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 2025, with cash outlays expected primarily in 2025 and 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. From the start of this program through December 31, 2025, we incurred costs of $1.1 billion (including $875 million of restructuring charges). These costs were recorded primarily through 2025, with cash outlays expected primarily through 2026.


The following summarizes costs and credits for acquisitions and cost-reduction/productivity initiatives:
	Year Ended December 31,
(MILLIONS)		2025		2024		2023
Restructuring charges/(credits):
Employee terminations		$	684	$	1,152	$	1,622
Asset impairments		349		432		227
Exit costs		59		403		119
Restructuring charges/(credits)(a)		1,092		1,987		1,968
Transaction costs(b)		118		5		190
Integration costs and other(c)		340		427		785
Restructuring charges and certain acquisition-related costs		1,550		2,419		2,943
Net periodic benefit costs/(credits) recorded in Other (income)/deductions––net		(78)		7		(7)
Inventory write-offs––recorded in Cost of sales		33		—		—
Additional depreciation––asset restructuring recorded in our consolidated statements of operations as follows(d):
Cost of sales		38		14		31
Selling, informational and administrative expenses		—		5		1
Research and development expenses		1		—		—
Total additional depreciation––asset restructuring		38		19		32

Implementation costs recorded in our consolidated statements of operations as follows(e):
Cost of sales		116		120		67
Selling, informational and administrative expenses		116		90		289
Research and development expenses		189		84		101

Total implementation costs		421		294		457
Total costs associated with acquisitions and cost-reduction/productivity initiatives		$	1,965	$	2,738	$	3,426

(a)Primarily represents cost-reduction initiatives. Amounts associated with our Biopharma segment: (i) charges of $691 million for 2025 (including charges of $920 million for our Realigning our Cost Base Program and credits of $288 million for our Manufacturing Optimization Program), (ii) charges of $1.8 billion for 2024 (including charges of $1.2 billion our Manufacturing Optimization Program and charges of $571 million for our Realigning our Cost Base Program) and (iii) charges of $1.5 billion for 2023 (including charges of $1.4 billion for our Realigning our Cost Base Program and charges of $3 million for our Transforming to a More Focused Company program, that we have substantially completed). For 2025 and 2024, Employee terminations include revisions of estimates of previously recorded accruals for severance benefits, driven in large part by higher-than-expected voluntary attrition.

(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. 2023 costs mostly relate to our acquisition of Seagen, including $476 million that was recognized as a post-closing compensation expense for payments to Seagen employees in the fourth quarter of 2023 for the fair value of long-term incentive awards that vested upon closing and the expense for employee incentive awards issued in contemplation of the merger. See Note 2A.


The following summarizes the components and changes in restructuring accruals:
(MILLIONS)	Employee Termination Costs		Asset Impairment Charges		Exit Costs		Accrual
Balance, January 1, 2024	$	1,978	$	—	$	11	$	1,988
Provision	1,152		432		403		1,987
Utilization and other(a)	(1,083)		(432)		(341)		(1,856)
Balance, December 31, 2024(b)	2,046		—		74		2,120
Provision	684		349		59		1,092
Utilization and other(a)	(947)		(349)		(6)		(1,302)
Balance, December 31, 2025(c)	$	1,783	$	—	$	127	$	1,910