PFIZER INC (PFE)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

GENERAL

The following MD&A is intended to assist the reader in understanding our financial condition and results of operations, including an evaluation of the amounts and certainty of cash flows from operations and from outside sources, and is provided as a supplement to and should be read in conjunction with the condensed consolidated financial statements and related notes in Item 1. Financial Statements in this Form 10-Q.

References to operational variances pertain to period-over-period changes that exclude the impact of foreign exchange rates. Although foreign exchange rate changes are part of our business, they are not within our control and because they can mask positive or negative trends in the business, we believe presenting operational variances excluding these foreign exchange changes provides useful information to evaluate our results.

OVERVIEW OF OUR PERFORMANCE, OPERATING AND GLOBAL ECONOMIC ENVIRONMENT

Our Business––Pfizer Inc. is a research-based, global biopharmaceutical company. We apply science and our global resources to bring therapies to people that extend and significantly improve their lives through the discovery, development, manufacture, marketing, sale and distribution of biopharmaceutical products worldwide.

Segments––Beginning in the first quarter of 2026, we manage our commercial operations through a global structure consisting of two operating segments: Biopharma and PC1. Biopharma is the only reportable segment. See Note 13A.

For additional information about our business, strategy and operating environment, see the Item 1. Business section and the Overview of Our Performance, Operating Environment, Strategy and Outlook section within MD&A of our 2025 Form 10-K.

Restructuring Programs

Realigning Our Cost Base Program––In the third quarter of 2026, we announced $1.0 billion of additional anticipated net cost savings associated with this program driven by further productivity enhancements from technology and simplification efforts across our commercial, R&D and enabling functions. These additional net savings are expected to further reduce costs in SI&A and be realized from 2027 through 2029. We expect one-time costs to achieve the additional savings to be incurred through 2029 and to total approximately $2.0 billion.

Manufacturing Optimization Program––In the third quarter of 2026, we announced the next phase of our multi-year program designed to reduce our cost of goods sold focused on network structure changes, product portfolio enhancements and additional operational efficiencies which is expected to deliver additional anticipated savings of approximately $1.5 billion through 2029, some of which is expected to begin being realized in 2027. The one-time costs to achieve the savings associated with this phase of the program are expected to be approximately $4.0 billion, with approximately 60% of non-cash expenditures. The costs to achieve these savings are expected to be incurred through 2029.

For a description of anticipated savings related to these programs, see the Costs and Expenses––Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives section within MD&A and Note 3 for the anticipated and actual costs of these programs.

Our Business Development Initiatives––We are committed to strategically capitalizing on growth opportunities, primarily by advancing our own product pipeline and maximizing the value of our existing products, but also through various business development activities. For a description of the more significant recent transactions through February 26, 2026, the filing date of our 2025 Form 10-K, see Note 2 in our 2025 Form 10-K. In addition, for a discussion of our acquisition of Metsera in November 2025 and other recent business development initiatives see Note 2, as well as the following:

Collaboration Agreement with Innovent––In May 2026, we entered into a strategic global licensing and collaboration agreement with Innovent, a Chinese biopharmaceutical company, for the research and development of 12 early-stage and de novo cancer medicines. The partnership includes licensing, co-development, and co-commercialization opportunities across a diverse portfolio of antibody-drug conjugates (ADCs) with novel differentiated payloads and multi-specific antibodies. Under the terms of the agreement, Innovent received a $650 million upfront payment and is eligible for up to $9.85 billion in development, regulatory and commercial milestone payments. Additionally, Innovent will receive up to double-digit royalties on sales of each licensed product if approved. For the four programs to be co-developed and co-commercialized by Pfizer and Innovent, the two companies will share the profits in the U.S., the U.K., and the European Union. The transaction closed on July 10, 2026.

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Our Second Quarter and First Six Months of 2026 Performance

Total Revenues––Total revenues increased $381 million, or 3%, in the second quarter of 2026 to $15.0 billion from $14.7 billion in the second quarter of 2025, reflecting an operational increase of $164 million, or 1%, as well as a favorable impact of foreign exchange of $217 million, or 1%. The operational increase was driven by an increase in revenues for Eliquis, Padcev, the Vyndaqel family, Lorbrena and several other products across categories, partially offset by a decline in COVID-19 product revenues and several other products across categories. Excluding contributions from Comirnaty and Paxlovid, Total revenues increased 5% operationally.

