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Document and Entity Information (USD  $)
3 Months Ended
Mar. 31, 2011
Apr. 29, 2011
Jun. 30, 2010
Document and Entity Information [Abstract]
Entity Registrant Name AMGEN INC
Entity Central Index Key 0000318154
Document Type 10-Q
Document Period End Date Mar 31, 2011
Amendment Flag false
Document Fiscal Year Focus 2011
Document Fiscal Period Focus Q1
Current Fiscal Year End Date --12-31
Entity Well-known Seasoned Issuer Yes
Entity Voluntary Filers No
Entity Current Reporting Status Yes
Entity Filer Category Large Accelerated Filer
Entity Public Float  $ 50,355,022,164
Entity Common Stock, Shares Outstanding 929,730,507
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Document and Entity Information (Parenthetical)
Jun. 30, 2010
Document and Entity Information [Abstract]
Common stock held by directors and officers and any stockholders whose ownership exceeds five percent of the shares outstanding 1,085,011
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Condensed Consolidated Statements of Income (Unaudited) (USD  $)
In Millions, except Per Share data
3 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Revenues:
Product sales  $ 3,618  $ 3,528
Other revenues 88 64
Total revenues 3,706 3,592
Operating expenses:
Cost of sales (excludes amortization of certain acquired intangible assets presented below) 564 508
Research and development 736 646
Selling, general and administrative 1,023 884
Amortization of certain acquired intangible assets 74 74
Other 16 (1)
Total operating expenses 2,413 2,111
Operating income 1,293 1,481
Interest expense, net 135 145
Interest and other income, net 148 84
Income before income taxes 1,306 1,420
Provisions for income taxes 181 253
Net income  $ 1,125  $ 1,167
Earnings per share:
Basic  $ 1.21  $ 1.19
Diluted  $ 1.2  $ 1.18
Shares used in calculation of earnings per share:
Basic 933 982
Diluted 941 988
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Condensed Consolidated Balance Sheets (Unaudited) (USD  $)
In Millions
3 Months Ended 12 Months Ended
Mar. 31, 2011
Dec. 31, 2010
Current assets:
Cash and cash equivalents  $ 1,266  $ 3,287
Marketable securities 14,092 14,135
Trade receivables, net 2,517 2,335
Inventories 2,098 2,022
Other current assets 1,716 1,350
Total current assets 21,689 23,129
Property, plant and equipment, net 5,455 5,522
Intangible assets, net 2,808 2,230
Goodwill 11,504 11,334
Other assets 1,258 1,271
Total assets 42,714 43,486
Current liabilities:
Accounts payable 832 716
Accrued liabilities 3,334 3,366
Current portion of convertible notes 83 2,488
Total current liabilities 4,249 6,570
Convertible notes 2,246 2,296
Other long-term debt 8,578 8,578
Other non-current liabilities 2,657 2,098
Contingencies and commitments    
Stockholders' equity:
Common stock and additional paid-in capital;  $0.0001 par value; 2,750 shares authorized; outstanding - 933 shares in 2011 and 932 shares in 2010 27,376 27,299
Accumulated deficit (2,383) (3,508)
Accumulated other comprehensive (loss) income (9) 153
Total stockholders' equity 24,984 23,944
Total liabilities and stockholders' equity  $ 42,714  $ 43,486
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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD  $)
In Millions, except Per Share data
Mar. 31, 2011
Dec. 31, 2010
Stockholders' equity:
Common stock and additional paid-in capital, par value  $ 0.0001  $ 0.0001
Common stock and additional paid-in capital, shares authorized 2,750 2,750
Common stock and additional paid-in capital, shares outstanding 933 932
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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD  $)
In Millions
3 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Cash flows from operating activities:
Net income  $ 1,125  $ 1,167
Depreciation and amortization 273 252
Stock-based compensation expense 77 68
Other items, net 14 10
Changes in operating assets and liabilities, net of acquisitions:
Trade receivables, net (181) (162)
Inventories (78) 21
Other current assets (62) (43)
Accounts payable (38) 308
Accrued income taxes 8 (189)
Other accrued liabilities (108) (519)
Net cash provided by operating activities 1,030 913
Cash flows from investing activities:
Purchases of property, plant and equipment (100) (94)
Cash paid for acquisitions, net of cash acquired (403) 0
Purchases of marketable securities (7,203) (3,160)
Proceeds from sales of marketable securities 6,933 2,170
Proceeds from maturities of marketable securities 224 141
Other (6) (12)
Net cash used in investing activities (555) (955)
Cash flows from financing activities:
Repayment of debt (2,500) 0
Repurchases of common stock (14) (1,587)
Net proceeds from issuance of debt 0 989
Net proceeds from issuance of common stock in connection with the Company's equity award programs 16 26
Other 2 (4)
Net cash used in financing activities (2,496) (576)
Decrease in cash and cash equivalents (2,021) (618)
Cash and cash equivalents at beginning of period 3,287 2,884
Cash and cash equivalents at end of period  $ 1,266  $ 2,266
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Summary of significant accounting policies
3 Months Ended
Mar. 31, 2011
Summary of significant accounting policies [Abstract]
Summary of significant accounting policies
1. Summary of significant accounting policies
Business
Amgen Inc. (including its subsidiaries, referred to as “Amgen,” “the Company,” “we,” “our” or “us”) is a global biotechnology medicines company that discovers, develops, manufactures and markets medicines for grievous illnesses. We concentrate on innovating novel medicines based on advances in cellular and molecular biology and we operate in one business segment, human therapeutics.
Basis of presentation
The financial information for the three months ended March 31, 2011 and 2010 is unaudited but includes all adjustments (consisting of only normal recurring adjustments, unless otherwise indicated), which Amgen considers necessary for a fair presentation of its condensed consolidated results of operations for those periods. Interim results are not necessarily indicative of results for the full fiscal year.
The condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2010.
Principles of consolidation
The condensed consolidated financial statements include the accounts of Amgen as well as its wholly owned subsidiaries. We do not have any significant interests in any variable interest entities. All material intercompany transactions and balances have been eliminated in consolidation.
Use of estimates
The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results may differ from those estimates.
Revenue recognition for arrangements with multiple-deliverables
From time to time, we enter into arrangements for the research and development (R&D), manufacture and/or commercialization of products and product candidates. These arrangements may require us to deliver various rights, services and/or goods across the entire life cycle of a product or product candidate, including (i) intellectual property rights/license, (ii) R&D services, (iii) manufacturing services and/or (iv) commercialization services. The underlying terms of these arrangements generally provide for consideration to Amgen in the form of non-refundable upfront license payments, R&D and commercial performance milestone payments, cost sharing and/or royalty payments.
In October 2009, the Financial Accounting Standards Board issued a new accounting standard which amends the guidance on the accounting for arrangements involving the delivery of more than one element. This standard addresses the determination of the unit(s) of accounting for multiple-element arrangements and how the arrangement’s consideration should be allocated to each unit of accounting. The Company adopted this new accounting standard on a prospective basis for all multiple-element arrangements entered into on or after January 1, 2011 and for any multiple-element arrangements that were entered into prior to January 1, 2011 but materially modified on or after January 1, 2011.
Pursuant to the new standard, each required deliverable is evaluated to determine if it qualifies as a separate unit of accounting. For Amgen this determination is generally based on whether the deliverable has “stand-alone value” to the customer. The arrangement’s consideration is then allocated to each separate unit of accounting based on the relative selling price of each deliverable. The estimated selling price of each deliverable is determined using the following hierarchy of values: (i) vendor-specific objective evidence of fair value, (ii) third-party evidence of selling price, and (iii) best estimate of selling price (BESP). The BESP reflects our best estimate of what the selling price would be if the deliverable was regularly sold by us on a stand-alone basis. We expect, in general, to use the BESP for allocating consideration to each deliverable. In general, the consideration allocated to each unit of accounting is then recognized as the related goods or services are delivered limited to the consideration that is not contingent upon future deliverables.
For multiple-element arrangements entered into prior to January 1, 2011 and not materially modified thereafter, we continue to apply our prior accounting policy with respect to such arrangements. Under this policy, in general, revenue from non-refundable, upfront fees related to intellectual property rights/licenses where we have continuing involvement is recognized ratably over the estimated period of ongoing involvement because there is no objective and reliable evidence of fair value for any undelivered item to allow the delivered item to be considered a separate unit of accounting. This requirement with respect to the fair value of undelivered items was eliminated in the newly issued accounting standard. In general, the consideration with respect to the other deliverables is recognized when the goods or services are delivered.
Under all of our multiple-element arrangements, consideration associated with at risk substantive performance milestones is recognized as revenue upon the achievement of the related milestone, as defined in the respective agreements.
The impact of adopting this new accounting standard is dependent on the terms and conditions of any future arrangement that we may enter into that includes multiple-deliverables, however, its adoption is not expected to have a material impact on our consolidated results of operations or financial position. The primary impact of adopting the new accounting standard is expected to be the earlier recognition of revenue associated with delivering rights to the underlying intellectual property.
The adoption of this accounting standard did not have a material impact on our condensed consolidated results of operations or financial position for the three months ended March 31, 2011. Our consolidated results of operations or financial position for 2010 also would not have been materially impacted if the accounting standard had been adopted on January 1, 2010.
Inventories
Inventories are stated at the lower of cost or market. Cost, which includes amounts related to materials, labor and overhead, is determined in a manner which approximates the first-in, first-out method. Cost also includes the impact of the recently enacted Puerto Rico excise tax related to our manufacturing operations in Puerto Rico. The Company capitalizes inventories produced in preparation for product launches when the related product candidates are considered to have a high probability of regulatory approval and the related costs are expected to be recoverable through the commercialization of the product. See Note 7, Inventories.
Property, plant and equipment, net
Property, plant and equipment is recorded at historical cost, net of accumulated depreciation and amortization of  $5.3 billion and  $5.2 billion as of March 31, 2011 and December 31, 2010, respectively.
Business combinations
Business combinations are accounted for using the acquisition method of accounting. Under the acquisition method, assets acquired, including in-process research and development (IPR&D) projects, and liabilities assumed are recorded at their respective fair values as of the acquisition date in our condensed consolidated financial statements. The excess of the acquisition date fair value of consideration over the fair value of the net assets acquired is recorded as goodwill. Contingent consideration obligations incurred in connection with a business combination are recorded at their fair values on the acquisition date. We revalue these obligations each subsequent reporting period until the related contingencies are resolved and record changes in their fair values in earnings. See Note 2, Acquisitions.
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Acquisitions
3 Months Ended
Mar. 31, 2011
Acquisitions [Abstract]
Acquisitions
2.   Acquisitions
On March 4, 2011, we acquired all of the outstanding stock of BioVex Group, Inc. (BioVex), a privately held biotechnology company developing treatments for cancer and the prevention of infectious disease, including OncoVEXGM-CSF, a novel oncolytic vaccine in phase 3 clinical development for the treatment of melanoma and head and neck cancer. This transaction, which was accounted for as a business combination, provides us with an opportunity to expand our efforts to bring novel therapeutics to market. Upon its acquisition, BioVex became a wholly owned subsidiary of Amgen.
The aggregate acquisition date consideration to acquire BioVex consisted of (in millions):
       
