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(a)	Excludes amortization of intangible assets, except as disclosed in Note 9A. Identifiable Intangible Assets and Goodwill: Identifiable Intangible Assets.

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(a)	Reclassified into Other (income)/deductions—net in the condensed consolidated statements of income.

(b)	Generally reclassified, as part of net periodic pension cost, into Cost of sales, Selling, informational and administrative expenses, and/or Research and development expenses, as appropriate, in the condensed consolidated statements of income. For additional information, see Note 10. Pension and Postretirement Benefit Plans.

(c)	See Note 5C. Tax Matters: Tax Provision/(Benefit) on Other Comprehensive Income/(Loss).

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•	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 that are not active, or inputs other than quoted prices that are directly or indirectly observable, or inputs that are derived principally from, or corroborated by, observable market data by correlation or other means (Level 2 inputs).

•	Unobservable inputs that reflect estimates and assumptions (Level 3 inputs).

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(a)	The changes in the estimated fair values are primarily to better reflect market participant assumptions about facts and circumstances existing as of the acquisition date. The measurement period adjustments did not result from intervening events subsequent to the acquisition date.

•	Environmental Matters—In the ordinary course of business, Hospira incurs liabilities for environmental matters such as remediation work, asset retirement obligations and environmental guarantees and indemnifications. The contingencies for environmental matters are not significant to Pfizer’s financial statements.

•	Legal Matters—Hospira is involved in various legal proceedings, including product liability, patent, commercial, antitrust and environmental matters and government investigations, of a nature considered normal to its business. The contingencies arising from legal matters are not significant to Pfizer’s financial statements.

•

Tax Matters—In the ordinary course of business, Hospira incurs liabilities for income taxes. Income taxes are exceptions to both the recognition and fair value measurement principles associated with the accounting for business combinations. Reserves for income tax contingencies continue to be measured under the benefit recognition model as previously used by Hospira. Net liabilities for income taxes approximate $3.4 billion as of the acquisition date, which includes $109 million for uncertain tax positions. The net tax liability includes the recording of additional adjustments of approximately $3.2 billion for the tax impact of fair value adjustments and approximately $719 million for income tax matters that we intend to resolve in a manner different from what Hospira had planned or intended. For example, because we plan to repatriate certain overseas funds, we provided deferred taxes on Hospira’s unremitted earnings for which no taxes have been previously provided by Hospira as it was Hospira’s intention to indefinitely reinvest those earnings.

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•	Elimination of Hospira’s historical intangible asset amortization expense (approximately $9 million in the third quarter of 2015 and $33 million in the first nine months of 2015).

•	Additional amortization expense (approximately $70 million in the third quarter of 2015 and $321 million in the first nine months of 2015) related to the fair value of identifiable intangible assets acquired.

•	Additional depreciation expense (approximately $14 million in the third quarter of 2015 and $57 million in the first nine months of 2015) related to the fair value adjustment to PP&E acquired.

•	Adjustment related to the non-recurring fair value adjustment to acquisition-date inventory estimated to have been sold (the elimination of $75 million of charges in the third quarter of 2015 and $66 million of charges in the first nine months of 2015).

•	Adjustment to decrease interest expense (approximately $3 million in the third quarter of 2015 and $23 million in the first nine months of 2015) related to the fair value adjustment of Hospira debt.

•

Adjustment for non-recurring acquisition-related costs directly attributable to the acquisition (the elimination of $680 million of charges in the third quarter of 2015 and $724 million of charges in the first nine months of 2015), reflecting non-recurring charges incurred by both Hospira and Pfizer, which would have been recorded in 2014 under the pro forma assumption that the Hospira acquisition was completed on January 1, 2014.

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(a)	For the quarter ending October 2, 2016, we recorded an adjustment to HIS assets for net realizable value of $1,394 million plus estimated costs to sell of $28 million for a total impairment on HIS net assets of $1,422 million.

(b)	Other assets held for sale consist primarily of property, plant and equipment and other assets.

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•	In connection with acquisition activity, we typically incur costs associated with executing the transactions, integrating the acquired operations (which may include expenditures for consulting and the integration of systems and processes), and

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•	In connection with our cost-reduction/productivity initiatives, we typically incur costs and charges associated with site closings and other facility rationalization actions, workforce reductions and the expansion of shared services, including the development of global systems.

•

Manufacturing plant network rationalization and optimization, where execution timelines are necessarily long. Our plant network strategy is expected to result in the exit of seven sites over the next several years. In connection with these activities, during 2014-2016, we expect to incur costs of approximately $400 million associated with prior acquisition activity and costs of approximately $1.1 billion associated with new non-acquisition-related cost-reduction initiatives. Through October 2, 2016, we incurred approximately $365 million and $828 million, respectively, associated with these initiatives.

•

The 2014 global commercial structure reorganization, which primarily includes the streamlining of certain functions, the realignment of regional locations and colleagues to support the businesses, as well as implementing the necessary system changes to support different reporting requirements. Through October 2, 2016, we incurred costs of approximately $219 million and have completed this initiative.

•	Other new cost-reduction/productivity initiatives, primarily related to commercial property rationalization and other consolidation and savings opportunities. In connection with these cost-reduction activities, during 2014-2016, we expect to incur costs of approximately $1.3 billion. Through October 2, 2016, we incurred approximately $895 million associated with these initiatives.

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(a)

In the nine months ended October 2, 2016, Employee terminations represent the expected reduction of the workforce by approximately 2,100 employees, mainly in manufacturing, sales, research and corporate. Employee termination costs are generally recorded when the actions are probable and estimable and include accrued severance benefits, pension and postretirement benefits, many of which may be paid out during periods after termination.

•	For the third quarter of 2016, the IH segment ($148 million); the EH segment ($28 million); WRD, GPD and Medical (M) (WRD/GPD/M) ($52 million); manufacturing operations ($108 million); and Corporate ($67 million).

•	For the first nine months of 2016, IH ($162 million); EH ($19 million); WRD/GPD/M ($104 million); manufacturing operations ($181 million); and Corporate ($107 million).

•	For the third quarter of 2015, IH ($9 million); EH ($280 million); WRD/GPD/M ($50 million); manufacturing operations ($26 million); and Corporate ($104 million).

•	For the first nine months of 2015, IH ($55 million); EH ($288 million); WRD/GPD/M ($66 million); manufacturing operations ($18 million); and Corporate ($127 million).

(b)

Transaction costs represent external costs for banking, legal, accounting and other similar services, most of which in the third quarter of 2016 are directly related to our acquisition of Medivation, and most of which in the first nine months of 2016 are directly related to our acquisitions of Medivation and Anacor, and the terminated transaction with Allergan. Transaction costs in 2015 represent external costs directly related to the acquisition of Hospira and primarily include expenditures for banking, legal, accounting and other similar services.

(c)

Integration costs represent external, incremental costs directly related to integrating acquired businesses, and primarily include expenditures for consulting and the integration of systems and processes. In the third quarter of 2016, integration costs mostly relate to our acquisition of Hospira and for the first nine months of 2016, integration costs mostly relate to our acquisition of Hospira and the terminated transaction with Allergan. Integration costs in 2015 represent external incremental costs directly related to our acquisition of Hospira.

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(d)	Additional depreciation––asset restructuring represents the impact of changes in the estimated useful lives of assets involved in restructuring actions.

(e)	Implementation costs represent external, incremental costs directly related to implementing our non-acquisition-related cost-reduction/productivity initiatives.

(a)	Included in Other current liabilities ($776 million) and Other noncurrent liabilities ($381 million).

(b)	Includes adjustments for foreign currency translation.

(c)	Included in Other current liabilities ($714 million) and Other noncurrent liabilities ($561 million).

(a)

Interest income increased in the first nine months of 2016, primarily due to higher investment returns. Interest expense increased in the third quarter and first nine months of 2016, primarily due to interest on legacy Hospira debt acquired in September 2015 and the addition of new fixed rate debt in the second quarter of 2016, partially offset by the maturity of other fixed rate debt in the second quarter of 2016.

(b)

In the first nine months of 2016, primarily includes amounts to resolve a Multi-District Litigation relating to Celebrex and Bextra pending against the Company in New York federal court for $486 million, which is subject to final court approval, partially offset by the reversal of a legal accrual where a loss is no longer deemed probable. In addition, the first nine months of 2016 includes a settlement related to a patent matter. See Note 12A2 for additional information.

(c)	In the first nine months of 2016, includes gains on sales/out-licensing of product and compound rights (approximately $49 million). In the first nine months of 2015, primarily includes gains on sales/out-licensing of product and compound rights (approximately $76 million) and gains on sales of investments in equity securities (approximately $160 million).

(d)

In the third quarter and first nine months of 2016, represents a charge related to the write-down of the HIS net assets to fair value less estimated costs to sell. In October 2016, ICU Medical and Pfizer announced that they entered into a definitive agreement under which ICU Medical will acquire all of Pfizer’s global infusion therapy net assets, HIS, for approximately $1 billion in cash and ICU Medical stock. HIS includes IV pumps, solutions and devices. See Note 2B for additional information.

(e)

In the third quarter of 2016, primarily includes intangible asset impairment charges of $126 million, reflecting $97 million of sterile injectable IPR&D compounds acquired in connection with our acquisition of InnoPharma and $29 million of other IPR&D assets acquired in connection with our acquisition of King in 2011. The intangible asset impairment charges for the third quarter of 2016 are associated with the following: EH ($97 million) and IH ($29 million). In the first nine months of 2016, primarily includes intangible asset impairment charges of $767 million, reflecting (i) $331 million related to developed technology rights for a generic injectable antibiotic product for the treatment of bacterial infections; and (ii) $265 million related to an IPR&D compound for the treatment of anemia, both acquired in connection with our acquisition of Hospira; (iii) $97 million of sterile injectable IPR&D compounds acquired in connection with our acquisition of InnoPharma; and (iv) $74 million of other IPR&D assets, $45 million of which were acquired in connection with our acquisition of Hospira and $29 million of which were acquired in connection with our acquisition of King in 2011. The intangible asset impairment charges for the first nine months of 2016 are associated with the following: EH ($738 million) and IH ($29 million). In addition, the first nine months of 2016 includes an impairment loss of $211 million related to Pfizer’s

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(f)	In the third quarter and first nine months of 2016 and 2015, represents expenses for changes to our infrastructure to align our commercial operations, including costs to internally separate our businesses into distinct legal entities, as well as to streamline our intercompany supply operations to better support each business.

(g)	In the first nine months of 2016, includes among other things, $150 million paid to Allergan for reimbursement of Allergan’s expenses associated with the terminated transaction (see Note 1A). The first nine months of 2016, also includes income of $116 million from resolution of a contract disagreement.

(a)	The fair value amount is presented as of the date of impairment, as these assets are not measured at fair value on a recurring basis. See also Note 1C.

(b)

Reflects intangible assets written down to fair value in the first nine months of 2016. Fair value was determined using the income approach, specifically the multi-period excess earnings method, also known as the discounted cash flow method. We started with a forecast of all the expected net cash flows associated with the asset and then applied an asset-specific discount rate to arrive at a net present value amount. Some of the more significant estimates and assumptions inherent in this approach include: the amount and timing of the projected net cash flows, which includes the expected impact of competitive, legal and/or regulatory forces on the product and the impact of technological risk associated with IPR&D assets; the discount rate, which seeks to reflect the various risks inherent in the projected cash flows; and the tax rate, which seeks to incorporate the geographic diversity of the projected cash flows.

•	a favorable change in the jurisdictional mix of earnings as a result of operating fluctuations in the normal course of business; as well as

•	an increase in benefits associated with the U.S. R&D tax credit, which was not in effect in the prior year quarter but was permanently extended on December 18, 2015,

•	a decrease in benefits associated with the resolution of certain tax positions pertaining to prior years primarily with various foreign tax authorities, and the expiration of certain statutes of limitations; as well as

•	the unfavorable tax effects of an impairment charge related to the write-down of HIS net assets to fair value less estimated costs to sell, mainly related to goodwill, which is not deductible for tax purposes, and the jurisdictional mix of intangible assets.

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•	a favorable change in the jurisdictional mix of earnings as a result of operating fluctuations in the normal course of business;

•	benefits related to the final resolution of an agreement in principle reached in February 2016 and finalized in April 2016 to resolve certain claims related to Protonix, which resulted in the receipt of information that raised our assessment of the likelihood of prevailing on the technical merits of our tax position;

•	benefits associated with our Venezuela operations; as well as

•	an increase in benefits associated with the U.S. R&D tax credit, which was not in effect in the first nine months of the prior year but was permanently extended on December 18, 2015,

•	a decrease in benefits associated with the resolution of certain tax positions pertaining to prior years primarily with various foreign tax authorities, and the expiration of certain statutes of limitations; as well as

•	the unfavorable tax effects of an impairment charge related to the write-down of HIS net assets to fair value less estimated costs to sell, mainly related to goodwill, which is not deductible for tax purposes, and the jurisdictional mix of intangible assets.

•	With respect to Pfizer, the IRS has issued a RAR for tax years 2009-2010. We are not in agreement with the RAR and are currently appealing certain disputed issues. Tax years 2011-2013 are currently under audit. Tax years 2014-2016 are open, but not under audit. All other tax years are closed.

•	With respect to Hospira, the federal income tax audit of tax years 2010-2011 was effectively settled in the second quarter of 2016. The IRS is currently auditing tax years 2012-2013 and 2014 through short-year 2015. All other tax years are closed. The tax years under audit for Hospira are not considered material to Pfizer.

•	With respect to Anacor and Medivation, the open tax years are not considered material to Pfizer.

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(a)	Taxes are not provided for foreign currency translation adjustments relating to investments in international subsidiaries that will be held indefinitely.

(a)	Amounts do not include foreign currency translation adjustments attributable to noncontrolling interests of $1 million loss for the first nine months of 2016.

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(a)	We use a market approach in valuing financial instruments on a recurring basis. For additional information, see Note 1C. All of our financial assets and liabilities measured at fair value on a recurring basis use Level 2 inputs in the calculation of fair value, except less than 2% that use Level 1 inputs and money market funds measured at net asset value.

(b)

As of October 2, 2016, trading funds and securities are composed of $196 million of trading equity funds, $12 million of trading securities and $96 million of trading debt funds. As of December 31, 2015, trading funds and securities are composed of $185 million of trading equity funds and $102 million of trading debt funds. As of October 2, 2016 and December 31, 2015, trading equity funds of $69 million and $85 million, respectively, are held in trust for benefits attributable to the former Pharmacia Savings Plus Plan.

(c)	Gross unrealized gains and losses are not significant.

(d)	Designated as hedging instruments, except for certain contracts used as offsets; namely, foreign currency forward-exchange contracts with fair values of $91 million as of October 2, 2016; and foreign currency forward-exchange contracts with fair values of $136 million as of December 31, 2015.

(e)

The differences between the estimated fair values and carrying values of held-to-maturity debt securities, private equity securities at cost and short-term borrowings not measured at fair value on a recurring basis were not significant as of October 2, 2016 or December 31, 2015. The fair value measurements of our held-to-maturity debt securities and our short-term borrowings are based on Level 2 inputs, using a market approach. The fair value measurements of our private equity securities carried at cost are based on Level 3 inputs. Short-term borrowings include foreign currency short-term borrowings with fair values of $547 million as of December 31, 2015, which are used as hedging instruments.

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(f)	Our private equity securities represent investments in the life sciences sector.

(g)

Designated as hedging instruments, except for certain contracts used as offsets; namely, foreign currency swaps with fair values of $211 million and foreign currency forward-exchange contracts with fair values of $145 million as of October 2, 2016; and foreign currency swaps with fair values of $234 million and foreign currency forward-exchange contracts with fair values of $59 million as of December 31, 2015.

