In the fourth quarter of 2023, we announced that we launched a multi-year, enterprise-wide cost realignment program that aims to realign our costs with our longer-term revenue expectations. In the second quarter of 2025, we identified additional productivity opportunities to further reduce costs primarily in SI&A, driven in large part by enhanced digital enablement, including automation and AI, and simplification of business processes.

We expect costs associated with these components of the program to be incurred through 2027 and to total approximately $4.7 billion, representing primarily cash expenditures for severance, implementation, exit, and digital enablement costs, as well as non-cash asset write-downs of which $3.4 billion is associated with our Biopharma segment.

In the third quarter of 2026, we identified additional productivity enhancements from technology and simplification efforts across our commercial, R&D and enabling functions designed to further reduce costs in SI&A. We expect one-time costs to achieve the additional savings to be incurred through 2029 and to total approximately $2.0 billion, primarily representing cash expenditures for severance, implementation and digital enablement of which $800 million is associated with our Biopharma segment.

Additionally, in connection with our efforts to simplify the structure and sharpen the focus of our R&D organization, in the first quarter of 2025, we expanded this program after having identified additional opportunities to drive improvements in productivity and operational efficiencies through enhanced digital enablement, including automation and AI, and simplification of business processes. We expect costs to implement these initiatives to be incurred through 2026 and to total approximately $600 million, primarily representing cash expenditures for severance, digital enablement and implementation, all of which is associated with our Biopharma segment. The majority of these costs were recorded in 2025, with cash outlays expected primarily through 2026.

In the second quarter of 2024, we announced that we launched a multi-year, multi-phased program to reduce our costs of goods sold, which includes operational efficiencies, network structure changes, and product portfolio enhancements. The first phase of this program is primarily focused on operational efficiencies, and we expect costs for this first phase to total approximately $1.4 billion, primarily representing cash expenditures for severance and implementation costs, all of which is associated with our Biopharma segment.

In the third quarter of 2026, we announced the next phase of the program, with a focus on network structure changes, product portfolio enhancements and additional operational efficiencies. The one-time costs to achieve the savings associated with this phase of the program are expected to be approximately $4.0 billion, substantially all associated with our Biopharma segment, with approximately 60% representing non-cash expenditures for accelerated depreciation and asset write-downs and 40% representing cash expenditures for severance, implementation and exit costs. The costs to achieve these savings are expected to be incurred through 2029.

From the start of this program through September 27, 2026, we incurred total costs of $1.2 billion, substantially all of which relates to our Biopharma segment (including $889 million of restructuring charges). These costs were recorded primarily through 2025, with cash outlays expected primarily through 2029.


The following summarizes costs and credits for acquisitions and cost-reduction/productivity initiatives:
	Three Months Ended				Nine Months Ended
(MILLIONS)	September 27, 2026		September 28, 2025		September 27, 2026		September 28, 2025
Restructuring charges/(credits):
Employee terminations	$	702	$	124	$	1,071	$	360
Asset impairments	30		111		112		328
Exit costs	21		2		38		96
Restructuring charges/(credits)(a)	753		237		1,221		784
Transaction costs	2		—		2		—
Integration costs and other(b)	35		49		124		162
Restructuring charges and certain acquisition-related costs	791		286		1,347		945
Net periodic benefit costs/(credits) recorded in Other (income)/deductions––net	(1)		(6)		(3)		(74)
Inventory write-offs––recorded in Cost of sales	6		33		52		33
Additional depreciation––asset restructuring recorded in our condensed consolidated statements of operations as follows(c):
Cost of sales	14		3		27		10

Research and development expenses	—		1		—		1
Total additional depreciation––asset restructuring	14		4		28		11
Implementation costs recorded in our condensed consolidated statements of operations as follows(d):
Cost of sales	21		26		61		72
Selling, informational and administrative expenses	50		26		142		46
Research and development expenses	60		53		162		116

Total implementation costs	131		105		364		234
Total costs associated with acquisitions and cost-reduction/productivity initiatives	$	940	$	423	$	1,788	$	1,150

(a)Primarily represents cost-reduction initiatives. Amounts associated with our Biopharma segment: (i) charges of $461 million for the three months ended September 27, 2026 (including charges of $385 million for our Realigning our Cost Base Program and charges of $65 million for our Manufacturing Optimization Program), (ii) charges of $882 million for the nine months ended September 27, 2026 (including charges of $849 million for our Realigning our Cost Base Program and charges of $14 million for our Manufacturing Optimization Program), (iii) charges of $240 million for the three months ended September 28, 2025 (including charges of $117 million for our Manufacturing Optimization Program and charges of $107 million for our Realigning our Cost Base Program) and (iv) charges of $451 million for the nine months ended September 28, 2025 (including charges of $669 million for our Realigning our Cost Base Program and credits of $295 million for our Manufacturing Optimization Program). For the nine months ended September 28, 2025, Employee terminations included revisions of estimates of previously recorded accruals for severance benefits, driven in large part by higher-than-expected voluntary attrition.


The following summarizes the components and changes in restructuring accruals:
(MILLIONS)	Employee Termination Costs		Asset Impairment Charges		Exit Costs		Accrual
Balance, December 31, 2025(a)	$	1,783	$	—	$	127	$	1,910
Provision	1,071		112		38		1,221
Utilization and other(b)	(758)		(112)		(63)		(934)
Balance, September 27, 2026(c)	$	2,096	$	—	$	101	$	2,197