| Financial Instruments |
Financial Instruments A. Fair Value Measurements Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis and Fair Value Hierarchy: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | March 29, 2026 | | December 31, 2025 | | (MILLIONS) | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Financial assets: | | | | | | | | | | | | | | | | | | Short-term investments | | | | | | | | | | | | | | | | | Equity securities with readily determinable fair value(a) | | $ | 1,865 | | | $ | — | | | $ | 1,865 | | | $ | — | | | $ | 2,596 | | | $ | — | | | $ | 2,596 | | | $ | — | | | | | | | | | | | | | | | | | | | | Available-for-sale debt securities: | | | | | | | | | | | | | | | | | Government and agency—non-U.S. | | 3,888 | | | — | | | 3,888 | | | — | | | 4,859 | | | — | | | 4,859 | | | — | | Government and agency—U.S. | | 2,935 | | | — | | | 2,935 | | | — | | | 3,030 | | | — | | | 3,030 | | | — | | Corporate and other | | 1,366 | | | — | | | 1,366 | | | — | | | 1,294 | | | — | | | 1,294 | | | — | | | | 8,189 | | | — | | | 8,189 | | | — | | | 9,183 | | | — | | | 9,183 | | | — | | | Total short-term investments | | 10,054 | | | — | | | 10,054 | | | — | | | 11,779 | | | — | | | 11,779 | | | — | | | Other current assets | | | | | | | | | | | | | | | | | | Derivative assets: | | | | | | | | | | | | | | | | | Interest rate contracts | | 6 | | | — | | | 6 | | | — | | | — | | | — | | | — | | | — | | Foreign exchange contracts | | 498 | | | — | | | 498 | | | — | | | 416 | | | — | | | 416 | | | — | | | Total other current assets | | 504 | | | — | | | 504 | | | — | | | 416 | | | — | | | 416 | | | — | | | Long-term investments | | | | | | | | | | | | | | | | | Equity securities with readily determinable fair values(b) | | 653 | | | 653 | | | — | | | — | | | 642 | | | 642 | | | — | | | — | | | | | | | | | | | | | | | | | | | | Available-for-sale debt securities: | | | | | | | | | | | | | | | | | Government and agency—non-U.S. | | — | | | — | | | — | | | — | | | 1 | | | — | | | 1 | | | — | | | | | | | | | | | | | | | | | | | Corporate and other | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | — | | | — | | | — | | | — | | | 1 | | | — | | | 1 | | | — | | | Total long-term investments | | 653 | | | 653 | | | — | | | — | | | 642 | | | 642 | | | 1 | | | — | | | Other noncurrent assets | | | | | | | | | | | | | | | | | | Derivative assets: | | | | | | | | | | | | | | | | | Interest rate contracts | | 27 | | | — | | | 27 | | | — | | | 52 | | | — | | | 52 | | | — | | Foreign exchange contracts | | 128 | | | — | | | 128 | | | — | | | 64 | | | — | | | 64 | | | — | | | Total derivative assets | | 155 | | | — | | | 155 | | | — | | | 116 | | | — | | | 116 | | | — | | Insurance contracts(c) | | 950 | | | — | | | 950 | | | — | | | 999 | | | — | | | 999 | | | — | | | Total other noncurrent assets | | 1,105 | | | — | | | 1,105 | | | — | | | 1,115 | | | — | | | 1,115 | | | — | | | Total assets | | $ | 12,315 | | | $ | 653 | | | $ | 11,663 | | | $ | — | | | $ | 13,953 | | | $ | 642 | | | $ | 13,311 | | | $ | — | | | | | | | | | | | | | | | | | | | | Financial liabilities: | | | | | | | | | | | | | | | | | | Other current liabilities | | | | | | | | | | | | | | | | | | Derivative liabilities: | | | | | | | | | | | | | | | | | | Interest rate contracts | | $ | 1 | | | $ | — | | | $ | 1 | | | $ | — | | | $ | 16 | | | $ | — | | | $ | 16 | | | $ | — | | Foreign exchange contracts | | 283 | | | — | | | 283 | | | — | | | 412 | | | — | | | 412 | | | — | | Contingent consideration liabilities(d) | | 95 | | | — | | | — | | | 95 | | | 95 | | | — | | | — | | | 95 | | | Total other current liabilities | | 379 | | | — | | | 284 | | | 95 | | | 523 | | | — | | | 428 | | | 95 | | | Other noncurrent liabilities | | | | | | | | | | | | | | | | | | Derivative liabilities: | | | | | | | | | | | | | | | | | | Interest rate contracts | | 275 | | | — | | | 275 | | | — | | | 215 | | | — | | | 215 | | | — | | Foreign exchange contracts | | 807 | | | — | | | 807 | | | — | | | 815 | | | — | | | 815 | | | — | | Contingent consideration liabilities(d) | | 1,946 | | | — | | | — | | | 1,946 | | | 1,695 | | | — | | | — | | | 1,695 | | | Total other noncurrent liabilities | | 3,027 | | | — | | | 1,081 | | | 1,946 | | | 2,725 | | | — | | | 1,030 | | | 1,695 | | | Total liabilities | | $ | 3,406 | | | $ | — | | | $ | 1,365 | | | $ | 2,041 | | | $ | 3,248 | | | $ | — | | | $ | 1,458 | | | $ | 1,790 | |