(h)	We adopted a new standard as of January 1, 2016 that changed the presentation of debt issuance costs related to a recognized debt liability as a direct deduction from the carrying value of that associated debt, consistent with the presentation of a debt discount. See Note 1B for additional information.

(i)

The fair value of our long-term debt (not including the current portion of long-term debt) was $34.3 billion as of October 2, 2016 and $32.7 billion as of December 31, 2015. The fair value measurements for our long-term debt are based on Level 2 inputs, using a market approach. Generally, the difference between the fair value of our long-term debt and the amount reported on the condensed consolidated balance sheet is due to a decline in relative market interest rates since the debt issuance.

(a)	As of October 2, 2016, derivative instruments at fair value include interest rate swaps ($49 million), foreign currency swaps ($67 million) and foreign currency forward-exchange contracts ($177 million) and, as of December 31, 2015, include interest rate swaps ($2 million), foreign currency swaps ($46 million) and foreign currency forward-exchange contracts ($538 million).

(b)	As of October 2, 2016, derivative instruments at fair value include interest rate swaps ($1.9 billion), foreign currency swaps ($23 million) and foreign currency forward-exchange contracts ($9 million) and, as of December 31, 2015, include interest rate swaps ($835 million), foreign currency swaps ($89 million) and foreign currency forward-exchange contracts ($20 million).

(c)	We adopted a new standard as of January 1, 2016 that changed the presentation of debt issuance costs related to a recognized debt liability as a direct deduction from the carrying value of that associated debt, consistent with the presentation of a debt discount. See Note 1B for additional information.

(d)	As of October 2, 2016, derivative instruments at fair value include interest rate swaps ($1 million), foreign currency swaps ($320 million) and foreign currency forward-exchange contracts ($483 million) and, as of December 31, 2015, include interest rate swaps ($5 million), foreign currency swaps ($560 million) and foreign currency forward-exchange contracts ($80 million).

(e)	As of October 2, 2016, derivative instruments at fair value include interest rate swaps ($2 million), foreign currency swaps ($1.0 billion) and foreign currency forward-exchange contracts ($20 million) and, as of December 31, 2015, include interest rate swaps ($134 million), foreign currency swaps ($928 million) and foreign currency forward-exchange contracts ($1 million).

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(a)	Issued by a diverse group of corporations, largely consisting of financial institutions, virtually all of which are investment-grade.

(b)	Issued by governments, government agencies or supranational entities, as applicable, all of which are investment-grade.

(c)

Includes loan-backed, receivable-backed, and mortgage-backed securities, all of which are investment-grade and in senior positions in the capital structure of the security. Loan-backed securities are collateralized by senior secured obligations of a diverse pool of companies or student loans, and receivable-backed securities are collateralized by credit cards receivables. Mortgage-backed securities are collateralized by diversified pools of residential and commercial mortgages. These securities are valued by third party models that use significant inputs derived from observable market data like prepayment rates, default rates, and recovery rates.

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(a)	OID = Other (income)/deductions—net, included in Other (income)/deductions—net in the condensed consolidated statements of income. OCI = Other comprehensive income/(loss), included in the condensed consolidated statements of comprehensive income.

(b)	Also, includes gains and losses attributable to derivative instruments designated and qualifying as fair value hedges, as well as the offsetting gains and losses attributable to the hedged items in such hedging relationships.

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(c)	There was no significant ineffectiveness for any period presented.

(d)

For derivative financial instruments in cash flow hedge relationships, the effective portion is included in Other comprehensive income/(loss)––Unrealized holding losses on derivative financial instruments, net. For derivative financial instruments in net investment hedge relationships and for foreign currency debt designated as hedging instruments, the effective portion is included in Other comprehensive income/(loss)––Foreign currency translation adjustments, net.

(a)	The change from December 31, 2015 reflects, among other things, the reclassification of $369 million to Assets held for sale during the third quarter of 2016 (see Note 2B).

(b)	Included in Other noncurrent assets. There are no recoverability issues associated with these amounts.

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(a)

The increase in Identifiable intangible assets, less accumulated amortization, is primarily related to assets acquired as part of the acquisitions of Medivation, Anacor and Bamboo (see Note 2A), the impact of foreign exchange and the impact of measurement period adjustments related to our acquisition of Hospira (see Note 2A), partially offset by amortization, impairments and the reclassification of $1.3 billion to Assets held for sale during the third quarter of 2016 (see Note 2B). For information about impairments, see Note 4.

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(a)	IH additions primarily relate to our acquisitions of Medivation, Anacor and Bamboo and are subject to change until we complete the valuations of assets acquired and liabilities assumed from Medivation, Anacor and Bamboo (see Note 2A).

(b)	Primarily reflects the impact of foreign exchange and, with respect to EH, the impact of the reclassification of $243 million to Assets held for sale during the third quarter of 2016 (see Note 2B).

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(a)

The increase in net periodic benefit costs for the three months ended October 2, 2016, compared to the three months ended September 27, 2015, for our U.S. qualified pension plans was primarily due to (i) higher interest costs resulting from a change in our approach in the third quarter of 2016 for measuring service and interest costs (the adjustment increased interest costs by $57 million related to prior periods in 2016 (see (e) below)), (ii) a lower expected return on plan assets resulting from a lower expected rate of return, as well as a net decrease of approximately $1.1 billion in the asset base, due in part to lump-sum payments made in 2015 to certain terminated vested colleagues to settle Pfizer’s pension obligation, partially offset by a voluntary contribution of $1.0 billion made at the beginning of January 2016, and (iii) an increase in the amounts amortized for actuarial losses, primarily as a result of the addition of Hospira qualified plans. The aforementioned increases were partially offset by lower settlement activity in 2016. The increase in net periodic benefit costs for the nine months ended October 2, 2016, compared to the nine months ended September 27, 2015, for our U.S. qualified pension plans was primarily driven by (i) a lower expected return on plan assets resulting from a lower expected rate of return, as well as a net decrease of approximately $1.1 billion in the asset base, due in part to lump-sum payments made in 2015 to certain terminated vested colleagues to settle Pfizer’s pension obligation, partially offset by a voluntary contribution of $1.0 billion made at the beginning of January 2016, and (ii) an increase in the amounts amortized for actuarial losses, primarily as a result of the addition of Hospira qualified plans. The aforementioned increases were partially offset by (i) lower service costs resulting from a higher discount rate, (ii) lower settlement activity, and (iii) lower interest costs resulting from a lower beginning benefit obligation.

(b)

The increase in net periodic benefit costs for the three months ended October 2, 2016, compared to the three months ended September 27, 2015, for our U.S. non-qualified pension plans was primarily due to (i) higher interest costs resulting from a change in our approach in the third quarter for measuring service and interest costs (the adjustment increased interest costs by $4 million related to prior periods in 2016

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(c)

The decrease in net periodic benefit costs for the three and nine months ended October 2, 2016, compared to the three and nine months ended September 27, 2015, for our international pension plans was primarily driven by (i) lower service and interest costs, resulting from a change in our approach for measuring service and interest costs (see (e) below), and (ii) a decrease in the amounts amortized for actuarial losses resulting from large gains in 2015, which decreased the plan net loss position. The aforementioned decreases to our net periodic benefit costs were partially offset by a decrease in the expected return on plan assets due to a lower expected rate of return on plan assets.

(d)

The decrease in net periodic benefit credit for the three months ended October 2, 2016, compared to the three months ended September 27, 2015, for our postretirement plans was primarily driven by (i) higher interest costs resulting from a change in our approach in the third quarter of 2016 for measuring service and interest costs (the adjustment increased interest costs by $8 million related to prior periods in 2016 (see (e) below)), and (ii) a decrease in expected return on plan assets, resulting from a decrease in plan assets, reflecting payments by the plan for IRC 401(h) reimbursements to Pfizer for eligible 2014 and 2015 prescription drug expenses for certain retirees. The aforementioned changes were partially offset by (i) higher curtailment gains and (ii) lower service costs resulting from a higher discount rate. The increase in net periodic benefit credit for the nine months ended October 2, 2016, compared to the nine months ended September 27, 2015, for our postretirement plans was primarily driven by (i) an increase in prior service credits due to the postretirement medical plan cap changes during 2016 and 2015, (ii) lower interest costs resulting from a lower benefit obligation, and (iii) lower service costs resulting from a higher discount rate. The aforementioned changes were partially offset by (i) a decrease in expected return on plan assets, primarily resulting from a decrease in plan assets, reflecting payments by the plan for IRC 401(h) reimbursements to Pfizer for eligible 2014 and 2015 prescription drug expenses for certain retirees, (ii) lower curtailment gains, and (iii) a decrease in the amounts amortized for actuarial losses resulting from the increase in 2015 in the discount rate used to determine the benefit obligation.

(e)

Effective January 1, 2016, the Company changed the approach used to measure service and interest costs for certain international pension and other postretirement benefit plans. For fiscal 2015, the Company measured service and interest costs utilizing a single weighted-average discount rate derived from the yield curve used to measure the respective plan obligations. For fiscal 2016, we elected to measure service and interest costs by applying the spot rates along the yield curve for certain international plans to the plans' liability cash flows. The Company believes the new approach provides a more precise measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve. This change does not affect the measurement of our plan obligations. We have accounted for this change as a change in accounting estimate and, accordingly, have accounted for it on a prospective basis. The expected reduction in expense for 2016 associated with this change in estimate is $42 million, which is recognized evenly over each quarter of the year. Effective January 1, 2016, the Company made a similar change for its U.S. pension and other postretirement benefit plans, but in the third quarter of 2016, we determined that our use of the bond model required the measurement of such costs to be conceptually aligned with the measurement of the pension benefit obligation. As such, 2016 service and interest costs for the U.S. plans were measured utilizing a single weighted-average discount rate derived from the bond model consistent with the approach used in 2015, resulting in an adjustment to increase net periodic pension cost by $112 million in the third quarter of 2016.

(a)	Contributions to the postretirement plans reflect IRC 401(h) reimbursements totaling $198 million received for eligible 2014 and 2015 prescription drug expenses for certain retirees.

(b)

Contributions expected to be made for 2016 are inclusive of amounts contributed during the nine months ended October 2, 2016, including the $1.0 billion voluntary contribution that was made in January 2016 for the U.S. qualified plans, which was considered pre-funding for future anticipated mandatory contributions and is also expected to reduce Pension Benefit Guaranty Corporation variable rate premiums. The U.S. supplemental (non-qualified) pension plan, international pension plan and the postretirement plan contributions from our general assets include direct employer benefit payments.

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(a)	These common stock equivalents were outstanding for the nine months ended October 2, 2016 and September 27, 2015, but were not included in the computation of diluted EPS for those periods because their inclusion would have had an anti-dilutive effect.

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•

Patent litigation, which typically involves challenges to the coverage and/or validity of patents on various products, processes or dosage forms. We are the plaintiff in the vast majority of these actions. An adverse outcome in actions in which we are the plaintiff could result in loss of patent protection for a drug, a significant loss of revenues from that drug or impairment of the value of associated assets.

•	Product liability and other product-related litigation, which can include personal injury, consumer, off-label promotion, securities, antitrust and breach of contract claims, among others, often involves highly complex issues relating to medical causation, label warnings and reliance on those warnings, scientific evidence and findings, actual, provable injury and other matters.

•	Commercial and other matters, which can include merger-related and product-pricing claims and environmental claims and proceedings, can involve complexities that will vary from matter to matter.

•	Government investigations, which often are related to the extensive regulation of pharmaceutical companies by national, state and local government agencies in the U.S. and in other countries.

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•	Personal Injury Actions

•	Antitrust Actions

•	Whistleblower Action

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•	Antitrust Actions

•	Personal Injury Actions

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•

Our entire contract manufacturing business, Pfizer CentreOne (previously known as Pfizer CentreSource or PCS), is part of EH. Pfizer CentreOne consists of (i) the revenues and expenses of legacy Pfizer's contract manufacturing and active pharmaceutical ingredient sales operation, including the revenues and expenses related to our manufacturing and supply agreements with Zoetis; and (ii) the revenues and expenses of legacy Hospira's One-2-One sterile injectables contract manufacturing operation, which has been included in EH since we acquired Hospira on September 3, 2015. Prior to 2016, PCS was managed outside our operating segments as part of PGS and reported as "Other Business Activities". We have reclassified prior period PCS operating results ($116 million of PCS revenues and $15 million of PCS earnings in the third quarter of 2015, and $360 million of PCS revenues and $66 million of PCS earnings in the first nine months of 2015) to conform to the current period presentation as part of EH.

•

In connection with the formation of a new EH R&D organization, certain functions transferred from Pfizer’s WRD organization to the new EH R&D organization. The new R&D organization within EH expects to develop potential new sterile injectable drugs and therapeutic solutions, as well as biosimilars. We have reclassified approximately $68 million of costs in the third quarter of 2015 and $202 million of costs in the first nine months of 2015 from WRD to EH to conform to the current period presentation as part of EH.

•	In connection with the formation of the GPD organization, a new unified center for late-stage development for our innovative products, which is generally responsible for the clinical development of assets that are in clinical trials for our

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•

WRD, which is generally responsible for research projects for our IH business until proof-of-concept is achieved and then for transitioning those projects to the IH segment via the newly formed GPD organization for possible clinical and commercial development. R&D spending may include upfront and milestone payments for intellectual property rights. The WRD organization also has responsibility for certain science-based and other platform-services organizations, which provide technical expertise and other services to the various R&D projects, including EH R&D projects. WRD is also responsible for facilitating all regulatory submissions and interactions with regulatory agencies, including all safety-event activities.

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GPD, which is generally responsible for the clinical development of assets that are in clinical trials for our WRD and Innovative portfolios. GPD also provides technical support and other services to Pfizer R&D projects. In connection with the formation of the GPD organization, certain development-related functions transferred from WRD and IH to GPD. In addition to the costs transferred from IH to GPD described above, we reclassified costs from WRD of approximately $78 million in the first quarter of 2016, approximately $86 million in the third quarter of 2015 and approximately $244 million in the first nine months of 2015 to GPD to conform to the current period presentation as part of GPD.

•	Pfizer Medical, which is responsible for the provision of medical information to healthcare providers, patients and other parties, transparency and disclosure activities, clinical trial results publication, grants for healthcare quality improvement and medical education, and partnerships with global public health and medical associations.

•	Corporate, representing platform functions (such as worldwide technology, global real estate operations, legal, finance, human resources, worldwide public affairs, compliance and worldwide procurement) and certain compensation and other corporate costs, such as interest income and expense, and gains and losses on investments.

•	Other unallocated costs, representing overhead expenses associated with our manufacturing and commercial operations not directly attributable to an operating segment.

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Certain transactions and events such as (i) purchase accounting adjustments, where we incur expenses associated with the amortization of fair value adjustments to inventory, intangible assets and PP&E; (ii) acquisition-related costs, where we incur costs for executing the transaction, integrating the acquired operations and restructuring the combined company; and (iii) certain significant items, which are substantive and in some cases recurring, or unusual items that are evaluated on an individual basis by management and which include non-acquisition-related restructuring costs, as well as costs incurred for legal settlements, asset impairments and disposals of assets or businesses, including, as applicable, any associated transition activities.

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(a)	Income from continuing operations before provision for taxes on income.

(b)

Effective as of the beginning of the second quarter of 2016, in connection with the formation of the GPD organization, certain development-related functions transferred from IH to GPD. We have reclassified approximately $76 million of costs in the first quarter of 2016, approximately $77 million of costs in the third quarter of 2015 and approximately $223 million of costs in the first nine months of 2015 from IH to GPD to conform to the current period presentation as part of GPD. Additionally, Anacor's and Medivations’s commercial operations are included in IH's operating results in our condensed consolidated statements of income. As a result, commencing from the acquisition date of June 24, 2016, IH's operating results for the third quarter and first nine months of 2016 include approximately three months of legacy Anacor operations, which were immaterial, and commencing from the acquisition date of September, 28, 2016, IH's operating results for the third quarter and first nine months of 2016 reflect three business days of legacy Medivation operations, which were immaterial.

