high-quality, highly liquid, w ell-diversif ied,available-for-sale debt securities.

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Selected Measures of Liquidity and Capital Resources

The follow ing table provides certain relevant measures of our liquidity and capital resources:

As of December 31,

(MILLIONS OF DOLLARS, EXCEPT RATIOS AND PER COMMON SHARE DATA) 2012 2011

Selected f inancial assets:

Cash and cash equivalents (a) $ 10,389 $ 3,182

Short-term investments (a) 22,319 23,270

Long-term investments 14,149 9,814

46,857 36,266

Debt:

Short-term borrow ings, including current portion of long-term debt 6,424 4,016

Long-term debt 31,036 34,926

37,460 38,942

Net f inancial assets (liabilities) (b) $ 9,397 $ (2,676)

Working capital (c) $ 32,796 $ 31,908

Ratio of current assets to current liabilities 2.15:1 2.10:1

Total Pfizer Inc. shareholders' equity per common share (d) $ 11.17 $ 10.85

(a)

See Notes to Consolidated Financial Statements–– Note 7. Financial Instruments f or a description of assets held and f or a description of credit risk related to our

f inancial instruments held.(b)

Net f inancial assets increased during 2012 primarily related to the $11.85 billion proceeds receiv ed f rom the sale of the Nutrition business. For additional inf ormation,

see the “Analy sis of the Consolidated Statements of Cash Flows ” section of this Financial Rev iew.(c) Working capital includes net assets held f or sale of $70 million as of December 31, 2012 and $4.1 billion as of December 31, 2011 .(d)

Represents total Pf izer Inc. shareholders’ equity div ided by the actual number of common shares outstanding (which excludes treasury shares and shares held by

our employ ee benef it trust).

For additional information about the sources and uses of our funds, see the “Analysis of the Consolidated Balance Sheets ” and “ Analysis of theConsolidated Statements of Cash Flow s ” sections of this Financial Review .

Subsequent Events

On January 28, 2013, our then w holly ow ned subsidiary, Zoetis, issued $3.65 billion aggregate principal amount of senior notes, net of an originalissue debt discount of $10 million. The notes have a w eighted-average effective interest rate of 3.30%, and mature at various dates as follow s:1.15% Notes due 2016 ($400 million); 1.875% Notes due 2018 ($749 million); 3.25% Notes due 2023 ($1.349 billion); and 4.7% Notes due 2043($1.142 billion). On February 6, 2013, Zoetis also entered into a commercial paper program w ith a capacity of up to $1.0 billion. No amounts arecurrently outstanding under this program.

Also on January 28, 2013, w e transferred to Zoetis substantially all of the assets and liabilities of our Animal Health business in exchange for allof the Class A and Class B common stock of Zoetis, $1.0 billion of the $3.65 billion senior notes and an amount of cash equal to substantially all ofthe cash proceeds received by Zoetis from the remaining $2.65 billion senior notes issued. The $1.0 billion of senior notes received by Pfizerw ere exchanged by Pfizer for the retirement of Pfizer commercial paper issued in December 2012, and the cash proceeds received by Pfizer ofapproximately $2.5 billion are restricted to debt repayment, dividends and/or stock buybacks, in all cases to be completed by mid-2014.

On February 6, 2013, an initial public offering (IPO) of Zoetis w as completed, pursuant to w hich w e sold 99.015 million shares of Zoetis inexchange for the retirement of approximately $2.5 billion of Pfizer commercial paper issued on January 10, 2013.

In summary, as a result of the above transactions, w e received approximately $6.1 billion of cash (of w hich approximately $2.5 billion is restrictedto debt repayment, dividends and/or stock buybacks, in all cases to be completed by mid-2014) and incurred approximately $3.65 billion in Zoetislong-term debt. For additional information, see Notes to Consolidated Financial Statements— Note 19A. Subsequent Events: Zoetis Debt Offeringand Initial Public Offering.

Tw o major corporate debt-rating organizations, Moody’s and S&P, assign ratings to the Zoetis short-term and long-term debt. A security rating isnot a recommendation to buy, sell or hold securities and the rating is subject to revision or w ithdraw al at any time by the rating organization. Eachrating should be evaluated independently of any other rating.

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The follow ing table provides the current ratings assigned by these rating agencies to the Zoetis commercial paper and senior unsecured non-

credit-enhanced long-term debt:

NAME OF RATING AGENCY

Zoetis

Commercial Paper Zoetis

Long-term Debt

Date of ActionRating Rating Outlook

Moody’s P-2 Baa2 Stable January 2013

S&P A-3 BBB- Stable January 2013

Domestic and International Short-Term Funds Many of our operations are conducted outside the U.S., and signif icant portions of our cash, cash equivalents and short-term investments areheld internationally. We generally hold approximately 10%-30% of these short-term funds in U.S. tax jurisdictions. The amount of funds held in U.S.tax jurisdictions can f luctuate due to the timing of receipts and payments in the ordinary course of business and due to other reasons, such asbusiness-development activities. As part of our ongoing liquidity assessments, w e regularly monitor the mix of domestic and international cashflow s (both inflow s and outf low s). Repatriation of overseas funds can result in additional U.S. federal, state and local income tax payments. Werecord U.S. deferred tax liabilities for certain unremitted earnings, but w hen amounts earned overseas are expected to be indefinitely reinvestedoutside the U.S., no accrual for U.S. taxes is provided.

A substantial portion of the proceeds related to the sale of our Nutrition business to Nestlé is located outside the U.S. We have provided deferredtaxes on certain current-year funds earned outside the U.S. that w ill not be indefinitely reinvested. We expect that the proceeds from the sale w illprimarily be used for share repurchases, as w ell as other value-creating opportunities. For additional information regarding our sale of theNutrition business to Nestlé, see Notes to Consolidated Financial Statements–– Note 2B. Acquisitions, Divestitures, Collaborative Arrangementsand Equity-Method Investments: Divestitures .

Accounts Receivable

We continue to monitor developments regarding government and government agency receivables in several European markets w here economicconditions remain challenging and uncertain. Historically, payments from a number of these European governments and government agenciesextend beyond the contractual terms of sale and the year-over-year trend is w orsening.

We believe that our allow ance for doubtful accounts is appropriate. Our assessment is based on an analysis of the follow ing: (i) paymentsreceived to date; (ii) the consistency of payments from customers; (iii) direct and observed interactions w ith the governments (including courtpetitions) and w ith market participants (for example, the factoring industry); and (iv) various third-party assessments of repayment risk (forexample, rating agency publications and the movement of rates for credit default sw ap instruments).

As of December 31, 2012 , w e had about $1.2 billion in aggregate gross accounts receivable from governments and/or government agencies inItaly, Spain, Greece, Portugal and Ireland, w here economic conditions remain challenging and uncertain. Such receivables in excess of one yearfrom the invoice date, totaling $274 million, w ere as follow s: $128 million in Italy; $105 million in Greece; $25 million in Portugal; $10 million in Spain;and $6 million in Ireland.

Although certain European governments and government agencies sometimes delay payments beyond the contractual terms of sale, w e seek toappropriately balance repayment risk w ith the desire to maintain good relationships w ith our customers and to ensure a humanitarian approach tolocal patient needs.

We w ill continue to closely monitor repayment risk and, w hen necessary, w e w ill continue to adjust our allow ance for doubtful accounts.

Our assessments about the recoverability of accounts receivables can result from a complex series of judgments about future events anduncertainties and can rely heavily on estimates and assumptions. For information about the risks associated w ith estimates and assumptions, seeNotes to Consolidated Financial Statements–– Note 1C. Basis of Presentation and Significant Accounting Policies: Estimates and Assumptions .

Credit Ratings

Tw o major corporate debt-rating organizations, Moody’s and S&P, assign ratings to Pfizer short-term and long-term debt. A security rating is not arecommendation to buy, sell or hold securities and the rating is subject to revision or w ithdraw al at any time by the rating organization. Each ratingshould be evaluated independently of any other rating.

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The follow ing table provides the current ratings assigned by these rating agencies to Pfizer commercial paper and senior unsecured non-credit-

enhanced long-term debt:

NAME OF RATING AGENCY

Pfizer

Commercial Paper Pfizer

Long-term Debt

Date of Last ActionRating Rating Outlook

Moody’s P-1 A1 Stable October 2009

S&P A1+ AA Stable October 2009

See "Subsequent Events" above for information about a January 2013 Zoetis debt offering and the Zoetis commercial paper program.

Debt Capacity

We have available lines of credit and revolving credit agreements w ith a group of banks and other f inancial intermediaries. We maintain cash andcash equivalent balances and short-term investments in excess of our commercial paper and other short-term borrow ings. As of December 31,2012 , w e had access to $9.1 billion of lines of credit, of w hich $2.0 billion expire w ithin one year. Of these lines of credit, $8.4 billion are unused,of w hich our lenders have committed to loan us $7.1 billion at our request. Also, $7.0 billion of our unused lines of credit, all of w hich expire in2016, may be used to support our commercial paper borrow ings.

In December 2012, Zoetis entered into a revolving credit agreement providing for a f ive-year $1.0 billion senior unsecured revolving credit facility,w hich became effective in February 2013 and expires in December 2017.

See "Subsequent Events" above for information about a January 2013 Zoetis debt offering and the Zoetis commercial paper program.

Global Economic Conditions

The challenging economic environment has not had, nor do w e anticipate it w ill have, a signif icant impact on our liquidity. Due to our signif icantoperating cash f low s, f inancial assets, access to capital markets and available lines of credit and revolving credit agreements, w e continue tobelieve that w e have the ability to meet our liquidity needs for the foreseeable future. As markets change, w e continue to monitor our liquidityposition. There can be no assurance that the challenging economic environment or a further economic dow nturn w ould not impact our ability toobtain f inancing in the future.

Contractual Obligations

Payments due under contractual obligations as of December 31, 2012, mature as follow s:

Years

(MILLIONS OF DOLLARS) Total 2013 2014-2015 2016-2017 Thereafter

Long-term debt, including current portion (a) $ 33,485 $ 2,449 $ 6,987 $ 6,356 $ 17,693

Interest payments on long-term debt obligations (b) 17,980 1,494 2,675 2,137 11,674

Other long-term liabilities reflected on our consolidated balance

sheet under U.S. GAAP (c) 5,034 474 899 892 2,769

Lease commitments (d) 1,288 190 304 164 630

Purchase obligations and other (e) 3,534 1,500 1,439 277 318

Uncertain tax positions (f) 80 80 — — —

(a) Long-term debt consists of senior unsecured notes, including f ixed and f loating rate, f oreign currency denominated, and other notes.(b)

Our calculations of expected interest pay ments incorporate only current period assumptions f or interest rates, f oreign currency translation rates and hedging

strategies (see Notes to Consolidated Financial Statements— Note 7. Financial Instruments ), and assume that interest is accrued through the maturity date or

expiration of the related instrument.(c)

Includes expected pay ments relating to our unf unded U.S. supplemental (non-qualif ied) pension plans, postretirement plans and def erred compensation plans.

Excludes amounts relating to our U.S. qualif ied pension plans and international pension plans, all of which hav e a substantial amount of plan assets, because the

required f unding obligations are not expected to be material and/or because such liabilities do not necessarily ref lect f uture cash pay ments, as the impact of changes

in economic conditions on the f air v alue of the pension plan assets and/or liabilities can be signif icant; howev er, we currently anticipate contributing approximately

$343 million to these plans in 2013. Also excludes $3.9 billion of liabilities related to the f air v alue of deriv ativ e f inancial instruments, legal matters, employ ee

terminations, env ironmental matters and other, most of which do not represent contractual obligations. See also our liquidity discussion abov e in this "Analy sis of

Financial Condition, Liquidity and Capital Resources" section, as well as the Notes to Consolidated Financial Statements— Note 3. Restructuring Charges and Other

Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives, Note 7A. Financial Instruments: Selected Financial Assets and Liabilities, Note 11E.

Pension and Postretirement Benefit Plans and Defined Contribution Plans: Cash Flows, and Note 17. Commitments and Contingencies.(d) Includes operating and capital lease obligations.(e)

Includes agreements to purchase goods and serv ices that are enf orceable and legally binding and includes amounts relating to adv ertising, inf ormation technology

serv ices, employ ee benef it administration serv ices, and potential milestone pay ments deemed reasonably likely to occur.(f) Includes amounts ref lected in Income taxes payable only . We are unable to predict the timing of tax settlements related to our noncurrent obligations f or uncertain

tax positions as tax audits can inv olv e complex issues and the resolution of those issues may span multiple y ears, particularly if subject to negotiation or litigation.

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The above table excludes amounts for potential milestone payments under collaboration, licensing or other arrangements, unless the paymentsare deemed reasonably likely to occur. Payments under these agreements generally become due and payable only upon the achievement ofcertain development, regulatory and/or commercialization milestones, w hich may span several years and w hich may never occur.

In 2013, w e expect to spend approximately $1.5 billion on property, plant and equipment. Planned capital spending mostly represents investment tomaintain existing facilities and capacity. We rely largely on operating cash f low s to fund our capital investment needs. Due to our signif icantoperating cash f low s, w e believe w e have the ability to meet our capital investment needs and anticipate no delays to planned capitalexpenditures.

See "Subsequent Events" above for information about a January 2013 Zoetis debt offering. If w e w ere to incorporate the 2013 Zoetis debtoffering into our contractual obligations table above, total payments due w ould increase by $5.8 billion, representing expected principal andinterest obligations of $223 million in 2013 through 2014, $629 million in 2015 through 2016 and $4.9 billion thereafter.

Off-Balance Sheet Arrangements

In the ordinary course of business and in connection w ith the sale of assets and businesses, w e often indemnify our counterparties againstcertain liabilities that may arise in connection w ith a transaction or that are related to activities prior to a transaction. These indemnif icationstypically pertain to environmental, tax, employee and/or product-related matters, and patent-infringement claims. If the indemnif ied party w ere tomake a successful claim pursuant to the terms of the indemnif ication, w e w ould be required to reimburse the loss. These indemnif icationsgenerally are subject to threshold amounts, specif ied claim periods and other restrictions and limitations. Historically, w e have not paid signif icantamounts under these provisions and, as of December 31, 2012 , recorded amounts for the estimated fair value of these indemnif ications are notsignif icant.

Certain of our co-promotion or license agreements give our licensors or partners the rights to negotiate for, or in some cases to obtain undercertain f inancial conditions, co-promotion or other rights in specif ied countries w ith respect to certain of our products.

Share-Purchase Plans

On December 12, 2011, w e announced that the Board of Directors had authorized a $10 billion share-purchase plan (the December 2011 StockPurchase Plan). On November 1, 2012, w e announced that the Board of Directors had authorized an additional $10 billion share-purchase plan,w hich became effective on November 30, 2012.

In 2012, w e purchased approximately 349 million shares of our common stock for approximately $8.2 billion . In 2011, w e purchasedapproximately 459 million shares of our common stock for approximately $9.0 billion . In 2010, w e purchased approximately 61 million shares ofour common stock for approximately $1.0 billion . After giving effect to share purchases through year-end 2012, our remaining share-purchaseauthorization is approximately $11.8 billion at December 31, 2012 .

Dividends on Common Stock

We paid dividends on our common stock of $6.5 billion in 2012 and $6.2 billion in 2011. In December 2012, our Board of Directors declared a f irst-quarter 2013 dividend of $0.24 per share, payable on March 5, 2013, to shareholders of record at the close of business on February 1, 2013. Thefirst-quarter 2013 cash dividend w ill be our 297 th consecutive quarterly dividend.

Our current and projected dividends provide a return to shareholders w hile maintaining suff icient capital to invest in grow ing our businesses andincreasing shareholder value. Our dividends are not restricted by debt covenants. While the dividend level remains a decision of Pfizer’s Board ofDirectors and w ill continue to be evaluated in the context of future business performance, w e currently believe that w e can support future annualdividend increases, barring signif icant unforeseen events.

NEW ACCOUNTING STANDARDS

Recently Adopted Accounting Standards

See Notes to Consolidated Financial Statements— Note 1B. Basis of Presentation and Significant Accounting Policies: Adoption of NewAccounting Standards.

Recently Issued Accounting Standards, Not Adopted as of December 31, 2012

None

FORWARD-LOOKING INFORMATION AND FACTORS THAT MAY AFFECT FUTURE RESULTS

This report and other w ritten or oral statements that w e make from time to time contain forw ard-looking statements that set forth anticipatedresults based on management’s plans and assumptions. Such forw ard-looking statements involve substantial risks and uncertainties. We havetried, w herever possible, to identify such statements by using w ords such as “w ill,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,”

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“believe,” “target,” “forecast,” “goal”, “objective” and other w ords and terms of similar meaning or by using future dates in connection w ith anydiscussion of, among other things, our anticipated future operating or f inancial performance, business plans and prospects, in-line products andproduct candidates, strategic review s, capital allocation, business-development plans and plans relating to share repurchases and dividends. Inparticular, these include statements relating to future actions, business plans and prospects, prospective products or product approvals, futureperformance or results of current and anticipated products, sales efforts, expenses, interest rates, foreign exchange rates, the outcome ofcontingencies, such as legal proceedings, plans relating to share repurchases and dividends, government regulation and f inancial results,including, in particular, the f inancial guidance set forth in the “Our Financial Guidance for 2013” section of this Financial Review and theanticipated costs and cost reductions set forth in the “ Restructuring Charges and Other Costs Associated w ith Acquisitions and Cost-Reduction/Productivity Initiatives ” section of this Financial Review . Among the factors that could cause actual results to differ materially from pastand projected future results are the follow ing:

• the outcome of research and development activities including, w ithout limitation, the ability to meet anticipatedclinical trial commencement and completion dates, regulatory submission and approval dates, and launch dates forproduct candidates;

• decisions by regulatory authorities regarding w hether and w hen to approve our drug applications, as w ell as theirdecisions regarding labeling, ingredients and other matters that could affect the availability or commercial potential ofour products;

• the speed w ith w hich regulatory authorizations, pricing approvals and product launches may be achieved;

• the outcome of post-approval clinical trials, w hich could result in the loss of marketing approval for a product orchanges in the labeling for, and/or increased or new concerns about the safety or eff icacy of, a product that couldaffect its availability or commercial potential;

• the success of external business-development activities;

• competitive developments, including the impact on our competitive position of new product entrants, in-line brandedproducts, generic products, private label products and product candidates that treat diseases and conditions similar tothose treated by our in-line drugs and drug candidates;

• the implementation by the FDA of an abbreviated legal pathw ay to approve biosimilar products, w hich could subjectour biologic products to competition from biosimilar products in the U.S., w ith attendant competitive pressures, afterthe expiration of any applicable exclusivity period and patent rights;

• the ability to meet generic and branded competition after the loss of patent protection for our products or competitorproducts;

• the ability to successfully market both new and existing products domestically and internationally;

• diff iculties or delays in manufacturing;

• trade buying patterns;

• the impact of existing and future legislation and regulatory provisions on product exclusivity;

• trends tow ard managed care and healthcare cost containment;

• the impact of the U.S. Budget Control Act of 2011 (the Budget Control Act) and the deficit-reduction actions to betaken pursuant to the Budget Control Act in order to achieve the deficit-reduction targets provided for therein, and theimpact of any broader deficit-reduction efforts;

• the possible failure of the U.S. federal government to suspend enforcement of the federal debt ceiling beyond May 18, 2013 or to increasethe federal debt ceiling and any resulting inability of the federal government to satisfy its f inancial obligations, including under Medicare,Medicaid and other publicly funded or subsidized health programs;

• the impact of U.S. healthcare legislation enacted in 2010—the Patient Protection and Affordable Care Act, as amendedby the Health Care and Education Reconciliation Act––and of any modif ication or repeal of any of the provisionsthereof;

• U.S. legislation or regulatory action affecting, among other things, pharmaceutical product pricing, reimbursement oraccess, including under Medicaid, Medicare and other publicly funded or subsidized health programs; the importationof prescription drugs from outside the U.S. at prices that are regulated by governments of various foreign countries;direct-to-consumer advertising and interactions w ith healthcare professionals; and the use of comparative effectivenessmethodologies that could be implemented in a manner that focuses primarily on the cost differences and minimizes thetherapeutic differences among pharmaceutical products and restricts access to innovative medicines;

• legislation or regulatory action in markets outside the U.S. affecting pharmaceutical product pricing, reimbursement oraccess, including, in particular, continued government-mandated price reductions for certain biopharmaceuticalproducts in certain European and emerging market countries;

• the exposure of our operations outside the U.S. to possible capital and exchange controls, expropriation and otherrestrictive government actions, changes in intellectual property legal protections and remedies, as w ell as politicalunrest and unstable governments and legal systems;

• contingencies related to actual or alleged environmental contamination;

• claims and concerns that may arise regarding the safety or eff icacy of in-line products and product candidates;

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• any signif icant breakdow n, infiltration or interruption of our information technology systems and infrastructure;

• legal defense costs, insurance expenses, settlement costs, the risk of an adverse decision or settlement and theadequacy of reserves related to product liability, patent protection, government investigations, consumer, commercial,securities, antitrust, environmental and tax issues, ongoing efforts to explore various means for resolving asbestoslitigation, and other legal proceedings;

• our ability to protect our patents and other intellectual property, both domestically and internationally;

• interest rate and foreign currency exchange rate f luctuations, including the impact of possible currency devaluations in countriesexperiencing high inflation rates;

• governmental law s and regulations affecting domestic and foreign operations, including, w ithout limitation, taxobligations and changes affecting the tax treatment by the U.S. of income earned outside the U.S. that may resultfrom pending and possible future proposals;

• any signif icant issues involving our largest w holesaler customers, w hich account for a substantial portion of ourrevenues;

• the possible impact of the increased presence of counterfeit medicines in the pharmaceutical supply chain on ourrevenues and on patient confidence in the integrity of our medicines;

• any signif icant issues that may arise related to the outsourcing of certain operational and staff functions to thirdparties, including w ith regard to quality, timeliness and compliance w ith applicable legal requirements and industrystandards;

• changes in U.S. generally accepted accounting principles;

• uncertainties related to general economic, political, business, industry, regulatory and market conditions including,w ithout limitation, uncertainties related to the impact on us, our customers, suppliers and lenders and counterparties toour foreign-exchange and interest-rate agreements of challenging global economic conditions and recent and possiblefuture changes in global f inancial markets; and the related risk that our allow ance for doubtful accounts may not beadequate;

• any changes in business, political and economic conditions due to actual or threatened terrorist activity in the U.S. andother parts of the w orld, and related U.S. military action overseas;

• grow th in costs and expenses;

• changes in our product, segment and geographic mix;

• our ability to successfully implement any strategic alternative that w e decide to pursue w ith regard to our remainingapproximately 80% ow nership stake in Zoetis Inc. and the impact thereof; and

• the impact of acquisitions, divestitures, restructurings, product recalls and w ithdraw als and other unusual items,including our ability to realize the projected benefits of our cost-reduction and productivity initiatives, including those relatedto our research and development organization.

We cannot guarantee that any forw ard-looking statement w ill be realized, although w e believe w e have been prudent in our plans andassumptions. Achievement of anticipated results is subject to substantial risks, uncertainties and inaccurate assumptions. Should know n orunknow n risks or uncertainties materialize or should underlying assumptions prove inaccurate, actual results could vary materially from pastresults and those anticipated, estimated or projected. Investors should bear this in mind as they consider forw ard-looking statements.

We undertake no obligation to publicly update forw ard-looking statements, w hether as a result of new information, future events or otherw ise.You are advised, how ever, to consult any further disclosures w e make on related subjects in our Form 10-Q, 8-K and 10-K reports and our otherf ilings w ith the SEC.

Certain risks, uncertainties and assumptions are discussed here and under the heading entitled “Risk Factors” in Part I, Item 1A. of our AnnualReport on Form 10-K for the year ended December 31, 2012, w hich w ill be f iled in February 2013. We note these factors for investors aspermitted by the Private Securities Litigation Reform Act of 1995. You should understand that it is not possible to predict or identify all suchfactors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.

This report includes discussion of certain clinical studies relating to various in-line products and/or product candidates. These studies typically arepart of a larger body of clinical data relating to such products or product candidates, and the discussion herein should be considered in thecontext of the larger body of data. In addition, clinical trial data are subject to differing interpretations, and, even w hen w e view data as suff icientto support the safety and/or effectiveness of a product candidate or a new indication for an in-line product, regulatory authorities may not shareour view s and may require additional data or may deny approval altogether.

Financial Risk Management

The overall objective of our f inancial risk management program is to seek to minimize the impact of foreign exchange rate movements and interestrate movements on our earnings. We manage these f inancial exposures through operational means and by using various f inancial instruments.These practices may change as economic conditions change.

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Foreign Exchange Risk

A signif icant portion of our revenues and earnings is exposed to changes in foreign exchange rates. We seek to manage our foreign exchangerisk, in part, through operational means, including managing same-currency revenues in relation to same-currency costs and same-currencyassets in relation to same-currency liabilities.

Foreign exchange risk is also managed through the use of foreign currency forw ard-exchange contracts. These contracts are used to offset thepotential earnings effects from mostly intercompany short-term foreign currency assets and liabilities that arise from operations. Foreign currencysw aps are used to offset the potential earnings effects from foreign currency debt. We also use foreign currency forw ard-exchange contractsand foreign currency sw aps to hedge the potential earnings effects from short-term and long-term foreign currency investments, third-partyloans and intercompany loans.

In addition, under certain market conditions, w e protect against possible declines in the reported net investments of our Japanese yensubsidiaries. In these cases, w e use currency sw aps or foreign currency debt.

Our f inancial instrument holdings at year-end w ere analyzed to determine their sensitivity to foreign exchange rate changes. The fair values ofthese instruments w ere determined using various methodologies. For additional details, see Notes to Consolidated Financial Statements— Note7A. Financial Instruments: Selected Financial Assets and Liabilities. In this sensitivity analysis, w e assumed that the change in one currency’srate relative to the U.S. dollar w ould not have an effect on other currencies’ rates relative to the U.S. dollar; all other factors w ere held constant. Ifthe dollar w ere to appreciate against all other currencies by 10%, the expected adverse impact on net income related to our f inancial instrumentsw ould be immaterial. For additional details, see Notes to Consolidated Financial Statements— Note 7E. Financial Instruments: Derivative FinancialInstruments and Hedging Activities .

Interest Rate Risk

Our U.S. dollar interest-bearing investments, loans and borrow ings are subject to interest rate risk. We also are subject to interest rate risk oneuro debt, investments and currency sw aps, U.K. debt and currency sw aps, Japanese yen short and long-term borrow ings and currencysw aps. We seek to invest, loan and borrow primarily on a short-term or variable-rate basis. From time to time, depending on market conditions, w ew ill f ix interest rates either through entering into f ixed-rate investments and borrow ings or through the use of derivative f inancial instrumentssuch as interest rate sw aps. In light of current market conditions, our current borrow ings are primarily on a long-term, f ixed-rate basis. We maychange this practice as market conditions change.

Our f inancial instrument holdings at year-end w ere analyzed to determine their sensitivity to interest rate changes. The fair values of theseinstruments w ere determined using various methodologies. For additional details, see Notes to Consolidated Financial Statements— Note 7A.Financial Instruments: Selected Financial Assets and Liabilities . In this sensitivity analysis, w e used a one hundred basis point parallel shift inthe interest rate curve for all maturities and for all instruments; all other factors w ere held constant. If there w ere a one hundred basis pointdecrease in interest rates, the expected adverse impact on net income related to our f inancial instruments w ould be immaterial.

Contingencies

Legal Matters

We and certain of our subsidiaries are subject to numerous contingencies arising in the ordinary course of business, such as patent litigation,product liability and other product-related litigation, commercial litigation, environmental claims and proceedings, government investigations andguarantees and indemnif ications (see Notes to Consolidated Financial Statements— Note 17. Commitments and Contingencies).

Certain of these contingencies could result in losses, including damages, f ines and/or civil penalties, and/or criminal charges, w hich could besubstantial.

We believe that our claims and defenses in these matters are substantial, but litigation is inherently unpredictable and excessive verdicts dooccur. We do not believe that any of these matters w ill have a material adverse effect on our f inancial position. How ever, w e could incurjudgments, enter into settlements or revise our expectations regarding the outcome of certain matters, and such developments could have amaterial adverse effect on our results of operations in the period in w hich the amounts are accrued and/or our cash f low s in the period in w hichthe amounts are paid.

We have accrued for losses that are both probable and reasonably estimable. Substantially all of these contingencies are subject to signif icantuncertainties and, therefore, determining the likelihood of a loss and/or the measurement of any loss can be complex. Consequently, w e areunable to estimate the range of reasonably possible loss in excess of amounts accrued. Our assessments are based on estimates andassumptions that have been deemed reasonable by management, but the assessment process relies heavily on estimates and assumptions thatmay prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause us to change those estimates

and assumptions.

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Tax Matters

We and certain of our subsidiaries are subject to numerous contingencies arising in the ordinary course of business for tax matters (see Notes toConsolidated Financial Statements— Note 5D. Tax Matters: Tax Contingencies).

We account for income tax contingencies using a benefit recognition model. If our initial assessment fails to result in the recognition of a taxbenefit, w e regularly monitor our position and subsequently recognize the tax benefit: (i) if there are changes in tax law , analogous case law orthere is new information that suff iciently raise the likelihood of prevailing on the technical merits of the position to more likely than not; (ii) if thestatute of limitations expires; or (iii) if there is a completion of an audit resulting in a favorable settlement of that tax year w ith the appropriateagency. We regularly re-evaluate our tax positions based on the results of audits of federal, state and foreign income tax f ilings, statute oflimitations expirations, changes in tax law or receipt of new information that w ould either increase or decrease the technical merits of a positionrelative to the “more-likely-than-not” standard.

Our assessments are based on estimates and assumptions that have been deemed reasonable by management, but our estimates ofunrecognized tax benefits and potential tax benefits may not be representative of actual outcomes, and variation from such estimates couldmaterially affect our f inancial statements in the period of settlement or w hen the statutes of limitations expire, as w e treat these events asdiscrete items in the period of resolution. Finalizing audits w ith the relevant taxing authorities can include formal administrative and legalproceedings, and, as a result, it is diff icult to estimate the timing and range of possible changes related to our uncertain tax positions, and suchchanges could be signif icant.

48

2012 Financial Report

Financial ReviewPfizer Inc. and Subsidiary Companies

Management’s Report

We prepared and are responsible for the f inancial statements that appear in our 2012 Financial Report. These f inancial statements are inconformity w ith accounting principles generally accepted in the United States of America and, therefore, include amounts based on informedjudgments and estimates. We also accept responsibility for the preparation of other f inancial information that is included in this document.

Report on Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over f inancial reporting as defined inRules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over f inancial reporting is designed toprovide reasonable assurance regarding the reliability of f inancial reporting and the preparation of f inancial statements for external purposes inaccordance w ith generally accepted accounting principles in the United States of America. The Company’s internal control over f inancial reportingincludes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary topermit preparation of f inancial statements in accordance w ith generally accepted accounting principles and that receipts and expenditures of theCompany are being made only in accordance w ith authorizations of management and directors of the Company; and (iii) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have amaterial effect on the f inancial statements.

Because of its inherent limitations, internal control over f inancial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions orthat the degree of compliance w ith the policies or procedures may deteriorate. Management assessed the effectiveness of the Company’sinternal control over f inancial reporting as of December 31, 2012. In making this assessment, management used the criteria set forth by theCommittee of Sponsoring Organizations of the Treadw ay Commission in Internal Control—Integrated Framew ork. Based on our assessment andthose criteria, management believes that the Company maintained effective internal control over f inancial reporting as of December 31, 2012.

The Company’s independent auditors have issued their auditors’ report on the Company’s internal control over f inancial reporting. That reportappears in our 2012 Financial Report under the heading, Report of Independent Registered Public Accounting Firm on Internal Control OverFinancial Reporting.

Ian Read

Chairman and Chief Executive Officer

Frank D’Amelio Loretta Cangialosi

Principal Financial Off icer Principal Accounting Officer

February 28, 2013

2012 Financial Report

49

Financial ReviewPfizer Inc. and Subsidiary Companies

The Audit Committee review s the Company’s f inancial reporting process on behalf of the Board of Directors. Management has the primaryresponsibility for the f inancial statements and the reporting process, including the system of internal controls.

In this context, the Committee has met and held discussions w ith management and the independent registered public accounting f irm regarding thefair and complete presentation of the Company’s results and the assessment of the Company’s internal control over f inancial reporting. TheCommittee has discussed signif icant accounting policies applied by the Company in its f inancial statements, as w ell as alternative treatments.Management has represented to the Committee that the Company’s consolidated f inancial statements w ere prepared in accordance w ithaccounting principles generally accepted in the United States of America, and the Committee has review ed and discussed the consolidatedfinancial statements w ith management and the independent registered public accounting f irm. The Committee has discussed w ith the independentregistered public accounting f irm matters required to be discussed under applicable Public Company Accounting Oversight Board standards.

In addition, the Committee has review ed and discussed w ith the independent registered public accounting f irm the auditor’s independence fromthe Company and its management. As part of that review , the Committee has received the w ritten disclosures and the letter required by applicablerequirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications w ith the AuditCommittee concerning independence, and the Committee has discussed the independent registered public accounting f irm’s independence fromthe Company.

The Committee also has considered w hether the independent registered public accounting f irm’s provision of non-audit services to the Companyis compatible w ith the auditor’s independence. The Committee has concluded that the independent registered public accounting f irm is independentfrom the Company and its management.

As part of its responsibilities for oversight of the Company’s Enterprise Risk Management process, the Committee has review ed and discussedCompany policies w ith respect to risk assessment and risk management, including discussions of individual risk areas, as w ell as an annualsummary of the overall process.

The Committee has discussed w ith the Company’s Internal Audit Department and independent registered public accounting f irm the overall scopeof and plans for their respective audits. The Committee meets w ith the Chief Internal Auditor, Chief Compliance and Risk Officer andrepresentatives of the independent registered public accounting f irm, in regular and executive sessions to discuss the results of theirexaminations, the evaluations of the Company’s internal controls, and the overall quality of the Company’s f inancial reporting and complianceprograms.

In reliance on the review s and discussions referred to above, the Committee has recommended to the Board of Directors, and the Board hasapproved, that the audited f inancial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012,for f iling w ith the SEC. The Committee has selected, and the Board of Directors has ratif ied, the selection of the Company’s independent registeredpublic accounting f irm for 2013.

W. Don Cornwell

Chair, Audit Committee

February 28, 2013

The Audit Committee Report does not constitute soliciting material, and shall not be deemed to be filed or incorporated by reference into anyCompany filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that theCompany specifically incorporates the Audit Committee Report by reference therein.

50

2012 Financial Report

Financial ReviewPfizer Inc. and Subsidiary Companies

The Board of Directors and Shareholders of Pfizer Inc.:

We have audited the accompanying consolidated balance sheets of Pfizer Inc. and Subsidiary Companies as of December 31, 2012 and 2011,and the related consolidated statements of income, comprehensive income, equity, and cash f low s for each of the years in the three-year periodended December 31, 2012. These consolidated f inancial statements are the responsibility of the Company’s management. Our responsibility is toexpress an opinion on these consolidated f inancial statements based on our audits.

We conducted our audits in accordance w ith the standards of the Public Company Accounting Oversight Board (United States). Those standardsrequire that w e plan and perform the audit to obtain reasonable assurance about w hether the f inancial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the f inancial statements. An auditalso includes assessing the accounting principles used and signif icant estimates made by management, as w ell as evaluating the overall f inancialstatement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated f inancial statements referred to above present fairly, in all material respects, the f inancial position of Pfizer Inc.and Subsidiary Companies as of December 31, 2012 and 2011, and the results of their operations and their cash f low s for each of the years inthe three-year period ended December 31, 2012, in conformity w ith U.S. generally accepted accounting principles.

We also have audited, in accordance w ith the standards of the Public Company Accounting Oversight Board (United States), the effectiveness ofPfizer Inc. and Subsidiary Companies’ internal control over f inancial reporting as of December 31, 2012, based on criteria established in InternalControl — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadw ay Commission (COSO), and our reportdated February 28, 2013 expressed an unqualif ied opinion on the effective operation of the Company’s internal control over f inancial reporting.

KPMG LLP

New York, New York

February 28, 2013

2012 Financial Report

51

Financial ReviewPfizer Inc. and Subsidiary Companies

The Board of Directors and Shareholders of Pfizer Inc.:

We have audited the internal control over f inancial reporting of Pfizer Inc. and Subsidiary Companies as of December 31, 2012, based on criteriaestablished in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadw ay Commission(COSO). Pfizer Inc. and Subsidiary Companies’ management is responsible for maintaining effective internal control over f inancial reporting and forits assessment of the effectiveness of internal control over f inancial reporting, included in the accompanying Management’s Report on InternalControl Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over f inancial reporting based onour audit.

We conducted our audit in accordance w ith the standards of the Public Company Accounting Oversight Board (United States). Those standardsrequire that w e plan and perform the audit to obtain reasonable assurance about w hether effective internal control over f inancial reporting w asmaintained in all material respects. Our audit included obtaining an understanding of internal control over f inancial reporting, assessing the risk thata material w eakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Ouraudit also included performing such other procedures as w e considered necessary in the circumstances. We believe that our audit provides areasonable basis for our opinion.

A company’s internal control over f inancial reporting is a process designed to provide reasonable assurance regarding the reliability of f inancialreporting and the preparation of f inancial statements for external purposes in accordance w ith generally accepted accounting principles. Acompany’s internal control over f inancial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, inreasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurancethat transactions are recorded as necessary to permit preparation of f inancial statements in accordance w ith generally accepted accountingprinciples, and that receipts and expenditures of the company are being made only in accordance w ith authorizations of management anddirectors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, ordisposition of the company’s assets that could have a material effect on the f inancial statements.

Because of its inherent limitations, internal control over f inancial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, orthat the degree of compliance w ith the policies or procedures may deteriorate.

In our opinion, Pfizer Inc. and Subsidiary Companies maintained, in all material respects, effective internal control over f inancial reporting as ofDecember 31, 2012, based on criteria established in Internal Control — Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadw ay Commission (COSO).

We also have audited, in accordance w ith the standards of the Public Company Accounting Oversight Board (United States), the consolidatedbalance sheets of Pfizer Inc. and Subsidiary Companies as of December 31, 2012 and 2011, and the related consolidated statements of income,comprehensive income, equity, and cash f low s for each of the years in the three-year period ended December 31, 2012, and our report datedFebruary 28, 2013 expressed an unqualif ied opinion on those consolidated f inancial statements.

KPMG LLP

New York, New York

February 28, 2013

52

2012 Financial Report

Financial ReviewPfizer Inc. and Subsidiary Companies

Year Ended December 31,

(MILLIONS, EXCEPT PER COMMON SHARE DATA) 2012 2011 2010

Revenues $ 58,986 $ 65,259 $ 65,165

Costs and expenses:

Cost of sales (a) 11,334 14,076 14,788

Selling, informational and administrative expenses (a) 16,616 18,832 18,973

Research and development expenses (a) 7,870 9,074 9,483

Amortization of intangible assets 5,175 5,544 5,364

Restructuring charges and certain acquisition-related costs 1,880 2,930 3,145

Other deductions––net 4,031 2,499 3,941

Income from continuing operations before provision for taxes on income 12,080 12,304 9,471

Provision for taxes on income 2,562 3,909 1,153

Income from continuing operations 9,518 8,395 8,318

Discontinued operations:

Income/(loss) from discontinued operations––net of tax 297 350 (19)

Gain/(loss) on sale of discontinued operations––net of tax 4,783 1,304 (11)

Discontinued operations––net of tax 5,080 1,654 (30)

Net income before allocation to noncontrolling interests 14,598 10,049 8,288

Less: Net income attributable to noncontrolling interests 28 40 31

Net income attributable to Pfizer Inc. $ 14,570 $ 10,009 $ 8,257

Earnings per common share––basic ( b)

Income from continuing operations attributable to Pfizer Inc. common shareholders $ 1.27 $ 1.07 $ 1.03

Discontinued operations––net of tax 0.68 0.21 —

Net income attributable to Pfizer Inc. common shareholders $ 1.96 $ 1.28 $ 1.03

Earnings per common share––diluted (b)

Income from continuing operations attributable to Pfizer Inc. common shareholders $ 1.26 $ 1.06 $ 1.03

Discontinued operations––net of tax 0.68 0.21 —

Net income attributable to Pfizer Inc. common shareholders $ 1.94 $ 1.27 $ 1.02

Weighted-average shares––basic 7,442 7,817 8,036

Weighted-average shares––diluted 7,508 7,870 8,074

Cash dividends paid per common share $ 0.88 $ 0.80 $ 0.72

(a) Exclusiv e of amortization of intangible assets, except as disclosed in Note 1K. Basis of Presentation and Significant Accounting Policies: Amortization of Intangible

Assets, Depreciation and Certain Long-Lived Assets.(b) EPS amounts may not add due to rounding.

See Notes to Consolidated Financial Statements, w hich are an integral part of these statements.

2012 Financial Report 53

Financial ReviewPfizer Inc. and Subsidiary Companies

Year Ended December 31,

(MILLIONS OF DOLLARS) 2012 2011 2010

Net income before allocation to noncontrolling interests $ 14,598 $ 10,049 $ 8,288

Foreign currency translation adjustments $ (811) $ 796 $ (3,534)

Reclassif ication adjustments (a) (207) (127) (7)

(1,018) 669 (3,541)

Unrealized holding gains/(losses) on derivative f inancial instruments 684 (502) (1,043)

Reclassif ication adjustments for realized (gains)/losses (b) (263) 239 702

421 (263) (341)

Unrealized holding gains/(losses) on available-for-sale securities 135 (143) 7

Reclassif ication adjustments for realized (gains)/losses (b) 3 15 (141)

138 (128) (134)

Benefit plans: Actuarial losses, net (2,232) (2,459) (1,426)

Reclassif ication adjustments related to amortization (c) 473 284 262

Reclassif ication adjustments related to curtailments and settlements, net (c) 317 355 266

Other 22 (100) 88

(1,420) (1,920) (810)

Benefit plans: Prior service credits and other 25 106 550

Reclassif ication adjustments related to amortization (c) (69) (69) (42)

Reclassif ication adjustments related to curtailments and settlements, net (c) (130) (91) (49)

Other (3) 3 5

(177) (51) 464

Other comprehensive loss, before tax (2,056) (1,693) (4,362)

Tax benefit on other comprehensive loss (d) (225) (959) (375)

Other comprehensive loss before allocation to noncontrolling interests $ (1,831) $ (734) $ (3,987)

Comprehensive income before allocation to noncontrolling interests $ 12,767 $ 9,315 $ 4,301

Less: Comprehensive income/(loss) attributable to noncontrolling interests 21 (5) 36

Comprehensive income attributable to Pfizer Inc. $ 12,746 $ 9,320 $ 4,265

(a) For 2012 and 2011, reclassif ied to Gain/(loss) on sale of discontinued operations—net of tax .(b) Reclassif ied into Other deductions—net in the consolidated statements of income.(c) Generally reclassif ied into Cost of sales, Selling, informational and administrative expenses, and/or Research and development expenses , as appropriate, in the

consolidated statements of income.(d) See Note 5E. Tax Matters: Taxes on Items of Other Comprehensive Income/(Loss).

