Pfizer Inc. (PFE) Lowering 15 Sales/EPS, but raising 16 estimates. Neutral

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1 CHANGING ESTIMATES February 1, 2016 Pfizer Inc. (PFE) Lowering 15 Sales/EPS, but raising 16 estimates 2015 sales/eps in-line with the Street; 2016 higher on Lyrica & Prevnar growth What's Incremental To Our View We lowered FY15 sales/eps est s. to $48.4B/$2.19 (-$75M/-$0.01), which are in-line with the Street. We raised our Prevnar franchise sales by +$323M, which were offset by lower pipeline & legacy asset sales. We raised our 2016 & outyear estimates on Prevnar-13 & Lyrica U.S. franchise sales. PFE reports 4Q15 earnings tomorrow (2/2/16) before market open; our sales/eps estimates of $13.6B/$0.52 are in line with the Street. Our PFE stand-alone sales/ EPS CAGR s are 2.5%/6% vs. the Street s 3.5%/8%. Maintain Neutral rating/ $37PT on 15x our 20E NEWCO EPS, discounted back to present. We lowered 15 sales/eps on higher Prevnar/lower pipeline sales We reduce 2015 sales/eps estimates to $48.4B/$2.19 from $48.5B/$2.20. Higher US Prevnar (+$323M) & Ex-US Enbrel (+$118M) sales were offset by reductions in our Ibrance (-$110M), & pipeline (-$300M), and other legacy sales estimates. Our 2015 revenue/eps estimates are towards the top-end of PFE s $47.5B-$48.5B sales and $2.16-$2.20 EPS ranges. Our 4Q15E sales/eps estimates of $13.6B/$0.52 are in line with the Street. Increased 16 & out-year estimates on higher Prevnar & Lyrica growth We expect strength in late 2015 (Prevnar boasted QoQ TRx growth of 123% and QoQ gross sales growth of 34% in 4Q15, according to IMS) to carry over into We raise our 2016 Prevnar estimates by $1.9B to $8.2B (from $6.3B) previously, bringing our 2016 Prevnar estimates materially above the Street s $6.6B. We also raised our 2016 Lyrica sales by +$316M on higher than projected US pricing growth. We raised our 2016 total revenue to $52.5B (from $51.3B previously) in line with the Street & increased our 2016 EPS estimate by +$0.04 to $2.39 (from $2.35 previously), $0.01 above the Street s $2.38. Robust Lyrica & Prevnar franchise growth in the US in 2016 & beyond contributed to modest increases to our out year revenue & EPS estimates. Our PFE stand-alone E sales/eps CAGRs are 2.5%/6.1% vs. the Street s 3.5%/8.1% PFE + AGN NEWCO will inject much needed growth As we noted in our PFE upgrade note dated November 25, 2015 (click here) PFE s proposed acquisition of Allergan (AGN, $282.70, not rated) makes strategic sense for PFE because AGN is investing in multiple new product launches & has a rich pipeline of late stage assets that could re-invigorate PFE s top-line growth. AGN s six therapeutic areas (aesthetics/dermatology, ophthalmology, gastrointestinal, anti-infectives, central nervous system, antiinfectives & women s health care) have limited overlap with PFE global Neutral Δ Key Drivers Price Target: $37.00 Prior: $37.00 To From Lower '15 EPS $2.19 $2.20 Lower legacy & pipeline sales Higher '16 EPS $2.39 $2.35 Higher Prevnar & Eliquis sales Price (Feb. 1, 2016) $ Wk Range $36.15-$30.17 Market Cap ($M) 188,744 ADTV 36,319,916 Shares Out (M) 6,256.0 Short Interest Ratio/% Of Float 2.0% Dividend/Yield $1.16/3.8% TR to Target 26.5% Total Debt $32,149.0 ROA 6.88% ROE 13.0% FCF/Share $3.09 FCF Yield 10.03% Cash And Equivalents ($M) $29,979.0 Enterprise Value ($M) $214,145.0 EV/EBITDA NTM 8.6x EPS Adjusted 2014A 2015E 2016E Curr. Prior Curr. Prior 1Q $0.57 $0.51A $ Q $0.58 $0.56A $ Q $0.57 $0.60A $ Q $0.54 $0.52 $ CY $2.27 $2.19 $2.20 $2.39 $2.35 P/E 13.3x 13.8x 12.6x Revenue ($M) CY $49,406 $48,408 $48,483 $52,525 $51,330 EV/Sales 4.3x 4.4x 4.1x Consensus CY $2.27 $2.19 $2.38 FYE Dec John T. Boris john.t.boris@suntrust.com Keith Hinton, CFA keith.hinton@suntrust.com SEE PAGE 10 FOR REQUIRED DISCLOSURE INFORMATION Page 1 Equity Research

