Pfizer : Quarterly Corporate Performance - First Quarter 2024 Prepared Remarks

First-Quarter 2024 Earnings Conference Call Prepared Remarks

May 1, 2024

[Slide 4: Opening Remarks - Albert Bourla]

Albert Bourla - Pfizer Inc. - Chairman and Chief Executive Officer

[Slide 5: Q1 2024: Strong Start to the Year]

In the first quarter, we had a solid start to the year and we are cautiously optimistic about what we will achieve in 2024.

I am pleased and appreciative of how our Pfizer colleagues are executing with discipline as they focus on the patients and others we serve. This helped us deliver a strong performance during the quarter in our non-COVID product portfolio, drive progress toward our oncology leadership, advance our pipeline and continue to strengthen our business.

Today we will discuss highlights from the quarter and provide updates about how we're continuing to make progress with the five strategic priorities we shared with you at the start of the year.

We are proud of the positive impact we achieve around the world with our deep capabilities and global scale. Through the first 3 months of the year, we reached more than 119 million patients with our medicines and vaccines. We will continue to build on Pfizer's 175-year history of driving medical and pharmaceutical breakthroughs as we maximize the opportunities in front of us.

[Slide 6: 2024 Key Priorities]

Our confidence in the year ahead comes from our focus on executing the strategic priorities that we believe will deliver operational, commercial and financial success across our business.

The priorities are:

• Achieve world-class oncology leadership
• Deliver the next wave of pipeline innovation
• Maximize performance of our new products
• Expand margins by realigning our cost base

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• Allocate capital to enhance shareholder value

In the first quarter we made notable progress with each one, and I'll share some highlights.

[Slide 7: Achieve World-Class Oncology Leadership]

Many of you joined us at our Oncology Innovation Day in February, and I hope you found it to be a valuable opportunity to see how we are well positioned to achieve world-class oncology leadership.

We are pleased with the excellence we have been able to achieve in both integration and commercial execution.

• With a strong mix of Pfizer and Seagen colleagues in the newly combined team, we believe we have one of the most experienced and talented groups of oncology leaders in the industry.
• We're also already seeing the benefit of strong commercial execution with our newly cross-trained sales and field medical teams.

In the first quarter of 2024, our oncology revenues grew 19% operationally over the same quarter a year ago, driven in part by:

• The acquisition of the four in-line products from legacy Seagen-in particular, the strong ongoing launch of Padcev in front-line locally advanced/metastatic urothelial cancer regardless of cisplatin eligibility, following FDA approval based on the groundbreaking EV-302 data;
• Increased demand for Xtandi, which continues to be a backbone therapy across the prostate cancer treatment continuum;
• And continued growth from Lorbrena, which could emerge as the potential first-line standard of care in ALK-positive metastatic non-small-cell lung cancer.

Earlier this week, we also announced the full FDA approval of Tivdak to treat recurrent or metastatic cervical cancer. Tivdak is the first antibody-drug conjugate to have positive overall survival data for patients with previously treated recurrent or metastatic cervical cancer.

Going forward, we are guided by a strategy focusing on our greatest opportunities to make a difference for patients with cancer. With the power of our deep expertise, broad and diverse portfolio and global scale, we are confident we are well on our way toward our 2030 goals of:

• Doubling the number of patients treated with our innovative cancer medicines;
• Increasing the number of blockbuster medicines in our portfolio from 5 today to 8 or more;
• And, driving an anticipated tenfold increase in the proportion of revenue from biologics. This is important because it brings the potential to provide more durable revenue based on several factors,

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including Inflation Reduction Act considerations and the greater challenges of copying complex biologics.

We will look forward to sharing continued updates with you on our progress in accelerating oncology breakthroughs.

[Slide 8: Deliver Next Wave of Pipeline Innovation]

Now, I'll turn to our progress with delivering the next wave of pipeline innovation.

In Oncology during the quarter, we had three pivotal Phase 3 study starts, including the first Phase 3 trial for our selective CDK4 inhibitor, atirmociclib, our integrin-beta-6-directed ADC, sigvotatug vedotin-and the fourth Phase 3 trial for Elrexfio in multiple myeloma.