See Notes to Consolidated Financial Statements, w hich are an integral part of these statements.

54

2012 Financial Report

Financial ReviewPfizer Inc. and Subsidiary Companies

As of December 31,

(MILLIONS, EXCEPT PREFERRED STOCK ISSUED AND PER COMMON SHARE DATA) 2012 2011

Assets

Cash and cash equivalents $ 10,389 $ 3,182

Short-term investments 22,319 23,270

Accounts receivable, less allow ance for doubtful accounts, 2012—$374; 2011—$226 12,378 13,058

Inventories 7,063 6,610

Taxes and other current assets 9,196 9,380

Assets of discontinued operations and other assets held for sale 70 5,317

Total current assets 61,415 60,817

Long-term investments 14,149 9,814

Property, plant and equipment, less accumulated depreciation 14,461 15,921

Goodw ill 44,672 44,569

Identif iable intangible assets, less accumulated amortization 46,013 51,184

Taxes and other noncurrent assets 5,088 5,697

Total assets $ 185,798 $ 188,002

Liabilities and Equity

Short-term borrow ings, including current portion of long-term debt: 2012—$2,449; 2011—$6 $ 6,424 $ 4,016

Accounts payable 4,264 3,678

Dividends payable 1,734 1,796

Income taxes payable 1,010 1,009

Accrued compensation and related items 2,046 2,120

Other current liabilities 13,141 15,066

Liabilities of discontinued operations — 1,224

Total current liabilities 28,619 28,909

Long-term debt 31,036 34,926

Pension benefit obligations 7,830 6,355

Postretirement benefit obligations 3,493 3,344

Noncurrent deferred tax liabilities 21,593 18,861

Other taxes payable 6,610 6,886

Other noncurrent liabilities 4,939 6,100

Total liabilities 104,120 105,381

Commitments and Contingencies

Preferred stock, w ithout par value, at stated value; 27 shares authorized; issued:

2012—967; 2011—1,112 39 45

Common stock, $0.05 par value; 12,000 shares authorized; issued: 2012—8,956;

2011—8,902 448 445

Additional paid-in capital 72,608 71,423

Employee benefit trusts (1) (3)

Treasury stock, shares at cost: 2012—1,680; 2011—1,327 (40,121) (31,801)

Retained earnings 54,240 46,210

Accumulated other comprehensive loss (5,953) (4,129)

Total Pfizer Inc. shareholders’ equity 81,260 82,190

Equity attributable to noncontrolling interests 418 431

Total equity 81,678 82,621

Total liabilities and equity $ 185,798 $ 188,002

See Notes to Consolidated Financial Statements, w hich are an integral part of these statements.

2012 Financial Report

55

Financial ReviewPfizer Inc. and Subsidiary Companies

PFIZER INC. SHAREHOLDERS

Preferred Stock Common Stock Employee Benefit

Trusts Treasury Stock

(MILLIONS, EXCEPT PREFERREDSHARES) Shares

StatedValue Shares

ParValue

Add’lPaid-InCapital Shares

FairValue Shares Cost

RetainedEarnings

Accum.Other

Comp.Inc./

(Loss)

Share -holders’

Equity

Non-controlling

Interests Total

Equity

Balance, January 1, 2010 1,511 $ 61 8,869 $ 443 $70,497 (19) $(333) (799) $ (21,632) $ 40,426 $ 552 $90,014 $ 432 $90,446

Net income 8,257 8,257 31 8,288

Other comprehensiveloss, net of tax (3,992) (3,992) 5 (3,987)

Cash dividends declared:

Common stock (5,964) (5,964) (5,964)

Preferred stock (3) (3) (3)

Noncontrolling interests (17) (17)

Share-based paymenttransactions 2 — 209 1 14 (5) (82) 141 141

Purchases of common stock (61) (1,000) (1,000) (1,000)

Employee benefit trusttransactions—net (19) 16 292 273 273

Preferred stock conversionsand redemptions (232) (9) (1) — 2 (8) (8)

Other 5 1 74 2 20 1 — — 95 1 96

Balance, December 31,2010 1,279 52 8,876 444 70,760 — (7) (864) (22,712) 42,716 (3,440) 87,813 452 88,265

Net income 10,009 10,009 40 10,049

Other comprehensiveloss, net of tax (689) (689) (45) (734)

Cash dividends declared:

Common stock (6,512) (6,512) (6,512)

Preferred stock (3) (3) (3)

Noncontrolling interests (19) (19)

Share-based paymenttransactions 23 1 594 (5) (90) 505 505

Purchases of common stock (459) (9,000) (9,000) (9,000)

Preferred stock conversionsand redemptions (167) (7) (2) — 1 (8) (8)

Other 3 — 71 — 4 1 — — 75 3 78

Balance, December 31,2011 1,112 45 8,902 445 71,423 — (3) (1,327) (31,801) 46,210 (4,129) 82,190 431 82,621

Net income 14,570 14,570 28 14,598

Other comprehensiveloss, net of tax (1,824) (1,824) (7) (1,831)

Cash dividends declared:

Common stock (6,537) (6,537) (6,537)

Preferred stock (3) (3) (3)

Noncontrollinginterests

(9)

(9)

Share-based paymenttransactions 52 3 1,150 (4) (97) 1,056 1,056

Purchases of commonstock (349) (8,228) (8,228) (8,228)

Preferred stockconversions andredemptions (145) (6) (3) — 1 (8) (8)

Other 2 — 38 — 2 — 4 — 44 (25) 19

Balance, December 31,2012 967 $ 39 8,956 $ 448 $72,608 — $ (1) (1,680) $ (40,121) $ 54,240 $(5,953) $81,260 $ 418 $81,678

See Notes to Consolidated Financial Statements, w hich are an integral part of these statements.

56

2012 Financial Report

Financial ReviewPfizer Inc. and Subsidiary Companies

Year Ended December 31,

(MILLIONS) 2012 2011 2010

Operating Activities

Net income before allocation to noncontrolling interests $ 14,598 $ 10,049 $ 8,288

Adjustments to reconcile net income before allocation to noncontrolling interests to net cash provided

by operating activities:

Depreciation and amortization 7,611 8,907 8,399

Asset w rite-offs and impairment charges 1,299 1,198 3,486

Share-based compensation expense 481 419 405

(Gain)/loss on sale of discontinued operations (7,123) (1,688) 11

Deferred taxes from continuing operations 739 307 2,109

Deferred taxes from discontinued operations 1,459 147 (156)

Benefit plan contributions (in excess of)/less than expense 135 (1,769) (677)

Other non-cash adjustments, net (203) (172) (49)

Other changes in assets and liabilities, net of acquisitions and divestitures:

Accounts receivable 275 (66) (608)

Inventories (631) 1,084 2,917

Other assets 83 701 (818)

Accounts payable 579 (367) (301)

Other liabilities (3,438) 1,508 1,114

Other tax accounts, net 1,190 (18) (12,666)

Net cash provided by operating activities 17,054 20,240 11,454

Investing Activities

Purchases of property, plant and equipment (1,327) (1,660) (1,513)

Purchases of short-term investments (24,018) (18,447) (11,082)

Proceeds from redemptions and sales of short-term investments 25,302 14,176 5,699

Net proceeds from redemptions and sales of short-term investments w ith

original maturities of 90 days or less 1,459 10,874 5,950

Purchases of long-term investments (11,145) (4,620) (4,128)

Proceeds from redemptions and sales of long-term investments 4,990 2,147 4,737

Acquisitions, net of cash acquired (1,050) (3,282) (273)

Proceeds from sale of businesses 11,850 2,376 —

Other investing activities 93 279 118

Net cash provided by/(used in) investing activities 6,154 1,843 (492)

Financing Activities

Proceeds from short-term borrow ings 7,995 12,810 6,400

Principal payments on short-term borrow ings (3) (3,826) (9,249)

Net payments on short-term borrow ings w ith original maturities of 90 days or less

(8,204) (7,540) (1,297)

Principal payments on long-term debt (1,513) (6,986) (6)

Purchases of common stock (8,228) (9,000) (1,000)

Cash dividends paid (6,534) (6,234) (6,088)

Other f inancing activities 488 169 66

Net cash used in f inancing activities (15,999) (20,607) (11,174)

Effect of exchange-rate changes on cash and cash equivalents (2) (29) (31)

Net increase/(decrease) in cash and cash equivalents 7,207 1,447 (243)

Cash and cash equivalents, beginning 3,182 1,735 1,978

Cash and cash equivalents, ending $ 10,389 $ 3,182 $ 1,735

Supplemental Cash Flow Information

Cash paid during the period for:

Income taxes $ 2,430 $ 2,938 $ 11,775

Interest 1,873 2,085 2,155

See Notes to Consolidated Financial Statements, w hich are an integral part of these statements.

2012 Financial Report

57

Financial ReviewPfizer Inc. and Subsidiary Companies

Note 1. Basis of Presentation and Significant Accounting Policies

A. Basis of Presentation

The consolidated f inancial statements include our parent company and all subsidiaries, and are prepared in accordance w ith accounting principlesgenerally accepted in the United States of America (U.S. GAAP). The decision w hether or not to consolidate an entity requires consideration ofmajority voting interests, as w ell as effective economic or other control over the entity. Typically, w e do not seek control by means other thanvoting interests. For subsidiaries operating outside the United States (U.S.), the f inancial information is included as of and for the year endedNovember 30 for each year presented. Substantially all unremitted earnings of international subsidiaries are free of legal and contractualrestrictions. All signif icant transactions among our businesses have been eliminated.

We have made certain reclassif ication adjustments to conform prior-period amounts to the current presentation, primarily related to certaininventories (see Note 8. Inventories ) and certain investments (see Note 7. Financial Instruments). As of the third quarter of 2012 , the AnimalHealth and Consumer Healthcare business units are no longer managed as a single operating segment.

Pfizer previously announced its intention to initiate an initial public offering (IPO) of up to a 19.8% stake in Zoetis Inc. (Zoetis), a subsidiary ofPfizer, and on February 6, 2013, an IPO of Zoetis w as completed, pursuant to w hich w e sold 99.015 million shares of Zoetis, w hich representedapproximately 19.8% of the total outstanding Zoetis shares. For additional information, see Note 19A. Subsequent Events: Zoetis Debt Offeringand Initial Public Offering .

On November 30, 2012, w e completed the sale of our Nutrition business to Nestlé and recognized a gain related to the sale of this business inGain/(loss) on sale of discontinued operations––net of tax in the consolidated statement of income for the year ended December 31, 2012. Theoperating results of this business are reported as Income/(loss) from discontinued operations––net of tax in the consolidated statements ofincome for all periods presented. In addition, in the consolidated balance sheet as of December 31, 2011, the assets and liabilities associated w iththis business are classif ied as Assets of discontinued operations and other assets held for sale and Liabilities of discontinued operations, asappropriate. For additional information, see Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:Divestitures . Prior period amounts have been restated.

On August 1, 2011, w e completed the sale of our Capsugel business and recognized a gain related to the sale of this business in G ain/(loss) onsale of discontinued operations––net of tax in the consolidated statement of income for the year ended December 31, 2011. The operating resultsof this business are reported as Income/(loss) from discontinued operations––net of tax in the consolidated statements of income for the yearsended December 31, 2011 and 2010. For additional information, see Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures .

On January 31, 2011, w e acquired King Pharmaceuticals, Inc. (King). Commencing from the acquisition date, our f inancial statements reflect theassets, liabilities, operating results and cash f low s of King, and, in accordance w ith our domestic and international reporting periods, ourconsolidated f inancial statements for the year ended December 31, 2011 reflect approximately 11 months of King’s U.S. operations andapproximately 10 months of King’s international operations. For additional information, see Note 2A. Acquisitions, Divestitures, CollaborativeArrangements and Equity-Method Investments: Acquisitions .

B. Adoption of New Accounting Standards

The provisions of the follow ing new accounting and disclosure standards w ere adopted as of January 1, 2012:

• Presentation of comprehensive income in f inancial statements. As a result of adopting this new standard, w e have presented separateConsolidated Statements of Comprehensive Income.

• An amendment to the guidelines on the measurement and disclosure of fair value that is consistent betw een U.S. GAAP andInternational Financial Reporting Standards. The adoption of this new standard did not have a signif icant impact on our f inancialstatements.

C. Estimates and Assumptions

In preparing the consolidated f inancial statements, w e use certain estimates and assumptions that affect reported amounts and disclosures,including amounts recorded and disclosed in connection w ith acquisitions. These estimates and underlying assumptions can impact all elements ofour f inancial statements. For example, in the consolidated statements of income, estimates are used w hen accounting for deductions fromrevenues (such as rebates, chargebacks, sales returns and sales allow ances), determining the cost of inventory that is sold, allocating cost inthe form of depreciation and amortization, and estimating restructuring charges and the impact of contingencies. On the consolidated balancesheets, estimates are used in determining the valuation and recoverability of assets, such as accounts receivables, investments, inventories,

f ixed assets and intangible assets (including acquired in-process research & development (IPR&D) assets and goodw ill), and estimates are usedin determining the reported amounts of liabilities, such as taxes payable, benefit obligations, accruals for contingencies, rebates, chargebacks,sales returns and sales allow ances, and restructuring reserves, all of w hich also impact the consolidated statements of income.

Our estimates are often based on complex judgments, probabilities and assumptions that w e believe to be reasonable but that can be inherentlyuncertain and unpredictable. If our estimates and assumptions are not representative of actual outcomes, our results could be materially impacted.

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As future events and their effects cannot be determined w ith precision, our estimates and assumptions may prove to be incomplete or inaccurate,or unanticipated events and circumstances may occur that might cause us to change those estimates and assumptions. We are subject to risksand uncertainties that may cause actual results to differ from estimated amounts, such as changes in the healthcare environment, competition,litigation, legislation and regulations. We regularly evaluate our estimates and assumptions using historical experience and expectations about thefuture. We adjust our estimates and assumptions w hen facts and circumstances indicate the need for change. Those changes generally w ill bereflected in our f inancial statements on a prospective basis unless they are required to be treated retrospectively under relevant accountingstandards. It is possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and supporta range of alternative estimated amounts.

D. Acquisitions

Our consolidated f inancial statements include the operations of an acquired business after the completion of the acquisition. We account foracquired businesses using the acquisition method of accounting, w hich requires, among other things, that most assets acquired and liabilitiesassumed be recognized at their estimated fair values as of the acquisition date and that the fair value of acquired IPR&D be recorded on thebalance sheet. Transaction costs are expensed as incurred. Any excess of the consideration transferred over the assigned values of the netassets acquired is recorded as goodw ill. When w e acquire net assets that do not constitute a business as defined in U.S. GAAP, no goodw ill isrecognized and acquired IPR&D is expensed.

Contingent consideration in business acquisitions is included as part of the acquisition cost and is recognized at fair value as of the acquisitiondate. Fair value is generally estimated by using a probability-w eighted income approach. Any liability resulting from contingent consideration isremeasured to fair value at each reporting date until the contingency is resolved. These changes in fair value are recognized in earnings in Otherdeductions––net .

Amounts recorded for acquisitions can result from a complex series of judgments about future events and uncertainties and can rely heavily onestimates and assumptions. For information about the risks associated w ith estimates and assumptions, see Note 1C. Basis of Presentation andSignificant Accounting Policies: Estimates and Assumptions .

E. Fair Value

We are often required to measure certain assets and liabilities at fair value, either upon initial recognition or for subsequent accounting orreporting. For example, w e use fair value extensively in the initial recognition of net assets acquired in a business combination and w henaccounting for and reporting on certain f inancial instruments. We estimate fair value using an exit price approach, w hich requires, among otherthings, that w e determine the price that w ould be received to sell an asset or paid to transfer a liability in an orderly market. The determination ofan exit price is considered from the perspective of market participants, considering the highest and best use of non-financial assets and, forliabilities, assuming that the risk of non-performance w ill be the same before and after the transfer.

When estimating fair value, depending on the nature and complexity of the asset or liability, w e may use one or all of the follow ing approaches:

• Income approach, w hich is based on the present value of a future stream of net cash f low s.

• Market approach, w hich is based on market prices and other information from market transactions involving identical or comparableassets or liabilities.

• Cost approach, w hich is based on the cost to acquire or construct comparable assets less an allow ance for functional and/oreconomic obsolescence.

Our fair value methodologies depend on the follow ing types of inputs:

• Quoted prices for identical assets or liabilities in active markets (Level 1 inputs).

• Quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets thatare not active or are directly or indirectly observable (Level 2 inputs).

• Unobservable inputs that reflect estimates and assumptions (Level 3 inputs).

A single estimate of fair value can result from a complex series of judgments about future events and uncertainties and can rely heavily onestimates and assumptions. For information about the risks associated w ith estimates and assumptions, see Note 1C. Basis of Presentation andSignificant Accounting Policies: Estimates and Assumptions.

F. Foreign Currency Translation

For most of our international operations, local currencies have been determined to be the functional currencies. We translate functional currencyassets and liabilities to their U.S. dollar equivalents at exchange rates in effect as of the balance sheet date and w e translate functional currency

income and expense amounts to their U.S. dollar equivalents at average exchange rates for the period. The U.S. dollar effects that arise fromchanging translation rates are recorded in Other comprehensive income/(loss) . The effects of converting non-functional currency assets andliabilities into the functional currency are recorded in Other deductions––net . For operations in highly inflationary economies, w e translatemonetary items at rates in effect as of the balance sheet date, w ith translation adjustments recorded in Other deductions––net , and w e translatenon-monetary items at historical rates.

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G. Revenues

Revenue Recognition —We record revenues from product sales w hen the goods are shipped and title passes to the customer. At the time ofsale, w e also record estimates for a variety of sales deductions, such as sales rebates, discounts and incentives, and product returns. When w ecannot reasonably estimate the amount of future product returns and/or other sales deductions, w e record revenues w hen the risk of productreturn and/or additional sales deductions has been substantially eliminated. We record sales of certain of our vaccines to the U.S. government aspart of the Pediatric Vaccine Stockpile program; these rules require that for f ixed commitments made by the U.S. government, w e record revenuesw hen risk of ow nership for the completed product has been passed to the U.S. government. There are no specif ic performance obligationsassociated w ith products sold under this program.

Deductions from Revenues–– As is typical in the biopharmaceutical industry, our gross product sales are subject to a variety of deductions thatgenerally are estimated and recorded in the same period that the revenues are recognized and primarily represent rebates and discounts togovernment agencies, w holesalers, distributors and managed care organizations w ith respect to our biopharmaceutical products. Thesedeductions represent estimates of the related obligations.

Specif ically:

• In the U.S., w e record provisions for pharmaceutical Medicaid, Medicare and performance-based contract rebates based upon ourexperience ratio of rebates paid and actual prescriptions w ritten during prior quarters. We apply the experience ratio to the respectiveperiod’s sales to determine the rebate accrual and related expense. This experience ratio is evaluated regularly to ensure that the historicaltrends are as current as practicable. In addition, to account for the impacts of the Patient Protection and Affordable Care Act, as amended bythe Health Care and Education Reconciliation Act (together, U.S. Healthcare Legislation), w e also consider the increase in minimum rebateand extension of Medicaid prescription drug rebates for drugs dispensed to enrollees. We estimate discounts on branded prescription drugsales to Medicare Part D participants in the Medicare “coverage gap,” also know n as the “doughnut hole,” based on historical experience ofbeneficiary prescriptions and consideration of the utilization that is expected to result from the discount in the coverage gap. We evaluatethis estimate regularly to ensure that the historical trends and future expectations are as current as practicable. For performance-basedcontract rebates, w e also consider current contract terms, such as changes in formulary status and discount rates.

• Outside the U.S., the majority of our pharmaceutical rebates, discounts and price reductions (collectively, sales allow ances) are contractualor legislatively mandated and our estimates are based on actual invoiced sales w ithin each period; both of these elements help to reduce therisk of variations in the estimation process. Some European countries base their rebates on the government’s unbudgeted pharmaceuticalspending, and w e use an estimated allocation factor (based on historical payments) and total revenues by country against our actualinvoiced sales to project the expected level of reimbursement. We obtain third-party information that helps us to monitor the adequacy ofthese accruals.

• Provisions for pharmaceutical chargebacks (primarily reimbursements to w holesalers for honoring contracted prices to third parties) closelyapproximate actual as w e settle these deductions generally w ithin tw o to f ive w eeks of incurring the liability.

• Provisions for pharmaceutical returns are based on a calculation for each market that incorporates the follow ing, as appropriate: localreturns policies and practices; returns as a percentage of sales; an understanding of the reasons for past returns; estimated shelf life byproduct; an estimate of the amount of time betw een shipment and return or lag time; and any other factors that could impact the estimate offuture returns, such as loss of exclusivity, product recalls or a changing competitive environment. Generally, returned products aredestroyed, and customers are refunded the sales price in the form of a credit.

• We record sales incentives as a reduction of revenues at the time the related revenues are recorded or w hen the incentive is offered,w hichever is later. We estimate the cost of our sales incentives based on our historical experience w ith similar incentives programs.

Our accruals for Medicaid rebates, Medicare rebates, performance-based contract rebates, sales allow ances and chargebacks w ere $3.8 billionas of December 31, 2012, and $4.8 billion as of December 31, 2011, and substantially all are included in Other current liabilities .

Amounts recorded for sales deductions can result from a complex series of judgments about future events and uncertainties and can rely heavilyon estimates and assumptions. For information about the risks associated w ith estimates and assumptions, see Note 1C. Basis of Presentationand Significant Accounting Policies: Estimates and Assumptions.

Taxes collected from customers relating to product sales and remitted to governmental authorities are presented on a net basis; that is, they areexcluded from Revenues .

Collaborative Arrangements— Payments to and from our collaboration partners are presented in our consolidated statements of income based onthe nature of the arrangement (including its contractual terms), the nature of the payments and applicable accounting guidance. Under co-promotion agreements, w e record the amounts received from our partners as alliance revenues, a component of Revenues, w hen our co-promotion partners are the principal in the transaction and w e receive a share of their net sales or profits. Alliance revenues are recorded w henour co-promotion partners ship the product and title passes to their customers. The related expenses for selling and marketing these products are

included in Selling, informational and administrative expenses. In collaborative arrangements w here w e manufacture a product for our partner,w e record revenues w hen our partner sells the product and title passes to its customer. All royalty payments to collaboration partners areincluded in Cost of sales .

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H. Cost of Sales and Inventories

We carry inventories at the low er of cost or market. The cost of f inished goods, w ork in process and raw materials is determined using averageactual cost. We regularly review our inventories for impairment and reserves are established w hen necessary.

I. Selling, Informational and Administrative Expenses

Selling, informational and administrative costs are expensed as incurred. Among other things, these expenses include the internal and externalcosts of marketing, advertising, shipping and handling, information technology and legal defense.

Advertising expenses totaled approximately $2.9 billion in 2012, $3.7 billion in 2011 and $3.8 billion in 2010. Production costs are expensed asincurred and the costs of radio time, television time and space in publications are expensed w hen the related advertising occurs.

J. Research and Development Expenses

Research and development (R&D) costs are expensed as incurred. These expenses include the costs of our proprietary R&D efforts, as w ell ascosts incurred in connection w ith certain licensing arrangements. Before a compound receives regulatory approval, w e record upfront andmilestone payments made by us to third parties under licensing arrangements as expense. Upfront payments are recorded w hen incurred, andmilestone payments are recorded w hen the specif ic milestone has been achieved. Once a compound receives regulatory approval , w e recordany milestone payments in Identifiable intangible assets, less accumulated amortization and, unless the asset is determined to have an indefinitelife, w e amortize the payments on a straight-line basis over the remaining agreement term or the expected product life cycle, w hichever isshorter.

K. Amortization of Intangible Assets, Depreciation and Certain Long-Lived Assets

Long-lived assets include:

• Goodwill —Goodw ill represents the excess of the consideration transferred for an acquired business over the assigned values of its netassets. Goodw ill is not amortized.

• Identifiable intangible assets, less accumulated amortization —These acquired assets are recorded at cost. Intangible assets w ith f initelives are amortized on a straight-line basis over their estimated useful lives. Intangible assets w ith indefinite lives that are associated w ithmarketed products are not amortized until a useful life can be determined. Intangible assets associated w ith IPR&D projects are not amortizeduntil approval is obtained in a major market, typically either the U.S. or the European Union (EU), or in a series of other countries, subject tocertain specif ied conditions and management judgment. The useful life of an amortizing asset generally is determined by identifying the periodin w hich substantially all of the cash f low s are expected to be generated.

• Property, plant and equipment, less accumulated depreciation —These assets are recorded at cost and are increased by the cost of anysignif icant improvements after purchase. Property, plant and equipment assets, other than land and construction in progress, aredepreciated on a straight-line basis over the estimated useful life of the individual assets. Depreciation begins w hen the asset is ready for itsintended use. For tax purposes, accelerated depreciation methods are used as allow ed by tax law s.

Amortization expense related to f inite-lived acquired intangible assets that contribute to our ability to sell, manufacture, research, market anddistribute products, compounds and intellectual property are included in Amortization of intangible assets as they benefit multiple businessfunctions. Amortization expense related to intangible assets that are associated w ith a single function and depreciation of property, plant andequipment are included in Cost of sales, Selling, informational and administrative expenses and Research and development expenses, asappropriate.

We review all of our long-lived assets for impairment indicators throughout the year and w e perform detailed testing w henever impairmentindicators are present. In addition, w e perform impairment testing for goodw ill and indefinite-lived assets at least annually. When necessary, w erecord charges for impairments.

Specif ically:

• For f inite-lived intangible assets, such as Developed Technology Rights, and for other long-lived assets, such as property, plant andequipment, w henever impairment indicators are present, w e calculate the undiscounted value of the projected cash f low s associated w iththe asset, or asset group, and compare this estimated amount to the carrying amount. If the carrying amount is found to be greater, w erecord an impairment loss for the excess of book value over fair value. In addition, in all cases of an impairment review , w e re-evaluate theremaining useful lives of the assets and modify them, as appropriate.

• For indefinite-lived intangible assets, such as Brands and IPR&D assets, w hen necessary, w e determine the fair value of the asset andrecord an impairment loss, if any, for the excess of book value over fair value. In addition, in all cases of an impairment review other than for

IPR&D assets, w e re-evaluate w hether continuing to characterize the asset as indefinite-lived is appropriate.

• For goodw ill, w hen necessary, w e determine the fair value of each reporting unit and compare that value to its book value. If the carryingamount is found to be greater, w e then determine the implied fair value of goodw ill by subtracting the fair value of all the identif iable netassets other than goodw ill from the fair value of the reporting unit and record an impairment loss, if any, for the excess of the book value ofgoodw ill over the implied fair value.

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Impairment review s can involve a complex series of judgments about future events and uncertainties and can rely heavily on estimates andassumptions. For information about the risks associated w ith estimates and assumptions, see Note 1C. Basis of Presentation and SignificantAccounting Policies: Estimates and Assumptions.

L. Restructuring Charges and Certain Acquisition-Related Costs

We may incur restructuring charges in connection w ith acquisitions w hen w e implement plans to restructure and integrate the acquiredoperations or in connection w ith our cost-reduction and productivity initiatives. Included in Restructuring charges and certain acquisition-relatedcosts are all restructuring charges, as w ell as certain other costs associated w ith acquiring and integrating an acquired business. (If therestructuring action results in a change in the estimated useful life of an asset, that incremental impact is classif ied in Cost of sales, Selling,informational and administrative expenses and Research and development expenses , as appropriate). Termination costs are a signif icantcomponent of our restructuring charges and are generally recorded w hen the actions are probable and estimable. Transaction costs, such asbanking, legal, accounting and other costs incurred in connection w ith a business acquisition are expensed as incurred .

Amounts recorded for restructuring charges and other associated costs can result from a complex series of judgments about future events anduncertainties and can rely heavily on estimates and assumptions. For information about the risks associated w ith estimates and assumptions, seeNote 1C. Basis of Presentation and Significant Accounting Policies: Estimates and Assumptions.

M. Cash Equivalents and Statement of Cash Flows

Cash equivalents include items almost as liquid as cash, such as certif icates of deposit and time deposits w ith maturity periods of three months orless w hen purchased. If items meeting this definition are part of a larger investment pool, w e classify them as Short-term investments .

Cash f low s associated w ith f inancial instruments designated as fair value or cash f low hedges may be included in operating, investing orf inancing activities, depending on the classif ication of the items being hedged. Cash f low s associated w ith f inancial instruments designated as netinvestment hedges are classif ied according to the nature of the hedge instrument. Cash f low s associated w ith f inancial instruments that do notqualify for hedge accounting treatment are classif ied according to their purpose and accounting nature.

N. Investments and Derivative Financial Instruments

Many, but not all, of our f inancial instruments are carried at fair value. For example, substantially all of our cash equivalents, short-terminvestments and long-term investments are classif ied as available-for-sale securities and are carried at fair value, w ith changes in unrealizedgains and losses, net of tax, reported in Other comprehensive loss (see Note 6. Accumulated Other Comprehensive Loss, ExcludingNoncontrolling Interests) . Derivative f inancial instruments are carried at fair value in various balance sheet categories (see Note 7A. FinancialInstruments: Selected Financial Assets and Liabilities ), w ith changes in fair value reported in current earnings or deferred for qualifyinghedging relationships. Virtually all of our valuation measurements for investments and derivative f inancial instruments are based on the use ofquoted prices for similar instruments in active markets, or quoted prices for identical or similar instruments in markets that are not active or aredirectly or indirectly observable.

Realized gains or losses on sales of investments are determined by using the specif ic identif ication cost method.

Investments w here w e have signif icant inf luence over the f inancial and operating policies of the investee are accounted for under the equitymethod. Under the equity method, w e record our share of the investee's income and expenses, in Other deductions — net . The excess of thecost of the investment over our share of the equity of the investee as of the acquisition date is allocated to the identif iable assets of the investee,w ith any remaining allocated to goodw ill. Such investments are initially recorded at cost, w hich typically does not include amounts of contingentconsideration.

We regularly evaluate all of our f inancial assets for impairment. For investments in debt and equity securities, w hen a decline in fair value, if any,is determined to be other-than-temporary, an impairment charge is recorded in the statement of income, and a new cost basis in the investment isestablished.

Impairment review s can involve a complex series of judgments about future events and uncertainties and can rely heavily on estimates andassumptions. For information about the risks associated w ith estimates and assumptions, see Note 1C. Basis of Presentation and SignificantAccounting Policies: Estimates and Assumptions.

O. Deferred Tax Assets and Liabilities and Income Tax Contingencies

Deferred tax assets and liabilities are recognized for the expected future tax consequences of differences betw een the f inancial reporting andtax bases of assets and liabilities using enacted tax rates and law s. We provide a valuation allow ance w hen w e believe that our deferred taxassets are not recoverable based on an assessment of estimated future taxable income that incorporates ongoing, prudent and feasible tax-

planning strategies.

We account for income tax contingencies using a benefit recognition model. If w e consider that a tax position is more likely than not to besustained upon audit, based solely on the technical merits of the position, w e recognize the benefit. We measure the benefit by determining theamount that is greater than 50% likely of being realized upon settlement, presuming that the tax position is examined by the appropriate taxingauthority that has full know ledge of all relevant information.

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Under the benefit recognition model, if our initial assessment fails to result in the recognition of a tax benefit, w e regularly monitor our position andsubsequently recognize the tax benefit: (i) if there are changes in tax law , analogous case law or there is new information that suff iciently raisethe likelihood of prevailing on the technical merits of the position to more-likely-than-not; (ii) if the statute of limitations expires; or (iii) if there is acompletion of an audit resulting in a favorable settlement of that tax year w ith the appropriate agency. We regularly re-evaluate our tax positionsbased on the results of audits of federal, state and foreign income tax f ilings, statute of limitations expirations, changes in tax law or receipt ofnew information that w ould either increase or decrease the technical merits of a position relative to the more-likely-than-not standard. Liabilitiesassociated w ith uncertain tax positions are classif ied as current only w hen w e expect to pay cash w ithin the next 12 months. Interest andpenalties, if any, are recorded in Provision for taxes on income and are classif ied on our consolidated balance sheet w ith the related tax liability.

Amounts recorded for valuation allow ances and income tax contingencies can result from a complex series of judgments about future events anduncertainties and can rely heavily on estimates and assumptions. For information about the risks associated w ith estimates and assumptions, seeNote 1C. Basis of Presentation and Significant Accounting Policies: Estimates and Assumptions.

P. Pension and Postretirement Benefit Plans

The majority of our employees w orldw ide are covered by defined benefit pension plans, defined contribution plans or both. In the U.S., w e haveboth qualif ied and supplemental (non-qualif ied) defined benefit plans, as w ell as other postretirement benefit plans, consisting primarily ofhealthcare and life insurance for retirees. Beginning on January 1, 2011, for employees hired in the U.S. and Puerto Rico after December 31,2010, w e no longer offer a defined benefit plan and, instead, offer an enhanced benefit under our defined contribution plan. On May 8, 2012, w eannounced to employees that as of January 1, 2018, Pfizer w ill transition its U.S. and Puerto Rico employees from its defined benefit plans to anenhanced defined contribution savings plan. We recognize the overfunded or underfunded status of each of our defined benefit plans as anasset or liability on our consolidated balance sheet. The obligations are generally measured at the actuarial present value of all benefitsattributable to employee service rendered, as provided by the applicable benefit formula. Our pension and other postretirement obligations mayinclude assumptions such as long-term rate of return on plan assets, expected employee turnover and participant mortality. For our pension plans,the obligation may also include assumptions as to future compensation levels. For our other postretirement benefit plans, the obligation mayinclude assumptions as to the expected cost of providing the healthcare and life insurance benefits, as w ell as the extent to w hich those costsare shared w ith the employee or others (such as governmental programs). Plan assets are measured at fair value. Net periodic benefit costs arerecognized, as required, into Cost of sales, Selling, informational and administrative expenses and Research and development expenses , asappropriate.

Amounts recorded for pension and postretirement benefit plans can result from a complex series of judgments about future events anduncertainties and can rely heavily on estimates and assumptions. For information about the risks associated w ith estimates and assumptions, seeNote 1C. Basis of Presentation and Significant Accounting Policies: Estimates and Assumptions.

Q. Legal and Environmental Contingencies

We and certain of our subsidiaries are subject to numerous contingencies arising in the ordinary course of business, such as patent litigation,product liability and other product-related litigation, commercial litigation, environmental claims and proceedings, government investigations andguarantees and indemnif ications. We record accruals for these contingencies to the extent that w e conclude that a loss is both probable andreasonably estimable. If some amount w ithin a range of loss appears to be a better estimate than any other amount w ithin the range, w e accruethat amount. Alternatively, w hen no amount w ithin a range of loss appears to be a better estimate than any other amount, w e accrue the low estamount in the range. We record anticipated recoveries under existing insurance contracts w hen recovery is assured.

Amounts recorded for contingencies can result from a complex series of judgments about future events and uncertainties and can rely heavily onestimates and assumptions. For information about the risks associated w ith estimates and assumptions, see Note 1C. Basis of Presentation andSignificant Accounting Policies: Estimates and Assumptions.

R. Share-Based Payments

Our compensation programs can include share-based payments. Generally, grants under share-based payment programs are accounted for atfair value and these fair values are generally amortized on a straight-line basis over the vesting terms into Cost of sales, Selling, informationaland administrative expenses and Research and development expenses , as appropriate.

Amounts recorded for share-based compensation can result from a complex series of judgments about future events and uncertainties and canrely heavily on estimates and assumptions. For information about the risks associated w ith estimates and assumptions, see Note 1C. Basis ofPresentation and Significant Accounting Policies: Estimates and Assumptions .

Note 2. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments

A. Acquisitions

NextWave Pharmaceuticals, Inc.

On November 27, 2012, w e completed our acquisition of NextWave Pharmaceuticals Incorporated (NextWave), a privately held, specialtypharmaceutical company. As a result of this acquisition, Pfizer now holds exclusive North American rights to Quillivant XR™ (methylphenidatehydrochloride), the f irst once-daily liquid medication approved in the U.S. for the treatment of attention deficit hyperactivity disorder. Quillivant

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XR received approval from the U.S. Food and Drug Administration on September 27, 2012, and w as launched in the U.S. on January 14, 2013. Thetotal consideration for the acquisition w as approximately $442 million , w hich consisted of upfront payments to NextWave's shareholders of about$278 million and contingent consideration w ith an estimated acquisition-date fair value of about $164 million . The contingent considerationconsists of up to $425 million in additional payments that are contingent upon attainment of certain revenue milestones. In connection w ith thisEstablished Products acquisition, w e recorded approximately $516 million in Identifiable intangible assets , consisting primarily of $472 million inDeveloped technology rights and $44 million in In-process research and development , $165 million in net deferred tax liabilities and $91 million inGoodwill. The allocation of the consideration transferred to the assets acquired and the liabilities assumed has not been f inalized.

Nexium Over-the-Counter Rights

On August 13, 2012, w e announced that w e entered into an agreement w ith AstraZeneca for the global over-the-counter (OTC) rights forNexium, a leading prescription drug currently approved to treat the symptoms of gastroesophageal reflux disease. Under the terms of theagreement, w e acquired the exclusive global rights to market Nexium for the OTC indications, w hich are subject to regulatory approval. We madean upfront payment of $250 million to AstraZeneca, and AstraZeneca is eligible to receive milestone payments of up to $550 million based onproduct launches and level of sales, as w ell as royalty payments based on sales. The upfront payment for this Consumer Healthcare assetacquisition w as expensed and included in Research and development expenses in our consolidated statement of income for the year endedDecember 31, 2012.

Alacer Corp.

On February 26, 2012, w e completed our acquisition of Alacer Corp., a company that manufactures, markets and distributes Emergen-C, a line ofeffervescent, pow dered drink mix vitamin supplements that is the largest-selling branded vitamin C line in the U.S. In connection w ith thisConsumer Healthcare acquisition, w e recorded $181 million in Identifiable intangible assets , consisting primarily of the Emergen-C indefinite-livedbrand, $69 million in net deferred tax liabilities and $192 million in Goodwill . The allocation of the consideration transferred to the assets acquiredand the liabilities assumed has been f inalized.

Ferrosan Holding A/S

On December 1, 2011, w e completed our acquisition of the consumer healthcare business of Ferrosan Holding A/S (Ferrosan), a Danish companyengaged in the sale of science-based consumer healthcare products, including dietary supplements and lifestyle products, primarily in the Nordicregion and the emerging markets of Russia and Central and Eastern Europe. This acquisition is reflected in our consolidated f inancial statementsbeginning in the f irst f iscal quarter of 2012 . Our acquisition of Ferrosan’s consumer healthcare business increases our presence in dietarysupplements w ith a new set of brands and pipeline products. Also, w e believe that the acquisition allow s us to expand the marketing ofFerrosan’s brands through Pfizer’s global footprint and provide greater distribution and scale for certain Pfizer brands, such as Centrum andCaltrate, in Ferrosan’s key markets. In connection w ith this Consumer Healthcare acquisition, w e recorded $362 million in Identifiable intangibleassets, consisting of indefinite-lived and f inite-lived brands, $94 million in net deferred tax liabilities and $322 million in Goodwill . The allocation ofthe consideration transferred to the assets acquired and the liabilities assumed has been f inalized.

Excaliard

On November 30, 2011, w e completed our acquisition of Excaliard Pharmaceuticals, Inc. (Excaliard), a privately ow ned biopharmaceuticalcompany. Excaliard's lead compound, EXC-001, a Phase 2 compound, is an antisense oligonucleotide designed to interrupt the process of skinfibrosis by inhibiting expression of connective tissue grow th factor (CTGF). The total consideration for the acquisition w as approximately $174million , w hich consisted of an upfront payment to Excaliard's shareholders of about $86 million and contingent consideration w ith an estimatedacquisition-date fair value of about $88 million . The contingent consideration consists of up to $230 million in additional payments that arecontingent upon the attainment of certain regulatory and revenue milestones. Payments under the contingent consideration arrangement w ere $30million in 2012 as a regulatory milestone w as reached. In connection w ith this Worldw ide Research and Development acquisition, w e recordedapproximately $257 million in Identifiable intangible assets––In-process research and development, approximately $87 million in net deferred taxliabilities and approximately $8 million in Goodwill .

Icagen

On September 20, 2011, w e completed our cash tender offer for the outstanding shares of Icagen, Inc. (Icagen), resulting in an approximate 70%ow nership of the outstanding shares of Icagen, a biopharmaceutical company focused on discovery, development and commercialization of novelorally-administered small molecule drugs that modulate ion channel targets. On October 27, 2011, w e acquired all of the remaining shares ofIcagen. In connection w ith this Worldw ide Research and Development acquisition, w e recorded approximately $19 million in Identifiable intangibleassets .

King Pharmaceuticals, Inc.

Description of the Transaction

On January 31, 2011 (the acquisition date), w e completed a tender offer for the outstanding shares of common stock of King at a purchase priceof $14.25 per share in cash and acquired approximately 92.5% of the outstanding shares. On February 28, 2011, w e acquired all of the remainingshares of King for $14.25 per share in cash. As a result, the total fair value of consideration transferred for King w as approximately $3.6 billion incash ( $3.2 billion , net of cash acquired).

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King’s principal businesses consisted of a prescription pharmaceutical business focused on delivering new formulations of pain treatmentsdesigned to discourage common methods of misuse and abuse; the Meridian auto-injector business for emergency drug delivery, w hich developsand manufactures the EpiPen; an established products portfolio; and an animal health business that offers a variety of feed-additive products fora w ide range of species.

Recording of Assets Acquired and Liabilities Assumed

The follow ing table provides the assets acquired and liabilities assumed from King:

(MILLIONS OF DOLLARS)

Amounts

Recognized as of

Acquisition Date

(Final)

Working capital, excluding inventories $ 155

Inventories 340

Property, plant and equipment 412

Identif iable intangible assets, excluding in-process research and development 1,806

In-process research and development 303

Net tax accounts (328)

All other long-term assets and liabilities, net 102

Total identif iable net assets 2,790

Goodw ill (a) 765

Net assets acquired/total consideration transferred $ 3,555

(a)

Goodwill recorded as of the acquisition date totaled $720 million f or our three biopharmaceutical operating segments and $45 million f or our Animal Health operating

segment. (Since the acquisition of King, we hav e rev ised our operating segments. See Note 18A. Segment, Geographic and Other Revenue Information: Segment

Information. )

As of the acquisition date, the fair value of accounts receivable approximated the book value acquired. The gross contractual amount receivablew as $200 million , virtually all of w hich w as expected to be collected.