2 innovative products (GIP) & global established products (GEP) segments or its late stage pipeline assets. Further, the deal right sizes PFE s US:Ex-US sales mix from 44%:56% (standalone) to 61%:39% (NEWCO), restoring some pricing power, and, assuming no tax penalty for earnings stripping, the NEWCO s adjusted effective tax rate (17%-18%) is materially lower than PFE s historical rate (25%-30% annually since 2010). We maintain our Neutral rating on PFE shares and our $37PT, which is based on 15x our 2020 NEWCO EPS of $3.46, discounted back to present at an ~8.5% rate. Risks to our NEWCO-based price target include failure to close the AGN deal, failure to recognize meaningful revenue & operational synergies, pipeline failures, and/or tax penalties against the NEWCO as a result of political pressure to stop and/or penalize inversions. Page 2 of 12

3 Exhibit 1: PFE 4Q15 Product Estimates vs. TRx Growth Upside / Downside Drug 1 year prior U.S. Rev ($M) 4Q15E Sales ($M) Sales Growth IMS TRx Growth Price Increases TRx and Price Increases Upside / Downside ($M) Prevnar Franchise (1) $621 $ % 94.4% NM 94.4% $ % PI on 11/1/2015 Lyrica % 1.9% 11.3% 13.2% $ % PI on 1/1/2015, 9.44% PI on 6/1/2015, 60% realized Viagra % (10.6%) 13.2% 2.7% (3.8) 9.4% PI on 1/1/2015, 9.44% PI on 6/1/2015, 70% realized Premarin (1.0%) (14.1%) 18.9% 4.8% % PI on 1/1/2015, 9.44% PI on 6/1/2015 Pristiq (17.1%) (6.1%) 18.9% 12.7% % PI on 1/1/2015, 9.44% PI on 6/1/2015 Chantix % 5.7% 15.9% 21.6% % PI on 1/1/2015, 6.44% PI on 6/1/2015 Xeljanz % 35.7% 21.7% 57.4% % PI on 1/1/2015, 6.9% PI on 6/1/2015; 7.9% PI on 10/1/2015 Sutent % 7.5% 12.0% 19.5% % PI on 1/1/2015, 5% PI on 6/1/2015 Lipitor (48.2%) (23.3%) 14.0% (9.3%) % PI on 1/1/2015, 5% PI on 6/1/2015 Zyvox (LOE 05/15) (97.1%) (81.4%) 24.0% (57.4%) % PI on 1/1/2015, 12% PI on 6/1/2015 Celebrex (LOE 12/14) (91.5%) (94.7%) 18.8% (75.9%) % PI on 1/1/2015, 9.44% PI on 6/1/2015 Xalkori % (6.3%) 12.0% 5.7% (11.6) 7.0% PI on 1/1/15, 5% PI on 6/1/2015 Zosyn % 47.8% 0.0% 47.8% 10.7 No price increase Ibrance NM NM 0.0% NM NM No price increase Inlyta % (6.0%) 11.0% 5.0% 1.1 6% PI on 1/1/2015, 5% PI on 6/1/2015 Rapamune 32 3 (91.1%) (51.4%) 27.4% (23.9%) % PI on 1/1/2015, 15% PI on 6/1/2015 Tygacil % (29.8%) 23.0% (6.8%) (4.3) 12% PI on 1/1/2015, 5% PI on 6/1/2015 Toviaz (11.0%) (18.4%) 13.2% (5.2%) % PI on 1/1/2015, 9.44% PI on 6/1/2015, 70% realized Revatio (11.5%) 77.1% 26.0% 103.1% % PI on 1/1/2015, 15% PI on 6/1/2015 Trumenba 0 29 NM NM 0.0% 0.0% NM No price increase Total PFE Net Sales $13,112 $13, % (23.6%) Projected Upside/Downside to Sales Estimate $543.7 Corresponding EPS Impact $0.02 Source: STRH Research, company reports, IMS. Notes Exhibit 2: PFE 2015 Financial Ranges PFE Management PFE Management PFE Management PFE Management SunTrust Current Consensus Current Ranges Midpoint Ranges Ranges Midpoint Ranges Estimates Estimates (09/30/2015) (09/30/2015) (10/27/2015) (10/27/2015) (02/01/2016) (02/01/2016) Revenue $46.5B-$47.5B $47.0B $47.5B-$48.5B $48.0B $48.4B (- 2% ) $48.4B Gross Margin 81.5% % $ % % 81.1% 81.0% (- 0.6% ) 81.2% Adjusted SG&A $12.8B-$13.8B $13.3B $13.6B-$14.1B $13.85B $13.8B (+ 1% ) $13.8B Adjusted R&D $7.3B-$7.6B $7.45B $7.5B-$7.8B $7.65B $7.5B (+ 5% ) $7.6B Interest & Other $500M $500M $500M $500M -$514M (- 10% ) -$512M Tax Rate 25.0% 25.0% 25.0% 25.0% 25% (- 1% ) 25.1% Net Income (adjusted) Not Provided Not Provided Not Provided Not Provided $13.7B (- 6% ) $13.7B Adjusted EPS $2.04-$2.10 $2.07 $2.16-$2.20 $2.18 $2.19 (- 3% ) $2.19 Cash flow from operations Not Provided Not Provided Not Provided Not Provided $20.3B (+ 20% ) $14.9B Share Repurchase $6B $6B Not Provided Not Provided $6B NA Share Count 6.25B 6.25B Not Provided Not Provided 6.26B (- 3% ) 6.26B Note: yellow indicates updates Source: STRH Research, company reports, FactSet. Page 3 of 12

4 Exhibit 3: PFE (stand-alone) 2015 Estimate Revisions 2015E ($ millions) Current Prior $ Chg % Chg. Total Revenue 48,408 48,483 (75) (0.2%) COGS 9,187 9, % Gross Profits 39,221 39,351 (130) (0.3%) SG&A Expense 13,791 13,847 (56) (0.4%) R&D Expense 7,527 7,539 (12) (0.2%) Operating Income 17,902 17,965 (63) (0.3%) Non-Operating Expense/(Income) (378) (378) 0 (0.0%) Pretax Income 18,280 18,343 (63) (0.3%) Taxes 4,577 4,593 (16) (0.3%) Minority Interests (30) (24) (6) 25.0% Net Income 13,673 13,726 (53) (0.4%) EPS - Diluted $2.19 $2.20 ($0.01) (0.7%) Shares Outstanding - Diluted 6,256 6, % DPS $1.12 $ Margin Analysis Current Current $ Chg % Chg. (bps) Gross Margin 81.0% 81.2% NA (14) SG&A 28.5% 28.6% NA (7) R&D 15.6% 15.6% NA -- Operating Margin 37.0% 37.1% NA (7) Pretax Margin 37.8% 37.8% NA (7) Tax Rate 25.0% 25.0% NA -- Net Margin 28.2% 28.3% NA (7) Percentage Change Current Current $ Chg % Chg. (bps) Revenue (2.0%) (1.9%) NA (12) COGS 0.6% (0.0%) NA 63 Gross Profit (2.6%) (2.3%) NA (29) SG&A 0.5% 0.9% NA (37) R&D 5.2% 5.4% NA (13) Operating Income (7.7%) (7.4%) NA (29) Pretax Income (7.7%) (7.4%) NA (29) Net Income (5.9%) (5.5%) NA (35) Shares Outstanding (2.6%) (2.7%) NA 8 EPS (3.4%) (2.9%) NA (42) Source: STRH Research, company reports. Exhibit 4: PFE (stand-alone) 2016 Estimate Revisions 2016E ($ millions) Current Prior $ Chg % Chg. Total Revenue 52,525 51,330 1, % COGS 10,328 9, % Gross Profits 42,198 41, % SG&A Expense 14,129 13, % R&D Expense 7,774 7, % Operating Income 20,295 20, % Non-Operating Expense/(Income) (123) (23.2%) Pretax Income 19,887 19, % Taxes 5,270 5, % Minority Interests (30) (24) (6) 25.0% Net Income 14,587 14, % EPS - Diluted $2.39 $2.35 $ % Shares Outstanding - Diluted 6,098 6, % DPS $1.17 $ Margin Analysis Current Prior $ Chg % Chg. (bps) Gross Margin 80.3% 80.8% NA (43) SG&A 26.9% 26.8% NA 10 R&D 14.8% 15.0% NA (20) Operating Margin 38.6% 39.0% NA (33) Pretax Margin 37.9% 37.9% NA (7) Tax Rate 26.5% 26.5% NA -- Net Margin 27.8% 27.8% NA (6) Percentage Change Current Prior $ Chg % Chg. (bps) Revenue 8.5% 5.9% NA 263 COGS 12.4% 8.1% NA 432 Gross Profit 7.6% 5.4% NA 223 SG&A 2.5% (0.7%) NA 310 R&D 3.3% 2.1% NA 115 Operating Income 13.4% 11.3% NA 202 Pretax Income 8.8% 6.2% NA 264 Net Income 6.7% 4.1% NA 259 Shares Outstanding (2.5%) (2.6%) NA 2 EPS 9.5% 6.8% NA 264 Source: STRH Research, company reports Page 4 of 12

5 Exhibit 5: PFE (stand-alone) Estimates - STRH vs Consensus ($ millions) 2015E 2016E 2017E 2018E 2019E 2020E '15-'20 CAGR Revenue 48,408 52,525 53,683 55,145 54,164 54, % % growth (2.0%) 8.5% 2.2% 2.7% (1.8%) 1.0% Consensus 48,393 52,549 54,577 56,421 57,059 57, % High 48,849 53,430 56,537 59,659 62,640 59,509 Low 47,880 51,330 52,646 54,067 53,233 53,763 # Contributors STRH vs cons 0.0% (0.0%) (1.6%) (2.3%) (5.1%) (4.6%) Operating Profit 17,902 20,295 21,105 22,661 22,510 22, % % growth (7.7%) 13.4% 4.0% 7.4% (0.7%) 1.8% % margin 37.0% 38.6% 39.3% 41.1% 41.6% 41.9% Consensus 17,803 19,351 21,398 22,735 24,848 25, % High 19,228 20,555 22,320 24,693 39,106 39,572 Low 15,584 17,645 20,162 20,716 20,088 19,598 # Contributors STRH vs cons 0.6% 4.9% (1.4%) (0.3%) (9.4%) (9.6%) Non-GAAP EPS % % growth (3.4%) 9.5% 6.1% 10.2% 0.7% 4.1% Consensus % High Low # Contributors STRH vs cons (0.2%) 0.6% (3.9%) (4.8%) (8.4%) (9.1%) Source: STRH Research, FactSet. Page 5 of 12

6 Exhibit 6: PFE (stand-alone) Pipeline Risk Adjusted Sales Estimates - STRH vs Consensus 2015E to 2020E ($ millions) 2015E 2016E 2017E 2018E 2019E 2020E Prevnar 7/13 STRH 6,070 8,207 8,907 9,421 9,769 10,064 % growth 36.0% 35.2% 8.5% 5.8% 3.7% 3.0% Consensus 6,001 6,641 7,090 7,233 7,460 7,666 % growth 34.4% 10.7% 6.8% 2.0% 3.1% 2.8% % Differential 1.1% 23.6% 25.6% 30.3% 30.9% 31.3% Eliquis STRH 886 1,423 1,908 2,309 2,679 3,048 % growth 136.9% 60.6% 34.0% 21.1% 16.0% 13.8% Consensus 618 1,176 1,826 2,089 2,238 2,406 % growth 65.1% 90.5% 55.2% 14.4% 7.1% 7.5% % Differential 43.5% 21.0% 4.5% 10.5% 19.7% 26.7% Ibrance STRH 790 1,339 1,894 2,348 2,745 3,196 % growth % 41.4% 24.0% 16.9% 16.4% Consensus 709 1,754 2,926 3,791 4,539 4,768 % growth % 66.8% 29.6% 19.7% 5.0% % Differential 11.5% (23.7%) (35.3%) (38.1%) (39.5%) (33.0%) Xeljanz STRH ,248 1,501 1,651 % growth 56.4% 42.3% 39.3% 30.4% 20.3% 10.0% Consensus ,164 1,447 1,527 % growth 62.3% 41.3% 32.1% 24.4% 24.3% 5.6% % Differential (3.6%) (3.0%) 2.3% 7.2% 3.7% 8.1% Xalkori STRH % growth 18.3% 8.8% 5.9% 4.5% 4.0% 4.0% Consensus % growth 14.3% 16.0% 10.9% 6.7% 4.4% 4.4% % Differential 3.5% (2.9%) (7.2%) (9.1%) (9.5%) (9.8%) Inlyta STRH % growth 7.6% 7.2% 4.5% 3.6% 3.2% 2.1% Consensus % growth 8.6% 15.6% 11.1% 9.1% 11.4% (3.5%) % Differential (1.0%) (8.2%) (13.6%) (17.9%) (23.9%) (19.5%) Dacomitinib STRH % growth - N/A N/A 150.0% 60.0% 35.8% Consensus % growth % 88.7% 59.0% % Differential 0.0% 0.0% (36.2%) (45.1%) (53.4%) (60.2%) Total STRH 9,188 12,692 14,762 16,474 17,891 19,201 % growth 53.3% 38.1% 16.3% 11.6% 8.6% 7.3% Consensus 8,774 11,375 14,001 15,610 17,139 17,854 % growth 46.4% 29.6% 23.1% 11.5% 9.8% 4.2% % Differential 4.7% 11.6% 5.4% 5.5% 4.4% 7.5% Source: STRH Research, First Order Analytics. *Eliquis is recorded as Alliance Revenue Page 6 of 12

