With the formation of the Consumer Healthcare JV in 2019 and the spin-off of our Upjohn Business in the fourth quarter of 2020, Pfizer has transformed into a more focused, global leader in science-based innovative medicines and vaccines. We have undertaken efforts to ensure our cost base aligns appropriately with our revenue base. While certain direct costs transferred to the Consumer Healthcare JV and to the Upjohn Business in connection with the spin-off, there are indirect costs which did not transfer. In addition, we are taking steps to restructure our corporate enabling functions to appropriately support and drive the purpose of our focused innovative biopharmaceutical products business and R&D and PGS platform functions. The program costs discussed below may be rounded and represent approximations.

We expect costs for this program, primarily related to corporate enabling functions, to be incurred from 2020 through 2022 and to total $1.6 billion on a pre-tax basis, with substantially all costs to be cash expenditures. Actions will include, 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 will primarily include severance and benefit plan impacts, exit costs as well as associated implementation costs.

Also as part of this program, we expect to incur costs related to manufacturing network optimization, including certain legacy cost-reduction initiatives, of $500 million, with approximately 20% of the costs to be non-cash. The costs for this effort are expected to be incurred primarily from 2020 through 2022, and will include, among other things, implementation costs, product transfer costs, site exit costs, as well as accelerated depreciation.

In 2020, we incurred costs of $896 million, composed primarily of the Transforming to a More Focused Company program. In 2019, we incurred costs of $820 million composed of $548 million for the 2017-2019 and Organizing for Growth initiatives, $288 million for the integration of Array, $94 million for the integration of Hospira, and $87 million for the Transforming to a More Focused Company program, partially offset by income of $197 million, primarily due to the reversal of certain accruals upon the effective favorable settlement of an IRS audit for multiple tax years and other acquisition-related initiatives.


The following summarizes acquisitions and cost-reduction/productivity initiatives costs and credits:
	Year Ended December 31,
(MILLIONS OF DOLLARS)		2020		2019		2018
Restructuring charges/(credits):
Employee terminations		$	474	$	108	$	473
Asset impairments(a)		88		69		290
Exit costs/(credits)		(6)		50		33
Restructuring charges(b)		556		227		796
Transaction costs(c)		10		63		1
Integration costs and other(d)		34		311		260
Restructuring charges and certain acquisition-related costs		600		601		1,058
Net periodic benefit costs recorded in Other (income)/deductions––net		39		23		144
Additional depreciation––asset restructuring recorded in our consolidated statements of income as follows(e):
Cost of sales		23		29		36
Selling, informational and administrative expenses		—		3		2
Research and development expenses		(3)		8		—
Total additional depreciation––asset restructuring		19		40		38

Implementation costs recorded in our consolidated statements of income as follows(f):
Cost of sales		40		61		75
Selling, informational and administrative expenses		197		73		71
Research and development expenses		1		22		39

Total implementation costs		238		156		186
Total costs associated with acquisitions and cost-reduction/productivity initiatives		$	896	$	820	$	1,426

(b)Represents acquisition-related costs ($192 million credit in 2019, and $37 million charge in 2018) and cost reduction initiatives ($556 million charge in 2020, $418 million charge in 2019, and $759 million charge in 2018). 2020 charges mainly represent employee termination costs for our Transforming to a More Focused Company cost-reduction program. 2019 restructuring charges mainly represent employee termination costs for cost-reduction and productivity initiatives, partially offset by the reversal of certain accruals related to our acquisition of Wyeth upon the effective favorable settlement of an IRS audit for multiple tax years (see Note 5B). 2018 charges were primarily related to employee termination costs and asset write downs. The employee termination costs for

2019 and 2018 were primarily for our improvements to operational effectiveness as part of the realignment of our business structure, and for 2019, also includes employee termination costs for the Transforming to a More Focused Company cost-reduction program.

(d)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. 2020 costs primarily related to our acquisition of Array. 2019 costs mainly related to our acquisitions of Array, including $157 million in payments to Array employees for the fair value of previously unvested stock options that was recognized as post-closing compensation expense (see Note 2A), and Hospira. 2018 costs mostly related to our acquisition of Hospira.


The following summarizes the components and changes in restructuring accruals:
(MILLIONS OF DOLLARS)	Employee Termination Costs		Asset Impairment Charges		Exit Costs		Accrual
Balance, January 1, 2019	$	1,113	$	—	$	49	$	1,161
Provision(a)	108		69		50		227
Utilization and other(b)	(450)		(69)		(53)		(572)
Balance, December 31, 2019(c)	770		—		46		816
Provision	474		88		(6)		556
Utilization and other(b)	(462)		(88)		(25)		(575)
Balance, December 31, 2020(d)	$	782	$	—	$	15	$	798