Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
Pfizer Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 7,193 – 8.84% × 139,753 = -5,155
The financial trajectory from 2021 to 2025 reveals a transition from significant value creation to a period of sustained economic value destruction. While the organization experienced a peak in operational efficiency and profitability in 2022, subsequent years show a failure to generate returns that exceed the cost of deployed capital.
- Net Operating Profit After Taxes (NOPAT)
- Operational earnings demonstrated extreme volatility, rising from 18,394 million USD in 2021 to a peak of 31,018 million USD in 2022. A sharp contraction occurred in 2023, with NOPAT falling to negative 1,277 million USD. Although profitability recovered to positive levels in 2024 and 2025, it stabilized at significantly lower levels—approximately 7,200 million USD—compared to the 2021-2022 period.
- Invested Capital and Cost of Capital
- The capital base expanded steadily from 87,670 million USD in 2021 to a peak of 154,882 million USD in 2023, before slightly contracting to 139,753 million USD by 2025. Throughout this period, the cost of capital remained relatively stable, fluctuating within a narrow range between 8.66% and 10.04%. This stability suggests that the decline in economic performance was primarily driven by operational earnings volatility rather than changes in the cost of financing.
- Economic Profit Analysis
- Economic profit shifted from a positive 9,768 million USD in 2021 to a peak of 19,901 million USD in 2022, indicating strong value creation. However, a severe reversal occurred in 2023, resulting in an economic loss of 14,686 million USD. Despite a reduction in the deficit in 2024, economic profit remained negative through 2025, ending at -5,155 million USD. This pattern confirms that the returns generated from the invested capital have been insufficient to cover the cost of that capital for three consecutive years.
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Net Operating Profit after Taxes (NOPAT)
Pfizer Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in restructuring accruals.
4 Addition of increase (decrease) in equity equivalents to net income attributable to Pfizer Inc. common shareholders.
5 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 2,621 × 3.80% = 100
6 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 2,771 × 21.00% = 582
7 Addition of after taxes interest expense to net income attributable to Pfizer Inc. common shareholders.
8 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 543 × 21.00% = 114
9 Elimination of after taxes investment income.
10 Elimination of discontinued operations.
Net income attributable to Pfizer Inc. common shareholders and Net Operating Profit After Taxes (NOPAT) exhibited significant fluctuations between 2021 and 2025. While net income demonstrated an initial increase followed by a substantial decline, NOPAT mirrored this pattern with even more pronounced volatility, including a negative value in 2023.
- Net Income Trend
- Net income attributable to Pfizer Inc. common shareholders increased from US$21,979 million in 2021 to US$31,372 million in 2022, representing a substantial year-over-year growth. However, a dramatic decrease was observed in 2023, falling to US$2,119 million. A partial recovery occurred in 2024, with net income reaching US$8,031 million, followed by a slight decrease to US$7,771 million in 2025.
- NOPAT Trend
- NOPAT followed a similar trajectory to net income, increasing from US$18,394 million in 2021 to US$31,018 million in 2022. A significant shift occurred in 2023, with NOPAT becoming negative at US$-1,277 million. A recovery was then seen in 2024, rising to US$7,374 million, and continuing to US$7,193 million in 2025. The magnitude of the decline and subsequent recovery in NOPAT was greater than that observed in net income.
- Relationship between Net Income and NOPAT
- While both metrics generally moved in the same direction, the divergence in 2023 is noteworthy. The substantial negative NOPAT value suggests that operating profits, after accounting for taxes, were insufficient to cover the cost of capital employed during that year, despite a positive, albeit significantly reduced, net income. This indicates that factors beyond core operational profitability, such as financing or non-operating items, played a larger role in determining net income in 2023.
The period between 2024 and 2025 shows relative stabilization in both metrics, although NOPAT remains considerably lower than its peak in 2022. Further investigation would be required to understand the underlying drivers of these fluctuations and their implications for the company’s long-term financial performance.