7 Exhibit 7: PFE (stand-alone) Income Statement E PFE-US 2014A 1Q15A 2Q15A 3Q15A 4Q15E 2015E 2016E 2017E 2018E 2019E 2020E CAGR ($ millions) 2013A 2014A Q1A Q2A Q3A Q4E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E '14-'17 '14-'19 '15-'20 Total Revenue 51,452 49,406 10,864 11,853 12,087 13,604 48,408 52,525 53,683 55,145 54,164 54,685 55,921 56,298 56,575 3% 2% 2% COGS 9,273 9,134 1,807 2,123 2,108 3,149 9,187 10,328 10,621 10,740 10,855 10,985 11,153 11,266 11,367 5% 4% 4% Gross Profits 42,179 40,272 9,057 9,730 9,979 10,455 39,221 42,198 43,062 44,405 43,308 43,700 44,768 45,031 45,208 2% 1% 2% SG&A Expense 14,172 13,721 3,078 3,372 3,276 4,065 13,791 14,129 14,172 14,023 13,487 13,398 13,141 13,230 13,239 1% 0% -1% R&D Expense 6,554 7,153 1,877 1,732 1,725 2,193 7,527 7,774 7,784 7,720 7,312 7,383 7,270 7,319 7,355 3% 0% 0% Operating Income 21,453 19,398 4,102 4,626 4,978 4,196 17,902 20,295 21,105 22,661 22,510 22,920 24,357 24,483 24,615 3% 3% 5% Amortization Interest & Other - net 164 (569) (167) (153) (90) (104) (514) Pretax Income 21,128 19,812 4,235 4,747 5,035 4,263 18,280 19,887 20,609 22,232 21,968 22,457 23,926 24,041 24,196 1% 2% 4% Taxes 5,810 5,250 1,033 1,213 1,298 1,033 4,577 5,270 5,462 5,892 5,822 5,951 6,340 6,371 6,412 1% 2% 5% Non-Control. Int./Min. Int. (30) (32) (6) (9) (9) (6) (30) (30) (30) (30) (30) (30) (30) (30) (30) Net Income 15,288 14,530 3,196 3,525 3,728 3,224 13,673 14,587 15,118 16,311 16,117 16,476 17,555 17,640 17,754 1% 2% 4% EPS - Diluted $2.22 $2.26 $0.51 $0.56 $0.60 $0.52 $2.19 $2.39 $2.54 $2.80 $2.82 $2.93 $3.17 $3.21 $3.25 4% 4% 6% Shares Outstanding - Diluted 6,895 6,424 6,292 6,243 6,243 6,248 6,256 6,098 5,957 5,834 5,722 5,620 5,546 5,499 5,456-2% -2% -2% DPS $0.96 $1.04 $0.28 $0.28 $0.28 $0.28 $1.12 $1.17 $1.23 $1.28 $1.32 $1.35 $1.37 $1.40 $1.43 6% 5% 4% $14.58 Margin Analysis Gross Margin 82.0% 81.5% 83.4% 82.1% 81.1% 76.9% 81.0% 80.3% 80.2% 80.5% 80.0% 79.9% 80.1% 80.0% 79.9% SG&A 27.9% 27.8% 28.3% 28.4% 27.1% 29.9% 28.5% 26.9% 26.4% 25.4% 24.9% 24.5% 23.5% 23.5% 23.4% R&D 12.5% 14.5% 17.3% 14.6% 14.3% 16.1% 15.6% 14.8% 14.5% 14.0% 13.5% 13.5% 13.0% 13.0% 13.0% Operating Margin 41.7% 39.3% 37.8% 39.0% 41.2% 30.8% 37.0% 38.6% 39.3% 41.1% 41.6% 41.9% 43.6% 43.5% 43.5% Pretax Margin 41.1% 40.1% 39.0% 40.0% 41.7% 31.3% 37.8% 37.9% 38.4% 40.3% 40.6% 41.1% 42.8% 42.7% 42.8% Tax Rate 28.0% 26.5% 24.4% 25.6% 25.8% 24.2% 25.0% 26.5% 26.5% 26.5% 26.5% 26.5% 26.5% 26.5% 26.5% Net Margin 29.7% 29.4% 29.4% 29.7% 30.8% 23.7% 28.2% 27.8% 28.2% 29.6% 29.8% 30.1% 31.4% 31.3% 31.4% Percentage Change Revenue (5.9%) (4.0%) (3.8%) (6.7%) (1.7%) 3.7% (2.0%) 8.5% 2.2% 2.7% (1.8%) 1.0% 2.3% 0.7% 0.5% COGS (2.3%) (1.5%) (9.0%) (8.5%) (6.1%) 21.9% 0.6% 12.4% 2.8% 1.1% 1.1% 1.2% 1.5% 1.0% 0.9% Gross Profit (6.6%) (4.5%) (2.7%) (6.3%) (0.7%) (0.7%) (2.6%) 7.6% 2.0% 3.1% (2.5%) 0.9% 2.4% 0.6% 0.4% SG&A (5.7%) (3.2%) 1.9% (3.3%) (0.7%) 3.8% 0.5% 2.5% 0.3% (1.1%) (3.8%) (0.7%) (1.9%) 0.7% 0.1% R&D (5.8%) 9.1% 16.4% 1.1% (3.5%) 7.6% 5.2% 3.3% 0.1% (0.8%) (5.3%) 1.0% (1.5%) 0.7% 0.5% Operating Income (7.4%) (9.6%) (12.3%) (10.7%) 0.3% (8.2%) (7.7%) 13.4% 4.0% 7.4% (0.7%) 1.8% 6.3% 0.5% 0.5% Pretax Income (4.5%) (6.2%) (13.6%) (9.4%) 0.7% (8.8%) (7.7%) 8.8% 3.6% 7.9% (1.2%) 2.2% 6.5% 0.5% 0.6% Net Income (2.9%) (5.0%) (12.8%) (6.5%) 2.0% (6.3%) (5.9%) 6.7% 3.6% 7.9% (1.2%) 2.2% 6.6% 0.5% 0.6% Shares Outstanding (8.2%) (6.8%) (2.8%) (3.1%) (2.5%) (2.0%) (2.6%) (2.5%) (2.3%) (2.1%) (1.9%) (1.8%) (1.3%) (0.9%) (0.8%) EPS 5.7% 2.0% (10.3%) (3.5%) 4.6% (4.4%) (3.4%) 9.5% 6.1% 10.2% 0.7% 4.1% 8.0% 1.3% 1.4% Source: STRH Research, company reports. Page 7 of 12

