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Segment Information
 12 Months Ended
Dec. 31, 2018
Segment Reporting [Abstract]  
Segment Information
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 sale of human pharmaceutical products worldwide in the following therapeutic areas: endocrinology, oncology, cardiovascular, neuroscience, immunology, and other. We lost our compound patent protection for Cialis® (tadalafil) and Adcirca® (tadalafil) in major European markets in November 2017, and in the U.S., pediatric exclusivity expired in May 2018. Pursuant to a settlement agreement related to our unit dose patent in the U.S., generic tadalafil entered the U.S. market in September 2018. Entry of generic competition into these markets following the loss of exclusivity will continue to cause a rapid and severe decline in revenue. Our formulation patents for Forteo® expired in December 2018 and use patents will expire in August 2019 in major European markets and the U.S. Both the formulation patent and the use patent expire in 2019 in Japan.
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®, Maxiban®, Denagard®, Tylan®, and other products for livestock and poultry, as well as Trifexis®, Interceptor®, Comfortis®, and other products for companion animals. The animal health segment for the years ended December 31, 2018 and 2017, included 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, 2018, 2017, and 2016, our three largest wholesalers each accounted for between 11 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, 2018 and 2017. Animal health products are sold primarily to wholesale distributors.
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:
 
 
 
U.S.(1)
 
Outside U.S.
 
 
 
2018
 
2017
 
2016
 
2018
 
2017
 
2016
Segment revenue—to unaffiliated customers:
 
 
 
 
 
 
 
 
 
 
 
Human pharmaceutical products:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Endocrinology:
 
 
 
 
 
 
 
 
 
 
 
Trulicity®
$
2,515.8

 
$
1,609.8

 
$
737.6

 
$
683.3

 
$
419.9

 
$
187.9

Humalog®
1,787.8

 
1,717.8

 
1,685.2

 
1,208.7

 
1,147.4

 
1,083.6

Humulin®
910.2

 
884.6

 
861.8

 
421.2

 
450.7

 
504.1

Forteo
757.9

 
965.2

 
770.5

 
817.7

 
783.8

 
729.4

Basaglar
622.8

 
311.1

 
15.8

 
178.5

 
121.0

 
70.3

Jardiance
400.2

 
290.4

 
144.5

 
258.1

 
157.0

 
57.4

Trajenta
224.2

 
213.2

 
165.9

 
350.5

 
324.7

 
270.7

Other Endocrinology
292.7

 
380.9

 
450.6

 
272.5

 
307.7

 
347.5

Total Endocrinology
7,511.6

 
6,373.0

 
4,831.9

 
4,190.5

 
3,712.2

 
3,250.9

 
 
 
 
 
 
 
 
 
 
 
 
Oncology:
 
 
 
 
 
 
 
 
 
 
 
Alimta
1,131.0

 
1,034.3

 
1,101.0

 
1,001.9

 
1,028.2

 
1,182.3

Erbitux
531.6

 
541.7

 
581.1

 
103.8

 
104.2

 
105.9

Cyramza®
291.5

 
278.8

 
270.1

 
529.9

 
479.6

 
344.0

Other Oncology
449.1

 
195.6

 
22.9

 
221.7

 
149.6

 
114.6

Total Oncology
2,403.2

 
2,050.4

 
1,975.1

 
1,857.3

 
1,761.6

 
1,746.8

 
 
 
 
 
 
 
 
 
 
 
 
Cardiovascular:
 
 
 
 
 
 
 
 
 
 
 
Cialis
1,129.2

 
1,358.6

 
1,469.5

 
722.7

 
964.5

 
1,002.1

Effient
68.1

 
340.1

 
465.6

 
54.1

 
48.8

 
69.6

Other Cardiovascular
158.4

 
24.0

 
56.3

 
121.8

 
135.2

 
162.3

Total Cardiovascular
1,355.7

 
1,722.7

 
1,991.4

 
898.6

 
1,148.5

 
1,234.0

 
 
 
 
 
 
 
 
 
 
 
 
Neuroscience:
 
 
 
 
 
 
 
 
 
 
 