At the upcoming American Society of Clinical Oncology annual meeting, we will present data spanning each of our tumor areas of focus and core scientific modalities, including new five-yearprogression-free survival data for Lorbrena, Phase 3 data for Adcetris in diffuse large B cell lymphoma (DLBCL) and additional developments from across our deep and diverse pipeline.

We are also driving continued execution beyond oncology with a sharpened focus on key value drivers expected to build potential multi-billion-dollar product portfolios. Through the first quarter, we are on track with delivering on our anticipated milestones and have important updates in both our growing respiratory and hematology portfolios.

With Abrysvo, we believe we have the opportunity to further expand what is currently the broadest approved range of patients for the RSV vaccine, including adults 60 years and older and infants from birth to six months via maternal immunization.

We recently reported positive results from the Phase 3 MONeT trial evaluating Abrysvo in adults aged 18 to 59 at increased risk for RSV disease. The trial met its primary endpoints and we intend to submit these data to regulatory agencies. We believe Abrysvo has the potential to become the first and only RSV vaccine for adults 18 years and older.

Hematology is another priority area. With the progress of recent and near-term milestones, we are confident that we could establish a potential multi-billion-dollar product portfolio across hemophilia and sickle cell disease.

• We recently received the first U.S. FDA gene therapy approval for Pfizer with FDA approval for Beqvez, a one-time gene therapy for adults with hemophilia B.
• This program builds upon our growing presence in hemophilia. We expect an FDA decision before year end for marstacimab...

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1. ...which has the potential to become the first once-weekly subcutaneous treatment in the hemophilia B market;

1. and the first treatment delivered as a flat dose for both hemophilia A and B.

Moving to sickle cell, we recently started the Phase 3 study of osivelotor, our potentially best-in-class next generation hemoglobin S polymerization inhibitor. We are committed to addressing the underserved needs of the sickle cell disease community, and we are leveraging our capabilities for potential breakthroughs for these patients.

[Slide 9: Maximize Performance of New Products]

Now, I'll turn to our strategic priority of maximizing performance of our new products. While it may take a year to realize the full benefit of the changes we put in place to bring a more efficient structure to our commercial operations, we are pleased by the impact we are already seeing from our sharpened focus and Pfizer colleagues embracing our high-performance culture.

Earlier, I mentioned the momentum with our oncology products. Our Pfizer U.S. Commercial and Pfizer International Commercial organizations are also moving ahead in driving progress and growth in their respective markets.

We have several potential key growth drivers for this year and into 2025.

• With Abrysvo, we're very pleased with the positive data in the 18 to 59 age group that differentiates our product and we're encouraged by our opportunities to continue increasing overall RSV market growth and market share.
• Another example is our enthusiasm for the potential of Nurtec to help the more than one billion people living with migraine worldwide.
  o With oral CGRP penetration leaving room for potential significant growth, we will continue to focus on reducing access barriers for health care professionals and patients, as well as on education through direct-to-consumer marketing.
• With Oxbryta, we will continue to educate health care professionals and patients on the importance of proactively treating the underlying cause of sickle cell disease by reframing treatment goals to chronic and proactive treatment.
• Velsipity is coming off its initial launch, and we are focused on ensuring patient access as a first- line advanced therapy oral option for moderate to severe Ulcerative Colitis.
• And, I'll also mention Litfulo. We will work toward continuing to accelerate the consideration of advanced systemic treatments for appropriate patients with alopecia areata and further unlock access to Litfulo.

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Additionally, we continue to protect and grow our core brands and key blockbusters, including Prevnar, Vyndaqel and Eliquis.

In a moment, Dave will provide updates about how we're also making progress with two other strategic priorities, expanding margins by realigning our cost base and allocating capital to enhance shareholder value.

When we consider what we achieved in the first quarter, along with our continued progress in executing our five strategic priorities, we are cautiously optimistic about the year ahead.

