The Company maintains alliances and collaborations with various third parties for the development and commercialization of certain products. See the 2010 Annual Report on Form 10-K for a more complete description of the below agreements, including termination provisions, as well as disclosures of other alliances and collaborations.

The Company has agreements with Sanofi for the codevelopment and cocommercialization of AVAPRO*/AVALIDE* (irbesartan/irbesartan-hydrochlorothiazide) and PLAVIX* (clopidogrel bisulfate). The worldwide alliance operates under the framework of two geographic territories; one in the Americas (principally the U.S., Canada, Puerto Rico and Latin American countries) and Australia, and the other in Europe and Asia. The agreements expire on the later of (i) with respect to PLAVIX*, 2013 and, with respect to AVAPRO*/AVALIDE*, 2012 in the Americas and Australia and 2013 in Europe and Asia, and (ii) the expiration of all patents and other exclusivity rights in the applicable territory.

The Company acts as the operating partner and owns a 50.1% majority controlling interest in the territory covering the Americas and Australia and consolidates all country partnership results for this territory with Sanofi's 49.9% share of the results reflected as a noncontrolling interest. The Company recognizes net sales in this territory and in comarketing countries outside this territory (e.g., Germany, Italy for irbesartan only, Spain and Greece). Discovery royalties owed to Sanofi are included in cost of products sold. Sanofi acts as the operating partner and owns a 50.1% majority controlling interest in the territory covering Europe and Asia. The Company's ownership interest in this territory is 49.9%. The Company does not consolidate the partnership entities in this territory but accounts for them under the equity method and reflects its share of the results recognized in equity in net income of affiliates. Distributions of partnership profits relating to the joint ventures among the Company and Sanofi are recognized in other operating activities in the consolidated statements of cash flows.

The Company and Sanofi have a separate partnership governing the copromotion of irbesartan in the U.S. The Company recognizes other income related to the amortization of deferred income associated with Sanofi's $350 million payment to the Company for their acquisition of an interest in the irbesartan license for the U.S. upon formation of the alliance. Deferred income will continue to be amortized through 2012, which is the expected expiration of market exclusivity. Certain supply activities and development and opt-out royalties with Sanofi are reflected on a net basis in other (income)/expense.

The Company and Sanofi are currently negotiating certain contractual matters. It is not possible at this time to reasonably assess the outcome of these matters. We do not expect the impact on the Company's results of operations or financial condition to be material.

The following summarized financial information is reflected in the consolidated financial statements:

		Three Months Ended September 30,				Nine Months Ended September 30,
Dollars in Millions		2011			2010	2011			2010
Territory covering the Americas and Australia:
	Net sales	$	1,936	$	1,874	$	5,959	$	5,580
	Discovery royalty expense		368		337		1,123		998
	Noncontrolling interest – pre-tax		590		523		1,764		1,543
	Profit distributions to Sanofi		(523)		(545)		(1,824)		(1,598)

Territory covering Europe and Asia:
	Equity in net income of affiliates		(75)		(73)		(226)		(261)
	Profit distributions to the Company		97		85		224		239

Other:
	Net sales in Europe comarketing countries and other		68		87		213		295
	Amortization (income)/expense – irbesartan license fee		(7)		(7)		(23)		(23)
	Supply activities and development and opt-out royalty
	(income)/expense		6		3		21		(28)

						September 30,		December 31,
Dollars in Millions						2011		2010
Investment in affiliates – territory covering Europe and Asia						$	24	$	22
Deferred income – irbesartan license fee							37		60

The following is summarized financial information for interests in the partnerships with Sanofi for the territory covering Europe and Asia, which are not consolidated but are accounted for using the equity method:

	Three Months Ended September 30,				Nine Months Ended September 30,
Dollars in Millions	2011		2010		2011		2010
Net sales	$	364	$	417	$	1,125	$	1,465
Gross profit		161		174		501		662
Net income		131		141		413		528

The Company has a worldwide commercialization agreement with Otsuka Pharmaceutical Co., Ltd. (Otsuka), to codevelop and copromote with Otsuka, ABILIFY* (aripiprazole), excluding certain Asia Pacific countries. Under the terms of the agreement, the Company purchases the product from Otsuka and performs finish manufacturing for sale to third-party customers by the Company or Otsuka. In the U.S., United Kingdom (UK), Germany, France and Spain, where the product is copromoted and invoiced to third-party customers by the Company on behalf of Otsuka, the Company recognizes alliance revenue for its contractual share of third-party net sales and recognizes this alliance revenue when ABILIFY* is shipped and all risks and rewards of ownership have transferred to third-party customers. In the U.S. starting January 1, 2011, the Company's contractual share of revenue was reduced from 58% to 53.5% and will be further reduced to 51.5% in 2012. Further reductions in the Company's contractual share of revenue in the U.S. will occur on January 1, 2013 under the terms of the commercialization agreement. Otsuka reimburses the Company 30% of ABILIFY* related operating expenses in the U.S. Reimbursements are netted principally in advertising and product promotion and marketing, selling and administrative expenses. In France, Germany, Spain and, beginning on January 1, 2011, the UK, the Company receives 65% of third-party net sales with no expense reimbursement. In certain countries where the Company is presently the exclusive distributor for the product or has an exclusive right to sell ABILIFY*, the Company recognizes all of the net sales and related cost of products sold and expenses.