Strattera®
89.7

 
284.9

 
534.9

 
361.1

 
333.3

 
319.8

Cymbalta(2)
54.3

 
114.9

 
269.3

 
653.7

 
642.2

 
661.2

Zyprexa®
36.2

 
75.5

 
69.8

 
435.1

 
505.7

 
655.5

Other Neuroscience
97.2

 
115.7

 
115.9

 
93.4

 
98.9

 
93.9

Total Neuroscience
277.4

 
591.0

 
989.9

 
1,543.3


1,580.1


1,730.4

 
 
 
 
 
 
 
 
 
 
 
 
Immunology:
 
 
 
 
 
 
 
 
 
 
 
Taltz®
738.7

 
486.0

 
110.8

 
198.7

 
73.2

 
2.3

Other Immunology
6.7

 
—

 
—

 
195.9

 
45.8

 
—

Total Immunology
745.4

 
486.0

 
110.8

 
394.6

 
119.0

 
2.3

 
 
 
 
 
 
 
 
 
 
 
 
Other human pharmaceutical products
58.7

 
50.9

 
42.6

 
176.6

 
190.3

 
157.8

Total human pharmaceutical products
12,352.2

 
11,274.0

 
9,941.7

 
9,061.0


8,511.7


8,122.2

Animal health products
1,523.0

 
1,511.1

 
1,564.5

 
1,619.5

 
1,574.5

 
1,593.7

Revenue
$
13,875.2

 
$
12,785.1

 
$
11,506.2

 
$
10,680.5

 
$
10,086.3

 
$
9,715.9


Numbers may not add due to rounding.
(1) U.S. revenue includes revenue in Puerto Rico.
(2) Cymbalta revenues benefited from reductions to the reserve for expected product returns of approximately $175 million during the year ended December 31, 2016.
 
 
 
 
2018
 
2017
 
2016
Segment profits:
 
 
 
 
 
 
Human pharmaceutical products
 
$
6,217.8

 
$
5,139.7

 
$
4,010.0

Animal health products
 
607.3

 
561.3

 
663.7

Total segment profits
 
$
6,825.1

 
$
5,701.0

 
$
4,673.7

 
 
 
 
 
 
 
Reconciliation of total segment profits to consolidated income before taxes:
 
 
 
 
 
 
Segment profits
 
$
6,825.1

 
$
5,701.0

 
$
4,673.7

Other profits (losses):
 
 
 
 
 
 
Amortization of intangible assets (Note 8)
 
(546.0
)
 
(674.8
)
 
(683.3
)
Asset impairment, restructuring, and other special charges (Note 5)
 
(482.0
)
 
(1,673.6
)
 
(382.5
)
Venezuela charge (Note 17)
 
—

 
—

 
(203.9
)
Acquired in-process research and development (Note 3)
 
(1,983.9
)
 
(1,112.6
)
 
(30.0
)
Inventory fair value adjustment related to acquisition of BIVIVP (Note 3)
 
—

 
(42.7
)
 
—

Other, net
 
(17.5
)
 
—

 
—

Consolidated income before taxes
 
$
3,795.7

 
$
2,197.4

 
$
3,374.0


Numbers may not add due to rounding.
Depreciation and software amortization expense included in our segment profits was as follows:
 
2018
 
2017
 
2016
Human pharmaceutical products
$
934.0

 
$
789.8

 
$
723.4

Animal health products
111.3

 
102.7

 
89.9

Total depreciation expense and software amortization included in segment profits
$
1,045.3


$
892.5


$
813.3


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 and global administrative services.
 
 
 
 
2018
 
2017
 
2016
Geographic Information
 
 
 
 
 
 
Revenue—to unaffiliated customers(1):
 
 
 
 
 
 
United States
 
$
13,875.2

 
$
12,785.1

 
$
11,506.2

Europe
 
4,231.1

 
3,943.2

 
3,768.1

Japan
 
2,493.7

 
2,419.7

 
2,330.9

Other foreign countries
 
3,955.7

 
3,723.3

 
3,616.9

Revenue
 
$
24,555.7

 
$
22,871.3

 
$
21,222.1

 
 
 
 
 
 
 
Long-lived assets(2):
 
 
 
 
 
 
United States
 
$
4,946.6

 
$
5,013.4

 
$
4,984.6

Europe
 
2,708.1

 
2,550.1

 
2,140.7

Japan
 
181.9

 
155.1

 
92.4

Other foreign countries
 
1,695.5

 
1,761.7

 
1,776.8

Long-lived assets
 
$
9,532.1

 
$
9,480.3

 
$
8,994.5


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.