• We are continuing to focus on commercial execution, protecting and growing our products and driving strong starts with new commercial launches.
• With the progress we are making in advancing our cost-realignment program, as well as our confidence in the underlying strength in our business and our continued execution, we have raised our outlook for 2024 Adjusted Earnings Per Share by 10 cents.

We have confidence in our company. With some of the most experienced and talented colleagues in the industry, we have demonstrated many times before that we are very good at execution and we expect to continue delivering life-changing medicines for hundreds of millions of patients globally and meaningful value for our shareholders.

Now, I'll turn it over to Dave to discuss our financial performance during the quarter, as well as our progress in strengthening our business and enhancing shareholder value.

[Slide 10: Financial Review - David Denton]

David Denton - Pfizer Inc. - Chief Financial Officer, Executive Vice President

Thank you, Albert, and good morning.

As we continue to navigate a challenging post-COVID environment, I'm pleased to share that this year is off to a solid start. We are protecting and growing our core brands while investing in building a more effective organization. Our relentless focus on execution is positioning Pfizer to improve shareholder returns.

This morning I will briefly review the highlights of our first quarter results; then touch on our capital allocation priorities. I'll wrap up by outlining our 2024 financial guidance and our key priorities for the remainder of the year.

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[Slide 11: Quarterly Income Statement Highlights]

Turning first to Q1 performance; let's walk down the P&L.

Total company revenues for the quarter were $14.9 billion, reflecting an operational decline of $3.5 billion or (19%) vs last year. As you know, our business continues to be negatively impacted by a declining COVID environment on a global basis. To that end, we expect our COVID products will continue to have an outsized effect on both our top-line and bottom-line throughout this year. However, I do want to point out that we expect our COVID products will continue to be significant contributors to revenues and cash- flows for the foreseeable future.

Strong commercial execution across the enterprise drove 11% operational revenue growth in the quarter excluding Comirnaty and Paxlovid. Performance was positively impacted by our renewed focus on key products and markets; refined allocation of commercial field resources globally; and further alignment of marketing resources into key priority areas. Contributing to this performance were our acquired products from Seagen, alongside in-line products such as Vyndaqel, Eliquis and Abrysvo. Dampening our growth in the quarter was the expected lower global demand for Ibrance, and Sulperazon, driven largely by lower demand in China in the first quarter of 2024 vs last year.

Adjusted Gross Margin for the first quarter improved by 530 basis points to 79.6% vs Q1 of last year. This improvement was driven by three factors:

• First, lower sales volume of Comirnaty resulted in favorable sales mix,
• Second, in the quarter we recorded a product return adjustment for Paxlovid associated with our US Government contract, which I'll touch upon in a moment,
• and finally, we executed strong cost management across our manufacturing network.

Improvements in our gross margin rate will continue to be an important focus for the company going forward.

Total Adjusted operating expenses increased modestly by 1% to $5.9 billion compared to Q1 of last year; despite adding expenses associated with the acquired Seagen business. This disciplined cost control puts us squarely on track to delivering on our $4 billion net cost savings commitment by the end of the year.

Adjusted SI&A Expenses increased 3% operationally in the quarter driven primarily by an increase in marketing and promotional expenses for recently acquired and launched products, partially offset by a decrease in expenses for Paxlovid and Comirnaty.

Consistent with our strategy, we are prioritizing our R&D spending to enhance overall returns while supporting growth from our pipeline. For the quarter Adjusted R&D Expenses were $2.5 billion, a decrease

of 1% operationally versus last year. The slight decline was driven primarily by lower spending resulting

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from our cost realignment program and lower spending on certain vaccine programs, largely offset by increased investments mainly to develop certain assets acquired from Seagen.

Q1 Reported diluted earnings per share were 55 cents. Our Adjusted diluted EPS was 82 cents which exceeded our expectations due to favorable gross margin performance and strong cost management across the enterprise.

As I stated earlier, during the quarter we recorded a favorable product return adjustment associated with our US Government contract for Paxlovid. Recall that during Q4 of last year we estimated that the US Government credit for Paxlovid was $3.5 billion. Earlier this year, the US Government announced that the EUA labeled product was no longer authorized for emergency use and the agreed upon return period had now expired. Given those facts, we could now finalize the total value of the US Government credit. This resulted in a favorable adjustment to revenues of $771 million for Paxlovid and contributed 11 cents to the company's earnings per share.

