Pfizer Limited received an order levying a penalty of ₹1.26 crore from the Income Tax Transfer Pricing authority for Assessment Year 2023-24.

The order was issued by the Deputy or Additional Commissioner of Income Tax (Transfer Pricing) on September 25, 2026, and received by the company on September 28, 2026. The penalty was imposed under Section 271G of the Income Tax Act, 1961.

Reason for Penalty

The regulatory filing indicates that the penalty stems from alleged non-furnishing of specific granular information sought during the transfer pricing audit for AY 2023-24. The company has stated that it believes the order is not maintainable and is in the process of preferring an appeal against it.

Financial Impact

Pfizer asserted that the order has no material impact on its financial position, operations, or other activities. The company maintains strong grounds on merits regarding the assessment.

Pfizer reported second-quarter 2026 revenues of $50 billion, exceeding expectations, with adjusted diluted EPS of $0.77, marking the ninth time in the last 10 quarters the company beat consensus revenue expectations.

Q2 2026 financial highlights

The company delivered 1% year-over-year operational revenue growth in the second quarter. Excluding COVID products, the underlying business delivered 5% operational revenue growth. Launch and acquired products contributed $3.2 billion in revenue, growing 18% operationally, though this growth rate was tempered by one-time items recorded in the second quarter of 2025 mostly impacting the legacy Seagen inline portfolio. Excluding that impact, the growth rate was 27%.

Adjusted SG&A expenses decreased 3% operationally, reflecting lower spending in corporate enabling functions. Adjusted R&D expenses increased 12% operationally, driven by higher spending in certain oncology and obesity product candidates. The Q2 reported loss per share of -$0.04 reflects a $4.3 billion non-cash intangible asset impairment recorded for SV following a Phase 3 readout in second-line-plus non-small cell lung cancer and, to a lesser extent, the removal of revenue projections for Xbrighter.

Full-year 2026 guidance update

Pfizer raised the midpoint of its full-year 2026 revenue guidance by $500 million to a range of $60.5 billion to $62.5 billion, up from the prior range of $59.5 billion to $60.5 billion. The updated guidance reflects strong non-COVID product performance and revised COVID-19 revenue expectations of approximately $4 billion, down from $5 billion. Adjusted diluted EPS guidance was reaffirmed at $2.80 to $3.00, absorbing an approximately $0.10 unfavorable impact related to the $650 million acquired in-process R&D charge from the Innovent Biologics transaction, which closed in July.

Cost savings and productivity programs

Pfizer announced an expansion of its ongoing cost improvement programs expected to generate approximately $2.5 billion in additional net cost savings from 2027 through 2029. This comprises approximately $1 billion in additional net cost savings from productivity enhancements through technology and simplification efforts, and approximately $1.5 billion from the next phase of its multi-year manufacturing optimization program. Total net cost savings from the manufacturing program are now expected to reach approximately $3 billion through 2029. Combined with prior initiatives, total net savings are now expected to reach approximately $9.7 billion through 2029. The company continues to expect $700 million in savings from phase one of its manufacturing optimization program in 2026, with $175 million realized in Q2.

Capital allocation and balance sheet

In the first half of 2026, Pfizer invested $5.5 billion in internal and external R&D and returned $4.9 billion to shareholders via quarterly dividends. The Innovent Biologics deal closed in July, resulting in an initial $650 million upfront payment to be recorded as acquired in-process R&D expense in the third quarter. Following this transaction, business development capacity stands at approximately $6 billion. Earlier in the quarter, Pfizer made its final TCJA repatriation tax payment of approximately $2.6 billion and closed its exit of VEE, providing approximately $1.65 billion in net cash proceeds.

Pipeline and R&D progress

Through the first half of 2026, Pfizer's R&D organization achieved three regulatory approvals, six key data readouts, and eight pivotal study starts. Key pipeline developments in the quarter included:

• The FDA expanded the approval of Padcev plus pembrolizumab to muscle-invasive bladder cancer regardless of cisplatin eligibility, based on Phase 3 results showing a 35% reduction in the risk of death versus standard of care.
• Phase 2b data for berabenatide at 4.8 mg showed placebo-corrected weight loss of up to 12.3% in the VESPA-3 trial; three Phase 3 trials — VESPA-4, VESPA-5, and VESPA-6 — are now fully enrolled.
• Phase 3 data for Litfulo in non-segmental vitiligo showed a placebo-adjusted response rate of 19.5% at week 52 on the facial VASI-75 endpoint at the 100 milligram dose.
• The MEFRA-1 Phase 3 study of the EZH2 inhibitor plus Xtandi in post-abiraterone metastatic castration-resistant prostate cancer is fully enrolled, with a first readout expected in the fourth quarter.
• Updated Phase 1 data for SV plus pembrolizumab in first-line non-small cell lung cancer with high PD-L1 expression showed an unconfirmed objective response rate of approximately 82%.

Looking ahead, Pfizer expects five regulatory decisions, eight key readouts, and 19 pivotal study starts over the next 12 months.