(c)

On September 3, 2015, we acquired Hospira. Commencing from the acquisition date, our condensed consolidated statement of income includes the operating results of Hospira. As a result, legacy Hospira commercial operations, including the legacy Hospira One-2-One contract manufacturing business, are included in EH’s operating results in our condensed consolidated statements of income for the third quarter and first nine months of 2016. In accordance with our domestic and international reporting periods, our results of operations and EH's operating results for the third quarter and first nine months of 2015 reflect only one month of legacy Hospira U.S. operations but no financial results from legacy Hospira international operations. See Note 2A for additional information. Effective as of the beginning of 2016, our entire contract manufacturing business, Pfizer CentreOne (previously known as Pfizer CentreSource or PCS), is part of EH. Pfizer CentreOne consists of (i) the revenues and expenses of legacy Pfizer's contract manufacturing and active pharmaceutical ingredient sales operation, including the revenues and expenses related to our manufacturing and supply agreements with Zoetis; and (ii) the revenues and expenses of legacy Hospira's One-2-One sterile injectables contract manufacturing operation, which has been included in EH since we acquired Hospira on September 3, 2015. Prior to 2016, PCS was managed outside our operating segments as part of PGS and reported as "Other Business Activities". We have reclassified prior period PCS operating results ($116 million of PCS revenues and $15 million of PCS earnings in the third quarter of 2015, and $360 million of PCS revenues and $66 million of PCS earnings in the first nine months of 2015) to conform to the current period presentation as part of EH. As noted above, also effective as of the beginning of 2016, in connection with the formation of a new EH R&D organization, certain functions transferred from Pfizer’s WRD organization to the new EH R&D organization. We have reclassified approximately $68 million of costs in the third quarter of 2015 and $202 million of costs in the first nine months of 2015 from WRD to EH to conform to the current period presentation as part of EH.

(d)	Other business activities includes the costs managed by our WRD, GPD and Pfizer Medical organizations.

(e)	For a description, see the “Other Costs and Business Activities” section above.

(f)	Certain significant items are substantive and in some cases recurring (such as restructuring or legal charges), or 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.

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(a)

On September 3, 2015, we acquired Hospira. Commencing from the acquisition date, our condensed consolidated statement of income includes the operating results of Hospira. As a result, legacy Hospira operations are included in our condensed consolidated statements of income for the third quarter and first nine months of 2016. In accordance with our domestic and international reporting periods, our results of operations and EH's operating results for the third quarter and first nine months of 2015 reflect only one month of legacy Hospira U.S. operations but no financial results from legacy Hospira international operations. On June 24, 2016, we acquired Anacor. Commencing from the acquisition date, our condensed consolidated statement of income includes the operating results of Anacor. As a result, legacy Anacor operations are included in our condensed consolidated statements of income for the third quarter and first nine months of 2016. In accordance with our domestic reporting period, our results of operations and IH's operating results for the third quarter and first nine months of 2016 include approximately three months of legacy Anacor operations. Additionally, on September 28, 2016, we acquired Medivation. Commencing from the acquisition date, our condensed consolidated statement of income includes the operating results of Medivation. As a result, legacy Medivation operations are included in our condensed consolidated statements of income for the third quarter and first nine months of 2016. In accordance with our domestic and international reporting periods, our results of operations and IH's operating results for the third quarter and first nine months of 2016 reflect three business days of legacy Medivation operations, which were immaterial. See Note 2A for additional information.

(b)	Developed Europe region includes the following markets: Western Europe, Finland and the Scandinavian countries. Revenues denominated in euros were $1.7 billion and $1.8 billion in the third quarter of 2016 and 2015, respectively, and $5.3 billion and $5.4 billion in the first nine months of 2016 and 2015, respectively.

(c)	Developed Rest of World region includes the following markets: Australia, Canada, Japan, New Zealand and South Korea.

(d)	Emerging Markets region includes, but is not limited to, the following markets: Asia (excluding Japan and South Korea), Latin America, Africa, Eastern Europe, Central Europe, the Middle East and Turkey.

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(a)

The IH business, previously known as the Innovative Products business, encompasses Internal Medicine, Vaccines, Oncology, Inflammation & Immunology, Rare Disease and Consumer Healthcare and includes all legacy Medivation and Anacor commercial operations. Medivation’s and Anacor’s commercial operations are included in IH’s operating results in our condensed consolidated statements of income, commencing from the acquisition date of September 28, 2016 for Medivation and from the acquisition date of June 24, 2016 for Anacor. As a result, IH’s revenues for the third quarter and first nine months of 2016 include three business days of legacy Medivation operations and approximately three months of legacy Anacor operations, which were immaterial.

(b)	Lyrica revenues from all of Europe, Russia, Turkey, Israel and Central Asia countries are included in Lyrica EH. All other Lyrica revenues are included in Lyrica IH. Total Lyrica revenues represent the aggregate of worldwide revenues from Lyrica IH and Lyrica EH.

(c)	Viagra revenues from the U.S. and Canada are included in Viagra IH. All other Viagra revenues are included in Viagra EH. Total Viagra revenues represent the aggregate of worldwide revenues from Viagra IH and Viagra EH.

(d)	Includes Eliquis (2016 and 2015) and Rebif (2015 only).

(e)

The EH business, previously known as the Established Products business, encompasses Legacy Established Products, Sterile Injectable Pharmaceuticals, Peri-LOE Products, Infusion Systems, Biosimilars and Pfizer CentreOne and includes all legacy Hospira commercial operations. Hospira's commercial operations, including the legacy Hospira One-2-One sterile injectables contract manufacturing business, are included in EH’s operating results in our condensed consolidated statements of income, commencing from the acquisition date of September 3, 2015. Therefore, in accordance with our domestic and international reporting periods, our results of operations and EH's operating results for the third quarter and first nine months of 2015 reflect only one month of legacy Hospira U.S. operations but no financial results from legacy Hospira international operations. Also, effective as of the beginning of 2016, our entire contract manufacturing business, Pfizer CentreOne (previously known as Pfizer CentreSource or PCS), is part of EH. Pfizer CentreOne consists of (i) legacy Pfizer's contract manufacturing and active pharmaceutical ingredient sales operation, including our manufacturing and supply agreements with Zoetis; and (ii) legacy Hospira's One-2-One sterile injectables contract manufacturing operation. Prior to 2016, PCS was managed outside our operating segments and its revenues were reported as other business activities. We have reclassified prior period PCS revenues ($116 million in the third quarter of 2015 and $360 million in the first nine months of 2015) to conform to the current period presentation as part of EH.

(f)	Legacy Established Products include products that have lost patent protection (excluding Sterile Injectable Pharmaceuticals and Peri-LOE Products).

(g)	Prior period revenues for Medrol and Zithromax/Zmax may not agree to previously-disclosed revenues because revenues for those products are now split between the Legacy Established Products and the Sterile Injectable Pharmaceuticals categories.

(h)	Sterile Injectable Pharmaceuticals include generic injectables and proprietary specialty injectables (excluding Peri-LOE Products).

(i)	Peri-LOE Products include products that have recently lost or are anticipated to soon lose patent protection. These products primarily include Lyrica in certain developed Europe markets, Pristiq globally, Celebrex, Zyvox and Revatio in most developed markets, Vfend and Viagra in certain developed Europe markets and Japan, and Inspra in the EU.

(j)	Infusion Systems include Medication Management Systems products composed of infusion pumps and related software and services, as well as IV Infusion Products, including large volume IV solutions and their associated administration sets.

(k)	Biosimilars include Inflectra (biosimilar infliximab) in certain European markets, Nivestim (biosimilar filgrastim) in certain Asian markets and Retacrit (biosimilar epoetin zeta) in certain international markets.

(l)	Pfizer CentreOne (previously known as Pfizer CentreSource or PCS) includes (i) revenues from legacy Pfizer's contract manufacturing and active pharmaceutical ingredient sales operation, including revenues related to our manufacturing and supply agreements with Zoetis; and (ii) revenues from legacy Hospira’s One-2-One sterile injectables contract manufacturing operation.

(m)	Includes Eliquis direct sales markets.

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•	a $1.4 billion charge related to the write-down of HIS net assets to fair value less estimated costs to sell (see also the Notes to Condensed Consolidated Financial Statements––Note 2B. Acquisitions, Assets and Liabilities Held for Sale, Research and Development and Collaborative Arrangements, Equity-Method Investments and Cost-Method Investment: Assets and Liabilities Held for Sale);

•	higher cost of sales (up $866 million) (see also the “Costs and Expenses––Cost of Sales” section of this MD&A);

•	higher selling, informational and administrative expenses (up $289 million) (see also the “Costs and Expenses––Selling, Informational and Administrative Expenses (SI&A) Expenses” section of this MD&A); and

•	higher research and development expenses (up $159 million) (see also the “Costs and Expenses––Research and Development (R&D) Expenses” section of this MD&A),

•	lower asset impairments (down $501 million) (see also the Notes to Condensed Consolidated Financial Statements––Note 4. Other (Income)/Deductions––Net);

•	higher Other, net income (up $105 million) (see also the Notes to Condensed Consolidated Financial Statements––Note 4. Other (Income)/Deductions––Net); and

•	lower restructuring charges and certain acquisition-related costs (down $50 million) (see also the Notes to Condensed Consolidated Financial Statements––Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives).

•	higher cost of sales (up $2.9 billion) (see also the “Costs and Expenses––Cost of Sales” section of this MD&A);

•	a $1.4 billion charge related to the write-down of HIS net assets to fair value less estimated costs to sell (see also the Notes to Condensed Consolidated Financial Statements––Note 2B. Acquisitions, Assets and Liabilities Held for Sale, Research and Development and Collaborative Arrangements, Equity-Method Investments and Cost-Method Investment: Assets and Liabilities Held for Sale);

•	higher selling, informational and administrative expenses (up $654 million) (see also the “Costs and Expenses––Selling, Informational and Administrative Expenses (SI&A) Expenses” section of this MD&A);

•	higher asset impairments (up $422 million) (see also the Notes to Condensed Consolidated Financial Statements––Note 4. Other (Income)/Deductions––Net);

•	higher charges for legal matters (up $395 million) (see also the Notes to Condensed Consolidated Financial Statements––Note 4. Other (Income)/Deductions––Net);

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•	higher restructuring charges and certain acquisition-related costs (up $261 million) (see also the Notes to Condensed Consolidated Financial Statements––Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives); and

•	higher amortization of intangible assets (up $186 million) (see also the “Costs and Expenses––Amortization of Intangible Assets” section of this MD&A); and

•	lower net gains on asset disposals (down $149 million) (see also the Notes to Condensed Consolidated Financial Statements––Note 4. Other (Income)/Deductions––Net),

•	higher Other, net income (up $187 million) (see also the Notes to Condensed Consolidated Financial Statements––Note 4. Other (Income)/Deductions––Net); and

•	lower charges for business and legal entity alignment costs (down $44 million) (see also the Notes to Condensed Consolidated Financial Statements––Note 4. Other (Income)/Deductions––Net).

•	$143 million in the third quarter of 2016 and $120 million in the third quarter of 2015, and $302 million in the first nine months of 2016 and $276 million in the first nine months of 2015, recorded as a reduction to Revenues related to the Medicare “coverage gap” discount provision; and

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$95 million in the third quarter of 2016 and $81 million in the third quarter of 2015, and $219 million in the first nine months of 2016 and $170 million in the first nine months of 2015, recorded in Selling, informational and administrative expenses, related to the 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.

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We believe that patients, who are experiencing increases in co-pays and restrictions on access to medicines as payers seek to control costs, sometimes switch to generic products, delay treatments, skip doses or use less effective treatments. We are exposed to negative pricing pressure in various markets around the world. The U.S. has highly competitive insurance markets, and Europe, Japan, China, Canada, South Korea and a number of other international markets have government-mandated reductions in prices and access restrictions for certain biopharmaceutical products to control costs for the government-sponsored healthcare system, particularly under recent global economic pressures. Furthermore, some government agencies and third-party payers use health technology assessments in ways that, at times, lead to restricted access to and lower prices for new medicines.

•	We continue to monitor developments regarding government and government agency receivables in several European markets, including Greece, where economic conditions remain challenging and uncertain. For further information about our Accounts Receivable, see the “Analysis of Financial Condition, Liquidity and Capital Resources” section of this MD&A.

•	Significant portions of our revenues and earnings, as well as our substantial international net assets, are exposed to changes in foreign exchange rates. We seek to manage our foreign exchange risk in part through operational means, including managing

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In June 2016, the U.K. electorate voted to leave the EU. The U.K. government has not formally notified the European Council of their intention to leave the EU, and in November 2016, the High Court ruled that the government needed parliamentary approval to trigger Article 50 of the Lisbon Treaty, and begin negotiations. The U.K. government said it will appeal the decision and Britain’s Supreme Court is expected to consider the case in early December 2016. The U.K. Prime Minister said they still expect to begin the two-year negotiation process establishing the terms of the exit and outlining the future relationship between the U.K. and the EU at the end of March 2017. This process is expected to be highly complex, and, if needed, may be bilaterally extended. The end result of these negotiations may pose certain implications to our research, commercial and general business operations in the U.K. and the EU.

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Our entire contract manufacturing business, Pfizer CentreOne (previously known as Pfizer CentreSource or PCS), is part of EH. Pfizer CentreOne consists of (i) the revenues and expenses of legacy Pfizer's contract manufacturing and active pharmaceutical ingredient sales operation, including the revenues and expenses related to our manufacturing and supply agreements with Zoetis; and (ii) the revenues and expenses of legacy Hospira's One-2-One sterile injectables contract manufacturing operation, which has been included in EH since we acquired Hospira on September 3, 2015. Prior to 2016, PCS was managed outside our operating segments as part of PGS and reported as "Other Business Activities". We have reclassified prior period PCS operating results ($116 million of PCS revenues and $15 million of PCS earnings in the third quarter of 2015, and $360 million of PCS revenues and $66 million of PCS earnings in the first nine months of 2015) to conform to the current period presentation as part of EH.

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In connection with the formation of a new EH R&D organization, certain functions transferred from Pfizer’s WRD organization to the new EH R&D organization. The new R&D organization within EH expects to develop potential new sterile injectable drugs and therapeutic solutions, as well as biosimilars. We have reclassified approximately $68 million of costs in the third quarter of 2015 and $202 million of costs in the first nine months of 2015 from WRD to EH to conform to the current period presentation as part of EH.

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In connection with the formation of the GPD organization, a new unified center for late-stage development for our innovative products, which is generally responsible for the clinical development of assets that are in clinical trials for our WRD and Innovative portfolios, certain development-related functions transferred from IH to GPD. We have reclassified approximately $76 million of costs in the first quarter of 2016, approximately $77 million of costs in the third quarter of 2015 and approximately $223 million of costs in the first nine months of 2015 from IH to GPD to conform to the current period presentation as part of GPD.

