PFIZER INC

Biopharma

Pfizer CentreOne

See the Item 1. Business—Patents and Other Intellectual Property Rights section of our 2025 Form 10-K for information regarding the expiration of various patent rights, Note 12 for a discussion of recent developments concerning patent and product litigation relating to certain of the products discussed above and Note 13C for the primary indications or class of the selected products discussed above.

Costs and Expenses

First Quarter of 2026 vs. First Quarter of 2025

Cost of Sales

Cost of sales increased $702 million in the first quarter of 2026, primarily due to the non-recurrence of a favorable revision of our estimate of accrued royalties in the first quarter of 2025 as well as a $285 million unfavorable impact of foreign exchange.

The increase in Cost of sales as a percentage of revenues in the first quarter of 2026 was primarily due to the factors mentioned above.

Certain of our vaccines, including Comirnaty, are subject to seasonality of demand, with a greater portion of revenues and related cost of sales anticipated in the fall and winter seasons.

Selling, Informational and Administrative Expenses

Selling, informational and administrative expenses decreased $70 million in the first quarter of 2026, primarily reflecting:

•a decrease of $100 million in marketing and promotional spend on various products from more targeted investments and ongoing productivity improvements; and

•lower spending of $60 million in corporate enabling functions,

partially offset by:

•a $60 million unfavorable impact of foreign exchange.

Research and Development Expenses

Research and development expenses increased $287 million in the first quarter of 2026, driven primarily by an increase in spending of $180 million in certain oncology and obesity product candidates.

Acquired In-Process Research and Development Expenses

Acquired in-process research and development expenses increased $128 million in the first quarter of 2026, reflecting upfront and milestone payments on certain in-licensing agreements.

Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives

Realigning Our Cost Base Program––This program is expected to deliver total net cost savings of approximately $5.7 billion through 2026. The total net cost savings are composed of net cost savings of $5.1 billion achieved through 2025, and the remaining anticipated savings of $600 million, primarily in SI&A, which are expected to be achieved by the end of 2026. In addition, we achieved cost savings of approximately $500 million from our pipeline focus and optimization initiatives including the expansion of our digital capabilities, with the savings expected to be reinvested in R&D programs by the end of 2026.

Manufacturing Optimization Program––The first phase of this multi-phased program is on track to deliver approximately $1.5 billion in net cost savings by the end of 2027, with approximately $1.3 billion of these net cost savings expected to be realized by the end of 2026.

Certain qualifying costs for these programs in all periods since inception were recorded and reflected as Certain Significant Items and excluded from our non-GAAP measure of Adjusted Income. See the Non-GAAP Financial Measure: Adjusted Income section within MD&A.

For a description of our programs, as well as the anticipated and actual costs, see Notes 3A and 3B. The program savings discussed above may be rounded and represent approximations. In addition to these programs, we continuously monitor our operations for cost reduction and/or productivity opportunities, especially in light of patent-based and regulatory exclusivity expiries as well as the expiration of collaborative arrangements for various products. Long-term improvement in gross margin will remain a key focus for the Company over the next few years.

Metsera acquisition––In connection with our acquisition of Metsera, we are focusing our efforts on achieving an appropriate cost structure for the combined company. We expect to generate approximately $600 million of annual cost synergies, to be achieved by the end of 2026. The one-time costs to generate these synergies are expected to be approximately $700 million, incurred primarily from 2025 through 2027.

Other (Income)/Deductions—Net

The favorable period-over-period change of $92 million in the first quarter of 2026 was primarily driven by (i) lower net losses on equity securities, and (ii) the non-recurrence of intangible asset impairment charges recorded in the first quarter of 2025, partially offset by (iii) increases in fair value of our contingent consideration liabilities and (iv) lower net periodic benefit credits associated with pension and postretirement plans. See Notes 4 and 7A.