[Slide 12: Q1 2024: Allocating Capital to Enhance Shareholder Value]

Now let me quickly touch upon our capital allocation strategy, which is designed to enhance long term shareholder value. Our strategy consists of:

• Maintaining and growing our dividend over time;
• Reinvesting in our business at an appropriate level of financial return; and
• Making value enhancing share repurchases after de-levering our balance sheet.

During the first quarter we:

• Returned $2.4 billion to shareholders via our quarterly dividend;
• Invested $2.5 billion in internal R&D; and
• As expected, completed business development activity was minimal.

We are committed to de-levering our capital structure with a gross leverage target of 3.25x, which we expect to achieve over time. In support of that goal, during the quarter we paid down approximately $1.25B in maturing debt and in May we will pay down another $1 billion of outstanding notes. And, importantly during the quarter, we began to monetize our Haleon stake through an initial sale of $3.5 billion which reduced our equity position in the company from 32% to approximately 23%. Looking ahead to the next couple of quarters I'd like to point out that we expect operating cash flows to be significantly below typical

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levels, largely due to the timing of certain payments. Despite this near-term pressure, clearly, our objective is to return to a more balanced capital allocation strategy over time.

[Slide 13: 2024 Financial Guidance: Maintains 2024 Revenue Range and Raises Adjusted Diluted EPS Range]

Now, let me spend a few minutes on our outlook for the remainder of the year. As we entered 2024, the company is highly focused on delivering on its financial commitments and our performance in Q1 demonstrates that we are off to a solid start. With that objective in mind, and the fact that it's still early in the year, we are modestly updating the earnings outlook for this year.

We are raising our full year Adjusted diluted earnings per share guidance range by 10 cents to a new range of $2.15 - $2.35. Looking ahead this increase takes into consideration both our improving line of sight to our cost savings target, and continued strength in our underlying business. As a reminder, our EPS guidance includes an anticipated $(0.40) of earnings dilution from the Seagen acquisition, largely due to the financing costs.

While the Paxlovid revenue return adjustment moves us towards the upper end of our revenue guidance range, our top line revenue expectations remain unchanged for the full year. We continue to expect revenues in the range of $58.5 billion to $61.5 billion. In addition, even though Comirnaty revenues continue to perform consistent with our plan, it is important to remember that we expect approximately 90% of sales to occur in the second half of the year, mostly in Q4 given the seasonal nature of the product.

Lastly, we remain on track to deliver at least $4 billion of net savings from our cost-realignment program by the end of the year. Improving our cost base will put us on strong footing towards margin expansion and improved financial returns moving forward.

As you know, over the past two years the company has made significant investments to drive growth in the back half of the decade. And we remain encouraged by the long-term growth outlook for Pfizer.

2024 is clearly a year of focus, execution and delivering on our near-term financial commitments. The foundation we establish this year sets the stage to deliver on our commitment to enhance shareholder value both this year and through the end of the decade.

And with that, I'd like to turn it back over to Albert to start the Q&A session.

Disclosure Notice: This material represents prepared remarks for Pfizer Inc.'s earnings conference call and is not an official transcript. Except where otherwise noted, the information contained in these prepared remarks is as of May 1, 2024. We assume no obligation to update any forward-looking statements contained in these prepared remarks as a result of new information or future events or developments.