Cash paid to former shareholders of BioVex
   $ 407
Fair value of contingent consideration obligations
    190
 
   
Total consideration
   $ 597
 
   
The cash consideration reflects a reduction in the purchase price related to changes in working capital and excludes amounts that have been and may be paid to the employees of BioVex who became Amgen employees upon the acquisition, including  $7 million paid to settle unvested employee options to acquire stock in BioVex which we expensed at the acquisition date.
In connection with this acquisition, we are obligated to make additional payments to the former shareholders of BioVex of up to  $575 million contingent upon the achievement of certain regulatory and sales milestones with regard to OncoVEXGM-CSF, including the filing of a biologics license application with the U.S. Food and Drug Administration (FDA), the first commercial sale in each of the United States and the European Union following receipt of marketing approval, which includes use of the product in specified patient populations, and upon achieving specified levels of sales. The estimated aggregate fair value of the contingent consideration obligations as of the acquisition date of  $190 million was determined using a combination of valuation techniques. The contingent consideration obligations to make regulatory milestone payments were valued based on assumptions regarding the probability of achieving the milestones and making the related payments with such amounts discounted to present value. The contingent consideration obligations to make sales milestone payments were valued based on assumptions regarding the probability of achieving specified product sales thresholds to determine the required payments with such amounts discounted to present value.
We allocated the total consideration to the acquisition date fair values of assets acquired and liabilities assumed as follows (in millions):
       
Intangible assets — IPR&D
   $ 675
Goodwill
    170
Deferred tax liabilities
    (246 )
Other assets and liabilities acquired, net
    (2 )
 
   
Total consideration
   $ 597
 
   
Intangible assets are composed of the estimated fair value of acquired IPR&D related to OncoVEXGM-CSF. The estimated fair value was determined using a probability-weighted income approach, which discounts expected future cash flows to present value. The estimated net cash flows were discounted to present value using a discount rate of 11%, which is based on the estimated weighted average cost of capital for companies with characteristics similar to BioVex. This is comparable to the estimated internal rate of return on BioVex operations and represents the rate that market participants would use to value the intangible assets. The projected cash flows from OncoVEXGM-CSF were based on certain key assumptions, including estimates of future revenue and expenses taking into account the stage of development of OncoVEXGM-CSF at the acquisition date, the time and resources needed to complete development and the probabilities of obtaining marketing approval from the FDA and other regulatory agencies. IPR&D intangible assets acquired in a business combination are considered to be indefinite-lived until the completion or abandonment of the associated R&D efforts.
The excess of the acquisition date consideration over the fair values assigned to the assets acquired and the liabilities assumed of  $170 million was recorded as goodwill, which is not deductible for tax purposes. Goodwill is primarily attributable to the deferred tax consequences of acquired IPR&D recorded for financial statement purposes.
The amounts initially recorded for acquired IPR&D intangible assets and tax-related liabilities are preliminary. The amounts will be finalized upon collection of the appropriate information with respect to the BioVex intercompany arrangements related to the acquired IPR&D and the tax impacts thereof.
BioVex is included in our condensed consolidated financial statements commencing on the acquisition date. Pro forma supplemental condensed consolidated financial information assuming the acquisition occurred on January 1, 2011 and 2010 is not provided as the impact would not be material to our condensed consolidated results of operations.
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Income taxes
3 Months Ended
Mar. 31, 2011
Income taxes [Abstract]
Income taxes
3. Income taxes
The effective tax rates for the three months ended March 31, 2011 and 2010 are different from the statutory rates primarily as a result of indefinitely invested earnings of our foreign operations. We do not provide for U.S. income taxes on undistributed earnings of our foreign operations that are intended to be invested indefinitely outside the United States. The effective tax rate for the three months ended March 31, 2011 was further reduced by foreign tax credits associated with the new Puerto Rico excise tax.
Commencing January 1, 2011, Puerto Rico imposes a temporary excise tax on the purchase of goods and services from a related manufacturer in Puerto Rico. This excise tax is currently scheduled to expire in 2016. We account for the excise tax as a manufacturing cost that is capitalized in inventory and expensed in cost of sales when the related products are sold. For U.S. income tax purposes, a significant portion of the excise tax results in tax credits that are recognized in our provision for income taxes when the excise tax is paid. Our effective tax rate for the three months ended March 31, 2011 without the impact of the tax credits associated with the new Puerto Rico excise tax would have been 18.8%.
One or more of our legal entities file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and certain foreign jurisdictions. Our income tax returns are routinely audited by the tax authorities in those jurisdictions. Significant disputes may arise with these tax authorities involving issues of the timing and amount of deductions, the use of tax credits and allocations of income among various tax jurisdictions because of differing interpretations of tax laws and regulations. We are no longer subject to U.S. federal income tax examinations for years ended on or before December 31, 2006 or to California state income tax examinations for years ended on or before December 31, 2003.
The Internal Revenue Service (IRS) is currently examining our U.S. income tax returns for the years ended December 31, 2007, 2008 and 2009. As of March 31, 2011, the Company and the IRS have agreed to certain transfer pricing adjustments for the year ended December 31, 2009 and the Company has, accordingly, adjusted its liability for unrecognized tax benefits (UTBs) as discussed below. The remainder of this examination is expected to be completed in 2012.
During the three months ended March 31, 2011, the gross amount of our UTBs increased by approximately  $72 million as a result of tax positions taken during the current year. During the three months ended March 31, 2011, the gross amount of our UTBs decreased by approximately  $201 million as a result of resolving certain transfer pricing matters related to prior years. Substantially all of the UTBs as of March 31, 2011, if recognized, would affect our effective tax rate.
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Earnings per share
3 Months Ended
Mar. 31, 2011
Earnings per share [Abstract]
Earnings per share
4. Earnings per share
The computation of basic earnings per share (EPS) is based upon the weighted-average number of our common shares outstanding. The computation of diluted EPS is based upon the weighted-average number of our common shares and dilutive potential common shares outstanding. Dilutive potential common shares outstanding, determined using the treasury stock method, principally include: shares that may be issued under our stock option, restricted stock and performance unit awards; our 2011 Convertible Notes and 2013 Convertible Notes, as discussed below; and our outstanding warrants (collectively “dilutive securities”). The convertible note hedges purchased in connection with the issuance of our convertible notes are excluded from the calculation of diluted EPS as their impact is always anti-dilutive.
Upon conversion of our 2011 Convertible Notes (while they were outstanding) and 2013 Convertible Notes, the principal amount would be settled in cash and the excess of the conversion value, as defined, over the principal amount may be settled in cash and/or shares of our common stock. Therefore, only the shares of our common stock potentially issuable with respect to the excess of the notes’ conversion value over their principal amount, if any, are considered as dilutive potential common shares for purposes of calculating diluted EPS.
The following table sets forth the computation for basic and diluted EPS (in millions, except per share data):
               
    Three months ended
    March 31,
    2011     2010
Income (Numerator):
             
Net income for basic and diluted EPS
   $ 1,125      $ 1,167
 
         
 
             
Shares (Denominator):
             
Weighted-average shares for basic EPS
    933       982
Effect of dilutive securities
    8       6
 
         
Weighted-average shares for diluted EPS
    941       988
 
         
 
             
Basic EPS
   $ 1.21      $ 1.19
Diluted EPS
   $ 1.20      $ 1.18
For the three months ended March 31, 2011 and 2010, there were employee stock options, calculated on a weighted average basis, to purchase 39 million and 40 million shares of our common stock, respectively, with exercise prices greater than the average market prices of our common stock for these periods that are not included in the computation of diluted EPS as their impact would have been anti-dilutive. In addition, shares of our common stock which may be issued upon exercise of our warrants are not included in the computation of diluted EPS for any of the periods presented above as their impact would have been anti-dilutive.
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Cost savings initiatives
3 Months Ended
Mar. 31, 2011
Cost savings initiatives [Abstract]
Cost savings initiatives
5. Cost savings initiatives
Manufacturing operations at Fremont, California
As part of continuing efforts to optimize our network of manufacturing facilities and improve cost efficiencies, on January 18, 2011, we entered into an agreement whereby Boehringer Ingelheim (BI) agreed to acquire all of our rights in and substantially all assets at our manufacturing operations located in Fremont, California. The transaction was approved by Amgen’s Board of Directors in December 2010 and closed in March 2011. In connection with the closing of this transaction, BI has or will assume our obligations under the facility’s operating lease agreements and has entered into an agreement to manufacture certain quantities of our marketed product Vectibix®, for us at this facility through December 31, 2012 (the “supply agreement”).
Due to the lack of sufficient initial investment by BI in the acquisition of this facility and our ongoing involvement with these operations, the transaction did not meet the accounting requirements to be treated as a sale involving real estate. As a result, the related assets will continue to be carried on our Condensed Consolidated Balance Sheet.
We considered this transaction with BI to be a potential indicator of impairment and, accordingly, we performed an impairment analysis of the carrying values of the related fixed assets as of December 31, 2010. Based on this analysis, we determined that no future economic benefit would be received from a manufacturing line at the facility that had not yet been completed. As a result, we wrote off its entire carrying value, which aggregated  $118 million for the three months ended December 31, 2010.
The carrying values of the remaining fixed assets, aggregating approximately  $133 million, were determined to be fully recoverable. However, as a result of this transaction, we reduced the estimated remaining useful lives of these fixed assets to coincide with the period covered by the supply agreement. During the three months ended March 31, 2011, we recorded incremental depreciation in excess of what otherwise would have been recorded of approximately  $10 million. This amount is included in Cost of sales (excludes amortization of certain acquired intangible assets presented below) in the Condensed Consolidated Statement of Income. In addition, due to the assignment to BI of the obligations under certain of the facility’s operating leases in March 2011, we recorded a charge of approximately  $11 million in the three months ended March 31, 2011 with respect to the lease period beyond the end of the supply agreement. This amount is recorded in Cost of sales (excludes amortization of certain acquired intangible assets presented below) in the Condensed Consolidated Statement of Income.
Other
As part of continuing efforts to improve cost efficiencies in our manufacturing operations, we also recorded certain charges aggregating  $16 million during the three months ended March 31, 2011, which are included in Other in the Condensed Consolidated Statement of Income.
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Available-for-sale investments
3 Months Ended
Mar. 31, 2011
Available-for-sale investments [Abstract]
Available-for-sale investments
6. Available-for-sale investments
The fair values of available-for-sale investments by type of security, contractual maturity and classification in the Condensed Consolidated Balance Sheets were as follows (in millions):
                               
            Gross     Gross     Estimated
    Amortized     unrealized     unrealized     fair
Type of security as of March 31, 2011   cost     gains     losses     value
U.S. Treasury securities
   $ 3,573      $ 7      $ (23 )    $ 3,557
Other government related debt securities:
                             
Obligations of U.S. government agencies and FDIC guaranteed bank debt
    1,660       13       (2 )     1,671
Foreign and other
    796       14             810
Corporate debt securities:
                             
