ACQUISITIONS, DIVESTITURES, LICENSING AND OTHER ARRANGEMENTS (Tables)

9 Months Ended

Sep. 30, 2024

Acquisitions, Divestitures and Other Arrangements [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following summarizes the total consideration transferred and allocation of consideration transferred to the assets acquired, liabilities assumed and Acquired IPRD expense:

Dollars in millions
Cash consideration for outstanding shares	$	12,606
Cash consideration for equity awards	1,421
Consideration to be paid	14,027
Less: Charge for unvested stock awards(a)	(289)
Transaction costs	55
Total consideration allocated	$	13,793
Cash and cash equivalents	$	1,167
Other assets	67
Intangible assets	100
Deferred income tax asset	542
Deferred income tax liability	(25)
Other liabilities	(180)
Total identifiable assets acquired, net	1,671
Acquired IPRD expense	12,122
Total consideration allocated	$	13,793

(a)        Includes cash-settled unvested equity awards of $130 million expensed in Marketing, selling and administrative and $159 million expensed in Research and development during the nine months ended September 30, 2024.

The purchase price allocation resulted in the following amounts being allocated to the assets acquired and liabilities assumed as of the acquisition date based upon their respective fair values summarized below:

Dollars in millions	Purchase Price Allocation
Cash and cash equivalents	$	501
Other assets	70
Intangible assets	3,700
Deferred income tax asset	81
Deferred income tax liability	(798)
Other liabilities	(109)
Identifiable net assets acquired	$	3,445
Goodwill	428
Total consideration allocated	$	3,873

The purchase price allocation resulted in the following amounts being allocated to the assets acquired and liabilities assumed as of the acquisition date based upon their respective fair values summarized below:

Dollars in millions	Purchase price allocation
Cash and cash equivalents	$	748
Inventories	215
Other assets	159
Intangible assets	4,225
Deferred income tax assets	734
Deferred income tax liabilities	(1,094)
Other liabilities	(204)
Identifiable net assets acquired	$	4,783
Goodwill	152
Total consideration allocated	$	4,935

Schedule of Business Acquisitions, by Acquisition

Total consideration for the acquisition consisted of the following:

Dollars in millions
Cash consideration for outstanding shares	$	3,851
Cash consideration for equity awards	296
Consideration paid	4,147
Less: Unvested stock awards(a)	(274)
Total consideration allocated	$	3,873

(a)    Includes cash settlement for unvested equity awards of $159 million expensed in Marketing, selling and administrative and $115 million expensed in Research and development during the nine months ended September 30, 2024.

Total consideration for the acquisition consisted of the following:

Dollars in millions
Cash consideration for outstanding shares	$	4,596
Cash consideration for equity awards	205
Consideration paid	4,801
Plus: Fair value of CVRs	248
Less: unvested stock awards(a)	(114)
Total consideration allocated	$	4,935

(a)    Includes cash settlement of unvested equity awards of $60 million expensed in Marketing, selling and administrative and $54 million expensed in Research and development during nine months ended September 30, 2024.

Divestitures

The following table summarizes the financial impact of divestitures including royalties, which are included in Other (income)/expense, net. Revenue and pretax earnings related to all divestitures were not material in all periods presented (excluding divestiture gains or losses).

	Three Months Ended September 30,
	Net Proceeds				Divestiture (Gains)/Losses				Royalty Income
Dollars in millions	2024		2023		2024		2023		2024		2023
Diabetes business - royalties	$	278	$	220	$	—	$	—	$	(284)	$	(217)
Mature products and other	3		3		5		—		—		—
Total	$	281	$	223	$	5	$	—	$	(284)	$	(217)

	Nine Months Ended September 30,
	Net Proceeds				Divestiture (Gains)/Losses				Royalty Income
Dollars in millions	2024		2023		2024		2023		2024		2023
Diabetes business - royalties	$	774	$	621	$	—	$	—	$	(820)	$	(623)
Mature products and other	3		10		5		—		—		—
Total	$	777	$	631	$	5	$	—	$	(820)	$	(623)

Licensing and Other Arrangements

The following table summarizes the financial impact of Keytruda* royalties, Tecentriq* royalties, upfront licensing fees and milestones for products that have not obtained commercial approval, which are included in Other (income)/expense, net.

	Three Months Ended September 30,				Nine Months Ended September 30,
Dollars in millions	2024		2023		2024		2023
Keytruda* royalties	$	(137)	$	(315)	$	(407)	$	(878)
Tecentriq* royalties	(12)		(24)		(35)		(78)
Contingent milestone income	(13)		—		(38)		(36)
Amortization of deferred income	(12)		(12)		(36)		(39)
Other royalties and licensing income	(6)		(14)		(16)		(37)
Royalty and licensing income	$	(180)	$	(365)	$	(532)	$	(1,068)