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Other (Income)/Deductions - Net (Tables) | 6 Months Ended
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Jun. 28, 2020
Other Income and Expenses [Abstract] |
Schedule of Other (Income)/Deductions - Net |
The following table provides components of Other (income)/deductions––net:
|  | Three Months Ended |  | Six Months Ended
(MILLIONS OF DOLLARS) |  | June 28, 2020 |  |  | June 30, 2019 |  |  | June 28, 2020 |  |  | June 30, 2019 |
Interest income(a) |  | $ | (19 | ) |  | $ | (59 | ) |  | $ | (53 | ) |  | $ | (125 | )
Interest expense(a) |  | 372 |  |  | 389 |  |  | 762 |  |  | 750 |
Net interest expense |  | 353 |  |  | 330 |  |  | 709 |  |  | 625 |
Royalty-related income(b) |  | (191 | ) |  | (231 | ) |  | (311 | ) |  | (320 | )
Net (gains)/losses on asset disposals |  | 1 |  |  | — |  |  | 2 |  |  | (1 | )
Net gains recognized during the period on equity securities(c) |  | (732 | ) |  | (36 | ) |  | (478 | ) |  | (147 | )
Income from collaborations, out-licensing arrangements and sales of compound/product rights(d) |  | (100 | ) |  | (22 | ) |  | (215 | ) |  | (104 | )
Net periodic benefit credits other than service costs(e) |  | (108 | ) |  | (51 | ) |  | (175 | ) |  | (91 | )
Certain legal matters, net |  | 17 |  |  | 15 |  |  | 26 |  |  | 19 |
Certain asset impairments(f) |  | — |  |  | 10 |  |  | — |  |  | 160 |
Business and legal entity alignment costs(g) |  | — |  |  | 137 |  |  | — |  |  | 256 |
Net losses on early retirement of debt |  | — |  |  | — |  |  | — |  |  | 138 |
GSK Consumer Healthcare JV equity method (income)/loss(h) |  | (126 | ) |  | — |  |  | (92 | ) |  | — |
Other, net(i) |  | 25 |  |  | (27 | ) |  | (107 | ) |  | (318 | )
Other (income)/deductions––net |  | $ | (862 | ) |  | $ | 126 |  |  | $ | (641 | ) |  | $ | 218 |
(a) | Interest income decreased in the second quarter and first six months of 2020, primarily driven by a lower investment balance and lower short-term interest rates. Interest expense decreased in the second quarter of 2020 mainly as a result of the retirement of higher-coupon debt and the issuance of new debt with a lower coupon than the debt outstanding for the comparative prior year period. Interest expense increased in the first six months of 2020, mainly as a result of an increased commercial paper balance due to the acquisition of Array.
(b) | Royalty-related income for the second quarter and first six months of 2019 included a one-time favorable resolution in the second quarter of 2019 of a legal dispute for $82 million.
(c) | The gains in the second quarter of 2020 include, among other things, unrealized gains of $508 million related to our investment in Allogene and unrealized gains of $61 million related to our investment in BioNTech. The gains in the first six months of 2020 include, among other things, unrealized gains of $374 million related to our investment in Allogene and unrealized gains of $127 million related to our investment in BioNTech. The gains in the first six months of 2019 included, among other things, unrealized gains of $104 million related to our investment in Cortexyme, Inc. For additional information on investments, see Note 7B.
(d) | Includes income from upfront and milestone payments from our collaboration partners and income from out-licensing arrangements and sales of compound/product rights. In the second quarter and first six months of 2020, mainly includes, among other things, $40 million of milestone income from Puma Biotechnology, Inc. related to Neratinib regulatory approvals in the EU, and $30 million of milestone income from Lilly related to the first commercial sale in the U.S. of LOXO-292 for the treatment of RET fusion-positive NSCLC. The first six months of 2020 also includes an upfront payment to us of $75 million from our sale of our CK1 assets to Biogen, Inc. In the first six months of 2019, primarily included $68 million in milestone income from Mylan Pharmaceuticals Inc. related to the FDA’s approval and launch of Wixela Inhub®, a generic of Advair Diskus®.
(e) | For additional information, see Note 10.
(f) | The first six months of 2019 included intangible asset impairment charges of: (i) $90 million related to WRDM IPR&D, for a pre-clinical stage asset from our acquisition of Bamboo for gene therapies for the potential treatment of patients with certain rare diseases, which was the result of a determination to not use certain Bamboo IPR&D acquired in future rare disease development, (ii) $40 million related to an Upjohn finite-lived developed technology right, acquired in connection with our acquisition of King, for government defense products and reflected, among other things, updated commercial forecasts including manufacturing cost assumptions, and (iii) $10 million related to a finite-lived developed technology right, acquired in connection with our acquisition of Anacor, for the treatment for toenail fungus marketed in the U.S. market only, associated with Biopharma and reflected, among other things, updated commercial forecasts. In addition, the first six months of 2019 included other asset impairments of $20 million.
(g) | In the second quarter and first six months of 2019, represents incremental costs associated with the design, planning and implementation of our new organizational structure, effective in the beginning of 2019, and primarily includes consulting, legal, tax and advisory services.
(h) | Includes our share of the GSK Consumer Healthcare joint venture’s earnings and the amortization of basis differences, which resulted from the excess of the initial fair value of our investment over the underlying equity in the carrying value of the net assets of the joint venture. See Note 2B for additional information.
(i) The second quarter of 2020 includes, among other things, dividend income of $76 million from our investment in ViiV, and charges of $86 million, reflecting the change in the fair value of contingent consideration. The first six months of 2020 includes, among other things, dividend income of $153 million from our investment in ViiV and charges of $99 million, reflecting the change in the fair value of contingent consideration. The second quarter of 2019 included, among other things, charges of $81 million, reflecting the change in the fair value of contingent consideration, dividend income of $76 million from our investment in ViiV, and $25 million of income from insurance recoveries related to Hurricane Maria. The first six months of 2019 included, among other things, dividend income of $140 million from our investment in ViiV and $50 million of income from insurance recoveries related to Hurricane Maria.

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- Definition Tabular disclosure of the components of non-operating income or non-operating expense that may include amounts earned from dividends, interest on securities, gains (losses) on securities sold, equity earnings of unconsolidated affiliates, net gain (loss) on sales of business, interest expense and other miscellaneous income or expense items. + References No definition available. + Details
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