(a)Includes money market funds primarily invested in U.S. Treasury and government debt. (b)Long-term equity securities of $147 million as of March 29, 2026 and $146 million as of December 31, 2025 were held in restricted trusts for U.S. non-qualified employee benefit plans. (c)Includes life insurance policies held in restricted trusts for U.S. non-qualified employee benefit plans. The underlying invested assets in these contracts are marketable securities, which are carried at fair value, with changes in fair value recognized in Other (income)/deductions—net (see Note 4). (d)Includes the fair value of contingent consideration associated with the acquisition of Metsera and certain prior business combinations. Fair value is estimated by using a probability-weighted discounted cash flow approach (see Notes 1D and 16D in our 2025 Form 10-K and Note 2A for additional information on contingent consideration liabilities). | | | | | | | | | | | | | The following provides the changes in our contingent consideration liabilities valued using significant unobservable inputs: | | Three Months Ended | | (MILLIONS) | March 29,
2026 | | March 30,
2025 | | Fair value, beginning | $ | 1,790 | | | $ | 517 | | Changes in estimated fair value(a) | 295 | | | 8 | | | Additions | — | | | — | | Settlements and other | (45) | | | (48) | | | Transfer into/(out of) Level 3 | — | | | — | | | | | | | Fair value, ending | $ | 2,041 | | | $ | 477 | |
(a)Reported in Other (income)/deductions––net. See Note 4. The amount in the first quarter of 2026 is primarily related to our acquisition of Metsera. Financial Assets and Liabilities Not Measured at Fair Value on a Recurring Basis––The carrying value of Long-term debt, excluding the current portion, was $61 billion as of March 29, 2026 and $62 billion as of December 31, 2025. The estimated fair value of such debt, using a market approach and Level 2 inputs, was $58 billion as of March 29, 2026 and $60 billion as of December 31, 2025. The differences between the estimated fair values and carrying values of held-to-maturity debt securities, private equity securities, long-term receivables and short-term borrowings not measured at fair value on a recurring basis were not significant as of March 29, 2026 and December 31, 2025. The fair value measurements of our held-to-maturity debt securities and short-term borrowings are based on Level 2 inputs. The fair value measurements of our long-term receivables and private equity securities are based on Level 3 inputs. B. Investments Total Short-Term and Long-Term Investments | | | | | | | | | | | | | | | | The following summarizes our investments by classification type: | | (MILLIONS) | | March 29,
2026 | | December 31, 2025 | | Short-term investments | | | | | Equity securities with readily determinable fair values | | $ | 1,865 | | | $ | 2,596 | | | Available-for-sale debt securities | | 8,189 | | | 9,183 | | | Held-to-maturity debt securities | | 1,318 | | | 675 | | | Total Short-term investments | | $ | 11,372 | | | $ | 12,454 | | | | | | | | Long-term investments | | | | | Equity securities with readily determinable fair values(a) | | $ | 653 | | | $ | 642 | | | | | | | | Available-for-sale debt securities | | — | | | 1 | | | Held-to-maturity debt securities | | 47 | | | 48 | | Private equity securities at cost(a) | | 688 | | | 696 | | | Equity-method investments | | 237 | | | 235 | | | Total Long-term investments | | $ | 1,626 | | | $ | 1,621 | | | | | | | | | | | |
(a)Represent investments in the life sciences sector. Debt Securities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Our investment portfolio consists of investment-grade debt securities issued across diverse governments, corporate and financial institutions: | | | March 29, 2026 | December 31, 2025 | | | | | Gross Unrealized | | | | Maturities (in Years) | | | | Gross Unrealized | | | | (MILLIONS) | | Amortized Cost | | Gains | | Losses | | Fair Value | | Within 1 | | Over 1