Financial
    2,957       55       (11 )     3,001
Industrial
    3,131       72       (6 )     3,197
Other
    352       10       (1 )     361
Mortgage and asset backed securities
    1,498       4       (7 )     1,495
Money market mutual funds
    1,075                   1,075
 
                     
Total debt securities
    15,042       175       (50 )     15,167
Equity securities
    52             (4 )     48
 
                     
 
   $ 15,094      $ 175      $ (54 )    $ 15,215
 
                     
                               
            Gross     Gross     Estimated
    Amortized     unrealized     unrealized     fair
Type of security as of December 31, 2010   cost     gains     losses     value
U.S. Treasury securities
   $ 5,044      $ 50      $ (14 )    $ 5,080
Other government related debt securities:
                             
Obligations of U.S. government agencies and FDIC guaranteed bank debt
    2,158       51       (1 )     2,208
Foreign and other
    837       16       (1 )     852
Corporate debt securities:
                             
Financial
    2,252       53       (9 )     2,296
Industrial
    2,441       71       (5 )     2,507
Other
    307       10       (1 )     316
Mortgage and asset backed securities
    841       5       (5 )     841
Money market mutual funds
    3,030                   3,030
Other short-term interest bearing securities
    147                   147
 
                     
Total debt securities
    17,057       256       (36 )     17,277
Equity securities
    50             (2 )     48
 
                     
 
   $ 17,107      $ 256      $ (38 )    $ 17,325
 
                     
               
       March 31,        December 31,
Contractual maturity   2011     2010
Maturing in one year or less
   $ 1,713      $ 4,118
Maturing after one year through three years
    7,049       6,736
Maturing after three years through five years
    5,367       5,812
Maturing after five years
    1,038       611
 
         
Total debt securities
    15,167       17,277
Equity securities
    48       48
 
         
 
   $ 15,215      $ 17,325
 
         
               
       March 31,        December 31,
Classification in the Condensed Consolidated Balance Sheets   2011     2010
Cash and cash equivalents
   $ 1,266      $ 3,287
Marketable securities
    14,092       14,135
Other assets — noncurrent
    48       48
 
         
 
    15,406       17,470
Less cash
    (191 )     (145 )
 
         
 
   $ 15,215      $ 17,325
 
         
For the three months ended March 31, 2011 and 2010, realized gains totaled  $89 million and  $21 million, respectively, and realized losses totaled  $8 million and  $2 million, respectively. The cost of securities sold is based on the specific identification method.
The primary objective of our investment portfolio is to enhance overall returns in an efficient manner while maintaining safety of principal, prudent levels of liquidity and acceptable levels of risk. Our investment policy limits debt security investments to certain types of debt and money market instruments issued by institutions with primarily investment grade credit ratings and places restrictions on maturities and concentration by type and issuer.
We review our available-for-sale investments for other-than-temporary declines in fair value below our cost basis each quarter and whenever events or changes in circumstances indicate that the cost basis of an asset may not be recoverable. This evaluation is based on a number of factors, including the length of time and extent to which the fair value has been below our cost basis and adverse conditions related specifically to the security, including any changes to the credit rating of the security by a rating agency. As of March 31, 2011 and December 31, 2010, we believe the cost bases for our available-for-sale investments were recoverable in all material respects.
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Inventories
3 Months Ended
Mar. 31, 2011
Inventories [Abstract]
Inventories
7. Inventories
Inventories consisted of the following (in millions):
               
       March 31,        December 31,
    2011     2010
Raw materials
   $ 135      $ 128
Work in process
    1,445       1,382
Finished goods
    518       512
 
         
 
   $ 2,098      $ 2,022
 
         
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Financing arrangements
3 Months Ended
Mar. 31, 2011
Financing arrangements [Abstract]
Financing arrangements
8. Financing arrangements
The following table reflects the carrying values and the fixed contractual coupon rates of our borrowings under our various financing arrangements (dollar amounts in millions):
               
       March 31,        December 31,
    2011     2010
0.125% convertible notes due 2011 (2011 Convertible Notes)
   $      $ 2,488
0.375% convertible notes due 2013 (2013 Convertible Notes)
    2,246       2,213
5.85% notes due 2017 (2017 Notes)
    1,099       1,099
4.85% notes due 2014 (2014 Notes)
    1,000       1,000
5.70% notes due 2019 (2019 Notes)
    998       998
6.40% notes due 2039 (2039 Notes)
    996       996
6.375% notes due 2037 (2037 Notes)
    899       899
3.45% notes due October 2020 (October 2020 Notes)
    897       897
5.75% notes due 2040 (2040 Notes)
    696       696
4.95% notes due 2041 (2041 Notes)
    595       595
6.15% notes due 2018 (2018 Notes)
    499       499
6.90% notes due 2038 (2038 Notes)
    499       499
4.50% notes due March 2020 (March 2020 Notes)
    300       300
Other notes including our zero coupon convertible notes
    183       183
 
         
Total borrowings
    10,907       13,362
Less current portion
    (83 )     (2,488 )
 
         
Total non-current debt
   $ 10,824      $ 10,874
 
         
The holders of our zero coupon convertible notes due in 2032 have the right to put the debt to us for repayment on March 1, 2012. Accordingly the debt is classified as a current liability as of March 31, 2011.
Debt repayments
In February 2011, the 2011 Convertible Notes became due, and we repaid the  $2.5 billion aggregate principal amount. As these convertible notes were cash settleable, the debt and equity components of these notes were bifurcated and accounted for separately. The discounted carrying value of the debt component resulting from the bifurcation was accreted back to the principal amount over the period the notes were outstanding. The total aggregate amount repaid, including the amount related to the debt discount of  $643 million resulting from the bifurcation, is included in Cash flows from financing activities in the Condensed Consolidated Statements of Cash Flows.
Shelf registration statement
In March 2011, we filed a shelf registration statement with the Securities and Exchange Commission (SEC) to replace an existing shelf registration statement that was scheduled to expire in April 2011. This shelf registration allows us to issue an unspecified amount of: debt securities; common stock; preferred stock; warrants to purchase debt securities, common stock, preferred stock or depository shares; rights to purchase common stock or preferred stock; securities purchase contracts; securities purchase units; and depository shares. Under this registration statement, all of the securities available for issuance may be offered from time to time with terms to be determined at the time of issuance. This shelf registration expires in March 2014.
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Stockholders' equity
3 Months Ended
Mar. 31, 2011
Stockholders' equity [Abstract]
Stockholders' equity
9. Stockholders’ equity
Stock repurchase program
The following table is a summary of activity under our stock repurchase program (in millions):
                               
    2011     2010
    Shares     Dollars     Shares     Dollars
First quarter
         $       29.1      $ 1,684
 
                     
In December 2009, the Board of Directors authorized us to repurchase up to an additional  $5.0 billion of our common stock of which a total of  $2.2 billion remains available as of March 31, 2011. In addition, in April 2011, the Board of Directors authorized us to repurchase up to an additional  $5.0 billion of our common stock.
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Fair value measurement
3 Months Ended
Mar. 31, 2011
Fair value measurement [Abstract]
Fair value measurement
10. Fair value measurement
We use various valuation approaches in determining the fair value of our financial assets and liabilities within a hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:
         
Level 1
    Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access
 
       
Level 2
    Valuations for which all significant inputs are observable, either directly or indirectly, other than level 1 inputs
 
       
Level 3
    Valuations based on inputs that are unobservable and significant to the overall fair value measurement
The availability of observable inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level of input used that is significant to the overall fair value measurement.
The following fair value hierarchy tables present information about each major class of the Company’s financial assets and liabilities measured at fair value on a recurring basis (in millions):
                               
    Quoted prices in     Significant     Significant      
    active markets for       other observable             unobservable            
Fair value measurement   identical assets     inputs     inputs      
as of March 31, 2011 using:   (Level 1)     (Level 2)     (Level 3)                  Total             
Assets:
                             
Available-for-sale securities:
                             
U.S. Treasury securities
   $ 3,557      $      $      $ 3,557
Other government related debt securities:
                             
Obligations of U.S. government agencies and FDIC guaranteed bank debt
          1,671             1,671
Foreign and other
          810             810
Corporate debt securities:
                             
Financial
          3,001             3,001
Industrial
          3,197             3,197
Other
          361             361
Mortgage and asset backed securities
          1,495             1,495
Money market mutual funds
    1,075                   1,075
Equity securities
    48                   48
Derivatives:
                             
Foreign currency contracts
          57             57
Interest rate swap contracts
          160             160
 
                     
Total assets
   $ 4,680      $ 10,752      $      $ 15,432
 
                     
 
                             
Liabilities:
                             
Derivatives:
                             
Foreign currency contracts
   $      $ 189      $      $ 189
Interest rate swap contracts
          12             12
Contingent consideration obligations in connection with a business combination
                190       190
 
                     
Total liabilities
   $      $ 201      $ 190      $ 391
 
                     
                               
    Quoted prices in     Significant     Significant      
    active markets for       other observable             unobservable            
Fair value measurement   identical assets     inputs     inputs      
as of December 31, 2010 using:   (Level 1)     (Level 2)     (Level 3)                  Total             
Assets:
                             
Available-for-sale securities:
                             
U.S. Treasury securities
   $ 5,080      $      $      $ 5,080
Other government related debt securities:
                             
Obligations of U.S. government agencies and FDIC guaranteed bank debt
          2,208             2,208
Foreign and other
          852             852
Corporate debt securities:
                             
Financial
          2,296             2,296
Industrial
          2,507             2,507
Other
          316             316
Mortgage and asset backed securities
          841             841
Money market mutual funds
    3,030                   3,030
Other short-term interest bearing securities
          147             147
Equity securities
    48                   48
Derivatives:
                             
Foreign currency contracts
          154             154
Interest rate swap contracts
          195             195
 
                     
Total assets
   $ 8,158      $ 9,516      $      $ 17,674
 
                     
 
                             
Liabilities:
                             
Derivatives:
                             
