Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives

12 Months Ended

Dec. 31, 2023

Restructuring and Related Activities [Abstract]

Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives

A. Restructuring Programs

Transforming to a More Focused Company Program––In 2019, we announced that we would be incurring costs associated with our Transforming to a More Focused Company Program, a multi-year effort to ensure our cost base aligned appropriately with our operating structure following Pfizer’s transformation into a more focused, innovative science-based global biopharmaceutical business. This program included activities to (i) restructure our corporate enabling functions to appropriately support our operating structure; (ii) transform our commercial go-to-market model; and (iii) optimize our manufacturing network and R&D operations. The costs to restructure our corporate enabling functions, and to optimize our R&D operations and reduce cycle times, as well as to further prioritize our internal R&D portfolio, primarily included severance and implementation costs. The costs to optimize our manufacturing network largely included severance, implementation costs, product transfer costs, site exit costs, and accelerated depreciation. From the start of this program in the fourth quarter of 2019 through December 31, 2023, we incurred costs of $4.0 billion, of which $1.5 billion ($1.0 billion of restructuring charges) was associated with our Biopharma segment and have substantially completed this program.

Realigning our Cost Base Program––In the fourth quarter of 2023, we announced that we launched a multi-year, enterprise-wide cost realignment program that aims to realign our costs with our longer-term revenue expectations. We expect costs associated with this multi-year effort to continue through 2024 and to total approximately $3.0 billion, primarily representing cash expenditures for severance and implementation costs, of which $1.1 billion is associated with our Biopharma segment.

In 2023, we incurred costs under this program of $1.7 billion, of which $674 million (including $665 million of restructuring charges) is associated with our Biopharma segment.

B. Key Activities


The following summarizes costs and credits for acquisitions and cost-reduction/productivity initiatives:
	Year Ended December 31,
(MILLIONS)		2023		2022		2021
Restructuring charges/(credits):
Employee terminations		$	1,622	$	776	$	680
Asset impairments		227		52		53
Exit costs/(credits)		119		54		8
Restructuring charges/(credits)(a)		1,968		882		741
Transaction costs(b)		190		144		20
Integration costs and other(c)		785		348		41
Restructuring charges and certain acquisition-related costs		2,943		1,375		802
Net periodic benefit costs/(credits) recorded in Other (income)/deductions––net		(7)		(9)		(63)
Additional depreciation––asset restructuring recorded in our consolidated statements of income as follows(d):
Cost of sales		31		34		63
Selling, informational and administrative expenses		1		2		23

Total additional depreciation––asset restructuring		32		36		87

Implementation costs recorded in our consolidated statements of income as follows(e):
Cost of sales		67		54		45
Selling, informational and administrative expenses		289		560		426
Research and development expenses		101		2		1

Total implementation costs		457		616		472
Total costs associated with acquisitions and cost-reduction/productivity initiatives		$	3,426	$	2,018	$	1,298

(a)Primarily represents cost-reduction initiatives. Amounts associated with our Biopharma segment: $672 million for 2023 (including charges of $665 million for Realigning our Cost Base Program and credits of $20 million for Transforming to a More Focused Company program), $354 million for 2022 (including charges of $291 million for Transforming to a More Focused Company program) and $610 million for 2021 (including charges of $612 million for Transforming to a More Focused Company program).

(b)Represents external costs for banking, legal, accounting and other similar services.

(c)Represents external, incremental costs directly related to integrating acquired businesses, such as expenditures for consulting and the integration of systems and processes, and certain other qualifying costs. 2023 costs mostly relate to our acquisition of Seagen, including $476 million that was recognized as a post-closing compensation expense for payments to Seagen employees in the fourth quarter of 2023 for the fair value of long-term incentive awards that vested upon closing and the expense for employee incentive awards issued in contemplation of the merger. 2022 costs mostly related to our acquisitions of Arena and GBT, including $138 million in payments to Arena employees in the first quarter of 2022 and $136 million in payments to GBT employees in the fourth quarter of 2022 for the fair value of previously unvested long-term incentive awards that was recognized as post-closing compensation expense. See Note 2A. 2021 costs primarily related to our acquisition of Trillium.

(d)Represents the impact of changes in the estimated useful lives of assets involved in restructuring actions.

(e)Represents external, incremental costs directly related to implementing our non-acquisition-related cost-reduction/productivity initiatives.


The following summarizes the components and changes in restructuring accruals:
(MILLIONS)	Employee Termination Costs		Asset Impairment Charges		Exit Costs		Accrual
Balance, January 1, 2022	$	1,014	$	—	$	57	$	1,071
Provision	776		52		54		882
Utilization and other(a)	(594)		(52)		(103)		(750)
Balance, December 31, 2022(b)	1,196		—		8		1,204
Provision	1,622		227		119		1,968
Utilization and other(a)	(840)		(227)		(116)		(1,184)
Balance, December 31, 2023(c)	$	1,978	$	—	$	11	$	1,988

(a)Other activity includes adjustments for foreign currency translation that are not material to our consolidated financial statements.

(b)Included in Other current liabilities ($991 million) and Other noncurrent liabilities ($213 million).

(c)Included in Other current liabilities ($1.3 billion) and Other noncurrent liabilities ($663 million).