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Cash Operating Taxes
Pfizer Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The provision for taxes on income exhibits significant volatility over the observed period. Beginning at US$1,852 million in 2021, it increased substantially to US$3,328 million in 2022 before experiencing a dramatic shift to a benefit of negative US$1,115 million in 2023. This benefit continued, albeit at a smaller magnitude, in 2024 (-US$28 million) and 2025 (-US$267 million). In contrast, cash operating taxes demonstrate a more stable, though fluctuating, pattern.
- Cash Operating Taxes Trend
- Cash operating taxes increased from US$6,137 million in 2021 to US$7,967 million in 2022, representing a substantial rise. A subsequent decrease was noted in 2023, falling to US$2,113 million. Values then recovered somewhat in 2024 and 2025, reaching US$2,426 million and US$2,334 million respectively. While fluctuating, the values in 2024 and 2025 remain considerably below the 2021 and 2022 levels.
The divergence between the provision for taxes on income and cash operating taxes is noteworthy. The large benefit recorded in the provision for taxes in 2023, 2024, and 2025 suggests the utilization of tax loss carryforwards or other tax planning strategies, resulting in a reduced accounting expense despite continued cash outflows for taxes. The cash operating taxes, while decreasing from 2022 to 2023, remained positive throughout the period, indicating actual cash payments were made to tax authorities even when the accounting provision reflected a benefit.
- Relationship between Provision and Cash Taxes
- The difference between the provision for taxes on income and cash operating taxes widened considerably in 2023, 2024, and 2025. This indicates a growing deferral of taxable income or an increasing benefit from tax credits or loss carryforwards. The substantial difference highlights the impact of non-cash tax items on the reported income tax expense.
The observed trends suggest a complex tax position, potentially involving significant tax planning and the utilization of deferred tax assets. Further investigation into the specific drivers of the tax benefit and the nature of the deferred tax items would be beneficial for a complete understanding of the company’s tax strategy and its impact on financial performance.
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Invested Capital
Pfizer Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of restructuring accruals.
5 Addition of equity equivalents to total Pfizer Inc. shareholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
8 Subtraction of marketable securities.
The reported invested capital demonstrates a clear increasing trend over the observed period, followed by a stabilization and slight increase. A significant rise is noted between 2021 and 2023, while subsequent years show a more moderate pattern. This analysis details the observed movements in invested capital alongside its constituent components: total reported debt & leases and total shareholders’ equity.
- Invested Capital Trend
- Invested capital increased substantially from US$87,670 million in 2021 to US$154,882 million in 2023, representing a growth of approximately 76.8%. This growth slowed considerably in 2024, with invested capital decreasing to US$135,342 million. A modest increase to US$139,753 million was observed in 2025. The 2024 decrease suggests a potential shift in capital allocation strategy or a reduction in capital-intensive projects.
- Debt & Leases
- Total reported debt & leases decreased from US$41,395 million in 2021 to US$39,046 million in 2022. However, a substantial increase occurred in 2023, reaching US$75,041 million. This was followed by a decrease to US$66,993 million in 2024 and a slight increase to US$67,416 million in 2025. The 2023 surge in debt likely contributed significantly to the overall increase in invested capital during that year.
- Shareholders’ Equity
- Total shareholders’ equity increased from US$77,201 million in 2021 to US$95,661 million in 2022, indicating strong equity growth. A decrease was then observed in 2023, falling to US$89,014 million, and continued to decline in 2024 and 2025, reaching US$88,203 million and US$86,476 million respectively. This consistent decline in shareholders’ equity over the latter part of the period partially offset the impact of increased debt on invested capital.
The interplay between debt and equity significantly influences the overall invested capital. While debt increased substantially in 2023, the subsequent decrease in shareholders’ equity moderated the growth in invested capital in 2024 and 2025. The stabilization of invested capital in the later years suggests a balancing act between debt financing and equity returns.