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Agreement to Sell Hospira Infusion Systems Net Assets to ICU Medical, Inc.––On October 6, 2016, we announced that we entered into a definitive agreement under which ICU Medical will acquire all of Pfizer’s global infusion therapy net assets, HIS, for approximately $1 billion in cash and ICU Medical stock. HIS includes IV pumps, solutions and devices. Under the terms of the agreement, Pfizer will receive approximately $400 million in newly issued shares of ICU Medical common stock and $600 million in cash from ICU Medical, subject to customary adjustments for net working capital. Upon completion of the transaction, which the companies expect to occur in the first quarter of 2017, subject to customary closing conditions, including required regulatory approvals, Pfizer will own approximately 16.6% of ICU Medical. Pfizer has also agreed to certain restrictions on transfer of its ICU Medical shares for at least 18 months. At October 2, 2016, we determined that the carrying value of the HIS net assets exceeded their fair value less estimated costs to sell, resulting in a pre-tax impairment charge of $1.4 billion which is included in Other (income)/deductions––net (see Notes to Condensed Consolidated Financial Statements––Note 4. Other (Income)/Deductions––Net). The difference between the carrying value and fair value may change prior to closing as a result of several factors, including changes in the market price of the shares to be received from ICU Medical and changes in the carrying value of the HIS net assets prior to closing. For example, a 10% per share increase or decrease in ICU Medical’s stock price between October 6, 2016 and the final closing date would have a corresponding decrease or increase in the net realizable value impairment charge of $44 million. For assets and liabilities classified as held for sale as part of our agreement to divest HIS as of October 2, 2016, see Notes to Condensed Consolidated Financial Statements––Note 2B. Acquisitions, Assets and Liabilities Held for Sale, Research and Development and Collaborative Arrangements, Equity-Method Investments and Cost-Method Investment: Assets and Liabilities Held for Sale.

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Acquisition of Medivation, Inc.––On September 28, 2016 (the acquisition date), we acquired Medivation. For additional information, see the “Our Business” section of this MD&A. Medivation’s portfolio includes Xtandi (enzalutamide), an androgen receptor inhibitor that blocks multiple steps in the androgen receptor signaling pathway within the tumor cell. Xtandi is being developed and commercialized through a collaboration between Pfizer and Astellas. Astellas has exclusive commercialization rights for Xtandi outside the U.S. In addition, Medivation has two development-stage oncology assets in its pipeline: talazoparib, which is currently in a Phase 3 study for the treatment of BRCA-mutated breast cancer, and pidilizumab, an immuno-oncology asset being developed for diffuse large B-cell lymphoma and other hematologic malignancies. We expect this acquisition will accelerate our leadership in Oncology––a high priority area for our company.

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Agreement to Acquire AstraZeneca’s Anti-Infectives Business––On August 24, 2016, we announced that we entered into an agreement with AstraZeneca to acquire the development and commercialization rights to its small molecule anti-infectives business, primarily outside the U.S. The agreement includes the commercialization and development rights to the newly approved EU drug Zavicefta™ (ceftazidime-avibactam), the marketed agents Merrem™/Meronem™ (meropenem) and Zinforo™ (ceftaroline fosamil), and the clinical development assets ATM-AVI and CXL (ceftaroline fosamil-AVI). Under the terms of the agreement, Pfizer will make an upfront payment of $550 million to AstraZeneca upon the close of the transaction and a deferred payment of $175 million in January 2019. In addition, AstraZeneca is eligible to receive up to $250 million in milestone payments, up to $600 million in sales-related payments, as well as tiered royalties on sales of Zavicefta™ and ATM-AVI in certain markets. The transaction is expected to close in the fourth quarter of 2016, subject to customary closing conditions, including antitrust clearance in certain jurisdictions.

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Acquisition of Bamboo Therapeutics, Inc.––On August 1, 2016 (the acquisition date), we acquired all the remaining equity in Bamboo, a privately held biotechnology company, focused on developing gene therapies for the treatment of patients with certain rare diseases relating to neuromuscular conditions and those affecting the central nervous system, for $150 million, plus potential milestone payments of up to $495 million contingent upon the progression of key assets through development, regulatory approval and commercialization. We previously purchased a minority stake in Bamboo in the first quarter of 2016 for a payment of approximately $43 million. This acquisition provides us with several clinical and pre-clinical assets that complement our rare disease portfolio, an advanced recombinant AAV vector design and production technology, and a fully functional Phase I/II gene therapy manufacturing facility.

•	Acquisition of Anacor Pharmaceuticals, Inc.––On June 24, 2016 (the acquisition date), we completed the acquisition of Anacor. For additional information, see the “Our Business” section of this MD&A. Included within Anacor’s pipeline is

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Research and Development Arrangement with NovaQuest Co-Investment Fund II, L.P.––On November 1, 2016, we announced the discontinuation of the global clinical development program for bococizumab. Except for a refund to NovaQuest of development cost amounts prepaid by NovaQuest to the extent such amounts were not used for program expenses, no additional payments are expected to be received from or paid to NovaQuest under this agreement. In May 2016, our agreement with NovaQuest became effective, under which NovaQuest agreed to fund up to $250 million in development costs related to certain Phase III clinical trials of Pfizer’s bococizumab compound and Pfizer agreed to use commercially reasonable efforts to develop and obtain regulatory approvals for such compound. NovaQuest’s development funding was expected to cover up to 40% of the development costs and was to be received over five quarters during 2016 and 2017. As there was a substantive and genuine transfer of risk to NovaQuest, the development funding applicable to program expenses through the third quarter of 2016 has been recognized by us as an obligation to perform contractual services and therefore has been recognized as a reduction of Research and development expenses as incurred. The reduction to Research and development expenses for the third quarter of 2016 totaled $67.6 million and for the first nine months of 2016 totaled $136.9 million.

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Research and Development Arrangement with NovaQuest Co-Investment Fund V, L.P.––In April 2016, Pfizer entered into an agreement with NovaQuest under which NovaQuest will fund up to $200 million in development costs related to certain Phase III clinical trials of Pfizer’s rivipansel compound and Pfizer will use commercially reasonable efforts to develop and obtain regulatory approvals for such compound. Following potential regulatory approval, NovaQuest will be eligible to receive a combination of fixed milestone payments of up to approximately $267 million in total based on achievement of first commercial sale and certain levels of cumulative net sales as well as royalties on rivipansel net sales over approximately eight years. NovaQuest’s development funding is expected to cover up to 100% of the development costs and will be received over approximately twelve quarters from 2016 to 2019. As there is a substantive and genuine transfer of risk to NovaQuest, the development funding is recognized by us as an obligation to perform contractual services and therefore is a reduction of Research and development expenses as incurred. The reduction to Research and development expenses for the third quarter of 2016 totaled $14.5 million and for the first nine months of 2016 totaled $29.5 million. Fixed sales-based milestone payments will be recorded as intangible assets and amortized to Amortization of intangible assets over the estimated commercial life of the rivipansel product and royalties on net sales will be recorded as Cost of sales when incurred.

•	Terminated Agreement to Combine with Allergan plc––On April 6, 2016, we announced that the merger agreement between Pfizer and Allergan entered into on November 22, 2015 was terminated by mutual agreement of the companies. For additional information, see the “Our Business” section of this MD&A.

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Research and Development Arrangement with RPI Finance Trust––In January 2016, Pfizer entered into an agreement with RPI, a subsidiary of Royalty Pharma, under which RPI will fund up to $300 million in development costs related to certain Phase III clinical trials of Pfizer’s Ibrance (palbociclib) product primarily for adjuvant treatment of hormone receptor positive early breast cancer (the Indication). If successful and upon approval of Ibrance in the U.S. or certain major markets in the EU for the Indication based on the applicable clinical trials, RPI will be eligible to receive a combination of approval-based fixed milestone payments of up to $250 million dependent upon results of the clinical trials and royalties on certain Ibrance sales over approximately seven years. RPI’s development funding is expected to cover up to 100% of the costs primarily for the applicable clinical trials through 2021. As there is a substantive and genuine transfer of risk to RPI, the development funding is recognized by us as an obligation to perform contractual services and therefore is a reduction of Research and development expenses as incurred. The reduction to Research and development expenses for the third quarter of 2016 totaled $11.0 million and for the first nine months of 2016 totaled $32.7 million. Fixed milestone payments due upon approval will be recorded as intangible assets and amortized to Amortization of intangible assets over the estimated commercial life of the Ibrance product and sales-based royalties will be recorded as Cost of sales when incurred.

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Minority Interest in AM-Pharma B.V.––In April 2015, we acquired a minority equity interest in AM-Pharma, a privately-held Dutch biopharmaceutical company focused on the development of recAP for inflammatory diseases, and secured an exclusive option to acquire the remaining equity in the company. The option becomes exercisable upon delivery of the clinical trial report after completion of a Phase II trial of recAP in the treatment of Acute Kidney Injury related to sepsis, which is expected to read out in 2017. Under the terms of the agreement, we paid $87.5 million for both the exclusive option and the minority equity interest, which was recorded as a cost-method investment in Long-term investments, and we may make additional payments of up to $512.5 million upon exercise of the option and potential launch of any product that may result from this investment.

•	Collaboration with OPKO Health, Inc.––We entered into a collaborative agreement with OPKO, which closed in January 2015, to develop and commercialize OPKO’s long-acting hGH-CTP for the treatment of GHD in adults and children, as well

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Acquisition of Marketed Vaccines Business of Baxter International Inc.––On December 1, 2014 (which fell in the first fiscal quarter of 2015 for our international operations), we acquired Baxter’s portfolio of marketed vaccines for a final purchase price of $648 million. The portfolio that was acquired consists of NeisVac-C and FSME-IMMUN/TicoVac. NeisVac-C is a vaccine that helps protect against meningitis caused by group C meningococcal meningitis and FSME-IMMUN/TicoVac is a vaccine that helps protect against tick-borne encephalitis.

(a)	The 2016 financial guidance reflects the following:

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Pfizer does not provide guidance for GAAP Reported financial measures (other than Revenues) or a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP Reported financial measures on a forward-looking basis because it is unable to predict with reasonable certainty the ultimate outcome of pending litigation, unusual gains and losses, acquisition-related expenses and potential future asset impairments without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on GAAP Reported results for the guidance period.

•	Does not assume the completion of any business development transactions not completed as of October 2, 2016, including any one-time upfront payments associated with such transactions.

•	Exchange rates assumed are a blend of the actual exchange rates in effect through the third quarter of 2016 and the mid-October 2016 exchange rates for the remainder of the year.

•	Guidance for 2016 revenues reflects the anticipated negative impact of $1.8 billion due to recent and expected generic competition for certain products that have recently lost or are anticipated to soon lose patent protection.

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Our November 1, 2016 announced decision to discontinue development of bococizumab. As a result, 2016 financial guidance for Adjusted R&D expenses was negatively impacted by $0.3 billion and 2016 financial guidance for Adjusted diluted EPS was negatively impacted by $0.04. This represents the estimated net impact of expected close down costs of approximately $400 million for these activities less spending no longer required for the trials.

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Guidance for 2016 revenues also reflects the anticipated negative impact of $1.4 billion as a result of unfavorable changes in foreign exchange rates relative to the U.S. dollar compared to foreign exchange rates from 2015, including $0.8 billion due to the estimated significant negative currency impact related to Venezuela. The anticipated negative impact on adjusted diluted EPS resulting from unfavorable changes in foreign exchange rates compared to foreign exchange rates from 2015 is approximately $0.20, including $0.08 due to the estimated significant negative currency impact related to Venezuela.

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•	Guidance for adjusted diluted EPS assumes diluted weighted-average shares outstanding of approximately 6.2 billion shares.

(b)	For an understanding of Adjusted income and its components and Adjusted diluted EPS (all of which are non-GAAP financial measures), see the “Non-GAAP Financial Measure (Adjusted Income)” section of this MD&A.

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(a)	IH = the Innovative Health segment; and EH = the Essential Health segment. For additional information about each operating segment, see the “Our Strategy––Commercial Operations” section of this MD&A and Notes to Condensed Consolidated Financial Statements––Note 13A. Segment, Geographic and Other Revenue Information: Segment Information.

•	the inclusion of a full quarter of revenues from legacy Hospira global operations of $1.1 billion in the third quarter of 2016 compared to the inclusion of only one month of legacy Hospira U.S. operations in the third quarter of 2015, resulting in operational growth of $800 million in the third quarter of 2016; and

•	the continued growth from key brands including Ibrance, Xeljanz, Lyrica (IH) and Chantix/Champix, all primarily in the U.S., and Eliquis globally (collectively, up approximately $770 million in the third quarter of 2016),

•	the loss of exclusivity and associated biosimilar or generic (as applicable) competition for Enbrel, Zyvox and Lyrica (EH), primarily in most developed Europe markets (collectively, down approximately $220 million in the third quarter of 2016);

•	the year-end 2015 expiry of the collaboration agreement to co-promote Rebif in the U.S. (down approximately $120 million in the third quarter of 2016);

•	a 4% operational decline from the legacy Established Products portfolio, primarily due to a decline from certain developed markets (down by approximately $110 million in the third quarter of 2016); and

•

the Prevnar/Prevenar 13 franchise, primarily driven by an expected decline in revenues for the adult indication in the U.S. due to a high initial capture rate of the eligible population following its successful fourth-quarter 2014 launch, which resulted in a smaller remaining “catch up” opportunity compared to the prior-year quarter, partially offset by the impact of favorable timing of CDC purchases for the pediatric indication (down approximately $30 million in the third quarter of 2016).

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•	the inclusion of nine months of revenues from legacy Hospira global operations of $3.5 billion in the first nine months of 2016 compared to the inclusion of only one month of legacy Hospira U.S. operations in the first nine months of 2015, resulting in operational growth of $3.1 billion in the first nine months of 2016; and

•	the continued growth from key brands including Ibrance, Lyrica (IH), Xeljanz and Chantix/Champix and Consumer Healthcare, all primarily in the U.S., as well as Eliquis globally (collectively, up approximately $2.7 billion in the first nine months of 2016),

•	the loss of exclusivity and associated generic competition for Zyvox, primarily in the U.S. and certain developed Europe markets, Lyrica (EH) in most developed Europe markets and Celebrex in most developed markets, as well as biosimilar competition for Enbrel in most developed Europe markets (collectively, down approximately $730 million in the first nine months of 2016); and

•	the year-end 2015 expiry of the collaboration agreement to co-promote Rebif in the U.S. (down approximately $260 million in the first nine months of 2016).

•	in the U.S., revenues increased $1.0 billion, or 17%, in the third quarter of 2016, and increased $4.6 billion, or 30%, in the first nine months of 2016, compared to the same periods in 2015, reflecting, among other things:

◦

the inclusion of a full quarter and nine months of revenues from legacy Hospira U.S. operations of approximately $840 million in the third quarter of 2016, and $2.6 billion in the first nine months of 2016, as compared to only one month of revenues from legacy Hospira U.S. operations of $330 million in the third quarter and first nine months of 2015, resulting in operational growth of approximately $510 million and $2.3 billion in the third quarter and first nine months of 2016, respectively; and

◦	the continued strong performance of several key products including Ibrance, Eliquis, Xeljanz, Lyrica (IH), and Chantix (collectively, up approximately $650 million in the third quarter of 2016 and $2.2 billion in the first nine months of 2016),

◦	the year-end 2015 expiry of the collaboration agreement to co-promote Rebif in the U.S. (down approximately $120 million in the third quarter of 2016 and $260 million in the first nine months of 2016);

◦	the loss of exclusivity and associated generic competition for Zyvox (down approximately $10 million in the third quarter of 2016 and $180 million in the first nine months of 2016); and

◦

with respect to the third quarter of 2016, the expected decline in revenues for Prevnar 13 primarily driven by the adult indication in the U.S. due to a high initial capture rate of the eligible population following its successful fourth-quarter 2014 launch, which resulted in a smaller remaining “catch up” opportunity compared to the prior-year quarter (down approximately $40 million in the third quarter of 2016).