Total revenues increased $1.1 billion, or 4%, in the first six months of 2026 to $29.5 billion from $28.4 billion in the first six months of 2025, reflecting an operational increase of $469 million, or 2%, as well as a favorable impact of foreign exchange of $648 million, or 2%. The operational increase was driven by an increase in revenues for Eliquis, Padcev, the Vyndaqel family, Lorbrena, Nurtec ODT/Vydura, Oncology biosimilars and several other products across categories, partially offset by a decline in COVID-19 product revenues and several other products across categories. Excluding contributions from Comirnaty and Paxlovid, Total revenues increased 6% operationally.

See the Total Revenues by Geography and Total Revenues––Selected Product Discussion sections within MD&A for more information, including a discussion of key drivers of our revenue performance for certain products.

Income/(Loss) from Continuing Operations Before Provision/(Benefit) for Taxes on Income/(Loss)–– Loss from continuing operations before provision/(benefit) for taxes on income/(loss) in the second quarter of 2026 was $653 million, compared to income of $3.0 billion in the second quarter of 2025, primarily due to (i) charges for intangible asset impairments and certain legal matters (both recorded in Other (income)/deductions––net) and (ii) increases in Restructuring charges and certain acquisition-related costs, Research and development expenses and Cost of sales, partially offset by (iii) a net gain in 2026 from the sale of our previous investment in ViiV (recorded in Other (income)/deductions––net), and (iv) higher revenues.

The decrease in Income from continuing operations before provision/(benefit) for taxes on income of $3.3 billion, to $2.5 billion in the first six months of 2026 from $5.8 billion in the first six months of 2025, was primarily due to (i) charges for intangible asset impairments and certain legal matters, and increases in the fair value of our contingent consideration liabilities (all recorded in Other (income)/deductions––net) and (ii) increases in Cost of sales and Research and development expenses, partially offset by (iii) a net gain in 2026 from the sale of our previous investment in ViiV (recorded in Other (income)/deductions––net), and (iv) higher revenues.

See the Analysis of the Condensed Consolidated Statements of Operations section within MD&A and Notes 3 and 4. For information on our tax provision and effective tax rate, see the Provision/(Benefit) for Taxes on Income/(Loss) section within MD&A and Note 5.

Our Operating Environment––We, like other businesses in our industry, are subject to certain industry-specific challenges. These include, among others, the topics listed below. See also the Item 1. Business––Government Regulation and Price Constraints and Item 1A. Risk Factors sections, and the Overview of Our Performance, Operating Environment, Strategy and Outlook––Our Operating Environment section of the MD&A of our 2025 Form 10-K.

Intellectual Property Rights and Collaboration/Licensing Rights––The loss, expiration or invalidation of intellectual property rights, patent litigation settlements and judgments, and the expiration of co-promotion and licensing rights can have a material adverse effect on our revenues. We anticipate a significant reduction of revenue from patent-based or regulatory exclusivity expiries in 2026 through 2030 as several of our in-line products experience these expirations, with the rate of the reduction of revenues from patent-based or regulatory exclusivity expiries expected to significantly accelerate over the next few years. In 2026, we now expect an unfavorable revenue impact from patent-based or regulatory exclusivity expiries of approximately $1.1 billion.

For additional information on patent rights we consider most significant to our business as a whole, including U.S., major Europe and Japan basic product patent expiration years, see the Item 1. Business––Patents and Other Intellectual Property Rights section of our 2025 Form 10-K. For a discussion of recent developments with respect to patent litigation involving certain of our products, see Notes 12A1 and 12A5.

Regulatory Environment/Pricing and Access––Government and Other Payor Group Pressures––Pricing and access pressures from governments globally, as well as private third-party payors in the U.S., continue to impact our global operations. With respect to the U.S., we expect to see continued focus by the U.S. government and states on regulating drug pricing and access to medicine, including but not limited to, international reference pricing, including Most-Favored-Nation (MFN) drug pricing. We continue to monitor and evaluate the implementation of the IRA, including the Medicare Drug Price Negotiation Program (MDPNP) and its government-set Maximum Fair Price (MFP) which became effective for Eliquis on January 1, 2026. Negotiated prices for Ibrance and Xtandi are effective in 2027. While Xeljanz remains a selected drug through 2028, the Centers for Medicare and Medicaid Services has determined that bona fide marketing of a generic version of Xeljanz still exists. Accordingly, no MFP for Xeljanz will be finalized or take effect. The IRA also made significant changes to the Medicare

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Part D benefit design (IRA Medicare Part D Redesign), which took effect beginning in 2025. We do not expect a material, incremental impact from the IRA Medicare Part D Redesign in 2026 versus the baseline set in 2025. In addition, changes to the Medicaid Drug Rebate Program or the 340B Program, including legal or legislative developments at the federal or state level with respect to the 340B Program, could have a material impact on our business. See the Item 1. Business––Pricing Pressures and Managed Care Organizations and ––Government Regulation and Price Constraints and the Item 1A. Risk Factors––Pricing and Reimbursement sections, and the Overview of Our Performance, Operating Environment, Strategy and Outlook––Our Operating Environment section of the MD&A of our 2025 Form 10-K and The Global Economic Environment––Global Trade Environment section below.

