Segment Information

We have two operating segments—human pharmaceutical products and animal health products. Our operating segments are distinguished by the ultimate end user of the product—humans or animals. Performance is evaluated based on profit or loss from operations before income taxes. The accounting policies of the individual segments are the same as those described throughout the notes to the consolidated financial statements.

Our human pharmaceutical products segment includes the discovery, development, manufacturing, marketing, and sales of human pharmaceutical products worldwide in the following therapeutic areas: endocrinology, oncology, cardiovascular, neuroscience, immunology, and other. We lost patent exclusivity for the schizophrenia and bipolar mania indications in December 2015 and April 2016, respectively, for Zyprexa^® in Japan. Generic versions of Zyprexa were launched in Japan in June 2016. We lost our patent exclusivity for Strattera^® in the U.S. in May 2017, and generic versions of Strattera were approved in the same month. As described in Note 15, following the settlement related to the compound patent challenge for Effient, generic products launched in the U.S. in the third quarter of 2017. The entry of generic competition into these markets following the loss of effective patent protection has caused a rapid and severe decline in revenue for the affected products. We lost our compound patent protection for Cialis^® (tadalafil) and Adcirca^® (tadalafil) in major European markets in November 2017. We also lost compound patent protection for Cialis and Adcirca in the U.S. in November 2017; however, we now expect U.S. exclusivity for Cialis to end at the earliest in late September 2018.

Our animal health segment, operating through our Elanco animal health division, includes the development, manufacturing, marketing, and sales of animal health products worldwide for both food and companion animals. Animal health products include Rumensin^®, Posilac, Optaflexx^®, Denagard^®, Tylan^®, Maxiban^®, and other products for livestock and poultry, as well as Trifexis^®, Interceptor^®,Comfortis^®, and other products for companion animals. The animal health segment amount for the year ended December 31, 2017 includes the results of operations from BIVIVP, which was acquired on January 3, 2017 (Note 3).

Most of our pharmaceutical products are distributed through wholesalers that serve pharmacies, physicians and other health care professionals, and hospitals. For the years ended December 31, 2017, 2016, and 2015, our three largest wholesalers each accounted for between 9 percent and 18 percent of consolidated total revenue. Further, they each accounted for between 14 percent and 22 percent of accounts receivable as of December 31, 2017 and 2016. Animal health products are sold primarily to wholesale distributors.

We manage our assets on a total company basis, not by operating segment, as the assets of the animal health business are intermixed with those of the pharmaceutical products business. Therefore, our chief operating decision maker does not review any asset information by operating segment and, accordingly, we do not report asset information by operating segment.

We are exposed to the risk of changes in social, political, and economic conditions inherent in foreign operations, and our results of operations and the value of our foreign assets are affected by fluctuations in foreign currency exchange rates.

The following table summarizes our revenue activity:



	2017		2016		2015
Segment revenue—to unaffiliated customers:
Human pharmaceutical products:

Endocrinology:
Humalog^®	$	2,865.2	$	2,768.8	$	2,841.9
Trulicity^®	2,029.8		925.5		248.7
Forteo^®	1,749.0		1,500.0		1,348.3
Humulin^®	1,335.4		1,365.9		1,307.4
Trajenta	537.9		436.6		356.8
Jardiance	447.5		201.9		60.2
Basaglar	432.1		86.1		11.1
Other Endocrinology	688.3		798.0		862.4
Total Endocrinology	10,085.2		8,082.8		7,036.8

Oncology:
Alimta	2,062.5		2,283.3		2,493.1
Cyramza^®	758.3		614.1		383.8
Erbitux	645.9		687.0		485.0
Other Oncology	345.2		137.4		147.9
Total Oncology	3,811.9		3,721.8		3,509.8

Cardiovascular:
Cialis	2,323.1		2,471.6		2,310.7
Effient	388.9		535.2		523.0
Other Cardiovascular	159.1		218.6		234.3
Total Cardiovascular	2,871.1		3,225.4		3,068.0