Foreign currency contracts
   $      $ 103      $      $ 103
 
                     
Total liabilities
   $      $ 103      $      $ 103
 
                     
The fair value of our U.S. Treasury securities, money market mutual funds and equity securities are based on quoted market prices in active markets with no valuation adjustment.
Substantially all of our other government related and corporate debt securities are investment grade with maturity dates of five years or less. Our other government related debt securities portfolio is comprised of securities with a weighted average credit rating of “AAA” or equivalent by Standard and Poor’s (S&P), Moody’s Investors Services, Inc. (Moody’s) or Fitch, Inc. (Fitch), and our corporate debt securities portfolio has a weighted average credit rating of “A” or equivalent by S&P, Moody’s or Fitch. We estimate the fair value of these securities taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades and broker/dealer quotes of the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs.
Our mortgage and asset backed securities portfolio is comprised entirely of senior tranches, with a credit rating of “AAA” or equivalent by S&P, Moody’s or Fitch. We estimate the fair value of these securities taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades and broker/dealer quotes of the same or similar securities, issuer credit spreads, benchmark securities, prepayment/default projections based on historical data and other observable inputs.
We value our other short-term interest bearing securities at amortized cost which approximates fair value given their near term maturity dates.
Substantially all of our foreign currency forward and option derivatives contracts have maturities of three years or less and all are entered into with counterparties that have a minimum credit rating of “A-” or equivalent by S&P, Moody’s or Fitch. We estimate the fair value of these contracts taking into consideration valuations obtained from a third-party valuation service that utilizes an income-based industry standard valuation model for which all significant inputs are observable, either directly or indirectly. These inputs include quoted foreign currency spot rates, forward points, London Interbank Offered Rate (LIBOR) and swap curves and obligor credit default swap rates. In addition, inputs for our foreign currency option contracts also include implied volatility measures. These inputs, where applicable, are at commonly quoted intervals. As of March 31, 2011 and December 31, 2010, we had open foreign currency forward contracts with notional amounts of  $3.4 billion and  $3.2 billion, respectively, and open foreign currency option contracts with notional amounts of  $300 million and  $398 million, respectively, that were primarily Euro-based and were designated as cash flow hedges. In addition, as of March 31, 2011 and December 31, 2010, we had  $788 million and  $670 million, respectively, of open foreign currency forward contracts to reduce exposure to fluctuations in value of certain assets and liabilities denominated in foreign currencies that were primarily Euro-based and that were not designated as hedges. (See Note 11, Derivative instruments.)
Our interest rate swap contracts are entered into with counterparties that have a minimum credit rating of “A-” or equivalent by S&P, Moody’s or Fitch. We estimate the fair value of these contracts using an income-based industry standard valuation model for which all significant inputs are observable either directly or indirectly. These inputs include LIBOR and swap curves and obligor credit default swap rates. We had interest rate swap agreements with an aggregate notional amount of  $3.6 billion as of March 31, 2011 and December 31, 2010 that were designated as fair value hedges. (See Note 11, Derivative instruments.)
Contingent consideration obligations in connection with a business combination were incurred as a result of our acquisition of BioVex in March 2011. The fair value measurements of contingent consideration obligations are based on significant unobservable inputs, and accordingly, such amounts are considered Level 3 measurements. There was no material change in the fair values of these obligations from the acquisition date through March 31, 2011. For a description of the valuation methodology and related assumptions used to estimate the fair values of the contingent consideration obligations, see Note 2, Acquisitions.
There have been no transfers of assets or liabilities between the fair value measurement levels and there were no material remeasurements to fair value during the three months ended March 31, 2011 and 2010 of assets and liabilities that are not measured at fair value on a recurring basis.
Summary of the fair value of other financial instruments
Short-term assets and liabilities
The estimated fair values of cash equivalents, accounts receivable and accounts payable approximate their carrying values due to the short-term nature of these financial instruments.
Borrowings
We estimate the fair value of our convertible notes using an income-based industry standard valuation model for which all significant inputs are observable either directly or indirectly, including benchmark yields adjusted for our credit risk (Level 2). The fair values of our convertible notes exclude their equity components and represent only the liability components of these instruments as their equity components are included in Common stock and additional paid-in capital in the Condensed Consolidated Balance Sheets. We estimate the fair value of our other long-term notes taking into consideration indicative prices obtained from a third party financial institution that utilizes industry standard valuation models, including both income and market based approaches, for which all significant inputs are observable, either directly or indirectly. These inputs include reported trades and broker/dealer quotes of the same or similar securities, credit spreads, benchmark yields and other observable inputs (Level 2). The following tables present the carrying values and estimated fair values of our borrowings (in millions):
                               
    March 31, 2011     December 31, 2010
    Carrying value        Fair value        Carrying value        Fair value   
2011 Convertible Notes
   $      $      $ 2,488      $ 2,501
2013 Convertible Notes
    2,246       2,480       2,213       2,479
2017 Notes
    1,099       1,245       1,099       1,280
2014 Notes
    1,000       1,094       1,000       1,101
2019 Notes
    998       1,107       998       1,139
2039 Notes
    996       1,089       996       1,149
2037 Notes
    899       974       899       1,027
October 2020 Notes
    897       836       897       857
2040 Notes
    696       699       696       734
2041 Notes
    595       546       595       564
2018 Notes
    499       568       499       584
2038 Notes
    499       591       499       607
March 2020 Notes
    300       307       300       311
Other notes including our zero coupon debt
    183       204       183       214
 
                     
Total
   $ 10,907      $ 11,740      $ 13,362      $ 14,547
 
                     
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Derivative instruments
3 Months Ended
Mar. 31, 2011
Derivative instruments [Abstract]
Derivative instruments
11. Derivative instruments
The Company is exposed to risks related to its business operations, certain of which are managed through derivative instruments. The risks that we manage by using derivative instruments are foreign exchange rate risk and interest rate risk. We use financial instruments including foreign currency forward, foreign currency option, forward interest rate and interest rate swap contracts to reduce our risk to these exposures. We do not use derivatives for speculative trading purposes.
We recognize all of our derivative instruments as either assets or liabilities at fair value in the Condensed Consolidated Balance Sheets (see Note 10, Fair value measurement). The accounting for changes in the fair value of a derivative instrument depends on whether it has been formally designated and qualifies as part of a hedging relationship under the applicable accounting standards and, further, on the type of hedging relationship. For derivatives formally designated as hedges, we assess both at inception and quarterly thereafter, whether the hedging derivatives are highly effective in offsetting changes in either the fair value or cash flows of the hedged item. Our derivatives that are not designated and do not qualify as hedges are adjusted to fair value through current earnings.
Cash flow hedges
We are exposed to possible changes in values of certain anticipated foreign currency cash flows resulting from changes in foreign currency exchange rates, associated primarily with our international product sales denominated in Euros. Increases or decreases in the cash flows associated with our international product sales due to movements in foreign currency exchange rates are partially offset by the corresponding increases and decreases in our international operating expenses resulting from these foreign currency exchange rate movements. To further reduce our exposure to foreign currency exchange rate fluctuations on our international product sales, we enter into foreign currency forward and option contracts to hedge a portion of our projected international product sales primarily over a three-year time horizon with, at any given point in time, a higher percentage of nearer term projected product sales being hedged than successive periods. As of March 31, 2011 and December 31, 2010, we had open foreign currency forward contracts with notional amounts of  $3.4 billion and  $3.2 billion, respectively, and open foreign currency option contracts with notional amounts of  $300 million and  $398 million, respectively. These foreign currency forward and option contracts, primarily Euro-based, have been designated as cash flow hedges, and accordingly, the effective portion of the unrealized gains and losses on these contracts are reported in Accumulated Other Comprehensive Income (AOCI) in the Condensed Consolidated Balance Sheets and reclassified to earnings in the same periods during which the hedged transactions affect earnings.
In connection with the anticipated issuance of long-term fixed-rate debt, we occasionally enter into forward interest rate contracts in order to hedge the variability in cash flows due to changes in the applicable Treasury rate between the time we enter into these contracts and the time the related debt is issued. Gains and losses on such contracts, which are designated as cash flow hedges, are reported in AOCI and amortized into earnings over the lives of the associated debt issuances.
The following table reflects the effective portion of the unrealized gain/(loss) recognized in Other Comprehensive Income for our cash flow hedge contracts (in millions):
                       
            Three months ended
            March 31,
Derivatives in cash flow hedging relationships     2011     2010
Foreign currency contracts
           $ (197 )    $ 175
Forward interest rate contracts
                 
 
                 
Total
           $ (197 )    $ 175
 
                 
The following table reflects the location in the Condensed Consolidated Statements of Income and the effective portion of the loss reclassified from AOCI into earnings for our cash flow hedge contracts (in millions):
                       
            Three months ended
            March 31,
Derivatives in cash flow hedging relationships   Statements of Income location     2011     2010
Foreign currency contracts
  Product sales    $ (8 )    $ (6 )
Forward interest rate contracts
  Interest expense, net          
 
                 
Total
           $ (8 )    $ (6 )
 
                 
No portions of our cash flow hedge contracts are excluded from the assessment of hedge effectiveness and the ineffective portions of these hedging instruments were approximately  $1 million of expense and approximately  $1 million of income for the three months ended March 31, 2011 and 2010, respectively. As of March 31, 2011, the amounts expected to be reclassified from AOCI into earnings over the next 12 months are approximately  $104 million of losses on foreign currency forward and option contracts and approximately  $1 million of losses on forward interest rate contracts.
Fair value hedges
To achieve a desired mix of fixed and floating interest rate debt, we have entered into interest rate swap agreements, which qualify and have been designated as fair value hedges. The terms of these interest rate swap agreements correspond to the related hedged debt instruments and effectively convert a fixed interest rate coupon to a floating LIBOR-based coupon over the lives of the respective notes. The rates on these swaps range from LIBOR plus 0.3% to LIBOR plus 2.6%. We had interest rate swap agreements with aggregate notional amounts of  $3.6 billion as of March 31, 2011 and December 31, 2010. The interest rate swap agreements as of March 31, 2011 and December 31, 2010 were for our notes due in 2014, 2017, 2018 and 2019. For derivative instruments that are designated and qualify as a fair value hedge, the unrealized gain or loss on the derivative resulting from the change in fair value during the period as well as the offsetting unrealized loss or gain of the hedged item resulting from the change in fair value during the period attributable to the hedged risk are recognized in current earnings. For the three months ended March 31, 2011 and 2010, we included the unrealized gain on the hedged debt of  $47 million and the unrealized loss on the hedged debt of  $17 million, respectively, in the same line item, Interest expense, net in the Condensed Consolidated Statements of Income, as the offsetting unrealized loss of  $47 million and the unrealized gain of  $17 million, respectively, on the related interest rate swap agreements.
Derivatives not designated as hedges
We enter into foreign currency forward contracts to reduce our exposure to foreign currency fluctuations of certain assets and liabilities denominated in foreign currencies which are not designated as hedging transactions. These exposures are hedged on a month-to-month basis. As of March 31, 2011 and December 31, 2010, the total notional amounts of these foreign currency forward contracts, primarily Euro-based, were  $788 million and  $670 million, respectively.
The following table reflects the location in the Condensed Consolidated Statements of Income and the amount of gain/(loss) recognized in earnings for the derivative instruments not designated as hedging instruments (in millions):
                       
            Three months ended
            March 31,
Derivatives not designated as hedging instruments   Statements of Income location     2011     2010
Foreign currency contracts
  Interest and other income, net    $ (51 )    $ 23
 
                 
The following tables reflect the fair values of both derivatives designated as hedging instruments and not designated as hedging instruments included in the Condensed Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010 (in millions):
                               
    Derivative assets     Derivative liabilities
March 31, 2011   Balance Sheet location     Fair value     Balance Sheet location     Fair value
Derivatives designated as hedging instruments:
                             
Interest rate swap contracts
 
Other current assets/Other non-current assets
   $ 160    
Accrued liabilities/Other non-current liabilities
   $ 12
 
                             
Foreign currency contracts
 
Other current assets/Other non-current assets
    57    
Accrued liabilities/Other non-current liabilities
    189
 
                             
Total derivatives designated as hedging instruments
            217               201
 
                         
 
                             
Derivatives not designated as hedging instruments:
                             