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Cost of Capital
Pfizer Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 154,098) | 154,098) | ÷ | 219,873) | = | 0.70 | 0.70 | × | 11.10% | = | 7.78% | ||
| Debt3 | 63,154) | 63,154) | ÷ | 219,873) | = | 0.29 | 0.29 | × | 4.50% × (1 – 21.00%) | = | 1.02% | ||
| Operating lease liability4 | 2,621) | 2,621) | ÷ | 219,873) | = | 0.01 | 0.01 | × | 3.80% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 219,873) | 1.00 | 8.84% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 147,918) | 147,918) | ÷ | 211,506) | = | 0.70 | 0.70 | × | 11.10% | = | 7.76% | ||
| Debt3 | 60,946) | 60,946) | ÷ | 211,506) | = | 0.29 | 0.29 | × | 4.49% × (1 – 21.00%) | = | 1.02% | ||
| Operating lease liability4 | 2,642) | 2,642) | ÷ | 211,506) | = | 0.01 | 0.01 | × | 3.70% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 211,506) | 1.00 | 8.82% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 155,569) | 155,569) | ÷ | 230,072) | = | 0.68 | 0.68 | × | 11.10% | = | 7.50% | ||
| Debt3 | 71,350) | 71,350) | ÷ | 230,072) | = | 0.31 | 0.31 | × | 4.54% × (1 – 21.00%) | = | 1.11% | ||
| Operating lease liability4 | 3,153) | 3,153) | ÷ | 230,072) | = | 0.01 | 0.01 | × | 3.80% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 230,072) | 1.00 | 8.66% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 237,687) | 237,687) | ÷ | 273,849) | = | 0.87 | 0.87 | × | 11.10% | = | 9.63% | ||
| Debt3 | 32,945) | 32,945) | ÷ | 273,849) | = | 0.12 | 0.12 | × | 3.97% × (1 – 21.00%) | = | 0.38% | ||
| Operating lease liability4 | 3,217) | 3,217) | ÷ | 273,849) | = | 0.01 | 0.01 | × | 3.00% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 273,849) | 1.00 | 10.04% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 258,449) | 258,449) | ÷ | 305,649) | = | 0.85 | 0.85 | × | 11.10% | = | 9.38% | ||
| Debt3 | 44,241) | 44,241) | ÷ | 305,649) | = | 0.14 | 0.14 | × | 3.79% × (1 – 21.00%) | = | 0.43% | ||
| Operating lease liability4 | 2,959) | 2,959) | ÷ | 305,649) | = | 0.01 | 0.01 | × | 2.80% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 305,649) | 1.00 | 9.84% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Pfizer Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (5,155) | (4,563) | (14,686) | 19,901) | 9,768) | |
| Invested capital2 | 139,753) | 135,342) | 154,882) | 110,746) | 87,670) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -3.69% | -3.37% | -9.48% | 17.97% | 11.14% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | 0.72% | -2.22% | -3.93% | 5.49% | 4.87% | |
| Amgen Inc. | 6.25% | -0.54% | 2.28% | 6.80% | 6.80% | |
| Bristol-Myers Squibb Co. | 5.66% | -22.01% | 1.55% | -1.21% | 1.09% | |
| Danaher Corp. | -10.71% | -10.87% | -11.64% | -6.63% | -5.80% | |
| Eli Lilly & Co. | 30.14% | 14.49% | 1.42% | 8.52% | 10.19% | |
| Gilead Sciences Inc. | 12.61% | -10.47% | 2.85% | -0.27% | 6.76% | |
| Johnson & Johnson | 11.55% | 1.88% | 0.03% | 5.29% | 10.35% | |
| Merck & Co. Inc. | 10.49% | 13.36% | -8.94% | 11.24% | 11.41% | |
| Regeneron Pharmaceuticals Inc. | 13.82% | 16.64% | 13.44% | 18.80% | 62.56% | |
| Thermo Fisher Scientific Inc. | -7.45% | -8.25% | -8.72% | -6.97% | -4.95% | |
| Vertex Pharmaceuticals Inc. | 20.79% | -22.86% | 11.09% | 13.84% | 15.05% | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -5,155 ÷ 139,753 = -3.69%
4 Click competitor name to see calculations.
The financial trajectory from 2021 to 2025 reveals a significant transition from positive value creation to a period of sustained economic loss. A peak in operational efficiency and value generation observed in 2022 was followed by a sharp reversal in 2023, with subsequent years failing to return to positive economic profit.