Neuroscience:
Cymbalta⁽¹⁾	757.2		930.5		1,027.6
Strattera	618.2		854.7		784.0
Zyprexa	581.2		725.3		940.3
Other Neuroscience	214.4		209.8		183.5
Total Neuroscience	2,171.0		2,720.3		2,935.4

Immunology:
Taltz^®	559.2		113.1		—
Other Immunology	45.9		—		—
Total Immunology	605.1		113.1		—

Other human pharmaceutical products	241.3		200.5		227.7
Total human pharmaceutical products	19,785.7		18,063.9		16,777.7
Animal health products	3,085.6		3,158.2		3,181.0
Revenue	$	22,871.3	$	21,222.1	$	19,958.7



	2017			2016			2015
Segment profits:
Human pharmaceutical products	$	5,139.7		$	4,010.0		$	4,026.7
Animal health products	561.3			663.7			597.9
Total segment profits	$	5,701.0		$	4,673.7		$	4,624.6

Reconciliation of total segment profits to consolidated income before taxes:
Segment profits	$	5,701.0		$	4,673.7		$	4,624.6
Other profits (losses):
Amortization of intangible assets (Note 8)	(674.8		)	(683.3		)	(626.2		)
Asset impairment, restructuring, and other special charges (Note 5)	(1,673.6		)	(382.5		)	(367.7		)
Venezuela charge (Note 17)	—			(203.9		)	—
Acquired in-process research and development (Notes 3 and 4)	(1,112.6		)	(30.0		)	(535.0		)
Inventory fair value adjustment related to acquisitions⁽²⁾ (Note 3)	(42.7		)	—			(153.0		)
Debt repurchase charges, net⁽³⁾ (Note 10)	—			—			(152.7		)
Consolidated income before taxes	$	2,197.4		$	3,374.0		$	2,790.0

Numbers may not add due to rounding.

⁽¹⁾Cymbalta revenues benefited from reductions to the reserve for expected product returns of approximately $175 million during the year ended December 31, 2016.

⁽²⁾Inventory fair value adjustments in 2017 and 2015 relate to our acquisitions of BIVIVP and Novartis AH, respectively.

⁽³⁾ We recognized pretax net charges of $152.7 million for the year ended December 31, 2015, attributable to the debt extinguishment loss of $166.7 million from the purchase and redemption of certain fixed-rate notes, partially offset by net gains from non-hedging interest rate swaps and foreign currency transactions associated with the related issuance of euro-denominated notes.

Depreciation and software amortization expense included in our segment profits was as follows:



	2017		2016		2015
Human pharmaceutical products	$	789.8	$	723.4	$	720.7
Animal health products	102.7		89.9		80.8
Total depreciation expense and software amortization included in segment profits	$	892.5	$	813.3	$	801.5

For internal management reporting presented to the chief operating decision maker, certain costs are fully allocated to our human pharmaceutical products segment and therefore are not reflected in the animal health segment's profit. Such items include costs associated with treasury-related financing, global administrative services, certain acquisition-related transaction costs, and certain manufacturing costs.



	2017		2016		2015
Geographic Information
Revenue—to unaffiliated customers⁽¹⁾:
United States	$	12,785.1	$	11,506.2	$	10,097.4
Europe	3,943.2		3,768.1		3,943.6
Japan	2,419.7		2,330.9		2,033.1
Other foreign countries	3,723.3		3,616.9		3,884.6
Revenue	$	22,871.3	$	21,222.1	$	19,958.7

Long-lived assets⁽²⁾:
United States	$	5,013.4	$	4,984.6	$	4,576.8
Europe	2,550.1		2,140.7		2,306.4
Japan	155.1		92.4		89.2
Other foreign countries	1,761.7		1,776.8		1,724.2
Long-lived assets	$	9,480.3	$	8,994.5	$	8,696.6

Numbers may not add due to rounding.

⁽¹⁾Revenue is attributed to the countries based on the location of the customer.

⁽²⁾Long-lived assets consist of property and equipment, net, and certain sundry assets.