Foreign currency contracts
 
Other current assets
       
Accrued liabilities
   
 
                         
 
                             
Total derivatives not designated as hedging instruments
                         
 
                         
Total derivatives
           $ 217            $ 201
 
                       
                               
    Derivative assets     Derivative liabilities
December 31, 2010   Balance Sheet location     Fair value     Balance Sheet location     Fair value
Derivatives designated as hedging instruments:
                             
 
                             
Interest rate swap contracts
 
Other current assets/Other non-current assets
   $ 195    
Accrued liabilities/Other non-current liabilities
   $
 
                             
Foreign currency contracts
 
Other current assets/Other non-current assets
    154    
Accrued liabilities/Other non-current liabilities
    103
 
                         
 
                             
Total derivatives designated as hedging instruments
            349               103
 
                         
Derivatives not designated as hedging instruments:
                             
 
                             
Foreign currency contracts
 
Other current assets
       
Accrued liabilities
   
 
                         
 
                             
Total derivatives not designated as hedging instruments
                         
 
                         
Total derivatives
           $ 349              $ 103
 
                         
Our derivative contracts that were in a liability position as of March 31, 2011 contain certain credit risk related contingent provisions that are triggered if (i) we were to undergo a change in control and (ii) our or the surviving entity’s creditworthiness deteriorates, which is generally defined as having either a credit rating that is below investment grade or a materially weaker creditworthiness after the change in control. If these events were to occur, the counterparties would have the right, but not the obligation, to close the contracts under early termination provisions. In such circumstances, the counterparties could request immediate settlement of these contracts for amounts that approximate the then current fair values of the contracts.
The cash flow effects of our derivatives contracts are included within Net cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows.
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Contingencies and commitments
3 Months Ended
Mar. 31, 2011
Contingencies and commitments [Abstract]
Contingencies and commitments
12. Contingencies and commitments
In the ordinary course of business, we are involved in various legal proceedings and other matters, including those discussed in this Note, which are complex in nature and have outcomes that are difficult to predict. We record accruals for such contingencies to the extent that we conclude that it is probable that a liability will be incurred and the amount of the related loss can be reasonably estimated. While it is not possible to accurately predict or determine the eventual outcome of these items, one or more of these items currently pending could have a material adverse effect on our consolidated results of operations, financial position or cash flows.
Certain of our legal proceedings and other matters are discussed below:
Roche U.S. International Trade Commission Complaint
On March 11, 2011, the U.S. International Trade Commission issued an order to show cause why the investigation should not be terminated without a determination of violation or by way of consent order in view of the resolution of the U.S. District Court for the District of Massachusetts proceedings. In response, on April 21, 2011, the parties filed a joint response requesting termination of the investigation on the basis of a proposed Consent Order and Stipulation.
Teva Matters
Sensipar® Abbreviated New Drug Application Litigation
On April 19, 2011, Teva Pharmaceuticals USA, Inc., Teva Pharmaceutical Industries Ltd. and Barr Laboratories, Inc. filed an unopposed motion for voluntary dismissal of their appeal. On April 20, 2011, the U.S. Court of Appeals for the Federal Circuit granted the motion and dismissed the appeal.
Simonian v. Amgen Inc.
On April 12, 2011, Amgen and Mr. Simonian reached a settlement and the U.S. District Court for the Northern District of Illinois dismissed the case with prejudice.
Average Wholesale Price Litigation
Plaintiffs continue to file for extensions for the final approval hearing of the Track II settlement due to continued deficiencies in executing notices, and the final approval hearing is currently scheduled for June 13, 2011.
Birch v. Sharer, et al.
On February 24, 2011, plaintiff filed a notice of appeal with the California State Appellate Court. The schedule for briefing the appeal has not yet been set.
Third-Party Payers Litigation
No appeal was filed with the U.S. Supreme Court by the plaintiffs and the deadline for doing so has passed.
Qui Tam Actions
On April 26, 2011, the Massachusetts District Court changed the trial date to be set for the running trial list starting on October 3, 2011.
On February 11, 2011, the states of New York, Massachusetts, California, Illinois and Indiana, on behalf of the states of Georgia and New Mexico, and the relator filed reply briefs and oral argument was heard by the U.S. Court of Appeals for the First Circuit on April 6, 2011. On April 11, 2011, the U.S. District Court for the District of Massachusetts heard summary judgment arguments on the fourth amended complaint from Amgen, Integrated Nephrology Network and the relator.
Other
In March 2011, the U.S. Attorney’s Office of the Western District of Washington informed Amgen that the subject matter of its investigation would be transferred to the U.S. Attorney’s Office of the Eastern District of New York.
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Subsequent events
3 Months Ended
Mar. 31, 2011
Subsequent events [Abstract]
Subsequent events
13. Subsequent events
In April 2011, we announced our acquisition of Laboratorio Quimico Farmaceutico Bergamo Ltda (Bergamo), a privately-held Brazilian pharmaceutical company, for approximately  $215 million in cash. Bergamo is a leading supplier of medicines to the hospital sector in Brazil with capabilities in oncology medicines. The company has approximately 400 staff, a portfolio of marketed products and manufacturing facilities in the state of Sao Paulo, Brazil. Upon its acquisition, Bergamo became a wholly owned subsidiary of Amgen. This acquisition will provide us with direct access to the Brazilian pharmaceutical market. This transaction will be accounted for as a business combination and included in our condensed consolidated financial statements commencing on the acquisition date.
Pro forma supplemental condensed consolidated financial information for Amgen including the results of Bergamo assuming an acquisition date of January 1, 2011 and 2010 is not provided as the impact to our condensed consolidated results of operations would not be material, either individually or when aggregated with the acquisition of BioVex (see Note 2, Acquisitions).
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Summary of significant accounting policies (Policies)
3 Months Ended
Mar. 31, 2011
Summary of significant accounting policies (Policies) [Abstract]
Business
Business
Amgen Inc. (including its subsidiaries, referred to as “Amgen,” “the Company,” “we,” “our” or “us”) is a global biotechnology medicines company that discovers, develops, manufactures and markets medicines for grievous illnesses. We concentrate on innovating novel medicines based on advances in cellular and molecular biology and we operate in one business segment, human therapeutics.
Basis of presentation
Basis of presentation
The financial information for the three months ended March 31, 2011 and 2010 is unaudited but includes all adjustments (consisting of only normal recurring adjustments, unless otherwise indicated), which Amgen considers necessary for a fair presentation of its condensed consolidated results of operations for those periods. Interim results are not necessarily indicative of results for the full fiscal year.
The condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2010.
Principles of consolidation
Principles of consolidation
The condensed consolidated financial statements include the accounts of Amgen as well as its wholly owned subsidiaries. We do not have any significant interests in any variable interest entities. All material intercompany transactions and balances have been eliminated in consolidation.
Use of estimates
Use of estimates
The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results may differ from those estimates.
Revenue recognition for arrangements with multiple - deliverables
Revenue recognition for arrangements with multiple-deliverables
From time to time, we enter into arrangements for the research and development (R&D), manufacture and/or commercialization of products and product candidates. These arrangements may require us to deliver various rights, services and/or goods across the entire life cycle of a product or product candidate, including (i) intellectual property rights/license, (ii) R&D services, (iii) manufacturing services and/or (iv) commercialization services. The underlying terms of these arrangements generally provide for consideration to Amgen in the form of non-refundable upfront license payments, R&D and commercial performance milestone payments, cost sharing and/or royalty payments.
In October 2009, the Financial Accounting Standards Board issued a new accounting standard which amends the guidance on the accounting for arrangements involving the delivery of more than one element. This standard addresses the determination of the unit(s) of accounting for multiple-element arrangements and how the arrangement’s consideration should be allocated to each unit of accounting. The Company adopted this new accounting standard on a prospective basis for all multiple-element arrangements entered into on or after January 1, 2011 and for any multiple-element arrangements that were entered into prior to January 1, 2011 but materially modified on or after January 1, 2011.
Pursuant to the new standard, each required deliverable is evaluated to determine if it qualifies as a separate unit of accounting. For Amgen this determination is generally based on whether the deliverable has “stand-alone value” to the customer. The arrangement’s consideration is then allocated to each separate unit of accounting based on the relative selling price of each deliverable. The estimated selling price of each deliverable is determined using the following hierarchy of values: (i) vendor-specific objective evidence of fair value, (ii) third-party evidence of selling price, and (iii) best estimate of selling price (BESP). The BESP reflects our best estimate of what the selling price would be if the deliverable was regularly sold by us on a stand-alone basis. We expect, in general, to use the BESP for allocating consideration to each deliverable. In general, the consideration allocated to each unit of accounting is then recognized as the related goods or services are delivered limited to the consideration that is not contingent upon future deliverables.
For multiple-element arrangements entered into prior to January 1, 2011 and not materially modified thereafter, we continue to apply our prior accounting policy with respect to such arrangements. Under this policy, in general, revenue from non-refundable, upfront fees related to intellectual property rights/licenses where we have continuing involvement is recognized ratably over the estimated period of ongoing involvement because there is no objective and reliable evidence of fair value for any undelivered item to allow the delivered item to be considered a separate unit of accounting. This requirement with respect to the fair value of undelivered items was eliminated in the newly issued accounting standard. In general, the consideration with respect to the other deliverables is recognized when the goods or services are delivered.
Under all of our multiple-element arrangements, consideration associated with at risk substantive performance milestones is recognized as revenue upon the achievement of the related milestone, as defined in the respective agreements.
The impact of adopting this new accounting standard is dependent on the terms and conditions of any future arrangement that we may enter into that includes multiple-deliverables, however, its adoption is not expected to have a material impact on our consolidated results of operations or financial position. The primary impact of adopting the new accounting standard is expected to be the earlier recognition of revenue associated with delivering rights to the underlying intellectual property.
The adoption of this accounting standard did not have a material impact on our condensed consolidated results of operations or financial position for the three months ended March 31, 2011. Our consolidated results of operations or financial position for 2010 also would not have been materially impacted if the accounting standard had been adopted on January 1, 2010.
Inventories
Inventories
Inventories are stated at the lower of cost or market. Cost, which includes amounts related to materials, labor and overhead, is determined in a manner which approximates the first-in, first-out method. Cost also includes the impact of the recently enacted Puerto Rico excise tax related to our manufacturing operations in Puerto Rico. The Company capitalizes inventories produced in preparation for product launches when the related product candidates are considered to have a high probability of regulatory approval and the related costs are expected to be recoverable through the commercialization of the product. See Note 7, Inventories.
Property, plant and equipment, net
Property, plant and equipment, net
Property, plant and equipment is recorded at historical cost, net of accumulated depreciation and amortization of  $5.3 billion and  $5.2 billion as of March 31, 2011 and December 31, 2010, respectively.
Business Combinations
Business combinations
Business combinations are accounted for using the acquisition method of accounting. Under the acquisition method, assets acquired, including in-process research and development (IPR&D) projects, and liabilities assumed are recorded at their respective fair values as of the acquisition date in our condensed consolidated financial statements. The excess of the acquisition date fair value of consideration over the fair value of the net assets acquired is recorded as goodwill. Contingent consideration obligations incurred in connection with a business combination are recorded at their fair values on the acquisition date. We revalue these obligations each subsequent reporting period until the related contingencies are resolved and record changes in their fair values in earnings. See Note 2, Acquisitions.
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Acquisitions (Tables) (BioVex Group Inc [Member])
3 Months Ended
Mar. 31, 2011
Business Acquisition [Line Items]
Aggregate acquisition date consideration to acquire an entity
       