Policy/Regulatory Environment––New and potential policy, regulatory or other changes from the U.S. Presidential administration, Congress and states,

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

GENERAL

The following MD&A is intended to assist the reader in understanding our financial condition and results of operations, including an evaluation of the amounts and certainty of cash flows from operations and from outside sources, and is provided as a supplement to and should be read in conjunction with the consolidated financial statements and related notes in Item 8. Financial Statements and Supplementary Data in this Form 10-K. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found within MD&A in our 2024 Form 10-K.

References to operational variances pertain to period-over-period changes that exclude the impact of foreign exchange rates. Although foreign exchange rate changes are part of our business, they are not within our control and because they can mask positive or negative trends in the business, we believe presenting operational variances excluding these foreign exchange changes provides useful information to evaluate our results.

OVERVIEW OF OUR PERFORMANCE, OPERATING ENVIRONMENT, STRATEGY AND OUTLOOK

Financial Highlights––The following is a summary of certain financial performance metrics (in billions, except per share data):

** For additional information regarding Adjusted diluted EPS (which is a non-GAAP financial measure), including reconciliations of certain GAAP Reported to non- GAAP Adjusted information, see the Non-GAAP Financial Measure: Adjusted Income section within MD&A.

Our Business and Strategy––Pfizer Inc. is a research-based, global biopharmaceutical company. We apply science and our global resources to bring therapies to people that extend and significantly improve their lives. See the Item 1. Business––About Pfizer section. As a science-driven global biopharmaceutical company, we remain focused on advancing our product pipeline, supporting our marketed brands and deploying capital responsibly, with a focus on initiatives that can help contribute to our long-term revenue and future growth. Most of our revenues come from the manufacture and sale of biopharmaceutical products. We believe that our medicines and vaccines provide significant value for healthcare providers and patients, and we continuously evaluate how we can best collaborate with patients, physicians and payors to support and expand patient access to reliable, affordable healthcare around the world. In addition, we continually seek to expand and broaden our product portfolio offerings through prioritized development of our pipeline and business development opportunities targeted at critical unmet patient needs. As a result, our commercial organizational structure and R&D operations are critical to the successful execution of our business strategy. Our ability to fulfill our purpose, Breakthroughs that change patients’ lives, remains a core focus and underscores our commitment to addressing the needs of society to help sustain long-term value creation for all stakeholders.

Our 2026 key priorities are:

1.Maximize value of key transactions

2.Deliver on critical R&D milestones

3.Invest to maximize post-2028 growth

4.Scale AI across our business.

One way we believe we will be more efficient, effective and able to execute on these strategic priorities is through digital enablement. This includes expanding automation, data‑driven decision making, and enterprise AI solutions that strengthen productivity and accelerate innovation.

In 2025, we managed our commercial operations through a global structure consisting of three operating segments: Biopharma, PC1 and Pfizer Ignite. Biopharma was the only reportable segment. See Note 17A and the Item 1. Business––Commercial Operations section. As part of our continued focus on commercial execution, at the beginning of 2026, we made changes in our commercial structure, which included the transition of certain off-patent branded and generic sterile injectables and biosimilars from the Specialty Care and Oncology product portfolios to a new Global Hospital and Biosimilars organization within our Biopharma reportable segment that went into effect on January 1, 2026. See the Item 1. Business––Commercial Operations section.

Realigning Our Cost Base Program

•In the fourth quarter of 2023, we announced that we launched a multi-year, enterprise-wide cost realignment program that aims to realign our costs with our longer-term revenue expectations. In the second quarter of 2025, we identified additional productivity opportunities to further reduce costs primarily in SI&A, driven in large part by enhanced digital enablement, including automation and AI, and simplification of business processes.

•In connection with our efforts to simplify the structure and sharpen the focus of our R&D organization, in the first quarter of 2025, we expanded this program after having identified additional opportunities to drive improvements in productivity and operational efficiencies through enhanced digital enablement, including automation and AI, and simplification of business processes.

Manufacturing Optimization Program––In the second quarter of 2024, we announced that we launched a multi-year, multi-phased program to reduce our costs of goods sold, which includes operational efficiencies, network structure changes, and product portfolio enhancements.

