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 – 8.53% × 139,753 = -4,733
The period under review demonstrates significant fluctuations in economic profit. Net operating profit after taxes (NOPAT) exhibited substantial growth initially, followed by a considerable decline and subsequent recovery, though not to initial levels. Invested capital increased markedly before decreasing and stabilizing. The cost of capital remained relatively stable throughout the period.
- NOPAT Trend
- NOPAT increased significantly from US$18,394 million in 2021 to US$31,018 million in 2022. However, a dramatic decrease occurred in 2023, resulting in a net loss of US$1,277 million. NOPAT recovered to US$7,374 million in 2024 and remained relatively stable at US$7,193 million in 2025.
- Cost of Capital Trend
- The cost of capital experienced a slight increase from 9.47% in 2021 to 9.66% in 2022. It then decreased to 8.37% in 2023 and remained consistent at approximately 8.5% for 2024 and 2025.
- Invested Capital Trend
- Invested capital rose from US$87,670 million in 2021 to US$110,746 million in 2022, and further increased to US$154,882 million in 2023. A decrease was observed in 2024, falling to US$135,342 million, followed by a modest increase to US$139,753 million in 2025.
- Economic Profit Trend
- Economic profit mirrored the NOPAT trend. It increased from US$10,088 million in 2021 to US$20,315 million in 2022. A substantial decline occurred in 2023, resulting in an economic loss of US$14,235 million. Economic profit remained negative in 2024 (US$-4,155 million) and 2025 (US$-4,733 million), though the magnitude of the loss increased slightly in the latter year.
The significant drop in economic profit in 2023 is attributable to the negative NOPAT experienced that year, despite a decrease in the cost of capital. While NOPAT recovered in subsequent years, it was insufficient to generate positive economic profit given the high level of invested capital and the relatively stable cost of capital. The increase in invested capital in 2023, coupled with the negative NOPAT, significantly exacerbated the economic loss.
Net Operating Profit after Taxes (NOPAT)
Pfizer Inc., NOPAT calculation
US$ 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$7,193 million in 2025. The magnitude of the decline and subsequent recovery in NOPAT was greater than that observed in net income.
- Relationship between Net Income and NOPAT
- While both metrics generally moved in the same direction, the divergence in 2023 is noteworthy. The substantial negative NOPAT value suggests that operating profits, after accounting for taxes, were insufficient to cover the cost of capital employed during that year, despite a positive, albeit significantly reduced, net income. This indicates that factors beyond core operational profitability, such as financing or non-operating items, played a larger role in determining net income in 2023.
The period between 2024 and 2025 shows relative stabilization in both metrics, although NOPAT remains considerably lower than its peak in 2022. Further investigation would be required to understand the underlying drivers of these fluctuations and their implications for the company’s long-term financial performance.
Cash Operating Taxes
Pfizer Inc., cash operating taxes calculation
US$ 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$2,334 million respectively. While fluctuating, the values in 2024 and 2025 remain considerably below the 2021 and 2022 levels.
The divergence between the provision for taxes on income and cash operating taxes is noteworthy. The large benefit recorded in the provision for taxes in 2023, 2024, and 2025 suggests the utilization of tax loss carryforwards or other tax planning strategies, resulting in a reduced accounting expense despite continued cash outflows for taxes. The cash operating taxes, while decreasing from 2022 to 2023, remained positive throughout the period, indicating actual cash payments were made to tax authorities even when the accounting provision reflected a benefit.
- Relationship between Provision and Cash Taxes
- The difference between the provision for taxes on income and cash operating taxes widened considerably in 2023, 2024, and 2025. This indicates a growing deferral of taxable income or an increasing benefit from tax credits or loss carryforwards. The substantial difference highlights the impact of non-cash tax items on the reported income tax expense.
The observed trends suggest a complex tax position, potentially involving significant tax planning and the utilization of deferred tax assets. Further investigation into the specific drivers of the tax benefit and the nature of the deferred tax items would be beneficial for a complete understanding of the company’s tax strategy and its impact on financial performance.
