Other (Income)/Deductions - Net (Tables)

9 Months Ended

Oct. 02, 2022

Other Income and Expenses [Abstract]

Schedule of Other (Income)/Deductions - Net


Components of Other (income)/deductions––net include:
	Three Months Ended				Nine Months Ended
(MILLIONS)	October 2, 2022		October 3, 2021		October 2, 2022		October 3, 2021
Interest income	$	(70)	$	(10)	$	(114)	$	(21)
Interest expense	311		325		925		975
Net interest expense	240		315		811		954
Royalty-related income	(239)		(261)		(628)		(649)
Net (gains)/losses on asset disposals	7		(1)		6		(99)
Net (gains)/losses recognized during the period on equity securities(a)	112		(400)		1,353		(1,601)
Income from collaborations, out-licensing arrangements and sales of compound/product rights(b)	(4)		(65)		(17)		(317)
Net periodic benefit costs/(credits) other than service costs	(306)		(1,132)		(294)		(1,635)
Certain legal matters, net	77		38		175		112
Certain asset impairments(c)	200		—		200		—
Haleon/Consumer Healthcare JV equity method (income)/loss(d)	51		(105)		(283)		(307)
Other, net	(198)		(84)		(260)		(502)
Other (income)/deductions––net	$	(59)	$	(1,696)	$	1,063	$	(4,043)

(a)The losses in the first nine months of 2022 include, among other things, unrealized losses of $974 million related to investments in BioNTech, Cerevel Therapeutics Holdings, Inc. (Cerevel) and Arvinas. The gains in the third quarter and first nine months of 2021 included, among other things, unrealized gains of $420 million and $1.5 billion, respectively, related to investments in BioNTech and Cerevel.

(b)The first nine months of 2021 included, among other things, $188 million of net collaboration income from BioNTech in the first quarter of 2021 related to Comirnaty.

(c)The amount in the third quarter and first nine months of 2022 represents an intangible asset impairment charge associated with our Biopharma segment, representing an IPR&D asset for the unapproved indication of symptomatic dilated cardiomyopathy (DCM) due to a mutation of the gene encoding the lamin A/C protein (LMNA), acquired in our Array BioPharma Inc. acquisition. The intangible asset impairment charge was a result of the Phase 3 trial reaching futility at a pre-planned interim analysis.

(d)See Note 2C.

Schedule of Impaired Intangible Assets


Additional information about the intangible asset that was impaired during 2022 (impairment recorded in Other (income)/deductions–net) follows:
	Fair Value(a)								Nine Months Ended October 2, 2022
(MILLIONS)	Amount		Level 1		Level 2		Level 3		Impairment
Intangible asset––IPR&D(b)	$	—	$	—	$	—	$	—	$	200

(a)The fair value amount is presented as of the date of impairment, as this asset is not measured at fair value on a recurring basis. See also Note 1F in our 2021 Form 10-K.

(b)Reflects an intangible asset written down to fair value in 2022. Fair value was determined using the income approach, specifically the multi-period excess earnings method, also known as the discounted cash flow method. We started with a forecast of all the expected net cash flows for the asset and then applied an asset-specific discount rate to arrive at a net present value amount. Some of the more significant estimates and assumptions inherent in this approach include: the amount and timing of the projected net cash flows, which includes the expected impact of competitive, legal and/or regulatory forces on the product; the discount rate, which seeks to reflect the various risks inherent in the projected cash flows; and the tax rate, which seeks to incorporate the geographic diversity of the projected cash flows.