Source: Pfizer

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Tools: Sankey Figma tool

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Billions of doses within the year. Astonishing feat.

I can’t believe how much money they make from sales in the USA. How is this possible?

Us doesn’t regulate drug prices

They charge what the market will pay

I didn't need convincing that we need to regulate drug prices, but you just convinced me again anyways.

The perverted US health system encourages it.

americans eat pills like candy.

at only 4% taxation and only on whatever is left when they deduct operating expenses, which they control...

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Why use millions as unit of measurement, if you are doing thousands of millions? It's called a billion.

I once compared the prices of medication I regularly use, in the US and in my country. Still can't stop thinking of how bizarre the difference is. For some drugs I would have to pay up to 100 times more in the US. And it's the same brand name, not a generic drug. Like what kind of added value can medication acquire to justify this unthinkable price difference.

How can such healthcare system even exist lol. It's like the whole population of the USA are constantly exploited by the insurance companies which thrive on the unjustifiably overpriced cost of medical services and drugs.

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See how little they actually spend on R&D! And how much they spend on marketing!

And doctors on payroll manipulate the consumers to buy the drugs

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That's just a made-up strawman. You can criticise people even if they are black/transgender/etc, noone is preventing that, look at how Herschel Walker lost in Georgia despite being black, perhaps had something to do with being a terrible candidate regardless of skin colour.

Only thing I would change are the values and go with billions and one decimal place instead of millions and three.

Yes, NOW they can get away with extortionate prices on drugs, because of “woke” culture or some weird bullshit going on in your head. They haven’t been doing this for decades or anything the old fashioned way of “millions in lobbying dollars to make politicians look the other way and not write pricing legislation.” Holy shit, the length people like you go to feel aggrieved. Let’s throw out literal decades of neocapitalist history you can actually track through donation dollars and written law and make up some nonsense about a minority getting a job as “the real cause.” What fragile little worlds you all live in.

we should reconsider their patent extent given how much they make and the gains in public health we would have

Honestly I prefer the millions. I know it's the same, but saying someone spends 700 million more on marketing than R&D hits home a little more than .7 billion more.

It’s not R&D (which is usually very small scale), but once a drug is developed the process to get it onto market is pretty significant. I’m not sure what how these buckets are divided exactly and depending on the product, scale up, clinical trials, regulatory testing and validation processes have A LOT of administrative and other costs. So like 1 dollar spent on R&D requires 10 dollars spent elsewhere to complete the process.

You are the product, that’s how.

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Something is wrong here. Yahoo reports 99.8BN revenue: https://finance.yahoo.com/quote/PFE/financials?p=PFE

and $29.7 net income

revenue up almost 100% from 2018, of course

net income almost triple

Because it's not just thousands of millions. For example, $0.059B is a silly way of phrasing that number.

It's expensive but it's still no where near a major cost and almost certainly bucketed into r&d. Otherwise you'd see it there. Besides, they buy up smaller companies that have already done it so they don't have to.

The tax rate is so aggravating

As a healthcare provider, you wouldn’t believe how much these companies spend in marketing. Routinely buy lunch for offices with ~50 employees, fancy provider dinners, targeted ads, etc..

This assumes that the R&D is successful.

What would this look like if their mRNA vaccine failed or more competitors beat them to the punch?

You also have them responding to a Pandemic. Which would make their returns on investment higher.

One of the benefits of a single payer system like Canada or UK is that you are one buying entity that has more bargaining power over drug companies. You can regulate drug prices.

what's the name of this type of chart?

Which one is employees salaries?

Billion means different things in different parts of the world. A thousand million, however? The same everywhere

If it’s part of bringing a product to market and it isn’t broken out on its own then it should be lumped into R&D. Scaling up and getting regulatory approvals is the development part of research and development.

Yea someone is not accurate 🤔

Judging by your own source, looks like OP posted the latest quarterly data from 30 September, you've quoted annual data.

Which exact financial period is this graph for?

Bundled in the operating expense part.

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Maybe under administrative costs.

38% is pretty high profit margin, no doubt, but I think other companies are comparable? Just off the top of my head, I think Apple (retail) is over 40%.

Hey make sure you get your 50th COVID booster

You know that the tax laws are bull shit when the effective tax rate of $8.65 billion is 4%.

I work for Pfizer’s oncology R&D group and they’re pretty good at only spending money to develop the most promising drugs and killing off projects early that won’t likely produce a viable drug (like 90% of projects)

https://en.m.wikipedia.org/wiki/Long_and_short_scales#Current_usage

Gotta hand it to them, they somehow converted leftists into capitalists over three short years.