Invested Capital
Pfizer Inc., invested capital calculation (financing approach)
US$ 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$86,476 million respectively. This consistent decline in shareholders’ equity over the latter part of the period partially offset the impact of increased debt on invested capital.
The interplay between debt and equity significantly influences the overall invested capital. While debt increased substantially in 2023, the subsequent decrease in shareholders’ equity moderated the growth in invested capital in 2024 and 2025. The stabilization of invested capital in the later years suggests a balancing act between debt financing and equity returns.
Cost of Capital
Pfizer Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 154,098) | 154,098) | ÷ | 219,873) | = | 0.70 | 0.70 | × | 10.67% | = | 7.48% | ||
| Debt3 | 63,154) | 63,154) | ÷ | 219,873) | = | 0.29 | 0.29 | × | 4.50% × (1 – 21.00%) | = | 1.02% | ||
| Operating lease liability4 | 2,621) | 2,621) | ÷ | 219,873) | = | 0.01 | 0.01 | × | 3.80% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 219,873) | 1.00 | 8.53% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | × | 10.67% | = | 7.46% | ||
| 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 | 8.52% | ||||||||||
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 | × | 10.67% | = | 7.21% | ||
| 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 | 8.37% | ||||||||||
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 | × | 10.67% | = | 9.26% | ||
| 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 | 9.66% | ||||||||||
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 | × | 10.67% | = | 9.02% | ||
| 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 | 9.47% | ||||||||||
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 | (4,733) | (4,155) | (14,235) | 20,315) | 10,088) | |
| Invested capital2 | 139,753) | 135,342) | 154,882) | 110,746) | 87,670) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -3.39% | -3.07% | -9.19% | 18.34% | 11.51% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | 1.15% | -1.79% | -3.51% | 5.90% | 5.25% | |
| Amgen Inc. | 6.59% | -0.22% | 2.59% | 7.14% | 7.13% | |
| Bristol-Myers Squibb Co. | 6.08% | -21.61% | 1.95% | -0.75% | 1.51% | |
| Danaher Corp. | -10.62% | -10.78% | -11.55% | -6.54% | -5.71% | |
| Eli Lilly & Co. | 30.63% | 14.98% | 1.91% | 9.00% | 10.66% | |
| Gilead Sciences Inc. | 13.07% | -10.03% | 3.26% | 0.15% | 7.12% | |
| Johnson & Johnson | 12.03% | 2.36% | 0.51% | 5.77% | 10.83% | |
| Merck & Co. Inc. | 10.99% | 13.87% | -8.42% | 11.77% | 11.89% | |
| Regeneron Pharmaceuticals Inc. | 14.28% | 17.10% | 13.90% | 19.27% | 63.02% | |
| Thermo Fisher Scientific Inc. | -7.36% | -8.15% | -8.62% | -6.87% | -4.86% | |
| Vertex Pharmaceuticals Inc. | 21.34% | -22.31% | 11.64% | 14.39% | 15.60% | |
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 × -4,733 ÷ 139,753 = -3.39%
4 Click competitor name to see calculations.
The period under review demonstrates a significant shift in financial performance as measured by economic value added metrics. Initially, the organization exhibited positive economic profit, but this transitioned to negative economic profit in subsequent years. This shift is reflected in the economic spread ratio, which indicates the efficiency with which capital is being deployed to generate returns.
- Economic Profit
- Economic profit increased substantially from 2021 to 2022, more than doubling to US$20,315 million. However, a dramatic reversal occurred in 2023, with economic profit becoming negative at -US$14,235 million. This negative trend continued in 2024 and 2025, albeit with a lessening magnitude of loss, registering at -US$4,155 million and -US$4,733 million respectively.
- Invested Capital
- Invested capital consistently increased from 2021 to 2023, rising from US$87,670 million to US$154,882 million. A decrease was observed in 2024, falling to US$135,342 million, followed by a modest increase to US$139,753 million in 2025. The increase in invested capital during the initial period did not translate into sustained economic profit.