8 Exhibit 8: PFE (stand-alone) Consolidated Balance Sheet E ($ millions) 2013A 2014A Q1A Q2A Q3A Q4E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E Assets Cash and Cash Equivalents 2,183 3,343 3,563 3,670 3,099 29,914 29,914 50,324 67,115 84, , , , , ,374 Short-Term Investments 30,225 32,779 24,145 26,586 17,559 33,442 33,442 52,502 71,658 90, , , , , ,738 Cash & Short-Term Investments 32,408 36,122 27,708 30,256 20,658 63,356 63, , , , , , , , ,112 Accounts Receivable Net 9,357 8,669 8,920 8,951 9,535 8,001 8,001 8,682 8,873 9,115 8,953 9,039 9,243 9,305 9,351 Short-Term Loans Inventories 6,166 5,663 5,786 5,796 7,678 5,033 5,033 5,658 5,819 5,884 5,947 6,019 6,111 6,173 6,228 Prepaid Expenses and Other 8,237 7,248 7,029 6,712 7,130 6,690 6,690 7,259 7,419 7,621 7,485 7,557 7,728 7,780 7,818 Assets of Discontinued Businesses Total Current Assets 56,244 57,702 49,443 51,715 45,001 83,080 83, , , , , , , , ,510 Net Property, Plant, and Equipment 12,397 11,762 11,527 11,432 13,695 11,625 11,625 11,276 10,949 10,652 10,336 10,029 9,748 9,474 9,205 Long-Term Loans and Investments 16,406 17,518 18,289 17,650 16,233 16,882 16,882 15,500 14,091 12,654 11,188 9,693 8,168 8,331 8,498 Net Goodwill 42,519 42,069 41,854 41,571 47,217 47,217 47,217 47,217 47,217 47,217 47,217 47,217 47,217 47,217 47,217 Intangibles - net 39,385 35,166 34,334 33,424 43,297 35,137 35,137 35,109 35,109 35,109 35,109 35,109 35,109 35,109 35,109 Other Assets 5,150 5,057 5,193 5,085 5,423 4,667 4,667 5,064 5,176 5,317 5,222 5,273 5,392 5,428 5,455 Total Assets 172, , , , , , , , , , , , , , ,994 Liabilities and Shareholders' Equity ST Debt & Current Portion of LT Debt 6,027 5,141 6,555 8,394 9,818 1,033 1,033 4,435 4,742 1,000 4,734 2, ,000 Accounts Payable 3,234 3,440 2,724 2,930 3,294 3,057 3,057 3,437 3,535 3,574 3,613 3,656 3,712 3,750 3,783 Income Taxes Payable ,057 1, Dividends Payable 1,663 1, ,726 1,728 1,724 1,724 1,768 1,817 1,852 1,872 1,877 1,897 1,920 1,943 Accrued Compensation 1,792 1,784 1,679 1,646 2,155 1,681 1,681 1,824 1,864 1,914 1,880 1,899 1,941 1,954 1,964 Other Current Liabilities 9,951 9,024 8,320 8,390 9,672 8,329 8,329 9,037 9,236 9,488 9,319 9,409 9,622 9,686 9,734 Liabilities of Discontinued Businesses Total Current Liabilities 23,366 21,631 20,222 24,143 27,845 16,314 16,314 21,033 21,737 18,387 21,967 20,142 17,739 17,880 18,998 Long-Term Debt 30,462 31,541 29,370 26,729 29,079 31,116 31,116 26,681 21,939 20,939 16,205 13,457 13,457 13,457 12,457 Pension benefit obligations 4,635 7,885 6,571 6,529 6,745 6,745 6,745 6,745 6,745 6,745 6,745 6,745 6,745 6,745 6,745 Postretirement Benefit Obligation 2,668 2,379 2,480 1,969 1,980 1,980 1,980 1,980 1,980 1,980 1,980 1,980 1,980 1,980 1,980 Deferred Taxes and Other Taxes 29,583 29,334 28,767 29,018 33,106 33,106 33,106 33,106 33,106 33,106 33,106 33,106 33,106 33,106 33,106 Other Liabilities 4,767 4,883 5,644 5,310 4,987 4,507 4,507 4,890 4,998 5,134 5,043 5,091 5,206 5,241 5,267 Total Liabilities 95,481 97,653 93,054 93, ,743 93,768 93,768 94,436 90,506 86,292 85,046 80,522 78,233 78,410 78,553 Preferred Stock (Carrying Value) Common stock Additional paid-in capital 77,283 78,977 80,004 80,407 80,763 80,763 80,142 80,142 80,142 80,142 80,142 80,142 80,142 80,142 80,142 Retained earnings 69,732 72,176 74,471 73,620 74,019 75,954 75,954 80,467 85,317 91,220 96, , , , ,796 Other comprehensive (3,271) (7,316) (8,557) (8,521) (9,170) 26,374 26,961 67, , , , , , , ,218 Employee benefit trusts Treasury Stock (67,923) (73,021) (79,100) (79,098) (79,259) (79,021) (79,021) (84,321) (89,621) (94,921) (100,221) (105,521) (108,521) (108,521) (108,521) Pfizer Shareholder Equity 76,307 71,300 67,304 66,894 66, , , , , , , , , , ,119 Equity attributable to non-controlling interests Total Shareholders' Equity 76,620 71,621 67,587 67,180 67, , , , , , , , , , ,440 Total Liabilities and Equity 172, , , , , , , , , , , , , , ,994 Source: STRH Research, company reports. Page 8 of 12