•

in our international markets, revenues decreased $8 million, or were relatively flat, in the third quarter of 2016, and decreased $176 million, or 1%, in the first nine months of 2016, compared to the same periods in 2015. Foreign exchange unfavorably impacted international revenues by approximately $223 million, or 3%, in the third quarter of 2016 and unfavorably impacted international revenues by approximately $1.3 billion, or 6% in the first nine months of 2016. Operationally, revenues increased $216 million, or 3%, in the third quarter of 2016 and increased $1.1 billion, or 5%, in the first nine months of 2016, compared to the same periods in 2015, reflecting, among other things:

◦	the inclusion of legacy Hospira international operations of approximately $290 million in the third quarter of 2016 and $850 million in the first nine months of 2016, compared to no financial results from legacy Hospira international operations in the third quarter and first nine months of 2015;

◦	the continued strong performance of Eliquis (up approximately $80 million in the third quarter of 2016 and $260 million in the first nine months of 2016); and

◦	the continued strong volume growth from certain other products in emerging markets, excluding the contributions from legacy Hospira and Eliquis and, for the first nine months of 2016, lower revenues from the Prevenar 13 pediatric indication (collectively, up approximately $150 million in the third quarter of 2016 and $460 million in the first nine months of 2016),

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◦	lower revenues primarily in most developed Europe markets for Enbrel, Zyvox and Lyrica (EH) as a result of the loss of exclusivity and associated biosimilar or generic (as applicable) competition (collectively, down approximately $200 million in the third quarter of 2016 and $470 million in the first nine months of 2016); and

◦	with respect to the first nine months of 2016, lower revenues for Prevenar 13, primarily for the pediatric indication, mostly in emerging markets, reflecting timing of purchases from Gavi, the Vaccine Alliance, and certain other markets, compared to the prior-year period (down approximately $60 million in the first nine months of 2016).

(a)	Rebates are product-specific and, therefore, for any given year are impacted by the mix of products sold.

(b)

Performance-based contract rebates include contract rebates with managed care customers within the U.S., including health maintenance organizations and PBMs, who receive rebates based on the achievement of contracted performance terms and claims under these contracts. Outside the U.S., performance-based contract rebates include rebates to wholesalers/distributors based on achievement of contracted performance for specific products or sales milestones.

(c)	Chargebacks primarily represent reimbursements to U.S. wholesalers for honoring contracted prices to third parties.

(d)	Sales allowances primarily represent price reductions that are contractual or legislatively mandated outside the U.S., discounts and distribution fees.

(e)

For the three months ended October 2, 2016, associated with the following segments: IH ($1.8 billion) and EH ($2.4 billion). For the three months ended September 27, 2015, associated with the following segments: IH ($1.6 billion); and EH ($2.3 billion). For the nine months ended October 2, 2016, associated with the following segments: IH ($5.1 billion) and EH ($7.2 billion). For the nine months ended September 27, 2015, associated with the following segments: IH ($4.2 billion) and EH ($6.5 billion).

•	an increase in chargebacks from EH products, primarily due to the inclusion of legacy Hospira sterile injectables in 2016, compared to the inclusion of only one month of legacy Hospira sterile injectables in 2015, and from certain IH products;

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•	an increase in performance-based contract rebates primarily due to sales to managed care customers in the U.S. and, for the first nine months of 2016, higher rebates in certain developed Europe markets due to competitive pressures post loss of exclusivity for certain products; and

•	an increase in Medicaid and related state program rebates, primarily as a result of updated estimates of sales related to these programs.

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(a)	As compared to the three and nine months ended September 27, 2015.

(b)

The IH business, previously known as the Innovative Products business, encompasses Internal Medicine, Vaccines, Oncology, Inflammation & Immunology, Rare Disease and Consumer Healthcare and includes all legacy Medivation and Anacor commercial operations. Medivation's and Anacor's commercial operations are included in IH's operating results in our consolidated statements of income, commencing from the acquisition date of September 28, 2016 for Medivation and from the acquisition date of June 24, 2016 for Anacor. As a result, IH's revenues for the third quarter and first nine months of 2016 include three business days of legacy Medivation operations and approximately three months of legacy Anacor operations, which were immaterial.

(c)	Lyrica revenues from all of Europe, Russia, Turkey, Israel and Central Asia countries are included in Lyrica EH. All other Lyrica revenues are included in Lyrica IH. Total Lyrica revenues represent the aggregate of worldwide revenues from Lyrica IH and Lyrica EH.

(d)	Viagra revenues from the U.S. and Canada are included in Viagra IH. All other Viagra revenues are included in Viagra EH. Total Viagra revenues represent the aggregate of worldwide revenues from Viagra IH and Viagra EH.

(e)	Includes Eliquis (2016 and 2015) and Rebif (2015 only).

(f)

The EH business, previously known as the Established Products business, encompasses Legacy Established Products, Sterile Injectable Pharmaceuticals, Peri-LOE Products, Infusion Systems, Biosimilars and Pfizer CentreOne and includes all legacy Hospira commercial operations. For additional information about changes impacting EH, see Notes to Condensed Consolidated Financial Statements––Note 13A. Segment, Geographic and Other Revenue Information: Segment Information.

(g)	Legacy Established Products include products that have lost patent protection (excluding Sterile Injectable Pharmaceuticals and Peri-LOE Products).

(h)	Prior period revenues for Medrol and Zithromax/Zmax may not agree to previously-disclosed revenues because revenues for those products are now split between the Legacy Established Products and the Sterile Injectable Pharmaceuticals categories.

(i)	Sterile Injectable Pharmaceuticals include generic injectables and proprietary specialty injectables (excluding Peri-LOE Products).

(j)	Peri-LOE Products include products that have recently lost or are anticipated to soon lose patent protection. These products primarily include Lyrica in certain developed Europe markets, Pristiq globally, Celebrex, Zyvox and Revatio in most developed markets, Vfend and Viagra in certain developed Europe markets and Japan, and Inspra in the EU.

(k)	Infusion Systems include Medication Management Systems products composed of infusion pumps and related software and services, as well as IV Infusion Products, including large volume IV solutions and their associated administration sets.

(l)	Biosimilars include Inflectra (biosimilar infliximab) in certain European markets, Nivestim (biosimilar filgrastim) in certain Asian markets and Retacrit (biosimilar epoetin zeta) in certain international markets.

(m)

Pfizer CentreOne (previously known as Pfizer CentreSource or PCS) includes (i) revenues from legacy Pfizer's contract manufacturing and active pharmaceutical ingredient sales operation, including revenues related to our manufacturing and supply agreements with Zoetis; and (ii) revenues from legacy Hospira’s One-2-One sterile injectables contract manufacturing operation. For additional information, see Notes to Condensed Consolidated Financial Statements––Note 13A. Segment, Geographic and Other Revenue Information: Segment Information.

(n)	Includes Eliquis direct sales markets.

*	Calculation not meaningful.

•

Prevnar/Prevenar 13 (IH) is our pneumococcal conjugate vaccine for the prevention of pneumococcal disease. Overall, worldwide revenues for Prevnar/Prevenar 13 decreased 2% operationally in the third quarter of 2016, and were relatively flat operationally in the first nine months of 2016, compared to the same periods in 2015. Foreign exchange had an unfavorable impact on worldwide revenues of 1% in both the third quarter, and in the first nine months of 2016, compared to the same periods in 2015.

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•

Lyrica (EH (revenues from all of Europe, Russia, Turkey, Israel and Central Asia)/IH (revenues from all other geographies)) is indicated in the U.S. for three neuropathic pain conditions, fibromyalgia and adjunctive therapy for adult patients with partial onset seizures. In certain markets outside the U.S., indications include neuropathic pain (peripheral and central), fibromyalgia, adjunctive treatment of epilepsy and generalized anxiety disorder. Worldwide revenues for Lyrica increased 1% operationally in the third quarter of 2016, and 4% operationally in the first nine months of 2016, compared to the same periods in 2015. Foreign exchange had a de minimis impact on worldwide revenues in the third quarter of 2016, and had an unfavorable impact on worldwide revenues of 1% in the first nine months of 2016, compared to the same periods in 2015.

•

Enbrel (IH, outside the U.S. and Canada), indicated for the treatment of moderate-to-severe rheumatoid arthritis, polyarticular juvenile rheumatoid arthritis, psoriatic arthritis, plaque psoriasis, ankylosing spondylitis and nonradiographic axial spondyloarthritis, recorded a 12% operational decrease in worldwide revenues, excluding the U.S. and Canada, in the third quarter of 2016, compared to the same period in 2015, primarily due to the impact of the entrance of the first etanercept biosimilar, as well as mandated price reductions across certain markets in Europe. Worldwide revenues, excluding the U.S. and Canada, decreased 2% operationally in the first nine months of 2016, compared to the same period in 2015, primarily due to the impact of the entrance of the first etanercept biosimilar, as well as mandated price reductions across certain markets in Europe, partially offset by stronger demand and price increases in emerging markets, specifically in Latin America. Foreign exchange had an unfavorable impact on revenues of 5% in the third quarter of 2016, and 7% in the first nine months of 2016, compared to the same periods in 2015.

•

Ibrance (IH) was launched in the U.S. in February 2015, and subsequently in certain international markets as a treatment for a certain form of advanced breast cancer. Ibrance recorded worldwide revenues of $550 million in the third quarter of 2016, and $1.5 billion in the first nine months of 2016, nearly all of which were recorded in the U.S. The significant revenues relate to the strength of our scientific/clinical data, continued positive patient experience as well as Ibrance being the only registered product in

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•

Lipitor (EH) is indicated for the treatment of elevated LDL-cholesterol levels in the blood. Lipitor faces generic competition in all major developed markets. Branded Lipitor recorded worldwide revenues of $422 million, or relatively flat operationally in the third quarter of 2016, and $1.3 billion in the first nine months of 2016, or relatively flat operationally, compared to the same periods in 2015. Foreign exchange had an unfavorable impact on worldwide revenues of 7% in the third quarter of 2016, and 8% in the first nine months of 2016, compared to the same periods in 2015.

•

Viagra (IH (U.S. and Canada revenues)/EH (all other revenues excluding U.S. and Canada)) is indicated for the treatment of erectile dysfunction. Viagra worldwide revenues decreased 9% operationally in the third quarter of 2016, and 5% operationally in the first nine months of 2016, compared to the same periods in 2015, primarily due to new access constraints and increased rebates. Foreign exchange had an unfavorable impact on worldwide revenues of 1% in the third quarter of 2016, and 2% in the first nine months of 2016, compared to the same periods in 2015. Revenues in the U.S. decreased 11% in the third quarter of 2016, and 6% in the first nine months of 2016, compared to the same periods in 2015, primarily reflecting new access constraints, lower patient demand and higher rebates, partially offset by price increases, higher sales to the Department of Veterans Affairs and the Department of Defense and shifts in wholesaler buying patterns. International revenues decreased 3% operationally both in the third quarter and in the first nine months of 2016, compared to the same periods in 2015, primarily from lower volumes in China and in developed international markets. Foreign exchange had an unfavorable impact on international revenues of 5% in the third quarter of 2016, and 7% in the first nine months of 2016, compared to the same periods in 2015.

•

Sutent (IH) is indicated for the treatment of advanced renal cell carcinoma, including mRCC; GIST after disease progression on, or intolerance to, imatinib mesylate; and advanced pancreatic neuroendocrine tumor. Sutent worldwide revenues decreased 6% operationally in the third quarter of 2016, compared to the same period in 2015, primarily due to competitive pressures, cost containment measures and timing of shipments to certain emerging markets. Sutent worldwide revenues increased 5% operationally in the first nine months of 2016, compared to the same period in 2015, primarily due to price increases in the U.S., as well as strong demand across geographies in the first half of the year. Foreign exchange had an unfavorable impact on worldwide revenues of 1% in the third quarter of 2016, and 4% in the first nine months of 2016, compared to the same periods in 2015.

•

Our Premarin family of products (EH) helps women address moderate-to-severe menopausal symptoms. Premarin worldwide revenues decreased 7% operationally in the third quarter of 2016, and were relatively flat operationally in the first nine months of 2016, compared to the same periods in 2015. Revenues in the U.S. decreased 7% in the third quarter of 2016, compared to the same period in 2015, primarily driven by prescription volume declines and lower market growth, partially offset by favorable pricing. Revenues in the U.S. increased 1% in the first nine months of 2016 compared to the same period in 2015, primarily driven by price increases, partially offset by prescription volume declines and lower market growth.

•

Norvasc (EH) is indicated for the treatment of hypertension. Norvasc worldwide revenues increased 1% operationally in the third quarter of 2016, and were relatively flat operationally in the first nine months of 2016, compared to the same periods in 2015. Results for the third quarter of 2016 were primarily impacted by strong demand in China, partially offset by generic erosion in Japan and volume declines in certain emerging markets, primarily in the Middle East. Results for the first nine months of 2016 were primarily impacted by generic erosion in Japan, offset by strong demand in China. Foreign exchange had an unfavorable impact on worldwide revenues of 2% in the third quarter of 2016, and 4% in the first nine months of 2016, compared to the same periods in 2015.

•

Xeljanz (IH) is approved for use as a second-line therapy for the treatment of adult patients with moderate to severe active rheumatoid arthritis who have had an inadequate response or intolerance to methotrexate and is available in 50 markets including the U.S., Japan, Australia, Turkey, Canada, Switzerland and Brazil. Xeljanz worldwide revenues increased 86% operationally in the third quarter of 2016, and 87% operationally in the first nine months of 2016, compared to the same periods in 2015. In the U.S., Xeljanz revenues increased 79% in both the third quarter and in the first nine months of 2016, compared to the same periods in 2015, driven by increased adoption among rheumatologists and growing awareness among patients as well as price increases.

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•

Chantix/Champix (IH) is approved as an aid to smoking-cessation treatment in adults 18 years of age and older in multiple markets worldwide. Worldwide revenues increased 24% operationally in the third quarter of 2016, and 30% operationally in the first nine months of 2016, compared to the same periods in 2015. Foreign exchange had a de minimis impact on worldwide revenues in the third quarter of 2016, and an unfavorable impact on worldwide revenues of 2% in the first nine months of 2016, compared to the same periods in 2015.

•

Celebrex (EH) is indicated for the treatment of the signs and symptoms of osteoarthritis and rheumatoid arthritis worldwide and for the management of acute pain in adults in the U.S., Japan and certain other markets. Celebrex recorded an 8% operational decrease in worldwide revenues in the third quarter of 2016, and an 11% operational decrease in worldwide revenues in the first nine months of 2016, compared to the same periods in 2015, primarily driven by the loss of exclusivity and associated generic competition in the U.S. and most developed international markets, partially offset by growth in China and other emerging markets. Foreign exchange had a de minimis impact on worldwide revenues in the third quarter of 2016, and an unfavorable impact on worldwide revenues of 3% in the first nine months of 2016, compared to the same periods in 2015.

•

Pristiq (EH) is indicated for the treatment of major depressive disorder in the U.S. and in various other countries. Pristiq has also been indicated for treatment of moderate-to-severe vasomotor symptoms associated with menopause in certain international markets. Worldwide revenues for Pristiq decreased 5% operationally in the third quarter of 2016, compared to the same period in 2015, primarily due to lower U.S. volumes partially offset by favorable pricing. Worldwide revenues for Pristiq increased 7% operationally in the first nine months of 2016, compared to the same period in 2015, primarily due to growth in the U.S. driven by favorable pricing. Foreign exchange had an unfavorable impact on worldwide revenues of 1% in the third quarter of 2016, and 2% in the first nine months of 2016, compared to the same periods in 2015.

•

BeneFIX and ReFacto AF/Xyntha (IH) are recombinant hemophilia products that assist patients with their lifelong hemophilia bleeding disorders. BeneFIX worldwide revenues decreased 9% operationally in the third quarter of 2016, and 1% operationally in the first nine months of 2016, compared to the same periods in 2015, primarily as a result of erosion of market share in the U.S. and certain Middle East and European countries due to the launch of new extended half-life treatment options. Foreign exchange had an unfavorable impact on worldwide revenues of 1% in the third quarter of 2016 and 2% in the first nine months of 2016, compared to the same periods in 2015.