Goodw ill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economicbenefits arising from other assets acquired that could not be individually identif ied and separately recognized. Specif ically, the goodw ill recordedas part of the acquisition of King includes the follow ing:

• the expected synergies and other benefits that w e believed w ould result from combining the operations of King w ith the operations ofPfizer;

• any intangible assets that did not qualify for separate recognition, as w ell as future, yet unidentif ied projects and products; and

• the value of the going-concern element of King’s existing businesses (the higher rate of return on the assembled collection of netassets versus if Pfizer had acquired all of the net assets separately).

Goodw ill is not amortized and is not deductible for income tax purposes (see Note 10A. Goodwill and Other Intangible Assets: Goodwill foradditional information).

The assets and liabilities arising from contingencies recognized as of the acquisition date are not signif icant to Pfizer’s consolidated f inancialstatements.

Actual and Pro Forma Impact of Acquisition

Revenues from King are included in Pfizer's consolidated statements of income from the acquisition date, January 31, 2011, through Pfizer’sdomestic and international year-ends and w ere $1.3 billion in 2011. We are not able to provide the results of operations attributable to King in2011 as those operations had been substantially integrated into the larger Pfizer operation shortly after the acquisition.

The follow ing table provides supplemental pro forma information:

Unaudited Pro Forma

Consolidated Results (a)

Year Ended December 31,

(MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA) 2011 2010

Revenues $ 65,368 $ 66,540

Net income attributable to Pfizer Inc. 10,228 8,013

Diluted earnings per share attributable to Pfizer Inc. common shareholders 1.30 0.99

(a) The pro f orma inf ormation f or December 31, 2011 and 2010 assumes that the acquisition of King occurred on January 1, 2010.

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The unaudited pro forma consolidated results do not purport to project the future results of operations of the combined company nor do theyreflect the expected realization of any cost savings associated w ith the acquisition. The unaudited pro forma consolidated results reflect thehistorical f inancial information of Pfizer and King, adjusted for the follow ing pre-tax amounts:

• Elimination of King's historical intangible asset amortization expense (approximately $6 million in 2011 and $116 million in 2010).

• Additional amortization expense (approximately $15 million in 2011 and $190 million in 2010) related to the fair value of identif iable intangibleassets acquired.

• Additional depreciation expense (approximately $3 million in 2011 and $35 million in 2010) related to the fair value adjustment to property,plant and equipment acquired.

• Adjustment related to the fair value adjustments to acquisition-date inventory estimated to have been sold (elimination of $160 million chargein 2011 and addition of $160 million charge in 2010).

• Adjustment for acquisition-related costs directly attributable to the acquisition (elimination of $224 million of charges in 2011 and addition of$224 million of charges in 2010, reflecting charges incurred by both King and Pfizer).

FoldRx Pharmaceuticals, Inc.

On October 6, 2010, w e completed our acquisition of FoldRx Pharmaceuticals, Inc. (FoldRx), a privately held drug discovery and clinicaldevelopment company. FoldRx's lead product candidate, Vyndaqel (tafamidis meglumine), is a f irst-in-class oral therapy for the treatment oftransthyretin familial amyloid polyneuropathy (TTR-FAP). The total consideration for the acquisition w as approximately $400 million , w hichconsisted of an upfront payment to FoldRx's shareholders of approximately $200 million and contingent consideration w ith an estimatedacquisition-date fair value of approximately $200 million . The contingent consideration consists of up to $455 million in additional payments that arecontingent upon the attainment of certain regulatory and revenue milestones. Payments under the contingent consideration arrangement w ere$225 million in 2012, as a regulatory milestone w as achieved. In connection w ith this Specialty Care acquisition, w e recorded approximately $500million in Identifiable intangible assets––In-process research and development, approximately $160 million in net deferred tax liabilities andapproximately $60 million in Goodwill. In 2012, w e recorded a decrease in the fair value of the contingent consideration of approximately $42million and in 2011, w e recorded an increase in the fair value of the contingent consideration of approximately $85 million .

B. Divestitures

Nutrition Business

On November 30, 2012, w e completed the sale of our Nutrition business to Nestlé for $11.85 billion in cash, and recognized a gain ofapproximately $4.8 billion , net of tax, in Gain/(loss) on sale of discontinued operations––net of tax . The divested business includes:

• our former Nutrition operating segment and certain prenatal vitamins previously commercialized by the Pfizer Consumer Healthcareoperating segment; and

• other associated amounts, such as direct manufacturing costs, enabling support functions and other costs not charged to the business,purchase-accounting impacts, acquisition-related costs, impairment charges, restructuring charges and implementation costsassociated w ith our cost reduction/productivity initiatives, all of w hich are reported outside our operating segment results.

The operating results of this business are reported as Income/(loss) from discontinued operations––net of tax in the consolidated statements ofincome for all periods presented. In addition, in the consolidated balance sheet as of December 31, 2011, the assets and liabilities associated w iththis discontinued operation are classif ied as Assets of discontinued operations and other assets held for sale and Liabilities of discontinuedoperations , as appropriate.

While the full purchase price of $11.85 billion w as received on November 30, the sale of the business w as not completed in certain non-U.S.jurisdictions w here regulatory review of the transaction remains ongoing. In these jurisdictions, w hich represent a relatively small portion of theNutrition business, w e continue to operate the business on an interim basis pending regulatory approval or divestiture to a third party buyer.These interim arrangements, pursuant to w hich Pfizer operates the business for the net economic benefit of Nestlé and is indemnif ied by Nestléagainst any risk associated w ith such operations during the interim period, are expected to conclude by the end of 2013 and the sale of thesecertain jurisdictions are expected to be completed by the end of 2013. As such, and as w e have already received all of the expected proceedsfrom the sale, and as Nestlé is contractually obligated to complete the transaction (or permit us to divest the delayed businesses to a third partybuyer on its behalf) regardless of the outcome of any pending regulatory review s, w e have treated these delayed-close businesses as sold foraccounting purposes.

In connection w ith the sale transaction, w e also entered into certain transitional agreements designed to ensure and facilitate the orderly transferof business operations to the buyer. These agreements primarily relate to administrative services, w hich are generally to be provided for a periodof 2 to 18 months. We w ill also manufacture and supply certain prenatal vitamin products for a transitional period. These agreements are not

material and none confers upon us the ability to influence the operating and/or f inancial policies of the Nutrition business subsequent to the sale.

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Capsugel Business

On August 1, 2011, w e completed the sale of our Capsugel business for approximately $2.4 billion in cash and recognized a gain of approximately$1.3 billion, net of tax, in Gain/(loss) on sale of discontinued operations––net of tax . The operating results of this business are reported asIncome/(loss) from discontinued operations––net of tax for 2011 and 2010.

Discontinued Operations

The follow ing table provides the components of Discontinued operations—net of tax :

Year Ended December 31, (a)

(MILLIONS OF DOLLARS) 2012 2011 2010

Revenues $ 2,258 $ 2,673 $ 2,643

Pre-tax income/(loss) from discontinued operations 414 487 (50)

Provision/(benefit) for taxes on income (b) 117 137 (31)

Income/(loss) from discontinued operations––net of tax 297 350 (19)

Pre-tax gain/(loss) on sale of discontinued operations 7,123 1,688 (11)

Provision for taxes on income (c) 2,340 384 —

Gain/(loss) on sale of discontinued operations––net of tax 4,783 1,304 (11)

Discontinued operations––net of tax $ 5,080 $ 1,654 $ (30)

(a)

Includes the Nutrition business f or all periods presented (through Nov ember 30, 2012) and the Capsugel business f or 2011 (through August 1, 2011) and 2010 only .

The net loss in 2010 includes the impairment of an indef inite-liv ed Brand intangible asset in the Nutrition business of approximately $385 million (pre-tax).(b)

Includes a def erred tax expense of $24 million f or 2012 , a def erred tax benef it of $43 million f or 2011 , and a def erred tax benef it of $156 million f or 2010 . These

def erred tax prov isions include def erred taxes related to inv estments in certain f oreign subsidiaries resulting f rom our intention not to hold these subsidiaries

indef initely .(c)

Includes a def erred tax expense of $1.4 billion f or 2012 and $190 million f or 2011 . These def erred tax prov isions include def erred tax expense of $2.2 billion f or 2012

and $190 million f or 2011 on certain current-y ear f unds earned outside the U.S. that will not be indef initely reinv ested ov erseas.

The follow ing table provides the components of Assets of discontinued operations and other assets held for sale and Liabilities of

discontinued operations :

As of December 31,

(MILLIONS OF DOLLARS) 2012 2011

Accounts receivable, less allow ance for doubtful accounts $ — $ 550

Other current assets — 419

Property, plant and equipment, less accumulated depreciation 70 1,118

Goodw ill — 498

Identif iable intangible assets, less accumulated amortization — 2,648

Other noncurrent assets — 84

Assets of discontinued operations and other assets held for sale $ 70 $ 5,317

Current liabilities $ — $ 385

Other liabilities — 839

Liabilities of discontinued operations $ — $ 1,224

The net cash f low s of our discontinued operations for each of the categories of operating, investing and f inancing activities are not signif icant forany period presented, except that investing activities includes the proceeds from the sale of these businesses.

C. Collaborative Arrangements

In the normal course of business, w e enter into collaborative arrangements w ith respect to in-line medicines, as w ell as medicines in developmentthat require completion of research and regulatory approval. Collaborative arrangements are contractual agreements w ith third parties that involvea joint operating activity, typically a research and/or commercialization effort, w here both w e and our partner are active participants in the activityand are exposed to the signif icant risks and rew ards of the activity. Our rights and obligations under our collaborative arrangements vary. Forexample, w e have agreements to co-promote pharmaceutical products discovered by us or other companies, and w e have agreements w herew e partner to co-develop and/or participate together in commercializing, marketing, promoting, manufacturing and/or distributing a drug product.

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The follow ing table provides the amounts and classif ication of payments (income/(expense)), betw een us and our collaboration partners:

Year Ended December 31,

(MILLIONS OF DOLLARS) 2012 2011 2010

Revenues —Revenues (a) $ 1,231 $ 1,029 $ 710

Revenue s—Alliance revenues (b) 3,492 3,630 4,084

Total revenues from collaborative arrangements 4,723 4,659 4,794

Cost of sales (c) (362) (420) (124)

Selling, informational and administrative expenses (d) (290) (237) (131)

Research and development expenses (e) (74) (299) (316)

Other deductions—net (15) 34 37

(a) Represents sales to our partners of products manuf actured by us.(b) Substantially all relate to amounts earned f rom our partners under co-promotion agreements.(c) Primarily relates to roy alties earned by our partners and cost of sales associated with inv entory purchased f rom our partners.(d) Represents net reimbursements to our partners f or selling, inf ormational and administrativ e expenses incurred.(e)

Primarily related to net reimbursements, as well as upf ront pay ments and pre-approv al milestone pay ments earned by our partners. The upf ront and milestone

pay ments were as f ollows: $44 million in 2012, $210 million in 2011 and $147 million in 2010.

The amounts disclosed in the above table do not include transactions w ith third parties other than our collaboration partners, or other costsassociated w ith the products under the collaborative arrangements. In addition, during 2012 and 2011, w e paid $29 million and $61 million ,respectively, in post-approval milestones to collaboration partners. These payments w ere recorded in Identifiable intangible assets ––Developed technology rights .

D. Equity-Method Investments

ViiV Healthcare Limited (ViiV)

On October 31, 2012, our equity-method investee, ViiV, acquired the remaining 50% of Shionogi-ViiV Healthcare LLC, its equity-method investee,from Shionogi & Co., Ltd. (Shionogi) in consideration for a 10% interest in ViiV (new ly issued shares) and contingent consideration in the form offuture royalties. As a result of this transaction, ViiV recorded a gain associated w ith the step-up on the 50% interest previously held by ViiV.Also, Pfizer's equity interest in ViiV w as reduced from 15% to 13.5% and GlaxoSmithKline plc's equity interest w as reduced from 85% to 76.5% .As a result of the above, w e recognized a gain of $44 million , w hich w as recorded in Other deductions –– net , in the fourth quarter of 2012.Our investment in ViiV is accounted for under the equity method due to the signif icant inf luence that w e have over the operations of ViiV throughour board representation and minority veto rights.

Investment in Hisun Pfizer Pharmaceuticals Company Limited

On September 6, 2012, Pfizer and Zhejiang Hisun Pharmaceuticals Co., Ltd., a leading Chinese pharmaceutical company, created a new company,Hisun Pfizer Pharmaceuticals Company Limited (HPP), to develop, manufacture and commercialize off-patent pharmaceutical products in China andglobal markets. In accordance w ith our international reporting periods, this transaction w as accounted for in the fourth quarter of 2012 . HPP w asestablished w ith registered capital of $250 million . Zhejiang Hisun Pharmaceuticals holds a 51% equity interest and Pfizer holds a 49% equityinterest in HPP. In 2013, the parties w ill contribute select existing products to HPP, w hich w ill have a broad portfolio covering cardiovasculardisease, infectious disease, oncology, mental health, and other therapeutic areas. See also Note 19B. Subsequent Events: Hisun PfizerPharmaceuticals Company Limited (HPP). The parties w ill also contribute manufacturing sites, cash and other relevant assets. Our investment inHPP is accounted for under the equity method due to the signif icant inf luence that w e have over the operations of HPP through our boardrepresentation, minority veto rights and 49% voting interest.

Investment in Laboratório Teuto Brasileiro

On November 8, 2010, w e consummated our partnership to develop and commercialize generic medicines w ith Laboratório Teuto Brasileiro S.A.(Teuto) a leading generics company in Brazil. As part of the transaction, w e acquired a 40% equity stake in Teuto, and entered into a series ofcommercial agreements. The partnership is enhancing our position in Brazil, a key emerging market, by providing access to Teuto’s portfolio ofproducts. Through this partnership, w e have access to signif icant distribution netw orks in rural and suburban areas in Brazil, and the opportunityto register and commercialize Teuto’s products in various markets outside Brazil. Under the terms of our purchase agreement w ith Teuto, w emade an upfront payment at the closing of approximately $230 million . On May 23, 2012, w e made a performance-based milestone payment to

Teuto of $91.5 million , w hich w as recorded as an additional investment in Teuto. We have an option to acquire the remaining 60% of Teuto’sshares beginning in 2014, and Teuto’s shareholders have an option to sell their 60% stake to us beginning in 2015. The portion of the totalarrangement consideration that w as allocated to the net call/put option, based on relative fair values of the 40% equity investment and the netoption, is being accounted for at cost and w ill be evaluated for impairment on an ongoing basis. Our investment in Teuto is accounted for underthe equity method due to the signif icant inf luence w e have over the operations of Teuto through our board representation, minority veto rights and40% voting interest.

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Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives

We incur signif icant costs in connection w ith acquiring, integrating and restructuring businesses and in connection w ith our global cost-reductionand productivity initiatives. For example:

• In connection w ith acquisition activity, w e typically incur costs associated w ith executing the transactions, integrating the acquiredoperations (w hich may include expenditures for consulting and the integration of systems and processes), and restructuring thecombined company (w hich may include charges related to employees, assets and activities that w ill not continue in the combinedcompany); and

• In connection w ith our cost-reduction and productivity initiatives, w e typically incur costs and charges associated w ith site closings andother facility rationalization actions, w orkforce reductions and the expansion of shared services, including the development of globalsystems.

All of our businesses and functions may be impacted by these actions, including sales and marketing, manufacturing and research anddevelopment, as w ell as groups such as information technology, shared services and corporate operations. Since the acquisition of Wyeth onOctober 15, 2009, our cost-reduction initiatives announced on January 26, 2009, but not completed as of December 31, 2009, w ere incorporatedinto a comprehensive plan to integrate Wyeth’s operations to generate cost savings and to capture synergies across the combined company. Inaddition, among our ongoing cost reduction/productivity initiatives, on February 1, 2011, w e announced a new productivity initiative to accelerateour strategies to improve innovation and productivity in R&D by prioritizing areas that w e believe have the greatest scientif ic and commercialpromise, utilizing appropriate risk/return profiles and focusing on areas that w e believe have the highest potential to deliver value in the near termand over time.

The follow ing table provides the components of costs associated w ith acquisitions and cost-reduction/productivity initiatives:

Year Ended December 31,

(MILLIONS OF DOLLARS) 2012 2011 2010

Transaction costs (a) $ 1 $ 30 $ 22

Integration costs (b) 405 725 1,001

Restructuring charges: (c)

Employee termination costs 997 1,794 1,062

Asset impairments 328 256 869

Exit costs 149 125 191

Restructuring charges and certain acquisition-related costs 1,880 2,930 3,145

Additional depreciation––asset restructuring recorded in our

consolidated statements of income as follow s: (d)

Cost of sales 267 555 520

Selling, informational and administrative expenses 20 75 227

Research and development expenses 296 605 34

Total additional depreciation––asset restructuring 583 1,235 781

Implementation costs recorded in our consolidated

statements of income as follow s: (e)

Cost of sales 31 250 —

Selling, informational and administrative expenses 129 25 —

Research and development expenses 232 72 —

Total implementation costs 392 347 —

Total costs associated w ith acquisitions and cost-reduction/productivity initiatives $ 2,855 $ 4,512 $ 3,926

(a)

Transaction costs represent external costs directly related to acquired businesses and primarily include expenditures f or banking, legal, accounting and other similar

serv ices.

(b)

I ntegration costs represent external, incremental costs directly related to integrating acquired businesses, and primarily include expenditures f or consulting and the

integration of sy stems and processes.(c)

From the beginning of our cost-reduction and transf ormation initiativ es in 2005 through December 31, 2012 , Employee termination costs represent the expected

reduction of the workf orce by approximately 62,200 employ ees, mainly in manuf acturing, sales and research, of which approximately 51,700 employ ees hav e been

terminated as of December 31, 2012 . In 2012 , substantially all employ ee termination costs represent additional costs with respect to approximately 4,800

employ ees.

The restructuring charges in 2012 are associated with the f ollowing:

• Primary Care operating segment ( $295 million ), Specialty Care and Oncology operating segment ( $175 million ), Established Products and EmergingMarkets operating segment ( $125 million ), Animal Health operating segment ( $59 million ), Consumer Healthcare operating segment ( $45 million ),research and dev elopment operations ( $6 million income), manuf acturing operations ( $265 million ) and Corporate ( $516 million ).

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The restructuring charges in 2011 are associated with the f ollowing:

• Primary Care operating segment ( $593 million ), Specialty Care and Oncology operating segment ( $220 million ), Established Products and EmergingMarkets operating segment ( $110 million ), Animal Health operating segment ( $45 million ), Consumer Healthcare operating segment ( $8 million ), researchand dev elopment operations ( $490 million ), manuf acturing operations ( $287 million ) and Corporate ( $422 million ).

The restructuring charges in 2010 are associated with the f ollowing:

• Primary Care operating segment ( $71 million ), Specialty Care and Oncology operating segment ( $197 million ), Established Products and Emerging

Markets operating segment ( $43 million ), Animal Health operating segment ( $34 million ), Consumer Healthcare operating segment ( $12 million ), research

and dev elopment operations ( $297 million ), manuf acturing operations ( $1.1 billion ) and Corporate ( $350 million ).(d) Additional depreciation––asset restructuring represents the impact of changes in the estimated usef ul liv es of assets inv olv ed in restructuring actions.(e) Implementation costs represent external, incremental costs directly related to implementing our non-acquisition-related cost-reduction/productiv ity initiativ es.

The follow ing table provides the components of and changes in our restructuring accruals:

(MILLIONS OF DOLLARS)

Employee

Termination

Costs

Asset

Impairment

Charges Exit Costs Accrual

Balance, January 1, 2011 $ 2,149 $ — $ 101 $ 2,250

Provision 1,794 256 125 2,175

Utilization and other (a) (1,518) (256) — (134) (1,908)

Balance, December 31, 2011 (b) 2,425 — 92 2,517

Provision 997 328 149 1,474

Utilization and other (a) (1,629) (328) (84) (2,041)

Balance, December 31, 2012 (c) $ 1,793 $ — $ 157 $ 1,950

(a) Includes adjustments f or f oreign currency translation.(b) Included in Other current liabilities ( $1.6 billion ) and Other noncurrent liabilities ( $930 million ).(c) Included in Other current liabilities ( $1.2 billion ) and Other noncurrent liabilities ( $731 million ).

Total restructuring charges incurred from the beginning of our cost-reduction and productivity initiatives in 2005 through December 31, 2012 w ere$15.6 billion .

The asset impairment charges included in restructuring charges for 2012 primarily relate to assets held for sale and are based on an estimate offair value, w hich w as determined to be low er than the carrying value of the assets prior to the impairment charge.

The follow ing table provides additional information about the long-lived assets held for sale that w ere impaired in 2012:

Fair Value (a)

Year Ended

December 31,

2012

(MILLIONS OF DOLLARS) Amount Level 1 Level 2 Level 3 Impairment

Long-lived assets (b) $ 139 $ — $ 139 $ — $ 210

(a)

The f air v alue amount is presented as of the date of impairment, as these assets are not measured at f air v alue on a recurring basis. See also Note 1E. Basis of

Presentation and Significant Accounting Policies: Fair Value .(b)

Ref lects property , plant and equipment and other long-liv ed held-f or-sale assets written down to their f air v alue of $139 million , less costs to sell of $3 million (a net

of $136 million ), in 2012 . The impairment charges of $210 million are included in Restructuring charges and certain acquisition-related costs . Fair v alue is determined

primarily using a market approach, with v arious inputs, such as recent sales transactions.

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Note 4. Other Deductions—Net

The follow ing table provides components of Other deductions––net :

Year Ended December 31,

(MILLIONS OF DOLLARS) 2012 2011 2010

Interest income (a) $ (383) $ (456) $ (400)

Interest expense (a) 1,524 1,681 1,797

Net interest expense 1,141 1,225 1,397

Royalty-related income (469) (569) (579)

Net gain on asset disposals (b) (52) (15) (243)

Certain legal matters, net (c) 2,220 784 1,723

Certain asset impairment charges (d) 927 902 1,790

Costs associated w ith the separation of Zoetis (e) 125 33 —

Other, net 139 139 (147)

Other deductions––net $ 4,031 $ 2,499 $ 3,941

(a)

2012 v . 2011 –– Interest income decreased due to lower av erage cash balances and lower interest rates earned on inv estments. Interest expense decreased due to

lower debt balances and the ef f ectiv e conv ersion of some f ixed-rate liabilities to f loating-rate liabilities. 2011 v . 2010 –– Interest income increased due to higher cash

balances and higher interest rates earned on inv estments. Interest expense decreased due to lower long- and short-term debt balances and the ef f ectiv e conv ersion

of some f ixed-rate liabilities to f loating rate liabilities. Capitalized interest expense totaled $ 41 million in 2012 , $ 50 million in 2011 and $ 36 million in 2010 .(b)

Net gains include realized gains and losses on sales of av ailable-f or-sale securities: in 2012 , 2011 and 2010 , gross realized gains were $ 39 million , $ 79 million and

$ 153 million , respectiv ely . Gross realized losses were $ 6 million in 2012 , $ 73 million in 2011 and $ 12 million in 2010 . Proceeds, primarily f rom the sale of

av ailable-f or-sale securities, were $ 19 billion in 2012 , $ 10.2 billion in 2011 and $ 5.3 billion in 2010 . In 2010, also includes gains on sales of certain inv estments and

businesses.(c)

In 2012 , primarily includes a $491 million charge resulting f rom an agreement-in-principle with the U.S. Department of Justice to resolv e an inv estigation into Wy eth's

historical promotional practices in connection with Rapamune, a $450 million settlement of a lawsuit by Brigham Young Univ ersity related to Celebrex, and charges

related to hormone-replacement therapy litigation and Chantix litigation. In 2011 , primarily includes charges related to hormone-replacement therapy litigation. In 2010

, includes a $1.3 billion charge f or asbestos litigation related to our wholly owned subsidiary , Quigley Company , Inc. (See Note 17. Commitments and Contingencies. )(d)

In 2012 , includes intangible asset impairment charges of $872 million , ref lecting (i) $393 million of IPR&D assets, primarily related to compounds that targeted

autoimmune and inf lammatory diseases (f ull write-of f ) and, to a lesser extent, compounds related to pain treatment; (ii) $175 million related to our Consumer

Healthcare indef inite-liv ed brand assets, primarily Robitussin, a cough suppressant; (iii) $279 million related to Dev eloped Technology Rights, a charge comprised of

impairments of v arious products, none of which indiv idually exceeded $45 million ; and (iv ) $25 million of f inite-liv ed brands. The intangible asset impairment charges

f or 2012 ref lect, among other things, the impact of new scientif ic f indings, updated commercial f orecasts, changes in pricing, an increased competitiv e env ironment,

litigation uncertainties regarding intellectual property and declining gross margins. The impairment charges in 2012 are associated with the f ollowing: Worldwide

Research and Dev elopment ( $303 million ); Consumer Healthcare ( $200 million ); Primary Care ( $135 million ); Established Products ( $83 million ); Specialty Care (

$56 million ); Emerging Markets ( $56 million ) and Animal Health ( $39 million ). In addition, in 2012 , also includes charges of approximately $55 million f or certain

inv estments. These inv estment impairment charges ref lect the dif f icult global economic env ironment.

In 2011 , includes intangible asset impairment charges of $851 million , the majority of which relates to intangible assets that were acquired as part of our acquisitionof Wy eth. These impairment charges ref lect (i) $475 million of IPR&D assets, primarily related to two compounds f or the treatment of certain autoimmune andinf lammatory diseases; (ii) $193 million related to our biopharmaceutical indef inite-liv ed brand, Xanax; and (iii) $183 million related to Dev eloped Technology Rightscomprising the impairment of f iv e assets. The intangible asset impairment charges f or 2011 ref lect, among other things, the impact of new scientif ic f indings and anincreased competitiv e env ironment. The impairment charges in 2011 are associated with the f ollowing: Worldwide Research and Dev elopment ( $394 million );Established Products ( $193 million ); Specialty Care ( $135 million ); Primary Care ( $56 million ); Oncology ( $56 million ) and Animal Health ( $17 million ). Inaddition, in 2011 , also includes charges of approximately $51 million f or certain inv estments. These inv estment impairment charges ref lect the dif f icult globaleconomic env ironment.

In 2010, includes intangible asset impairment charges of $1.8 billion , the majority of which relates to intangible assets that were acquired as part of our acquisitionof Wy eth. These impairment charges ref lect (i) $945 million of IPR&D assets, primarily Prev nar 13/Prev enar 13 Adult, a compound f or the prev ention ofpneumococcal disease in adults age 50 and older, and Neratinib, a compound f or the treatment of breast cancer; (ii) $292 million of indef inite-liv ed Brands, primarilyrelated to Robitussin; and (iii) $540 million of Dev eloped Technology Rights, primarily Thelin, a product that treated pulmonary hy pertension, and Protonix, a productthat treats erosiv e gastroesophageal ref lux disease. These impairment charges, most of which occurred in the third quarter of 2010, ref lect, among other things, thef ollowing: f or IPR&D assets, the impact of changes to the dev elopment programs, the projected dev elopment and regulatory time-f rames and the risk associatedwith these assets; f or Brand assets, the current competitiv e env ironment and planned inv estment support; and, f or Dev eloped Technology Rights, in the case ofThelin, we v oluntarily withdrew the product in regions where it was approv ed and discontinued all clinical studies worldwide, and f or the others, an increasedcompetitiv e env ironment. The impairment charges in 2010 are generally associated with the f ollowing: Specialty Care ( $708 million ); Oncology ( $396 million );Consumer Healthcare ( $292 million ); Established Products ( $182 million ); Primary Care ( $145 million ); and Worldwide Research and Dev elopment ( $54 million ).

(e)Costs incurred in connection with the initial public of f ering of a 19.8% ownership stake in Zoetis. Includes expenditures f or banking, legal, accounting and similar

serv ices. (See Note 19A. Subsequent Events: Zoetis Debt Offering and Initial Public Offering.)

The asset impairment charges included in Other deductions––net in 2012 primarily relate to identif iable intangible assets and are based onestimates of fair value.

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The follow ing table provides additional information about the intangible assets that w ere impaired in 2012:

Year Ended

December 31,

Fair Value (a) 2012

(MILLIONS OF DOLLARS) Amount Level 1 Level 2 Level 3 Impairment

Intangible assets––IPR&D (b) $ 54 $ — $ — $ 54 $ 393

Intangible assets––Other (b) 1,006 — — 1,006 479

Total $ 1,060 $ — $ — $ 1,060 $ 872

(a)

The f air v alue amount is presented as of the date of impairment, as these assets are not measured at f air v alue on a recurring basis. See also Note 1E. Basis of

Presentation and Significant Accounting Policies: Fair Value .(b)

Ref lects intangible assets written down to their estimated f air v alue of $1.1 billion in 2012 . The impairment charges of $872 million are included in Other deductions––

net. Fair v alue is determined using the income approach, specif ically the multi-period excess earnings method, also known as the discounted cash f low method.

We start with a f orecast of all the expected net cash f lows associated with the asset, which includes the application of a terminal v alue f or indef inite-liv ed assets,

and then we apply an asset-specif ic discount rate to arriv e at a net present v alue amount. Some of the more signif icant estimates and assumptions inherent in this

approach include: the amount and timing of the projected net cash f lows, which includes the expected impact of competitiv e, legal and/or regulatory f orces on the

projections and the impact of technological risk associated with IPR&D assets, as well as the selection of a long-term growth rate; the discount rate, which seeks to

ref lect the v arious risks inherent in the projected cash f lows; and the tax rate, which seeks to incorporate the geographic div ersity of the projected cash f lows.

Note 5. Tax Matters

A. Taxes on Income from Continuing Operations

The follow ing table provides the components of Income from continuing operations before provision for taxes on income :

Year Ended December 31,

(MILLIONS OF DOLLARS) 2012 2011 2010

United States $ (4,732) $ (2,210) $ (2,256)

International 16,812 14,514 11,727

Income from continuing operations before provision for taxes on income ( a), (b) $ 12,080 $ 12,304 $ 9,471

(a)

2012 v . 2011 –– The increase in the domestic loss was primarily due to the reduction in rev enues resulting f rom the loss of exclusiv ity of Lipitor, Geodon and certain

other biopharmaceutical products; certain legal settlements and related charges, primarily associated with Rapamune, Celebrex, hormone-replacement therapy and

Chantix; higher costs associated with the separation of Zoetis; and the pay ment to AstraZeneca to obtain the exclusiv e global ov er-the-counter rights to Nexium,

partially of f set by lower acquisition-related costs. The increase in international income was due to lower purchase accounting costs, lower acquisition-related costs,

and lower charges related to cost-reduction and productiv ity initiativ es, partially of f set by the reduction in rev enues resulting f rom the loss of exclusiv ity of Lipitor,

Geodon and certain other biopharmaceutical products.(b)

2011 v . 2010 –– The decrease in the domestic loss was primarily due to the non-recurrence of a charge of $1.3 billion (pre-tax) in 2010 f or asbestos litigation related

to our wholly owned subsidiary , Quigley Company , Inc., partially of f set by a reduction in rev enues due to the loss of exclusiv ity f or sev eral biopharmaceutical

products and the impact of the U.S. Healthcare Legislation. The increase in international income was due to the f av orable impact of f oreign exchange, lower

impairment charges, as well as increased rev enues f rom biopharmaceutical products, such as the Prev nar/Prev enar f amily , Enbrel and Celebrex.

The follow ing table provides the components of Provision for taxes on income based on the location of the taxing authorities:

Year Ended December 31,

(MILLIONS OF DOLLARS) 2012 2011 2010

United States

Current income taxes:

Federal $ (752) $ 1,349 $ (2,790)

State and local (44) 207 (323)

Deferred income taxes:

Federal 851 364 2,103

State and local (328) (240) 8

Total U.S. tax provision/(benefit) (273) 1,680 (1,002)

International

Current income taxes 2,619 2,046 2,157

Deferred income taxes 216 183 (2)

Total international tax provision 2,835 2,229 2,155

Provision for taxes on income (a), (b), (c), (d) $ 2,562 $ 3,909 $ 1,153

(a) In 2012 , the Provision for taxes on income was impacted by the f ollowing:

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• U.S. tax expense of approximately $2.2 billion as a result of prov iding U.S. def erred income taxes on certain current-y ear f unds earned outside the U.S. thatwill not be indef initely reinv ested ov erseas (see Note 5C. Tax Matters: Deferred Taxes );

• U.S. tax benef its of approximately $1.1 billion , representing tax and interest, resulting f rom a multi-y ear settlement with the IRS with respect to audits of thePf izer Inc. tax returns f or the y ears 2006 through 2008, and international tax benef its of approximately $310 million , representing tax and interest, resultingf rom the resolution of certain tax positions pertaining to prior y ears with v arious f oreign tax authorities, and f rom the expiration of certain statutes oflimitations;

• The non-deductibility of a $336 million f ee pay able to the f ederal gov ernment as a result of the U.S. Healthcare Legislation;

• The non-deductibility of the $491 million legal charge associated with Rapamune litigation (see also Note 4. Other Deductions –– Net ); and

• The expiration of the U.S. research and dev elopment tax credit on December 31, 2011.

(b) In 2011 , the Provision for taxes on income was impacted by the f ollowing:

• U.S. tax expense of approximately $ 2.1 billion as a result of prov iding U.S. def erred income taxes on certain current-y ear f unds earned outside the U.S. thatwill not be indef initely reinv ested ov erseas (see Note 5C. Tax Matters: Deferred Taxes );

• International tax benef its of approximately $267 million , representing tax and interest, resulting f rom the resolution of certain prior-period tax positions withv arious f oreign tax authorities and f rom the expiration of certain statutes of limitations, and U.S. tax benef its of approximately $80 million , representing taxand interest, resulting f rom the settlement of certain audits with the IRS; and

• The non-deductibility of a $248 million f ee pay able to the f ederal gov ernment as a result of the U.S. Healthcare Legislation.

(c) In 2010 , the Provision for taxes on income was impacted by the f ollowing:

• U.S. tax expense of approximately $2.5 billion as a result of prov iding U.S. def erred income taxes on certain current-y ear f unds earned outside the U.S. thatwill not be indef initely reinv ested ov erseas (see Note 5C. Tax Matters: Deferred Taxes );

• U.S. tax benef its of approximately $2.0 billion , representing tax and interest, resulting f rom a multi-y ear audit settlement with the IRS, and international taxbenef its of approximately $460 million , representing tax and interest, resulting f rom the resolution of certain prior-period tax positions with v arious f oreign taxauthorities, and f rom the expiration of certain statutes of limitations; and

• The write-of f of approximately $270 million of def erred tax assets related to the Medicare Part D subsidy f or retiree prescription drug cov erage, resulting f romthe prov isions of the U.S. Healthcare Legislation enacted in March 2010 concerning the tax treatment of that subsidy ef f ectiv e f or tax y ears beginning af terDecember 31, 2012.

(d) In all y ears, f ederal, state and international net tax liabilities assumed or established as part of a business acquisition are not included in Provision for taxes onincome (see Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions ).

B. Tax Rate Reconciliation

The reconciliation of the U.S. statutory income tax rate to our effective tax rate for Income from continuing operations follow s:

Year Ended December 31,

2012 2011 2010

U.S. statutory income tax rate 35.0 % 35.0 % 35.0 %

Taxation of non-U.S. operations (a), (b), (c) (3.0) (3.1) 2.5

Tax settlements and resolution of certain tax positions (d) (12.0) (2.8) (26.3)

U.S. Healthcare Legislation (d) 1.0 0.7 2.8

U.S. research and development tax credit and manufacturing deduction (d) (0.3) (0.9) (2.3)

Certain legal settlements and charges (d) 1.4 — 0.4

Acquired IPR&D — — 0.5

Wyeth acquisition-related costs — — 0.5

Sales of biopharmaceutical companies — 0.2 —

All other––net (0.9) 2.7 (0.9)

Effective tax rate for income from continuing operations 21.2 % 31.8 % 12.2 %

(a)

For taxation of non-U.S. operations, this rate impact ref lects the income tax rates and relativ e earnings in the locations where we do business outside the United

States, together with the cost of repatriation decisions, as well as changes in uncertain tax positions not included in the reconciling item called “Tax settlements and

resolution of certain tax positions”. Specif ically : (i) the jurisdictional location of earnings is a signif icant component of our ef f ectiv e tax rate each y ear as tax rates

outside the U.S. are generally lower than the U.S. statutory income tax rate, and the rate impact of this component is inf luenced by the specif ic location of non-U.S.

earnings and the lev el of such earnings as compared to our total earnings; (ii) the cost of repatriation decisions, and other U.S. tax implications of our f oreign

operations, is a signif icant component of our ef f ectiv e tax rate each y ear and generally of f sets some of the reduction to our ef f ectiv e tax rate each y ear resulting

f rom the jurisdictional location of earnings; and (iii) the impact of changes in uncertain tax positions not included in the reconciling item called “Tax settlements and

resolution of certain tax positions” is a component of our ef f ectiv e tax rate each y ear that can result in either an increase or decrease to our ef f ectiv e tax rate. The

jurisdictional mix of earnings, which includes the impact of the location of earnings as well as repatriation costs, can v ary as a result of the repatriation decisions, as

a result of operating f luctuations in the normal course of business and as a result of the extent and location of other income and expense items, such as restructuring

charges, asset impairments and gains and losses on strategic business decisions. See also Note 5A. Tax Matters: Taxes on Income from Continuing Operations f or the

components of pre-tax income and Provision for taxes on income, which is based on the location of the taxing authorities, and f or inf ormation about settlements and

other items impacting Provision for taxes on income .

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(b) In all periods presented, the reduction in the ef f ectiv e tax rate resulting f rom the jurisdictional location of earnings is largely due to generally lower tax rates as well

as manuf acturing and other incentiv es associated with our subsidiaries in Puerto Rico, Ireland and Singapore. We benef it f rom a Puerto Rican incentiv e grant that

expires in 2029. Under the grant, we are partially exempt f rom income, property and municipal taxes. In Ireland, we benef ited f rom an incentiv e tax rate ef f ectiv e

through 2010 on income f rom manuf acturing operations. In Singapore, we benef it f rom incentiv e tax rates ef f ectiv e through 2031 on income f rom manuf acturing and

other operations.(c)

2010 –– The rate impact in 2010 also includes the adjustments to increase our uncertain tax positions based on tax positions taken during a prior period (see also the

reconciliation of our gross unrecognized tax benef its f or 2010 in Note 5D. Tax Matters: Tax Contingencies , where substantially all of the prior period increases relate

to non-U.S. jurisdictions). Without this impact, the rate impact in 2010 would hav e been approximately a 2.1% reduction of the U.S. statutory income tax rate.(d)

For a discussion about tax settlements and resolution of certain tax positions, the impact of U.S. Healthcare Legislation, the U.S. research and dev elopment tax

credit and the impact of certain legal settlements and charges, see Note 5A. Tax Matters: Taxes on Income from Continuing Operations . We receiv ed no benef it f rom

the U.S. research and dev elopment tax credit in 2012 as the credit expired on December 31, 2011 and was not extended until January 2013.

C. Deferred Taxes

Deferred taxes arise as a result of basis differentials betw een f inancial statement accounting and tax amounts.

The components of our deferred tax assets and liabilities, show n before jurisdictional netting, follow :

2012 Deferred Tax 2011 Deferred Tax

(MILLIONS OF DOLLARS) Assets (Liabilities) Assets (Liabilities)

Prepaid/deferred items $ 1,817 $ (119) $ 1,659 $ (211)

Inventories 330 (198) 324 (52)

Intangible assets 1,649 (14,187) 1,713 (15,301)

Property, plant and equipment 508 (1,485) 226 (1,311)

Employee benefits 5,042 (391) 4,280 (524)

Restructurings and other charges 784 (334) 553 (95)

Legal and product liability reserves 1,888 — 1,812 —

Net operating loss/credit carryforw ards 3,439 — 4,381 —

Unremitted earnings (c) — (16,042) — (11,699)

State and local tax adjustments 385 — 476 —

All other 1,259 (504) 1,105 (121)

17,101 (33,260) 16,529 (29,314)

Valuation allow ances (1,102) — (1,201) —

Total deferred taxes $ 15,999 $ (33,260) $ 15,328 $ (29,314)

Net deferred tax liability (a), (b) $ (17,261) $ (13,986)

(a)

2012 v . 2011 –– The net def erred tax liability position increased, ref lecting an increase in noncurrent def erred tax liabilities related to unremitted earnings, as well as a

decrease in def erred tax assets related to net operating loss and credit carry f orwards, partially of f set by the reduction in noncurrent def erred tax liabilities resulting

f rom the amortization of identif iable intangible assets and the increase in def erred tax assets related to employ ee benef its.(b)

In 2012 , included in Taxes and other current assets ( $3.6 billion ), Taxes and other noncurrent assets ( $700 million ), Other current liabilities ( $11 million ) and

Noncurrent deferred tax liabilities ( $21.6 billion ). In 2011 , included in Taxes and other current assets ( $4.0 billion ), Taxes and other noncurrent assets ( $1.2 billion ),

Other current liabilities ( $350 million ) and Noncurrent deferred tax liabilities ( $18.9 billion ).(c)

See Note 5A. Tax Matters: Taxes on Income from Continuing Operations and Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method

Investments: Divestitures.

We have carryforw ards, primarily related to foreign tax credits, net operating and capital losses and charitable contributions, w hich are availableto reduce future U.S. federal and state, as w ell as international, income taxes payable w ith either an indefinite life or expiring at various times from2013 to 2032. Certain of our U.S. net operating losses are subject to limitations under Internal Revenue Code Section 382.

Valuation allow ances are provided w hen w e believe that our deferred tax assets are not recoverable based on an assessment of estimatedfuture taxable income that incorporates ongoing, prudent and feasible tax planning strategies.

As of December 31, 2012 , w e have not made a U.S. tax provision on approximately $73.0 billion of unremitted earnings of our internationalsubsidiaries. As these earnings are intended to be indefinitely reinvested overseas, the determination of a hypothetical unrecognized deferred taxliability as of December 31, 2012 , is not practicable.

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D. Tax Contingencies

We are subject to income tax in many jurisdictions, and a certain degree of estimation is required in recording the assets and liabilities related toincome taxes. All of our tax positions are subject to audit by the local taxing authorities in each tax jurisdiction. These tax audits can involvecomplex issues, interpretations and judgments and the resolution of matters may span multiple years, particularly if subject to negotiation orlitigation. Our assessments are based on estimates and assumptions that have been deemed reasonable by management, but our estimates ofunrecognized tax benefits and potential tax benefits may not be representative of actual outcomes, and variation from such estimates couldmaterially affect our f inancial statements in the period of settlement or w hen the statutes of limitations expire. We treat these events as discreteitems in the period of resolution.