Cash paid to former shareholders of BioVex
   $ 407
Fair value of contingent consideration obligations
    190
 
   
Total consideration
   $ 597
 
   
Allocation of the total consideration to the acquisition date fair values of assets acquired and liabilities assumed
       
Intangible assets — IPR&D
   $ 675
Goodwill
    170
Deferred tax liabilities
    (246 )
Other assets and liabilities acquired, net
    (2 )
 
   
Total consideration
   $ 597
 
   
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Earnings per share (Tables)
3 Months Ended
Mar. 31, 2011
Earnings per share (Tables) [Abstract]
Computation for basic and diluted EPS
               
    Three months ended
    March 31,
    2011     2010
Income (Numerator):
             
Net income for basic and diluted EPS
   $ 1,125      $ 1,167
 
         
 
             
Shares (Denominator):
             
Weighted-average shares for basic EPS
    933       982
Effect of dilutive securities
    8       6
 
         
Weighted-average shares for diluted EPS
    941       988
 
         
 
             
Basic EPS
   $ 1.21      $ 1.19
Diluted EPS
   $ 1.20      $ 1.18
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Available-for-sale investments (Tables)
3 Months Ended
Mar. 31, 2011
Available-for-sale investments (Tables) [Abstract]
Fair values of available-for-sale investments by type of security
                               
            Gross     Gross     Estimated
    Amortized     unrealized     unrealized     fair
Type of security as of March 31, 2011   cost     gains     losses     value
U.S. Treasury securities
   $ 3,573      $ 7      $ (23 )    $ 3,557
Other government related debt securities:
                             
Obligations of U.S. government agencies and FDIC guaranteed bank debt
    1,660       13       (2 )     1,671
Foreign and other
    796       14             810
Corporate debt securities:
                             
Financial
    2,957       55       (11 )     3,001
Industrial
    3,131       72       (6 )     3,197
Other
    352       10       (1 )     361
Mortgage and asset backed securities
    1,498       4       (7 )     1,495
Money market mutual funds
    1,075                   1,075
 
                     
Total debt securities
    15,042       175       (50 )     15,167
Equity securities
    52             (4 )     48
 
                     
 
   $ 15,094      $ 175      $ (54 )    $ 15,215
 
                     
                               
            Gross     Gross     Estimated
    Amortized     unrealized     unrealized     fair
Type of security as of December 31, 2010   cost     gains     losses     value
U.S. Treasury securities
   $ 5,044      $ 50      $ (14 )    $ 5,080
Other government related debt securities:
                             
Obligations of U.S. government agencies and FDIC guaranteed bank debt
    2,158       51       (1 )     2,208
Foreign and other
    837       16       (1 )     852
Corporate debt securities:
                             
Financial
    2,252       53       (9 )     2,296
Industrial
    2,441       71       (5 )     2,507
Other
    307       10       (1 )     316
Mortgage and asset backed securities
    841       5       (5 )     841
Money market mutual funds
    3,030                   3,030
Other short-term interest bearing securities
    147                   147
 
                     
Total debt securities
    17,057       256       (36 )     17,277
Equity securities
    50             (2 )     48
 
                     
 
   $ 17,107      $ 256      $ (38 )    $ 17,325
 
                     
Fair values of available-for-sale investments by contractual maturity
               
       March 31,        December 31,
Contractual maturity   2011     2010
Maturing in one year or less
   $ 1,713      $ 4,118
Maturing after one year through three years
    7,049       6,736
Maturing after three years through five years
    5,367       5,812
Maturing after five years
    1,038       611
 
         
Total debt securities
    15,167       17,277
Equity securities
    48       48
 
         
 
   $ 15,215      $ 17,325
 
         
Fair values of available-for-sale investments by classification in the Consolidated Balance Sheets
               
       March 31,        December 31,
Classification in the Condensed Consolidated Balance Sheets   2011     2010
Cash and cash equivalents
   $ 1,266      $ 3,287
Marketable securities
    14,092       14,135
Other assets — noncurrent
    48       48
 
         
 
    15,406       17,470
Less cash
    (191 )     (145 )
 
         
 
   $ 15,215      $ 17,325
 
         
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Inventories (Tables)
3 Months Ended
Mar. 31, 2011
Inventories (Tables) [Abstract]
Inventories
               
       March 31,        December 31,
    2011     2010
Raw materials
   $ 135      $ 128
Work in process
    1,445       1,382
Finished goods
    518       512
 
         
 
   $ 2,098      $ 2,022
 
         
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Financing arrangements (Tables)
3 Months Ended
Mar. 31, 2011
Financing arrangements (Tables) [Abstract]
Carrying values and the fixed contractual coupon rates of borrowing under various financing arrangements
               
       March 31,        December 31,
    2011     2010
0.125% convertible notes due 2011 (2011 Convertible Notes)
   $      $ 2,488
0.375% convertible notes due 2013 (2013 Convertible Notes)
    2,246       2,213
5.85% notes due 2017 (2017 Notes)
    1,099       1,099
4.85% notes due 2014 (2014 Notes)
    1,000       1,000
5.70% notes due 2019 (2019 Notes)
    998       998
6.40% notes due 2039 (2039 Notes)
    996       996
6.375% notes due 2037 (2037 Notes)
    899       899
3.45% notes due October 2020 (October 2020 Notes)
    897       897
5.75% notes due 2040 (2040 Notes)
    696       696
4.95% notes due 2041 (2041 Notes)
    595       595
6.15% notes due 2018 (2018 Notes)
    499       499
6.90% notes due 2038 (2038 Notes)
    499       499
4.50% notes due March 2020 (March 2020 Notes)
    300       300
Other notes including our zero coupon convertible notes
    183       183
 
         
Total borrowings
    10,907       13,362
Less current portion
    (83 )     (2,488 )
 
         
Total non-current debt
   $ 10,824      $ 10,874
 
         
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Stockholders' equity (Tables)
3 Months Ended
Mar. 31, 2011
Stockholder's Equity (Tables) [Abstract]
Summary of activity under a stock repurchase program
                               
    2011     2010
    Shares     Dollars     Shares     Dollars
First quarter
         $       29.1      $ 1,684
 
                     
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Fair value measurement (Tables)
3 Months Ended
Mar. 31, 2011
Fair value measurement (Tables) [Abstract]
Information about each major class of the companys' financial assets and liabilities measured at fair value on a recurring basis
                               
    Quoted prices in     Significant     Significant      
    active markets for       other observable             unobservable            
Fair value measurement   identical assets     inputs     inputs      
as of March 31, 2011 using:   (Level 1)     (Level 2)     (Level 3)                  Total             
Assets:
                             
Available-for-sale securities:
                             
U.S. Treasury securities
   $ 3,557      $      $      $ 3,557
Other government related debt securities:
                             
Obligations of U.S. government agencies and FDIC guaranteed bank debt
          1,671             1,671
Foreign and other
          810             810
Corporate debt securities:
                             
Financial
          3,001             3,001
Industrial
          3,197             3,197
Other
          361             361
Mortgage and asset backed securities
          1,495             1,495
Money market mutual funds
    1,075                   1,075
Equity securities
    48                   48
Derivatives:
                             
Foreign currency contracts
          57             57
Interest rate swap contracts
          160             160
 
                     
Total assets
   $ 4,680      $ 10,752      $      $ 15,432
 
                     
 
                             
Liabilities:
                             
Derivatives:
                             
Foreign currency contracts
   $      $ 189      $      $ 189
Interest rate swap contracts
          12             12
Contingent consideration obligations in connection with a business combination
                190       190
 
                     
Total liabilities
   $      $ 201      $ 190      $ 391
 
                     
                               
    Quoted prices in     Significant     Significant      
    active markets for       other observable             unobservable            
Fair value measurement   identical assets     inputs     inputs      
as of December 31, 2010 using:   (Level 1)     (Level 2)     (Level 3)                  Total             
Assets:
                             
Available-for-sale securities:
                             
U.S. Treasury securities
   $ 5,080      $      $      $ 5,080
Other government related debt securities:
                             
Obligations of U.S. government agencies and FDIC guaranteed bank debt
          2,208             2,208
Foreign and other
          852             852
Corporate debt securities:
                             
Financial
          2,296             2,296
Industrial
          2,507             2,507
Other
          316             316
Mortgage and asset backed securities
          841             841
Money market mutual funds
    3,030                   3,030
Other short-term interest bearing securities
          147             147
Equity securities
    48                   48
Derivatives:
                             
Foreign currency contracts
          154             154
Interest rate swap contracts
          195             195
 
                     
Total assets
   $ 8,158      $ 9,516      $      $ 17,674
 
                     
 
                             
Liabilities:
                             
Derivatives:
                             
Foreign currency contracts
   $      $ 103      $      $ 103
 
                     
Total liabilities
   $      $ 103      $      $ 103
 
                     
Carrying values and estimated fair values of borrowings
                               
    March 31, 2011     December 31, 2010
    Carrying value        Fair value        Carrying value        Fair value   
2011 Convertible Notes
   $      $      $ 2,488      $ 2,501
2013 Convertible Notes
    2,246       2,480       2,213       2,479
2017 Notes
    1,099       1,245       1,099       1,280
2014 Notes
    1,000       1,094       1,000       1,101
2019 Notes
    998       1,107       998       1,139
2039 Notes
    996       1,089       996       1,149
2037 Notes
    899       974       899       1,027
October 2020 Notes
    897       836       897       857
2040 Notes
    696       699       696       734
2041 Notes
    595       546       595       564
2018 Notes
    499       568       499       584
2038 Notes
    499       591       499       607
March 2020 Notes
    300       307       300       311
Other notes including our zero coupon debt
    183       204       183       214
 
                     
Total
   $ 10,907      $ 11,740      $ 13,362      $ 14,547
 
                     
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Derivative instruments (Tables)
3 Months Ended
Mar. 31, 2011
Derivative instruments (Tables) [Abstract]
Effective portion of the unrealized gain/(loss) recognized in Other Comprehensive Income for our cash flow hedge contracts
                       
            Three months ended
            March 31,
Derivatives in cash flow hedging relationships     2011     2010
Foreign currency contracts
           $ (197 )    $ 175
Forward interest rate contracts
                 
 
                 
Total
           $ (197 )    $ 175
 
                 
Location in the Consolidated Statements of Income and the effective portion of the gain/(loss) reclassified from Accumulated Other Comprehensive Income into earnings for our cash flow hedge contracts
                       
            Three months ended
            March 31,
Derivatives in cash flow hedging relationships   Statements of Income location     2011     2010
Foreign currency contracts
  Product sales    $ (8 )    $ (6 )
Forward interest rate contracts
  Interest expense, net          
 
