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Other (Income)/Deductions - Net (Detail) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jul. 01, 2018
Jun. 30, 2019
Jul. 01, 2018
Other Income and Expenses [Abstract]        
Interest income [1] $ (59) $ (80) $ (125) $ (157)
Interest expense [1] 389 326 750 635
Net interest expense 330 245 625 478
Royalty-related income [2] (231) (121) (320) (217)
Net gains on asset disposals 0 (15) (1) (22)
Net gains recognized during the period on investments in equity securities [3],[4] (36) (257) (147) (375)
Net realized losses on sales of investments in debt securities 0 8 0 12
Income from collaborations, out-licensing arrangements and sales of compound/product rights [5] (22) (174) (104) (316)
Net periodic benefit credits other than service costs [6] (51) (84) (91) (166)
Certain legal matters, net [7] 15 (88) 19 (107)
Certain asset impairments [8] 10 40 160 40
Business and legal entity alignment costs [9] 137 1 256 4
Net losses on early retirement of debt [10] 0 0 138 3
Other, net [11] (27) (106) (318) (64)
Other (income)/deductions––net [12] $ 126 $ (551) $ 218 $ (728)
[1]
Interest income decreased in the second quarter and first six months of 2019, primarily driven by a lower investment balance. Interest expense increased in the second quarter and first six months of 2019, mainly as a result of higher short-term interest rates, as well as the retirement of lower-coupon debt and the issuance of new debt with a higher coupon than the debt outstanding for the comparative prior year periods.
[2]
The increase in royalty-related income for the second quarter and first six months of 2019 is primarily due to a one-time favorable resolution in the second quarter of 2019 of a legal dispute for $82 million.
[3]
The second quarter of 2018 included gains of $142 million and the first six months of 2018 included gains of $203 million related to our investment in ICU Medical stock. For additional information, see Note 7B.
[4]
The net gains on investments in equity securities are reported in Other (income)/deductions––net. For additional information, see Note 4.
[5]
Includes income from upfront and milestone payments from our collaboration partners and income from out-licensing arrangements and sales of compound/product rights. In the first six months of 2019, mainly includes $68 million in milestone income from Mylan Pharmaceuticals Inc. related to the FDA’s approval and launch of Wixela Inhub®, a generic of Advair Diskus® (fluticasone propionate and salmeterol inhalation powder). In the second quarter of 2018, primarily included, among other things, $88 million in milestone income from multiple licensees and an upfront payment to us of $75 million for the sale of
an α-amino-3-hydroxy-5-methyl-4-isoxazolepropionic acid (AMPA) receptor potentiator for cognitive impairment associated with schizophrenia (CIAS) to Biogen Inc. In the first six months of 2018, mainly includes, among other things, all of the factors discussed above for the second quarter of 2018, as well as a $75 million milestone payment received from Shire related to their first dosing of a patient in a Phase 3 clinical trial of a compound out-licensed by Pfizer to Shire for the treatment of ulcerative colitis, and a $40 million milestone payment from Merck in conjunction with the approval of ertugliflozin in the EU.
[6]
For additional information, see Note 10.
[7]
In the second quarter and first six months of 2018, primarily represented the reversal of a legal accrual where a loss was no longer deemed probable.
[8]
The second quarter and first six months of 2019 include an intangible asset impairment charge of $10 million and the second quarter and first six months of 2018 included an intangible asset impairment charge of $31 million, which are all related to a finite-lived developed technology right, acquired in connection with our acquisition of Anacor, for the treatment for toenail fungus marketed in the U.S. market only, associated with Biopharma and reflect, among other things, updated commercial forecasts. The first six months of 2019 also includes intangible asset impairment charges of: (i) $90 million related to WRDM IPR&D, which relates to a pre-clinical stage asset from our acquisition of Bamboo for gene therapies for the potential treatment of patients with certain rare diseases; and (ii) $40 million related to a Biopharma developed technology right, acquired in connection with our acquisition of King, for government defense products. The WRDM IPR&D intangible asset impairment charge was the result of a determination to not use certain Bamboo IPR&D acquired in future rare disease development. The intangible asset impairment charge related to the Biopharma developed technology right reflects, among other things, updated commercial forecasts including manufacturing cost assumptions. In addition, the first six months of 2019, includes other asset impairments of $20 million.
[9]
In the second quarter and first six months of 2019, represents incremental costs associated with the design, planning and implementation of our new organizational structure, effective in the beginning of 2019, and primarily includes consulting, legal, tax and advisory services. In the second quarter and first six months of 2018, represents expenses for changes to our infrastructure to align our commercial operations that existed through December 31, 2018, including costs to internally separate our businesses into distinct legal entities, as well as to streamline our intercompany supply operations to better support each business.
[10]
In the first six months of 2019, represents net losses due to the early retirement of debt in the first quarter of 2019, inclusive of the related termination of cross-currency swaps.
[11]
The second quarter of 2019 includes, among other things, charges of $81 million, reflecting the change in the fair value of contingent consideration, dividend income of $76 million from our investment in ViiV and $25 million of income from insurance recoveries related to Hurricane Maria. The first six months of 2019 includes, among other things, dividend income of $140 million from our investment in ViiV and $50 million of income from insurance recoveries related to Hurricane Maria. The second quarter of 2018 included, among other things, dividend income of $76 million from our investment in ViiV, and charges of $23 million, reflecting the change in the fair value of contingent consideration. The first six months of 2018 included, among other things, dividend income of $135 million from our investment in ViiV, and charges of $135 million reflecting the change in the fair value of contingent consideration. The second quarter and first six months of 2018 also included a non-cash $50 million pre-tax gain on the contribution of Pfizer’s allogeneic CAR T development program assets obtained from Cellectis S.A. and Les Laboratoires Servier SAS in connection with our contribution agreement entered into with Allogene, and a non-cash $17 million gain on the cash settlement of a liability that we incurred in April 2018 upon the EU approval of Mylotarg.
[12]
Amounts may not add due to rounding.