9 Exhibit 9: PFE (stand-alone) Statement of Cash Flows E ($ millions) 2013A 2014A Q1A Q2A Q3A Q4E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E Reported Net Income 22,072 9,168 2,381 2,636 2,138 2,474 10,673 11,587 12,118 13,311 13,117 13,476 14,555 14,640 14,754 Depreciation and Amortization 6,410 5,537 1,260 1,201 1,272 1,275 5,100 4,800 4,700 4,700 4,700 4,700 4,700 4,700 4,700 Share-based Compensation Expense (Gains) on sales of equity investments (459) Loss (gains) on sales of business -- (51) Loss (gains) on sales of product lines Cumulative effect in acctg principle change Discontinued operations (10,446) Asset impairments & restructuring 1, Deferred taxes and Other 1, (1,251) Charge for in-process R&D Minority interest Other -- (628) 905 (2,269) 1, Changes in Working Capital (3,392) 1,423 (2,784) 2,275 (779) 5,331 4,043 (174) (7) 19 (11) (20) (8) 0 4 Operating Cash Flow 17,765 16, ,091 5,024 10,501 20,300 16,738 17,348 18,581 18,347 18,703 19,807 19,903 20,024 Capital Expenditures (1,206) (1,199) (239) (258) (289) (182) (968) (1,051) (1,074) (1,103) (1,083) (1,094) (1,118) (1,126) (1,132) Purchase of short-term investments (42,761) (50,954) (7,546) (8,483) (5,039) (5,039) (26,107) (31,107) (31,107) (31,107) (31,107) (31,107) (31,107) (31,107) (31,107) Proceeds from short-term sales of investments 36,850 51,304 15,945 7,558 15,663 20,834 60,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 Purchase of long-term investments (11,020) (10,718) (3,150) (2,272) (1,156) (1,286) (7,864) (7,864) (7,864) (7,864) (7,864) (7,864) (7,864) (7,864) (7,864) Proceeds from redemptions of long-term investments 7,555 6,145 1,937 1,354 1,244 1,610 6,145 6,145 6,145 6,145 6,145 6,145 6,145 6,145 6,145 Purchase of other assets -- (384) (7) (5) (36) -- (48) Proceeds from sales of other assets Other (28) Purchase of Businesses (15) (195) (678) (1) (15,643) -- (16,322) Proceeds from Sales of Businesses Investing Cash Flow (10,625) (5,654) 6,592 (2,105) (5,243) 15,937 15,182 16,469 16,446 16,417 16,437 16,426 16,402 16,394 16,388 Proceeds from issuances of long-term debt 6,618 4, ,037 2, Repayments of long-term debt (4,146) (2,104) (3,002) -- (1) (299) (3,302) (425) (4,435) (4,742) (1,000) (4,734) (2,748) Increase in short-term debt 7,798 (1,828) 2,861 (358) (481) -- 2, Decrease in short-term debt (4,234) (10) -- (10) 1, , Stock Option Transactions 1,750 1, , Proceeds from Common Stock Purchases of Common Stock (16,290) (5,000) (6,000) -- (160) -- (6,000) (5,300) (5,300) (5,300) (5,300) (5,300) (3,000) (3,000) (3,000) Dividend Paid (6,580) (6,609) (1,758) (1,725) (1,728) (1,684) (6,895) (7,073) (7,268) (7,408) (7,489) (7,508) (7,590) (7,678) (7,773) Other Financing Cash Flow (14,975) (9,986) (6,982) (1,875) (267) 54 (8,910) (12,798) (17,003) (17,450) (13,789) (17,542) (13,338) (10,678) (10,773) Cash from Discontinued Operations Effect of Exchange Rates (63) (83) (74) (4) (85) Net Cash Flow (7,898) 1, (571) 26,491 26,571 20,409 16,792 17,548 20,995 17,587 22,871 25,619 25,639 Cash/Equivalents - Beginning of Period 10,081 2,183 3,343 3,563 3,670 3,099 3,343 29,914 50,324 67,115 84, , , , ,735 Cash/Equivalents - End of Period 2,183 3,343 3,563 3,670 3,099 29,914 29,914 50,324 67,115 84, , , , , ,374 Source: STRH Research, company reports. Page 9 of 12

10 Company Description Pfizer (PFE) is a global pharmaceutical company with 2014 total sales of $49.5B (-4% YoY). Worldwide sales are divided between the U.S. (38%) and international markets (62%). PFE's top ten drugs accounted for 50% of total 2014 pharmaceutical sales, including Lyrica ($5.2B, seizures/neuropathic pain/fibromyalgia), Prevnar ($4.7B, pneumococcal vaccine), Enbrel ($3.9B, rheumatoid arthritis/ psoriasis), Celebrex ($2.7B, arthritis), Lipitor ($2.1B; LDL cholesterol reducer), Viagra ($1.7B, erectile dysfunction), Zyvox ($1.4B, antiinfective), Sutent ($1.2B, cancer), Norvasc ($1.1B, hypertension), and Premarin ($1.1B, hormone replacement therapy for post menopausal females). In 2012, PFE executed the sale of its Nutritional business to Nestle and in 2013 successfully spun off its Zoetis (ZTS) animal health business. Investment Thesis We rate PFE a Neutral based on its long-term growth outlook. We think PFE's strategy of downsizing the company back to its pharmaceutical roots moves it in the right direction; however, it faces the challenge of growing off a declining base from >$15B from LOEs. In addition, PFE needs to replace ~$3B of highly