The Company paid Otsuka $400 million in April 2009 for extending the term of the U.S. portion of the commercialization and manufacturing agreement through April 2015. This payment is included in other assets and is being amortized as a reduction of net sales through the extension period. Previously capitalized milestone payments totaling $60 million are included in intangible assets and amortized to cost of products sold over the remaining life of the agreement in the U.S.

The Company and Otsuka also have an oncology collaboration for SPRYCEL (dasatinib) and IXEMPRA (ixabepilone) (the “Oncology Products”) in the U.S., Japan and the EU (the “Oncology Territory”). The Company pays a collaboration fee to Otsuka equal to 30% of the first $400 million annual net sales of the Oncology Products in the Oncology Territory, 5% of annual net sales between $400 million and $600 million, and 3% of annual net sales between $600 million and $800 million with additional trailing percentages of annual net sales over $800 million. This fee is included in cost of products sold. Otsuka contributes 20% of the first $175 million of certain commercial operational expenses relating to the Oncology Products in the Oncology Territory and 1% of such costs in excess of $175 million. Reimbursements are netted principally in marketing, selling and administrative expense and advertising and product promotion expense.

The following summarized financial information related to this alliance is reflected in the consolidated financial statements:

		Three Months Ended September 30,				Nine Months Ended September 30,
Dollars in Millions		2011		2010		2011		2010
ABILIFY* net sales, including amortization of extension payment		$	691	$	608	$	2,021	$	1,858
Oncology Products collaboration fee expense			30		30		100		92
Reimbursement of operating expenses to/(from) Otsuka			(23)		(26)		(68)		(74)
Amortization (income)/expense – extension payment			16		17		49		49
Amortization (income)/expense – upfront, milestone and other
	licensing payments		1		1		5		5

						September 30,		December 31,
Dollars in Millions						2011		2010
Other assets - extension payment						$	236	$	285
Other intangible assets - upfront, milestone and other licensing payments							6		11

The Company has an Epidermal Growth Factor Receptor (EGFR) collaboration agreement with Eli Lilly and Company (Lilly) through Lilly's November 2008 acquisition of ImClone Systems Incorporated (ImClone) for the codevelopment and promotion of ERBITUX* (cetuximab) and necitumumab (IMC-11F8) in North America and Japan. The EGFR agreement expires as to ERBITUX* in September 2018 and as to necitumumab when both parties agree to terminate.

Under the EGFR agreement, with respect to ERBITUX* sales in North America, Lilly receives a distribution fee based on a flat rate of 39% of net sales in North America plus reimbursement of certain royalties paid by Lilly, which is included in cost of products sold. In Japan, the Company shares rights to ERBITUX* under an agreement with Lilly and Merck KGaA and receives 50% of the pre-tax profit from Merck's net sales of ERBITUX* in Japan which is further shared equally with Lilly. The Company's share of profits from commercialization in Japan is included in other income. With respect to necitumumab, the companies will share in the cost of developing and potentially commercializing necitumumab in the U.S., Canada and Japan. Lilly maintains exclusive rights to necitumumab in all other markets. The Company will fund 55% of development costs for U.S. studies, 50% for Japan studies, and 27.5% for global studies. All reimbursements to Lilly are recognized in research and development expense.

Previously capitalized milestone payments are being amortized through 2018, the remaining term of the agreement. The amortization is classified in cost of products sold.

The following summarized financial information related to this alliance is reflected in the consolidated financial statements:

		Three Months Ended September 30,				Nine Months Ended September 30,
Dollars in Millions		2011		2010		2011		2010
Net sales		$	172	$	159	$	510	$	497
Distribution fees and royalty expense			72		62		212		194
Research and development expense reimbursement to Lilly – necitumumab			4		4		10		9
Amortization (income)/expense – upfront, milestone and other
	licensing payments		9		9		28		28
Japan commercialization fee (income)/expense			(9)		(11)		(24)		(30)

						September 30,		December 31,
Dollars in Millions						2011		2010
Other intangible assets – upfront, milestone and other licensing payments						$	258	$	286

The Company and Gilead Sciences, Inc. (Gilead) have a joint venture to develop and commercialize ATRIPLA* (efavirenz 600 mg/ emtricitabine 200 mg/ tenofovir disoproxil fumarate 300 mg), a once-daily single tablet three-drug regimen combining the Company's SUSTIVA (efavirenz) and Gilead's TRUVADA* (emtricitabine and tenofovir disoproxil fumarate), in the U.S., Canada and Europe. The Company accounts for its participation in the U.S. joint venture under the equity method of accounting and recognizes its share of the joint venture results in equity in net income of affiliates in the consolidated statements of earnings.