For a description of our accounting policies associated w ith accounting for income tax contingencies, see Note 1O. Basis of Presentation andSignificant Accounting Policies: Deferred Tax Assets and Liabilities and Income Tax Contingencies. For a description of the risks associatedw ith estimates and assumptions, see Note 1C. Basis of Presentation and Significant Accounting Policies: Estimates and Assumptions.

Uncertain Tax Positions

As tax law is complex and often subject to varied interpretations, it is uncertain w hether some of our tax positions w ill be sustained upon audit.As of December 31, 2012 and 2011, w e had approximately $5.0 billion and $6.1 billion , respectively, in net liabilities associated w ith uncertain taxpositions, excluding associated interest:

• Tax assets associated w ith uncertain tax positions primarily represent our estimate of the potential tax benefits in one tax jurisdiction that couldresult from the payment of income taxes in another tax jurisdiction. These potential benefits generally result from cooperative efforts amongtaxing authorities, as required by tax treaties to minimize double taxation, commonly referred to as the competent authority process. Therecoverability of these assets, w hich w e believe to be more likely than not, is dependent upon the actual payment of taxes in one taxjurisdiction and, in some cases, the successful petition for recovery in another tax jurisdiction. As of December 31, 2012 and 2011, w e hadapproximately $1.3 billion and $1.2 billion , respectively, in assets associated w ith uncertain tax positions. In 2012, these amounts w ereincluded in Taxes and other noncurrent assets ( $887 million ) and Noncurrent deferred tax liabilities ( $446 million ). In 2011, these amountsw ere included in Taxes and other noncurrent assets .

• Tax liabilities associated w ith uncertain tax positions represent unrecognized tax benefits, w hich arise w hen the estimated benefit recorded inour f inancial statements differs from the amounts taken or expected to be taken in a tax return because of the uncertainties described above.These unrecognized tax benefits relate primarily to issues common among multinational corporations. Substantially all of these unrecognized taxbenefits, if recognized, w ould impact our effective income tax rate.

The reconciliation of the beginning and ending amounts of gross unrecognized tax benefits follow s:

(MILLIONS OF DOLLARS) 2012 2011 2010

Balance, beginning $ (7,309) $ (6,759) $ (7,657)

Acquisitions (a) — (72) (49)

Divestitures (b) 85 — —

Increases based on tax positions taken during a prior period (c) (139) (502) (513)

Decreases based on tax positions taken during a prior period (c), (d) 1,442 271 2,384

Decreases based on cash payments for a prior period 647 575 280

Increases based on tax positions taken during the current period (c) (1,125) (855) (1,396)

Impact of foreign exchange 78 (89) 104

Other, net (c), (e) 6 122 88

Balance, ending (f) $ (6,315) $ (7,309) $ (6,759)

(a)

The amount in 2011 primarily relates to the acquisition of King. See also Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method

Investments: Acquisitions.(b)

Primarily relates to the sale of our Nutrition business. See also Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:

Divestitures.(c) Primarily included in Provision for taxes on income.(d)

Primarily related to ef f ectiv ely settling certain issues with the U.S. and f oreign tax authorities. See also Note 5A. Tax Matters: Taxes on Income from Continuing

Operations.(e) Includes decreases as a result of a lapse of applicable statutes of limitations.

(f) In 2012, included in Income taxes payable ( $36 million ), Taxes and other current assets ( $30 million ), Taxes and other noncurrent assets ( $169 million ),

Noncurrent deferred tax liabilities ( $231 million ) and Other taxes payable ( $5.8 billion ). In 2011, included in Income taxes payable ( $357 million ), Taxes and

other current assets ( $11 million ), Taxes and other noncurrent assets ( $225 million ), Noncurrent deferred tax liabilities ( $677 million ) and Other taxes payable (

$6.0 billion ).

• Interest related to our unrecognized tax benefits is recorded in accordance w ith the law s of each jurisdiction and is recorded in Provision fortaxes on income in our consolidated statements of income. In 2012 , w e recorded net interest income of $120 million primarily as a result ofsettling certain issues w ith the U.S. and various foreign tax authorities; in 2011 , w e recorded net interest expense of $203 million ; and in 2010, w e recorded net interest income of $545 million , primarily as a result of settling certain issues w ith the U.S. and various foreign taxauthorities. Gross accrued interest totaled $766 million as of December 31, 2012 (reflecting a decrease of approximately $63 million as a resultof cash payments) and $951 million as of December 31, 2011 (reflecting a decrease of approximately $203 million as a result of cashpayments). In 2012 , these amounts w ere included in Taxes and other current assets ( $14 million ) and Other taxes payable ( $752 million ). In

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2011 , these amounts w ere included in Income taxes payable ( $120 million ), Taxes and other current assets ( $2 million ) and Other taxes

payable ( $829 million ). Accrued penalties are not signif icant. See also Note 5A. Tax Matters: Taxes on Income from Continuing Operations.

Status of Tax Audits and Potential Impact on Accruals for Uncertain Tax Positions

The United States is one of our major tax jurisdictions and w e are regularly audited by the IRS:

• With respect to Pfizer Inc., tax years 2009-2010 are currently under audit. Tax years 2011-2012 are not under audit. All other tax years areclosed.

• With respect to Wyeth, tax years 2006 through the Wyeth acquisition date (October 15, 2009) are currently under audit. All other tax yearsare closed.

• With respect to King, the audit for tax year 2008 has been effectively settled, and for Alpharma Inc. (a subsidiary of King), tax years 2005-2007 have been effectively settled. For King, tax years 2009 through the date of acquisition (January 31, 2011) are open, but not underaudit. All other tax years are closed. The open tax years and audits for King and its subsidiaries are not material to Pfizer Inc.

In addition to the open audit years in the U.S., w e have open audit years in other major tax jurisdictions, such as Canada (2001-2012), Japan(2007-2012), Europe (2007-2012, primarily reflecting Ireland, the United Kingdom, France, Italy, Spain and Germany), Latin America (1998-2012,primarily reflecting Brazil and Mexico) and Puerto Rico (2007-2012).

Any settlements or statutes of limitations expirations could result in a signif icant decrease in our uncertain tax positions. We estimate that it isreasonably possible that w ithin the next tw elve months, our gross unrecognized tax benefits, exclusive of interest, could decrease by as muchas $150 million , as a result of settlements w ith taxing authorities or the expiration of the statutes of limitations. Our assessments are based onestimates and assumptions that have been deemed reasonable by management, but our estimates of unrecognized tax benefits and potential taxbenefits may not be representative of actual outcomes, and variation from such estimates could materially affect our f inancial statements in theperiod of settlement or w hen the statutes of limitations expire, as w e treat these events as discrete items in the period of resolution. Finalizingaudits w ith the relevant taxing authorities can include formal administrative and legal proceedings, and, as a result, it is diff icult to estimate thetiming and range of possible changes related to our uncertain tax positions, and such changes could be signif icant.

E. Taxes on Items of Other Comprehensive Income/(Loss)

The follow ing table provides the components of tax benefit on Other comprehensive loss :

Year Ended December 31,

(MILLIONS OF DOLLARS) 2012 2011 2010

Foreign currency translation adjustments (a) $ 110 $ (61) $ (165)

Unrealized holding gains/(losses) on derivative f inancial instruments 246 (207) (342)

Reclassif ication adjustments for realized (gains)/losses (98) 97 215

148 (110) (127)

Unrealized holding gains/(losses) on available-for-sale securities 20 (17) (4)

Reclassif ication adjustments for realized (gains)/losses 1 — (18)

21 (17) (22)

Benefit plans: Actuarial losses, net (721) (993) (504)

Reclassif ication adjustments related to amortization 171 99 94

Reclassif ication adjustments related to curtailments and settlements, net 105 118 98

Other 15 29 82

(430) (747) (230)

Benefit plans: Prior service credits and other 7 41 210

Reclassif ication adjustments related to amortization (27) (27) (18)

Reclassif ication adjustments related to curtailments and settlements, net (51) (35) (19)

Other (3) (3) (4)

(74) (24) 169

Tax benefit on other comprehensive loss $ (225) $ (959) $ (375)

(a) Taxes are not prov ided f or f oreign currency translation adjustments relating to inv estments in international subsidiaries that will be held indef initely .

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Note 6. Accumulated Other Comprehensive Loss, Excluding Noncontrolling Interests

The follow ing table provides the changes, net of tax, in Accumulated other comprehensive income/(loss) :

Net Unrealized Gain/(Losses) Benefit Plans

(MILLIONS OF DOLLARS)

Currency

Translation

Adjustment

And Other

Derivative

Financial

Instruments

Available-

For-Sale

Securities Actuarial

Gains/(Losses)

Prior Service

(Costs)/

Credits And

Other

Accumulated

Other

Comprehensive

Income/(Loss)

Balance, January 1, 2010 $ 3,550 $ 6 $ 269 $ (3,367) $ 94 $ 552

Other comprehensive income/(loss)(a) (3,381) (214) (112) (580) 295 (3,992)

Balance, December 31, 2010 169 (208) 157 (3,947) 389 (3,440)

Other comprehensive income/(loss)(a) 775 (153) (111) (1,173) (27) (689)

Balance, December 31, 2011 944 (361) 46 (5,120) 362 (4,129)

Other comprehensive

income/(loss) (a) (1,121) 273 117 (990) (103) (1,824)

Balance, December 31, 2012 $ (177) $ (88) $ 163 $ (6,110) $ 259 $ (5,953)

(a) Amounts do not include f oreign currency translation adjustments attributable to noncontrolling interests of $7 million loss in 2012 , $45 million loss in 2011 and

$5 million income in 2010 .

As of December 31, 2012, w e estimate that w e w ill reclassify into 2013 income the follow ing pre-tax amounts currently held in Accumulatedother comprehensive loss : $4.7 million of the unrealized holding gains on derivative f inancial instruments; $609 million of actuarial losses relatedto benefit plan obligations and plan assets and other benefit plan items; and $62 million of prior service credits, primarily related to benefit planamendments.

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Note 7. Financial Instruments

A. Selected Financial Assets and Liabilities

The follow ing table provides additional information about certain of our f inancial assets and liabilities:

As of December 31,

(MILLIONS OF DOLLARS) 2012 2011

Selected f inancial assets measured at fair value on a recurring basis (a)

Trading securities (b) $ 142 $ 154

Available-for-sale debt securities (c) 32,584 29,179

Available-for-sale money market funds (d) 1,727 1,727

Available-for-sale equity securities, excluding money market funds (c) 263 317

Derivative f inancial instruments in receivable positions: (e)

Interest rate sw aps 1,036 1,033

Foreign currency forw ard-exchange contracts 152 349

Foreign currency sw aps 194 17

36,098 32,776

Other selected f inancial assets

Held-to-maturity debt securities, carried at amortized cost (c), (f) 1,513 1,587

Private equity securities, carried at equity method or at cost (f), (g) 1,239 1,020

2,752 2,607

Total selected f inancial assets $ 38,850 $ 35,383

Financial liabilities measured at fair value on a recurring basis (a)

Derivative f inancial instruments in a liability position: (h)

Foreign currency sw aps $ 428 $ 1,396

Foreign currency forw ard-exchange contracts 243 355

Interest rate sw aps 33 14

704 1,765

Other f inancial liabilities (i)

Short-term borrow ings, carried at historical proceeds, as adjusted (f) 6,424 4,016

Long-term debt, carried at historical proceeds, as adjusted (j), (k) 31,036 34,926

37,460 38,942

Total selected f inancial liabilities $ 38,164 $ 40,707

(a)

We use a market approach in v aluing f inancial instruments on a recurring basis. See also Note 1E. Basis of Presentation and Significant Accounting Policies: Fair

Value . All of our f inancial assets and liabilities measured at f air v alue on a recurring basis use Lev el 2 inputs in the calculation of f air v alue, except less than 1% that

use Lev el 1 or Lev el 3 inputs.(b) Trading securities are held in trust f or legacy business acquisition sev erance benef its.(c) Gross unrealized gains and losses are not signif icant.(d)

Includes $408 million as of December 31, 2012 and $357 million as of December 31, 2011 of money market f unds held in trust in connection with the asbestos

litigation inv olv ing Quigley Company , Inc., a wholly owned subsidiary . As of December 31, 2011 , this amount includes approximately $625 million of money market

f unds that were held in escrow to secure certain of Wy eth’s pay ment obligations under its 1999 Nationwide Class Action Settlement Agreement, which relates to

litigation against Wy eth concerning its f ormer weight-loss products, Redux and Pondimin. The amounts held in escrow at December 31, 2011 were released f rom

restriction during 2012 and classif ied as part of Short-term investments.(e)

Designated as hedging instruments, except f or certain contracts used as of f sets; namely , f oreign currency f orward-exchange contracts with f air v alues of $102

million as of December 31, 2012 ; and f oreign currency f orward-exchange contracts with f air v alues of $169 million and interest rate swaps with f air v alues of $8

million as of December 31, 2011 .(f) The dif f erences between the estimated f air v alues and carry ing v alues of held to maturity debt securities, priv ate equity securities at cost and short-term borrowings

not measured at f air v alue on a recurring basis were not signif icant as of December 31, 2012 or December 31, 2011 . The f air v alue measurements of our held-to-

maturity debt securities and our short-term borrowings are based on Lev el 2 inputs, using a market approach. The f air v alue measurements of our priv ate equity

securities at cost are based on Lev el 3 inputs, using a market approach.(g) Our priv ate equity securities represent inv estments in the lif e sciences sector.(h)

Designated as hedging instruments, except f or certain contracts used as of f sets; namely , f oreign currency f orward-exchange contracts with f air v alues of $141

million and f oreign currency swaps with f air v alues of $129 million as of December 31, 2012 ; and f oreign currency f orward-exchange contracts with f air v alues of

$141 million and f oreign currency swaps with f air v alues of $123 million as of December 31, 2011 .(i) Some carry ing amounts may include adjustments f or discount or premium amortization or f or the ef f ect of interest rate swaps designated as hedges.(j) Includes f oreign currency debt with f air v alues of $809 million as of December 31, 2012 and $919 million as of December 31, 2011 , which are used as hedging

instruments.

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(k) The f air v alue of our long-term debt (not including the current portion of long-term debt) is $37.5 billion as of December 31, 2012 and $40.1 billion as of

December 31, 2011 . The f air v alue measurements f or our long-term debt are based on Lev el 2 inputs, using a market approach.

A single estimate of fair value can result from a complex series of judgments about future events and uncertainties and can rely heavily onestimates and assumptions. For a description of our general accounting policies associated w ith developing fair value estimates, see Note 1E.Basis of Presentation and Significant Accounting Policies: Fair Value . For a description of the risks associated w ith estimates and assumptions,see Note 1C. Basis of Presentation and Significant Accounting Policies: Estimates and Assumptions .

The follow ing methods and assumptions w ere used to estimate the fair value of our f inancial assets and liabilities:

• Trading equity securities—quoted market prices.

• Trading debt securities—observable market interest rates.

• Available-for-sale debt securities—third-party matrix-pricing model that uses signif icant inputs derived from or corroborated by observablemarket data and credit-adjusted interest rate yield curves.

• Available-for-sale money market funds—observable Net Asset Value prices.

• Available-for-sale equity securities, excluding money market funds—third-party pricing services that principally use a composite ofobservable prices.

• Derivative f inancial instruments (assets and liabilities)—third-party matrix-pricing model that uses signif icant inputs derived from orcorroborated by observable market data. Where applicable, these models discount future cash f low amounts using market-based observableinputs, including interest rate yield curves, and forw ard and spot prices for currencies. The credit risk impact to our derivative f inancialinstruments w as not signif icant.

• Held-to-maturity debt securities—third-party matrix-pricing model that uses signif icant inputs derived from or corroborated by observablemarket data and credit-adjusted interest rate yield curves.

• Private equity securities, excluding equity-method investments—application of the implied volatility associated w ith an observable biotechindex to the carrying amount of our portfolio.

• Short-term borrow ings and long-term debt—third-party matrix-pricing model that uses signif icant inputs derived from or corroborated byobservable market data and our ow n credit rating.

We periodically review the methodologies, inputs and outputs of third-party pricing services for reasonableness. Our procedures can include, forexample, referencing other third-party pricing models, monitoring key observable inputs (like LIBOR interest rates) and selectively performing test-comparisons of values w ith actual sales of f inancial instruments.

The follow ing table provides the classif ication of these selected f inancial assets and liabilities in our consolidated balance sheets:

As of December 31,

(MILLIONS OF DOLLARS) 2012 2011

Assets

Cash and cash equivalents $ 1,000 $ 900

Short-term investments 22,319 23,270

Long-term investments 14,149 9,814

Taxes and other current assets (a) 296 357

Taxes and other noncurrent assets (b) 1,086 1,042

$ 38,850 $ 35,383

Liabilities

Short-term borrowings, including current portion of long-term debt $ 6,424 $ 4,016

Other current liabilities (c) 330 459

Long-term debt 31,036 34,926

Other noncurrent liabilities (d) 374 1,306

$ 38,164 $ 40,707

(a)

As of December 31, 2012 , deriv ativ e instruments at f air v alue include f oreign currency f orward-exchange contracts ( $152 million ) and f oreign currency swaps (

$144 million ) and, as of December 31, 2011 , include f oreign currency f orward-exchange contracts ( $349 million ) and interest rate swaps ( $8 million ).(b)

As of December 31, 2012 , deriv ativ e instruments at f air v alue include interest rate swaps ( $1 billion ) and f oreign currency swaps ( $50 million ) and, as of

December 31, 2011 , include interest rate swaps ( $1 billion ) and f oreign currency swaps ( $17 million ).(c)

At December 31, 2012 , deriv ativ e instruments at f air v alue include f oreign currency f orward-exchange contracts ( $243 million ) and f oreign currency swaps ( $87

million ) and, as of December 31, 2011 , include f oreign currency f orward-exchange contracts ( $355 million ) and f oreign currency swaps ( $104 million ).(d)

At December 31, 2012 , deriv ativ e instruments at f air v alue include f oreign currency swaps ( $341 million ) and interest rate swaps ( $33 million ) and, as of

December 31, 2011 , include f oreign currency swaps ( $1.3 billion ) and interest rate swaps ( $14 million ).

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In addition, w e have long-term receivables w here the determination of fair value employs discounted future cash f low s, using current interestrates at w hich similar loans w ould be made to borrow ers w ith similar credit ratings and for the same remaining maturities. The differencesbetw een the estimated fair values and carrying values of these receivables w ere not signif icant as of December 31, 2012 or December 31, 2011.

There w ere no signif icant impairments of f inancial assets recognized in any period presented.

B. Investments in Debt Securities

The follow ing table provides the contractual maturities of the available-for-sale and held-to-maturity debt securities:

Years

Over 1 Over 5 December 31,

2012

(MILLIONS OF DOLLARS) Within 1 to 5 to 10 Total

Available-for-sale debt securities

Western European and other government debt (a) $ 13,671 $ 2,084 $ — $ 15,755

Corporate debt (b) 1,085 4,468 1,741 7,294

Reverse repurchase agreements (c) 2,790 — — 2,790

Western European, Scandinavian and other government agency debt (a) 2,348 415 — 2,763

Federal Home Loan Mortgage Corporation and Federal National Mortgage

Association asset-backed securities — 2,492 43 2,535

U.S. government debt 688 197 — 885

Supranational debt (a) 168 394 — 562

Held-to-maturity debt securities

Certif icates of deposit and other 1,240 273 — 1,513

Total debt securities $ 21,990 $ 10,323 $ 1,784 $ 34,097

(a) All issued by abov e-inv estment-grade gov ernments, gov ernment agencies or supranational entities, as applicable.(b) Largely issued by abov e-inv estment-grade institutions in the f inancial serv ices sector.(c) Inv olv ing U.S. gov ernment securities.

C. Short-Term Borrowings

Short-term borrow ings include amounts for commercial paper of $2.7 billion as of December 31, 2012 and 2011 . The w eighted-average effectiveinterest rate on short-term borrow ings outstanding w as 1.6% as of December 31, 2012 and 0.2% as of December 31, 2011 .

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D. Long-Term Debt

The follow ing table provides the components of our senior unsecured long-term debt:

As of December 31,

(MILLIONS OF DOLLARS) Maturity Date 2012 2011

6.20% (a) March 2019 $ 3,327 $ 3,248

5.35% (a) March 2015 3,065 3,069

7.20% (a) March 2039 2,903 2,948

4.75% euro (b) June 2016 2,638 2,583

5.75% euro (b) June 2021 2,634 2,581

3.625% euro (b), (c) June 2013 — 2,392

6.50% U.K . pound (b) June 2038 2,407 2,306

5.95% April 2037 2,086 2,088

5.50% February 2014 1,832 1,893

5.50% (d) March 2013 — 1,564

4.55% euro May 2017 1,384 1,325

4.75% euro December 2014 1,284 1,266

5.50% February 2016 1,048 1,061

Notes and other debt w ith a w eighted-average interest rate of 6.51% (e) 2021–2036 3,403 3,435

Notes and other debt w ith a w eighted-average interest rate of 5.28% (f) 2014–2018 2,254 2,302

Foreign currency notes and other foreign currency debt w ith a w eighted-

average interest rate of 2.48% (g) 2014-2016 771 865

Long-term debt $ 31,036 $ 34,926

Current portion of long-term debt (not included above) $ 2,449 $ 6

(a)

Instrument is callable by us at any time at the greater of 100% of the principal amount or the sum of the present v alues of the remaining scheduled pay ments of

principal and interest discounted at the U.S. Treasury rate plus 0.50% plus, in each case, accrued and unpaid interest.(b)

Instrument is callable by us at any time at the greater of 100% of the principal amount or the sum of the present v alues of the remaining scheduled pay ments of

principal and interest discounted at a comparable gov ernment bond rate plus 0.20% plus, in each case, accrued and unpaid interest.(c) At December 31, 2012, the note has been reclassif ied to Current portion of long-term debt .(d) At December 31, 2012, the note had been called and is no longer outstanding.(e) Contains debt issuances with a weighted-av erage maturity of approximately 17 y ears .(f) Contains debt issuances with a weighted-av erage maturity of approximately 4 y ears .(g) Contains debt issuances with a weighted-av erage maturity of approximately 3 y ears .

The follow ing table provides the maturity schedule of our Long-term debt outstanding as of December 31, 2012:

(MILLIONS OF DOLLARS) 2014 2015 2016 2017 After 2017 Total

Maturities $ 3,922 $ 3,065 $ 4,449 $ 1,907 $ 17,693 $ 31,036

E. Derivative Financial Instruments and Hedging Activities

Foreign Exchange Risk

A signif icant portion of our revenues, earnings and net investments in foreign aff iliates is exposed to changes in foreign exchange rates. Weseek to manage our foreign exchange risk, in part, through operational means, including managing same-currency revenues in relation to same-currency costs and same-currency assets in relation to same-currency liabilities. Depending on market conditions, foreign exchange risk also is

managed through the use of derivative f inancial instruments and foreign currency debt. These f inancial instruments serve to protect net incomeand net investments against the impact of the translation into U.S. dollars of certain foreign exchange-denominated transactions. As ofDecember 31, 2012 , the aggregate notional amount of foreign exchange derivative f inancial instruments hedging or offsetting foreign currencyexposures is $45.6 billion . The derivative f inancial instruments primarily hedge or offset exposures in the euro, Japanese yen and U.K. pound.The maximum length of time over w hich w e are hedging future foreign exchange cash f low relates to our $2.4 billion U.K. pound debt maturing in2038.

All derivative contracts used to manage foreign currency risk are measured at fair value and are reported as assets or liabilities on theconsolidated balance sheet. Changes in fair value are reported in earnings or in Other comprehensive income/(loss) , depending on the natureand purpose of the f inancial instrument (offset or hedge relationship) and the effectiveness of the hedge relationships, as follow s:

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• We record in Other comprehensive income/(loss) the effective portion of the gains or losses on foreign currency forw ard-exchangecontracts and foreign currency sw aps that are designated as cash f low hedges and reclassify those amounts, as appropriate, into earningsin the same period or periods during w hich the hedged transaction affects earnings.

• We recognize the gains and losses on forw ard-exchange contracts and foreign currency sw aps that are used to offset the same foreigncurrency assets or liabilities immediately into earnings along w ith the earnings impact of the items they generally offset. These contractsessentially take the opposite currency position of that reflected in the month-end balance sheet to counterbalance the effect of any currencymovement.

• We recognize the gain and loss impact on foreign currency sw aps designated as hedges of our net investments in earnings in three w ays:over time—for the periodic net sw ap payments; immediately—to the extent of any change in the difference betw een the foreign exchangespot rate and forw ard rate; and upon sale or substantial liquidation of our net investments—to the extent of change in the foreign exchangespot rates.

• We record in Other comprehensive income/(loss) the foreign exchange gains and losses related to foreign exchange-denominated debtdesignated as a hedge of our net investments in foreign subsidiaries and reclassify those amounts into earnings upon the sale or substantialliquidation of our net investments.

Any ineffectiveness is recognized immediately into earnings. There w as no signif icant ineffectiveness for any period presented.

Interest Rate Risk Our interest-bearing investments, loans and borrow ings are subject to interest rate risk. We seek to invest and loan primarily on a short-term orvariable-rate basis; how ever, in light of current market conditions, w e currently borrow primarily on a long-term, f ixed-rate basis. From time totime, depending on market conditions, w e w ill change the profile of our outstanding debt by entering into derivative f inancial instruments likeinterest rate sw aps.

We entered into derivative f inancial instruments to hedge or offset the f ixed interest rates on the hedged item, matching the amount and timing ofthe hedged item. As of December 31, 2012 , the aggregate notional amount of interest rate derivative f inancial instruments is $11.6 billion . Thederivative f inancial instruments primarily hedge U.S. dollar and euro f ixed-rate debt.

All derivative contracts used to manage interest rate risk are measured at fair value and reported as assets or liabilities on the consolidatedbalance sheet. Changes in fair value are reported in earnings, as follow s:

• We recognize the gains and losses on interest rate sw aps that are designated as fair value hedges in earnings upon the recognition of thechange in fair value of the hedged risk. We recognize the offsetting earnings impact of f ixed-rate debt attributable to the hedged risk also inearnings.

Any ineffectiveness is recognized immediately into earnings. There w as no signif icant ineffectiveness for any period presented.

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The follow ing table provides information about the gains/(losses) incurred to hedge or offset operational foreign exchange or interest rate risk:

Amount of

Gains/(Losses)

Recognized in OID (a), (b), (c)

Amount of

Gains/(Losses)

Recognized in OCL

(Effective Portion) (a), (d)

Amount of

Gains/(Losses)

Reclassif ied from

OCL into OID

(Effective Portion) (a), (d)

(MILLIONS OF DOLLARS) Dec 31,

2012 Dec 31,

2011 Dec 31,

2012 Dec 31,

2011 Dec 31,

2012 Dec 31,

2011

Derivative Financial Instruments in Cash

Flow Hedge Relationships:

Foreign currency sw aps $ — $ — $ 676 $ (496) $ 257 $ (243)

Derivative Financial Instruments in Net

Investment Hedge Relationships:

Foreign currency sw aps (4) 7 200 (1,059) — —

Derivative Financial Instruments Not

Designated as Hedges:

Foreign currency forw ard-exchange

contracts (61) (260) — — — —

Foreign currency sw aps (7) 106 — — — —

Non-Derivative Financial Instruments in

Net Investment Hedge Relationships:

Foreign currency short-term

borrow ings — — — 940 — —

Foreign currency long-term debt — — 88 (41) — —

All other net 7 15 5 (4) 6 4

$ (65) $ (132) $ 969 $ (660) $ 263 $ (239)

(a)

OID = Other (income)/deductions—net, included in Other deductions—net in the consolidated statements of income . OCL = Other comprehensiv e loss, included in

the consolidated statements of comprehensiv e income .(b) Also includes gains and losses attributable to the hedged risk in f air v alue hedge relationships.(c) There was no signif icant inef f ectiv eness f or any period presented.(d)

Amounts presented represent the ef f ectiv e portion of the gain or loss. For deriv ativ e f inancial instruments in cash f low hedge relationships, the ef f ectiv e portion is

included in Other comprehensive loss––Unrealized holding gains/(losses) on derivative financial instruments . For deriv ativ e f inancial instruments in net inv estment

hedge relationships and f or f oreign currency debt designated as hedging instruments, the ef f ectiv e portion is included in Other comprehensive loss––foreign currency

translation adjustments.

For information about the fair value of our derivative f inancial instruments, and the impact on our consolidated balance sheets, see Note 7A.Financial Instruments: Selected Financial Assets and Liabilities above . Certain of our derivative instruments are covered by associated credit-support agreements that have credit-risk-related contingent features designed to reduce our counterparties’ exposure to our risk of defaulting onamounts ow ed. As of December 31, 2012 , the aggregate fair value of these derivative instruments that are in a net liability position is $451 million, for w hich w e have posted collateral of $424 million in the normal course of business. These features include the requirement to pay additionalcollateral in the event of a dow ngrade in our debt ratings. If there had been a dow ngrade to below an A rating by S&P or the equivalent rating byMoody’s Investors Service, on December 31, 2012 , w e w ould have been required to post an additional $58 million of collateral to ourcounterparties. The collateral advanced receivables are reported in Cash and cash equivalents.

F. Credit Risk

On an ongoing basis, w e review the creditw orthiness of counterparties to our foreign exchange and interest rate agreements and do not expectto incur a signif icant loss from failure of any counterparties to perform under the agreements. There are no signif icant concentrations of creditrisk related to our f inancial instruments w ith any individual counterparty. As of December 31, 2012 , w e had $2.9 billion due from a w ell-

diversif ied, highly rated group (S&P ratings of mostly A+ or better) of bank counterparties around the w orld. See Note 7B. Financial Instruments:Investments in Debt Securities above for details about our investments.

In general, there is no requirement for collateral from customers. How ever, derivative f inancial instruments are executed under master nettingagreements w ith f inancial institutions. These agreements contain provisions that provide for the ability for collateral payments, depending onlevels of exposure, our credit rating and the credit rating of the counterparty. As of December 31, 2012 , w e received cash collateral of $660million against various counterparties. The collateral primarily supports the approximate fair value of our derivative contracts. With respect to thecollateral received, w hich is included in Cash and cash equivalents, the obligations are reported in Short-term borrowings, including currentportion of long-term debt.

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Note 8. Inventories

The follow ing table provides the components of Inventories :

As of December 31,

(MILLIONS OF DOLLARS) 2012 2011

Finished goods $ 2,529 $ 2,311

Work-in-process 3,794 3,514

Raw materials and supplies 740 785

Inventories $ 7,063 $ 6,610

Noncurrent inventories (not included above) (a) $ 761 $ 800

(a) Included in Taxes and other noncurrent assets . There are no recov erability issues associated with these amounts.

Note 9. Property, Plant and Equipment

The follow ing table provides the components of Property, plant and equipment :

Useful Lives As of December 31,

(MILLIONS OF DOLLARS) (Years) 2012 2011

Land — $ 597 $ 737

Buildings 33-50 11,420 12,089

Machinery and equipment 8-20 10,795 10,882

Furniture, f ixtures and other 3-12 1/2 3,962 4,235

Construction in progress — 1,108 1,294

27,882 29,237

Less: Accumulated depreciation 13,421 13,316

Property, plant and equipment (a) $ 14,461 $ 15,921

(a)

The decrease in total property , plant and equipment is primarily due to depreciation, disposals, impairments and the impact of f oreign exchange, partially of f set by

capital additions.

Note 10. Goodwill and Other Intangible Assets

A. Goodwill

The follow ing table provides the components of and changes in the carrying amount of Goodwill :

(MILLIONS OF DOLLARS) Primary

Care

Specialty

Care and

Oncology

Established

Products and

Emerging

Markets

Other

Operating

Segments (a) Total

Balance, January 1, 2011 $ 6,050 — $ 16,659 $ 18,274 $ 2,449 $ 43,432

Additions (b) 129 300 321 55 805

Other (c) 50 138 151 (7) 332

Balance, December 31, 2011 6,229 17,097 18,746 2,497 44,569

Additions (d) — — 91 514 605

Other (c) (77) (212) (234) 21 (502)

Balance, December 31, 2012 $ 6,152 $ 16,885 $ 18,603 $ 3,032 $ 44,672

(a) Ref lects amounts associated with Animal Health and Consumer Healthcare.(b) Primarily ref lects the acquisition of King (see Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions) .(c) Primarily ref lects the impact of f oreign exchange.(d)

Related to our acquisitions of Ferrosan, Alacer and NextWav e (see Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:

Acquisitions) .

As of December 31, 2012 and 2011, the gross goodw ill balance w as $45.2 billion and $45.1 billion , respectively. Accumulated goodw illimpairment losses, generated entirely by our Animal Health operating segment in f iscal 2002, w ere $536 million as of December 31, 2012 and2011.

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B. Other Intangible Assets

The follow ing table provides the components of Identifiable intangible assets :

December 31, 2012 December 31, 2011

(MILLIONS OF DOLLARS)

Gross

Carrying

Amount Accumulated

Amortization

Identifiable

Intangible

Assets, less

Accumulated

Amortization

Gross

Carrying

Amount Accumulated

Amortization

Identif iable

Intangible

Assets, less

Accumulated

Amortization

Finite-lived intangible assets

Developed technology rights $ 73,112 $ (37,069) $ 36,043 $ 72,678 $ (31,922) $ 40,756

Brands 1,873 (781) 1,092 1,678 (687) 991

License agreements and other 1,085 (793) 292 1,048 (577) 471

76,070 (38,643) 37,427 75,404 (33,186) 42,218

Indefinite-lived intangible assets

Brands 7,828 — 7,828 7,694 — 7,694

In-process research and

development 688 — 688 1,200 — 1,200

Trademarks/Tradenames 70 — 70 72 — 72

8,586 — 8,586 8,966 — 8,966

Identifiable intangible assets (a) $ 84,656 $ (38,643) $ 46,013 $ 84,370 $ (33,186) $ 51,184

(a)

The decrease is primarily related to amortization, as well as impairment charges (see Note 4. Other Deductions — Net ), partially of f set by the assets acquired as part

of the acquisitions of NextWav e, Ferrosan and Alacer (see Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:

Acquisitions ).

As of December 31, 2012 , our identif iable intangible assets are associated w ith the follow ing, as a percentage of total identif iable intangibleassets, less accumulated amortization:

• Developed Technology Rights: Specialty Care ( 66% ); Established Products ( 19% ); Primary Care ( 13% ); Animal Health ( 1% ); andOncology ( 1% );

• Brands, f inite-lived: Consumer Healthcare ( 64% ); Established Products ( 24% ); and Animal Health ( 12% );

• Brands, indefinite-lived: Consumer Healthcare ( 66% ); and Established Products ( 34% ); and

• IPR&D: Worldw ide Research and Development ( 55% ); Established Products ( 20% ); Primary Care ( 12% ); Specialty Care ( 10% ); andAnimal Health ( 3% ).

There are no percentages for our Emerging Markets business unit as it is a geographic-area unit, not a product-based unit. The carrying value ofthe assets associated w ith our Emerging Markets business unit is included w ithin the assets associated w ith the other four biopharmaceuticalbusiness units.

For information about intangible asset impairments, see Note 4. Other Deductions — Net.

Developed Technology Rights

Developed technology rights represent the amortized cost associated w ith developed technology, w hich has been acquired from third parties andw hich can include the right to develop, use, market, sell and/or offer for sale the product, compounds and intellectual property that w e haveacquired w ith respect to products, compounds and/or processes that have been completed. We possess a w ell-diversif ied portfolio of hundredsof developed technology rights across therapeutic categories, primarily representing the commercialized products included in our f ivebiopharmaceutical business units. Virtually all of these assets w ere acquired in connection w ith our Wyeth acquisition in 2009 and our Pharmaciaacquisition in 2003. The more signif icant components of developed technology rights are the follow ing (in order of signif icance): Prevnar13/Prevenar 13 Infant and Enbrel and, to a lesser extent, Premarin, Prevnar 13/Prevenar 13 Adult, Effexor, Pristiq, Tygacil, BMP-2, Refacto AF and

Benefix. Also included in this category are the post-approval milestone payments made under our alliance agreements for certainbiopharmaceutical products.

Brands

Brands represent the amortized or unamortized cost associated w ith tradenames and know -how , as the products themselves do not receivepatent protection. Most of these assets are associated w ith our Consumer Healthcare business unit. Virtually all of these assets w ere acquired inconnection w ith our Wyeth acquisition in 2009 and our Pharmacia acquisition in 2003. The more signif icant components of indefinite-lived brandsare the follow ing (in order of signif icance): Advil, Xanax, Centrum and Medrol. The more signif icant components of f inite-lived brands are thefollow ing (in order of signif icance): Depo-Provera, Advil Cold and Sinus and Idoform and Bif iform.

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In-Process Research and Development

IPR&D assets represent research and development assets that have not yet received regulatory approval in a major market. The more signif icantcomponents of IPR&D are a treatment for skin f ibrosis and programs for the treatment of staph aureus infections and epilepsy, as w ell as avaccine for the prevention of meningitidis serogroup B in adolescents and young adults.

IPR&D assets are required to be classif ied as indefinite-lived assets until the successful completion or the abandonment of the associatedresearch and development effort. Accordingly, during the development period after the date of acquisition, these assets w ill not be amortized untilapproval is obtained in a major market, typically either the U.S. or the EU, or in a series of other countries, subject to certain specif ied conditionsand management judgment. At that time, w e w ill determine the useful life of the asset, reclassify the asset out of in-process research anddevelopment and begin amortization. If the associated research and development effort is abandoned, the related IPR&D assets w ill likely bew ritten-off, and w e w ill record an impairment charge.

Among the IPR&D assets reclassif ied to Developed Technology rights as a result of being approved in a major market w ere the follow ing: in 2012,tw o IPR&D assets w ith a combined book value of approximately $160 million and, in late 2011, Prevenar 13 for adults age 50 years and older andVyndaqel (tafamidis meglumine), w ith a combined book value of approximately $2.3 billion .

For information about impairments of IPR&D assets, see Note 4. Other Deductions––Net.

For IPR&D assets, the risk of failure is signif icant and there can be no certainty that these assets ultimately w ill yield a successful product. Thenature of the biopharmaceutical business is high-risk and, as such, w e expect that many of these IPR&D assets w ill become impaired and bew ritten off at some time in the future.

Amortization

The w eighted-average life of both our total f inite-lived intangible assets and the largest component, Developed technology rights, is approximately11 years. Total amortization expense for f inite-lived intangible assets w as $5.4 billion in 2012 , $5.8 billion in 2011 and $5.5 billion in 2010 .

The follow ing table provides the annual amortization expense expected for the years 2013 through 2017:

(MILLIONS OF DOLLARS) 2013 2014 2015 2016 2017

Amortization expense $ 4,804 $ 4,145 $ 3,735 $ 3,488 $ 3,373

Note 11. Pension and Postretirement Benefit Plans and Defined Contribution Plans

The majority of our employees w orldw ide are covered by defined benefit pension plans, defined contribution plans or both. In the U.S., w e haveboth qualif ied and supplemental (non-qualif ied) defined benefit plans. A qualif ied plan meets the requirements of certain sections of the InternalRevenue Code, and, generally, contributions to qualif ied plans are tax deductible. A qualif ied plan typically provides benefits to a broad group ofemployees w ith restrictions on discriminating in favor of highly compensated employees w ith regard to coverage, benefits and contributions. Asupplemental (non-qualif ied) plan provides additional benefits to certain employees. In addition, w e provide medical and life insurance benefits tocertain retirees and their eligible dependents through our postretirement plans.

Beginning on January 1, 2011, for employees hired in the U.S. and Puerto Rico after December 31, 2010, w e no longer offer a defined benefit planand, instead, offer an enhanced benefit under our defined eligible contribution plan. In addition to the standard matching contribution by theCompany, the enhanced benefit provides an automatic Company contribution for such eligible employees based on age and years of service.

On May 8, 2012, w e announced to employees that as of January 1, 2018, Pfizer w ill transition its U.S. and Puerto Rico employees from its definedbenefit plans to an enhanced defined contribution savings plan. As a result of this decision to freeze the U.S. and Puerto Rico defined benefitplans, a curtailment w as triggered and w e performed a re-measurement of the pension obligations and plan assets in the second quarter of 2012, w hich had an immaterial impact to the funded status of the plans. For the year ended December 31, 2012 , w e recorded, among other impacts, acurtailment gain of approximately $59 million in the consolidated statement of income.

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A. Components of Net Periodic Benefit Costs and Changes in Other Comprehensive Loss

The follow ing table provides the annual cost and changes in Other comprehensive loss for our benefit plans:

Year Ended December 31,

Pension Plans

U.S.

Qualif ied (a)

U.S.

Supplemental

(Non-Qualif ied) (b) International (c) Postretirement

Plans (d)

(MILLIONS OFDOLLARS) 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010

Service cost (e) $ 357 $ 351 347 $ 35 $ 36 28 $ 215 $ 243 224 $ 68 $ 68 79

Interest cost (e) 697 734 740 62 72 77 406 443 418 182 195 211

Expected return on

plan assets (e) (983) (871) (782) — — — (424) (437) (425) (46) (35) (31)

Amortization of:

Actuarial

losses (e) 306 145 151 41 36 29 93 86 67 33 17 15

Prior service

credits (10) (8) 2 (3) (3) (2) (7) (5) (4) (49) (53) (38)

Curtailments and

settlements––

net 83 95 (52) 24 23 1 (9) — (3) (65) (68) (23)

Special termination

benefits 8 23 73 30 26 180 5 5 6 6 3 19

Net periodic

benefit costs 458 469 479 189 190 313 279 335 283 129 127 232

Changes in Other

comprehensive

loss (f) 461 1,879 260 110 36 117 759 (365) 152 267 421 (183)

Total amount

recognized in

comprehensive

income $ 919 $ 2,348 $ 739 $ 299 $ 226 $ 430 $1,038 $ (30) $ 435 $ 396 $ 548 $ 49

(a)

2012 v . 2011 –– The decrease in net periodic benef it cost f or our U.S. qualif ied plans was primarily driv en by (i) higher expected return on plan assets (resulting f rom

contributions made to the plan in 2011 that increased the plan asset base), (ii) lower interest costs, (iii) a decrease in special termination benef its, and (iv ) lower

curtailments and settlements –– net due to the curtailment gain resulting f rom the decision to f reeze the def ined benef it plans in the U.S. and Puerto Rico largely

of f set by an increase in the amounts amortized f or actuarial losses (resulting f rom a decrease in the discount rate and lower than expected actual returns in 2011).