                 
Total
           $ (8 )    $ (6 )
 
                 
Location in the Consolidated Statements of Income and the amount of gain/(loss) recognized in earnings for the derivative instruments not designated as hedging instruments
                       
            Three months ended
            March 31,
Derivatives not designated as hedging instruments   Statements of Income location     2011     2010
Foreign currency contracts
  Interest and other income, net    $ (51 )    $ 23
 
                 
Fair values of both derivatives designated as hedging instruments and not designated as hedging instruments included in Consolidated Balance Sheets
                               
    Derivative assets     Derivative liabilities
March 31, 2011   Balance Sheet location     Fair value     Balance Sheet location     Fair value
Derivatives designated as hedging instruments:
                             
Interest rate swap contracts
 
Other current assets/Other non-current assets
   $ 160    
Accrued liabilities/Other non-current liabilities
   $ 12
 
                             
Foreign currency contracts
 
Other current assets/Other non-current assets
    57    
Accrued liabilities/Other non-current liabilities
    189
 
                             
Total derivatives designated as hedging instruments
            217               201
 
                         
 
                             
Derivatives not designated as hedging instruments:
                             
Foreign currency contracts
 
Other current assets
       
Accrued liabilities
   
 
                         
 
                             
Total derivatives not designated as hedging instruments
                         
 
                         
Total derivatives
           $ 217            $ 201
 
                       
                               
    Derivative assets     Derivative liabilities
December 31, 2010   Balance Sheet location     Fair value     Balance Sheet location     Fair value
Derivatives designated as hedging instruments:
                             
 
                             
Interest rate swap contracts
 
Other current assets/Other non-current assets
   $ 195    
Accrued liabilities/Other non-current liabilities
   $
 
                             
Foreign currency contracts
 
Other current assets/Other non-current assets
    154    
Accrued liabilities/Other non-current liabilities
    103
 
                         
 
                             
Total derivatives designated as hedging instruments
            349               103
 
                         
Derivatives not designated as hedging instruments:
                             
 
                             
Foreign currency contracts
 
Other current assets
       
Accrued liabilities
   
 
                         
 
                             
Total derivatives not designated as hedging instruments
                         
 
                         