The Company records revenue for the bulk efavirenz component of ATRIPLA* upon sales of that product to third-party customers. Revenue for the efavirenz component is determined by applying a percentage to ATRIPLA* revenue to approximate revenue for the SUSTIVA brand.

The following summarized financial information related to this alliance is reflected in the consolidated financial statements:

The Company maintains two worldwide codevelopment and cocommercialization agreements with AstraZeneca PLC (AstraZeneca). The first agreement (Saxagliptin Agreement) is for the worldwide codevelopment and cocommercialization (excluding Japan) of ONGLYZA (saxagliptin). The second agreement (SGLT2 Agreement) is for the worldwide (including Japan) codevelopment and cocommercialization of dapagliflozin. KOMBIGLYZE (saxagliptin and metformin) was codeveloped with AstraZeneca under the Saxagliptin Agreement and is pending regulatory approval in the EU under the tradename KOMBOGLYZE. Under each agreement, the two companies will jointly develop the clinical and marketing strategy and share development expenses, commercialization expenses, and profits and losses equally on a global basis (excluding, in the case of saxagliptin, Japan). The Company will manufacture both products. Under each agreement, the Company has the option to decline involvement in cocommercialization in a given country and instead receive compensation which is tiered based on net sales. Net reimbursements for commercial costs are included principally in advertising and product promotion and selling, general and administrative expenses. AstraZeneca's share of profits is included in cost of products sold.

Upfront, milestone and other licensing payments received for both compounds totaling $470 million, including $120 million received during the nine months ended September 30, 2011, are deferred and amortized over the useful life of the products into other income.

The majority of development costs under the initial development plans were paid by AstraZeneca (with AstraZeneca bearing all costs of the initial agreed upon development plan for dapagliflozin in Japan). Additional development costs will be shared equally. The net reimbursements to/(from) AstraZeneca for development costs related to saxagliptin and dapagliflozin are netted in research and development.

The following summarized financial information related to this alliance is reflected in the consolidated financial statements:

		Three Months Ended September 30,				Nine Months Ended September 30,
Dollars in Millions		2011		2010		2011		2010
Net sales		$	127	$	47	$	320	$	85
Profit sharing expense			58		21		148		39
Commercialization expense reimbursements to/(from) AstraZeneca			(11)		(13)		(30)		(25)
Research and development expense reimbursements to/(from) AstraZeneca			4		6		33		9
Amortization (income)/expense – upfront, milestone and other
	licensing payments		(10)		(7)		(28)		(20)

						September 30,		December 31,
Dollars in Millions						2011		2010
Deferred income – upfront, milestone and other licensing payments						$	382	$	290

The Company and Pfizer Inc. (Pfizer) maintain a worldwide codevelopment and cocommercialization agreement for ELIQUIS* (apixaban). Effective January 1, 2007, Pfizer funds 60% of all development costs under the initial development plan and the Company funds 40%. The net reimbursements to the Company for ELIQUIS* development costs are netted in research and development. The companies will jointly develop the clinical and marketing strategy and will share commercialization expenses and profits and losses equally on a global basis. The Company is responsible for manufacturing the product under this arrangement. In May 2011, ELIQUIS* was approved in the EU for the prevention of venous thromboembolic events (VTE) in adult patients who have undergone elective hip or knee replacement surgery. ELIQUIS* was launched in a limited number of EU countries beginning in July 2011.

Previously received upfront, milestone and other licensing payments totaling $474 million are deferred and amortized over the useful life of the product into other income.

The following summarized financial information related to this alliance is reflected in the consolidated financial statements:

		Three Months Ended September 30,				Nine Months Ended September 30,
Dollars in Millions		2011		2010		2011		2010
Commercialization expense reimbursement to/(from) Pfizer		$	(2)	$	(2)	$	(5)	$	(4)
Research and development reimbursements to/(from) Pfizer			(16)		(39)		(74)		(158)
Amortization (income)/expense – upfront, milestone and other
	licensing payments		(8)		(8)		(24)		(24)

						September 30,		December 31,
Dollars in Millions						2011		2010
Deferred income – upfront, milestone and other licensing payments						$	358	$	382

In July 2011, the Company notified Exelixis, Inc. (Exelixis) that it is terminating its license for XL-281, a Phase I oral anti-cancer compound with utility in RAS and RAF mutant tumors. Effective October 8, 2011, all rights returned to Exelixis effectively ending the collaboration agreement entered into in December 2008. The Company is no longer obligated for contingent development and regulatory milestones of $315 million and sales-based milestones of $150 million. The Company's other collaborations with Exelixis remain unchanged. At September 30, 2011, the Company's equity investment in Exelixis represented less than 1% of their outstanding shares.