profitable alliance revenue (LOAR) following the giveback of Enbrel in North America in 2013 (3-year royalty) and Spiriva/Rebif (no royalties) in 2014/2015, respectively. PFE's alliance revenue peaked at $4.1 billion in 2010 and could trough at ~$900M in 2016E. The >$3B LOAR is only partially mitigated by 2019E sales for Eliquis ($2.65B in sales projected vs. Street's $1.8B). The $15B hit to revenues from LOEs/LOARs implies that over the next three years, PFE's Value (generic drugs) Core will become larger, which could weigh negatively on its earnings as its Innovation (branded drugs) Core experiences LOEs & LOAR at a faster rate than its pipeline is able to replenish. PFE is evaluating a break-up of the company but is unlikely to do so for at least 3 years, in our view, until it structures the two businesses and generates separate financial reporting for its Innovation and Value Core businesses. PFE needs to see how its pipeline matures in the near term while it considers partners/divestitures/spins for its growing generic business (Value core). We see the capital deployment balance shifting from share repos/dividends to M&A. PFE needs to strengthen its Value Core by deploying cash toward multiple bolt-on acquisitions or a sizable acquisition to improve its underlying performance. Valuation and Risks Valuation We arrive at our $37 target price for Pfizer based on its shares trading at 15x our NEWCO 2020E EPS discounted back to present. We believe this is warranted due to PFE s anemic growth outlook and higher concentration of sales in generics. Our DCF analysis yields an intrinsic value of $38 per share assuming a WACC of 7.9% and a terminal growth rate of -8%. Although PFE's growth strategy appears to be focused on growing its "innovation core" over the long term, we believe that its top-line growth outlook is negative without the right mix of divestitures and acquisitions. Over the past decade, we note that Pfizer has traded in a range of >20% discount to a 50% premium (-3% average discount) relative to the drug multiple. Given that Pfizer's current growth and risk profile is very different from years past, we believe a discount to the group is warranted. Risks We expect Pfizer to see continued deterioration of its base business in the US, with execution risk on the pipeline, and potential restructuring issues. Additional risks to Pfizer s price target include: 1) increasing competition in emerging markets from branded and generic players; 2) pricing pressures/ higher discounts and rebates demanded by payers and governments; and 3) setbacks to the latestage pipeline, including negative clinical trial results and delays in product approvals (Xeljanz rejected in the EU) resulting in reductions in our sales estimates. For example, Xeljanz could be associated with serious long-term safety issues (serious infections and risk of cancer) due to its off-target effects. Xeljanz could also see increased competition from other oral JAK 2/3 inhibitors that are more specific and may not be associated with off target effects. We also note that sources of upside risk include: 1) timely approval and outperformance from latestage pipeline assets: 2) improvement in performance of lagging products (e.g., Lyrica/Celebrex/ Viagra/Chantix); 3) additional cost saving initiatives; and 4) faster-than-expected in-roads into emerging markets. We note investment risks related to the overall pharmaceutical industry include continuing political risk, product development risk, regulatory and commercialization risks, competitive threats and increasing pricing pressures from global payers. If the impact on the company from any of these factors proves to be greater/less than we anticipate, it may cause the stock to fall below/rise above our target price. Page 10 of 12