- Economic Profit Trends
- Economic profit experienced an initial surge, increasing from US$ 9,768 million in 2021 to a peak of US$ 19,901 million in 2022. This growth was followed by a severe downturn in 2023, where economic profit fell to -US$ 14,686 million. While a partial recovery was noted in 2024, with the loss narrowing to -US$ 4,563 million, the figure declined again to -US$ 5,155 million by the end of 2025.
- Invested Capital Dynamics
- The capital base expanded aggressively between 2021 and 2023, growing from US$ 87,670 million to a peak of US$ 154,882 million. A contraction occurred in 2024, bringing the invested capital down to US$ 135,342 million, followed by a slight increase to US$ 139,753 million in 2025. This suggests a period of heavy investment followed by a strategic adjustment or divestment phase.
- Economic Spread Ratio Analysis
- The economic spread ratio closely mirrored the movement of economic profit. The ratio rose from 11.14% in 2021 to 17.97% in 2022, indicating that returns significantly exceeded the cost of capital. However, a precipitous drop to -9.48% in 2023 signaled the onset of value destruction. Despite a modest improvement to -3.37% in 2024, the ratio remained negative at -3.69% in 2025, confirming that returns on invested capital have remained below the required cost of capital for three consecutive years.
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Economic Profit Margin
Pfizer Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (5,155) | (4,563) | (14,686) | 19,901) | 9,768) | |
| Revenues | 62,579) | 63,627) | 59,553) | 101,175) | 82,145) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -8.24% | -7.17% | -24.66% | 19.67% | 11.89% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AbbVie Inc. | 0.72% | -2.73% | -4.94% | 7.77% | 8.31% | |
| Amgen Inc. | 10.42% | -1.06% | 5.93% | 10.90% | 11.26% | |
| Bristol-Myers Squibb Co. | 6.96% | -28.55% | 2.33% | -1.87% | 1.88% | |
| Danaher Corp. | -32.81% | -33.56% | -38.22% | -16.48% | -14.50% | |
| Eli Lilly & Co. | 22.94% | 11.51% | 1.22% | 7.25% | 9.40% | |
| Gilead Sciences Inc. | 18.67% | -16.23% | 4.86% | -0.46% | 11.95% | |
| Johnson & Johnson | 16.94% | 2.25% | 0.03% | 6.34% | 10.83% | |
| Merck & Co. Inc. | 15.81% | 16.54% | -10.41% | 14.02% | 16.57% | |
| Regeneron Pharmaceuticals Inc. | 12.76% | 14.59% | 12.26% | 18.93% | 42.30% | |
| Thermo Fisher Scientific Inc. | -15.75% | -15.79% | -17.42% | -12.85% | -10.07% | |
| Vertex Pharmaceuticals Inc. | 18.34% | -18.76% | 14.88% | 20.42% | 18.65% | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenues
= 100 × -5,155 ÷ 62,579 = -8.24%
3 Click competitor name to see calculations.
The financial trajectory from 2021 to 2025 is characterized by a transition from substantial economic value creation to a sustained period of economic value destruction. A peak in profitability was reached in 2022, followed by a severe contraction in 2023 and a subsequent period of marginal instability.
- Economic Profit Margin Volatility
- The economic profit margin experienced a significant increase from 11.89% in 2021 to a peak of 19.67% in 2022. This growth was followed by a precipitous decline in 2023, where the margin fell to -24.66%. While the margin improved to -7.17% in 2024, it weakened again to -8.24% by 2025, indicating a failure to return to positive economic profit levels.
- Revenue Correlation and Impact
- A direct correlation is observed between revenue fluctuations and economic profit. Revenues peaked at 101,175 million USD in 2022, coinciding with the maximum economic profit of 19,901 million USD. The subsequent revenue drop to 59,553 million USD in 2023 aligned with the deepest economic loss of 14,686 million USD, suggesting that the reduction in top-line performance severely impaired the ability to cover the cost of capital.
- Value Destruction Phase
- From 2023 through 2025, economic profit remained consistently negative. Although the magnitude of the loss narrowed significantly after 2023, the persistence of negative margins in 2024 and 2025 confirms a continued trend of economic value destruction, where the generated returns failed to exceed the required cost of capital employed.
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