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These prepared remarks contain forward-looking statements about, among other topics, our anticipated operating and financial performance, including financial guidance and projections; reorganizations; business plans, strategy, goals and prospects; expectations for our product pipeline, in-line products and product candidates, including anticipated regulatory submissions, data read-outs, study starts, approvals, launches, clinical trial results and other developing data, revenue contribution and projections, potential pricing and reimbursement, potential market dynamics, including patient demand, market size and utilization rates and growth, performance, timing of exclusivity and potential benefits; strategic reviews; capital allocation objectives; an enterprise-wide cost realignment program, which we launched in October 2023 (including anticipated costs, savings and potential benefits); dividends and share repurchases; plans for and prospects of our acquisitions, dispositions and other business development activities, including our recent acquisition of Seagen, and our ability to successfully capitalize on growth opportunities and prospects; manufacturing and product supply; our ongoing efforts to respond to COVID-19, including our plans and expectations regarding Comirnaty (as defined in our first quarter of 2024 earnings release) and our oral COVID-19 treatment (Paxlovid); our expectations regarding the impact of COVID-19 on our business, operations and financial results; and our Environmental, Social and Governance (ESG) priorities, strategies and goals. Given their forward-looking nature, these statements involve substantial risks, uncertainties and potentially inaccurate assumptions and we cannot assure that any outcome expressed in these forward-looking statements will be realized in whole or in part. You can identify these statements by the fact that they use future dates or use words such as "will," "may," "could," "likely," "ongoing," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "assume," "target," "forecast," "guidance," "goal," "objective," "aim," "seek," "potential," "hope" and other words and terms of similar meaning. Pfizer's financial guidance is based on estimates and assumptions that are subject to significant uncertainties.

Among the factors that could cause actual results to differ materially from past results and future plans and projected future results are the following:

Risks Related to Our Business, Industry and Operations, and Business Development:

• the outcome of research and development (R&D) activities, including, the ability to meet anticipated pre-clinical or clinical endpoints, commencement and/or completion dates for our pre-clinical or clinical trials, regulatory submission dates, and/or regulatory approval and/or launch dates; the possibility of unfavorable pre-clinical and clinical trial results, including the possibility of unfavorable new pre-clinical or clinical data and further analyses of existing pre-clinical or clinical data; risks associated with preliminary, early stage or interim data; the risk that pre-clinical and clinical trial data are subject to differing interpretations and assessments, including during the peer

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review/publication process, in the scientific community generally, and by regulatory authorities; and whether and when additional data from our pipeline programs will be published in scientific journal publications and, if so, when and with what modifications and interpretations;

• our ability to successfully address comments received from regulatory authorities such as the U.S. Food and Drug Administration or the European Medicines Agency, or obtain approval for new products and indications from regulators on a timely basis or at all; regulatory decisions impacting labeling, including the scope of indicated patient populations, product dosage, manufacturing processes, safety and/or other matters, including decisions relating to emerging developments regarding potential product impurities; uncertainties regarding the ability to obtain, and the scope of, recommendations by technical or advisory committees; and the timing of, and ability to obtain, pricing approvals and product launches, all of which could impact the availability or commercial potential of our products and product candidates;
• claims and concerns that may arise regarding the safety or efficacy of in-line products and product candidates, including claims and concerns that may arise from the outcome of post-approval clinical trials, which could impact marketing approval, product labeling, and/or availability or commercial potential;
• the success and impact of external business development activities, such as the December 2023 acquisition of Seagen, including the ability to identify and execute on potential business development opportunities; the ability to satisfy the conditions to closing of announced transactions in the anticipated time frame or at all; the ability to realize the anticipated benefits of any such transactions in the anticipated time frame or at all; the potential need for and impact of additional equity or debt financing to pursue these opportunities, which has in the past and could in the future result in increased leverage and/or a downgrade of our credit ratings and could limit our ability to obtain future financing; challenges integrating the businesses and operations; disruption to business and operations relationships; risks related to growing revenues for certain acquired or partnered products; significant transaction costs; and unknown liabilities;
• competition, including from new product entrants, in-line branded products, generic products, private label products, biosimilars and product candidates that treat or prevent diseases and conditions similar to those treated or intended to be prevented by our in-line products and product candidates;
• the ability to successfully market both new and existing products, including biosimilars;
• difficulties or delays in manufacturing, sales or marketing; supply disruptions, shortages or stock- outs at our facilities or third-party facilities that we rely on; and legal or regulatory actions;
• the impact of public health outbreaks, epidemics or pandemics (such as COVID-19) on our business, operations and financial condition and results, including impacts on our employees, manufacturing, supply chain, sales and marketing, research and development and clinical trials;

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