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•

Xalkori (IH) is indicated for the treatment of patients with locally advanced or metastatic NSCLC that is ALK-positive or ROS1-positive. Xalkori worldwide revenues increased 15% operationally in the third quarter of 2016, and 20% operationally in the first nine months of 2016, compared to the same periods in 2015, as a result of a steady increase in diagnostic rates for the ALK gene mutation across key markets, which has led to more patients being treated, and price increases in the U.S. Foreign exchange had a de minimis impact on worldwide revenues in the third quarter of 2016, and an unfavorable impact on worldwide revenues of 2% in the first nine months of 2016, compared to the same periods in 2015.

•

Zyvox (EH) is used to treat serious Gram-positive pathogens, including methicillin-resistant staphylococcus-aureus. Zyvox worldwide revenues decreased 41% operationally in the third quarter of 2016, and 48% operationally in the first nine months of 2016, compared to the same periods in 2015, due to generic competition in the U.S. and developed international markets and corresponding pricing pressures. Zyvox revenues in emerging markets increased 13% operationally in the third quarter of 2016, compared to the same period in 2015, primarily driven by growth in China and certain emerging markets. Foreign exchange had an unfavorable impact on worldwide revenues of 3% in the third quarter of 2016, and 4% in the first nine months of 2016, compared to the same periods in 2015.

•

Inlyta (IH) is indicated for the treatment of patients with advanced RCC after failure of a prior systemic treatment. Worldwide revenues decreased 11% operationally in the third quarter of 2016, and 1% operationally in the first nine months of 2016, compared to the same periods in 2015, primarily due to increased competition due to new entrants in the second line market primarily in the U.S., offsetting the growth in certain emerging markets, particularly in China, following the launch in the third quarter of 2015, as well as Argentina. Foreign exchange had a 1% favorable impact on worldwide revenues in the third quarter of 2016, and a 1% unfavorable impact on worldwide revenues in the first nine months of 2016, compared to the same periods in 2015.

•	Alliance revenues (IH/EH) increased 18% operationally in the third quarter of 2016, and 31% operationally in the first nine months of 2016, compared to the same periods in 2015, mainly due to:

◦	an increase in Eliquis alliance revenues due to increased market share,

◦	the year-end 2015 expiry of the collaboration agreement to co-promote Rebif in the U.S., which resulted in a decrease of approximately $120 million in the third quarter of 2016, and approximately $260 million in the first nine months of 2016, compared to the same periods in 2015.

•

Eliquis (apixaban) (IH) is being jointly developed and commercialized by Pfizer and BMS. The two companies share commercialization expenses and profit/losses equally on a global basis. In April 2015, we signed an agreement with BMS to transfer full commercialization rights in certain smaller markets to us, beginning in the third quarter of 2015. BMS supplies the product to us at cost plus a percentage of the net sales to end-customers in these markets. Eliquis is part of the NOAC market; the agents in this class were developed as alternative treatment options to warfarin in appropriate patients. Eliquis (apixaban) is approved for multiple indications in major markets around the world:

◦	to reduce the risk of stroke and systemic embolism in patients with nonvalvular atrial fibrillation;

◦	for the treatment of DVT and PE, and for the reduction in the risk of recurrent DVT and PE following initial therapy; and

◦	for the prophylaxis of DVT, which may lead to PE, in patients who have undergone hip or knee replacement surgery.

•

Xtandi (enzalutamide) (IH) is being developed and commercialized through a collaboration between Pfizer and Astellas. The two companies share equally in the gross profits (losses) related to U.S. net sales of Xtandi. Subject to certain exceptions, Pfizer and Astellas also share equally all Xtandi commercialization costs attributable to the U.S. market. Pfizer and Astellas also share certain development and other collaboration expenses and Pfizer receives tiered royalties as a percentage of international Xtandi net sales. Xtandi is approved for the following indications:

◦	treatment of patients with metastatic castration-resistant prostate cancer (mCRPC) in the U.S., Europe and many other countries worldwide; and

◦	treatment of patients with castration-resistant prostate cancer (CRPC) in Japan.

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*	The dates set forth in this column are the dates on which the FDA accepted our submissions.

(a)

Epogen® is a registered U.S. trademark of Amgen Inc.; Procrit® is a registered U.S. trademark of Johnson & Johnson. In October 2015, we received a “complete response” letter from the FDA with respect to our biologics license application for Retacrit, our proposed biosimilar to epoetin alfa, which was submitted for all indications of the reference product. We are working diligently to address the content of the letter.

(\b)

In May 2012, the FDA’s Peripheral and Central Nervous System Drugs Advisory Committee voted that the tafamidis meglumine data provide substantial evidence of efficacy for a surrogate endpoint that is reasonably likely to predict a clinical benefit. In June 2012, the FDA issued a “complete response” letter with respect to the tafamidis NDA. The FDA has requested the completion of a second efficacy study, and also has asked for additional information on the data within the current tafamidis NDA. Pfizer initiated study B3461028 in December 2013, a global Phase 3 study to support a potential new indication in transthyretin cardiomypathy, which includes transthyretin familial amyloid cardiomyopathy (TTR-FAC) and wild-type cardiomyopathy (WT-CM). We continue to work with the FDA to identify next steps.

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*	For applications in the EU, the dates set forth in this column are the dates on which the EMA validated our submissions.

(a)	This indication for Eliquis (apixaban) was developed and is being commercialized in collaboration with BMS.

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(a)

Remicade® is a registered trademark of Janssen Biotech, Inc. In February 2016, we divested the rights for development and commercialization of PF-06438179, a potential biosimilar to Remicade® (infliximab) in the 28 countries that form the EEA to Sandoz, which was a condition to the European Commission’s approval of the Hospira transaction. We retain commercialization and manufacturing rights to PF-06438179 in all countries outside of the EEA.

(b)	Herceptin® is a registered trademark of Genentech, Inc.

(c)	Rituxan® is a registered trademark of Biogen MA Inc.

(d)	Avastin® is a registered trademark of Genentech, Inc.

(e)	Humira® is a registered trademark of AbbVie Biotechnology Ltd.

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•	the inclusion of legacy Hospira global operations in 2016, compared to the inclusion of only one month of legacy Hospira U.S. operations in the third quarter and first nine months of 2015; and

•	the unfavorable impact of foreign exchange of 9% in the third quarter of 2016 and 6% in the first nine months of 2016.

•	an unfavorable change in product mix due to (i) the inclusion of legacy Hospira global operations in 2016, compared to the inclusion of only one month of legacy Hospira U.S. operations in the third quarter of 2015, with products that carry a higher cost; and (ii) the impact of losses of exclusivity on products which formerly had a higher gross margin;

•	an increase in royalty expense; and

•	the unfavorable impact of foreign exchange,

•	a favorable change in product mix related to legacy Pfizer products, excluding losses of exclusivity.

•

an unfavorable change in product mix due to (i) the inclusion of legacy Hospira global operations in 2016, compared to the inclusion of only one month of legacy Hospira U.S. operations in the first nine months of 2015,with products that carry a higher cost, as well as the impact of acquired Hospira inventory which is measured at fair value on the acquisition date and amortized over the turn of the related inventory; and (ii) the impact of losses of exclusivity on products which formerly had a higher gross margin; and

•	the unfavorable impact of foreign exchange,

•	a favorable change in product mix related to legacy Pfizer products, excluding losses of exclusivity.

•	increased investments to support certain recently launched products and other in-line biopharmaceutical products; and

•	the inclusion of legacy Hospira global operations in 2016, compared to the inclusion of only one month of legacy Hospira U.S. operations in the third quarter of 2015,

•	the favorable impact of foreign exchange of 2% in the third quarter of 2016; and

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•	lower advertising, promotional and field force expenses, reflecting the benefits of cost-reduction and productivity initiatives.

•	an increase in the allowance for doubtful trade accounts receivable, resulting from unfavorable developments with a distributor;

•	the inclusion of legacy Hospira global operations in 2016, compared to the inclusion of only one month of legacy Hospira U.S. operations in the first nine months of 2015; and

•	increased investments to support certain recently launched products and other in-line biopharmaceutical products,

•	the favorable impact of foreign exchange of 3% in the first nine months of 2016; and

•	lower field force, advertising and promotional expenses, reflecting the benefits of cost-reduction and productivity initiatives.

•	increased costs associated with our oncology programs, primarily our avelumab alliance with Merck KGaA; and

•	the inclusion of legacy Hospira global operations in 2016, compared to the inclusion of only one month of legacy Hospira U.S. operations in the third quarter of 2015, and increased investment in legacy Hospira biosimilar and sterile injectable development programs,

•

development funding of $93 million under which we had an obligation to perform contractual services related to certain clinical trials of bococizumab, Ibrance and rivipansel (see Notes to Condensed Consolidated Financial Statements––Note 2C. Acquisitions, Assets and Liabilities Held for Sale, Research and Development and Collaborative Arrangements, Equity-Method Investments and Cost-Method Investment: Research and Development and Collaborative Arrangements).

•	the non-recurrence of the $295 million upfront payment to OPKO in the first quarter of 2015 associated with a worldwide development and commercialization agreement; and

•

development funding of $199 million under which we had an obligation to perform contractual services related to certain clinical trials of bococizumab, Ibrance and rivipansel (see Notes to Condensed Consolidated Financial Statements––Note 2C. Acquisitions, Assets and Liabilities Held for Sale, Research and Development and Collaborative Arrangements, Equity-Method Investments and Cost-Method Investment: Research and Development and Collaborative Arrangements),

•	the inclusion of legacy Hospira global operations in 2016, compared to the inclusion of only one month of legacy Hospira U.S. operations in the third quarter of 2015, and increased investment in legacy Hospira biosimilar and sterile injectable development programs;

•	increased costs associated with our oncology programs, primarily our avelumab alliance with Merck KGaA; and

•	increased investments in certain late-stage pipeline programs, including bococizumab for which we announced the discontinuation of our global clinical development program in November 2016.

•	Research Units within our WRD organization continue to be generally responsible for research assets for our IH business (assets that have not yet achieved proof-of-concept). Our Research Units are organized in a variety of ways (by therapeutic area or combinations of therapeutic areas, by discipline, by location, etc.) to enhance flexibility, cohesiveness and focus.

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•	We created an R&D organization within the EH business, which supports the large base of EH products and is expected to develop potential new sterile injectable drugs and therapeutic solutions, as well as biosimilars.

•	We formed the GPD organization, which is generally responsible for the clinical development of assets that are in clinical trials for our WRD and Innovative portfolios. GPD also provides technical support and other services to Pfizer R&D projects.

•

Our science-based and other platform-services organizations, where a significant portion of our R&D spending occurs, provide technical expertise and other services to the various R&D projects, and are organized into science-based functions (which are part of our WRD organization), such as Pharmaceutical Sciences, Medicinal Chemistry, Regulatory and Drug Safety, and non-science-based functions, such as Facilities, Business Technology and Finance. As a result, within each of these functions, we are able to migrate resources among projects, candidates and/or targets in any therapeutic area and in most phases of development, allowing us to react quickly in response to evolving needs.

(a)	Comprises Restructuring charges and certain acquisition-related costs as well as costs associated with our cost-reduction/productivity initiatives included in Cost of sales, Research and development expenses and/or Selling, informational and administrative expenses, as appropriate.

*	Calculation not meaningful.

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*	Calculation not meaningful.

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•	senior management receives a monthly analysis of our operating results that is prepared on an Adjusted income and Adjusted diluted earnings per share basis;

•	our annual budgets are prepared on an Adjusted income and Adjusted diluted earnings per share basis; and

•	senior management’s annual compensation is derived, in part, using Adjusted income and Adjusted diluted earnings per share measures. See the “Adjusted Income––General Description of Adjusted Income Measure” section of our 2015 Financial Report for additional information.

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(a)	For details of adjustments, see “Details of Income Statement Items Included in GAAP Reported but Excluded from Non-GAAP Adjusted Income” below.

(b)

The effective tax rate on Non-GAAP Adjusted income was 22.7% in the third quarter of 2016, compared with 25.8% in the third quarter of 2015. This decline was primarily due to a favorable change in the jurisdictional mix of earnings as a result of operating fluctuations in the normal course of business, as well as an increase in tax benefits associated with the U.S. R&D tax credit, which was not in effect in the prior year quarter but was permanently extended on December 18, 2015, partially offset by a decrease in tax benefits associated with the resolution of certain tax positions pertaining to prior years primarily with various foreign tax authorities, and the expiration of certain statutes of limitations. The effective tax rate on Non-GAAP Adjusted income was 23.3% in the first nine months of 2016, compared with 25.3% in the first nine months of 2015. This decline was primarily due to a favorable change in the jurisdictional mix of earnings as a result of operating fluctuations in the normal course of business, as well as an increase in tax benefits associated with the U.S. R&D tax credit, which was not in effect in the first nine months of the prior year but was permanently extended on December 18, 2015, partially offset by a decrease in tax benefits associated with the resolution of certain tax positions pertaining to prior years primarily with various foreign tax authorities, and the expiration of certain statutes of limitations.

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(a)	Included primarily in Amortization of intangible assets.

(b)	Included in Provision for taxes on income. Income taxes includes the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction’s applicable tax rate.

(c)

Included in Restructuring charges and certain acquisition-related costs (see Notes to Condensed Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives). Restructuring charges include employee termination costs, asset impairments and other exit costs associated with business combinations. Transaction costs primarily represent external costs for banking, legal, accounting and other similar services. Integration costs represent external, incremental costs directly related to integrating acquired businesses, and primarily include expenditures for consulting and the integration of systems and processes.

(d)	Included in Cost of sales. Represents the impact of changes in estimated useful lives of assets involved in restructuring actions related to acquisitions.

(e)

Included in Provision for taxes on income. Income taxes includes the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction’s applicable tax rate. The nine months ended October 2, 2016 were unfavorably impacted by the remeasurement of certain deferred tax liabilities resulting from plant network restructuring activities.

(f)	Included in Discontinued operations––net of tax. For the three and nine months ended September 27, 2015, represents post-close adjustments.

(g)	Amounts relate to our cost-reduction/productivity initiatives not related to acquisitions. Included in Restructuring charges and certain acquisition-related costs (see Notes to Condensed Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives).

(h)	Amounts relate to our cost-reduction/productivity initiatives not related to acquisitions (see Notes to Condensed Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives).

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(i)	Included in Other (income)/deductions—net (see the “Other (Income)/Deductions—Net” section of this MD&A and Notes to Condensed Consolidated Financial Statements—Note 4. Other (Income)/Deductions—Net).

(j)	Included in Other (income)/deductions––net. Represents expenses for changes to our infrastructure to align our commercial operations, including costs to internally separate our businesses into distinct legal entities as well as to streamline our intercompany supply operations to better support each business.

(k)

In the third quarter of 2016, included in Cost of sales ($4 million) and Other (income)/deductions––net ($13 million). For the third quarter of 2015, included in Cost of sales ($21 million income), Selling, informational and administrative expenses ($22 million income), Research and development expenses ($4 million income) and Other (income)/deductions––net ($84 million). For the first nine months of 2016, included in Cost of sales ($29 million income), Selling, informational and administrative expenses ($3 million), Research and development expenses ($2 million) and Other (income)/deductions––net ($213 million). For the first nine months of 2015, included in Cost of sales ($21 million income), Selling, informational and administrative expenses ($19 million income), Research and development expenses ($4 million income) and Other (income)/deductions––net ($161 million).

(l)

Included in Provision for taxes on income. Income taxes includes the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction’s applicable tax rate. The third quarter of 2016 was unfavorably impacted by the tax effects of an impairment charge related to the write-down of the HIS net assets to fair value less estimated costs to sell, mainly related to goodwill, which is not deductible for tax purposes, and the jurisdictional mix of intangible assets. The first nine months of 2016 were favorably impacted by benefits related to the final resolution of an agreement in principle reached in February 2016 and finalized in April 2016 to resolve certain claims related to Protonix, which resulted in the receipt of information that raised our assessment of the likelihood of prevailing on the technical merits of our tax position, as well as benefits associated with our Venezuela operations, partially offset by the unfavorable tax effects of an impairment charge related to the write-down of the HIS net assets to fair value less estimated costs to sell, mainly related to goodwill, which is not deductible for tax purposes, and the jurisdictional mix of intangible assets.

