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Pfizer – case study

Pfizer Inc. is an American multinational science-led pharmaceutical and biotechnology company with headquarters in New York. The company focuses on the discovery, development, and commercialization of prescription medicine for major diseases in areas including oncology, cardiovascular, gastrointestinal, infection, neuroscience, respiratory, and inflammation. Its pipeline forms a robust portfolio of investigational therapies in various stages of clinical development. Its geographical segments include US, Europe, Asia, Africa and Australasia. In 2023 Pfizer acquired: a drug developer Biohaven Pharmaceutical for $11.6 billion, a drug maker Global Blood Therapeutics for $5.4 billion, and Arena Pharmaceuticals for another $6.7 billion. Prizer is currently in the process of launching 19 new products or new indications for existing products over the next year and a half.

The 2023 annual report for Pfizer is in the Appendix.

Required

After understanding the company, go to the financial statements, which along with the footnotes to the statements are our main focus for financial statement analysis.

1. On the basis of the information supplied in this annual report prepare a brief discussion and analysis of Pfizer’s performance and financial position.
2. In particular, you should address the following points:
   1. What is the Pfizer’s core operating activity through which it generates revenues? When does Pfizer recognize its revenues from this core operating activity? Discuss the timing of revenue recognition and explain why the distinction between the two types of revenues with respect to timing is made.
   2. Discuss the accounting treatment of intangible assets and goodwill and its implications on the balance sheet and income statements.
   3. Discuss the accounting treatment of inventories and its implications on the balance sheet and income statement numbers.
   4. Discuss the firm’s policy on amortization and/or impairment of intangible assets and its implications on numbers in the financial statements. Provide examples to illustrate your points.
   5. How much did Pfizer originally pay for all the property plant and equipment that are on the balance sheet as of December 31^st 2023?
   6. Provide an estimate of the total cost of non-current assets  (tangible and intangible) acquired in 2023? How did the company finance these acquisitions?
   7. Did Pfizer dispose of any intangible and tangible assets during 2023? What was the net book value of sold assets?
   8. Discuss the firm’s policy rebates, chargebacks, returns and other revenue accruals and their implications. What do accruals and deferrals include and what effect will they have on future cash flows?
   9. Explain which transactions during 2023 affected total equity. Which particular accounts reflected these changes in total equity?
   10. Did Pfizer issue any shares as part of a stock option compensation plan during 2023? Discuss the implications on shareholders wealth and estimate a stock option overhang at the end of fiscal 2023. Explain your findings.
   11. Discuss changes in retained profits across years (2021-2023).  
   12. What were the key components of comprehensive income for 2023? What events caused comprehensive income decrease in 2023 relative to 2022?

Some important notes regarding the coursework

• Maximum length 1,200 words. However, it is possible to produce a concise yet thorough analysis in less than 1,200 words.
• Summarize your broad conclusion and finding at the front of your report in an executive summary (which is included in the word count).
• Your objective is to highlight the most salient information to enable your reader to understand firm’s performance and financial position.

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