How PFE (Pfizer) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a global pharmaceutical leader like Pfizer (formerly Pfizer Inc.) makes money is essential for investors and anyone interested in the business of healthcare and biopharmaceuticals. In this post, we break down Pfizer's quarterly income statement (Q2 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

![ (https://blog.valuesense.io/content/images/2025/10/PFEincome1761920123.png)

Quick Pfizer Overview

Pfizer operates as a leading global biopharmaceutical company, developing, manufacturing, and marketing prescription medicines, vaccines, and consumer healthcare products. Revenue comes primarily from the sale of branded pharmaceuticals across therapeutic areas such as oncology, vaccines, immunology, and rare diseases. The company also generates income from contract manufacturing and business innovation services through Pfizer CentreOne.

Revenue Breakdown

• Total Revenue (Q2 2025): $14.7B (+10.3% YoY)
  • Global Pharmaceuticals: $14.3B (97.6% of total, +10.1% YoY)
  • Business Innovation (Pfizer CentreOne): $328M (2.2% of total, +18.0% YoY)
  • Other Revenue by Product: $20M (0.1% of total, +42.9% YoY)
• Growth is powered by strong demand for core pharmaceutical products, expansion in emerging markets, and increased contract manufacturing activity.

Gross Profit and Margins

• Gross Profit: $9.42B (64.3% gross margin)
  • Cost of Revenue: $5.23B (+3.8% YoY)
  • Pfizer maintains robust margins due to its scalable drug portfolio, patent protection, and operational efficiencies in manufacturing.
• Most costs come from raw materials, manufacturing, supply chain logistics, and royalties.

Operating Income and Expenses

• Operating Income: $3.58B (+90.3% YoY, 24.4% margin)
• Operating Expenses: $5.85B (-8.2% YoY)
  • R&D: $2.44B (-8.7% YoY, 16.7% of revenue) — Focused on oncology, vaccines, and next-generation therapeutics.
  • SG&A: $3.40B (-7.8% YoY, 23.2% of revenue) — Includes global salesforce, marketing, and administrative functions.
  • Pfizer continues to prioritize innovation and control costs while expanding its product pipeline and global reach.

Net Income

• Pre-Tax Income: $3.04B (0.0% YoY, 20.8% margin)
• Income Tax: $141M (4.6% effective tax rate)
• Net Income: $2.89B (+11,920.8% YoY, 19.7% net margin)
• Pfizer converts a significant portion of sales into profit due to its scale, efficient operations, and strong pricing power in core markets.

What Drives Pfizer's Money Machine?

• Global Pharmaceuticals: 97.6% of revenue, driven by blockbuster drugs in oncology, vaccines, and immunology.
• Prescription Volume & Pricing: High prescription volumes and premium pricing for innovative therapies.
• R&D Investment: $2.44B in Q2 2025, targeting breakthrough medicines and vaccine technologies.
• Business Innovation: Pfizer CentreOne contract manufacturing and services, growing at 18% YoY, though not yet a major profit center.

Visualizing Pfizer's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A and R&D) taking the largest chunk.
• Even after large investments in research and global sales infrastructure, 19.7% of revenue drops to the bottom line.

Key Takeaways

• Pfizer's money comes overwhelmingly from branded pharmaceutical sales
• High gross and net margins illustrate the power of Pfizer's patent-protected, scalable business model
• Heavy investment in R&D, balanced by efficiency in operating costs
• Ongoing growth is driven by new drug launches, emerging market expansion, and contract manufacturing

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FAQ About Pfizer's Income Statement

1. What is the main source of Pfizer's revenue in 2025?

Pfizer generates over 97% of its revenue from Global Pharmaceuticals, including prescription medicines and vaccines. Additional revenue comes from contract manufacturing (Pfizer CentreOne) and other product sales.

2. How profitable is Pfizer in Q2 2025?

Pfizer reported net income of $2.89B in Q2 2025, with a net margin of approximately 19.7%, reflecting strong profitability driven by patent-protected products and operational scale.

3. What are the largest expense categories for Pfizer?

The biggest expenses on Pfizer's income statement are operating expenses, particularly Research & Development (R&D) at $2.44B and Sales, General & Administrative (SG&A) at $3.40B in Q2 2025. R&D investment focuses on oncology, vaccines, and next-generation therapies.

4. Why does Business Innovation (Pfizer CentreOne) operate at a loss?

Business Innovation, despite generating $328M in revenue, posted an operating loss in Q2 2025 because Pfizer aggressively invests in expanding contract manufacturing and service capabilities, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does Pfizer's effective tax rate compare to previous years?

Pfizer's effective tax rate in Q2 2025 was 4.6%, lower than previous years. This low rate is primarily due to tax benefits from international structuring and share-based compensation.