A lot of their R&D is capitalized on the balance sheet.

A lot of their R&D isn’t reported here, it’s on the balance sheet

That’s really interesting. How early or late in the development process do they kill off drugs? Or does it just depend

Can be anytime really and there’s lots of “go/no-go” checks along the way but the vast majority get killed off before human clinical trials. That is one of the largest costs for drug R&D

Eh, it’s mostly due to employee compensation and specific medical deductions from COVID. I don’t really think those are bad things

Q3 of 2022

Why? The reasons for it are pretty normal

Yeah, I remember seeing stat a few years back that for every drug that makes it to market, close to 19 are cancelled before that point. Partially why completed drugs are priced so high before the patent runs out

Wait, how does employee compensation make their taxes negligible and why is this good?

It doesn’t change the amount of tax they pay, it just lowers their effective tax rate. The $356 million in income tax reported here isn’t the same thing as the tax they actually pay the IRS

When stock options are exercised by employees, this lowers their income tax expense without lowering profit, which results in a lower tax rate

It’s a weird adjustment because it’s basically just theoretical, but most large companies have large adjustments for it each year

Ok, so are you suggesting they pay more than this to the IRS? If so, how would we find THAT number? And I’m still not seeing how this is “good” for society at large.

>are you suggesting they pay more than this to the IRS

Could be more, could be less. And there’s no way to see it, it’s not public info. Usually when companies report very low rates though, their actual tax paid tends to be higher

I’m not saying that it’s good for society, I just think most people are under the impression it’s due to some shady accounting or loopholes. But it’s basically just normal stuff

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4%? It should be 30 like a citizen.

This is just for income tax though, and hardly any citizens pay 30%

In actuality though, Pfizer is paying much more than 4% in corporate tax. They pay 21% on US earnings and probably a similar average rate on their foreign ops

Turns out all you need to do for people to forget you're a massive monopoly is put BLM in your bio and the LGBQT+ flag lol

I just would like to highlight how much they are making in USA versus Developed Europe. Both being the same kind of economy, with the same population.

Looking at their gross profit, it is almost like 75% of their profit come from the USA. It makes me wonder, aren’t their vaccines a little bit overpriced in the USA compared to the rest of the whole world ?

I don’t think people believe the accounting practices are shady per se. It’s more so that the system is broke if a company can generate 10s of billions in revenue AND profit while only paying a few % (1.5% of revenue in this case) in taxes. I don’t care what legal or illegal means are used to get there. They simply should be paying a much more substantial amount of their profits towards the government and therefore society at large. Especially in a case where some these companies are causing tremendous harm like many pharmaceutical companies today.

I guess I learned something new. That being said Short scale is total trash and a much more confusing and complicated way of displaying numbers. The point is this is an English graphic and short scale is the official scale of English speaking countries.

You either are really bad at math or come from a non-English speaking country where long scale is used. English graphics should only use short scale.

Big pharma is an ally now!

how do you know thats actual testing though?

OPs graph appears like this could be the final approval stage, post R and D on the clinical trials

Anyone has a good idea or explanation why provision for tax is only 4%? I would assume the business to get taxed higher. Or is it included in one of the categories already, and if so, what are these 4% provisions?

It’s hard to tell since their quarterly filings don’t provide reconciliations, but combining that info with their 2021 total filing, here’s my best explanation as a CPA:

1. Pfizer sells into a lot of foreign countries with different tax rates than the US. On their 2021 tax rec, this was the single largest driver of their low tax rate

2. They’ve received a lot of tax credits from their vaccine distribution both in 2021 and 2022

3. They had IRS resolutions in 2022 that reduced their tax expense in prior years, which reduces this years income tax expense

4. The actual tax they paid was much higher than the $356 million reported here. It’s just that income tax expense includes deferred taxes for future years, which are very negative right now. For reference, they’ve paid almost $5 billion of tax for 2022 so far

This is why the US is so against nationalized health care. The profits are too big.

Where are you getting that percentage? Compare like to like. They're paying 4% if that data is real, as their effective tax rate. For citizens, the effective tax rate is 14.6%, see source below.

The top 50% of taxpayers paid 97.1% of all federal income taxes in 2018. Among those taxpayers, the average income tax rate was 14.6% and the average tax paid was $20,663. The OECD reported that the U.S. "tax wedge" for the average single worker was 28.4% in 2021.

https://www.thebalancemoney.com/what-the-average-american-pays-in-taxes-4768594

A balance sheet is a statement of assets and liabilities. They mean two fundamentally different things.

