US Big Pharma 4Q 2012 and Annual 2012 Adjusted Earnings Both Decline 3%

The 6 US Big Pharma Corps had Total Non-GAAP Adjusted Net Income of $13,571 mil in the 4Q 2012, which was a 3% decline from the 4Q 2011.  And these 6 Big Pharma Corps had Total Non-GAAP Adjusted Net Income of $57,831 mil in annual 2012, which was also a 3% decline from annual 2011.

So how were these same earnings in annual 2011?  Well, much better.  The Total Non-GAAP Adjusted Net Income in annual 2011 increased 5% from annual 2010.

And all 6 Big Pharma Corps had their earnings change from the prior year deteriorate in 2012 vs 2011 as compared with such earnings change in 2011 vs 2010.

I think it is pretty clear that the Affordable Care Act played a very positive role in reducing the excess profits of all of these 6 Big Pharma Corps.  At the same time, this new health care act has also bent back the long-term US health care cost curve.

This Adjusted After-tax Net Income above is what was disclosed in the company's earnings release, and it excludes Special, Unusual Items which are significant in amount relative to Reported Net Income.

Below here are the Adjusted After-tax Net Income of each of these 6 US Big Pharma Corps in the 4Qs of both 2012 and 2011:

	4Q 2012	4Q 2011
	Non-GAAP	Non-GAAP	4Q	4Q
	Adjusted	Adjusted	Increase	Increase
	Net	Net	(Decrease)	(Decrease)
	Income	Income	Amount	%
	mils of $s	mils of $s	mils of $s
Big Pharma
Pfizer	3,512	3,784	(272)	-7%
Johnson & Johnson	3,376	3,129	247	8%
Merck	2,540	2,978	(438)	-15%
Abbott Labs	2,421	2,295	126	5%
Eli Lilly	945	969	(24)	-2%
Bristol Myers Squibb	777	906	(129)	-14%
Total all 6	13,571	14,061	(490)	-3%

And below here are the Adjusted After-tax Net Income of each of these 6 US Big Pharma Corps in both annual 2012 and annual 2011.  In addition, the two far right columns below compare the annual earnings growth or decline in 2012 vs 2011 and in 2011 vs 2010:

	Annual	Annual
	2012	2011	Annual	Annual	Annual
	Non-GAAP	Non-GAAP	2012	2012	2011
	Adjusted	Adjusted	Increase	Increase	Increase
	Net	Net	(Decrease)	(Decrease)	(Decrease)
	Income	Income	Amount	%	%
	mils of $s	mils of $s	mils of $s
Big Pharma
Pfizer	16,476	17,839	(1,363)	-8%	2%
Johnson & Johnson	14,345	13,867	478	3%	4%
Merck	11,743	11,697	46	0%	9%
Abbott Labs	8,119	7,331	788	11%	13%
Eli Lilly	3,784	4,914	(1,130)	-23%	-6%
Bristol Myers Squibb	3,364	3,921	(557)	-14%	5%
Total all 6	57,831	59,569	(1,738)	-3%	5%

 
And below here is the 2011 CEO Compensation disclosure in the most recent 2011 Proxy Statements filed by each of these Big Pharma Corps with the SEC:

					Non-equity	Increase
					Incentive	In	All
			Stock	Option	Plan	Pension	Other	Total
		Salary	Awards	Awards	Compensation	Value	Compensation	Compensation
		000s	000s	000s	000s	000s	000s	000s
Johnson & Johnson	Weldon	1,907	2,609	4,189	14,336	3,435	321	26,797
Pfizer	Read	1,700	5,684	6,916	3,500	6,893	319	25,012
Abbott Labs	White	1,900	9,760	1,836	4,200	5,419	896	24,011
Eli Lilly	Lechleiter	1,500	5,625	0	2,625	6,530	90	16,370
Bristol Myers Squibb	Andreotti	1,510	7,352	0	4,220	1,180	650	14,912
Merck	Frazier	1,500	3,108	3,000	3,097	2,587	56	13,348
Total all 6		10,017	34,138	15,941	31,978	26,044	2,332	120,450

It is good to see that 3 (Merck's Frazier, Bristol Myers Squibb's Andreotti and Eli Lilly's Lechleiter) of these 6 CEO's have Total Compensation at roughly half of that of the top 3.  But then when you review the magnitude of the above Total Compensation amounts, which totaled $120 mil for just these 6 CEO's, it is also easy to see why so many US citizens feel that there is such incredible income inequality between the very wealthy in the country and everyone else.

And from their SEC income tax footnote filings, below here is the most recent year 2011 disclosure of the just one year (2011) of foreign tax breaks that each of these 6 Big Pharma companies received by having their foreign earnings taxed somewhere other than in the US. The foreign tax break amount here represents the difference between these foreign earnings taxed at their actual foreign income tax rates vs at the US Federal Income Tax Rate of 35%.

	2011
	Foreign
	Tax
	Breaks
	mils of $s
Merck	2,220
Johnson & Johnson	1,953
Abbott Labs	1,191
Eli Lilly	797
Pfizer	421
Bristol Myers Squibb	593
Total all 6	7,175

Yeah, that is $7.2 bil of foreign tax breaks for just the year 2011 for just these 6 Big Pharma Corps.

And below here are the cumulative unremitted foreign earnings of these 6 Big Pharma Corps at Dec 31, 2011, the most recent date this number was disclosed.  These unremitted foreign earnings result from the shifting of income, and the related US jobs, to low taxed foreign jurisdictions.

	Unremitted
	Foreign
	Earnings
	12-31-11
	bils of $s
Pfizer	63.0
Merck	44.3
Johnson & Johnson	41.6
Abbott Labs	31.9
Eli Lilly	20.6
Bristol Myers Squibb	18.5
Total all 6	219.9

Yeah, that's total unremitted foreign earnings as of Dec 31, 2011 of $220 bil.

Clearly, US Big Pharma has benefited dramatically from many corporate tax loopholes.

It's easy to see why the country's largest companies like these Big Pharma Corps want the US Debt to be reduced solely by US Government cost cuts rather than by a combination of both costs cuts and additional US Tax Revenues.

And the Business Roundtable, which speaks for the largest US Corps, is now lobbying very heavily to delay first eligibility for both Social Security and Medicare Benefits to Age 70.  Give me a break!