2011 v . 2010 –– The decrease in the U.S. qualif ied pension plans' net periodic benef it costs was largely driv en by lower special termination benef its costs and higher

expected returns due to contributions made to the plans, partially of f set by lower curtailment gains and an increase in settlement costs associated with on-going

restructuring ef f orts.(b)

2012 v . 2011 –– The net periodic benef it cost f or our U.S. supplemental (non-qualif ied) pension plans was largely unchanged as the curtailment gain resulting f rom the

decision to f reeze the def ined benef it plans in the U.S. and Puerto Rico was more than of f set by higher settlement activ ity . 2011 v . 2010 –– The decrease in the

U.S. supplemental (non-qualif ied) plans’ net periodic benef it costs was primarily driv en by lower special termination benef its costs associated with Wy eth-related

restructuring initiativ es.(c)

2012 v . 2011 –– The decrease in net periodic benef it costs f or our international pension plans was primarily driv en by changes impacting our U.K. plans in 2011 (see

(e) below) as well as higher curtailment gains resulting f rom ongoing restructuring initiativ es. 2011 v . 2010 –– The increase in the international plans’ net periodic

benef it costs as compared to the prior y ear was primarily driv en by changes in assumptions, including the decrease in discount rates across most plans.(d)

2012 v . 2011 –– The net periodic benef it cost f or our postretirement plans was largely unchanged, as an increase in amounts amortized f or actuarial plan losses was

partially of f set by higher expected return on plan assets. 2011 v . 2010 –– The decrease in the postretirement plans’ net periodic benef it costs was due to the

harmonization of the Wy eth postretirement medical program initiated in mid-2010 .(e)The decrease in serv ice cost in 2012 f or our international plans is largely driv en by restructuring activ ities in the U.K. and Ireland. The decrease in interest cost in

2012 and 2011 ref lect lower interest rates during the periods. The increase in the expected return on plan assets in 2012 f or our U.S. qualif ied plans is due to a higher

plan asset base . The higher amortization of actuarial losses is due larger accumulated actuarial losses resulting f rom lower interest rates.(f) For details, see our Consolidated Statements of Comprehensiv e Income and Note 6. Accumulated Other Comprehensive Loss, Excluding Noncontrolling Interests.

The follow ing table provides the amounts in Accumulated other comprehensive loss expected to be amortized into 2013 net periodic benefit

costs:

Pension Plans

(MILLIONS OF DOLLARS) U.S.

Qualif ied

U.S.

Supplemental

(Non-Qualif ied) International Postretirement

Plans

Actuarial losses $ (360) $ (54) $ (149) $ (46)

Prior service credits and other 7 2 8 45

Total $ (353) $ (52) $ (141) $ (1)

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B. Actuarial Assumptions

The follow ing table provides the w eighted-average actuarial assumptions of our benefit plans:

(PERCENTAGES) 2012 2011 2010

Weighted-average assumptions used to determine benefit obligations

Discount rate:

U.S. qualif ied pension plans 4.3% 5.1% 5.9%

U.S. non-qualif ied pension plans 3.9% 5.0% 5.8%

International pension plans 3.8% 4.7% 4.8%

Postretirement plans 4.1% 4.8% 5.6%

Rate of compensation increase:

U.S. qualif ied pension plans 2.7% 3.5% 4.0%

U.S. non-qualif ied pension plans 2.8% 3.5% 4.0%

International pension plans 3.1% 3.3% 3.5%

Weighted-average assumptions used to determine net periodic benefit cost

Discount rate:

U.S. qualif ied pension plans 5.1% 5.9% 6.3%

U.S. non-qualif ied pension plans 5.0% 5.8% 6.2%

International pension plans 4.7% 4.8% 5.1%

Postretirement plans 4.8% 5.6% 6.0%

Expected return on plan assets:

U.S. qualif ied pension plans 8.5% 8.5% 8.5%

International pension plans 5.9% 6.0% 6.4%

Postretirement plans 8.5% 8.5% 8.5%

Rate of compensation increase:

U.S. qualif ied pension plans 3.5% 4.0% 4.0%

U.S. non-qualif ied pension plans 3.5% 4.0% 4.0%

International pension plans 3.3% 3.5% 3.6%

The assumptions above are used to develop the benefit obligations at f iscal year-end and to develop the net periodic benefit cost for thesubsequent f iscal year. Therefore, the assumptions used to determine net periodic benefit cost for each year are established at the end of eachprevious year, w hile the assumptions used to determine benefit obligations are established at each year-end.

The net periodic benefit cost and the benefit obligations are based on actuarial assumptions that are review ed on an annual basis. We revisethese assumptions based on an annual evaluation of long-term trends, as w ell as market conditions that may have an impact on the cost ofproviding retirement benefits.

The expected rates of return on plan assets for our U.S. qualif ied, international and postretirement plans represent our long-term assessment ofreturn expectations, w hich w e may change based on shifts in economic and f inancial market conditions. The 2012 expected rates of return forthese plans reflect our long-term outlook for a globally diversif ied portfolio, w hich is inf luenced by a combination of return expectations forindividual asset classes, actual historical experience and our diversif ied investment strategy. The historical returns are one of the inputs used toprovide context for the development of our expectations for future returns. Using this information, w e develop ranges of returns for each assetclass and a w eighted-average expected return for our targeted portfolio, w hich includes the impact of portfolio diversif ication and active portfoliomanagement.

The follow ing table provides the healthcare cost trend rate assumptions for our U.S. postretirement benefit plans:

2012 2011

Healthcare cost trend rate assumed for next year 7.5% 7.8%

Rate to w hich the cost trend rate is assumed to decline 4.5% 4.5%

Year that the rate reaches the ultimate trend rate 2027 2027

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The follow ing table provides the effects as of December 31, 2012 of a one-percentage-point increase or decrease in the healthcare cost trend

rate assumed for postretirement benefits:

(MILLIONS OF DOLLARS) Increase Decrease

Effect on total service and interest cost components $ 17 $ (16)

Effect on postretirement benefit obligation 333 (293)

Actuarial and other assumptions for pension and postretirement plans can result from a complex series of judgments about future events anduncertainties and can rely heavily on estimates and assumptions. For a description of the risks associated w ith estimates and assumptions, seeNote 1C. Basis of Presentation and Significant Accounting Policies: Estimates and Assumptions .

C .Obligations and Funded Status

The follow ing table provides an analysis of the changes in our benefit obligations, plan assets and funded status of our benefit plans:

Year Ended December 31,

Pension Plans

U.S. Qualif ied (a) U.S. Supplemental

(Non-Qualif ied) (b) International (c) Postretirement

Plans (d)

(MILLIONS OF DOLLARS) 2012 2011 2012 2011 2012 2011 2012 2011

Change in benefit obligation (e)

Benefit obligation, beginning $ 14,835 $ 13,035 $ 1,431 $ 1,401 $ 8,891 $ 8,965 $ 3,900 $ 3,582

Service cost 357 351 35 36 215 243 68 68

Interest cost 697 734 62 72 406 443 182 195

Employee contributions — — — — 9 12 58 45

Plan amendments — (73) — (9) (1) 4 (24) (28)

Changes in actuarial assumptions and

other 1,926 1,808 252 111 1,232 (516) 259 300

Foreign exchange impact — — — — (80) 304 1 —

Acquisitions (1) 56 1 — 71 3 — 14

Curtailments (605) (97) (80) (10) (101) (121) (11) 17

Settlements (485) (476) (121) (128) (33) (56) — —

Special termination benefits 8 23 30 26 5 5 6 3

Benefits paid (464) (526) (61) (68) (387) (395) (274) (296)

Benefit obligation, ending (e) 16,268 14,835 1,549 1,431 10,227 8,891 4,165 3,900

Change in plan assets

Fair value of plan assets, beginning 12,005 10,596 — — 6,953 6,542 422 414

Actual gain on plan assets 1,464 398 — — 668 176 85 9

Company contributions 20 1,969 182 196 383 475 353 250

Employee contributions — — — — 9 12 58 45

Foreign exchange impact — — — — (35) 197 — —

Acquisitions — 44 — — 31 2 — —

Settlements (485) (476) (121) (128) (33) (56) — —

Benefits paid (464) (526) (61) (68) (387) (395) (274) (296)

Fair value of plan assets, ending 12,540 12,005 — — 7,589 6,953 644 422

Funded status—Plan assets less than

benefit obligation $ (3,728) $ (2,830) $ (1,549) $ (1,431) $ (2,638) $ (1,938) $ (3,521) $ (3,478)

(a)

The unf av orable change in the f unded status of our U.S. qualif ied plans is primarily due to the decrease in the discount rate, partially of f set by the curtailmentresulting f rom the decision to f reeze the def ined benef it plans in the U.S. and Puerto Rico, and an increase in the actual gain on plan assets.

(b)

Our U.S. supplemental (non-qualif ied) plans are generally not f unded and these obligations, which are substantially greater than the annual cash outlay f or theseliabilities, will be paid f rom cash generated f rom operations.

(c)

The unf av orable change in the f unded status of our international plans is primarily due to changes in actuarial assumptions, partially of f set by an increase in theactual gain on plan assets. Outside the U.S., in general, we f und our def ined benef it plans to the extent that tax or other incentiv es exist.

(d)

The f unded status of our postretirement plans is largely unchanged as changes in actuarial assumptions were of f set by the actual return on plan assets andincreased contributions.

(e)

For the U.S. and international pension plans, the benef it obligation is the projected benef it obligation. For the postretirement plans, the benef it obligation is the

accumulated postretirement benef it obligation (ABO). The ABO f or all of our U.S. qualif ied pension plans was $15.9 billion in 2012 and $13.8 billion in 2011 . The ABO

f or our U.S. supplemental (non-qualif ied) pension plans was $1.5 billion in 2012 and $1.2 billion 2011 . The ABO f or our international pension plans was $9.4 billion in

2012 and $8.3 billion in 2011 .

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The follow ing table provides information as to how the funded status is recognized in our consolidated balance sheets:

As of December 31,

Pension Plans

U.S. Qualif ied U.S. Supplemental

(Non-Qualif ied) International Postretirement

Plans

(MILLIONS OF DOLLARS) 2012 2011 2012 2011 2012 2011 2012 2011

Noncurrent assets (a) $ — $ — $ — $ — $ 124 $ 327 $ — $ —

Current liabilities (b) — — (162) (130) (47) (41) (28) (134)

Noncurrent liabilities (c) (3,728) (2,830) (1,387) (1,301) (2,715) (2,224) (3,493) (3,344)

Funded status $ (3,728) $ (2,830) $ (1,549) $ (1,431) $ (2,638) $ (1,938) $ (3,521) $ (3,478)

(a) Included primarily in Taxes and other noncurrent assets .(b) Included in Accrued compensation and related items .(c) Included in Pension benefit obligations and Postretirement benefit obligations , as appropriate.

The follow ing table provides the pre-tax components of amounts recognized in Accumulated other comprehensive loss :

As of December 31,

Pension Plans

U.S. Qualif ied U.S. Supplemental

(Non-Qualif ied) International Postretirement

Plans

(MILLIONS OF DOLLARS) 2012 2011 2012 2011 2012 2011 2012 2011

Actuarial losses (a) $ (5,027) $ (4,638) $ (664) $ (566) $ (2,780) $ (2,020) $ (932) $ (759)

Prior service (costs)/credits and

other 51 123 14 26 (20) (21) 374 468

Total $ (4,976) $ (4,515) $ (650) $ (540) $ (2,800) $ (2,041) $ (558) $ (291)

(a)

The actuarial losses primarily represent the impact of changes in discount rates and other assumptions that result in cumulativ e changes in our projected benef it

obligations as well as the cumulativ e dif f erence between the expected return and actual return on plan assets. These actuarial losses are recognized in Accumulated

other comprehensive loss and are amortized into net periodic benef it costs ov er an av erage period of 9.8 y ears f or our U.S. qualif ied plans, an av erage period of 9.9

y ears f or our U.S. supplemental (non-qualif ied) plans, an av erage period of 14.5 y ears f or our international plans and an av erage period of 11.0 y ears f or our

postretirement plans.

The follow ing table provides information related to the funded status of selected benefit plans:

As of December 31,

Pension Plans

U.S. Qualif ied U.S. Supplemental

(Non-Qualif ied) International

(MILLIONS OF DOLLARS) 2012 2011 2012 2011 2012 2011

Pension plans w ith an accumulated benefit obligation in excess of

plan assets:

Fair value of plan assets $ 12,540 $ 12,005 $ — $ — $ 2,776 $ 2,529

Accumulated benefit obligation 15,870 13,799 1,465 1,225 5,056 4,446

Pension plans w ith a projected benefit obligation in excess of plan

assets:

Fair value of plan assets 12,540 12,005 — — 6,432 2,686

Projected benefit obligation 16,268 14,835 1,549 1,431 9,193 4,951

All of our U.S. plans and substantially all of our international plans w ere underfunded as of December 31, 2012.

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D. Plan Assets

The follow ing table provides the components of plan assets:

Fair Value (a) Fair Value (a)

(MILLIONS OF DOLLARS)

As of

December 31,

2012 Level 1 Level 2 Level 3

As of

December 31,

2011 Level 1 Level 2 Level 3

U.S. qualif ied pension plans

Cash and cash

equivalents $ 368 $ — $ 368 $ — $ 2,111 $ — $ 2,111 $ —

Equity securities:

Global equity securities 3,536 3,519 17 — 2,522 2,509 12 1

Equity commingled

funds 2,215 — 2,215 — 1,794 — 1,794 —

Debt securities:

Fixed income

commingled funds 943 — 943 — 870 — 870 —

Government bonds 1,093 — 1,093 — 808 — 805 3

Corporate debt

securities 2,414 — 2,411 3 1,971 — 1,966 5

Other investments:

Private equity funds 866 — — 866 920 — — 920

Insurance contracts 348 — 348 — 353 — 353 —

Other 757 — — 757 656 — — 656

Total 12,540 3,519 7,395 1,626 12,005 2,509 7,911 1,585

International pension plans

Cash and cash

equivalents 299 — 299 — 299 — 299 —

Equity securities:

Global equity securities 1,723 1,638 85 — 1,513 1,432 81 —

Equity commingled

funds 2,194 — 2,194 — 1,966 — 1,966 —

Debt securities:

Fixed income

commingled funds 825 — 825 — 785 — 785 —

Government bonds 914 — 914 — 956 — 956 —

Corporate debt

securities 613 — 613 — 536 — 536 —

Other investments:

Private equity funds 110 — 14 96 55 — 4 51

Insurance contracts 465 — 117 348 433 — 67 366

Other 446 — 57 389 410 — 62 348

Total 7,589 1,638 5,118 833 6,953 1,432 4,756 765

U.S. postretirement plans (b)

Cash and cash

equivalents 28 — 28 — 19 — 19 —

Equity securities:

Global equity securities 79 79 — — 24 24 — —

Equity commingled

funds 50 — 50 — 17 — 17 —

Debt securities:

Fixed income

commingled funds 20 — 20 — 8 — 8 —

Government bonds 25 — 25 — 8 — 8 —

Corporate debt

securities 55 — 55 — 19 — 19 —

Other investments:

Insurance contracts 350 — 350 — 312 — 312 —

Other 37 — 37 — 15 — 15 —

Total $ 644 $ 79 $ 565 $ — $ 422 $ 24 $ 398 $ —

(a)

Fair v alues are determined based on v aluation inputs categorized as Lev el 1, 2 or 3 (see Note 1E. Basis of Presentation and Significant Accounting Policies: Fair

Value ).

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(b) Ref lects postretirement plan assets, which support a portion of our U.S. retiree medical plans.

The follow ing table provides an analysis of the changes in our more signif icant investments valued using signif icant unobservable inputs:

Year Ended December 31,

U.S. Qualif ied Pension Plans International Pension Plans

Private Equity Funds Other Insurance Contracts Other

(MILLIONS OF DOLLARS) 2012 2011 2012 2011 2012 2011 2012 2011

Fair value, beginning $ 920 $ 899 $ 656 $ 465 $ 366 $ 366 $ 348 $ 214

Actual return on plan assets:

Assets held, ending 4 (246) 61 24 8 8 (14) (4)

Assets sold during the period — 55 — (6) — — 5 —

Purchases, sales and settlements, net (58) 212 40 173 (5) (12) 50 120

Transfer into/(out of) Level 3 — — — — (5) (15) — 12

Exchange rate changes — — — — (16) 19 — 6

Fair value, ending $ 866 $ 920 $ 757 $ 656 $ 348 $ 366 $ 389 $ 348

A single estimate of fair value can result from a complex series of judgments about future events and uncertainties and can rely heavily onestimates and assumptions. For a description of our general accounting policies associated w ith developing fair value estimates, see Note 1E.Basis of Presentation and Significant Accounting Policies: Fair Value. For a description of the risks associated w ith estimates and assumptions,see Note 1C. Basis of Presentation and Significant Accounting Policies: Estimates and Assumptions.

Specif ically, the follow ing methods and assumptions w ere used to estimate the fair value of our pension and postretirement plans’ assets:

• Cash and cash equivalents, Equity commingled funds, Fixed-income commingled funds––observable prices.

• Global equity securities—quoted market prices.

• Government bonds, Corporate debt securities—observable market prices.

• Other investments—principally unobservable inputs that are signif icant to the estimation of fair value. These unobservable inputs couldinclude, for example, the investment managers’ assumptions about earnings multiples and future cash f low s.

We periodically review the methodologies, inputs and outputs of third-party pricing services for reasonableness.

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The follow ing table provides the long-term target asset allocations ranges and the percentage of the fair value of plan assets for benefit plans:

As of December 31,

Target

Allocation Percentage Percentage of Plan Assets

(PERCENTAGES) 2012 2012 2011

U.S. qualified pension plans

Cash and cash equivalents 0-5 2.9% 17.6%

Equity securities 25-50 45.9% 36.0%

Debt securities 30-55 35.5% 30.4%

Real estate and other investments 10-15 15.7% 16.0%

Total 100% 100% 100%

International pension plans

Cash and cash equivalents 0-5 3.9% 4.4%

Equity securities 25-50 51.6% 50.0%

Debt securities 30-55 31.0% 32.7%

Real estate and other investments 10-15 13.5% 12.9%

Total 100% 100% 100.0%

U.S. postretirement plans

Cash and cash equivalents 0-5 4.4% 4.6%

Equity securities 10-35 20.1% 9.7%

Debt securities 5-30 15.5% 8.1%

Real estate, insurance contracts and other investments 55-70 60.0% 77.6%

Total 100% 100% 100%

We utilize long-term asset allocation ranges in the management of our plans’ invested assets. Our long-term return expectations are developedbased on a diversif ied, global investment strategy that takes into account historical experience, as w ell as the impact of portfolio diversif ication,active portfolio management, and our view of current and future economic and f inancial market conditions. As market conditions and other factorschange, w e may adjust our targets accordingly and our asset allocations may vary from the target allocations.

Our long-term asset allocation ranges reflect our asset class return expectations and tolerance for investment risk w ithin the context of therespective plans’ long-term benefit obligations. These ranges are supported by analysis that incorporates historical and expected returns byasset class, as w ell as volatilities and correlations across asset classes and our liability profile. This analysis, referred to as an asset-liabilityanalysis, also provides an estimate of expected returns on plan assets, as w ell as a forecast of potential future asset and liability balances.

The plans’ assets are managed w ith the objectives of minimizing pension expense and cash contributions over the long term. Asset liabilitystudies are performed periodically in order to support asset allocations.

The investment managers of each separately managed account are permitted to use derivative securities as described in their investmentmanagement agreements.

Investment performance is review ed on a monthly basis in total, as w ell as by asset class and individual manager, relative to one or morebenchmarks. Investment performance and detailed statistical analysis of both investment performance and portfolio holdings are conducted, alarge portion of w hich is presented to senior management on a quarterly basis. Periodic formal meetings are held w ith each investment managerto review the investments.

E. Cash Flows

It is our practice to fund amounts for our qualif ied pension plans that are at least suff icient to meet the minimum requirements set forth in applicableemployee benefit law s and local tax law s.

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The follow ing table provides the expected future cash f low information related to our benefit plans:

Pension Plans

(MILLIONS OF DOLLARS) U.S.Qualif ied U.S. Supplemental

(Non-Qualif ied) International Postretirement Plans

Expected employer contributions:

2013 $ — $ 162 $ 343 $ 257

Expected benefit payments:

2013 $ 1,115 $ 162 $ 444 $ 295

2014 782 137 400 306

2015 796 116 417 313

2016 812 111 430 321

2017 856 114 442 329

2018–2022 4,595 561 2,396 1,748

The table reflects the total U.S. and international plan benefits projected to be paid from the plans or from our general assets under the currentactuarial assumptions used for the calculation of the benefit obligation and, therefore, actual benefit payments may differ from projected benefitpayments.

F. Defined Contribution Plans

We have savings and investment plans in several countries, including the U.S., U.K., Japan, Spain and the Netherlands. For the U.S. plans,employees may contribute a portion of their salaries and bonuses to the plans, and w e match, largely in company stock or company stock units, aportion of the employee contributions. In the U.S., the matching contributions in company stock are sourced through open market purchases.Employees are permitted to subsequently diversify all or any portion of their company matching contribution. The contribution match for certainlegacy Pharmacia U.S. participants is held in an employee stock ow nership plan. We recorded charges related to our plans of $297 million in 2012, $288 million in 2011 and $259 million in 2010 .

Note 12. Equity

A. Common Stock

We purchase our common stock through privately negotiated transactions or in open market purchases as circumstances and prices w arrant.Purchased shares under each of the share-purchase plans, w hich are authorized by our Board of Directors, are available for general corporatepurposes. On December 12, 2011, w e announced that the Board of Directors had authorized a $10 billion share-purchase plan (the December2011 Stock Purchase Plan). On November 1, 2012, w e announced that the Board of Directors had authorized an additional $10 billion share-purchase plan, w hich became effective on November 30, 2012.

In 2012, w e purchased approximately 349 million shares of our common stock for approximately $8.2 billion . In 2011, w e purchasedapproximately 459 million shares of our common stock for approximately $9.0 billion . In 2010, w e purchased approximately 61 million shares ofour common stock for approximately $1 billion . After giving effect to share purchases through year-end 2012, our remaining share-purchaseauthorization is approximately $11.8 billion at December 31, 2012 .

B. Preferred Stock

The Series A convertible perpetual preferred stock is held by an Employee Stock Ow nership Plan (Preferred ESOP) Trust and provides dividendsat the rate of 6.25% , w hich are accumulated and paid quarterly. The per-share stated value is $40,300 and the preferred stock ranks senior toour common stock as to dividends and liquidation rights. Each share is convertible, at the holder’s option, into 2,574.87 shares of our commonstock w ith equal voting rights. The conversion option is indexed to our common stock and requires share settlement, and, therefore, is reported atthe fair value at the date of issuance. We may redeem the preferred stock at any time or upon termination of the Preferred ESOP, at our option, incash, in shares of common stock, or a combination of both at a price of $40,300 per share.

C. Employee Stock Ownership Plans

We have tw o employee stock ow nership plans (collectively, the ESOPs), the Preferred ESOP and another that holds common stock of theCompany (Common ESOP).

Allocated shares held by the Common ESOP are considered outstanding for the earnings per share (EPS) calculations and the eventualconversion of allocated preferred shares held by the Preferred ESOP is assumed in the diluted EPS calculation. As of December 31, 2012 , thePreferred ESOP held preferred shares w ith a stated value of approximately $39 million , convertible into approximately 2 million shares of ourcommon stock. As of December 31, 2012 , the Common ESOP held approximately 3 million shares of our common stock. As of December 31, 2012, all preferred and common shares held by the ESOPs have been allocated to the Pharmacia U.S. and certain Puerto Rico savings planparticipants.

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D. Employee Benefit Trust

The Pfizer Inc. Employee Benefit Trust (EBT) w as established in 1999 to fund our employee benefit plans through the use of its holdings of PfizerInc. stock. Our consolidated balance sheets reflect the fair value of the shares ow ned by the EBT as a reduction of Equity. Beginning in May2009, the Company began using the shares held in the EBT to help fund the Company’s matching contribution in the Pfizer Savings Plan.

Note 13. Share-Based Payments

Our compensation programs can include share-based payments, in the form of stock options, Restricted Stock Units (RSUs), PortfolioPerformance Shares (PPSs), Performance Share Aw ards (PSAs) and Total Shareholder Return Units (TSRUs).

The Company’s shareholders approved the amendment and restatement of the 2004 Stock Plan at the Annual Meeting of Shareholders held onApril 23, 2009. The primary purpose of the amendment w as to increase the number of shares of common stock available for grants by 425 millionshares. In addition, the amendment provided other changes, including that the number of stock options, Stock Appreciation Rights (SARs) (know nas TSRUs) or other performance-based aw ards that may be granted to any one individual during any 36 -month period is limited to 8 millionshares, and that RSUs, PPSs, PSAs and restricted stock grants count as 2 shares, w hile stock options and TSRUs count as 1 share, tow ard themaximums for the incremental 425 million shares. As of December 31, 2012 , 236 million shares w ere available for aw ard. The 2004 Stock Plan,as amended, is the only Pfizer plan under w hich equity-based compensation may currently be aw arded to executives and other employees.

Although not required to do so, w e have used authorized and unissued shares and, to a lesser extent, shares held in our Employee Benefit Trustand treasury stock to satisfy our obligations under these programs.

A. Impact on Net Income

The follow ing table provides the components of share-based compensation expense and the associated tax benefit:

Year Ended December 31,

(MILLIONS OF DOLLARS) 2012 2011 2010

Restricted stock units $ 235 $ 228 $ 211

Stock options 157 166 150

Total shareholder return units 35 17 28

Performance share aw ards 35 3 14

Portfolio performance shares 14 — —

Directors’ compensation and other 5 5 2

Share-based payment expense 481 419 405

Tax benefit for share-based compensation expense (149) (139) (129)

Share-based payment expense, net of tax $ 332 $ 280 $ 276

Amounts capitalized as part of inventory cost and the impact of modif ications under our cost-reduction and productivity initiatives to share-basedaw ards w ere not signif icant for any period presented. Generally, the modif ications resulted in an acceleration of vesting, either in accordancew ith plan terms or at management’s discretion.

B. Restricted Stock Units (RSUs)

RSUs are aw arded to select employees and, w hen vested, entitle the holder to receive a specif ied number of shares of Pfizer common stock,including shares resulting from dividend equivalents paid on such RSUs. For RSUs granted during the periods presented, in virtually all instances,the units vest after three years of continuous service from the grant date.

We measure the value of RSU grants as of the grant date using the closing price of Pfizer common stock. The values determined through this fairvalue methodology generally are amortized on a straight-line basis over the vesting term into Cost of sales, Selling, informational andadministrative expenses , and Research and development expenses , as appropriate.

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The follow ing table summarizes all RSU activity during 2012:

Shares

(Thousands)

Weighted-

Average

Grant Date

Fair Value

Per Share

Nonvested, December 31, 2011 41,940 $ 17.08

Granted 13,232 21.05

Vested (15,464) 15.09

Reinvested dividend equivalents 1,585 22.95

Forfeited (3,433) 19.17

Nonvested, December 31, 2012 37,860 $ 19.34

The follow ing table provides data related to all RSU activity:

(MILLIONS OF DOLLARS)

Year Ended December 31,

2012 2011 2010

Total fair value of shares vested $ 348 $ 256 $ 222

Total compensation cost related to nonvested RSU aw ards not yet recognized, pre-tax $ 258 $ 264 $ 230

Weighted-average period over w hich RSU cost is expected to be recognized (years) 1.2 1.3 1.4

C. Stock Options

Stock options are aw arded to select employees and, w hen vested, entitle the holder to purchase a specif ied number of shares of Pfizer commonstock at a price per share equal to the closing market price of Pfizer common stock on the date of grant.

All eligible employees may receive stock option grants. No stock options w ere aw arded to senior and other key management in any periodpresented; how ever, stock options w ere aw arded to certain other employees. In virtually all instances, stock options granted since 2005 vestafter three years of continuous service from the grant date and have a contractual term of 10 years . In most cases, stock options must be heldfor at least 1 year from the grant date before any vesting may occur. In the event of a sale or restructuring, options held by employees areimmediately vested and are exercisable for a period from three months to their remaining term, depending on various conditions.

We measure the value of stock option grants as of the grant date using, for virtually all grants, the Black-Scholes-Merton option-pricing model. Thevalues determined through this fair value methodology generally are amortized on a straight-line basis over the vesting term into Cost of sales,Selling, informational and administrative expenses , and Research and development expenses , as appropriate.

The follow ing table provides the w eighted-average assumptions used in the valuation of stock options:

Year Ended December 31,

2012 2011 2010

Expected dividend yield (a) 4.10% 4.14% 4.00%

Risk-free interest rate (b) 1.28% 2.59% 2.87%

Expected stock price volatility (c) 23.78% 25.55% 26.85%

Expected term (d) (years) 6.50 6.25 6.25

(a) Determined using a constant div idend y ield during the expected term of the option.(b) Determined using the interpolated y ield on U.S. Treasury zero-coupon issues.(c) Determined using implied v olatility , af ter consideration of historical v olatility .(d) Determined using historical exercise and post-v esting termination patterns.

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The follow ing table summarizes all stock option activity during 2012:

Shares

(Thousands)

Weighted-

Average

Exercise Price

Per Share

Weighted-Average

Remaining

Contractual Term

(Years)

Aggregate

Intrinsic

Value (a)

(Millions)

Outstanding, December 31, 2011 429,553 $ 25.31

Granted 57,919 21.04

Exercised (37,160) 15.98

Forfeited (6,881) 19.12

Canceled (60,476) 35.96

Outstanding, December 31, 2012 382,955 $ 24.00 5.0 $ 1,230

Vested and expected to vest (b) , December 31,

2012 375,102 24.10 4.9 $ 1,183

Exercisable, December 31, 2012 225,829 $ 27.32 2.8 $ 308

(a) Market price of underly ing Pf izer common stock less exercise price.(b) The number of options expected to v est takes into account an estimate of expected f orf eitures.

The follow ing table summarizes data related to all stock option activity:

Year Ended/As of

December 31,

(MILLIONS OF DOLLARS, EXCEPT PER STOCK OPTION AMOUNTS) 2012 2011 2010

Weighted-average grant date fair value per stock option $ 2.79 $ 3.15 $ 3.25

Aggregate intrinsic value on exercise $ 263 $ 32 $ 5

Cash received upon exercise $ 568 $ 153 $ 16

Tax benefits realized related to exercise $ 81 $ 10 $ 1

Total compensation cost related to nonvested stock options not yet recognized, pre-tax $ 148 $ 177 $ 178

Weighted-average period over w hich stock option compensation cost is expected to be recognized

(years) 1.2 1.3 1.3

D. Total Shareholder Return Units (TSRUs)

TSRUs are aw arded to senior and other key management. The contractual terms for TSRUs w ere for 5 years for certain aw ards and for 7 yearsfor the balance of the aw ards in 2012 and 2011 , and for 5 years for all aw ards in 2010 . The target number of shares is determined by referenceto the fair value of share-based aw ards to similar employees in the industry peer group.

We measure the value of TSRU grants as of the grant date using a Monte Carlo simulation model. The values determined through this fair valuemethodology generally are amortized on a straight-line basis over the vesting term into Cost of sales, Selling, informational and administrativeexpenses , and Research and development expenses , as appropriate.

The w eighted-average assumptions used in the valuation of TSRUs follow :

Year Ended December 31,

2012 2011 2010

Expected dividend yield (a) 4.10% 4.15% 3.99%

Risk-free interest rate (b) 1.15% 2.51% 2.34%

Expected stock price volatility (c) 23.80% 25.55% 26.76%

Contractual term (years) 5.97 5.95 5.00

(a) Determined using a constant div idend y ield during the expected term of the TSRU.(b) Determined using the interpolated y ield on U.S. Treasury zero-coupon issues.(c) Determined using implied v olatility , af ter consideration of historical v olatility .

E. Performance Share Awards (PSAs)

PSAs are aw arded to senior and other key management. PSAs vest after three years of continuous service from the grant date. The number ofshares paid, if any, including shares resulting from dividend equivalents, depends upon the achievement of predetermined goals related to Pfizer 's total share return as compared to an industry peer group, for the three-year performance period from the year of the grant date. The targetnumber of shares is determined by reference to the value of share-based aw ards to similar employees in the industry peer group.

We measure the value of PSA grants as of the grant date using the intrinsic value method, for w hich w e use the closing price of Pfizer commonstock. The values are amortized on a straight-line basis over the probable vesting term into Cost of sales, Selling, informational and

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administrative expenses , and Research and development expenses , as appropriate, and adjusted each reporting period, as necessary, toreflect changes in the price of Pfizer's common stock, changes in management's assessment of the probability that the specif ied performancecriteria w ill be achieved and/or changes in management's assessment of the probable vesting term.

F. Portfolio Performance Shares (PPSs)

PPSs are aw arded to select employees and, w hen vested, entitle the holder to receive, at the end of the performance period, a number of sharesw ithin a possible range of shares of Pfizer common stock, including shares resulting from dividend equivalents paid on such shares. For PPSsgranted during the period presented, the aw ards vest after three years of continuous service from the grant date and the number of shares paid,if any, depends on the achievement of predetermined goals related to Pfizer ' s long-term product portfolio during a f ive year performance periodfrom the year of the grant date. The target number of shares is determined by reference to competitive survey data.

We measure the value of PPS grants as of the grant date using the intrinsic value method, for w hich w e use the closing price of Pfizer commonstock. The values are amortized on a straight-line basis over the probable vesting term into Research and development expenses and adjustedeach reporting period, as necessary, to reflect changes in the price of Pfizer's common stock, changes in management's assessment of theprobability that the specif ied performance criteria w ill be achieved and/or changes in management's assessment of the probable vesting term.

The follow ing table summarizes all PPS activity during 2012, w ith the shares representing the maximum aw ard that could be achieved:

Shares

(Thousands)

Weighted-

Average

Intrinsic

Value

Per Share

Nonvested, December 31, 2011 — $ —

Granted 3,964 21.03

Vested (2) 22.42

Forfeited (220) 23.18

Nonvested, December 31, 2012 3,742 $ 25.08

The follow ing table provides data related to all PPS activity:

(MILLIONS OF DOLLARS)

Year Ended December 31,

2012 2011 2010

Total fair value of shares vested $ — $ — $ —

Total compensation cost related to nonvested PPS aw ards not yet recognized, pre-tax $ 33 $ — $ —

Weighted-average period over w hich nonvested PPS cost is expected to be recognized (years) 2.2 — —

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Note 14. Earnings Per Common Share Attributable to Common Shareholders

The follow ing table provides the detailed calculation of Earnings per common share:

Year Ended December 31,

(IN MILLIONS) 2012 2011 2010

EPS Numerator––Basic

Income from continuing operations $ 9,518 $ 8,395 $ 8,318

Less: Net income attributable to noncontrolling interests 28 40 31

Income from continuing operations attributable to Pfizer Inc. 9,490 8,355 8,287

Less: Preferred stock dividends––net of tax 2 2 2

Income from continuing operations attributable to Pfizer Inc. common shareholders 9,488 8,353 8,285

Discontinued operations––net of tax 5,080 1,654 (30)

Net income attributable to Pfizer Inc. common shareholders $ 14,568 $ 10,007 $ 8,255

EPS Numerator––Diluted

Income from continuing operations attributable to Pfizer Inc. common

shareholders and assumed conversions $ 9,490 $ 8,355 $ 8,287

Discontinued operations––net of tax 5,080 1,654 (30)

Net income attributable to Pfizer Inc. common shareholders and assumed

conversions $ 14,570 $ 10,009 $ 8,257

EPS Denominator

Weighted-average number of common shares outstanding––Basic 7,442 7,817 8,036

Common-share equivalents: stock options, stock issuable under employee

compensation plans and convertible preferred stock 66 53 38

Weighted-average number of common shares outstanding––Diluted 7,508 7,870 8,074

Stock options that had exercise prices greater than the average market price

of our common stock issuable under employee compensation plans (a) — 177 272 413

(a)

These common stock equiv alents were outstanding f or the y ears ended December 31, 2012 , 2011 and 2010 , but were not included in the computation of diluted EPS

f or those periods because their inclusion would hav e had an anti-dilutiv e ef f ect.

Note 15. Lease Commitments

We lease properties and equipment for use in our operations. In addition to rent, the leases may require us to pay directly for taxes, insurance,maintenance and other operating expenses or to pay higher rent w hen operating expenses increase. Rental expense, net of sublease income,w as $335 million in 2012 , $380 million in 2011 and $381 million in 2010 .

The future minimum rental commitments under non-cancelable operating leases follow :

(MILLIONS OF DOLLARS) 2013 2014 2015 2016 2017 After 2017

Lease commitments $ 184 $ 162 $ 132 $ 85 $ 74 $ 618

Note 16. Insurance

Our insurance coverage reflects market conditions (including cost and availability) existing at the time it is w ritten, and our decision to obtaininsurance coverage or to self-insure varies accordingly. Depending upon the cost and availability of insurance and the nature of the risk involved,the amount of self-insurance may be signif icant. The cost and availability of coverage have resulted in self-insuring certain exposures, including

product liability. If w e incur substantial liabilities that are not covered by insurance or substantially exceed insurance coverage and that are inexcess of existing accruals, there could be a material adverse effect on our results of operations or cash f low s in the period in w hich theamounts are paid and/or accrued (see Note 17. Commitments and Contingencies ).

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Note 17. Commitments and Contingencies

We and certain of our subsidiaries are subject to numerous contingencies arising in the ordinary course of business. For a discussion of our taxcontingencies, see Notes to Consolidated Financial Statements–– Note 5D. Tax Matters: Tax Contingencies .

A. Legal Proceedings

Our non-tax contingencies include, among others, the follow ing:

• Patent litigation, w hich typically involves challenges to the coverage and/or validity of our patents on various products, processes ordosage forms. We are the plaintif f in the vast majority of these actions. An adverse outcome in actions in w hich w e are the plaintif fcould result in a loss of patent protection for the drug at issue, a signif icant loss of revenues from that drug and impairments of anyassociated assets.

• Product liability and other product-related litigation, w hich can include personal injury, consumer, off-label promotion, securities-law ,antitrust and breach of contract claims, among others, often involves highly complex issues relating to medical causation, labelw arnings and reliance on those w arnings, scientif ic evidence and f indings, actual, provable injury and other matters.

• Commercial and other matters, w hich can include merger-related and product-pricing claims and environmental claims and proceedings,can involve complexities that w ill vary from matter to matter.

• Government investigations, w hich often are related to the extensive regulation of pharmaceutical companies by national, state and localgovernment agencies in the U.S. and in other countries.

Certain of these contingencies could result in losses, including damages, f ines and/or civil penalties, and/or criminal charges, w hich could besubstantial.

We believe that our claims and defenses in these matters are substantial, but litigation is inherently unpredictable and excessive verdicts dooccur. We do not believe that any of these matters w ill have a material adverse effect on our f inancial position. How ever, w e could incurjudgments, enter into settlements or revise our expectations regarding the outcome of certain matters, and such developments could have amaterial adverse effect on our results of operations in the period in w hich the amounts are accrued and/or our cash f low s in the period in w hichthe amounts are paid.

We have accrued for losses that are both probable and reasonably estimable. Substantially all of these contingencies are subject to signif icantuncertainties and, therefore, determining the likelihood of a loss and/or the measurement of any loss can be complex. Consequently, w e areunable to estimate the range of reasonably possible loss in excess of amounts accrued. Our assessments are based on estimates andassumptions that have been deemed reasonable by management, but the assessment process relies heavily on estimates and assumptions thatmay prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause us to change those estimatesand assumptions.

Amounts recorded for legal and environmental contingencies can result from a complex series of judgments about future events and uncertaintiesand can rely heavily on estimates and assumptions.

The principal pending matters to w hich w e are a party are discussed below . In determining w hether a pending matter is a principal matter, w econsider both quantitative and qualitative factors in order to assess materiality, such as, among other things, the amount of damages and thenature of any other relief sought in the proceeding, if such damages and other relief are specif ied; our view of the merits of the claims and of thestrength of our defenses; w hether the action purports to be a class action and our view of the likelihood that a class w ill be certif ied by the court;the jurisdiction in w hich the proceeding is pending; any experience that w e or, to our know ledge, other companies have had in similarproceedings; w hether disclosure of the action w ould be important to a reader of our f inancial statements, including w hether disclosure mightchange a reader’s judgment about our f inancial statements in light of all of the information about the Company that is available to the reader; thepotential impact of the proceeding on our reputation; and the extent of public interest in the matter. In addition, w ith respect to patent matters, w econsider, among other things, the f inancial signif icance of the product protected by the patent. As a result of considering qualitative factors in ourdetermination of principal matters, there are some matters discussed below w ith respect to w hich management believes that the likelihood ofpossible loss in excess of amounts accrued is remote.

A1. Legal Proceedings––Patent Litigation Like other pharmaceutical companies, w e are involved in numerous suits relating to our patents, including but not limited to those discussedbelow . Most of the suits involve claims by generic drug manufacturers that patents covering our products, processes or dosage forms are invalidand/or do not cover the product of the generic manufacturer. Also, counterclaims, as w ell as various independent actions, have been f iledclaiming that our assertions of, or attempts to enforce, our patent rights w ith respect to certain products constitute unfair competition and/or

violations of antitrust law s. In addition to the challenges to the U.S. patents on a number of our products that are discussed below , w e note thatthe patent rights to certain of our products are being challenged in various other countries.

ACTIONS IN WHICH WE ARE THE PLAINTIFF AND CERTAIN RELATED ACTIONS

Viagra (sildenafil)In March 2010, w e brought a patent-infringement action in the U.S. District Court for the Eastern District of Virginia against Teva PharmaceuticalsUSA, Inc. (Teva USA) and Teva Pharmaceutical Industries Ltd. (Teva Pharmaceutical Industries), w hich had f iled an

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abbreviated new drug application w ith the U.S. Food and Drug Administration (FDA) seeking approval to market a generic version of Viagra. TevaUSA and Teva Pharmaceutical Industries assert the invalidity and non-infringement of the Viagra use patent, w hich (including the six -monthpediatric exclusivity period resulting from the Company’s conduct of clinical studies to evaluate Revatio in the treatment of pediatric patients w ithpulmonary arterial hypertension; Viagra and Revatio have the same active ingredient, sildenafil) expires in 2020. In August 2011, the court ruledthat our Viagra use patent is valid and infringed, thereby preventing Teva USA and Teva Pharmaceutical Industries from receiving FDA approvalfor a generic version of Viagra and from marketing its generic product in the U.S. before 2020. In September 2011, Teva USA and TevaPharmaceutical Industries appealed the decision to the U.S. Court of Appeals for the Federal Circuit.

