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 through 2026.

From the start of this program through March 29, 2026, we incurred total costs of $4.3 billion, of which $3.3 billion is associated with our Biopharma segment (including $2.9 billion of restructuring charges).

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 March 29, 2026, we incurred costs of $1.1 billion (including $853 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:
	Three Months Ended
(MILLIONS)		March 29, 2026		March 30, 2025
Restructuring charges/(credits):
Employee terminations		$	15	$	384
Asset impairments		28		173
Exit costs		6		64
Restructuring charges/(credits)(a)		49		621

Integration costs and other(b)		51		57
Restructuring charges and certain acquisition-related costs		100		678
Net periodic benefit costs/(credits) recorded in Other (income)/deductions––net		3		(59)





Additional depreciation––asset restructuring recorded in Cost of sales(c)		3		4
Implementation costs recorded in our condensed consolidated statements of operations as follows(d):
Cost of sales		15		20
Selling, informational and administrative expenses		36		6
Research and development expenses		38		24

Total implementation costs		89		50
Total costs associated with acquisitions and cost-reduction/productivity initiatives		$	195	$	673

(a)Primarily represents cost-reduction initiatives. Amounts associated with our Biopharma segment: (i) charges of $31 million for the three months ended March 29, 2026 (including charges of $47 million for our Realigning our Cost Base Program and credits of $22 million for our Manufacturing Optimization Program) and (ii) charges of $617 million for the three months ended March 30, 2025 (including charges of $587 million for our Realigning our Cost Base Program and credits of $4 million for our Manufacturing Optimization Program).

(b)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.


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	15		28		6		49
Utilization and other(b)	(330)		(28)		(12)		(371)
Balance, March 29, 2026(c)	$	1,467	$	—	$	121	$	1,588