to 5 | | Over 5 | | Amortized Cost | | Gains | | Losses | | Fair Value | | Available-for-sale debt securities | | | | | | | | | | | | | | | | | | | | | | | Government and agency––non-U.S. | | $ | 3,860 | | | $ | 29 | | | $ | (2) | | | $ | 3,888 | | | $ | 3,888 | | | $ | — | | | $ | — | | | $ | 4,890 | | | $ | 3 | | | $ | (34) | | | $ | 4,859 | | Government and agency––U.S. | | 2,935 | | | — | | | — | | | 2,935 | | | 2,935 | | | — | | | — | | | 3,030 | | | — | | | — | | | 3,030 | | | Corporate and other | | 1,366 | | | — | | | — | | | 1,366 | | | 1,366 | | | — | | | — | | | 1,295 | | | — | | | (1) | | | 1,294 | | Held-to-maturity debt securities | | | | | | | | | | | | | | | | | | | | | | | Corporate, time deposits and other | | 756 | | | — | | | — | | | 756 | | | 710 | | | 9 | | | 37 | | | 487 | | | — | | | — | | | 487 | | Government and agency––non-U.S. | | 610 | | | — | | | — | | | 610 | | | 608 | | | — | | | 1 | | | 236 | | | — | | | — | | | 236 | | | Total debt securities | | $ | 9,526 | | | $ | 29 | | | $ | (2) | | | $ | 9,554 | | | $ | 9,507 | | | $ | 10 | | | $ | 38 | | | $ | 9,938 | | | $ | 3 | | | $ | (35) | | | $ | 9,906 | |
Any expected credit losses to these portfolios would be immaterial to our financial statements. Equity Securities | | | | | | | | | | | | | | | | | | | | The following presents the calculation of the portion of unrealized (gains)/losses that relates to equity securities, excluding equity-method investments, held at the reporting date: | | | | | Three Months Ended | | (MILLIONS) | | | | | | March 29,
2026 | | March 30,
2025 | Net (gains)/losses recognized during the period on equity securities(a) | | | | | | $ | 9 | | | $ | 370 | | | Less: Net (gains)/losses recognized during the period on equity securities sold during the period | | | | | | (6) | | | (924) | | Net unrealized (gains)/losses during the reporting period on equity securities still held at the reporting date | | | | | | $ | 15 | | | $ | 1,295 | |
(a)Reported in Other (income)/deductions––net. See Note 4. Included in net unrealized (gains)/losses are observable price changes on equity securities without readily determinable fair values. As of March 29, 2026, there were cumulative impairments and downward adjustments of $444 million and upward adjustments of $225 million. Impairments, downward and upward adjustments were not material to our operations in the first quarters of 2026 and 2025. C. Short-Term Borrowings | | | | | | | | | | | | | | | | Short-term borrowings include: | | (MILLIONS) | | March 29,
2026 | | December 31, 2025 | | | | | | | Current portion of long-term debt, principal amount | | $ | 3,864 | | | $ | 3,000 | | Other short-term borrowings, principal amount(a) | | 29 | | | 157 | | Total short-term borrowings, principal amount | | 3,893 | | | 3,157 | | | | | | | | Net unamortized discounts, premiums and debt issuance costs | | (3) | | | (3) | | Total Short-term borrowings, including current portion of long-term debt, carried at historical proceeds, as adjusted | | $ | 3,890 | | | $ | 3,154 | |
(a)Primarily includes cash collateral. See Note 7F. D. Long-Term Debt | | | | | | | | | | | | | | | | The following summarizes the aggregate principal amount of our senior unsecured long-term debt, and adjustments to report our aggregate long-term debt: | | (MILLIONS) | | March 29,
2026 | | December 31, 2025 | | Total long-term debt, principal amount | | $ | 60,313 | | | $ | 61,293 | | | Net fair value adjustments related to hedging and purchase accounting | | 726 | | | 834 | | | Net unamortized discounts, premiums and debt issuance costs | | (473) | | | (486) | | | | | | | | Total long-term debt, carried at historical proceeds, as adjusted | | $ | 60,565 | | | $ | 61,641 | |
