The purpose of this paper is to assess Pfizer Inc. and Merck & Co.’s financial performance over the previous three financial years using their respective financial statement; balance sheets, income statements, and cash flow statements. Although in this analysis, those financial statement items will be evaluated that are considered to be significant by an investor or other user of the financial information, and it will be discussed whether each company’s performance in relation to these items appeared to be improving, declining, or remaining stable over the past three years. Though, based on this, the decision regarding which company is preferable for investment will be made.


Pfizer Inc. (Pfizer) is a research-based multinational biopharmaceutical corporation, head office in New York. It was established by two German migrants Charles Pfizer and Charles F. Erhart in 1849. The company is engaged in the manufacturing, marketing, and distribution of biopharmaceutical products for various domains such as immunology, cancer, cardiology, endocrinology, and neurology. The top-selling medication of the company is Prevnar 13, an anti-pneumococcal vaccination, Ibrance, Eliquis, and Xeljanz. Pfizer markets these goods internationally, with close to 50% of its overall sales coming from overseas markets.

Currently, the company is carrying out its operation via two major segments: Innovative Health (IH) and Essential Health (EH) segment. The innovative health segments are involved in the development and dissemination of drugs and vaccines for, cancer, inflammatory and immunological, cardiovascular disease, and consumer healthcare (Brown). On the other hand, the Essential health segment deals with the production and distribution of branded generics, generic sterile injectable pharmaceuticals, biosimilars, and a few branded goods, such as anti-infectives. Though, based on the company’s successive progress, it is ranked 49th on the Forbes Global 2000 and 64th on the Fortune 500.

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Merck & Co:

Merck & Co., Inc. is an American transnational pharmaceutical corporation, established in 1891. The company is engaged in the provision of health solutions via its prescription drugs, vaccinations, biological therapies, veterinary medicine, and consumer care products. The major products of company are Remicade, Isentress, Januvia, Zetia, Gardasil, Pembrolizumab, Mectizan, Keytruda, and Molnupiravir.

Currently, the company is operating via four major segments: pharmaceuticals, alliances, animal health services, and healthcare services. The pharmaceutical segment provides Pharmaceutical and vaccination items for human health. Meanwhile, Alliance segments engage in the compilation of results from the business’s partnership with AstraZeneca LP on sales of Nexium and Prilosec. Furthermore, the Animal Health segment develops, produces, and markets animal health products, such as pharmaceutical and vaccination products for the prevention, treatment, and management of disease in livestock and domestic species of animals (Reuters). Similarly, the Healthcare Services division provides services and solutions that Centre on engagement, health analytics, and clinical services in order to increase the value of the treatment patients receive. However, based on 2021 revenues, the company is ranked 71st on the 2022 Fortune 500 and 87th on the 2022 Forbes Global 2000.

Financial Statement Analysis:

Pfizer Inc. Income Statement:

Pfizer Inc.
Consolidated Income Statement
US$ in millions
12 months ended: Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Revenues 81,288 41,908 51,750
Operating income 19,433 8,160 13,174
Net income 21,979 9,616 16,272


The above findings suggest that Pfizer Inc.’s revenues fell between 2019 and 2020 before rising again between 2020 and 2021 and surpassing 2019 levels. However, company revenues for the year 2021 were 93.97% improved compared to the 2020 financial year (Annual Report). This increase could be attributed to the favorable impact of foreign exchange of $1.2 billion (3 percent), the Covid-19 vaccine-BNT162b2 or Comirnaty sales worldwide, making up 45% of the business’s overall revenues, and solid growth of Eliquis internationally. Similarly, the outcome shows that the company’s net income showed a fluctuating trend over the last 3 years. For instance, from 2019 to 2020, Pfizer Inc.’s net income attributable to Pfizer Inc. fell, but from 2020 to 2021, it improved by 128.6% owing to the increase in sales of Covid-19 vaccines all over the world (Annual Report).

Meanwhile, it is observed that the company operating income has increased by 77% in 2021. However, this increase in operating in 2021 could be attributed to a 439,380 million rise in company revenue respectively.

Nevertheless, Pfizer’s poorer financial performance in 2020 could be partly accredited to COVID-19 pandemic-related shelter-in-place policies that have delayed the demand for new prescriptions and immunizations. In addition, acquisitions, and Pfizer’s Consumer Healthcare division’s contribution to the GSK Consumer Healthcare joint venture (JV), which was completed in mid-2019, have contributed to a significant decline in corporate revenue in 2020.

Mercer & Co Income statement:

Merck & Co. Inc.
Consolidated Income Statement
US$ in millions
12 months ended: Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Sales 48,704 47,994 46,840
Operating income 12,538 7,905 11,603
Net income 13,049 7,067 9,843


Merck & Co.’s income statement shows that the company’s revenues improved from 2019 to 2021. For instance, in 2021, Merck’s yearly revenue was $48.704 billion, about 4 percent compared to the 2019 financial year. However, this increase in Merck’s revenue over the last three years was attributed to higher sales of vaccination products, largely as a result of substantial growth in sales of the cancer-prevention vaccine Gardasil/Gardasil 9 and Keytruda (medication used to treat cancer)

However, it is observed that the company’s operating income declined in 2019, which grew in 2021, and surpassed 2019 levels. In contrast, Merck & Co.’s net income exhibits a similar pattern. For example, Merck & Co. Inc.’s net income decreased from 2019 to 2020 by 28.2% but then increased from 2020 to 2021 by 85%. Nevertheless, the thorough analysis of the company income statement reveals that this increase in net income and operating income in 2021 as compared to 2020 was primarily driven by the 12.01% decline in the cost of sales and 9% fall in Research & Development spending.