See Note 3 for the anticipated and actual costs of these programs. For a description of anticipated savings related to these programs, see the Costs and Expenses––Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives section within MD&A.

R&D: We believe we have a strong pipeline and are well-positioned for future growth. R&D is at the heart of fulfilling our purpose to deliver breakthroughs that change patients’ lives as we work to translate advanced science and technologies into the medicines and vaccines that may be the most impactful for patients. Innovation, drug discovery and development are critical to our success. In addition to discovering and developing new products, our R&D efforts seek to add value to our existing products by improving their effectiveness, safety profile and ease of dosing and by discovering potential new indications. See the Item 1. Business—Research and Development section for our R&D priorities and strategy.

We seek to leverage a strong pipeline, organize around expected operational growth drivers and capitalize on trends creating long-term growth opportunities, including:

•an aging global population that is generating increased demand for innovative medicines and vaccines that address patients’ unmet needs; and

•advances in both biological science and platform technologies that are enhancing the delivery of potential breakthrough new medicines and vaccines.

Our Business Development Initiatives and Other Recent Developments––We are committed to strategically capitalizing on growth opportunities, primarily by advancing our own product pipeline and maximizing the value of our existing products, but also through various business development activities. We view our business development activity as an enabler of our strategies and seek to generate growth by pursuing opportunities and transactions that have the potential to strengthen our business and our capabilities. We assess our business, assets and scientific capabilities/portfolio as part of our regular, ongoing portfolio review process and also continue to consider business development activities that will help advance our business strategy. See Note 2 for a discussion of our recent business development initiatives, including the acquisitions of Seagen and Metsera, and the following for significant recent activities.

Agreement with the U.S. Government––In September 2025, we announced an agreement with the Trump Administration in which we voluntarily agreed to implement measures designed to make certain drug prices for U.S. patients more comparable to those in other developed countries and also allow U.S. patients to purchase certain medicines at significant discounts to current retail prices. The September 2025 agreement also provides a three-year grace period during which time our products will not face Section 232 tariffs, provided the Company further invests in manufacturing in the U.S. Pfizer is now in the process of entering into binding final agreements to implement these arrangements. See the Item 1. Business––Pricing Pressures and Managed Care Organizations and ––Government Regulation and Price Constraints sections for additional information.

Our 2025 Performance

Total Revenues––Total revenues decreased $1.0 billion, or 2%, to $62.6 billion in 2025 from $63.6 billion in 2024, reflecting an operational decrease of $1.3 billion, or 2%, partially offset by a favorable impact of foreign exchange of $247 million. The operational decrease was primarily driven by declines in COVID-19 product revenues, partially offset by increases from the Vyndaqel family, Eliquis, Padcev, Lorbrena, Abrysvo and Oncology biosimilars. Excluding contributions from Comirnaty and Paxlovid, Total revenues increased 6% operationally.

The following chart outlines the components of the net change in Total revenues:

See the Total Revenues by Geography and Total Revenues––Selected Product Discussion sections within MD&A for more information, including a discussion of key drivers of our revenue performance. Certain of our vaccines, including Comirnaty, are subject to seasonality of demand, with a greater portion of revenues anticipated in the fall and winter seasons. Revenues may also vary due to changes in public health recommendations for vaccination. In addition, Paxlovid revenues trend with COVID-19 infection rates. See also The Global Economic Environment––COVID-19 section below for information about our COVID-19 products. For information regarding the primary indications or class of certain products, see Note 17C.

Income from Continuing Operations Before Provision/(Benefit) for Taxes on Income––The decrease in Income from continuing operations before provision/(benefit) for taxes on income of $503 million, to $7.5 billion in 2025 from $8.0 billion in 2024, was primarily due to (i) higher intangible asset impairment charges in 2025, (ii) an increase in Acquired in-process research and development expenses, (iii) net losses on equity securities in 2025 versus net gains on equity securities in 2024 and (iv) lower revenues, partially offset by (v) decreases in Cost of Sales, SI&A, and Restructuring charges and certain acquisition-related costs, and (vi) net periodic benefit credits associated with pension and other postretirement plans incurred in 2025 versus net periodic benefit costs in 2024.

See the Analysis of the Consolidated Statements of Operations section within MD&A and Notes 3 and 4. For information on our tax provision and effective tax rate, see the Provision/(Benefit) for Taxes on Income section within MD&A and Note 5.

Our Operating Environment––We, like other businesses in our industry, are subject to certain industry-specific challenges. These include, among others, the topics listed below. See also the Item 1. Business––Government Regulation and Price Constraints and Item 1A. Risk Factors sections.

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