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•

Our entire contract manufacturing business, Pfizer CentreOne (previously known as Pfizer CentreSource or PCS), is part of EH. Pfizer CentreOne consists of (i) the revenues and expenses of legacy Pfizer's contract manufacturing and active pharmaceutical ingredient sales operation, including the revenues and expenses related to our manufacturing and supply agreements with Zoetis; and (ii) the revenues and expenses of legacy Hospira's One-2-One sterile injectables contract manufacturing operation, which has been included in EH since we acquired Hospira on September 3, 2015. Prior to 2016, PCS was managed outside our operating segments as part of PGS and reported as "Other Business Activities". We have reclassified prior period PCS operating results ($116 million of PCS revenues and $15 million of PCS earnings in the third quarter of 2015, and $360 million of PCS revenues and $66 million of PCS earnings in the first nine months of 2015) to conform to the current period presentation as part of EH.

•

In connection with the formation of a new EH R&D organization, certain functions transferred from Pfizer’s WRD organization to the new EH R&D organization. The new R&D organization within EH expects to develop potential new sterile injectable drugs and therapeutic solutions, as well as biosimilars. We have reclassified approximately $68 million of costs in the third quarter of 2015 and $202 million of costs in the first nine months of 2015 from WRD to EH to conform to the current period presentation as part of EH.

•

In connection with the formation of the GPD organization, a new unified center for late-stage development for our innovative products, which is generally responsible for the clinical development of assets that are in clinical trials for our WRD and Innovative portfolios, certain development-related functions transferred from IH to GPD. We have reclassified approximately $76 million of costs in the first quarter of 2016, approximately $77 million of costs in the third quarter of 2015 and approximately $223 million of costs in the first nine months of 2015 from IH to GPD to conform to the current period presentation as part of GPD.

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(a)

Amounts represent the revenues and costs managed by each of our operating segments. The expenses generally include only those costs directly attributable to the operating segment. On September 3, 2015, we acquired Hospira. Commencing from the acquisition date, our condensed consolidated statement of income includes the operating results of Hospira. As a result, legacy Hospira commercial operations, including the legacy Hospira One-2-One contract manufacturing business, are included in EH’s operating results in our condensed consolidated statements of income for the third quarter and first nine months of 2016. In accordance with our domestic and international reporting periods, our consolidated statements of income for the third quarter and first nine months of 2015 reflect only one month of legacy Hospira U.S. operations but no financial results from legacy Hospira international operations. Additionally, Medivation’s and Anacor's commercial operations are included in IH's operating results in our consolidated statements of income, commencing from the acquisition date of September 28, 2016 for Medivation and from the acquisition date of June 24, 2016 for Anacor. As a result, IH's operating results for the third quarter and first nine months of 2016 include three business days of legacy Medivation operations and approximately three months of legacy Anacor operations, which were all immaterial. See Notes to Condensed Consolidated Financial Statements––Note 2A. Acquisitions, Assets and Liabilities Held for Sale, Research and Development and Collaborative Arrangements, Equity-Method Investments and Cost-Method Investment: Acquisitions for additional information.

(b)	Other comprises the revenues and costs included in our Adjusted income components (see footnote (c) below) that are managed outside of our two operating segments and includes the following:

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(i)

WRD—the research and development expenses managed by our WRD organization, which is generally responsible for research projects for our IH business until proof-of-concept is achieved and then for transitioning those projects to the IH segment via the newly formed GPD organization for possible clinical and commercial development. R&D spending may include upfront and milestone payments for intellectual property rights. The WRD organization also has responsibility for certain science-based and other platform-services organizations, which provide technical expertise and other services to the various R&D projects, including EH R&D projects. WRD is also responsible for facilitating all regulatory submissions and interactions with regulatory agencies, including all safety-event

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(ii)

GPD––the costs associated with our newly formed GPD organization, which is generally responsible for the clinical development of assets that are in clinical trials for our WRD and Innovative portfolios. GPD also provides technical support and other services to Pfizer R&D projects. In connection with the formation of the GPD organization, certain development-related functions transferred from WRD and IH to GPD. We have reclassified costs of approximately $78 million from WRD and $76 million from IH in the first quarter of 2016, approximately $86 million from WRD and $77 million from IH in the third quarter of 2015 and approximately $244 million from WRD and $223 million from IH in the first nine months of 2015 to GPD to conform to the current period presentation as part of GPD.

(iii)	Medical—the costs associated with our Pfizer Medical organization, which is responsible for the provision of medical information to healthcare providers, patients and other parties, transparency and disclosure activities, clinical trial results publication, grants for healthcare quality improvement and medical education, and partnerships with global public health and medical associations.

(iv)	Corporate—the costs associated with Corporate, representing platform functions (such as worldwide technology, global real estate operations, legal, finance, human resources, worldwide public affairs, compliance and worldwide procurement) and certain compensation and other corporate costs, such as interest income and expense, and gains and losses on investments.

(v)	Other Unallocated—other unallocated costs, representing overhead expenses associated with our manufacturing and commercial operations not directly attributable to an operating segment.

*	Amounts not material. After excluding net interest expense included in Corporate and net income from investments not attributable to an operating segment and included in Corporate, Other (income)/deductions––net approximates $57 million of income for the first nine months of 2016.

•	WRD/GPD/Medical––The information provided in the table above for WRD, GPD and Medical was substantially all derived from our estimates of the costs incurred in connection with the R&D projects associated with each operating segment.

•

Corporate/Other Unallocated––The information provided in the table above for Corporate and Other Unallocated was derived mainly using proportional allocation methods based on global, regional or country revenues or global, regional or country headcount, as well as certain cost metrics, as appropriate, such as those derived from research and development and manufacturing costs, and, to a lesser extent, specific identification. Management believes that the allocations of Corporate and Other Unallocated costs are reasonable.

(c)	See the “Non-GAAP Financial Measure (Adjusted Income)” section of this MD&A for a definition of these “Adjusted Income” components.

(d)

Includes costs associated with (i) purchase accounting adjustments; (ii) acquisition-related costs; and (iii) certain significant items, which are substantive and in some cases recurring (such as restructuring or legal charges), or unusual items that are evaluated on an individual basis by management. For additional information about these reconciling items and/or our Non-GAAP Adjusted measure of performance, see the “Non-GAAP Financial Measure (Adjusted Income)” section of this MD&A.

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•

IH Revenues increased 9% to $7.3 billion in the third quarter of 2016, compared to $6.8 billion in the same period in 2015, and increased 12% to $21.5 billion in the first nine months of 2016, compared to $19.1 billion in the same period in 2015. Foreign exchange had an unfavorable impact of 1% on IH revenues in the third quarter of 2016, and an unfavorable impact of 3% in the first nine months of 2016, compared to the same periods in 2015. IH Revenues increased by 10% operationally in the third quarter of 2016 and 15% operationally in the first nine months of 2016 compared to the same periods in 2015, primarily due to the following operational factors:

◦	continued growth from Ibrance, primarily in the U.S., Eliquis globally, as well as Xeljanz, Lyrica, Chantix and Consumer Healthcare, all primarily in the U.S. (collectively, up approximately $790 million for the third quarter of 2016 and $2.7 billion for the first nine months of 2016),

◦	a decline in Rebif revenues in the U.S. due to the year-end 2015 expiry of the collaboration agreement to co-promote Rebif in the U.S., as well as lower revenues for Enbrel in most developed Europe markets, primarily due to biosimilar competition (down approximately $220 million for the third quarter of 2016 and $300 million for the first nine months of 2016); and

◦

the Prevnar/Prevenar 13 franchise, primarily driven by an expected decline in revenues for the adult indication in the U.S. due to a high initial capture rate of the eligible population following its successful fourth-quarter 2014 launch, which resulted in a smaller remaining “catch up” opportunity compared to the prior-year quarter, partially offset by the impact of favorable timing of CDC purchases for the pediatric indication (down approximately $30 million for the third quarter of 2016 and $20 million, or relatively flat, for the first nine months of 2016).

•

Cost of sales as a percentage of Revenues increased 1.2 percentage points in the third quarter of 2016, compared to the same period in 2015, driven by the unfavorable impact of foreign exchange, partially offset by an increase in alliance revenues, which have no associated cost of sales. Cost of sales as a percentage of Revenues was essentially flat in first nine months of 2016, compared to the first nine months of 2015. The increase in Cost of sales of 19% in the third quarter of 2016, compared to the same period in 2015, was primarily driven by the unfavorable impact of foreign exchange, an increase in royalty expense and increased sales volumes. The increase in Cost of sales of 14% in the first nine months of 2016, compared to the same period in 2015, was primarily driven by the unfavorable impact of foreign exchange, an increase in sales volumes and an increase in royalty expense.

•

The increase in Selling, informational and administrative expenses of 8% in the third quarter of 2016, compared to the same period in 2015, reflects increased investment across select key products, including Eliquis, Xeljanz and Prevnar 13, partially offset by the favorable impact of foreign exchange. The increase in Selling, informational and administrative expenses of 9% in the first nine months of 2016, compared to the same period in 2015, reflects an increase in the allowance for doubtful trade accounts receivable, resulting from unfavorable developments with a distributor, and additional investment across select key products, including Eliquis and Ibrance, partially offset by the favorable impact of foreign exchange.

•

The increase in Research and development expenses of 20% in the third quarter of 2016, compared to the same period in 2015, primarily reflects increased costs associated with our oncology programs, primarily our avelumab alliance with Merck KGaA. The decrease in Research and development expenses of 3% in the first nine months of 2016, compared to the same period in 2015, primarily reflects the non-recurrence of the $295 million upfront payment made to OPKO in the first quarter of 2015, partially offset by increased costs associated with our oncology programs, primarily our avelumab alliance with Merck KGaA and increased investment in certain late-stage pipeline programs, including bococizumab (for which we announced the discontinuation of our global clinical development program during the fourth quarter of 2016) (see Notes to Condensed Consolidated Financial Statements––Note 2C. Acquisitions, Assets and Liabilities Held for Sale, Research and Development and Collaborative Arrangements, Equity-Method Investments and Cost-Method Investment: Research and Development and Collaborative Arrangements).

•

EH Revenues increased 7%, to $5.7 billion in the third quarter of 2016, compared to $5.3 billion in the same period in 2015. Foreign exchange had an unfavorable impact of 3% on EH revenues in the third quarter of 2016, compared to the same period in 2015. Revenues increased by 10% operationally in the third quarter of 2016, compared to the same period in 2015, primarily due to the inclusion of a full quarter of revenues from legacy Hospira global operations of $1.1 billion in the third quarter of 2016, compared to $330 million in the third quarter of 2015, due to the inclusion of only one month of legacy Hospira U.S. operations in

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◦	a 15% operational decline from the Peri-LOE Products portfolio, largely due to the loss of exclusivity and associated generic competition for Lyrica and Zyvox, both primarily in most developed Europe markets (down by approximately $180 million in the third quarter of 2016); and

◦	a 4% operational decline from the legacy Established Products portfolio, primarily due to a decline from certain developed markets (down by approximately $110 million in the third quarter of 2016),

◦	7% operational growth from the legacy Pfizer Sterile Injectable Pharmaceuticals portfolio, mostly in emerging markets and the U.S. (up by approximately $50 million in the third quarter of 2016).

•

EH Revenues increased 13% to $17.7 billion in the first nine months of 2016, compared to $15.7 billion in the same period in 2015. Foreign exchange had an unfavorable impact of 5% in the first nine months of 2016, compared to the same period in 2015. Revenues increased by 18% operationally in the first nine months of 2016, compared to the same period in 2015, primarily due to the inclusion of nine months of revenues from legacy Hospira global operations of $3.5 billion in the first nine months of 2016, compared to $330 million in the first nine months of 2015 due to the inclusion of only one month of legacy Hospira U.S. operations in the first nine months of 2015, partially offset by the loss of exclusivity and associated generic competition for certain Peri-LOE Products, primarily Zyvox in the U.S. and certain developed Europe markets, as well as Lyrica in certain developed Europe markets. EH Revenues excluding the contribution from the legacy Hospira portfolio, decreased 2% operationally in the first nine months of 2016, compared to the same period in 2015, primarily due to the following operational factors:

◦	a 17% operational decline from the Peri-LOE Products portfolio, primarily due to the loss of exclusivity and associated generic competition for certain Peri-LOE Products, primarily Zyvox in the U.S. and certain developed Europe markets as well as Lyrica in certain developed Europe markets (down by approximately $710 million in the first nine months of 2016),

◦	10% operational growth in the legacy Pfizer Sterile Injectable Pharmaceuticals portfolio, mostly in emerging markets and the U.S. (up by approximately $220 million in the first nine months of 2016); and

◦	2% operational growth in the Legacy Established Products portfolio, largely in the U.S. and emerging markets (up by approximately $160 million in the first nine months of 2016).

•

Cost of sales as a percentage of Revenues increased 5.3 percentage points in the third quarter of 2016, and increased 6.0 percentage points in the first nine months of 2016, compared to the same periods in 2015, primarily due to the inclusion of legacy Hospira global operations in 2016, compared to the inclusion of only one month of legacy Hospira U.S. operations in the third quarter and first nine months of 2015, the unfavorable impact of foreign exchange and the impact of product losses of exclusivity resulting in an unfavorable change in product mix. The increase in Cost of sales of 33% in the third quarter of 2016 and 46% in the first nine months of 2016, compared to the same periods in 2015, was driven by the inclusion of legacy Hospira global operations in 2016, compared to the inclusion of only one month of legacy Hospira U.S. operations in the third quarter and first nine months of 2015 and the unfavorable impact of foreign exchange, partially offset by lower volumes in developed markets.

•

Selling, informational and administrative expenses increased 2% in the third quarter of 2016, and 4% in the first nine months of 2016, compared to the same periods in 2015, primarily due to the inclusion of legacy Hospira global operations in 2016, compared to the inclusion of only one month of legacy Hospira U.S. operations in the third quarter and first nine months of 2015, partially offset by lower advertising, promotional and field force expenses, reflecting the benefits of cost-reduction and productivity initiatives, and the favorable impact of foreign exchange.

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•

Research and development expenses increased 21% in the third quarter of 2016, and increased 33% in the first nine months of 2016, compared to the same periods in 2015, reflecting the inclusion of legacy Hospira global operations in 2016, compared to the inclusion of only one month of legacy Hospira U.S. operations in the third quarter and first nine months of 2015 and increased investment in legacy Hospira biosimilar and sterile injectable development programs.

•	The favorable change in Other (income)/deductions––net in the first nine months of 2016, compared to the same period in 2015, primarily reflects resolution of a contract disagreement and the favorable impact of foreign exchange.

•	For Foreign currency translation adjustments, net, for the third quarter of 2016 and for the first nine months of 2016, primarily reflects the weakening of the U.S. dollar against the euro, Australian dollar and Japanese yen, partially offset by the strengthening of the U.S. dollar against U.K. pound.

•	For Unrealized holding losses on derivative financial instruments, net and Unrealized holding gains/(losses) on available-for-sale securities, net, reflects the impact of fair value remeasurements and the reclassification of realized amounts into income. For additional information, see Notes to Condensed Consolidated Financial Statements—Note 7. Financial Instruments.

•

For Benefit plans: actuarial losses, net, for the third quarter of 2016, reflects (i) the impact of favorable foreign exchange and (ii) a decrease in the impact of remeasurement activity from the prior year. For the first nine months of 2016, reflects (i) a decrease in the impact of favorable foreign exchange from the prior year and (ii) a decrease in the impact of remeasurement activity from the prior year. For additional information, see Notes to Condensed Consolidated Financial Statements—Note 10. Pension and Postretirement Benefit Plans.

