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Segment Information
 12 Months Ended
Dec. 31, 2022
Segment Reporting [Abstract]  
Segment Information
We manage our operations through two geographic regions. Each operating segment has responsibility for its commercial activities. Within each of these operating segments, we offer a diversified product portfolio, including parasiticides, vaccines, dermatology, anti-infectives, other pharmaceutical products, medicated feed additives and animal health diagnostics, for both companion animal and livestock customers.
In 2021, certain costs associated with information technology that specifically support our global manufacturing operations, which were previously reported in Other unallocated, are now reported in Corporate. In addition, in the first quarter of 2021, the company realigned certain management responsibilities. These changes did not impact the determination of our operating segments, however they resulted in the reallocation of certain costs between segments. These changes primarily include the following: (i) certain diagnostics costs, which were previously reported in Corporate, are now reported in our U.S. results; and (ii) certain other miscellaneous costs, which were previously reported in our U.S. results, are now reported in Corporate.
Operating Segments
Our operating segments are the U.S. and International. Our chief operating decision maker uses the revenue and earnings of the two operating segments, among other factors, for performance evaluation and resource allocation.
Other Costs and Business Activities
Certain costs are not allocated to our operating segment results, such as costs associated with the following:
•    Other business activities, includes our CSS contract manufacturing results, our human health business, and expenses associated with our dedicated veterinary medicine research and development organization, research alliances, U.S. regulatory affairs and other operations focused on the development of our products. Other R&D-related costs associated with non-U.S. market and regulatory activities are generally included in the international commercial segment.
•    Corporate, includes enabling functions such as information technology, facilities, legal, finance, human resources, business development, certain diagnostic costs and communications, among others. These costs also include compensation costs and other miscellaneous operating expenses not charged to our operating segments, as well as interest income and expense.
•    Certain transactions and events such as (i) Purchase accounting adjustments, where we incur expenses associated with the amortization of fair value adjustments to inventory, intangible assets and property, plant and equipment; (ii) Acquisition-related activities, where we incur costs associated with acquiring and integrating newly acquired businesses, such as transaction costs and integration costs; and (iii) Certain significant items, which comprise substantive, unusual items that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis, such as restructuring charges and implementation costs associated with our cost-reduction/productivity initiatives that are not associated with an acquisition, certain asset impairment charges, certain legal and commercial settlements and the impact of divestiture-related gains and losses.
•Other unallocated includes (i) certain overhead expenses associated with our global manufacturing operations not charged to our operating segments; (ii) certain costs associated with finance that specifically support our global manufacturing operations; (iii) certain supply chain and global logistics costs; and (iv) procurement costs.
Segment Assets
We manage our assets on a total company basis, not by operating segment. Therefore, our chief operating decision maker does not regularly review any asset information by operating segment and, accordingly, we do not report asset information by operating segment. Total assets were approximately $14.9 billion and $13.9 billion at December 31, 2022 and 2021, respectively.
Selected Statement of Income Information                                 
Earnings
Depreciation and Amortization(a)
Year Ended December 31,Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020202220212020
U.S.
Revenue$4,313 $4,042 $3,557 
Cost of Sales803 788 709 
Gross Profit3,510 3,254 2,848 
    Gross Margin81.4 %80.5 %80.1 %
Operating Expenses765 681 602 
Other (income)/deductions-net(18)4 7 
U.S. Earnings2,763 2,569 2,239 $55 $54 $55 
International
Revenue(b)
3,681 3,652 3,035 
Cost of Sales1,083 1,106 971 
Gross Profit2,598 2,546 2,064 
    Gross Margin70.6 %69.7 %68.0 %
Operating Expenses611 602 510 
Other (income)/deductions-net(3)(4)7 
International Earnings1,990 1,948 1,547 86 74 56 
Total operating segments4,753 4,517 3,786 141 128 111 
Other business activities
(424)(406)(372)28 28 27 
Reconciling Items:
Corporate
(1,073)(1,052)(879)132 115 101 
Purchase accounting adjustments
(160)(175)(198)159 175 199 
Acquisition-related costs
(5)(12)(18)— — — 
Certain significant items(c)
(56)(73)(43)— — — 
Other unallocated
(379)(311)(280)5 2 3 
Total Earnings(d)
$2,656 $2,488 $1,996 $465 $448 $441 
(a)    Certain production facilities are shared. Depreciation and amortization is allocated to the reportable operating segments based on estimates of where the benefits of the related assets are realized.
(b)    Revenue denominated in euros was $774 million in 2022, $814 million in 2021 and $718 million in 2020.
(c)    For 2022, certain significant items primarily represents inventory and asset impairment charges related to customer relationships, developed technology rights and property, plant and equipment in our diagnostics, poultry, cattle and swine businesses and the consolidation of manufacturing sites in China of $47 million, as well as employee termination and exit costs associated with cost-reduction and productivity initiatives in certain international markets of $4 million.
For 2021, certain significant items primarily included certain asset impairment charges of $46 million, as well as employee termination costs associated with our international operations and other costs associated with cost-reduction and productivity initiatives of $24 million.
For 2020, certain significant items primarily included certain asset impairment charges of $37 million and CEO transition-related costs of $16 million, partially offset by a net gain resulting from a cash payment received pursuant to an agreement related to the 2016 sale of certain U.S. manufacturing sites of $18 million.
    (d)    Defined as income before provision for taxes on income.
B. Geographic Information
Property, plant and equipment, less accumulated depreciation, by geographic region follow:
As of December 31,
(MILLIONS OF DOLLARS)20222021
U.S.$1,820 $1,638 
International933 784 
Property, plant and equipment, less accumulated depreciation$2,753 $2,422