Pfizer.Finacial Analyses

PFIZER

Table of contents :

I. Company overview 5

II. Financial Ratio Analysis 19

A. Short - term liquidity ratios 19

B. Long- Term solvency ratios 25

C. Profitability ratios 28

D. Market price and dividends ratio...................................................34

III. Cash Flow Analysis 39

IV. Business Valuation 48

DISCOUNTED CASH FLOW 48

1. Assumptions for the future 48

2. Discounted Cash Flow Analysis 51

3. Final conclusions on DCF for Pfizer 57

I. Company overview

History

1849

Charles Pfizer & Company opens as a fine-chemicals business. A modest red-brick building in the Williamsburg section of Brooklyn, New York, serves as office, laboratory, factory, and warehouse. The company's first product is santonin -- a palatable antiparasitic which is an immediate success.

1862

The first domestic production of tartaric acid and cream of tartar, products vital to the food and chemical industries, is launched by Pfizer.

1868 The expansion propelled by the Civil War continues and Pfizer's revenues double. The company now has a substantially increased product line and 150 new employees. To accommodate this growth, it buys and renovates a post-Revolutionary-era building at 81 Maiden Lane in Manhattan and moves its headquarters there. The site carries the Pfizer name for nearly a century.

1880 Using imported concentrates of lemon and lime, Pfizer begins manufacturing citric acid, which becomes the company's main product and the launching pad of its growth in the decades that follow.

1882 Spurred by America's westward expansion and its own growing number of clients west of the Mississippi, Pfizer opens offices and a warehouse in Chicago, Illinois, its first location outside of New York.

1891 On December 27, cofounder Charles Erhart dies and leaves a partnership worth $250,000 to his son William. However, the agreement stipulates that Charles Pfizer can buy William Erhart's share at half its inventory value -- an option Charles Pfizer quickly exercises, consolidating ownership of the company in his hands.

1899 A leader in the American chemical business, Pfizer marks its 50th anniversary. Its portfolio includes a wide array of industrial and pharmacological products, anchored by citric acid, camphor, cream of tartar, borax, and iodine. The company has offices in New York and Chicago, and its contacts in the import-export business crisscross the world.

1900 Pfizer files an official certificate of incorporation in the state of New Jersey, with authorized capital of $2 million divided into 20,000 shares of $100 each. Pfizer would remain a privately held company until June 22, 1942, when 240,000 shares of new common stock were offered to the public.

1905 Emile Pfizer, Charles Pfizer's youngest son, is appointed President at a special board meeting. He serves as President from 1906 to 1941 and briefly as Chairman in 1941. He is the last member of the Pfizer/Erhart family to be actively involved with the company.

1906 At the age of 82, Charles Pfizer dies while vacationing at his Newport, Rhode Island estate. A tribute to Pfizer in The New York Tribune notes that "by bringing to his task a thorough German technical education, great industry, and determination, he successfully met all difficulties and each year expanded his business."

Company sales exceed $3 million.

1914 The Board of Directors creates the position of Chairman and elects John Anderson to that post. Anderson, who had joined Pfizer in 1873 as a 16-year-old office boy, would remain Chairman until 1929.

1919 Pfizer chemist James Currie successfully pioneers the mass production of citric acid from sugar through mold fermentation, an achievement that eventually frees Pfizer from dependency on European citrus growers

1924 Charles Pfizer & Co. turns 75 years old. A celebration at the Brooklyn plant, which has 306 employees, marks the milestone.

1928 Alexander Fleming discovers the antibiotic properties of the penicillin mold, an event destined to make medical history and to change the course of Pfizer's future.

1929 On January 10, 1929, John Anderson announces he is stepping down as chairman of the board. William Erhart (right) is named the new chairman, Emile Pfizer continues to serve as president, and John Anderson's son, George, becomes senior vice president.

1936 Doctor Richard Pasternack develops a fermentation-free method for producing ascorbic acid, vitamin C. After building a new plant and initiating a 24-hour-a-day, seven-day-a-week production schedule, Pfizer becomes the world's leading producer of vitamin C.

1939 Pfizer succeeds so well in the production of citric acid by fermenting sugar that a pound of citric acid, which had cost $1.25 in 1919, tumbles to 20Ñž, and Pfizer is widely recognized as a leader in fermentation technology

1941 Pfizer responds to an appeal from the United States Government to expedite the manufacture of penicillin to treat Allied soldiers fighting in World War II. Of the companies pursuing mass production of penicillin, Pfizer alone uses fermentation technology

1944 Using deep-tank fermentation, Pfizer is successful in its efforts to mass-produce penicillin and becomes the world's largest producer of the "miracle drug." Most of the penicillin that goes ashore with Allied forces on D-Day is made by Pfizer

1945 George A. Anderson becomes Pfizer's chairman of the board. John L. Smith fills the office of President.

1949 As the mid-point of the 20th century nears, Pfizer celebrates its 100th anniversary and a new generation of leaders takes the helm. John McKeen becomes president, George Anderson retires, and John L. Smith takes his place as chairman of the board. Pfizer scientists begin an intensive quest to find new organisms to fight disease.

1950 Following the death of John L. Smith, John E. McKeen becomes chairman of the board.

Terramycin® (oxytetracycline), a broad-spectrum antibiotic that is the result of the Company's

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