•

For Benefit plans: prior service credits and other, net, for the third quarter of 2016, reflects an increase of $95 million as a result of changes to our Puerto Rico Postretirement Plan. For the first nine months of 2016, reflects a decrease in the impact of plan changes from the prior year. For additional information, see Notes to Condensed Consolidated Financial Statements—Note 10. Pension and Postretirement Benefit Plans.

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•	For Trade accounts receivable, less allowance for doubtful accounts, the change reflects the timing of sales and collections in the normal course of business and an increase in the allowance for doubtful accounts, resulting from unfavorable developments with a distributor.

•	For Inventories, the change reflects inventory builds in the normal course of business, partially offset by planned inventory reductions.

•	For Other current assets, the change reflects an increase in VAT receivable balances due to a change in our supply chain, partially offset by a decrease in receivables associated with our derivative financial instruments.

•	For PP&E, the change reflects depreciation during the period, partially offset by capital additions in the normal course of business.

•	For Identifiable intangible assets, less accumulated amortization, the change primarily reflects amortization and impairments for the period (see Notes to Condensed Consolidated Financial Statements––Note 4. Other (Income)/Deductions—Net for additional information on impairments for the period).

•	For Other noncurrent assets, the change reflects an increase in receivables associated with our derivative financial instruments and an increase in noncurrent VAT receivable balances due to a change in our supply chain.

•	For Trade accounts payable, the change reflects the timing of purchases and payments in the normal course of business.

•	For Accrued compensation and related items, the decrease reflects prior year’s bonus payments made to employees, partially offset by current year’s accruals.

•

For Other current liabilities, the change reflects consideration due for the acquisition of Medivation (see Notes to Condensed Consolidated Financial Statements––Note 2A. Acquisitions, Assets and Liabilities Held for Sale, Research and Development and Collaborative Arrangements, Equity-Method Investments and Cost-Method Investment: Acquisitions), an increase in VAT payable balances due to a change in our supply chain, partially offset by payments and accruals for certain legal and restructuring matters, and payments for interest and the timing of other accruals and payments in the normal course of business.

•	For Pension benefit obligations, net and Postretirement benefit obligations, net, the change reflects a $1.0 billion voluntary pension contribution in January 2016, as well as the information provided in Notes to Condensed Consolidated Financial Statements—Note 10. Pension and Postretirement Benefit Plans.

•	For Other noncurrent liabilities, the change reflects an increase in the payables associated with our restructuring matters and deferred revenue from a co-development agreement, partially offset by payments and accruals for certain legal matters, and changes in accruals in the normal course of business.

•	For Treasury stock, the change reflects $5 billion paid to GS&Co. in March 2016 pursuant to the terms of an accelerated share repurchase agreement. See Notes to Condensed Consolidated Financial Statements—Note 12. Commitments and Contingencies for additional information.

*	Calculation not meaningful.

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•	net redemptions/proceeds from sale of investments of $14.1 billion in the first nine months of 2016, compared to net redemptions/proceeds of investments of $16.1 billion in the first nine months of 2015; and

•

cash paid of $17.7 billion, net of cash acquired, primarily for the acquisitions of Medivation, Bamboo and Anacor in the first nine months of 2016 compared to cash paid of $16.3 billion, net of cash acquired, primarily for the acquisition of Hospira and the acquisition of Baxter’s portfolio of marketed vaccines in the first nine months of 2015. (see Notes to Condensed Consolidated Financial Statements—Note 2A. Acquisitions, Assets and Liabilities Held for Sale, Research and Development and Collaborative Arrangements, Equity-Method Investments and Cost-Method Investment: Acquisitions).

•	the issuance of long-term debt of $5 billion on June 3, 2016; and

•	purchases of common stock of $5.0 billion in the first nine months of 2016, compared to $6.2 billion in the first nine months of 2015,

•	net proceeds on short-term borrowings of $2.1 billion in the first nine months of 2016, compared to net proceeds on borrowings of $3.9 billion in the first nine months of 2015;

•	higher repayments on long-term debt of $4.3 billion in the first nine months of 2016, compared to $3.0 billion in the first nine months of 2015;

•	higher cash dividends paid of $5.5 billion in the first nine months of 2016, compared to $5.2 billion in the first nine months of 2015; and

•	lower proceeds from the exercise of stock options of $946 million in the first nine months of 2016, compared to $1.2 billion in the first nine months of 2015.

•	the working capital requirements of our operations, including our research and development activities;

•	investments in our business;

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•	dividend payments and potential increases in the dividend rate;

•	share repurchases;

•	the cash requirements associated with our cost-reduction/productivity initiatives;

•	paying down outstanding debt;

•	contributions to our pension and postretirement plans; and

•	business-development activities.

(a)	See Notes to Condensed Consolidated Financial Statements––Note 7. Financial Instruments for a description of certain assets held and for a description of the credit risk related to our financial instruments held.

(b)

The change in selected net financial assets/(liabilities) is predominantly a result of cash paid for acquisitions of businesses, particularly Medivation and Anacor. We retain a strong financial liquidity position as a result of our net cash provided by operating activities, our high quality financial asset portfolio and access to capital markets. Both Moody’s and S&P rating agencies maintained our strong investment-grade corporate debt-rating subsequent to the acquisitions. For additional information, see the “Credit Ratings” section of this MD&A.

(c)

The decrease in working capital is primarily due to a decrease in short-term investments and an increase in short term borrowings, and the timing of accruals, cash receipts and payments in the ordinary course of business, partially offset by the reclassification of Assets held for sale (see Notes to Condensed Consolidated Financial Statements––Note 2B. Acquisitions, Assets and Liabilities Held for Sale, Research and Development and Collaborative Arrangements, Equity-Method Investments and Cost-Method Investment: Assets and Liabilities Held for Sale). Our financing and investing activities were partially funded from the decrease in short-term investments and the increase in short-term borrowings.

(d)	Represents total Pfizer Inc. shareholders’ equity divided by the actual number of common shares outstanding (which excludes treasury stock).

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(a)	In September 2016, Moody's updated their credit outlook from negative outlook to stable.

(b)	In April 2016, S&P updated their credit outlook from negative watch to stable.

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(a)

Represents $160 million paid to GS&Co. in July 2015 to settle an accelerated share repurchase agreement entered into on February 9, 2015 with GS&Co. to repurchase shares of our common stock under our previously announced share repurchase authorization. This agreement was completed in July 2015, and pursuant to the agreement’s settlement terms, we elected to settle the agreement in cash and paid an additional $160 million to GS&Co. on July 13, 2015, resulting in a total of approximately $5.2 billion paid to GS&Co.

(b)

Represents shares purchased pursuant to and received upon settlement of an accelerated share repurchase agreement entered into on March 8, 2016. For additional information, see Notes to Condensed Consolidated Financial Statements––Note 12. Commitments and Contingencies and “Unregistered Sales of Equity Securities and Use of Proceeds––Issuer Purchases of Equity Securities" in Part II, Item 2 of this Quarterly Report on Form 10-Q.

(c)	Includes approximately 151 million shares purchased for $5.2 billion pursuant to an accelerated share repurchase agreement (see note (a) above). For additional information, see Notes to Consolidated Financial Statements––Note 12. Equity in our 2015 Form 10-K.

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•	the outcome of research and development activities including, without limitation, the ability to meet anticipated pre-clinical and clinical trial commencement and completion dates, regulatory submission and approval dates, and

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•

decisions by regulatory authorities regarding whether and when to approve our drug applications, which will depend on the assessment by such regulatory authorities of the benefit-risk profile suggested by the totality of the efficacy and safety information submitted; decisions by regulatory authorities regarding labeling, ingredients and other matters that could affect the availability or commercial potential of our products; and uncertainties regarding our ability to address the comments in complete response letters received by us with respect to certain of our drug applications to the satisfaction of the FDA;

•	the speed with which regulatory authorizations, pricing approvals and product launches may be achieved;

•	the outcome of post-approval clinical trials, which could result in the loss of marketing approval for a product or changes in the labeling for, and/or increased or new concerns about the safety or efficacy of, a product that could affect its availability or commercial potential;

•	risks associated with interim data, including the risk that final results of studies for which interim data have been provided and/or additional clinical trials may be different from (including less favorable than) the interim data results and may not support further clinical development of the applicable product candidate or indication;

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the success of external business-development activities, including the ability to satisfy the conditions to closing of announced transactions in the anticipated time frame or at all, including our ability and the ability of ICU Medical and AstraZeneca to satisfy the conditions to closing the sale of our HIS net assets to ICU Medical, and the acquisition of the small molecule anti-infectives business from AstraZeneca, respectively;

•	competitive developments, including the impact on our competitive position of new product entrants, in-line branded products, generic products, private label products and product candidates that treat diseases and conditions similar to those treated by our in-line drugs and drug candidates;

•	the implementation by the FDA and regulatory authorities in certain other countries of an abbreviated legal pathway to approve biosimilar products, which could subject our biologic products to competition from biosimilar products, with attendant competitive pressures, after the expiration of any applicable exclusivity period and patent rights;

•	risks related to our ability to develop and launch biosimilars, including risks associated with "at risk" launches, defined as the marketing of a product by Pfizer before the final resolution of litigation (including any appeals) brought by a third party alleging that such marketing would infringe one or more patents owned or controlled by the third party;

•	the ability to meet generic and branded competition after the loss of patent protection for our products or competitor products;

•	the ability to successfully market both new and existing products domestically and internationally;

•	difficulties or delays in manufacturing;

•	trade buying patterns;

•	the impact of existing and future legislation and regulatory provisions on product exclusivity;

•	trends toward managed care and healthcare cost containment, and our ability to obtain timely or adequate pricing or formulary placement for our products;

•	the impact of any significant spending reductions or cost controls affecting Medicare, Medicaid or other publicly funded or subsidized health programs or changes in the tax treatment of employer-sponsored health insurance that may be implemented, and/or any significant additional taxes or fees that may be imposed on the pharmaceutical industry as part of any broad deficit-reduction effort;

•	the impact of U.S. healthcare legislation enacted in 2010—the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act––and of any modification, repeal or invalidation of any of the provisions thereof;

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U.S. federal or state legislation or regulatory action and/or policy efforts affecting, among other things, pharmaceutical product pricing, reimbursement or access, including under Medicaid, Medicare and other publicly funded or subsidized health programs; patient out-of-pocket costs for medicines, manufacturer prices and/or price increases that could result in new mandatory rebates and discounts or other pricing restrictions; the importation of prescription drugs from outside the U.S. at prices that are regulated by governments of various foreign countries; restrictions on 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 the cost differences and minimizes the therapeutic differences among pharmaceutical products and restricts access to

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•	legislation or regulatory action in markets outside the U.S. affecting pharmaceutical product pricing, reimbursement or access, including, in particular, continued government-mandated reductions in prices and access restrictions for certain biopharmaceutical products to control costs in those markets;

•	the exposure of our operations outside the U.S. to possible capital and exchange controls, expropriation and other restrictive government actions, changes in intellectual property legal protections and remedies, as well as political unrest, unstable governments and legal systems and inter-governmental disputes;

•	contingencies related to actual or alleged environmental contamination;

•	claims and concerns that may arise regarding the safety or efficacy of in-line products and product candidates;

•	any significant breakdown, 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 the adequacy of reserves related to product liability, patent matters, government investigations, consumer, commercial, securities, antitrust, environmental, employment, tax issues, ongoing efforts to explore various means for resolving asbestos litigation, 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 fluctuations, including the impact of possible currency devaluations in countries experiencing high inflation rates and the volatility following the U.K. referendum in which voters approved the exit from the EU;

•	governmental laws and regulations affecting domestic and foreign operations, including, without limitation, tax obligations and changes affecting the tax treatment by the U.S. of income earned outside the U.S. that may result from pending and possible future proposals;

•	the end result of any negotiations between the U.K. government and the EU regarding the terms of the U.K.’s exit from the EU, which could have implications on our research, commercial and general business operations in the U.K. and the EU;

•	any significant issues involving our largest wholesaler customers, which account for a substantial portion of our revenues;

•	the possible impact of the increased presence of counterfeit medicines in the pharmaceutical supply chain on our revenues and on patient confidence in the integrity of our medicines;

•	any significant issues that may arise related to the outsourcing of certain operational and staff functions to third parties, including with regard to quality, timeliness and compliance with applicable legal requirements and industry standards;

•	any significant issues that may arise related to our joint ventures and other third-party business arrangements;

•	changes in U.S. generally accepted accounting principles;

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uncertainties related to general economic, political, business, industry, regulatory and market conditions including, without limitation, uncertainties related to the impact on us, our customers, suppliers and lenders and counterparties to our foreign-exchange and interest-rate agreements of challenging global economic conditions and recent and possible future changes in global financial markets; and the related risk that our allowance for doubtful accounts may not be adequate;

•	any changes in business, political and economic conditions due to actual or threatened terrorist activity in the U.S. and other parts of the world, and related U.S. military action overseas;

•	growth in costs and expenses;

•	changes in our product, segment and geographic mix;

•	the impact of purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items;

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the impact of acquisitions, divestitures, restructurings, internal reorganizations, product recalls, withdrawals and other unusual items, including our ability to realize the projected benefits of our cost-reduction and productivity initiatives, including those related to our research and development organization, and of the internal separation of our commercial operations into our current operating structure;

•	the risk of an impairment charge related to our intangible assets, goodwill or equity-method investments;

•	risks related to internal control over financial reporting; and

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risks and uncertainties related to our recent acquisitions of Hospira, Anacor and Medivation, including, among other things, the ability to realize the anticipated benefits of the acquisitions of Hospira, Anacor and Medivation, including the possibility that expected cost savings related to the acquisition of Hospira and accretion related to the acquisitions of Hospira, Anacor and Medivation will not be realized or will not be realized within the expected time frame; the risk that the businesses will not be integrated successfully; disruption from the transactions making it more difficult to maintain business and operational relationships; significant transaction costs; and unknown liabilities.

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(a)

On October 23, 2014, we announced that the Board of Directors had authorized an $11 billion share-purchase plan, and share purchases commenced thereunder in January 2015 (the October 2014 Stock Purchase Plan). In December 2015, the Board of Directors authorized a new $11 billion share repurchase program to be utilized over time. On March 8, 2016, we entered into an accelerated share repurchase agreement with GS&Co. to repurchase $5 billion of our common stock. Pursuant to the terms of the agreement, on March 10, 2016, we paid $5 billion to GS&Co. and received an initial delivery of approximately 136 million shares of our common stock from GS&Co. based on a price of $29.36 per share, which represented, based on the closing share price of our common stock on the NYSE on March 8, 2016, approximately 80% of the notional amount of the accelerated share repurchase agreement. On June 20, 2016, the accelerated share repurchase agreement with GS&Co. was completed, which, per the terms of the agreement, resulted in GS&Co. owing us a certain number of shares of Pfizer common stock. Pursuant to the agreement’s settlement terms, we received an additional 18 million shares of our common stock from GS&Co. on June 20, 2016. The average price paid for all of the shares delivered under the accelerated share repurchase agreement was $32.38 per share. The common stock received is included in Treasury stock. This agreement was entered into pursuant to our previously announced share repurchase authorization. After giving effect to the accelerated share repurchase agreement, our remaining share-purchase authorization is approximately $11.4 billion at October 2, 2016.

(b)

These columns reflect the following transactions during the third fiscal quarter of 2016: (i) the surrender to Pfizer of 44,460 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock units issued to employees; (ii) the open market purchase by the trustee of 23,098 shares of common stock in connection with the reinvestment of dividends paid on common stock held in trust for employees who were granted performance share awards and who deferred receipt of such awards; and (iii) the surrender of 86 shares of common stock to satisfy withholding obligations in connection with the settlement of total shareholder return units.

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