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Segment Information
 6 Months Ended
Jun. 30, 2022
Segment Reporting [Abstract]  
Segment Information
16. Segment Information
Operating Segments
We manage our operations through two geographic operating segments: the U.S. and International. Each operating segment has responsibility for its commercial activities. Within each of these operating segments, we offer a diversified product portfolio, including parasiticides, vaccines, dermatology, other pharmaceuticals, anti-infectives, animal health diagnostics and medicated feed additives, for both companion animal and livestock customers. Our chief operating decision maker uses the revenue and earnings of the two operating segments, among other factors, for performance evaluation and resource allocation.
Other Costs and Business Activities
Certain costs are not allocated to our operating segment results, such as costs associated with the following:
•    Other business activities, includes our Client Supply Services (CSS) contract manufacturing results, our human health business, and expenses associated with our dedicated veterinary medicine research and development organization, research alliances, U.S. regulatory affairs and other operations focused on the development of our products. Other R&D-related costs associated with non-U.S. market and regulatory activities are generally included in the international commercial segment.
•    Corporate, includes enabling functions such as information technology, facilities, legal, finance, human resources, business development, certain diagnostic costs and communications, among others. These costs also include compensation costs and other miscellaneous operating expenses not charged to our operating segments, as well as interest income and expense.
•Certain transactions and events such as (i) Purchase accounting adjustments, where we incur expenses associated with the amortization of fair value adjustments to inventory, intangible assets and property, plant and equipment; (ii) Acquisition-related activities, where we incur costs associated with acquiring and integrating newly acquired businesses, such as transaction costs and integration costs; and (iii) Certain significant items, which comprise substantive, unusual items that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis, such as restructuring charges and implementation costs associated with our cost-reduction/productivity initiatives that are not associated with an acquisition, certain asset impairment charges, certain legal and commercial settlements and the impact of divestiture-related gains and losses.
•Other unallocated includes (i) certain overhead expenses associated with our global manufacturing operations not charged to our operating segments; (ii) certain costs associated with finance that specifically support our global manufacturing operations; (iii) certain supply chain and global logistics costs; and (iv) procurement costs.
Segment Assets
We manage our assets on a total company basis, not by operating segment. Therefore, our chief operating decision maker does not regularly review any asset information by operating segment and, accordingly, we do not report asset information by operating segment.
Selected Statement of Income Information    
Earnings
Depreciation and Amortization(a)
Three Months EndedThree Months Ended
June 30,June 30,
(MILLIONS OF DOLLARS)2022202120222021
U.S.
Revenue$1,091 $1,004 
Cost of sales198 192 
Gross profit893 812 
    Gross margin81.9 %80.9 %
Operating expenses207 170 
Other (income)/deductions-net(7)1 
U.S. Earnings693 641 $15 $14 
International
Revenue(b)
943 924 
Cost of sales288 278 
Gross profit655 646 
    Gross margin69.5 %69.9 %
Operating expenses161 147 
Other (income)/deductions-net(2)— 
International Earnings496 499 23 18 
Total operating segments1,189 1,140 38 32 
Other business activities
(111)(98)7 7 
Reconciling Items:
Corporate
(267)(262)31 28 
Purchase accounting adjustments
(40)(44)40 44 
Acquisition-related costs
(1)(2)— — 
Certain significant items(c)
(4)(24)— — 
Other unallocated
(96)(74)1 1 
Total Earnings(d)
$670 $636 $117 $112 
(a)    Certain production facilities are shared. Depreciation and amortization is allocated to the reportable operating segments based on estimates of where the benefits of the related assets are realized.
(b)    Revenue denominated in euros was $204 million and $209 million for the three months ended June 30, 2022 and 2021, respectively.
(c)    For the three months ended June 30, 2022, primarily represents inventory charges related to the consolidation of manufacturing sites in China.
For the three months ended June 30, 2021, primarily represents asset impairment charges related to the consolidation of manufacturing sites in China, employee termination costs related to cost-reduction and productivity initiatives and a net loss related to the sale of certain assets of our poultry automation business located in the U.S. and Canada.
(d)    Defined as income before provision for taxes on income.
Earnings
Depreciation and Amortization(a)
Six Months EndedSix Months Ended
June 30,June 30,
(MILLIONS OF DOLLARS)2022202120222021
U.S.
Revenue$2,111 $1,937 
Cost of sales383 376 
Gross profit1,728 1,561 
    Gross margin81.9 %80.6 %
Operating expenses372 301 
Other (income)/deductions-net(7)2 
U.S. Earnings1,363 1,258 $28 $27 
International
Revenue(b)
1,891 1,846 
Cost of sales553 560 
Gross profit1,338 1,286 
    Gross margin70.8 %69.7 %
Operating expenses306 277 
Other (income)/deductions-net(2)— 
International Earnings1,034 1,009 41 35 
Total operating segments2,397 2,267 69 62 
Other business activities
(209)(195)14 14 
Reconciling Items:
Corporate
(526)(492)66 55 
Purchase accounting adjustments
(80)(88)80 88 
Acquisition-related costs
(3)(7)— — 
Certain significant items(c)
(4)(32)— — 
Other unallocated
(178)(130)2 2 
Total Earnings(d)
$1,397 $1,323 $231 $221 
(a)    Certain production facilities are shared. Depreciation and amortization is allocated to the reportable operating segments based on estimates of where the benefits of the related assets are realized.
(b)    Revenue denominated in euros was $407 million and $401 million for the six months ended June 30, 2022 and 2021, respectively.
(c)    For the six months ended June 30, 2022, primarily represents inventory charges related to the consolidation of manufacturing sites in China and product transfer costs, partially offset by other items.
For the six months ended June 30, 2021, primarily represents asset impairment charges related to the consolidation of manufacturing sites in China, employee termination costs related to cost-reduction and productivity initiatives and a net loss related to the sale of certain assets of our poultry automation business located in the U.S. and Canada.
(d)    Defined as income before provision for taxes on income.