- Economic Spread Ratio
- The economic spread ratio mirrored the trend in economic profit. It rose from 11.51% in 2021 to 18.34% in 2022, indicating improved profitability relative to invested capital. However, the ratio declined sharply to -9.19% in 2023, and remained negative in 2024 (-3.07%) and 2025 (-3.39%). The sustained negative values suggest that the organization’s returns on invested capital are falling below its cost of capital.
The divergence between invested capital and economic profit suggests a potential issue with capital allocation or operational efficiency. While capital investment increased, the ability to generate returns from that investment diminished significantly after 2022. The consistent negative economic spread ratio from 2023 onwards warrants further investigation into the underlying causes of this decline.
Economic Profit Margin
Pfizer Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (4,733) | (4,155) | (14,235) | 20,315) | 10,088) | |
| Revenues | 62,579) | 63,627) | 59,553) | 101,175) | 82,145) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -7.56% | -6.53% | -23.90% | 20.08% | 12.28% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AbbVie Inc. | 1.15% | -2.21% | -4.40% | 8.35% | 8.95% | |
| Amgen Inc. | 10.99% | -0.44% | 6.73% | 11.44% | 11.81% | |
| Bristol-Myers Squibb Co. | 7.47% | -28.03% | 2.93% | -1.17% | 2.61% | |
| Danaher Corp. | -32.53% | -33.27% | -37.91% | -16.25% | -14.28% | |
| Eli Lilly & Co. | 23.31% | 11.90% | 1.64% | 7.66% | 9.83% | |
| Gilead Sciences Inc. | 19.35% | -15.55% | 5.55% | 0.25% | 12.60% | |
| Johnson & Johnson | 17.65% | 2.83% | 0.60% | 6.91% | 11.33% | |
| Merck & Co. Inc. | 16.56% | 17.16% | -9.79% | 14.68% | 17.28% | |
| Regeneron Pharmaceuticals Inc. | 13.19% | 15.00% | 12.68% | 19.40% | 42.61% | |
| Thermo Fisher Scientific Inc. | -15.55% | -15.61% | -17.22% | -12.67% | -9.88% | |
| Vertex Pharmaceuticals Inc. | 18.82% | -18.31% | 15.62% | 21.23% | 19.33% | |
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 × -4,733 ÷ 62,579 = -7.56%
3 Click competitor name to see calculations.
The economic profit margin exhibited significant fluctuations over the five-year period. Initial positive values transitioned to negative values, indicating a decline in economic profitability. A detailed examination of the trends is presented below.
- Economic Profit
- Economic profit demonstrated a substantial increase from 2021 to 2022, rising from US$10,088 million to US$20,315 million. However, this was followed by a dramatic decrease, resulting in a loss of US$14,235 million in 2023. Losses continued in subsequent years, albeit at a reduced magnitude, reaching US$4,155 million in 2024 and US$4,733 million in 2025.
- Revenues
- Revenues increased notably from 2021 to 2022, growing from US$82,145 million to US$101,175 million. A significant decline occurred in 2023, with revenues falling to US$59,553 million. Revenues experienced a modest recovery in 2024, reaching US$63,627 million, and remained relatively stable in 2025 at US$62,579 million.
- Economic Profit Margin
- The economic profit margin mirrored the trend in economic profit. It increased from 12.28% in 2021 to 20.08% in 2022, reflecting improved economic profitability relative to revenue. The margin then plummeted to -23.90% in 2023, indicating a substantial economic loss relative to revenue. The margin remained negative in 2024 (-6.53%) and 2025 (-7.56%), suggesting continued economic underperformance, although the magnitude of the loss lessened compared to 2023. The negative margins in the latter years suggest that the cost of capital exceeded the returns generated from operations.
The divergence between revenue and economic profit trends is particularly noteworthy. While revenues initially increased, the subsequent decline in economic profit, and the resulting negative economic profit margins, suggest increasing costs or a decrease in operational efficiency. The stabilization of revenues in the final two years, coupled with continued negative economic profit margins, indicates that the underlying issues impacting profitability have not been fully resolved.