Balance Sheet

Pfizer Inc.
Consolidated Balance Sheet
US$ in millions
  Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Current Asset 59,693 35,067 32,803
Total assets 181,476 154,229 167,489
Current Liabilities 42,671 25,920 37,304
Total Liabilities 104,014 90,756 104,042
Total Equity 77,462 63,473 63,447


In any corporation balance sheet, current & non-current assets and liabilities and shareholder equity are considered to be the most significant items for the investor or user of the financial statement. Although Pfizer Inc. balance sheet items show that company performance in the fiscal year 2021 was improved compared to the 2019 & 2020 fiscal years. For instance, it is seen that the corporation’s total assets increased by 17.67%, from $167,489 Million in 2019 to $181,476 Million in 2021 (Annual Report). Additionally, the company’s current asset and liability comparison demonstrates that the firm’s current ratio increased from 0.87 in 2019 to 1.40, showing that as compared to 2019, the company has enough current assets to cover its current liabilities in 2021-which is a good sign for investors.

Besides, figures reflect that the company’s shareholder equity has increased by 22.04 percent in 2021. Although from the company’s total debt and equity values, it is observed that the company debt-to-equity ratio for the company was recorded at 1.34 in 2021, lower than in 2019 but still higher than the benchmark, which illustrates that the company is largely dependent on debt financing.

Merck & Co. Inc.
Consolidated Balance Sheet
US$ in millions
  Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Current assets 30,266 27,764 27,483
Total assets 105,694 91,588 84,397
Current Liabilities 23,872 27,327 22,220
Total Liabilities 67,437 66,184 58,396
Total Equity 38,257 25,404 26,001


The above findings reveal that Merck & Co’s performance in the fiscal year 2021 improved over the previous year’s fiscal year. As it can be seen that the corporation’s total assets increased 25.23% in 2021, from $84,397Million in 2019 to $105,694 Million in 2021(Annual Report). Meanwhile, the company’s current asset and liability figures show that the firm’s current ratio grew from 1.016 in 2020 to 1.26 in 2021, indicating to investors that the company has a moderate liquidity position, which is acceptable. Furthermore, it is observed that the company’s shareholder equity climbed by 47.14 percent over the last three years. Although, the company’s total liabilities and equity values comparison exhibit that the company’s debt-to-equity ratio was 1.76 in 2021, lower than 2.60 in  2020 but still higher than the benchmark, which is highly unfavorable for investors since a ratio larger than 1 indicates that debt is largely employed to finance the company assets. In contrast, a ratio below 1 indicates that equity is used primarily to finance the assets.

Cash Flow Statement:

Pfizer Inc.

  Investing Activities 2021
1 Purchases of short-term investments $38,457 Million
2 Proceeds from redemptions/sales of short-term investments $27,447 Million


  Financing Activities 2021
1 Principal payments on long-term debt $2,004 Million
2 Cash dividends paid $8,729 Million


The detailed overview of the company cash flow statement indicated that the company has used $22,534 Million Cash in investing activities and $9,816 in financing activities in 2021 (Annual Report). Although, the findings show that the major two items that contributed to company investing activities are; purchases of short-term investments and proceeds from the sale of short-term investments. Meanwhile, it is seen that the major items that contributed to the company investing activities are; payment of debts and cash dividend payments.

Merck & Co:

  Investing Activities 2021
1 Purchases of PPE $1,066 Million
2 Purchases of Securities and other investments in financial assets $269 Million


  Financing activities 2021
1 Payments on debt $1,896 Million
2 Profit withdrawal from Merck KG $567 Million


In the assessment of Merck & Co’s Cash flow statement, it is found that the company generated $2,593 Million via financing activities, whereas it used $16,555 Million in investing activities in 2021(Annual Report). However, the research reveals that acquisitions of securities & other investments and Purchases of property, plants, & equipment are the two main items that contributed to the company investing activities. On the other hand, Payment of debts and profit withdrawal from Merch KG were the two main contributors to the company’s financing activities.

Although I agree with investing and financing strategies that each company appears to be employed since it will enable the company to expand its business activities and improve its financial performance.

Items not included in the financial statements

  • I believe “Goodwill” is one of the factors that are crucial to investors when deciding whether or not to invest in a company but is not disclosed in each firm’s financial statement. Goodwill symbolizes company brand recognition, customer loyalty, and substantial value. It enables investors to constantly evaluate a company’s future prospects when deciding the stock’s value.
  • Besides, I think CSR expenditures are other factors that are vital to investors when deciding whether or not to invest in a company but are not disclosed in each firm’s financial statement. Since the majority of investors believe that developing a strong CSR strategy can aid businesses in gaining consumers’ confidence and loyalty. It has been observed that devoted clients remain with a business even when it is through a financial crisis and work to improve their situation. Investors never run any risk by funding such a company.


A brief glance at the key financial indicators of Merck & Co. and Pfizer led to the conclusion that Merck & Co. lagged behind Pfizer in terms of revenue, liquidity, and profitability. For instance, in 2021 it is reported that Pfizer’s revenue was 67% and net income 68.43% more than Merck & Co. Meanwhile, it is seen the company’s financial leverage was lower than Merck & Co. Additionally, Pfizer is currently introducing a number of mRNA vaccines and potential blockbusters in the fields of immunology, heart disease, and cancer after years of battling to develop significant new medications. This would bring huge financial gain. Though, I would choose Pfizer over Merck for making the investment.


Works Cited

Annual Report. “Merck and Co.” Merck & Co., 2021,

“Pfizer Inc. – Investor Relations – Annual Reports.” Investors Relation, 2021,

Brown, Maury. “Pfizer (PFE).” Forbes, 2021,

Reuters. “Merck and Co.” Reuters, 28 July 2022,