March 14, 2005
This paper is a Macroeconomic Forecast Outline of Pfizer, Inc. This outline will identify main economic indicators for Pfizer as a business entity and as a representative of pharmaceutical industry. This paper will identify sources of various data collected based on economical activity and relationships between different economical indicators. Main Economic Indicators
The purpose of economic indicators is to provide for researchers and analysts the ability to interpreter economic data. Economic indicators are the main source of prediction of market behavior. They are also detailed explanations of how to analyze various changes over a business cycle. There are very many different economic indicators that are used to analyze economic activity of a company, industry, country, or region. There are three different general trends (directions for prices or rates) in the economy. "Those with predictive value are leading indicators; those occurring at the same time as the related economic activity are coincident indicators; and those that only become apparent after the activity are lagging indicators. Examples are unemployment, housing starts, Consumer Price Index, industrial production, bankruptcies, GDP, stock market prices, money supply changes, and housing starts also called business indicators." (http://www.investorwords.com/1643/economic_indicator.html) This paper analyzes the main economic indicators related specifically to one of the largest pharmaceutical company Pfizer, Inc such as overall performance, revenue, net income, research and development, cost and expenses. There are certain economic indicators that do not apply to individual companies, but influence their economical forecasts. Such factors as inflation and unemployment rate pertain to an industry or region and such factors as political instability or any force major conditions will affect the market analyses even they are not an economic indicators. There are many more factors that affect economic predictions and their detailed analyses are presented in http://www.economic-indicators.com, web site for tracking US economy. Overall performance is always one of the most important indicators of economic activity and every financial report starts with results of annual performance. Performance is "The results of activities of an organization or investment over a given period of time. " (http://www.investorwords.com/3665/performance.html) The performance usually includes the information for a current period as well as comparisons with other similar periods. Pfizer's 2004 financial report include the following highlights:
Total revenues increased 17% to $52.5 billion in 2004 and39% to $44.7 billion in 2003, primarily due to the acquisition of Pharmacia Corporation (Pharmacia) on April 16, 2003, the impact of foreign exchange and strong product performance
Net income increased to $11.4 billion in 2004 compared to $3.9 billion in 2003 and $9.1 billion in 2002. 2003 results reflect certain one-time charges associated with the acquisition of Pharmacia
Cost synergies from the Pharmacia acquisition of $3.6 billion in 2004, up from an annual rate of $1.3 billion in 2003 Revenue and net income are two other significant economic indicators. Revenue is "total dollar payment for goods and services that are credited to an income statement over a particular time period. By subtracting expenses from revenue, a company's net income can be calculated." (http://www.investorwords.com/4254/revenue.html) Pfizer considers revenue as total sale subtracting sales deductions such as rebates, discounts, incentives, and product returns. As for any typical pharmaceutical company a variety of deductions represent rebates and discounts to government agencies, wholesalers, and managed care organizations. Based on Pfizer's 2004 financial report total revenues increased 17% to $52,516 million in 2004. Revenue increases in 2004...
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