In October 2010 , w e f iled a patent-infringement action w ith respect to Viagra in the U.S. District Court for the Southern District of New Yorkagainst Apotex Inc. and Apotex Corp., Mylan Pharmaceuticals Inc. and Mylan Inc., Actavis, Inc. and Amneal Pharmaceuticals LLC. These genericmanufacturers have f iled abbreviated new drug applications w ith the FDA seeking approval to market their generic versions of Viagra. Theyassert the invalidity and non-infringement of the Viagra use patent.

In May and June 2011, respectively, Watson Laboratories Inc. (Watson) and Hetero Labs Limited (Hetero) notif ied us that they had f iledabbreviated new drug applications w ith the FDA seeking approval to market their generic versions of Viagra. Each asserts the invalidity and non-infringement of the Viagra use patent. In June and July 2011, respectively, w e f iled actions against Watson and Hetero in the U.S. District Courtfor the Southern District of New York asserting the validity and infringement of the use patent.

Sutent (sunitinib malate)In May 2010, Mylan Pharmaceuticals Inc. notif ied us that it had f iled an abbreviated new drug application w ith the FDA seeking approval to marketa generic version of Sutent and challenging on various grounds the Sutent basic patent, w hich expires in 2021, and tw o other patents, w hichexpire in 2020 and 2021. In June 2010, w e f iled suit against Mylan Pharmaceuticals Inc. in the U.S. District Court for the District of Delaw areasserting the infringement of those three patents.

Lyrica (pregabalin)Beginning in March 2009, several generic manufacturers notif ied us that they had f iled abbreviated new drug applications w ith the FDA seekingapproval to market generic versions of Lyrica capsules and, in the case of one generic manufacturer, Lyrica oral solution. Each of the genericmanufacturers is challenging one or more of three patents for Lyrica: the basic patent, w hich expires in 2018, and tw o other patents, w hichexpire in 2013 and 2018. Each of the generic manufacturers asserts the invalidity and/or the non-infringement of the patents subject to challenge.Beginning in April 2009, w e f iled actions against these generic manufacturers in the U.S. District Court for the District of Delaw are asserting theinfringement and validity of our patents for Lyrica. All of these cases w ere consolidated in the District of Delaw are. In July 2012, the court heldthat all three patents are valid and infringed, thereby preventing the generic manufacturers from obtaining f inal FDA approval for their genericversions of Lyrica and from marketing those products in the U.S. prior to the expiration of the three patents. In August 2012, the genericmanufacturers appealed the decision to the U.S. Court of Appeals for the Federal Circuit.

In November 2010, Novel Laboratories, Inc. (Novel) notif ied us that it had f iled an abbreviated new drug application w ith the FDA seeking approvalto market a generic version of Lyrica oral solution and asserting the invalidity and/or non-infringement of our three patents for Lyrica referred toabove. In January 2011, w e f iled an action against Novel in the U.S. District Court for the District of Delaw are asserting the validity andinfringement of all three patents.

Apotex Inc. notif ied us, in May and June 2011, respectively, that it had f iled abbreviated new drug applications w ith the FDA seeking approval tomarket generic versions of Lyrica oral solution and Lyrica capsules. Apotex Inc. asserts the invalidity and non-infringement of the basic patent, asw ell as the seizure patent that expires in 2013. In July 2011, w e f iled an action against Apotex Inc. in the U.S. District Court for the District ofDelaw are asserting the validity and infringement of the challenged patents in connection w ith both of the abbreviated new drug applications.

In October 2011, Alembic Pharmaceuticals Limited (Alembic) notif ied us that it had f iled an abbreviated new drug application w ith the FDA seekingapproval to market a generic version of Lyrica capsules and asserting the invalidity of the basic patent. In December 2011, w e f iled an actionagainst Alembic in the U.S. District Court for the District of Delaw are asserting the validity and infringement of the basic patent.

In December 2012, Wockhardt Limited (Wockhardt) notif ied us that it had f iled an abbreviated new drug application w ith the FDA seeking approvalto market a generic version of Lyrica oral solution and asserting the invalidity and non-infringement of the basic patent. In January 2013, w e f iledan action against Wockhardt in the U.S. District Court for the District of Delaw are asserting the validity and infringement of the basic patent.

In February 2013, the Canadian Federal Court denied our application to prevent approval of a generic version of Lyrica in Canada, a decision thatis not subject to appeal, and shortly thereafter generic versions of Lyrica became available in Canada.

Protonix (pantoprazole sodium)Wyeth has a license to market Protonix in the U.S. from Nycomed GmbH (Nycomed), w hich ow ns the patents relating to Protonix. The basic patent(including the six -month pediatric exclusivity period) for Protonix expired in January 2011.

Follow ing their respective f ilings of abbreviated new drug applications w ith the FDA, Teva USA and Teva Pharmaceutical Industries, SunPharmaceutical Advanced Research Centre Ltd. and Sun Pharmaceutical Industries Ltd. (collectively, Sun) and KUDCO Ireland, Ltd. (KUDCOIreland) received f inal FDA approval to market their generic versions of Protonix 20mg and 40mg delayed-release tablets. Wyeth and Nycomedfiled actions against those generic manufacturers in the U.S. District Court for the District of New Jersey, w hich subsequently w ere consolidatedinto a single proceeding, alleging infringement of the basic patent and seeking declaratory and injunctive relief. Follow ing the court's denial of apreliminary injunction sought by Wyeth and Nycomed, Teva USA and Teva Pharmaceutical Industries and Sun launched

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their generic versions of Protonix tablets at risk in December 2007 and January 2008, respectively. Wyeth launched its ow n generic version ofProtonix tablets in January 2008, and Wyeth and Nycomed filed amended complaints in the pending patent-infringement action seekingcompensation for damages resulting from Teva USA’s, Teva Pharmaceutical Industries’ and Sun's at-risk launches. In April 2010, the jury in the pending patent-infringement action upheld the validity of the basic patent for Protonix. In July 2010, the court upheldthe jury verdict, but it did not issue a judgment against Teva USA, Teva Pharmaceutical Industries or Sun because of their other claims relating tothe patent that still are pending. Wyeth and Nycomed w ill continue to pursue all available legal remedies against those generic manufacturers,including compensation for damages resulting from their at-risk launches. Separately, Wyeth and Nycomed are defendants in purported class actions brought by direct and indirect purchasers of Protonix in the U.S.District Court for the District of New Jersey. Plaintif fs seek damages, on behalf of the respective putative classes, for the alleged violation ofantitrust law s in connection w ith the procurement and enforcement of the patents for Protonix. These purported class actions have been stayedpending resolution of the underlying patent litigation in the U.S. District Court for the District of New Jersey. Rapamune (sirolimus)In March 2010, Watson Laboratories Inc. - Florida (Watson Florida) notif ied us that it had f iled an abbreviated new drug application w ith the FDAseeking approval to market a generic version of Rapamune. Watson Florida asserted the invalidity and non-infringement of a method-of-use patentw hich (including the six -month pediatric exclusivity period) expires in January 2014 and a solid-dosage formulation patent w hich (including thesix-month pediatric exclusivity period) expires in 2018. In April 2010, w e f iled actions against Watson Florida and three other Watson entities in theU.S. District Courts for the District of Delaw are and the Southern District of Florida asserting the infringement of the method-of-use patent. In June2010, our action in the Southern District of Florida w as transferred to the District of Delaw are and consolidated w ith our pending action there. InJanuary 2013, the court ruled that the method-of-use patent is valid and infringed, thereby preventing Watson Florida and the three other Watsonentities from marketing a generic version of Rapamune in the U.S. prior to the expiration of that patent, subject to a possible appeal of the decisionby Watson Florida and the three other Watson entities.

Tygacil (tigecycline)In October 2009, Sandoz, Inc., a division of Novartis AG (Sandoz), notif ied Wyeth that it had f iled an abbreviated new drug application w ith theFDA seeking approval to market a generic version of Tygacil. Sandoz asserts the invalidity and non-infringement of tw o of Wyeth’s patentsrelating to Tygacil, including the basic patent, w hich expires in 2016. In December 2009, Wyeth f iled suit against Sandoz in the U.S. District Courtfor the District of Delaw are asserting infringement of the basic patent. In January 2013, this action w as settled on terms that are not material toPfizer.

EpiPenKing Pharmaceuticals, Inc. (King) brought a patent-infringement action against Sandoz in the U.S. District Court for the District of New Jersey inJuly 2010 as the result of its abbreviated new drug application w ith the FDA seeking approval to market an epinephrine injectable product. Sandozis challenging patents, w hich expire in 2025, covering the next-generation autoinjector for use w ith epinephrine that is sold under the EpiPenbrand name. Embeda (morphine sulfate/naltrexone hydrochloride extended-release capsules)In August 2011, Watson Florida notif ied us that it had f iled an abbreviated new drug application w ith the FDA seeking approval to market a genericversion of Embeda extended-release capsules. Watson Florida asserts the invalidity and non-infringement of three formulation patents that expirein 2027. In October 2011, w e f iled an action against Watson Florida in the U.S. District Court for the District of Delaw are asserting the infringementof, and defending against the allegations of the invalidity of, the three formulation patents.

Torisel (temsirolimus)In December 2011, w e brought patent-infringement actions in the U.S. District Court for the District of Delaw are against Sandoz and AccordHealthcare, Inc. USA and certain of its aff iliates (collectively, Accord) as a result of their abbreviated new drug applications w ith the FDA seekingapproval to market generic versions of Torisel before the expiration of the basic patent in 2014. In May 2012, w e brought an action in the samecourt against Sandoz for infringement of a formulation patent that expires in 2026. In September 2012, our actions against Sandoz and Accordw ere consolidated in the District of Delaw are.

Pristiq (desvenlafaxine)Beginning in May 2012, several generic manufacturers notif ied us that they had f iled abbreviated new drug applications w ith the FDA seekingapproval to market generic versions of Pristiq. Each of the generic manufacturers asserts the invalidity, unenforceability and/or non-infringementof one or both of tw o patents for Pristiq that expire in 2022 and in 2027. Beginning in June 2012, w e f iled actions against these genericmanufacturers in the U.S. District Court for the District of Delaw are and, in certain instances, also in other jurisdictions asserting the validity,enforceability and infringement of those patents. ACTION IN WHICH WE WERE THE DEFENDANT

Lipitor (atorvastatin)In the U.K., w hile the patent protection for Lipitor expired in November 2011, the exclusivity period w as extended by six months to May 6, 2012 byvirtue of the pediatric extension to the supplementary protection certif icate. In September 2011, Dr. Reddy’s Laboratories (U.K.) Limited f iled anaction in the High Court of Justice seeking revocation of the six-month pediatric extension and damages resulting from the inability to launch itsgeneric Lipitor product during the pediatric extension period in the U.K. and certain other European Union (EU) markets. The action w as basedupon the interpretation of the EU Pediatric Medicines Regulation. In December 2012, the court decided in our favor, rejecting Dr. Reddy's claim in itsentirety. In January 2013, this action w as settled on terms that are not material to Pfizer.

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A2. Legal Proceedings––Product Litigation Like other pharmaceutical companies, w e are defendants in numerous cases, including but not limited to those discussed below , related to ourpharmaceutical and other products. Plaintif fs in these cases seek damages and other relief on various grounds for alleged personal injury andeconomic loss. Asbestos

• Quigley

Quigley Company, Inc. (Quigley), a w holly ow ned subsidiary, w as acquired by Pfizer in 1968 and sold products containing small amounts ofasbestos until the early 1970s. In September 2004, Pfizer and Quigley took steps that w ere intended to resolve all pending and future claimsagainst Pfizer and Quigley in w hich the claimants allege personal injury from exposure to Quigley products containing asbestos, silica or mixeddust. We recorded a charge of $369 million pre-tax ( $229 million after-tax) in the third quarter of 2004 in connection w ith these matters.

In September 2004, Quigley f iled a petition in the U.S. Bankruptcy Court for the Southern District of New York seeking reorganization underChapter 11 of the U.S. Bankruptcy Code. In March 2005, Quigley f iled a reorganization plan in the Bankruptcy Court that needed the approval of75% of the voting claimants, as w ell as the Bankruptcy Court and the U.S. District Court for the Southern District of New York. In connection w iththat f iling, Pfizer entered into settlement agreements w ith law yers representing more than 80% of the individuals w ith claims related to Quigleyproducts against Quigley and Pfizer. The agreements provide for a total of $430 million in payments, of w hich $215 million became due inDecember 2005 and has been and is being paid to claimants upon receipt by Pfizer of certain required documentation from each of the claimants.The reorganization plan provided for the establishment of a trust (the Trust) for the evaluation and, as appropriate, payment of all unsettledpending claims, as w ell as any future claims alleging injury from exposure to Quigley products.

In February 2008, the Bankruptcy Court authorized Quigley to solicit an amended reorganization plan for acceptance by claimants. According tothe off icial report f iled w ith the court by the balloting agent in July 2008, the requisite votes w ere cast in favor of the amended plan ofreorganization.

The Bankruptcy Court held a confirmation hearing w ith respect to Quigley’s amended plan of reorganization that concluded in December 2009. InSeptember 2010, the Bankruptcy Court declined to confirm the amended reorganization plan. As a result of the foregoing, Pfizer recordedadditional charges for this matter of approximately $1.3 billion pre-tax (approximately $800 million after-tax) in 2010. Further, in order to preserveits right to address certain legal issues raised in the court’s opinion, in October 2010 , Pfizer f iled a notice of appeal and motion for leave to appealthe Bankruptcy Court’s decision denying confirmation.

In March 2011, Pfizer entered into a settlement agreement w ith a committee (the Ad Hoc Committee) representing approximately 40,000 claimantsin the Quigley bankruptcy proceeding (the Ad Hoc Committee claimants). Consistent w ith the additional charges recorded in 2010 referred toabove, the principal provisions of the settlement agreement provide for a settlement payment in tw o installments and other consideration, asfollow s:

• the payment to the Ad Hoc Committee, for the benefit of the Ad Hoc Committee claimants, of a f irst installment of $500 million upon receipt byPfizer of releases of asbestos-related claims against Pfizer Inc. from Ad Hoc Committee claimants holding $500 million in the aggregate of claims(Pfizer began paying this f irst installment in June 2011);

• the payment to the Ad Hoc Committee, for the benefit of the Ad Hoc Committee claimants, of a second installment of $300 million upon Pfizer’sreceipt of releases of asbestos-related claims against Pfizer Inc. from Ad Hoc Committee claimants holding an additional $300 million in theaggregate of claims follow ing the earlier of the effective date of a revised plan of reorganization and April 6, 2013;

• the payment of the Ad Hoc Committee’s legal fees and expenses incurred in this matter up to a maximum of $19 million (Pfizer began payingthese legal fees and expenses in May 2011); and

• the procurement by Pfizer of insurance for the benefit of certain Ad Hoc Committee claimants to the extent such claimants w ith non-malignantdiseases have a future disease progression to a malignant disease (Pfizer procured this insurance in August 2011).

Follow ing the execution of the settlement agreement w ith the Ad Hoc Committee, Quigley f iled a revised plan of reorganization and accompanyingdisclosure statement w ith the Bankruptcy Court in April 2011, w hich it amended in June 2012. In August 2012, the Bankruptcy Court authorizedQuigley to solicit the revised plan of reorganization for acceptance by claimants. The balloting agent's preliminary tabulation report f iled w ith thecourt reflects that the requisite number of asbestos-related claimants cast votes in favor of the revised plan. A class of claimants holding non-asbestos-related, unsecured claims voted against the revised plan. How ever, w e believe that, under applicable bankruptcy law , the revised planmay be confirmed notw ithstanding the vote of the non-asbestos-related claimants.

Under the revised plan, and consistent w ith the additional charges recorded in 2010 referred to above, w e expect to contribute an additionalamount to the Trust, if and w hen the Bankruptcy Court confirms the plan, of cash and non-cash assets (including insurance proceeds) w ith a

value in excess of $550 million . The Bankruptcy Court must f ind that the revised plan meets the standards of the U.S. Bankruptcy Code before itconfirms the plan. We expect that, if approved by claimants, confirmed by the Bankruptcy Court and the District Court and upheld on anysubsequent appeal, the revised reorganization plan w ill result in the District Court entering a permanent injunction directing pending claims, as w ellas future claims, alleging asbestos-related personal injury from exposure to Quigley products to the Trust, subject to the recent decision of theSecond Circuit discussed below . There is no assurance that the plan w ill be approved by claimants or confirmed by the courts.

In April 2012, the U.S. Court of Appeals for the Second Circuit aff irmed a ruling by the U.S. District Court for the Southern District of New York thatthe Bankruptcy Court’s preliminary injunction in the Quigley bankruptcy proceeding does not prohibit actions directly against Pfizer Inc. for

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alleged asbestos-related personal injury from exposure to Quigley products based on the “apparent manufacturer” theory of liability underPennsylvania law . The Second Circuit’s decision is procedural and does not address the merits of the plaintif fs’ claims under Pennsylvania law .After the Second Circuit denied our petition for a rehearing, in September 2012, w e f iled a petition for certiorari w ith the U.S. Supreme Courtseeking a reversal of the Second Circuit’s decision. In July 2012, the Second Circuit had granted a stay of its decision w hile the U.S. SupremeCourt considers our petition for certiorari.

In a separately negotiated transaction w ith an insurance company in August 2004, w e agreed to a settlement related to certain insurancecoverage w hich provides for payments to an insurance proceeds trust established by Pfizer and Quigley over a ten -year period of amountstotaling $405 million . Most of these insurance proceeds, as w ell as other payments from insurers that issued policies covering Pfizer and Quigley,w ould be paid, follow ing confirmation, to the Trust for the benefit of present unsettled and future claimants w ith claims arising from exposure toQuigley products.

• Other Matters

Betw een 1967 and 1982, Warner-Lambert ow ned American Optical Corporation, w hich manufactured and sold respiratory protective devices andasbestos safety clothing. In connection w ith the sale of American Optical in 1982, Warner-Lambert agreed to indemnify the purchaser for certainliabilities, including certain asbestos-related and other claims. As of December 31, 2012 , approximately 66,400 claims naming American Opticaland numerous other defendants w ere pending in various federal and state courts seeking damages for alleged personal injury from exposure toasbestos and other allegedly hazardous materials. Warner-Lambert is actively engaged in the defense of, and w ill continue to explore variousmeans to resolve, these claims.

Warner-Lambert and American Optical brought suit in state court in New Jersey against the insurance carriers that provided coverage for theasbestos and other allegedly hazardous materials claims related to American Optical. A majority of the carriers subsequently agreed to pay for aportion of the costs of defending and resolving those claims. The litigation continues against the carriers w ho have disputed coverage or howcosts should be allocated to their policies, and the court held that Warner-Lambert and American Optical are entitled to payment from each ofthose carriers of a proportionate share of the costs associated w ith those claims. Under New Jersey law , a special allocation master w asappointed to implement certain aspects of the court’s rulings.

Numerous law suits are pending against Pfizer in various federal and state courts seeking damages for alleged personal injury from exposure toproducts containing asbestos and other allegedly hazardous materials sold by Gibsonburg Lime Products Company (Gibsonburg). Gibsonburgw as acquired by Pfizer in the 1960s and sold products containing small amounts of asbestos until the early 1970s.

There also are a small number of law suits pending in various federal and state courts seeking damages for alleged exposure to asbestos infacilities ow ned or formerly ow ned by Pfizer or its subsidiaries.

Celebrex and BextraBeginning in late 2004, actions, including purported class actions, w ere f iled in various federal and state courts against Pfizer, PharmaciaCorporation (Pharmacia) and certain current and former off icers, directors and employees of Pfizer and Pharmacia. These actions include (i)purported class actions alleging that Pfizer and certain current and former off icers of Pfizer violated federal securities law s by misrepresentingthe safety of Celebrex and Bextra, and (ii) purported class actions f iled by persons w ho claim to be participants in the Pfizer or PharmaciaSavings Plan alleging that Pfizer and certain current and former off icers, directors and employees of Pfizer or, w here applicable, Pharmacia andcertain former off icers, directors and employees of Pharmacia, violated certain provisions of the Employee Retirement Income Security Act of1974 (ERISA) by selecting and maintaining Pfizer stock or Pharmacia stock as an investment alternative w hen it allegedly no longer w as a suitableor prudent investment option. In June 2005, the federal securities and ERISA actions w ere transferred for consolidated pre-trial proceedings to aMulti-District Litigation (In re Pfizer Inc. Securities, Derivative and "ERISA" Litigation MDL-1688) in the U.S. District Court for the Southern District ofNew York. In the consolidated federal securities action in the Multi-District Litigation, the court in March 2012 certif ied a class consisting of allpersons w ho purchased or acquired Pfizer stock betw een October 31, 2000 and October 19, 2005. In November 2012, several institutionalinvestors that had opted out of the certif ied class f iled three, separate, multi-plaintif f actions in the Southern District of New York against the samedefendants named in the consolidated class action, asserting allegations substantially similar to those asserted in the consolidated class action.

Various Drugs: Off-Label Promotion ActionsIn May 2010, a purported class action w as f iled in the U.S. District Court for the Southern District of New York against Pfizer and several of ourcurrent and former off icers. The complaint alleges that the defendants violated federal securities law s by making or causing Pfizer to make falsestatements, and by failing to disclose or causing Pfizer to fail to disclose material information, concerning the alleged off-label promotion of certainpharmaceutical products, alleged payments to physicians to promote the sale of those products and government investigations related thereto.Plaintif fs seek damages in an unspecif ied amount. In March 2012, the court certif ied a class consisting of all persons w ho purchased Pfizercommon stock in the U.S. or on U.S. stock exchanges betw een January 19, 2006 and January 23, 2009 and w ere damaged as a result of thedecline in the price of Pfizer common stock allegedly attributable to the claimed violations.

Hormone-Replacement Therapy

• Personal Injury and Economic Loss Actions

Pfizer and certain w holly ow ned subsidiaries and limited liability companies, including Wyeth and King, along w ith several other pharmaceuticalmanufacturers, have been named as defendants in approximately 10,000 actions in various federal and state courts alleging personal injury oreconomic loss related to the use or purchase of certain estrogen and progestin medications prescribed for w omen to treat the symptoms ofmenopause. Although new actions are occasionally f iled, the number of new actions w as not signif icant in the fourth quarter

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of 2012, and w e do not expect a substantial change in the rate of new actions being f iled. Plaintif fs in these suits allege a variety of personalinjuries, including breast cancer, ovarian cancer, stroke and heart disease. Certain co-defendants in some of these actions have assertedindemnif ication rights against Pfizer and its aff iliated companies. The cases against Pfizer and its aff iliated companies involve one or more of thefollow ing products, all of w hich remain approved by the FDA: femhrt (w hich Pfizer divested in 2003); Activella and Vagifem (w hich are NovoNordisk products that w ere marketed by a Pfizer aff iliate from 2000 to 2004); Premarin, Prempro, Aygestin, Cycrin and Premphase (w hich arelegacy Wyeth products); and Provera, Ogen, Depo-Estradiol, Estring and generic MPA (w hich are legacy Pharmacia & Upjohn products). Thefederal cases have been transferred for consolidated pre-trial proceedings to a Multi-District Litigation (In re Prempro Products Liability LitigationMDL-1507) in the U.S. District Court for the Eastern District of Arkansas. Certain of the federal cases have been remanded to their respectiveDistrict Courts for further proceedings including, if necessary, trial. This litigation consists of individual actions, a few purported statew ide class actions and a purported provincew ide class action in Quebec,Canada, a statew ide class action in California and a nationw ide class action in Canada. In March 2011, in an action against Wyeth seeking therefund of the purchase price paid for Wyeth’s hormone-replacement therapy products by individuals in the State of California during the periodfrom January 1995 to January 2003, the U.S. District Court for the Southern District of California certif ied a class consisting of all individualpurchasers of such products in California w ho actually heard or read Wyeth’s alleged misrepresentations regarding such products. This is theonly hormone-replacement therapy action to date against Pfizer and its aff iliated companies in the U.S. in w hich a class has been certif ied. Inaddition, in August 2011, in an action against Wyeth seeking damages for personal injury, the Supreme Court of British Columbia certif ied a classconsisting of all w omen w ho w ere prescribed Premplus and/or Premarin in combination w ith progestin in Canada betw een January 1, 1997 andDecember 1, 2003 and w ho thereafter w ere diagnosed w ith breast cancer.

Pfizer and its aff iliated companies have prevailed in many of the hormone-replacement therapy actions that have been resolved to date, w hetherby voluntary dismissal by the plaintif fs, summary judgment, defense verdict or judgment notw ithstanding the verdict; a number of these caseshave been appealed by the plaintif fs. Certain other hormone-replacement therapy actions have resulted in verdicts for the plaintif fs and haveincluded the aw ard of compensatory and, in some instances, punitive damages; each of these cases has been appealed by Pfizer and/or itsaff iliated companies. The decisions in a few of the cases that had been appealed by Pfizer and/or its aff iliated companies or by the plaintif fs havebeen upheld by the appellate courts, w hile several other cases that had been appealed by Pfizer and/or its aff iliated companies or by the plaintif fshave been remanded by the appellate courts to their respective trial courts for further proceedings. Trials of additional hormone-replacementtherapy actions are underw ay or scheduled in 2013.

Most of the unresolved actions against Pfizer and/or its aff iliated companies have been outstanding for more than f ive years and could take manymore years to resolve. How ever, opportunistic settlements could occur at any time. The litigation process is time-consuming, as every hormone-replacement action being litigated involves contested issues of medical causation and know ledge of risk. Even though the vast majority ofhormone-replacement therapy actions concern breast cancer, the underlying facts (e.g., medical causation, family history, reliance on w arnings,physician/patient interaction, analysis of labels, actual, provable injury and other critical factors) can differ signif icantly from action to action, andthe process of discovery has not yet begun for a majority of the unresolved actions. In addition, the hormone-replacement therapy litigationinvolves fundamental issues of science and medicine that often are uncertain and continue to evolve.

As of February 2013, Pfizer and its aff iliated companies had settled, or entered into definitive agreements or agreements-in-principle to settle,approximately 95% of the hormone-replacement therapy actions pending against us and our aff iliated companies. Since the inception of thislitigation, w e have recorded aggregate charges w ith respect to those actions, as w ell as w ith respect to the actions that have resulted in verdictsagainst us or our aff iliated companies, of approximately $1.6 billion . In addition, w e have recorded aggregate charges of approximately $100million that provide for the expected costs to resolve all remaining hormone-replacement therapy actions against Pfizer and its aff iliatedcompanies, excluding the class actions and purported class actions referred to above. The approximately $100 million charges are an estimateand, w hile w e cannot reasonably estimate the range of reasonably possible loss in excess of the amounts accrued for these contingencies giventhe uncertainties inherent in this product liability litigation, as described above, additional charges may be required in the future.

• Government Inquiries; Action by the State of Nevada

Pfizer and/or its aff iliated companies also have received inquiries from various federal and state agencies and off icials relating to the marketing oftheir hormone-replacement products. In November 2008, the State of Nevada f iled an action against Pfizer, Pharmacia & Upjohn Company andWyeth in state court in Nevada alleging that they had engaged in deceptive marketing of their respective hormone-replacement therapymedications in Nevada in violation of the Nevada Deceptive Trade Practices Act. The action seeks monetary relief, including civil penalties andtreble damages. In February 2010, the action w as dismissed by the court on the grounds that the statute of limitations had expired. In July 2011,the Nevada Supreme Court reversed the dismissal and remanded the case to the district court for further proceedings. Effexor

• Personal Injury Actions

A number of individual law suits and multi-plaintif f law suits have been f iled against us and/or our subsidiaries in various federal and state courts

alleging personal injury as a result of the purported ingestion of Effexor.

• Antitrust Actions

Beginning in May 2011, actions, including purported class actions, w ere f iled in various federal courts against Wyeth and, in certain of theactions, aff iliates of Wyeth and certain other defendants relating to Effexor XR, w hich is the extended-release formulation of Effexor. Theplaintif fs in each of the class actions seek to represent a class consisting of all persons in the U.S. and its territories w ho directly purchased,

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indirectly purchased or reimbursed patients for the purchase of Effexor XR or generic Effexor XR from any of the defendants from June 14, 2008until the time the defendants’ allegedly unlaw ful conduct ceased. The plaintif fs in all of the actions allege delay in the launch of generic Effexor XRin the U.S. and its territories, in violation of federal antitrust law s and, in certain of the actions, the antitrust, consumer protection and various otherlaw s of certain states, as the result of Wyeth fraudulently obtaining and improperly listing certain patents for Effexor XR, enforcing certain patentsfor Effexor XR, and entering into a litigation settlement agreement w ith a generic manufacturer w ith respect to Effexor XR. Each of the plaintif fsseeks treble damages (for itself in the individual actions or on behalf of the putative class in the purported class actions) for alleged priceovercharges for Effexor XR or generic Effexor XR in the U.S. and its territories since June 14, 2008. All of these actions have been consolidatedin the U.S. District Court for the District of New Jersey. In October 2012, the court stayed these actions pending the review by the U.S. SupremeCourt of an action, to w hich the Company is not a party, involving a similar legal issue.

ZoloftA number of individual law suits and multi-plaintif f law suits have been f iled against us and/or our subsidiaries in various federal and state courtsalleging personal injury as a result of the purported ingestion of Zoloft. Among other types of actions, the Zoloft personal injury litigation includesactions alleging a variety of birth defects as a result of the purported ingestion of Zoloft by w omen during pregnancy. Plaintif fs in these birth-defect actions seek compensatory and punitive damages and the disgorgement of profits resulting from the sale of Zoloft. In April 2012, thefederal birth-defect cases w ere transferred for consolidated pre-trial proceedings to a Multi-District Litigation (In re Zoloft Products LiabilityLitigation MDL-2342) in the U.S. District Court for the Eastern District of Pennsylvania.

Neurontin

• Off-Label Promotion Actions in the U.S.

A number of law suits, including purported class actions, have been f iled against us in various federal and state courts alleging claims arising fromthe promotion and sale of Neurontin. The plaintif fs in the purported class actions seek to represent nationw ide and certain statew ide classesconsisting of persons, including individuals, health insurers, employee benefit plans and other third-party payers, w ho purchased or reimbursedpatients for the purchase of Neurontin that allegedly w as used for indications other than those included in the product labeling approved by theFDA. In 2004, many of the suits pending in federal courts, including individual actions as w ell as purported class actions, w ere transferred forconsolidated pre-trial proceedings to a Multi-District Litigation (In re Neurontin Marketing, Sales Practices and Product Liability Litigation MDL-1629)in the U.S. District Court for the District of Massachusetts.

In the Multi-District Litigation, in 2009, the court denied the plaintif fs’ renew ed motion for certif ication of a nationw ide class of all consumers andthird-party payers w ho allegedly purchased or reimbursed patients for the purchase of Neurontin for off-label uses from 1994 through 2004. InMay 2011, the court denied a motion to reconsider its class certif ication ruling. In 2010, the Multi-District Litigation court partially granted our motion for summary judgment, dismissing the claims of all of the proposed classrepresentatives for third-party payers and four of the six proposed class representatives for individual consumers. In June 2011, three third-partypayer proposed class representatives appealed both the dismissal and the denial of class certif ication to the U.S. Court of Appeals for the FirstCircuit.

Also in the Multi-District Litigation, in February 2011, a third-party payer w ho w as not included in the proposed class action appealed a dismissalorder to the U.S. Court of Appeals for the First Circuit.

Plaintif fs are seeking certif ication of statew ide classes of Neurontin purchasers in actions pending in California and Illinois. State courts in NewYork, Pennsylvania, Missouri and New Mexico have declined to certify statew ide classes of Neurontin purchasers.

In January 2011, the U.S. District Court for the District of Massachusetts entered an order trebling a jury verdict against us in an action by a third-party payer seeking damages for the alleged off-label promotion of Neurontin in violation of the federal Racketeer Influenced and CorruptOrganizations (RICO) Act. The verdict w as for approximately $47.4 million , w hich w as subject to automatic trebling to $142.1 million under theRICO Act. In November 2010, the court had entered a separate verdict against us in the amount of $65.4 million , together w ith prejudgmentinterest, under California’s Unfair Trade Practices law relating to the same alleged conduct, w hich amount is included w ithin and is not additional tothe $142.1 million trebled amount of the jury verdict. In August 2011, w e appealed the District Court’s judgment to the U.S. Court of Appeals for theFirst Circuit.

• Personal Injury Actions in the U.S. and Certain Other Countries

A number of individual law suits have been f iled against us in various U.S. federal and state courts and in certain other countries alleging suicide,attempted suicide and other personal injuries as a result of the purported ingestion of Neurontin. Certain of the U.S. federal actions have beentransferred for consolidated pre-trial proceedings to the same Multi-District Litigation referred to in the f irst paragraph of the “Neurontin - Off-LabelPromotion Actions in the U.S.” section above.

• Antitrust Action in the U.S.

In January 2011, in a Multi-District Litigation (In re Neurontin Antitrust Litigation MDL-1479) that consolidates four actions, the U.S. District Court forthe District of New Jersey certif ied a nationw ide class consisting of w holesalers and other entities w ho purchased Neurontin directly from Pfizerand Warner-Lambert during the period from December 11, 2002 to August 31, 2008 and w ho also purchased generic gabapentin after it becameavailable. The complaints allege that Pfizer and Warner-Lambert engaged in anticompetitive conduct in violation of the Sherman Act that included,among other things, submitting patents for listing in the Orange Book and prosecuting and enforcing certain

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patents relating to Neurontin, as w ell as engaging in off-label marketing of Neurontin. Plaintif fs seek compensatory damages on behalf of theclass, w hich may be subject to trebling.

Lipitor

• Whistleblower Action

In 2004, a former employee f iled a “w histleblow er” action against us in the U.S. District Court for the Eastern District of New York. The complaintremained under seal until September 2007, at w hich time the U.S. Attorney for the Eastern District of New York declined to intervene in the case.We w ere served w ith the complaint in December 2007. Plaintif f alleges off-label promotion of Lipitor in violation of the Federal Civil False ClaimsAct and the false claims acts of certain states, and he seeks treble damages and civil penalties on behalf of the federal government and thespecif ied states as the result of their purchase, or reimbursement of patients for the purchase, of Lipitor allegedly for such off-label uses. Plaintif falso seeks compensation as a w histleblow er under those federal and state statutes. In addition, plaintif f alleges that he w as w rongfullyterminated, in violation of the anti-retaliation provisions of applicable federal and New York law , and he seeks damages and the reinstatement ofhis employment. In 2009, the court dismissed w ithout prejudice the off-label promotion claims and, in 2010, plaintif f f iled an amended complaintcontaining off-label promotion allegations that are substantially similar to the allegations in the original complaint. In November 2012, the DistrictCourt dismissed the amended complaint. In December 2012, the plaintif f appealed the District Court's decision to the U.S. Court of Appeals for theSecond Circuit.

• Antitrust Actions

Beginning in November 2011, purported class actions relating to Lipitor w ere f iled in various federal courts against Pfizer, certain aff iliates ofPfizer, and, in most of the actions, Ranbaxy, among others. The plaintif fs in these various actions seek to represent nationw ide, multi-state orstatew ide classes consisting of persons or entities w ho directly purchased, indirectly purchased or reimbursed patients for the purchaseof Lipitor (or, in certain of the actions, generic Lipitor) from any of the defendants from March 2010 until the cessation of the defendants’ allegedlyunlaw ful conduct (the Class Period). The plaintif fs allege delay in the launch of generic Lipitor, in violation of federal antitrust law s and/or stateantitrust, consumer protection and various other law s, resulting from (i) the 2008 agreement pursuant to w hich Pfizer and Ranbaxy settled certainpatent litigation involving Lipitor, and Pfizer granted Ranbaxy a license to sell a generic version of Lipitor in various markets beginning on varyingdates, and (ii) in certain of the actions, the procurement and/or enforcement of certain patents for Lipitor. Each of the actions seeks, among otherthings, treble damages on behalf of the putative class for alleged price overcharges for Lipitor (or, in certain of the actions, generic Lipitor) duringthe Class Period. In addition, individual actions have been f iled against Pfizer, Ranbaxy and certain of their aff iliates, among others, that assertclaims and seek relief for the plaintif fs that are substantially similar to the claims asserted and the relief sought in the purported class actionsdescribed above. These various actions have been consolidated for pre-trial proceedings in a Multi-District Litigation (In re Lipitor AntitrustLitigation MDL-2332) in the U.S. District Court for the District of New Jersey.

Chantix/Champix

• Actions in the U.S.

A number of individual law suits have been f iled against us in various federal and state courts alleging suicide, attempted suicide and otherpersonal injuries as a result of the purported ingestion of Chantix, as w ell as economic loss. Plaintif fs in these actions seek compensatory andpunitive damages and the disgorgement of profits resulting from the sale of Chantix. In October 2009, the federal cases w ere transferred forconsolidated pre-trial proceedings to a Multi-District Litigation (In re Chantix (Varenicline) Products Liability Litigation MDL-2092) in the U.S. DistrictCourt for the Northern District of Alabama.

In late-November 2012, w e began advanced settlement discussions w ith various law firms that represent the plaintif fs in the majority of theseactions as w ell as persons w ho have asserted claims but not f iled legal actions. As of February 2013, w e had settled, or entered into definitiveagreements or agreements-in-principle to settle, approximately 80% of the know n Chantix claims in the U.S., including actions pending in the MDLand in state courts. In connection w ith these settlements and settlement agreements and agreements-in-principle, w e recorded aggregatecharges in 2012 of approximately $273 million . In addition, w e recorded aggregate charges in 2012 of approximately $15 million that provide forthe expected costs to resolve all remaining Chantix actions in the MDL and in state courts and all other know n Chantix claims in the U.S. Theapproximately $15 million aggregate charges are an estimate, and w hile w e cannot estimate the range of reasonably possible loss in excess ofthe amounts accrued given the uncertainties inherent in this litigation, as described below , additional charges may be required in the future inconnection w ith certain pending actions and claims and unknow n claims relating to Chantix.

The federal Chantix actions w ere consolidated in the MDL more than three years ago, and the unresolved Chantix federal and state actions andother know n, unresolved Chantix claims could take many more years to resolve. How ever, opportunistic settlements could occur at any time. Thelitigation process is time-consuming, as every Chantix action being litigated involves contested issues of medical causation and know ledge of risk.Although the vast majority of Chantix actions allege neuropsychiatric injuries, the nature of the alleged injuries varies w idely, from completedsuicide to attempted suicide resulting in hospitalization to the exacerbation of pre-existing depression or anxiety. In addition to the w idely varying

types of injuries at issue, the underlying facts (e.g., medical causation; smoking, psychiatric and family history; reliance on w arnings;physician/patient interaction; analysis of labels; actual, provable injury; and other critical factors) can differ signif icantly from action to action, andthe process of discovery has not yet begun for a majority of the unresolved actions. In addition, the Chantix litigation involves fundamental issuesof science and medicine that often are uncertain and continue to evolve. As a result of the foregoing factors, w e are unable to estimate the rangeof reasonably possible loss in excess of the amounts accrued.

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• Actions in Canada

Beginning in December 2008, purported class actions w ere f iled against us in the Ontario Superior Court of Justice (Toronto Region), the SuperiorCourt of Quebec (District of Montreal), the Court of Queen’s Bench of Alberta, Judicial District of Calgary, and the Superior Court of BritishColumbia (Vancouver Registry) on behalf of all individuals and third-party payers in Canada w ho have purchased and ingested Champix orreimbursed patients for the purchase of Champix. Each of these actions asserts claims under Canadian product liability law , including w ithrespect to the safety and eff icacy of Champix, and, on behalf of the putative class, seeks monetary relief, including punitive damages. In June2012, the Ontario Superior Court of Justice certif ied the Ontario proceeding as a class action, defining the class as consisting of the follow ing: (i)all persons in Canada w ho ingested Champix during the period from April 2, 2007 to May 31, 2010 and w ho experienced at least one of a numberof specif ied neuropsychiatric adverse events; (ii) all persons w ho are entitled to assert claims in respect of Champix pursuant to Canadianlegislation as the result of their relationship w ith a class member; and (iii) all health insurers w ho are entitled to assert claims in respect ofChampix pursuant to Canadian legislation. The Ontario Superior Court of Justice certif ied the class against Pfizer Canada Inc. only and ruled thatthe action against Pfizer Inc. should be stayed until after the trial of the issues that are common to the class members. The actions in Quebec,Alberta and British Columbia have been stayed in favor of the Ontario action, w hich is proceeding on a national basis.

BapineuzumabIn June 2010, a purported class action w as f iled in the U.S. District Court for the District of New Jersey against Pfizer, as successor to Wyeth,and several former off icers of Wyeth. The complaint alleges that Wyeth and the individual defendants violated federal securities law s by makingor causing Wyeth to make false and misleading statements, and by failing to disclose or causing Wyeth to fail to disclose material information,concerning the results of a clinical trial involving bapineuzumab, a product in development for the treatment of Alzheimer’s disease. The plaintif fseeks to represent a class consisting of all persons w ho purchased Wyeth securities from May 21, 2007 through July 2008 and seeks damagesin an unspecif ied amount on behalf of the putative class. In February 2012, the court granted the defendants’ motion to dismiss the complaint. InMarch 2012, the plaintif f f iled a motion seeking the court’s permission to f ile an amended complaint. In December 2012, the court granted theplaintif f 's motion and, in January 2013, the defendants f iled a motion to dismiss the amended complaint.

In July 2010, a related action w as f iled in the U.S. District Court for the Southern District of New York against Elan Corporation (Elan), certaindirectors and off icers of Elan, and Pfizer, as successor to Wyeth. Elan participated in the development of bapineuzumab until September 2009.The complaint alleges that Elan, Wyeth and the individual defendants violated federal securities law s by making or causing Elan to make false andmisleading statements, and by failing to disclose or causing Elan to fail to disclose material information, concerning the results of a clinical trialinvolving bapineuzumab. The plaintif f seeks to represent a class consisting of all persons w ho purchased Elan call options from June 17, 2008through July 29, 2008 and seeks damages in an unspecif ied amount on behalf of the putative class. In June 2011, the court granted Pfizer’s andElan’s motions to dismiss the complaint. In July 2011, the plaintif f f iled a supplemental memorandum setting forth the bases that the plaintif f believedsupported amendment of the complaint. In August 2011, the court dismissed the complaint w ith prejudice. In February 2013, the U.S. Court ofAppeals for the Second Circuit aff irmed the District Court's dismissal of the complaint.

ThimerosalWyeth is a defendant in a number of suits by or on behalf of vaccine recipients alleging that exposure through vaccines to cumulative doses ofthimerosal, a preservative used in certain childhood vaccines formerly manufactured and distributed by Wyeth and other vaccine manufacturers,caused severe neurological damage and/or autism in children. While several suits w ere f iled as purported nationw ide or statew ide class actions,all of the purported class actions have been dismissed, either by the courts or voluntarily by the plaintif fs. In addition to the suits alleging injuryfrom exposure to thimerosal, certain of the cases w ere brought by parents in their individual capacities for, among other things, loss of servicesand loss of consortium of the injured child.

