Segment and other information

12 Months Ended

Dec. 31, 2024

Segment Reporting [Abstract]

Segment and other information

Segment and other information

We operate our business in one operating segment, which also represents one reportable segment: human therapeutics. Therefore, results of our operations are reported on a consolidated basis for purposes of segment reporting, consistent with internal management reporting.

The human therapeutics segment is engaged in the discovery, development, manufacturing and delivery of innovative medicines to fight some of the world’s toughest diseases. The Company’s Chief Executive Officer has been identified as the chief operating decision maker (CODM). The CODM manages and allocates resources on a consolidated basis. The determination of a single segment is consistent with the financial information regularly reviewed by the CODM for purposes of evaluating performance and allocating resources, which is reviewed on a consolidated basis.

As the Company’s CODM evaluates the financial performance of the Company’s human therapeutics segment on a consolidated basis, the measure of segment performance is net income, as reflected in the Consolidated Statements of Income. The CODM uses net income to allocate resources on a consolidated basis, which enables the CODM to assess both the overall level of resources available and optimize distribution of resources across functions, therapeutic areas, regions and research and development programs in line with our long-term corporate-wide strategic goals. In addition, the CODM may also evaluate financial performance based on net income adjusted for certain items that are unusual and non-recurring. As the Company manages its assets on a consolidated basis, the measure of segment assets is total assets, as reflected in the Consolidated Balance Sheets. See Note 10, Investments, for further information regarding equity method investments, and Net cash used in investing activities in the Consolidated Statements of Cash Flows for further information regarding capital expenditures.

The following table provides segment revenues, significant segment expenses, other segment items, reported segment net income and a reconciliation of segment net income to the Company’s total consolidated net income for the years ended December 31, 2024, 2023 and 2022 (in millions):

	Years ended December 31,
	2024		2023		2022
Revenues:
Product sales	$	32,026	$	26,910	$	24,801
Other revenues	1,398		1,280		1,522
Total revenues	33,424		28,190		26,323
Less:
Manufacturing cost of sales(1)(2)	11,118		7,347		5,776
Profit share and royalties in cost of sales(1)	1,740		1,104		630
Research and development(1)	5,964		4,784		4,434
Sales and marketing(1)	4,713		3,784		3,736
General and administrative(1)	2,383		2,395		1,678
Other segment items(3)	262		(743)		777
Equity in (income) loss of equity method investments	(10)		14		667
Interest income	(510)		(1,225)		(127)
Interest expense, net	3,155		2,875		1,406
Provision for income taxes	519		1,138		794
Segment net income	4,090		6,717		6,552
Reconciliation of profit or loss:
Adjustments and reconciling items	—		—		—
Consolidated net income	$	4,090	$	6,717	$	6,552

____________

(1)    During the years ended December 31, 2024, 2023 and 2022, we recognized amortization expense on our intangible assets of $4.8 billion, $3.2 billion and $2.6 billion, respectively. Amortization of intangible assets is included primarily in Cost of sales in the Consolidated Statements of Income. In addition, during the years ended December 31, 2024, 2023 and 2022, we recognized depreciation and ROU asset amortization expense of $805 million, $824 million and $818 million, respectively.

(2)    During the years ended December 31, 2024, 2023 and 2022, manufacturing cost of sales included amortization of step-up to fair value of inventory acquired in business combinations of $2.4 billion, $656 million and $30 million, respectively.

(3)    Other segment items included in Segment net income primarily consists of: (i) fair value adjustments on equity securities (see Note 10, Investments) and (ii) net impairment charges on intangible assets (see Note 13, Goodwill and other intangible assets). For the year ended December 31, 2023, other segment items also included expenses related to our restructuring plan that was both initiated and substantially completed in 2023. For the year ended December 31, 2022, other segment items also included a loss on the divestiture of Gensenta (see Note 4, Acquisitions and divestitures).