PFIZER INC

OPERATIONS

GENERAL

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

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

OVERVIEW OF OUR PERFORMANCE, OPERATING AND GLOBAL ECONOMIC ENVIRONMENT

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

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

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

Restructuring Programs

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

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

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

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

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

Our Second Quarter and First Six Months of 2026 Performance

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

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

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

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

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

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

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

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

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

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

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

Policy/Regulatory Environment––New and potential policy, regulatory or other changes from the U.S. Presidential administration, Congress and states, including, among others, increased, decreased, withdrawn or new regulatory requirements, including changes in requirements for licensure, changes, delays or failure to receive recommendations, reimbursement and regulatory approvals and coverage for our vaccines and medicines, as well as potential impacts on our activities in markets outside of the U.S., could have a material adverse effect on our business, earnings, cash flows, liquidity and financial guidance.

Product Supply––We periodically encounter supply delays, disruptions and shortages, including due to voluntary product recalls and natural or man-made disasters.

We have not seen a significant disruption of our supply chain in the first six months of 2026 and through the date of filing of this Form 10-Q, and all of our manufacturing sites globally have continued to operate at or near normal levels. We continue to monitor potential supply chain impacts from geopolitical and trade developments. We do not anticipate the availability of raw materials to have a significant impact on our operations in 2026, but are monitoring potential supply chain disruptions as a result of ongoing geopolitical and trade negotiations, which could, among other things, impact costs. For information on risks related to product manufacturing, see the Item 1A. Risk Factors––Product Manufacturing, Sales and Marketing Risks section of our 2025 Form 10-K.

The Global Economic Environment––In addition to the industry-specific factors discussed above, we, like other businesses of our size and global extent of activities, are exposed to economic cycles as well as broader geopolitical and regulatory developments. See the Item 1A. Risk Factors—Global Operations section of our 2025 Form 10-K, as well as the Overview of Our Performance, Operating Environment, Strategy and Outlook––The Global Economic Environment section of the MD&A of our 2025 Form 10-K.

Global Trade Environment––Issued or future executive orders or other new or changes in laws, regulations or policies regarding tariffs or other trade or foreign policy, could have a material adverse effect on our business, earnings, cash flow, liquidity and financial guidance. While the U.S. Supreme Court’s February 2026 decision related to executive authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA) did not have a material impact on our consolidated financial statements, the regulatory landscape continues to evolve. Specifically, on April 2, 2026, the U.S. Government announced Section 232 tariffs on imported patented pharmaceuticals and their ingredients, up to a 100% duty to address national security concerns regarding supply chain reliance (the April 2, 2026 Section 232 Executive Order). These measures, featuring exemptions for commitments to onshore and invest in U.S. manufacturing, became effective for Pfizer on July 31, 2026. We have reached final binding agreements with the U.S. Government, ratifying the arrangements first announced in September 2025. Under these agreements, we have voluntarily committed to implement measures designed to make certain drug prices for U.S. patients more comparable to those in other developed countries, allow U.S. patients to purchase certain medicines at significant discounts to current retail prices and further invest in our U.S. manufacturing. Pursuant to the agreements, the applicable tariff rate under the April 2, 2026 Section 232 Executive Order for Pfizer products will be zero until January 20, 2029. We will continue to monitor developments and any potential impacts on our future financial results and business. For additional information on risks related to our global operations and changes in laws, see the Item 1A. Risk Factors—Global Operationsand ––Changes in Laws and Accounting Standards sections of our 2025 Form 10-K.

SIGNIFICANT ACCOUNTING POLICIES AND APPLICATION OF CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS

For a description of our significant accounting policies, see Note 1 in our 2025 Form 10-K. Of these policies, the following are considered critical to an understanding of our consolidated financial statements as they require the application of the most subjective and the most complex judgments: Acquisitions (Note 1D); Fair Value (Note 1E); Revenues (Note 1G); Long-Lived Assets (Note 1M); Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives (Note 1N); Income Taxes (Note 1Q); Pension and Postretirement Benefit Plans (Note 1R); and Legal and Environmental Contingencies (Note 1S).

For a discussion about the critical accounting estimates and assumptions impacting our consolidated financial statements, see the Significant Accounting Policies and Application of Critical Accounting Estimates and Assumptions section within MD&A of our 2025 Form 10-K. See also Note 1C in our 2025 Form 10-K for a discussion about the risks associated with estimates and assumptions.