The National Childhood Vaccine Injury Act (the Vaccine Act) requires that persons alleging injury from childhood vaccines f irst f ile a petition in theU.S. Court of Federal Claims asserting a vaccine-related injury. At the conclusion of that proceeding, petitioners may bring a law suit against themanufacturer in federal or state court, provided that they have satisf ied certain procedural requirements. Also under the terms of the VaccineAct, if a petition has not been adjudicated by the U.S. Court of Federal Claims w ithin a specif ied time period after f iling, the petitioner may opt out ofthe proceeding and pursue a law suit against the manufacturer by follow ing certain procedures. Some of the vaccine recipients w ho have suedWyeth to date may not have satisf ied the conditions to f iling a law suit that are mandated by the Vaccine Act. The claims brought by parents for,among other things, loss of services and loss of consortium of the injured child are not covered by the Vaccine Act.

In 2002, the Office of Special Masters of the U.S. Court of Federal Claims established an Omnibus Autism Proceeding w ith jurisdiction overpetitions in w hich vaccine recipients claim to suffer from autism or autism spectrum disorder as a result of receiving thimerosal-containingchildhood vaccines and/or the measles, mumps and rubella (MMR) vaccine. There currently are several thousand petitions pending in the OmnibusAutism Proceeding. Special masters of the court have heard six test cases on petitioners’ theories that either thimerosal-containing vaccines incombination w ith the MMR vaccine or thimerosal-containing vaccines alone can cause autism or autism spectrum disorder.

• In February 2009, special masters of the U.S. Court of Federal Claims rejected the three cases brought on the theory that a combination of MMRand thimerosal-containing vaccines caused petitioners’ conditions. After these rulings w ere aff irmed by the U.S. Court of Federal Claims, tw oof them w ere appealed by petitioners to the U.S. Court of Appeals for the Federal Circuit. In 2010, the Federal Circuit aff irmed the decisions of

the special masters in both of these cases.

• In March 2010, special masters of the U.S. Court of Federal Claims rejected the three additional test cases brought on the theory thatthimerosal-containing vaccines alone caused petitioners’ conditions. Petitioners did not seek review by the U.S. Court of Federal Claims of thedecisions of the special masters in these latter three test cases, and judgments w ere entered dismissing the cases in April 2010.

• Petitioners in each of the six test cases have f iled an election to bring a civil action.

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RebifWe have an exclusive collaboration agreement w ith EMD Serono, Inc. (Serono) to co-promote Rebif, a treatment for multiple sclerosis, in the U.S.In August 2011, Serono f iled a complaint in the Philadelphia Court of Common Pleas seeking a declaratory judgment that w e are not entitled to a 24-month extension of the Rebif co-promotion agreement, w hich otherw ise w ould terminate at the end of 2013. We disagree w ith Serono'sinterpretation of the agreement and believe that w e have the right to extend the agreement to the end of 2015. In October 2011, the courtsustained our preliminary objections and dismissed Serono’s complaint, and Serono has appealed the decision to the Superior Court ofPennsylvania. Various Drugs: Co-Pay ProgramsIn March 2012, a purported class action w as f iled against Pfizer in the U.S. District Court for the Southern District of New York. The plaintif fs seekto represent a class consisting of all entities in the U.S. and its territories that have reimbursed patients for the purchase of certain Pfizer drugsfor w hich co-pay programs exist or have existed. The plaintif fs allege that these programs violate the federal RICO Act and federal antitrust lawby, among other things, providing an incentive for patients to use certain Pfizer drugs rather than less-expensive competitor products, therebyincreasing the payers’ reimbursement costs. The plaintif fs seek treble damages on behalf of the putative class for their excess reimbursementcosts allegedly attributable to the co-pay programs as w ell as an injunction prohibiting us from offering such programs. In July 2012, asubstantially similar purported class action w as f iled against Pfizer in the U.S. District Court for the Southern District of Illinois, w hich action w asstayed in October 2012 pending the outcome of the action in the Southern District of New York. Similar purported class actions have been f iledagainst several other pharmaceutical companies.

A3. Legal Proceedings––Commercial and Other Matters

Average Wholesale Price LitigationPfizer, certain of its subsidiaries and other pharmaceutical manufacturers are defendants in actions in various state courts by a number of states,as w ell as one purported class action by certain employee benefit plans and other third-party payers, alleging that the defendants providedaverage w holesale price (AWP) information for certain of their products that w as higher than the actual average prices at w hich those productsw ere sold. The AWP is used to determine reimbursement levels under Medicare Part B and Medicaid and in many private-sector insurance policiesand medical plans. The plaintif fs claim that the alleged spread betw een the AWPs at w hich purchasers w ere reimbursed and the actual saleprices w as promoted by the defendants as an incentive to purchase certain of their products. In addition to suing on their ow n behalf, some ofthe plaintif f states seek to recover on behalf of individuals, private-sector insurance companies and medical plans in their states. These variousactions allege, among other things, fraud, unfair competition, unfair trade practices and the violation of consumer protection statutes, and seekmonetary and other relief, including civil penalties and treble damages.

Monsanto-Related MattersIn 1997, Monsanto Company (Former Monsanto) contributed certain chemical manufacturing operations and facilities to a new ly formedcorporation, Solutia Inc. (Solutia), and spun off the shares of Solutia. In 2000, Former Monsanto merged w ith Pharmacia & Upjohn Company toform Pharmacia Corporation (Pharmacia). Pharmacia then transferred its agricultural operations to a new ly created subsidiary, named MonsantoCompany (New Monsanto), w hich it spun off in a tw o-stage process that w as completed in 2002. Pharmacia w as acquired by Pfizer in 2003 andis now a w holly ow ned subsidiary of Pfizer.

In connection w ith its spin-off that w as completed in 2002, New Monsanto assumed, and agreed to indemnify Pharmacia for, any liabilities relatedto Pharmacia’s former agricultural business. New Monsanto is defending and indemnifying Pharmacia in connection w ith various claims andlitigation arising out of, or related to, the agricultural business.

In connection w ith its spin-off in 1997, Solutia assumed, and agreed to indemnify Pharmacia for, liabilities related to Former Monsanto's chemicalbusinesses. As the result of its reorganization under Chapter 11 of the U.S. Bankruptcy Code, Solutia’s indemnif ication obligations related toFormer Monsanto’s chemical businesses are limited to sites that Solutia has ow ned or operated. In addition, in connection w ith its spinoff that w ascompleted in 2002, New Monsanto assumed, and agreed to indemnify Pharmacia for, any liabilities primarily related to Former Monsanto's chemicalbusinesses, including, but not limited to, any such liabilities that Solutia assumed. Solutia's and New Monsanto's assumption of and agreement toindemnify Pharmacia for these liabilities apply to pending actions and any future actions related to Former Monsanto's chemical businesses inw hich Pharmacia is named as a defendant, including, w ithout limitation, actions asserting environmental claims, including alleged exposure topolychlorinated biphenyls. Solutia and New Monsanto are defending and indemnifying Pharmacia in connection w ith various claims and litigationarising out of, or related to, Former Monsanto’s chemical businesses.

Trade Secrets Action in CaliforniaIn 2004, Ischemia Research and Education Foundation (IREF) and its chief executive off icer brought an action in California Superior Court, SantaClara County, against a former IREF employee and Pfizer. Plaintif fs allege that defendants conspired to misappropriate certain information fromIREF’s allegedly proprietary database in order to assist Pfizer in designing and executing a clinical study of a Pfizer drug. In 2008, the jury returneda verdict for compensatory damages of approximately $38.7 million . In March 2009, the court aw arded prejudgment interest, but declined toaw ard punitive damages. In July 2009, the court granted our motion for a new trial and vacated the jury verdict. In February 2013, the trial court'sdecision w as aff irmed by the California Court of Appeal, Sixth Appellate District.

Environmental MattersIn 2009, w e submitted to the U.S. Environmental Protection Agency (EPA) a corrective measures study report w ith regard to PharmaciaCorporation's discontinued industrial chemical facility in North Haven, Connecticut and a revised site-w ide feasibility study w ith regard to Wyeth’sdiscontinued industrial chemical facility in Bound Brook, New Jersey. In September 2010, our corrective measures study report w ith regard to theNorth Haven facility w as approved by the EPA, and w e commenced construction of the site remedy in late 2011 under an Updated AdministrativeOrder on Consent w ith the EPA. In July 2011, w e f inalized an Administrative Settlement Agreement and Order on Consent for Removal Action w iththe EPA w ith regard to the Bound Brook facility. In May 2012, w e completed construction of an interim

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remedy to address the discharge of impacted groundw ater from that facility to the Raritan River. In September 2012, the EPA issued a f inalremediation plan for the Bound Brook facility's main plant area, w hich is generally in accordance w ith one of the remedies evaluated in our revisedsite-w ide feasibility study. The estimated costs of the site remedy for the North Haven facility and the site remediation for the Bound Brook facilityare covered by accruals previously taken by us.

We are a party to a number of other proceedings brought under the Comprehensive Environmental Response, Compensation, and Liability Act of1980, as amended (CERCLA or Superfund), and other state, local or foreign law s in w hich the primary relief sought is the cost of past and/orfuture remediation.

In February 2011, King received notice from the U.S. Department of Justice (DOJ) advising that the EPA has requested that DOJ initiateenforcement action seeking injunctive relief and penalties against King for alleged non-compliance w ith certain provisions of the federal Clean AirAct at its Bristol, Tennessee manufacturing facility. King has executed a tolling agreement w ith the DOJ in order to facilitate the possible resolutionof this matter. We do not expect that any injunctive relief or penalties that may result from this matter w ill be material to Pfizer.

In October 2011, w e voluntarily disclosed to the EPA potential non-compliance w ith certain provisions of the federal Clean Air Act at ourBarceloneta, Puerto Rico manufacturing facility. We do not expect that any injunctive relief or penalties that may result from our voluntarydisclosure w ill be material to Pfizer. Separately, in October 2012, the EPA issued an administrative complaint and penalty demand of $216,000 toresolve alleged non-compliance w ith similar provisions of the federal Clean Air Act that the EPA identif ied as part of its March 2010 inspection ofthe Barceloneta facility. We have commenced discussions w ith the EPA seeking to resolve this latter matter.

A4. Legal Proceedings––Government Investigations Like other pharmaceutical companies, w e are subject to extensive regulation by national, state and local government agencies in the U.S. and inthe other countries in w hich w e operate. As a result, w e have interactions w ith government agencies on an ongoing basis. It is possible thatcriminal charges and substantial f ines and/or civil penalties could result from government investigations. Among the investigations by governmentagencies is the matter discussed below .

The DOJ is conducting a civil investigation regarding Wyeth’s practices relating to the pricing for Protonix for Medicaid rebate purposes prior toWyeth's acquisition by Pfizer. In 2009, the DOJ filed a civil complaint in intervention in tw o qui tam actions that had been f iled 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 rebatepurposes betw een 2001 and 2006 violated the Federal Civil False Claims Act and federal common law . The tw o qui tam actions have beenunsealed and the complaints include substantially similar allegations. In addition, in 2009, several states and the District of Columbia f iled acomplaint under the same docket number asserting violations of various state law s based on allegations substantially similar to those set forth inthe civil complaint f iled by the DOJ. We are exploring w ith the DOJ various w ays to resolve this matter.

A5. Legal Proceedings––Certain Matters Resolved in 2012

As previously reported, during 2012, several matters, including those discussed below , w ere resolved or w ere the subject of definitivesettlement agreements or settlement agreements-in-principle.

RapamuneIn October 2012, Wyeth entered into an agreement-in-principle w ith the DOJ to resolve the previously reported civil and criminal investigation w ithrespect to Wyeth's promotional practices relating to Rapamune prior to Wyeth's acquisition by Pfizer. Under the agreement-in-principle, w e w illpay approximately $257 million to resolve the civil allegations and approximately $234 million to resolve the criminal allegations, and Wyeth w illplead guilty to a misdemeanor misbranding offense under the U.S. Federal Food, Drug and Cosmetic Act. The resolution is subject to the executionof f inal settlement agreements by the parties as w ell as court approval, w hich is expected to occur in the coming months. In connection w ith theagreement-in-principle, w e recorded a charge of $491 million , w hich is not deductible for income tax purposes, in the third quarter of 2012.

CelebrexPfizer and several predecessor and aff iliated companies, including Monsanto Company (Monsanto), w ere defendants in an action brought byBrigham Young University (BYU) and a BYU professor in the U.S. District Court for the District of Utah alleging, among other things, breach byMonsanto of a 1991 research agreement w ith BYU. Plaintif fs claimed that research under that agreement led to the discovery of Celebrex andthat, as a result, they w ere entitled to a share of the profits from Celebrex sales. Plaintif fs sought, among other things, compensatory and punitivedamages and equitable relief. On April 28, 2012, the parties reached an agreement-in-principle to settle this action for $450 million , and w erecorded a charge in that amount in the f irst quarter of 2012. In June 2012, the parties entered into a f inal settlement agreement, and the actionw as dismissed w ith prejudice by the court.

B. Guarantees and Indemnifications

In the ordinary course of business and in connection w ith the sale of assets and businesses, w e often indemnify our counterparties against

certain liabilities that may arise in connection w ith the transaction or related to activities prior to the transaction. These indemnif ications typicallypertain to environmental, tax, employee and/or product-related matters and patent-infringement claims. If the indemnif ied party w ere to make asuccessful claim pursuant to the terms of the indemnif ication, w e w ould be required to reimburse the loss. These indemnif ications are generallysubject to threshold amounts, specif ied claim periods and other restrictions and limitations. Historically, w e have not paid signif icant amountsunder these provisions and, as of December 31, 2012 , recorded amounts for the estimated fair value of these indemnif ications are not signif icant.See also Note 1E. Basis of Presentation and Significant Policies: Fair Value.

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C. Purchase Commitments

As of December 31, 2012 , w e have agreements totaling $3.5 billion to purchase goods and services that are enforceable and legally binding andinclude amounts relating to advertising, information technology services, employee benefit administration services, and potential milestonepayments deemed reasonably likely to occur.

Note 18. Segment, Geographic and Other Revenue Information

A. Segment Information

We manage our operations through f ive operating segments––Primary Care, Specialty Care and Oncology, Established Products and EmergingMarkets, Animal Health, and Consumer Healthcare. (As of the third quarter of 2012 , the Animal Health and Consumer Healthcare business unitsare no longer managed as a single operating segment.) Each operating segment has responsibility for its commercial activities and for certainresearch and development activities related to in-line products and IPR&D projects that generally have achieved proof-of-concept.

On November 30, 2012, w e completed the sale of our Nutrition business to Nestlé and recognized a gain on the sale of this business inGain/(loss) on sale of discontinued operations––net of tax in the consolidated statement of income for the year ended December 31, 2012. Theoperating results of this business are reported as Income/(loss) from discontinued operations––net of tax in the consolidated statements ofincome for all periods presented. See Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:Divestitures.

We regularly review our segments and the approach used by management to evaluate performance and allocate resources. Generally, productsare transferred to the Established Products unit in the beginning of the f iscal year follow ing loss of patent protection or marketing exclusivity.

Operating Segments

A description of each of our f ive operating segments follow s:

• Primary Care operating segment––includes revenues and earnings, as defined by management, from human prescription pharmaceuticalproducts primarily prescribed by primary-care physicians, and may include products in the follow ing 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 in 2012 include Celebrex, Chantix/Champix, Eliquis, Lipitor (in certainEU countries and in Australia and New Zealand), Lyrica, Premarin, Pristiq and Viagra. All revenues and earnings for such products areallocated to the Primary Care unit, except those generated in Emerging Markets and those that are managed by the Established Products unit.

• Specialty Care and Oncology operating segment––comprises the Specialty Care business unit and the Oncology business unit.

◦ Specialty Care––includes revenues and earnings, as defined by management, from human prescription pharmaceutical products primarilyprescribed by physicians w ho are specialists, and may include products in the follow ing therapeutic and disease areas: anti-infectives,endocrine disorders, hemophilia, inf lammation, ophthalmology, pulmonary arterial hypertension, specialty neuroscience and vaccines.Examples of products in this unit in 2012 include BeneFIX, Enbrel, Genotropin, Geodon (outside the U.S.), the Prevnar/Prevenar family,ReFacto AF, Revatio (outside the U.S.), Tygacil, Vfend (outside the U.S. and South Korea), Vyndaqel (outside the U.S.), Xalatan (outside theU.S., Canada and South Korea), Xeljanz (in the U.S.), Xyntha and Zyvox. All revenues and earnings for such products are allocated to theSpecialty Care unit, except those generated in Emerging Markets and those that are managed by the Established Products unit.

◦ Oncology––includes revenues and earnings, as defined by management, from human prescription pharmaceutical products addressingoncology and oncology-related illnesses. The products in this unit in 2012 include Inlyta, Sutent, Torisel, Xalkori, Mylotarg (in Japan) andBosulif (in the U.S.). All revenues and earnings for such products are allocated to the Oncology unit, except those generated in EmergingMarkets and those that are managed by the Established Products unit.

• Established Products and Emerging Markets operating segment––comprises the Established Products business unit and the Emerging Marketsbusiness unit.

◦ Established Products–– includes revenues and earnings, as defined by management, from human prescription pharmaceutical products thathave lost patent protection or marketing exclusivity in certain countries and/or regions. Typically, products are transferred to this unit in thebeginning of the f iscal year follow ing loss of patent protection or marketing exclusivity. How ever, in certain situations, products may betransferred to this unit at a different point than the beginning of the f iscal year follow ing loss of patent protection or marketing exclusivity inorder to maximize their value. This unit also excludes revenues and earnings generated in Emerging Markets. Examples of products in thisunit in 2012 include Arthrotec, Effexor, Lipitor (in the U.S., Canada, South Korea and Japan), Medrol, Norvasc, Protonix, Relpax, Vfend (inthe U.S. and South Korea), Xalatan (in the U.S., Canada and South Korea) and Zosyn/Tazocin.

◦ Emerging Markets––includes revenues and earnings, as defined by management, from all human prescription pharmaceutical products soldin Emerging Markets, including Asia (excluding Japan and South Korea), Latin America, the Middle East, Eastern Europe, Africa, Turkey and

Central Europe.

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• Animal Health operating segment––includes w orldw ide revenues and earnings, as defined by management, from products and services toprevent and treat disease in livestock and companion animals, including anti-infectives, vaccines, parasiticides, medicinal feed additives, otherpharmaceutical products and other non-pharmaceutical products.

• Consumer Healthcare operating segment–– includes w orldw ide revenues and earnings, as defined by management, from non-prescriptionproducts in the follow ing therapeutic categories: dietary supplements, pain management, respiratory and personal care. Products marketed byConsumer Healthcare include Advil, Caltrate, Centrum, ChapStick, Emergen-C, Preparation H and Robitussin.

Our chief operating decision maker uses the revenues and earnings of the f ive operating segments, among other factors, for performanceevaluation and resource allocation. For the operating segments that comprise more than one business unit, a single segment manager hasresponsibility for those business units.

Other Costs and Business Activities Certain costs are not allocated to our operating segment results, such as costs associated w ith the follow ing:

• Worldw ide Research and Development (WRD), w hich is generally responsible for human health research projects until proof-of-concept isachieved and then for transitioning those projects to the appropriate business unit for possible clinical and commercial development. R&Dspending may include upfront and milestone payments for intellectual property rights. This organization also has responsibility for certainscience-based and other platform-services organizations, w hich provide technical expertise and other services to the various R&D projects.WRD is also responsible for facilitating all human-health-related regulatory submissions and interactions w ith regulatory agencies, including allsafety-event activities.

• Pfizer Medical is responsible for external affairs relating to all therapeutic areas, providing Pfizer-related medical information to healthcareproviders, patients and other parties, and quality assurance and regulatory compliance activities, w hich include conducting clinical trial auditsand readiness review s.

• Corporate, w hich is responsible for platform functions such as f inance, global real estate operations, human resources, legal, compliance,science and technology, w orldw ide procurement, w orldw ide public affairs and policy and w orldw ide technology. These costs also includecompensation costs and other miscellaneous operating expenses not charged to our operating segments, as w ell as interest income andexpense.

• Certain transactions and events such as (i) purchase accounting adjustments, w here w e incur expenses associated w ith the amortization offair value adjustments to inventory, intangible assets and property, plant and equipment; (ii) acquisition-related activities, w here w e incur costsfor restructuring, integration, implementation and executing the transaction; and (iii) certain signif icant items, w hich include non-acquisition-related restructuring costs, as w ell as costs incurred for legal settlements, asset impairments and sales of assets or businesses.

Segment Assets

We manage our assets on a total company basis, not by operating segment, as many of our operating assets are shared (such as our plantnetw ork assets) or commingled (such as accounts receivable, as many of our customers are served by multiple operating segments). Therefore,our chief operating decision maker does not regularly review any asset information by operating segment and, accordingly, w e do not reportasset information by operating segment. Total assets w ere approximately $186 billion as of December 31, 2012 and approximately $188 billion asof December 31, 2011 .

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Selected income statement information

The follow ing table provides selected income statement information by reportable segment:

Revenues R&D Expenses Earnings (a) Depreciation & Amortization

(b)

Year Ended December 31, Year Ended December 31, Year Ended December 31, Year Ended December 31,

(MILLIONS OF DOLLARS) 2012 2011 (c) 2010 2012 2011 (c) 2010 2012 2011 (c) 2010 2012 2011 (c) 2010

Reportable Segments:

Primary Care (d) $15,558 $22,670 $23,328 $ 1,009 $ 1,307 $ 1,473 $ 9,613 $15,001 $15,773 $ 244 $ 247 $ 201

Specialty Care and

Oncology 15,461 16,568 16,435 1,401 1,561 1,624 10,499 10,789 10,571 406 419 432

Established

Products and

Emerging

Markets (e) 20,195 18,509 18,760 403 441 452 11,218 9,417 10,100 410 422 418

Total

reportable

segments 51,214 57,747 58,523 2,813 3,309 3,549 31,330 35,207 36,444 1,060 1,088 1,051

Other operating segments(f) 7,511 7,212 6,323 693 425 428 1,919 2,009 1,565 245 232 197

Other business activities(g) 261 300 319 2,838 3,340 3,711 (2,891) (3,343) (3,735) 116 153 197

Reconciling Items:

Corporate (h) — — — 971 1,292 1,551 (6,240) (7,410) (7,966) 485 540 617

Purchase

accounting

adjustments (i) — — — (3) (2) 149 (4,957) (6,753) (8,136) 5,022 5,525 5,436

Acquisition-related

costs (j) — — — 6 23 34 (967) (1,979) (3,926) 283 624 781

Certain significant

items (k) — — — 522 654 18 (5,324) (4,347) (3,565) 300 611 —

Other unallocated(l) — — — 30 33 43 (790) (1,080) (1,210) 100 134 120

$58,986 $65,259 $65,165 $ 7,870 $ 9,074 $ 9,483 $12,080 $12,304 $ 9,471 $ 7,611 $ 8,907 $ 8,399

(a) Income f rom continuing operations bef ore prov ision f or taxes on income.(b) Certain production f acilities are shared. Deprecation is allocated based on estimates of phy sical production.(c) For 2011, includes King commencing on the acquisition date of January 31, 2011.(d)

Rev enues and Earnings f rom the Primary Care segment decreased f or 2012 as compared to the prior y ear, and earnings as a percentage of rev enues also declined,

primarily due to the loss of exclusiv ity of Lipitor in most major markets, and the subsequent shif t in the reporting of Lipitor in those major markets to the Established

Products business unit.(e)

Rev enues and Earnings f rom the Established Products and Emerging Markets segment increased in 2012 as compared to the prior y ear, primarily due to additional

products losing exclusiv ity and mov ing to the Established Products unit and increased operational sales in emerging markets, partially of f set by unf av orable f oreign

exchange. Earnings as a percentage of rev enue increased due to the change in the mix of products.(f) Includes the Animal Health operating segment and the Consumer Healthcare operating segment. In 2012, higher R&D expenses and lower Earnings ref lect the

Consumer Healthcare acquisition of the ov er-the-counter (OTC) rights f or Nexium (see Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-

Method Investments: Acquisitions ).(g)

Other business activ ities includes the rev enues and operating results of Pf izer CentreSource, our contract manuf acturing and bulk pharmaceutical chemical sales

operation, and the research and dev elopment costs managed by our Worldwide Research and Dev elopment organization and our Pf izer Medical organization.(h)

Corporate f or R&D expenses includes, among other things, administration expenses and compensation expenses associated with our research and dev elopment

activ ities and f or Earnings includes, among other things, administration expenses, interest income/(expense) and certain compensation and other costs not charged to

our operating segments.(i) Purchase accounting adjustments include certain charges related to the f air v alue adjustments to inv entory , intangible assets and property , plant and equipment.(j) Acquisition-related costs can include costs associated with acquiring, integrating and restructuring newly acquired businesses, such as transaction costs, integration

costs, restructuring charges and additional depreciation associated with asset restructuring (see Note 3. Restructuring Charges and Other Costs Associated with

Acquisitions and Cost-Reduction/Productivity Initiatives f or additional inf ormation).(k) Certain signif icant items are substantiv e, unusual items that, either as a result of their nature or size, would not be expected to occur as part of our normal business

on a regular basis.

For Earnings in 2012 , certain signif icant items includes: (i) restructuring charges and implementation costs associated with our cost-reduction initiativ es that arenot associated with an acquisition of $1.9 billion , (ii) charges f or certain legal matters of $2.2 billion , (iii) certain asset impairment charges of $884 million , (iv )costs associated with the separation of Zoetis of $325 million and (v ) other charges of $36 million (see Note 3. Restructuring Charges and Other Costs Associatedwith Acquisitions and Cost-Reduction/Productivity Initiatives and Note 4. Other Deductions––Net f or additional inf ormation).

For Earnings in 2011 , certain signif icant items includes: (i) restructuring charges and implementation costs associated with our cost-reduction initiativ es that are

not associated with an acquisition of $2.5 billion , (ii) certain asset impairment charges of $856 million , (iii) charges f or certain legal matters of $822 million , (iv )

other charges of $101 million and (v ) costs associated with the separation of Zoetis of $35 million (see Note 3. Restructuring Charges and Other Costs Associated

with Acquisitions and Cost-Reduction/Productivity Initiatives and Note 4. Other Deductions––Net f or additional inf ormation).

For Earnings in 2010 , certain signif icant items includes: (i) certain asset impairment charges of $1.8 billion , (ii) charges f or certain legal matters of $1.7 billion ,(iii) inv entory write-of f of $212 million and (iv ) other income of $102 million (see Note 3. Restructuring Charges and Other Costs Associated with Acquisitions andCost-Reduction/Productivity Initiatives and Note 4. Other Deductions––Net f or additional inf ormation).

For R&D in all periods presented, certain signif icant items primarily ref lect additional depreciation––asset restructuring and implementation costs.(l) Includes ov erhead expenses associated with our manuf acturing and commercial operations not directly attributable to an operating segment.

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B. Geographic Information

Revenues exceeded $500 million in each of 16 countries outside the U.S. in 2012 and 2011, and in each of 17 countries outside the U.S. in 2010.The U.S. and Japan w ere the only countries to contribute more than 10% of total revenue in 2012. The U.S. w as the only country to contributemore than 10% of total revenue in 2011 and 2010.

The follow ing table provides revenues by geographic area:

Year Ended December 31,

(MILLIONS OF DOLLARS) 2012 2011 (a) 2010

Revenues

United States $ 23,086 $ 26,933 $ 28,855

Developed Europe (b) 13,375 16,099 16,156

Developed Rest of World (c) 10,554 10,975 9,891

Emerging Markets (d) 11,971 11,252 10,263

Revenues $ 58,986 $ 65,259 $ 65,165

(a) For 2011, includes King commencing on the acquisition date of January 31, 2011.(b)

Dev eloped Europe region includes the f ollowing markets: Western Europe, Finland and the Scandinav ian countries. Rev enues denominated in euros were $10 billion ,$12 billion and $12 billion f or 2012 , 2011 and 2010 , respectiv ely .

(c) Dev eloped Rest of World region includes the f ollowing markets: Australia, Canada, Japan, New Zealand and South Korea.(d)

Emerging Markets region includes, but is not limited to, the f ollowing markets: Asia (excluding Japan and South Korea), Latin America, the Middle East, Eastern

Europe, Af rica, Turkey and Central Europe.

Long-lived assets by geographic region follow :

As of December 31,

(MILLIONS OF DOLLARS) 2012 2011 2010

Property, plant and equipment, net

United States $ 7,262 $ 7,893 $ 8,508

Developed Europe (a) 5,121 5,866 7,000

Developed Rest of World (b) 847 903 853

Emerging Markets (c) 1,231 1,259 1,246

Property, plant and equipment, net $ 14,461 $ 15,921 $ 17,607

(a) Dev eloped Europe region includes the f ollowing markets: Western Europe, Finland and the Scandinav ian countries.(b) Dev eloped Rest of World region includes the f ollowing markets: Australia, Canada, Japan, New Zealand, and South Korea.(c)

Emerging Markets region includes, but is not limited to, the f ollowing markets: Asia (excluding Japan and South Korea), Latin America, Middle East, Af rica, Central

and Eastern Europe and Turkey .

C. Other Revenue Information

Signif icant Customers

We sell our products primarily to customers in the w holesale sector. In 2012 , sales to our three largest U.S. w holesaler customers representedapproximately 12% , 9% and 7% of total revenues and, collectively, represented approximately 16% of total accounts receivable as ofDecember 31, 2012 . In 2011 , sales to our three largest U.S. w holesaler customers represented approximately 13% , 11% and 9% of totalrevenues and, collectively, represented approximately 14% of total accounts receivable as of December 31, 2011 . For both years, these salesand related accounts receivable w ere concentrated in our three biopharmaceutical operating segments.

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Financial ReviewPfizer Inc. and Subsidiary Companies

Signif icant Product Revenues

The follow ing table provides revenues by product:

Year Ended December 31,

(MILLIONS OF DOLLARS) 2012 2011 (a) 2010

Revenues from biopharmaceutical products:

Lyrica $ 4,158 $ 3,693 $ 3,063

Lipitor (b) 3,948 9,577 10,733

Enbrel (Outside the U.S. and Canada) 3,737 3,666 3,274

Prevnar 13/Prevenar 13 3,718 3,657 2,416

Celebrex 2,719 2,523 2,374

Viagra 2,051 1,981 1,928

Norvasc 1,349 1,445 1,506

Zyvox 1,345 1,283 1,176

Sutent 1,236 1,187 1,066

Premarin family 1,073 1,013 1,040

Genotropin 832 889 885

Xalatan/Xalacom 806 1,250 1,749

BeneFIX 775 693 643

Detrol/Detrol LA 761 883 1,013

Vfend 754 747 825

Chantix/Champix 670 720 755

Pristiq 630 577 466

ReFacto AF/Xyntha 584 506 404

Zoloft 541 573 532

Revatio 534 535 481

Medrol 523 510 455

Zosyn/Tazocin 484 636 952

Zithromax/Zmax 435 453 415

Effexor 425 678 1,718

Prevnar/Prevenar (7-valent) 399 488 1,253

Fragmin 381 382 341

Relpax 368 341 323

Rapamune 346 372 388

Cardura 338 380 413

Tygacil 335 298 324

Aricept (c) 326 450 454

Xanax XR 274 306 307

BMP2 263 340 400

Sulperazon 262 218 213

Diflucan 259 265 278

Caduet 258 538 527

Neurontin 235 289 322

Dalacin/Cleocin 232 192 214

Unasyn 228 231 244

Metaxalone/Skelaxin (d) 223 203 —

Inspra 214 195 157

Toviaz 207 187 137

Somavert 197 183 157

Alliance revenues (e) 3,492 3,630 4,084

All other biopharmaceutical products (f) 8,289 8,584 8,118

Total revenues from biopharmaceutical products 51,214 57,747 58,523

Revenues from other products:

Animal Health 4,299 4,184 3,575

Consumer Healthcare 3,212 3,028 2,748

Other (g) 261 300 319

Revenues $ 58,986 $ 65,259 $ 65,165

(a) For 2011 , includes King commencing on the acquisition date of January 31, 2011.

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Financial ReviewPfizer Inc. and Subsidiary Companies

(b)

Lipitor lost exclusiv ity in the U.S. in Nov ember 2011 and v arious other major markets in 2011 and 2012. This loss of exclusiv ity reduced branded worldwide rev enues

by $5.6 billion in 2012 , in comparison with 2011, and reduced branded worldwide rev enues by $1.2 billion in 2011 , in comparison with 2010.(c) Represents direct sales under license agreement with Eisai Co., Ltd.(d) Legacy King product.(e) Includes Enbrel (in the U.S. and Canada), Spiriv a, Rebif , Aricept and Exf orge.(f) Includes sales of generic atorv astatin.(g) Includes rev enues generated primarily f rom Pf izer CentreSource, our contract manuf acturing and bulk pharmaceutical chemical sales organization.

Note 19. Subsequent Events

A. Zoetis Debt Offering and Initial Public Offering

On January 28, 2013, our then w holly ow ned subsidiary, Zoetis, issued $3.65 billion aggregate principal amount of senior notes, net of an originalissue debt discount of $10 million . The notes have a w eighted-average effective interest rate of 3.30% , and mature at various dates as follow s:1.15% Notes due 2016 ( $400 million ); 1.875% Notes due 2018 ( $749 million ); 3.25% Notes due 2023 ( $1.349 billion ); and 4.7% Notes due 2043( $1.142 billion ). On February 6, 2013, Zoetis also entered into a commercial paper program w ith a capacity of up to $1.0 billion . No amounts arecurrently outstanding under this program.

Also on January 28, 2013, w e transferred to Zoetis substantially all of the assets and liabilities of our Animal Health business in exchange for allof the Class A and Class B common stock of Zoetis, $1.0 billion of the $3.65 billion senior notes and an amount of cash equal to substantially all ofthe cash proceeds received by Zoetis from the remaining $2.65 billion senior notes issued. The $1.0 billion of senior notes received by Pfizerw ere exchanged by Pfizer for the retirement of Pfizer commercial paper issued in December 2012, and the cash proceeds received by Pfizer ofapproximately $2.5 billion are restricted to debt repayment, dividends and/or stock buybacks, in all cases to be completed by mid-2014.

On February 6, 2013, an initial public offering (IPO) of Zoetis w as completed, pursuant to w hich w e sold 99.015 million shares (all of the Class Acommon stock, including shares sold pursuant to the underw riters' overallotment option to purchase additional shares, w hich w as exercised infull) of Zoetis in exchange for the retirement of approximately $2.5 billion of Pfizer commercial paper issued on January 10, 2013. The IPOrepresented approximately 19.8% of the total outstanding Zoetis shares. On February 1, 2013, Zoetis shares began trading on the New YorkStock Exchange under the symbol “ZTS.” The excess of the consideration received over the net book value of our divested interest w ill berecorded in Additional paid-in capital.

In summary, as a result of the above transactions, w e received approximately $6.1 billion of cash (of w hich approximately $2.5 billion is restrictedto debt repayment, dividends and/or stock buybacks, in all cases to be completed by mid-2014) and incurred approximately $3.65 billion in Zoetislong-term debt.

We w ill continue to consolidate Zoetis as w e have retained control over the entity, and w e w ill reflect amounts attributable to noncontrollinginterests for the divested portion. The net assets, operations and cash f low s that comprise Zoetis are not the same as those of the Animal Healthoperating segment.

B. Hisun Pfizer Pharmaceuticals Company Limited (HPP) On January 1, 2013, as previously announced, w e contributed product rights associated w ith China and other assets to our 49% -ow ned equity-method investee, HPP, w hich had been formed on September 6, 2012. We expect to recognize a gain on the transfer of the assets in the f irstquarter of 2013.

C. Venezuela Currency Devaluation

On February 13, 2013, the Venezuelan government devalued its currency from a rate of 4.3 to 6.3 of Venezuelan currency to the U.S. dollar. Weincurred a foreign currency loss immediately on the devaluation as a result of remeasuring the local balance sheets, and w e w ill experienceongoing adverse impacts to earnings as our revenues and expenses w ill be translated into U.S, dollars at low er rates. The impacts are notexpected to be signif icant.

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Financial ReviewPfizer Inc. and Subsidiary Companies

Quarter

(MILLIONS OF DOLLARS, EXCEPT PER COMMON SHARE DATA) First Second Third Fourth

2012

Revenues $ 14,885 $ 15,057 $ 13,976 $ 15,068

Costs and expenses (a) 11,853 10,383 10,683 12,107

Restructuring charges and certain acquisition-related costs (b) 597 190 302 791

Income from continuing operations before provision/(benefit) for taxes on income 2,435 4,484 2,991 2,170

Provision/(benefit) for taxes on income 711 1,290 (119) 680

Income from continuing operations 1,724 3,194 3,110 1,490

Discontinued operations—net of tax (c) 79 66 104 4,831

Net income before allocation to noncontrolling interests 1,803 3,260 3,214 6,321

Less: Net income attributable to noncontrolling interests 9 7 6 6

Net income attributable to Pfizer Inc. $ 1,794 $ 3,253 $ 3,208 $ 6,315

Earnings per common share—basic:

Income from continuing operations attributable to Pfizer Inc. common

shareholders $ 0.23 $ 0.43 $ 0.42 $ 0.20

Discontinued operations—net of tax 0.01 0.01 0.01 0.66

Net income attributable to Pfizer Inc. common shareholders $ 0.24 $ 0.44 $ 0.43 $ 0.86

Earnings per common share—diluted:

Income from continuing operations attributable to Pfizer Inc. common

shareholders $ 0.23 $ 0.42 $ 0.41 $ 0.20

Discontinued operations—net of tax 0.01 0.01 0.01 0.65

Net income attributable to Pfizer Inc. common shareholders $ 0.24 $ 0.43 $ 0.43 $ 0.85

Cash dividends paid per common share $ 0.22 $ 0.22 $ 0.22 $ 0.22

Stock prices

High $ 22.80 $ 23.30 $ 25.15 $ 26.09

Low $ 20.75 $ 21.40 $ 22.00 $ 23.55

(a)

The f ourth quarter of 2012 ref lects historically higher Q4 costs in Cost of sales, Selling, informational and administrative expenses, Research and development

expenses and Other deductions—net.(b) The f ourth quarter of 2012 ref lects higher employ ee termination costs.(c) The f ourth quarter of 2012 ref lects the gain on the sale of our Nutrition business.

Basic and diluted EPS are computed independently for each of the periods presented. Accordingly, the sum of the quarterly EPS amounts may notagree to the total for the year.

As of January 31, 2013, there w ere 207,223 holders of record of our common stock (New York Stock Exchange symbol PFE).

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Financial ReviewPfizer Inc. and Subsidiary Companies

Quarter

(MILLIONS OF DOLLARS, EXCEPT PER COMMON SHARE DATA) First Second Third Fourth

2011

Revenues $ 16,024 $ 16,485 $ 16,609 $ 16,141

Costs and expenses (a) 12,124 12,409 11,978 13,514

Restructuring charges and certain acquisition-related costs (b) 890 478 1,090 472

Income from continuing operations before provision for taxes on income 3,010 3,598 3,541 2,155

Provision for taxes on income (c) 874 1,077 1,216 742

Income from continuing operations 2,136 2,521 2,325 1,413

Discontinued operations—net of tax 98 97 1,424 35

Net income before allocation to noncontrolling interests 2,234 2,618 3,749 1,448

Less: Net income attributable to noncontrolling interests 12 8 11 9

Net income attributable to Pfizer Inc. $ 2,222 $ 2,610 $ 3,738 $ 1,439

Earnings per common share—basic:

Income from continuing operations attributable to Pfizer Inc. common

shareholders $ 0.27 $ 0.32 $ 0.30 $ 0.18

Discontinued operations—net of tax 0.01 0.01 0.19 —

Net income attributable to Pfizer Inc. common shareholders $ 0.28 $ 0.33 $ 0.48 $ 0.19

Earnings per common share—diluted:

Income from continuing operations attributable to Pfizer Inc. common

shareholders $ 0.26 $ 0.32 $ 0.30 $ 0.18

Discontinued operations—net of tax 0.01 0.01 0.18 —

Net income attributable to Pfizer Inc. common shareholders $ 0.28 $ 0.33 $ 0.48 $ 0.19

Cash dividends paid per common share $ 0.20 $ 0.20 $ 0.20 $ 0.20

Stock prices

High $ 20.57 $ 21.45 $ 20.95 $ 21.90

Low $ 17.62 $ 19.10 $ 16.63 $ 17.05

(a)

The f ourth quarter of 2011 ref lects historically higher Q4 costs in Cost of sales and Selling, informational and administrative expenses , Research and development

expenses and Other deductions—net .(b) The third quarter of 2011 ref lects higher employ ee termination costs.(c) The third quarter of 2011 ref lects the gain on the sale of Capsugel.

Basic and diluted EPS are computed independently for each of the periods presented. Accordingly, the sum of the quarterly EPS amounts may notagree to the total for the year.