11 Companies Mentioned in This Note Allergan plc (AGN, $282.70, not rated) Analyst Certification I, John T. Boris, hereby certify that the views expressed in this research report accurately reflect my personal views about the subject company(ies) and its (their) securities. I also certify that I have not been, am not, and will not be receiving direct or indirect compensation in exchange for expressing the specific recommendation(s) in this report. Required Disclosures Analyst compensation is based upon stock price performance, quality of analysis, communication skills, and the overall revenue and profitability of the firm, including investment banking revenue. As a matter of policy and practice, the firm prohibits the offering of favorable research, a specific research rating or a specific target price as consideration or inducement for the receipt of business or compensation. In addition, associated persons preparing research reports are prohibited from owning securities in the subject companies. STRH Ratings System for Equity Securities 3 designations based on total returns* within a 12-month period** Buy total return 15% (10% for low-beta securities)*** Reduce total return negative 10% (5% for low Beta securities) Neutral total return is within the bounds above NR NOT RATED, STRH does not provide equity research coverage CS Coverage Suspended *Total return (price appreciation + dividends) **Price targets are within a 12-month period, unless otherwise noted ***Low Beta defined as securities with an average Beta of 0.8 or less, using Bloomberg s 5-year average Beta Legend for Rating and Price Target History Charts: D = drop coverage I = initiate coverage T = transfer coverage Page 11 of 12

12 SunTrust Robinson Humphrey ratings distribution (as of 02/01/2016): Coverage Universe Investment Banking Clients Past 12 Months Rating Count Percent Rating Count Percent Buy % Buy % Neutral % Neutral % Sell/Reduce % Sell/Reduce % Other Disclosures Information contained herein has been derived from sources believed to be reliable but is not guaranteed as to accuracy and does not purport to be a complete analysis of the security, company or industry involved. This report is not to be construed as an offer to sell or a solicitation of an offer to buy any security. SunTrust Robinson Humphrey, Inc. and/or its officers or employees may have positions in any securities, options, rights or warrants. The firm and/or associated persons may sell to or buy from customers on a principal basis. Investors may be prohibited in certain states from purchasing some overthe-counter securities mentioned herein. Opinions expressed are subject to change without notice. The information herein is for persons residing in the United States only and is not intended for any person in any other jurisdiction. SunTrust Robinson Humphrey, Inc. s research is provided to and intended for use by Institutional Accounts as defined in FINRA Rule 4512(c). The term Institutional Account" shall mean the account of: (1) a bank, savings and loan association, insurance company or registered investment company; (2) an investment adviser registered either with the SEC under Section 203 of the Investment Advisers Act or with a state securities commission (or any agency or office performing like functions); or (3) any other person (whether a natural person, corporation, partnership, trust or otherwise) with total assets of at least $50 million. SunTrust Robinson Humphrey, Inc. is a registered broker-dealer and a member of FINRA and SIPC. It is a service mark of SunTrust Banks, Inc. SunTrust Robinson Humphrey, Inc. is owned by SunTrust Banks, Inc. ("SunTrust") and affiliated with SunTrust Investment Services, Inc. Despite this affiliation, securities recommended, offered, sold by, or held at SunTrust Robinson Humphrey, Inc. and at SunTrust Investment Services, Inc. (i) are not insured by the Federal Deposit Insurance Corporation; (ii) are not deposits or other obligations of any insured depository institution (including SunTrust Bank); and (iii) are subject to investment risks, including the possible loss of the principal amount invested. SunTrust Bank may have a lending relationship with companies mentioned herein. SunTrust Robinson Humphrey, Inc All rights reserved. Reproduction or quotation in whole or part without permission is forbidden. ADDITIONAL INFORMATION IS AVAILABLE at our website, or by writing to: SunTrust Robinson Humphrey, Research Department, 3333 Peachtree Road N.E., Atlanta, GA Page 12 of 12