E. Derivative Financial Instruments and Hedging Activities Foreign Exchange Risk––A significant portion of our revenues, earnings and net investments in foreign affiliates is exposed to changes in foreign exchange rates. Where foreign exchange risk is not offset by other exposures, we manage our foreign exchange risk principally through the use of derivative financial instruments and foreign currency debt. These financial instruments serve to mitigate the impact on net income as a result of remeasurement into another currency, or against the impact of translation into U.S. dollars of certain foreign exchange-denominated transactions. The derivative financial instruments primarily hedge or offset exposures in the euro, U.K. pound, Chinese renminbi, Japanese yen, Canadian dollar, and Swedish krona, and include a portion of our forecasted foreign exchange-denominated intercompany inventory sales hedged up to two years. We may also seek to protect against possible declines in the net investments of our foreign business entities. Interest Rate Risk––Our interest-bearing investments and borrowings are subject to interest rate risk. Depending on market conditions, we may change the profile of our outstanding debt or investments by entering into derivative financial instruments like interest rate swaps, either to hedge or offset the exposure to changes in the fair value of hedged items with fixed interest rates, or to convert variable rate debt or investments to fixed rates. The derivative financial instruments primarily hedge U.S. dollar fixed-rate debt. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The following summarizes the fair value of the derivative financial instruments and notional amounts: | | | March 29, 2026 | | December 31, 2025 | | | | | Fair Value | | | | Fair Value | | (MILLIONS) | | Notional | | Asset | | Liability | | Notional | | Asset | | Liability | Derivatives designated as hedging instruments: | | | | | | | | | | | | | Foreign exchange contracts(a) | | $ | 23,593 | | | $ | 517 | | | $ | 942 | | | $ | 22,984 | | | $ | 325 | | | $ | 1,066 | | | Interest rate contracts | | 7,995 | | | 33 | | | 276 | | | 6,750 | | | 52 | | | 230 | | | | | | 550 | | | 1,218 | | | | | 377 | | | 1,296 | | Derivatives not designated as hedging instruments: | | | | | | | | | | | | | | Foreign exchange contracts | | $ | 17,134 | | | 109 | | | 147 | | | $ | 22,777 | | | 155 | | | 162 | | | | | | | | | | | | | | | | Total | | | | $ | 659 | | | $ | 1,365 | | | | | $ | 532 | | | $ | 1,458 | |
(a)The notional amount of outstanding foreign exchange contracts hedging our intercompany forecasted inventory sales was $4.9 billion as of March 29, 2026 and $5.0 billion as of December 31, 2025. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The following summarizes information about the gains/(losses) incurred to hedge or offset operational foreign exchange or interest rate risk exposures: | | | | Gains/(Losses)
Recognized in OID(a) | | Gains/(Losses)
Recognized in OCI(a) | | Gains/(Losses) Reclassified from OCI into OID and COS(a) | | | Three Months Ended | | (MILLIONS) | | March 29,
2026 | | March 30,
2025 | | March 29,
2026 | | March 30,
2025 | | March 29,
2026 | | March 30,
2025 | | Derivative Financial Instruments in Cash Flow Hedge Relationships: | | | | | | | | | | | | | | Interest rate contracts | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 2 | | Foreign exchange contracts(b) | | — | | | — | | | (48) | | | (138) | | | (21) | | | 295 | | Amount excluded from effectiveness testing and amortized into earnings(c) | | — | | | — | | | 12 | | | 15 | | | 12 | | | 16 | | | Derivative Financial Instruments in Fair Value Hedge Relationships: | | | | | | | | | | | | | | Interest rate contracts | | (85) | | | 142 | | | — | | | — | | | — | | | — | | | Hedged item | | 85 | | | (142) | | | — | | | — | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Derivative Financial Instruments in Net Investment Hedge Relationships: | | | | | | | | | | | | | | Foreign exchange contracts | | — | | | — | | | 240 | | | (437) | | | — | | | — | | Amount excluded from effectiveness testing and amortized into earnings(c) | | — | | | — | | | 47 | | | 75 | | | 53 | | | 41 | | Non-Derivative Financial Instruments in Net Investment Hedge Relationships(d): | | | | | | | | | | | | | | Foreign currency short-term borrowings | | — | | | — | | | 18 | | | — | | | — | | | — | | | Foreign currency long-term debt | | — | | | — | | | (2) | | | (31) | | | — | | | — | | | Derivative Financial Instruments Not Designated as Hedges: | | | | | | | | | | | | | | Foreign exchange contracts | | (13) | | | (31) | | | — | | | — | | | — | | | — | | | | | | | | | | | | | | | | | | $ | (13) | | | $ | (31) | | | $ | 267 | | | $ | (517) | | | $ | 44 | | | $ | 354 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(a)OID = Other (income)/deductions—net, included in Other (income)/deductions—net in the condensed consolidated statements of operations. COS = Cost of Sales, included in Cost of sales in the condensed consolidated statements of operations. OCI = Other comprehensive income/(loss), included in the condensed consolidated statements of comprehensive income/(loss). (b)The amounts reclassified from OCI into COS were a net loss of $14 million in the first quarter of 2026 and a net gain of $62 million in the first quarter of 2025. The remaining amounts were reclassified from OCI into OID. Based on quarter-end foreign exchange rates that are subject to change, we expect to reclassify a pre-tax loss of $9 million within the next 12 months into income. The maximum length of time over which we are hedging our exposure to the variability in future foreign exchange cash flows is approximately 17 years and relates to foreign currency debt. (c)The amounts reclassified from OCI were reclassified into OID. (d)Long-term debt includes foreign currency borrowings, which are used in net investment hedges; the related carrying values as of March 29, 2026 and December 31, 2025 were $863 million and $879 million, respectively. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The following summarizes cumulative basis adjustments to our long-term debt in fair value hedges: | | | March 29, 2026 | | December 31, 2025 | | | | | Cumulative Amount of Fair Value Hedging Adjustment Increase/(Decrease) to
Carrying Amount | | | | Cumulative Amount of Fair Value Hedging Adjustment Increase/(Decrease) to
Carrying Amount | | (MILLIONS) | | Carrying Amount of Hedged Assets/Liabilities(a) | | Active Hedging Relationships | | Discontinued Hedging Relationships | | Carrying Amount of Hedged Assets/Liabilities(a) | | Active Hedging Relationships | | Discontinued Hedging Relationships | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Long-term debt | | $ | 8,429 | | | $ | (248) | | | $ | 803 | | | $ | 7,110 | | | $ | (163) | | | $ | 821 | |
(a)Carrying amounts exclude the cumulative amount of fair value hedging adjustments. F. Credit Risk A significant portion of our trade accounts receivable balances are due from wholesalers and governments. For additional information on our trade accounts receivables with significant customers, see Note 17C in our 2025 Form 10-K. As of March 29, 2026, the largest investment exposures in our portfolio consisted primarily of U.S. government money market funds, as well as sovereign debt instruments issued by the U.S., the U.K., France, Sweden, and Japan. With respect to our derivative financial instrument agreements with financial institutions, we do not expect to incur a significant loss from failure of any counterparty. Derivative financial instruments are executed under International Swaps and Derivatives Association master agreements with credit-support annexes that contain zero threshold provisions requiring collateral to be exchanged daily depending on levels of exposure. As a result, there are no significant concentrations of credit risk with any individual financial institution. As of March 29, 2026, the aggregate fair value of these derivative financial instruments that are in a net payable position was $1.1 billion, for which we have posted collateral of $1.2 billion with a corresponding amount reported in Short-term investments. As of March 29, 2026, the aggregate fair value of our derivative financial instruments that are in a net receivable position was $41 million, for which we have received collateral of $29 million with a corresponding amount reported in Short-term borrowings, including current portion of long-term debt.
|