If you look at their 10-Q, a lot of their in-process R&D this year came from acquisitions, which are capitalized on the balance sheet and them amortized over 15 years

Also, any foreign R&D they have abides by foreign reporting rules, in which development costs are also capitalized

>Where are you getting that percentage

It’s the US corporate tax rate. The 4% figure is based on their reported profits, but this isn’t the same as taxable income

The actual tax paid so far in 2022 for them is around $5 billion. It’s just that their effective tax rate includes deferred taxes in future years, which are very negative

That’s great and all, but that $8.6b in net profit is my biggest concern. Drug makers blame high R&D costs to develop new meds on exorbitant drug costs, but it’s all just going right back to shareholders, whether directly through dividends, retained earnings, or share buybacks.

And that $8.6b in net profit is just the last 3 months. These figures are just Q3 2022. FY2021 they brought in a whopping $21.98b in net profit from $81.3b in revenue. And spending $13.8b in R&D. 59% more in net profit attributed to shareholders than R&D.

source: page 51

We effectively pay for every other country to have low drug prices. They make up the revenue loss by charging Americans more

This is Q3 2022 data. It’s accurate

source: page 5

That makes sense they would capitalize it, but the amortization is still a tiny percentage. There's no way to slice this that isn't very little money spent on r&d compared to the profits. I used to work health care supply chain and r&d was never a major expense. The selling costs including buying employees boats to take doctors out on "as friends" because it didn't count as bribery if you didn't give the doctor the boat directly. Crazy shit

not their mRNA vaccine - that would be Biontech - Pfizer afaik did the heavy lifting in production.

Side effect I would say. In a completely free market the price of life saving insulin is just very high. And regulation seems to prevent effective cost competition. Newly developed drugs might see less investment if the US market weren't so juicy, I would give you that.

> in a completely free market the price of life saving insulin is just very high

But that’s not entirely true. Yes it’s needed to live, but so is water. And water isn’t exorbitantly expensive. Insulin is VERY cheap to make and because lawmakers aren’t willing to combat evergreen-ing patents, competition simply all but isn’t allowed. If they’d allow generics to come to market, the price would plummet.

In a completely free market we’d have a race to the bottom.

4% of 9.001, but, yah, sure is low!

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yeah so its only for 3 months!!!

They do spend quite a bit on R&D normally though. It’s just that a large portion of R&D in 2022 comes from acquisitions, so it’s reported on the balance sheet instead of the income statement

Acquisitions definitely aren’t R&D. They’ll expand they’re product line, yes, but those products already existed or were researched and developed without Pfizer’s M&A.

One could argue acquisitions allow for more efficient R&D as synergies between newly acquired research teams eliminate redundancies, but you’d need to look into what research PFE was doing prior to the acquisition and if they’re buying something they already were working on, and additionally you’d walk into an even stronger case against consolidating the drug makers into an oligopoly, which isn’t good for consumers.

It’s not the acquisition itself, it’s the in-process R&D that transfers to Pfizer. It’s not allowed to be expensed, it has to be capitalized. They money they spend on the acquisition for R&D replaces money they would’ve otherwise spent on internal R&D

Right, but that in-process R&D is just that, in process. PFE doesn’t deserve credit for this as it was already in the works prior to the acquisition. The acquired company had already spent/allocated the money.

And while it could be argued otherwise, these acquisitions continue to consolidate IP and influence upwards to a smaller number of massive companies. Which long term will not benefit consumers

Edit: even if in process R&D is included, their 10-K shows only $802m attributed to “restructuring and acsquisition related costs” for 2021. And Im not seeing it anywhere else on the income statement/balance sheet/or statement of cash flows.

For Q3, as you’ll see in OP’s infographic, in-process R&D adds another $502m for a total of $3.2b in R&D. Way below their net income of $8.6b.

I get what you’re saying, but when you look at the total cost a company spends on R&D, you have to include acquired R&D. A company spending money internally on R&D isn’t really different from a company spending money on a company for its R&D

I added this as an edit on my previous comment but I’ll paste it here as well

Even if in process R&D is included, their 10-K shows only $802m attributed to “restructuring and acsquisition related costs” for 2021. This was already included in my quoted figure netting $21.98b in net revenue for last year. And Im not seeing it anywhere else on the income statement/balance sheet/or statement of cash flows.

For Q3, as you’ll see in OP’s infographic, in-process R&D adds another $502m for a total of $3.2b in R&D. Way below their net income of $8.6b.