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

9 Months Ended

Sep. 28, 2025

Restructuring and Related Activities [Abstract]

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

A. Realigning Our Cost Base Program

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 $3.1 billion 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 the first quarter of 2025, with cash outlays expected primarily in 2025 and 2026.

We expect costs associated with all the components of this program to total approximately $5.3 billion of which $3.7 billion is associated with the Biopharma segment.

From the start of this program through September 28, 2025, we incurred total costs of $3.7 billion, of which $2.9 billion is associated with our Biopharma segment (including $2.6 billion of restructuring charges).

B. Manufacturing Optimization Program

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 is expected to include 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. From the start of this program through September 28, 2025, we incurred costs of $1.0 billion, substantially all of which is restructuring costs for our Biopharma segment. These costs were recorded primarily in 2024, with cash outlays expected primarily in 2025 and 2026.

C. Key Activities


The following summarizes costs and credits for acquisitions and cost-reduction/productivity initiatives:
	Three Months Ended				Nine Months Ended
(MILLIONS)	September 28, 2025		September 29, 2024		September 28, 2025		September 29, 2024
Restructuring charges/(credits):
Employee terminations	$	124	$	25	$	360	$	1,009
Asset impairments	111		111		328		177
Exit costs	2		82		96		145
Restructuring charges/(credits)(a)	237		217		784		1,331
Transaction costs(b)	—		—		—		5
Integration costs and other(c)	49		96		162		333
Restructuring charges and certain acquisition-related costs	286		313		945		1,669
Net periodic benefit costs/(credits) recorded in Other (income)/deductions––net	(6)		2		(74)		7
Inventory write-offs––recorded in Cost of sales	33		—		33		—
Additional depreciation––asset restructuring recorded in our condensed consolidated statements of operations as follows(d):
Cost of sales	3		6		10		11
Selling, informational and administrative expenses	—		2		—		5
Research and development expenses	1		—		1		—
Total additional depreciation––asset restructuring	4		8		11		16
Implementation costs recorded in our condensed consolidated statements of operations as follows(e):
Cost of sales	26		30		72		95
Selling, informational and administrative expenses	26		13		46		77
Research and development expenses	53		33		116		66

Total implementation costs	105		75		234		238
Total costs associated with acquisitions and cost-reduction/productivity initiatives	$	423	$	398	$	1,150	$	1,930

(a)Primarily represents cost-reduction initiatives. Amounts associated with our Biopharma segment: (i) 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), (ii) 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), (iii) charges of $141 million for the three months ended September 29, 2024 (primarily including charges for our Realigning our Cost Base Program) and (iv) charges of $1.2 billion for the nine months ended September 29, 2024 (including charges of $1.3 billion for our Manufacturing Optimization Program and credits of $69 million for our Realigning our Cost

Base Program). For the nine months ended September 28, 2025 and September 29, 2024, Employee terminations include revisions of estimates of previously recorded accruals for severance benefits, driven in large part by higher-than-expected voluntary attrition.

(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.

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

(e)Represents 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, December 31, 2024(a)	$	2,046	$	—	$	74	$	2,120
Provision	360		328		96		784
Utilization and other(b)	(724)		(328)		(15)		(1,067)
Balance, September 28, 2025(c)	$	1,682	$	—	$	155	$	1,836

(a)Included in Other current liabilities ($1.7 billion) and Other noncurrent liabilities ($437 million).

(b)Other activity includes adjustments for foreign currency translation that are not material to our condensed consolidated financial statements.

(c)Included in Other current liabilities ($1.3 billion) and Other noncurrent liabilities ($532 million).