Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives

12 Months Ended

Dec. 31, 2022

Restructuring and Related Activities [Abstract]

Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives

A. Transforming to a More Focused Company Program

With the formation of the Consumer Healthcare JV in 2019 and the spin-off of our former Upjohn Business in the fourth quarter of 2020, Pfizer transformed into a more focused, global leader in science-based innovative medicines and vaccines. We took efforts to ensure our cost base and support model aligned appropriately with our operating structure. While certain direct costs transferred to the Consumer Healthcare JV in 2019, and to the Upjohn Business in connection with the spin-off, there are indirect costs which did not transfer. This program is primarily composed of the following initiatives:

•We took steps to restructure our corporate enabling functions to appropriately support our business, R&D and PGS platform functions. Actions included, among others, changes in location of certain activities, expanded use and co-location of centers of excellence and shared services, and increased use of digital technologies. The associated actions and the specific costs primarily included severance and benefit plan impacts, exit costs as well as associated implementation costs.

•In addition, we transformed our commercial go-to market model in the way we engage patients and physicians. We also made several organizational changes in the third quarter of 2022 to further transform our operations to better leverage our expertise in certain areas and in anticipation of potential future new product or indication launches (see Note 1A). Actions included, among others, centralization of certain activities and enhanced use of digital technologies. The costs for this effort primarily included severance and associated implementation costs.

•We also optimized our manufacturing network under this program and incurred one-time costs for cost-reduction initiatives related to our manufacturing operations. The costs for this effort included, among other things, severance costs, implementation costs, product transfer costs, site exit costs, as well as accelerated depreciation.

•In the fourth quarter of 2022, we began taking steps to optimize our end-to-end R&D operations to reduce costs and cycle times as well as to further prioritize our internal R&D portfolio in areas where our capabilities are differentiated while increasing external innovation efforts to leverage an expanding and productive biotech sector. Actions include leveraging automation and digital capabilities, novel clinical development approaches and capabilities, and externalization of select assets and R&D units. We expect costs for this effort of $500 million to be incurred primarily through 2023, with costs to primarily represent cash expenditures. The costs for this effort primarily include severance costs and associated implementation costs.

From the start of this program in the fourth quarter of 2019 through December 31, 2022, we incurred costs of $3.5 billion, of which $1.4 billion ($1.0 billion of restructuring charges) is associated with Biopharma. We have incurred approximately 85% of total expected costs to date, and we expect the remaining costs to be substantially incurred through 2023.

B. Key Activities


The following summarizes acquisitions and cost-reduction/productivity initiatives costs and credits:
	Year Ended December 31,
(MILLIONS)		2022		2021		2020
Restructuring charges/(credits):
Employee terminations		$	776	$	680	$	474
Asset impairments		52		53		66
Exit costs/(credits)		54		8		(6)
Restructuring charges/(credits)(a)		882		741		535
Transaction costs(b)		144		20		10
Integration costs and other(c)		348		41		34
Restructuring charges and certain acquisition-related costs		1,375		802		579
Net periodic benefit costs/(credits) recorded in Other (income)/deductions––net		(9)		(63)		3
Additional depreciation––asset restructuring recorded in our consolidated statements of income as follows(d):
Cost of sales		34		63		21
Selling, informational and administrative expenses		2		23		—
Research and development expenses		—		—		(3)
Total additional depreciation––asset restructuring		36		87		17

Implementation costs recorded in our consolidated statements of income as follows(e):
Cost of sales		54		45		40
Selling, informational and administrative expenses		560		426		197
Research and development expenses		2		1		1

Total implementation costs		616		472		238
Total costs associated with acquisitions and cost-reduction/productivity initiatives		$	2,018	$	1,298	$	838

(a)Primarily represents cost reduction initiatives. Restructuring charges/(credits) associated with Biopharma: ($354 million charge in 2022, $610 million charge in 2021, and $71 million charge in 2020).

(b)Represents external costs for banking, legal, accounting and other similar services.

(c)Represents external, incremental costs directly related to integrating acquired businesses, such as expenditures for consulting and the integration of systems and processes, and certain other qualifying costs. 2022 costs mostly related to our acquisitions of Arena and GBT, including $138 million in payments to Arena employees in the first quarter of 2022 and $136 million in payments to GBT employees in the fourth quarter of 2022 for the fair value of previously unvested long-term incentive awards that was recognized as post-closing compensation expense. See Note 2A. 2021 costs primarily related to our acquisition of Trillium. 2020 costs primarily related to our acquisition of Array.

(d)Represents the impact of changes in the estimated useful lives of assets involved in restructuring actions.

(e)Represents external, incremental costs directly related to implementing our non-acquisition-related cost-reduction/productivity initiatives.


The following summarizes the components and changes in restructuring accruals:
(MILLIONS)	Employee Termination Costs		Asset Impairment Charges		Exit Costs		Accrual
Balance, January 1, 2021	$	782	$	—	$	15	$	798
Provision	680		53		8		741
Utilization and other(a)	(449)		(53)		34		(468)
Balance, December 31, 2021(b)	1,014		—		57		1,071
Provision	776		52		54		882
Utilization and other(a)	(594)		(52)		(103)		(750)
Balance, December 31, 2022(c)	$	1,196	$	—	$	8	$	1,204

(a)Includes adjustments for foreign currency translation.

(b)Included in Other current liabilities ($816 million) and Other noncurrent liabilities ($255 million).

(c)Included in Other current liabilities ($991 million) and Other noncurrent liabilities ($213 million).