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Financial ReviewPfizer Inc. and Subsidiary Companies

Year Ended/As of December 31, (a)

(MILLIONS, EXCEPT PER COMMON SHARE DATA) 2012 2011 2010 2009 2008

Revenues $ 58,986 $ 65,259 $ 65,165 $ 49,078 $ 47,529

Research and development expenses (b) 7,870 9,074 9,483 7,887 8,557

Other costs and expenses 37,156 40,951 43,066 26,138 26,790

Restructuring charges and certain acquisition-related costs (c) 1,880 2,930 3,145 4,330 2,662

Income from continuing operations before provision for taxes on income 12,080 12,304 9,471 10,723 9,520

Provision for taxes on income 2,562 3,909 1,153 2,150 1,582

Income from continuing operations 9,518 8,395 8,318 8,573 7,938

Discontinued operations—net of tax (d) 5,080 1,654 (30) 71 188

Less: Net income attributable to noncontrolling interests 28 40 31 9 22

Net income attributable to Pfizer Inc. $ 14,570 $ 10,009 $ 8,257 $ 8,635 $ 8,104

Effective tax rate—continuing operations 21.2% 31.8% 12.2% 20.1% 16.6%

Depreciation and amortization (e) $ 7,611 $ 8,907 $ 8,399 $ 4,757 $ 5,090

Property, plant and equipment additions (e) 1,327 1,660 1,513 1,205 1,701

Cash dividends paid 6,534 6,234 6,088 5,548 8,541

Working capital 32,796 31,908 35,764 28,537 16,748

Property, plant and equipment, less accumulated depreciation 14,461 15,921 17,607 21,316 12,864

Total assets 185,798 188,002 195,014 212,949 111,148

Long-term debt 31,036 34,926 38,410 43,192 7,955

Long-term capital (f) 134,307 136,408 144,542 150,562 68,637

Total Pfizer Inc. shareholders’ equity 81,260 82,190 87,813 90,014 57,556

Earnings per common share—basic (g)

Income from continuing operations attributable to Pfizer Inc. common

shareholders $ 1.27 $ 1.07 $ 1.03 $ 1.22 $ 1.18

Discontinued operations—net of tax 0.68 0.21 — 0.01 0.03

Net income attributable to Pfizer Inc. common shareholders $ 1.96 $ 1.28 $ 1.03 $ 1.23 $ 1.20

Earnings per common share—diluted (g)

Income from continuing operations attributable to Pfizer Inc. common

shareholders $ 1.26 $ 1.06 $ 1.03 $ 1.22 $ 1.17

Discontinued operations—net of tax 0.68 0.21 — 0.01 0.03

Net income attributable to Pfizer Inc. common shareholders $ 1.94 $ 1.27 $ 1.02 $ 1.23 $ 1.20

Market value per share (December 31) $ 25.08 $ 21.64 $ 17.51 $ 18.19 $ 17.71

Return on Pfizer Inc. shareholders’ equity 17.83% 11.78% 10.39% 13.42% 13.22%

Cash dividends paid per common share $ 0.88 $ 0.80 $ 0.72 $ 0.80 $ 1.28

Pfizer Inc. shareholders’ equity per common share (h) $ 11.17 $ 10.85 $ 10.96 $ 11.19 $ 8.56

Current ratio 2.15:1 2.10:1 2.21:1 1.75:1 1.61:1

Weighted-average shares—basic 7,442 7,817 8,036 7,007 6,727

Weighted-average shares—diluted 7,508 7,870 8,074 7,045 6,750

(a)

For 2011, includes King commencing on the acquisition date of January 31, 2011. For 2009, includes Wy eth commencing on the acquisition date of October 15,

2009.(b)

Research and development expenses includes upf ront and milestone pay ments f or intellectual property rights of $371 million in 2012 , $306 million in 2011 ; $393

million in 2010 ; $489 million in 2009 ; and $377 million in 2008 .(c) Restructuring charges and certain acquisition-related costs primarily includes the f ollowing:

2012 —Restructuring charges of $1.5 billion related to our cost-reduction and productiv ity initiativ es.2011 —Restructuring charges of $2.2 billion related to our acquisition of Wy eth and other cost-reduction initiativ es.2010 —Restructuring charges of $2.1 billion related to our acquisition of Wy eth and other cost-reduction initiativ es.2009 —Restructuring charges of $3.0 billion related to our cost-reduction initiativ es.2008 —Restructuring charges of $2.6 billion related to our cost-reduction initiativ es.

(d)

The sale of our Nutrition business closed on Nov ember 30, 2012. 2012, 2011, 2010 and 2009 ref lect the Nutrition business, which was acquired in 2009, as a

discontinued operation. All f inancial inf ormation bef ore 2012 ref lects Capsugel (the sale of which closed on August 1, 2011) as a discontinued operation.(e) Includes discontinued operations.(f) Def ined as long-term debt, noncurrent def erred tax liabilities and total equity . In 2009 , increase ref lects the long-term debt and def erred tax liabilities associated with

the acquisition of Wy eth.(g) EPS amounts may not add due to rounding.(h)

Represents total Pf izer Inc. shareholders’ equity div ided by the actual number of common shares outstanding (which excludes treasury shares and those held by our

employ ee benef it trusts). The increase in 2009 was due to the issuance of equity to partially f inance the Wy eth acquisition.

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Financial ReviewPfizer Inc. and Subsidiary Companies

Peer Group Performance Graph

The follow ing graph assumes a $100 investment on December 31, 2007, and reinvestment of all dividends, in each of the Company's CommonShares, the S&P 500 Index, and a composite peer group of the major U.S.- and European-based pharmaceutical companies, w hich are: AbbottLaboratories, Amgen, AstraZeneca, Bristol-Myers Squibb Company, Eli Lilly and Company, GlaxoSmithKline, Johnson & Johnson and Merck andCo., Inc.

Five Year Performance

2007 2008 2009 2010 2011 2012

PFIZER 100.0 83.1 90.0 90.3 116.3 140.0

PEER GROUP 100.0 84.7 95.6 95.2 111.5 123.4

S&P 500 100.0 63.0 79.7 91.7 93.6 108.6

120 2012 Financial Report

Exhibit 21

SUBSIDIARIES OF THE COMPANY

The following is a list of subsidiaries of the Company as of December 31, 2012 (1) , omitting somesubsidiaries which, considered in the aggregate, would not constitute a significant subsidiary.

Company Where Incorporated

A. H. Robins (Philippines) Company, Inc. Philippines

A.S. Ruffel (Private) Limited Zimbabwe

A/O Pfizer Russia

ACAHC LLC Delaware

Agouron Pharmaceuticals, Inc. California

AH Robins LLC Delaware

AH USA 42 LLC Delaware

AHP Holdings B.V. Netherlands

AHP Holdings Pty. Limited Australia

AHP Manufacturing B.V. Netherlands

Alacer Corp. California

Alacer East, LLC Delaware

Allabinc de Mexico, S.A. de C.V. Mexico

Alpha-Lux Investments S.àr.l. Luxembourg

Alpharma (Bermuda) Investments Ltd. Bermuda

Alpharma (Bermuda) Ltd Bermuda

Alpharma (Bermuda), LLC Delaware

Alpharma (Luxembourg) S.A.R.L. y Compania Limitada Chile

Alpharma (Luxembourg) S.àr.l. Luxembourg

Alpharma Animal Health (Beijing) Trading Co. Ltd. People's Republic of China

Alpharma Animal Health (Hong Kong) Co. Limited Hong Kong

Alpharma Animal Health (Shenzhou) Co., Ltd. People's Republic of China

Alpharma Animal Health (Yantai) Co., Ltd. People's Republic of China

Alpharma Animal Health Company Texas

Alpharma Animal Health Italia S.r.l. Italy

Alpharma Bermuda G.P. Bermuda

Alpharma Canada Corporation Canada

Alpharma de Argentina S.R.L. Argentina

Alpharma do Brasil Ltda Brazil

Alpharma Euro Holdings, LLC Delaware

Alpharma Holdings (Barbados) SRL Barbados

Alpharma Holdings Inc. Delaware

Alpharma International (Luxembourg) Sarl Luxembourg

Alpharma Ireland Limited Ireland

Alpharma Operating, LLC Delaware

Alpharma Pharmaceuticals (Thailand) Limited Thailand

Alpharma Pharmaceuticals LLC Delaware

Alpharma Specialty Pharma Inc. Delaware

(1) This list reflects the subsidiaries of the Company as of December 31, 2012, and accordingly does not reflect anyorganizational or name changes which occurred in 2013 in connection with or as a result of the Zoetis Inc. initialpublic offering, completed on February 6, 2013 or otherwise.

Alpharma U.S. Inc. Delaware

Alpharma USHP Inc. Delaware

Alpharma, LLC Delaware

American Food Industries LLC Delaware

American Home Products Holdings (U.K.) Limited United Kingdom

Andean Services S.A. Colombia

Animal Health Holdings C.V. Netherlands

Ayerst-Wyeth Pharmaceuticals LLC Delaware

Barre Parent Corporation Delaware

BINESA 2002, S.L. Spain

Biocor Animal Health Inc. Delaware

Bioren, Inc. Delaware

BioRexis Pharmaceutical Corporation Delaware

Blue Point Provider, S. de R.L. de C.V. Mexico

Blue Umbrella First Aid, S. de R.L. de C.V. Mexico

Blue Umbrella Services, S. de R.L. de C.V. Mexico

Blue Whale Re Ltd. Vermont

C.E. Commercial Holdings C.V. Netherlands

C.E. Commercial Investments C.V. Netherlands

C.E. Holdings Europe C.V. Netherlands

C.P. Pharma Gyógyszerkereskedelmi Korlátolt FelelõsségûTársaság Hungary

C.P. Pharma Services Corporation, S. de R.L. de C.V. Mexico

C.P. Pharmaceuticals International C.V. Netherlands

Carlerba - Produtos Químicos e Farmacêuticos, Lda. Portugal

CICL Corporation Delaware

COC I Corporation Delaware

Coley Pharmaceutical GmbH Germany

Coley Pharmaceutical Group, Inc. Delaware

Coley Pharmaceutical Group, Ltd. Canada

Compania Farmaceutica Upjohn, S.A. Guatemala

Continental Farmaceutica SPRL Belgium

Continental Pharma, Inc. Belgium

CovX Research LLC Delaware

Covx Technologies Ireland Limited Ireland

Cyanamid de Argentina S.A. Delaware

Cyanamid de Colombia, S.A. Delaware

Cyanamid Inter-American Corporation Delaware

Cyanamid of Great Britain Limited United Kingdom

Design Group Sverige AB Sweden

Distribuidora Mercantil Centro Americana, S.A Delaware

Durgon Holdings Limited British Virgin Islands

Egyptian Company for Animal Health LLC Egypt

Embrex Bio-Tech Trade (Shanghai) Co., Ltd. People's Republic of China

Embrex Europe Limited United Kingdom

Embrex Poultry Health, LLC North Carolina

Embrex, Inc. North Carolina

Empresa Laboratories de Mexico S.A. de C.V. Mexico

Encysive (UK) Limited United Kingdom

Encysive Canada Inc. Canada

Encysive Pharmaceuticals Inc. Delaware

Esperion LUV Development, Inc. Delaware

Eurovita Trading Limited Ireland

Excaliard Pharmaceuticals, Inc. Delaware

Farminova Produtos Farmaceuticos de Inovacao, Lda. Portugal

Farmitalia Carlo Erba Limited United Kingdom

Farmogene Productos Farmaceuticos Lda Portugal

Ferrosan A/S Denmark

Ferrosan AB Sweden

Ferrosan Finance S.A. Panama

Ferrosan Holding A/S Denmark

Ferrosan International A/S Denmark

Ferrosan Limited United Kingdom

Ferrosan Norge AS Norway

Ferrosan Poland Sp. z o.o. w likwidacji Poland

Ferrosan S.R.L. Romania

FoldRx Pharmaceuticals, Inc. Delaware

Fort Dodge (Hong Kong) Limited Hong Kong

Fort Dodge Animal Health Limited United Kingdom

Fort Dodge Animal Health, S. de R.L. de C.V. Mexico

Fort Dodge Asia Exports, Inc. Delaware

Fort Dodge Australia Pty. Limited Australia

Fort Dodge de Venezuela, C.A. Venezuela

Fort Dodge Laboratories Inc. Iowa

Fort Dodge Manufatura Ltda. Brazil

Fort Dodge Saude Animal Ltda. Brazil

G. D. Searle & Co. Limited United Kingdom

G. D. Searle International Capital LLC Delaware

G. D. Searle LLC Delaware

Genetics Institute, LLC Delaware

GenTrac, Inc. Wisconsin

GI Europe, Inc. Delaware

GI Japan, Inc. Delaware

Grangematic Limited Ireland

Greenstone LLC Delaware

Hälseprodukter Forserum AB Sweden

Haptogen Limited United Kingdom

Icagen, Inc. Delaware

ImmunoPharmaceutics, Inc. California

Industrial Santa Agape, S.A. Guatemala

Instituto Pasteur de Lisboa Virginio Leitao Vieira dos Santos &Filhos S.A. Portugal

Interfarma - Produtos Quimicos e Farmaceuticos, Lda. Portugal

International Affiliated Corporation LLC Delaware

Invicta Farma, S.A. Spain

JMI-Daniels Pharmaceuticals, Inc. Florida

John Wyeth & Brother Limited United Kingdom

Kiinteistö oy Espoon Pellavaniementie 14 Finland

King Pharmaceuticals Holdings LLC Delaware

King Pharmaceuticals LLC Delaware

King Pharmaceuticals Research and Development, Inc. Delaware

Kommanditbolaget Hus Gron Sweden

Korea Pharma Holding Company Limited Hong Kong

Laboratoires Pfizer SA Morocco

Laboratorio Teuto Brasileiro S.A. Brazil

Laboratorios Parke Davis, S.L. Spain

Laboratorios Pfizer Ltda. Brazil

Laboratórios Pfizer, Lda. Portugal

Laboratorios Wyeth LLC Pennsylvania

Laboratorios Wyeth S.A. Peru

Laboratorios Wyeth S.A. Venezuela

LLC Ferrosan Consumer Health Russia

Lothian Developments V SPRL Belgium

MDP Holdings, Inc. Delaware

Meridian Medical Technologies Limited United Kingdom

Meridian Medical Technologies, Inc. Delaware

Meridica Limited United Kingdom

Mikjan Corporation Arkansas

Monarch Pharmaceuticals Ireland Limited Ireland

Monarch Pharmaceuticals, Inc. Tennessee

MPP Trustee Limited United Kingdom

MTG Divestitures LLC Delaware

Neusentis Limited United Kingdom

NextWave Pharmaceuticals Incorporated Delaware

Nordic Sales Group AS Norway

Nostrum Farma, S.A. Spain

Nutrifarma Ferrosan Saðlik Ürün ve Hizmetieri A.Þ. Turkey

O.C.T. (Thailand) Ltd. Thailand

Oy Ferrosan AB Finland

PAH 7V6 Holding Limited Hong Kong

PAH Amazon Holdings Sarl Luxembourg

PAH Brasil Participacoes Ltda Brazil

PAH Central America 1 LLC Delaware

PAH Central America 2 LLC Delaware

PAH CHHK Holding B.V. Netherlands

PAH Colombia Holdco I LLC Pennsylvania

PAH Colombia S.A.S. Colombia

PAH Colombia USP 2 LLC Pennsylvania

PAH Costa Rica, SRL Costa Rica

PAH CP LLC Delaware

PAH Egypt Holding B.V. Netherlands

PAH GDS LLC Delaware

PAH HCP 1 LLC Delaware

PAH HCP 2 LLC Delaware

PAH Holdco SARL Luxembourg

PAH Holdings LLC Delaware

PAH India Holdco LLC Delaware

PAH India Holding 1 B.V. Netherlands

PAH Japan Holding B.V. Netherlands

PAH Luxembourg 1 SARL Luxembourg

PAH Luxembourg 2 SARL Luxembourg

PAH Luxembourg 3 SARL Luxembourg

PAH Luxembourg 5 SARL Luxembourg

PAH Luxmex SARL Luxembourg

PAH Mexico Holdco SARL Luxembourg

PAH Netherlands 1 Cooperatief U.A. Netherlands

PAH Netherlands 2 B.V. Netherlands

PAH Netherlands T3 B.V. Netherlands

PAH Nominee 2 B.V. Netherlands

PAH Nominee 3 B.V. Netherlands

PAH Nominee B.V. Netherlands

PAH Oceania B.V. Netherlands

PAH P&U 2 LLC Delaware

PAH P&U LLC Delaware

PAH Panama B.V. Netherlands

PAH Panama LLC Delaware

PAH PD LLC Delaware

PAH PH LLC Delaware

PAH PI LLC Delaware

PAH PM LLC Delaware

PAH Portugal Holding B.V. Netherlands

PAH PP LLC Delaware

PAH Russia Holding B.V. Netherlands

PAH SBSS Lux Holding Sarl Luxembourg

PAH Singapore Pte. Ltd. Singapore

PAH Spain, S.L. Spain

PAH Switzerland GmbH Switzerland

PAH Tabor LLC Delaware

PAH Treasury Center BVBA Belgium

PAH Turkey Holding B.V. Netherlands

PAH UK 2 Limited United Kingdom

PAH USA 15 LLC Delaware

PAH USA IN8 LLC Delaware

PAH Velvet B.V. Netherlands

PAH Venezuela Holding B.V. Netherlands

PAH W LLC Delaware

PAH WAH LLC Delaware

PAH WAI 1 LLC Delaware

PAH WAI 2 LLC Delaware

PAH Weesp B.V. Netherlands

PAH West Europe 2 SARL Luxembourg

PAH West Europe SARL Luxembourg

PAH WHC 2 LLC Delaware

PAH WHC LLC Delaware

PAH WHC Splitco LLC Delaware

PAH WLC LLC Delaware

Parke Davis Limited Hong Kong

Parke Davis Productos Farmaceuticos Lda Portugal

Parke, Davis & Company LLC Michigan

Parkedale Pharmaceuticals, Inc. Michigan

Parke-Davis Manufacturing Corp. Delaware

P-D Co., LLC Delaware

Peak Enterprises LLC Delaware

PF Americas Holding C.V. Netherlands

PF Asia Manufacturing Coöperatief U.A. Netherlands

PF PR Holdings C.V. Netherlands

PF PRISM C.V. Netherlands

PF PRISM Holdings S.a.r.l. Luxembourg

PF Prism S.á.r.l. Luxembourg

Pfizer (Far East) Limited Hong Kong

Pfizer (H.K.) Holding Limited Hong Kong

Pfizer (Malaysia) Sdn Bhd Malaysia

Pfizer (People's Republic of China) Research and DevelopmentCo. Ltd. People's Republic of China

Pfizer (Perth) Pty Limited Australia

Pfizer (S.A.S.) France

Pfizer (Suzhou) Pharmaceutical Information Consultation Co.,Ltd. People's Republic of China

Pfizer (Thailand) Limited Thailand

Pfizer (Wuhan) Research and Development Co. Ltd. People's Republic of China

Pfizer AB Sweden

Pfizer Africa & Middle East for Pharmaceuticals, VeterinaryProducts & Chemicals S.A.E. Egypt

Pfizer Afrique de L'Ouest Senegal

Pfizer AG Switzerland

Pfizer AH LLC Ukraine

Pfizer Alpine Holdings Cooperatief U.A. Netherlands

Pfizer Animal Health (Ireland) Limited Ireland

Pfizer Animal Health (Thailand) Limited Thailand

Pfizer Animal Health Australia Manufacturing Pty. Ltd. Australia

Pfizer Animal Health Australia Pty Ltd Australia

Pfizer Animal Health Austria GmbH Austria

Pfizer Animal Health B.V. Netherlands

Pfizer Animal Health Canada Inc. Canada

Pfizer Animal Health Chile S.A. Chile

Pfizer Animal Health Cia. Ltda. Ecuador

Pfizer Animal Health Czech Sro Czech Republic

Pfizer Animal Health Finland Oy Finland

Pfizer Animal Health Germany GmbH Germany

Pfizer Animal Health Hungary 1 Kft Hungary

Pfizer Animal Health India Limited India

Pfizer Animal Health International (S.A.S.) France

Pfizer Animal Health Italia S.r.l. Italy

Pfizer Animal Health Japan K.K. Japan

Pfizer Animal Health Korea Ltd. Republic of Korea

Pfizer Animal Health Lithuania UAB Lithuania

Pfizer Animal Health MA EEIG United Kingdom

Pfizer Animal Health Malaysia Sdn. Bhd. Malaysia

Pfizer Animal Health Manufacturing Italia S.r.l. Italy

Pfizer Animal Health Mexico, S. de R.L. de C.V. Mexico

Pfizer Animal Health New Zealand Limited New Zealand

Pfizer Animal Health Panama S. de R.L. Panama

Pfizer Animal Health Peru SRL Peru

Pfizer Animal Health Philippines, Inc. Philippines

Pfizer Animal Health Poland Sp z o.o. Poland

Pfizer Animal Health S.A. Belgium

Pfizer Animal Health S.R.L. Romania

Pfizer Animal Health South Africa (Pty) Ltd. South Africa

Pfizer Animal Health Taiwan Limited Taiwan

Pfizer Animal Health UK 1 Ltd. United Kingdom

Pfizer Animal Health Uruguay SRL Uruguay

Pfizer Animal Pharma Private Limited India

Pfizer ApS Denmark

Pfizer AS Norway

Pfizer Asia Limited Taiwan

Pfizer Asia Manufacturing Pte. Ltd. Singapore

Pfizer Asia Pacific Pte Ltd. Singapore

Pfizer AsiaPac Holdings SARL Luxembourg

Pfizer Asset Management Luxembourg SARL Luxembourg

Pfizer Atlantic Holdings S.a.r.l. Luxembourg

Pfizer Australia Holdings B.V. Netherlands

Pfizer Australia Holdings Pty Limited Australia

Pfizer Australia Investments B.V. Netherlands

Pfizer Australia Investments Pty. Ltd. Australia

Pfizer Australia Pty Limited Australia

Pfizer B.V. Netherlands

Pfizer Baltic Holdings B.V. Netherlands

Pfizer BH D.o.o. Bosnia and Herzegovina

Pfizer Biologics Ireland Holdings Limited Ireland

Pfizer Biotech Corporation Taiwan

Pfizer Biotechnology Ireland Ireland

Pfizer Bolivia S.A. Bolivia

Pfizer Business Enterprises C.V. Netherlands

Pfizer Canada Inc. Canada

Pfizer CentreSource Asia Pacific Pte. Ltd. Singapore

Pfizer Chile S.A. Chile

Pfizer Cia. Ltda. Ecuador

Pfizer Colombia Spinco I LLC Pennsylvania

Pfizer Commercial Holdings Coöperatief U.A. Netherlands

Pfizer Consumer Healthcare GmbH Germany

Pfizer Consumer Healthcare Ltd. United Kingdom

Pfizer Continental Holdings SARL Luxembourg

Pfizer Continental Services LLC Delaware

Pfizer Cork Limited Ireland

Pfizer Corporation Panama

Pfizer Corporation Austria Gesellschaft m.b.H. Austria

Pfizer Corporation Hong Kong Limited Hong Kong

Pfizer Croatia d.o.o. Croatia

Pfizer Deutschland GmbH Germany

Pfizer Development LP United Kingdom

Pfizer Development Services (UK) Limited United Kingdom

Pfizer Distribution Company Ireland

Pfizer Domestic Ventures Limited Isle of Jersey

Pfizer Dominicana, S.A. Dominican Republic

Pfizer East India B.V. Netherlands

Pfizer Eastern Investments B.V. Netherlands

Pfizer Egypt S.A.E. Egypt

Pfizer Enterprises Inc. Delaware

Pfizer Enterprises SARL Luxembourg

Pfizer ESP Pty Ltd Australia

Pfizer Europe Holdings SARL Luxembourg

Pfizer Europe MA EEIG United Kingdom

Pfizer Europe Services LLC Delaware

Pfizer Export AB Sweden

Pfizer Export Company Ireland

Pfizer Finance GmbH & Co. KG Germany

Pfizer Finance Holding S.r.l. Italy

Pfizer Finance Italy S.r.l. Italy

Pfizer Finance Share Service (Dalian) Co., Ltd. People's Republic of China

Pfizer Finance Verwaltungs GmbH Germany

Pfizer Financial Services N.V./S.A. Belgium

Pfizer France Coöperatief U.A. Netherlands

Pfizer France International Investments SAS France

Pfizer France Investment Holdings France

Pfizer Free Zone Panama, S. de R.L. Panama

Pfizer Global Holdings B.V. Netherlands

Pfizer Global Investments SARL Luxembourg

Pfizer Global Supply Ireland

Pfizer Global Supply Japan Inc. Japan

Pfizer Global Trading Ireland

Pfizer GmbH Germany

Pfizer Gulf FZ-LLC United Arab Emirates

Pfizer H.C.P. Corporation New York

Pfizer Hayvan Saðliði Limited Þirketi Turkey

Pfizer Health AB Sweden

Pfizer Health Solutions Inc. Delaware

Pfizer Healthcare Consultant (Shanghai) Co., Ltd People's Republic of China

Pfizer Healthcare Ireland Ireland

Pfizer Hellas Animal Health S.A. Greece

Pfizer Hellas, A.E. Greece

Pfizer Himalaya Holdings Coöperatief U.A. Netherlands

Pfizer HK Service Company Limited Hong Kong

Pfizer Holding France (S.C.A.) France

Pfizer Holding Italy S.r.l. Italy

Pfizer Holding Ventures Ireland

Pfizer Holdings Europe Ireland

Pfizer Holdings International Luxembourg (PHIL) Sarl Luxembourg

Pfizer Holdings K.K. Japan

Pfizer Holdings Luxembourg SARL Luxembourg

Pfizer Holdings North America SARL Luxembourg

Pfizer Holdings Turkey Limited Isle of Jersey

Pfizer Holland Holdings B.V. Netherlands

Pfizer Ilaclari Limited Sirketi Turkey

Pfizer International Business Europe Ireland

Pfizer International Investments Ltd. Bermuda

Pfizer International LLC New York

Pfizer International Luxembourg SA Luxembourg

Pfizer International Operations (S.A.S.) France

Pfizer International S. de R.L. Panama

Pfizer International Sweden Sweden

Pfizer International Trading (Shanghai) Limited People's Republic of China

Pfizer Investment Capital Ireland

Pfizer Investment Co. Ltd. People's Republic of China

Pfizer Investment Holdings S.a.r.l. Luxembourg

Pfizer Investments Netherlands B.V. Netherlands

Pfizer Ireland Investments Limited Ireland

Pfizer Ireland Pharmaceuticals Ireland

Pfizer Ireland Ventures Ireland

Pfizer Italia S.r.l. Italy

Pfizer Japan Inc. Japan

Pfizer Jersey Capital Limited Isle of Jersey

Pfizer Jersey Company Limited Isle of Jersey

Pfizer Jersey Finance Limited Isle of Jersey

Pfizer Laboratories (Pty) Limited South Africa

Pfizer Laboratories Limited Kenya

Pfizer Limitada Angola

Pfizer Limited India

Pfizer Limited Taiwan

Pfizer Limited Tanzania

Pfizer Limited Uganda

Pfizer Limited United Kingdom

Pfizer LLC Russia

Pfizer Luxco Holdings Sarl Luxembourg

Pfizer Luxembourg Global Holdings SARL Luxembourg

Pfizer Luxembourg SARL Luxembourg

Pfizer Manufacturing Belgium N.V. Belgium

Pfizer Manufacturing Deutschland GmbH Germany

Pfizer Manufacturing Holdings Coöperatief U.A. Netherlands

Pfizer Manufacturing Holdings LLC Delaware

Pfizer Manufacturing Ireland Ireland

Pfizer Manufacturing LLC Delaware

Pfizer Manufacturing Services Ireland

Pfizer Medical Technology Group (Belgium) N.V. Belgium

Pfizer Medicamentos Genericos e Participacoes Ltda. Brazil

Pfizer Mexico Luxco SARL Luxembourg

Pfizer Mexico, S.A. de C.V. Mexico

Pfizer Middle East for Pharmaceuticals, Animal Health andChemicals S.A.E. Egypt

Pfizer Namibia (Proprietary) Limited Namibia

Pfizer New Zealand Limited New Zealand

Pfizer North American Holdings Inc. Delaware

Pfizer Olot, S.L. Spain

Pfizer OTC B.V. Netherlands

Pfizer Overseas LLC Delaware

Pfizer Overseas Services Inc. Delaware

Pfizer Oy Finland

Pfizer Pacific Coöperatief U.A. Netherlands

Pfizer Pacific Holdings B.V. Netherlands

Pfizer Pacific Investments B.V. Netherlands

Pfizer Pakistan Limited Pakistan

Pfizer Parke Davis Philippines

Pfizer Parke Davis (Thailand) Ltd. Thailand

Pfizer Parke Davis Pte. Ltd. Singapore

Pfizer PGM (S.A.S.) France

Pfizer PGRD (S.A.S.) France

Pfizer Pharm Algerie Algeria

Pfizer Pharma GmbH Germany

Pfizer Pharma Trade LLC Egypt

Pfizer Pharmaceutical (Wuxi) Co., Ltd. People's Republic of China

Pfizer Pharmaceutical India Pvt. Ltd. India

Pfizer Pharmaceutical Trading Limited Liability Company (a/k/aPfizer Kft. or Pfizer LLC) Hungary

Pfizer Pharmaceuticals B.V. Netherlands

Pfizer Pharmaceuticals Global Coöperatief U.A. Netherlands

Pfizer Pharmaceuticals Israel Ltd. Israel

Pfizer Pharmaceuticals Korea Limited Republic of Korea

Pfizer Pharmaceuticals Limited Cayman Islands

Pfizer Pharmaceuticals LLC Delaware

Pfizer Pharmaceuticals Ltd. People's Republic of China

Pfizer Pharmaceuticals Tunisie Sarl Tunisia

Pfizer PHF Ireland

Pfizer Philippines Holdings B.V. Netherlands

Pfizer Pigments Inc. Delaware

Pfizer Polska Sp. z.o.o. Poland

Pfizer Precision Holdings SARL Luxembourg

Pfizer Prev - Sociedade de Previdencia Privada Brazil

Pfizer Private Limited Malaysia

Pfizer Private Ltd. Singapore

Pfizer Production LLC Delaware

Pfizer Products Inc. Connecticut

Pfizer Products India Private Limited India

Pfizer Romania SRL Romania

Pfizer S.A. Peru

Pfizer S.A. (Belgium) Belgium

Pfizer S.A.S. Colombia

Pfizer S.G.P.S. Lda. Portugal

Pfizer S.R.L. Argentina

Pfizer Saidal Manufacturing Algeria

Pfizer Salud Animal, S.L. Spain

Pfizer Santé Animale SAS France

Pfizer Santé Familiale SAS France

Pfizer Saude Animal Lda. Portugal

Pfizer Saudi Limited Saudi Arabia

Pfizer Science and Technology Ireland Limited Ireland

Pfizer Searle Investment Limited Isle of Jersey

Pfizer Service Company BVBA Belgium

Pfizer Service Company Ireland Ireland

Pfizer Services 1 (S.N.C.) France

Pfizer Services 3 (S.N.C.) France

Pfizer Services 4 (S.N.C.) France

Pfizer Services LLC Delaware

Pfizer Shared Services Ireland

Pfizer Shareholdings Intermediate SARL Luxembourg

Pfizer Singapore Trading Pte. Ltd. Singapore

Pfizer Spain Holdings Coöperatief U.A. Netherlands

Pfizer Specialities Ghana Ghana

Pfizer Specialties Limited Nigeria

Pfizer Specialty UK Limited United Kingdom

Pfizer Sterling Investments Limited Isle of Jersey

Pfizer Strategic Investment Company Limited Isle of Jersey

Pfizer Suzhou Animal Health Products Co., Ltd. People's Republic of China

Pfizer Trading Polska sp.z.o.o. Poland

Pfizer Transactions Ireland Ireland

Pfizer Transactions LLC Delaware

Pfizer Transactions Luxembourg SARL Luxembourg

Pfizer Tunisie SA Tunisia

Pfizer Ukraine Ukraine

Pfizer Vaccines LLC Delaware

Pfizer Venezuela, S.A. Venezuela

Pfizer Warner Lambert Luxembourg SARL Luxembourg

Pfizer WBB Australia Pty Ltd Australia

Pfizer Zona Franca, S.A. Costa Rica

Pfizer, Inc. Philippines

Pfizer, S.A. Costa Rica

Pfizer, S.A. de C.V. Mexico

Pfizer, S.L. Spain

Pfizer, spol. s r.o. Czech Republic

Pharmacia & Upjohn Company LLC Delaware

Pharmacia & Upjohn Company, Inc. Delaware

Pharmacia & Upjohn LLC Delaware

Pharmacia & Upjohn, S.A. de C.V. Mexico

Pharmacia Brasil Ltda. Brazil

Pharmacia de Centroamerica S.A. Panama

Pharmacia GmbH Germany

Pharmacia Grupo Pfizer, S.L. Spain

Pharmacia Hepar LLC Delaware

Pharmacia Holding AB Sweden

Pharmacia Inter-American LLC Michigan

Pharmacia International B.V. Netherlands

Pharmacia International Inc. South Dakota

Pharmacia Ireland Ireland

Pharmacia Korea Ltd. Republic of Korea

Pharmacia Laboratories Limited United Kingdom

Pharmacia Limited United Kingdom

Pharmacia LLC Delaware

Pharmacia Malaysia Sdn Bhd Malaysia

Pharmacia Searle Limited United Kingdom

Pharmacia South Africa (Pty) Ltd South Africa

PHIVCO Corp. Delaware

PHIVCO Holdco S.à r.l. Luxembourg

PHIVCO Luxembourg SARL Luxembourg

PN Mexico LLC Delaware

PN North America, S. de R.L. de C.V. Mexico

PowderJect Research Limited United Kingdom

PowderJect Vaccines, Inc. Delaware

PowderMed Limited United Kingdom

PowderMed, Inc. Delaware

Prosec Forsakrings AB (Prosec Insurance Co. Ltd.) Sweden

PT. Fort Dodge Indonesia Indonesia

PT. Pfizer Indonesia Indonesia

Purepac Pharmaceutical Holdings, Inc. Delaware

PZR Ltd. United Kingdom

PZR Property Limited United Kingdom

Quigley Company, Inc. New York

Renrall LLC Wyoming

Rinat Neuroscience Corp. Delaware

Rivepar (S.A.S.) France

RMV Produtos Veterinarios Ltda. Brazil

Roerig Produtos Farmaceuticos, Lda. Portugal

Roerig S.A. Chile

Roerig, S.A. Venezuela

Sanidad Animal PAH Bolivia S.A. Bolivia

Sao Cristovao Participacoes Ltda. Brazil

Searle Laboratorios, Lda. Portugal

Searle Ltd. Bermuda

Servicios P&U, S. de R.L. de C.V. Mexico

Shiley International California

Shiley LLC California

Sinergis Farma-Produtos Farmaceuticos, Lda. Portugal

Site Realty, Inc. Delaware

Solinor LLC Delaware

STI International Limited United Kingdom

Sugen, Inc. Delaware

Sutumex, S.A. de C.V. Mexico

Synbiotics Corporation California

Synbiotics Europe S.A.S. France

Tabor LLC Delaware

The Pfizer Incubator LLC Delaware

Thiakis Limited United Kingdom

Trans-Europe Assurance Limited Ireland

Upjohn Laboratorios Lda. Portugal

US Oral Pharmaceuticals Pty Ltd Australia

Vermont Whey Company Vermont

Vesterålens Naturprodukter A/S Denmark

Vesterålens Naturprodukter AB Sweden

Vesterålens Naturprodukter AS Norway

Vesterålens Naturprodukter OY Finland

Vicuron Holdings LLC Delaware

Vicuron Pharmaceuticals Italy S.r.l. Italy

Vinci Farma, S.A. Spain

Warner Lambert del Uruguay S.A. Uruguay

Warner Lambert Ilac Sanayi ve Ticaret Limited Sirketi Turkey

Warner Lambert Poland Sp.z.o.o. w likwidacji Poland

Warner-Lambert (Tanzania), Limited Tanzania

Warner-Lambert (Thailand) Limited Thailand

Warner-Lambert Company AG Switzerland

Warner-Lambert Company LLC Delaware

Warner-Lambert de El Salvador, S.A. de C.V. El Salvador

Warner-Lambert de Honduras, Sociedad Anonima Honduras

Warner-Lambert de Puerto Rico, Inc. Puerto Rico

Warner-Lambert Guatemala, Sociedad Anonima Guatemala

Warner-Lambert, S.A. Delaware

Whitehall International Inc. New York

Whitehall Laboratories Inc. Delaware

Whitehall Laboratorios S.A. Uruguay

WL de Guatemala, Sociedad Anonima Guatemala

W-L LLC Delaware

Wyeth (Asia) Limited Delaware

Wyeth (Far East) Limited Hong Kong

Wyeth (Singapore) Pte. Ltd. Singapore

Wyeth (Thailand) Ltd. Thailand

Wyeth AB Sweden

Wyeth Advertising Inc. New York

Wyeth Australia Pty. Limited Australia

Wyeth Ayerst Inc. Delaware

Wyeth Ayerst SARL Luxembourg

Wyeth Canada ULC Canada

Wyeth Consumer Healthcare LLC Pennsylvania

Wyeth Egypt Ltd. Egypt

Wyeth Egypt Trading Ltd. Egypt

Wyeth Europa Limited United Kingdom

Wyeth Farma, S.A. Spain

Wyeth Holdings Corporation Maine

Wyeth Ilaclari, S. de R.L. de C.V. Mexico

Wyeth Industria Farmaceutica Ltda. Brazil

Wyeth KFT. Hungary

Wyeth Korea, Inc. Republic of Korea

Wyeth Lederle S.r.l. Italy

Wyeth Lederle Vaccines S.A. Belgium

Wyeth Limited India

Wyeth LLC Russia

Wyeth LLC Delaware

Wyeth Pakistan Limited Pakistan

Wyeth Pharmaceutical Co., Ltd. People's Republic of China

Wyeth Pharmaceuticals Central America Services, S.A. Panama

Wyeth Pharmaceuticals Company Puerto Rico

Wyeth Pharmaceuticals FZ-LLC United Arab Emirates

Wyeth Pharmaceuticals Inc. Delaware

Wyeth Pharmaceuticals India Private Limited India

Wyeth Pharmaceuticals Limited Ireland

Wyeth Pharmaceuticals S. de R.L. de C.V. Mexico

Wyeth Philippines, Co. Ltd. Philippines

Wyeth Prev-Sociedade de Previdencia Privada Brazil

Wyeth Puerto Rico, Inc. Puerto Rico

Wyeth Regional Manufacturing (Singapore) PTE. LTD. Singapore

Wyeth Research Ireland Limited Ireland

Wyeth Subsidiary Illinois Corporation Illinois

Wyeth Whitehall Export GmbH Austria

Wyeth Whitehall SARL Luxembourg

Wyeth, S. de R.L. de C.V. Mexico

Wyeth-Ayerst (Asia) Limited Delaware

Wyeth-Ayerst Promotions Limited Delaware

Yusafarm D.O.O. Serbia

Zoetis Inc. Delaware

Exhibit 23Consent of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Pfizer Inc.:

We consent to the incorporation by reference in this Form 10-K of Pfizer Inc. of our reports dated February 28, 2013, with respect to the consolidatedbalancesheets of Pfizer Inc. and Subsidiary Companies as of December 31, 2012 and 2011, and the related consolidated statements of income, comprehensiveincome, shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2012, and the effectiveness of internalcontrol over financial reporting as of December 31, 2012, which reports appear in the December 31, 2012 annual report on Form 10-K of Pfizer Inc.and Subsidiary Companies.

We also consent to the incorporation by reference of our reports in the following Registration Statements:

-Form S-8 dated October 27, 1983 (File No. 2-87473),-Form S-8 dated March 22, 1990 (File No. 33-34139),-Form S-8 dated January 24, 1991 (File No. 33-38708),-Form S-8 dated November 18, 1991 (File No. 33-44053),-Form S-8 dated May 27, 1993 (File No. 33-49631),-Form S-8 dated May 19, 1994 (File No. 33-53713),-Form S-8 dated October 5, 1994 (File No. 33-55771),-Form S-8 dated December 20, 1994 (File No. 33-56979),-Form S-8 dated March 29, 1996 (File No. 33-02061),-Form S-8 dated September 25, 1997 (File No. 333-36371),-Form S-8 dated April 24, 1998 (File No. 333-50899),-Form S-8 dated April 22, 1999 (File No. 333-76839),-Form S-8 dated June 19, 2000 (File No. 333-39610),-Form S-8 dated April 27, 2001 (File No. 333-59660),-Form S-8 dated April 27, 2001 (File No. 333-59654),-Form S-8 dated April 16, 2003 (File No. 333-104581),-Form S-8 dated April 16, 2003 (File No. 333-104582),-Form S-8 dated November 18, 2003 (File No. 333-110571),-Form S-8 dated December 18, 2003 (File No. 333-111333),-Form S-8 dated April 26, 2004 (File No. 333-114852),-Form S-8 dated March 1, 2007 (File No. 333-140987),-Form S-4 dated March 27, 2009 (File No. 333-158237),-Form S-8 dated October 16, 2009 (File No. 333-162519),-Form S-8 dated October 16, 2009 (File No. 333-162520),-Form S-8 dated October 16, 2009 (File No. 333-162521),-Form S-8 dated March 1, 2010 (File No. 333-165121) and-Form S-3 dated May 10, 2012 (File No. 333-181321).

/s/ KPMG LLP

New York, New YorkFebruary 28, 2013

Exhibit 31.1

Certification by the Chief Executive Officer Pursuant toSection 302 of the Sarbanes-Oxley Act of 2002

I, Ian C. Read, certify that:

1. I have reviewed this report on Form 10-K of Pfizer Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a materialfact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleadingwith respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present inall material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periodspresented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined inExchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designedunder our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, ismade known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by thisreport based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during theregistrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’sinternal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal controlover financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or personsperforming the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and reportfinancial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting.

Date: February 28, 2013

/s/ IAN C. READIan C. ReadChairman and Chief Executive Officer

Exhibit 31.2

Certification by the Chief Financial Officer Pursuant toSection 302 of the Sarbanes-Oxley Act of 2002

I, Frank A. D'Amelio, certify that:

1. I have reviewed this report on Form 10-K of Pfizer Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a materialfact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleadingwith respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present inall material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periodspresented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined inExchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designedunder our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, ismade known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by thisreport based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during theregistrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’sinternal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal controlover financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or personsperforming the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and reportfinancial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting.

Date: February 28, 2013

/s/ FRANK A. D'AMELIOFrank A. D'AmelioExecutive Vice President, Business Operations and Chief Financial Officer

Exhibit 32.1

Certification by the Chief Executive Officer Pursuant to 18 U. S. C. Section 1350, as Adopted Pursuant toSection 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U. S. C. Section 1350, I, Ian C. Read, hereby certify that, to the best of my knowledge, the Annual Report onForm 10-K of Pfizer Inc. for the year ended December 31, 2012 (the “Report”) fully complies with the requirements of Section 13(a) orSection 15(d) of the Securities Exchange Act of 1934, and that the information contained in that Report fairly presents, in all materialrespects, the financial condition and results of operations of Pfizer Inc.

/s/ IAN C. READIan C. ReadChairman and Chief Executive Officer

February 28, 2013

This certification accompanies this Report on Form 10-K pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 andshall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the SecuritiesExchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference intoany filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specificallyincorporates it by reference.

Exhibit 32.2

Certification by the Chief Financial Officer Pursuant to 18 U. S. C. Section 1350, as Adopted Pursuant toSection 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U. S. C. Section 1350, I, Frank A. D’Amelio, hereby certify that, to the best of my knowledge, the AnnualReport on Form 10-K of Pfizer Inc. for the year ended December 31, 2012 (the “Report”) fully complies with the requirements ofSection 13(a) or Section 15(d) of the Securities Exchange Act of 1934, and that the information contained in that Report fairlypresents, in all material respects, the financial condition and results of operations of Pfizer Inc.

/s/ FRANK A. D’AMELIOFrank A. D’AmelioExecutive Vice President, Business Operations andChief Financial Officer

February 28, 2013

This certification accompanies this Report on Form 10-K pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 andshall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the SecuritiesExchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference intoany filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specificallyincorporates it by reference.