Total derivatives
           $ 349              $ 103
 
                         
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Summary of significant accounting policies (Details) (USD  $)
In Billions
Mar. 31, 2011
Dec. 31, 2010
Summary of significant accounting policies (Textuals) [Abstract]
Accumulated depreciation and amortization on property, plant and equipment  $ 5.3  $ 5.2
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Acquisitions (Details) (BioVex Group Inc [Member], USD  $)
In Millions
Mar. 04, 2011
Aggregate acquisition date consideration to acquire an entity
Cash paid to former shareholders of acquired entity  $ 407
Fair value of contingent consideration obligations 190
Total consideration  $ 597
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Acquisitions (Details 1) (BioVex Group Inc [Member], USD  $)
In Millions
Mar. 04, 2011
Allocation of total consideration to the acquisition date fair values of assets acquired and liabilities assumed
Intangible assets - in process research and development  $ 675
Goodwill 170
Deferred tax liabilities (246)
Other assets and liabilities acquired, net (2)
Total consideration  $ 597
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Acquisitions (Details Textuals) (BioVex Group Inc [Member], USD  $)
In Millions, unless otherwise specified
Mar. 04, 2011
Acquisitions (Textuals) [Abstract]
Payments to employees of acquired entity to settle unvested employee options  $ 7
Contingent consideration obligations 575
Estimated aggregate fair value of the contingent consideration obligations 190
Discount rate used to estimate fair value of acquired in process research and development 11.00%
Goodwill on acquisition  $ 170
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Income taxes (Details) (USD  $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2011
Income taxes (Textuals) [Abstract]
Effective tax rate for the period excluding the impact of the tax credits associated with the new Puerto Rico excise tax 18.80%
Increase in gross amount of unrecognized tax benefits for period  $ 72
Decrease in gross amount of unrecognized tax benefits for period  $ 201
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Earnings per share (Details) (USD  $)
In Millions, except Per Share data
3 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Income (Numerator):
Net income for basic and diluted Earnings Per Share  $ 1,125  $ 1,167
Shares (Denominator):
Weighted-average shares for basic Earnings Per Share 933 982
Effect of dilutive securities 8 6
Weighted-average shares for diluted Earnings Per Share 941 988
Basic Earnings Per Share  $ 1.21  $ 1.19
Diluted Earnings Per Share  $ 1.2  $ 1.18
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Earnings per share (Details Textuals)
In Millions
3 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Earnings per share (Textuals) [Abstract]
Antidilutive securities excluded from computation of diluted earnings per share, amount 39 40
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Cost savings initiatives (Details) (Optimization of Manufacturing Network [Member], USD  $)
In Millions
3 Months Ended 12 Months Ended 3 Months Ended
Mar. 31, 2011
Other charges [Member]
Dec. 31, 2010
Other charges [Member]
Asset Impairment Charges [Member]
Mar. 31, 2011
Dec. 31, 2010
Cost savings initiatives (Textuals) [Abstract]
Impairment of fixed assets  $ 118
Carrying value of remaining assets 133
Incremental depreciation included in cost of sales 10
Charge related to lease period beyond period of supply agreement 11
Other charges related to cost efficiencies  $ 16
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Available-for-sale investments (Details) (USD  $)
In Millions
3 Months Ended 12 Months Ended
Mar. 31, 2011
Dec. 31, 2010
Fair values of available-for-sale investments by type of security
Amortized cost  $ 15,094  $ 17,107
Gross unrealized gains 175 256
Gross unrealized losses (54) (38)
Estimated fair value 15,215 17,325
US Treasury securities [Member]
Fair values of available-for-sale investments by type of security
Amortized cost 3,573 5,044
Gross unrealized gains 7 50
Gross unrealized losses (23) (14)
Estimated fair value 3,557 5,080
Other government related debt securities - Obligations of U.S. government agencies and FDIC guaranteed bank debt [Member]
Fair values of available-for-sale investments by type of security
Amortized cost 1,660 2,158
Gross unrealized gains 13 51
Gross unrealized losses (2) (1)
Estimated fair value 1,671 2,208
Other government related debt securities - Foreign and other [Member]
Fair values of available-for-sale investments by type of security
Amortized cost 796 837
Gross unrealized gains 14 16
Gross unrealized losses 0 (1)
Estimated fair value 810 852
Corporate debt securities - Financial [Member]
Fair values of available-for-sale investments by type of security
Amortized cost 2,957 2,252
Gross unrealized gains 55 53
Gross unrealized losses (11) (9)
Estimated fair value 3,001 2,296
Corporate debt securities - Industrial [Member]
Fair values of available-for-sale investments by type of security
Amortized cost 3,131 2,441
Gross unrealized gains 72 71
Gross unrealized losses (6) (5)
Estimated fair value 3,197 2,507
Corporate debt securities - Other [Member]
Fair values of available-for-sale investments by type of security
Amortized cost 352 307
Gross unrealized gains 10 10
Gross unrealized losses (1) (1)
Estimated fair value 361 316
Mortgage and asset backed securities [Member]
Fair values of available-for-sale investments by type of security
Amortized cost 1,498 841
Gross unrealized gains 4 5
Gross unrealized losses (7) (5)
Estimated fair value 1,495 841
Money market mutual funds [Member]
Fair values of available-for-sale investments by type of security
Amortized cost 1,075 3,030
Gross unrealized gains 0 0
Gross unrealized losses 0 0
Estimated fair value 1,075 3,030
Other short-term interest bearing securities [Member]
Fair values of available-for-sale investments by type of security
Amortized cost 147
Gross unrealized gains 0
Gross unrealized losses 0
Estimated fair value 147
Total debt securities [Member]
Fair values of available-for-sale investments by type of security
Amortized cost 15,042 17,057
Gross unrealized gains 175 256
Gross unrealized losses (50) (36)
Estimated fair value 15,167 17,277
Equity securities [Member]
Fair values of available-for-sale investments by type of security
Amortized cost 52 50
Gross unrealized gains 0 0
Gross unrealized losses (4) (2)
Estimated fair value  $ 48  $ 48
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Available-for-sale investments (Details 1) (USD  $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Fair values of available-for-sale investments by contractual maturity
Maturing in one year or less  $ 1,713  $ 4,118
Maturing after one year through three years 7,049 6,736
Maturing after three years through five years 5,367 5,812
Maturing after five years 1,038 611
Total 15,215 17,325
Total debt securities [Member]
Fair values of available-for-sale investments by contractual maturity
Total 15,167 17,277
Equity securities [Member]
Fair values of available-for-sale investments by contractual maturity
Total  $ 48  $ 48
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Available-for-sale investments (Details 2) (USD  $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Mar. 31, 2010
Dec. 31, 2009
Fair values of available-for-sale investments by classification in the Consolidated Balance Sheets
Cash and cash equivalents  $ 1,266  $ 3,287  $ 2,266  $ 2,884
Marketable securities 14,092 14,135
Other assets - noncurrent 48 48
Total including cash 15,406 17,470
Less cash (191) (145)
Total  $ 15,215  $ 17,325
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Available-for-sale investments (Details Textuals) (USD  $)
In Millions
3 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Available-for-sale securities (Textuals) [Abstract]
Total realized gains  $ 89  $ 21
Total realized losses  $ 8  $ 2
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Inventories (Details) (USD  $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Inventories
Raw materials  $ 135  $ 128
Work in process 1,445 1,382
Finished goods 518 512
Inventories  $ 2,098  $ 2,022
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Financing arrangements (Details) (USD  $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Carrying value of long-term borrowings
Convertible notes current  $ 83  $ 2,488
Convertible notes 2,246 2,296
Notes payable 8,578 8,578
Other notes including our zero coupon convertible notes 183 183
Total borrowings 10,907 13,362
Less current portion (83) (2,488)
Total non-current debt 10,824 10,874
0.125% convertible notes due 2011 (2011 Convertible notes) [Member]
Carrying value of long-term borrowings
Convertible notes current 0 2,488
Less current portion 0 (2,488)
0.375% convertible notes due 2013 (2013 Convertible notes) [Member]
Carrying value of long-term borrowings
Convertible notes 2,246 2,213
5.85% notes due 2017 (2017 Notes) [Member]
Carrying value of long-term borrowings
Notes payable 1,099 1,099
4.85% notes due 2014 (2014 Notes) [Member]
Carrying value of long-term borrowings
Notes payable 1,000 1,000
5.70% notes due 2019 (2019 Notes) [Member]
Carrying value of long-term borrowings
Notes payable 998 998
6.40% notes due 2039 (2039 Notes) [Member]
Carrying value of long-term borrowings
Notes payable 996 996
6.375% notes due 2037 (2037 Notes) [Member]
Carrying value of long-term borrowings
Notes payable 899 899
3.45% notes due October 2020 (October 2020 Notes) [Member]
Carrying value of long-term borrowings
Notes payable 897 897
5.75% notes due 2040 (2040 Notes) [Member]
Carrying value of long-term borrowings
Notes payable 696 696
4.95% notes due 2041 (2041 Notes) [Member]
Carrying value of long-term borrowings
Notes payable 595 595
6.15% notes due 2018 (2018 Notes) [Member]
Carrying value of long-term borrowings
Notes payable 499 499
6.90% notes due 2038 (2038 Notes) [Member]
Carrying value of long-term borrowings
Notes payable 499 499
4.50% notes due March 2020 (March 2020 Notes) [Member]
Carrying value of long-term borrowings
Notes payable  $ 300  $ 300
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Financing arrangements (Details Textuals) (USD  $)
In Millions, unless otherwise specified
3 Months Ended 3 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Mar. 31, 2011
5.85% notes due 2017 (2017 Notes) [Member]
Dec. 31, 2010
5.85% notes due 2017 (2017 Notes) [Member]
Mar. 31, 2011
0.125% convertible notes due 2011 (2011 Convertible notes) [Member]
Dec. 31, 2010
0.125% convertible notes due 2011 (2011 Convertible notes) [Member]
Mar. 31, 2011
0.375% convertible notes due 2013 (2013 Convertible notes) [Member]
Dec. 31, 2010
0.375% convertible notes due 2013 (2013 Convertible notes) [Member]
Mar. 31, 2011
4.85% notes due 2014 (2014 Notes) [Member]
Dec. 31, 2010
4.85% notes due 2014 (2014 Notes) [Member]
Mar. 31, 2011
5.70% notes due 2019 (2019 Notes) [Member]
Dec. 31, 2010
5.70% notes due 2019 (2019 Notes) [Member]
Mar. 31, 2011
6.15% notes due 2018 (2018 Notes) [Member]
Dec. 31, 2010
6.15% notes due 2018 (2018 Notes) [Member]
Mar. 31, 2011
6.375% notes due 2037 (2037 Notes) [Member]
Dec. 31, 2010
6.375% notes due 2037 (2037 Notes) [Member]
Mar. 31, 2011
4.50% notes due March 2020 (March 2020 Notes) [Member]
Dec. 31, 2010
4.50% notes due March 2020 (March 2020 Notes) [Member]
Mar. 31, 2011
6.90% notes due 2038 (2038 Notes) [Member]
Dec. 31, 2010
6.90% notes due 2038 (2038 Notes) [Member]
Mar. 31, 2011
5.75% notes due 2040 (2040 Notes) [Member]
Dec. 31, 2010
5.75% notes due 2040 (2040 Notes) [Member]
Mar. 31, 2011
6.40% notes due 2039 (2039 Notes) [Member]
Dec. 31, 2010
6.40% notes due 2039 (2039 Notes) [Member]
Mar. 31, 2011
3.45% notes due October 2020 (October 2020 Notes) [Member]
Dec. 31, 2010
3.45% notes due October 2020 (October 2020 Notes) [Member]
Mar. 31, 2011
4.95% notes due 2041 (2041 Notes) [Member]
Dec. 31, 2010
4.95% notes due 2041 (2041 Notes) [Member]
Financing arrangements (Textuals) [Abstract]
Stated contractual interest rate on note 5.85% 5.85% 0.13% 0.38% 0.38% 4.85% 4.85% 5.70% 5.70% 6.15% 6.15% 6.38% 6.38% 4.50% 4.50% 6.90% 6.90% 5.75% 5.75% 6.40% 6.40% 3.45% 3.45% 4.95% 4.95%
Repayment of debt  $ 2,500  $ 0  $ 2,500
Original debt discount  $ 643
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Stockholders' equity (Details) (USD  $)
In Millions
3 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Stock repurchase program
Stock repurchases, in dollars  $ 0  $ 1,684
Stock repurchases, in shares 0 29.1
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Stockholders' equity (Details Textuals) (USD  $)
In Billions
Apr. 30, 2011
Mar. 31, 2011
Dec. 31, 2009
Stockholders' equity (Textuals) [Abstract]
Additional amount authorized by the Board of Directors under a stock repurchase plan  $ 5  $ 5
Amount available for stock repurchases under a Board of Directors approved stock repurchase plan  $ 2.2
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Fair value measurement (Details) (USD  $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Assets
Total available-for-sale securities  $ 15,215  $ 17,325
Interest rate swap contracts 217 349
Total assets 15,432 17,674
Liabilities
Interest rate swap contracts 201 103
Total liabilities 391 103
US Treasury securities [Member] | Quoted prices in active markets for identical assets (Level 1) [Member]
Assets
Total available-for-sale securities 3,557 5,080
Other government related debt securities - Obligations of U.S. government agencies and FDIC guaranteed bank debt [Member] | Quoted prices in active markets for identical assets (Level 1) [Member]
Assets
Total available-for-sale securities 0 0
Other government related debt securities - Foreign and other [Member] | Quoted prices in active markets for identical assets (Level 1) [Member]
Assets
Total available-for-sale securities 0 0
Corporate debt securities - Financial [Member] | Quoted prices in active markets for identical assets (Level 1) [Member]
Assets
Total available-for-sale securities 0 0
Corporate debt securities - Industrial [Member] | Quoted prices in active markets for identical assets (Level 1) [Member]
Assets
Total available-for-sale securities 0 0
Corporate debt securities - Other [Member] | Quoted prices in active markets for identical assets (Level 1) [Member]
Assets
Total available-for-sale securities 0 0
Mortgage and asset backed securities [Member] | Quoted prices in active markets for identical assets (Level 1) [Member]
Assets
Total available-for-sale securities 0 0
Money market mutual funds [Member] | Quoted prices in active markets for identical assets (Level 1) [Member]
Assets
Total available-for-sale securities 1,075 3,030
Other short-term interest bearing securities [Member] | Quoted prices in active markets for identical assets (Level 1) [Member]
Assets
Total available-for-sale securities 0
Equity securities [Member] | Quoted prices in active markets for identical assets (Level 1) [Member]
Assets
Total available-for-sale securities 48 48
Quoted prices in active markets for identical assets (Level 1) [Member]
Assets
Total assets 4,680 8,158
Quoted prices in active markets for identical assets (Level 1) [Member] | Foreign currency contracts [Member]
Assets
Foreign currency contracts 0 0
Quoted prices in active markets for identical assets (Level 1) [Member] | Interest rate swap contracts [Member]
Assets
Interest rate swap contracts 0 0
Foreign currency contracts [Member] | Quoted prices in active markets for identical assets (Level 1) [Member]
Liabilities
Foreign currency contracts 0 0
Interest rate swap contracts [Member] | Quoted prices in active markets for identical assets (Level 1) [Member]
Liabilities
Interest rate swap contracts 0
Contingent consideration obligations in connection with a business combination [Member] | Quoted prices in active markets for identical assets (Level 1) [Member]
Liabilities
Contingent consideration in connection with a business combination 0
Quoted prices in active markets for identical assets (Level 1) [Member]
Liabilities
Total liabilities 0 0
US Treasury securities [Member] | Significant other observable inputs (Level 2) [Member]
Assets
Total available-for-sale securities 0 0
Other government related debt securities - Obligations of U.S. government agencies and FDIC guaranteed bank debt [Member] | Significant other observable inputs (Level 2) [Member]
Assets
Total available-for-sale securities 1,671 2,208
Other government related debt securities - Foreign and other [Member] | Significant other observable inputs (Level 2) [Member]
Assets
Total available-for-sale securities 810 852
Corporate debt securities - Financial [Member] | Significant other observable inputs (Level 2) [Member]
Assets
Total available-for-sale securities 3,001 2,296
Corporate debt securities - Industrial [Member] | Significant other observable inputs (Level 2) [Member]
Assets
Total available-for-sale securities 3,197 2,507
Corporate debt securities - Other [Member] | Significant other observable inputs (Level 2) [Member]
Assets
Total available-for-sale securities 361 316
Mortgage and asset backed securities [Member] | Significant other observable inputs (Level 2) [Member]
Assets
Total available-for-sale securities 1,495 841
Money market mutual funds [Member] | Significant other observable inputs (Level 2) [Member]
Assets
Total available-for-sale securities 0 0
Other short-term interest bearing securities [Member] | Significant other observable inputs (Level 2) [Member]
Assets
Total available-for-sale securities 147
Equity securities [Member] | Significant other observable inputs (Level 2) [Member]
Assets
Total available-for-sale securities 0 0
Significant other observable inputs (Level 2) [Member]
Assets
Total assets 10,752 9,516
Significant other observable inputs (Level 2) [Member] | Foreign currency contracts [Member]
Assets
Foreign currency contracts 57 154
Significant other observable inputs (Level 2) [Member] | Interest rate swap contracts [Member]
Assets
Interest rate swap contracts 160 195
Foreign currency contracts [Member] | Significant other observable inputs (Level 2) [Member]
Liabilities
Foreign currency contracts 189 103
Interest rate swap contracts [Member] | Significant other observable inputs (Level 2) [Member]
Liabilities
Interest rate swap contracts 12
Contingent consideration obligations in connection with a business combination [Member] | Significant other observable inputs (Level 2) [Member]
Liabilities
Contingent consideration in connection with a business combination 0
Significant other observable inputs (Level 2) [Member]
Liabilities
Total liabilities 201 103
US Treasury securities [Member] | Significant unobservable inputs (Level 3) [Member]
Assets
Total available-for-sale securities 0 0
Other government related debt securities - Obligations of U.S. government agencies and FDIC guaranteed bank debt [Member] | Significant unobservable inputs (Level 3) [Member]
Assets
Total available-for-sale securities 0 0
Other government related debt securities - Foreign and other [Member] | Significant unobservable inputs (Level 3) [Member]
Assets
Total available-for-sale securities 0 0
Corporate debt securities - Financial [Member] | Significant unobservable inputs (Level 3) [Member]
Assets
Total available-for-sale securities 0 0
Corporate debt securities - Industrial [Member] | Significant unobservable inputs (Level 3) [Member]
Assets
Total available-for-sale securities 0 0
Corporate debt securities - Other [Member] | Significant unobservable inputs (Level 3) [Member]
Assets
Total available-for-sale securities 0 0
Mortgage and asset backed securities [Member] | Significant unobservable inputs (Level 3) [Member]
Assets
Total available-for-sale securities 0 0
Money market mutual funds [Member] | Significant unobservable inputs (Level 3) [Member]
Assets
Total available-for-sale securities 0 0
Other short-term interest bearing securities [Member] | Significant unobservable inputs (Level 3) [Member]
Assets
Total available-for-sale securities 0
Equity securities [Member] | Significant unobservable inputs (Level 3) [Member]
Assets
Total available-for-sale securities 0 0
Significant unobservable inputs (Level 3) [Member]
Assets
Total assets 0 0
Significant unobservable inputs (Level 3) [Member] | Foreign currency contracts [Member]
Assets
Foreign currency contracts 0 0
Significant unobservable inputs (Level 3) [Member] | Interest rate swap contracts [Member]
Assets
Interest rate swap contracts 0 0
Foreign currency contracts [Member] | Significant unobservable inputs (Level 3) [Member]
Liabilities
Foreign currency contracts 0 0
Interest rate swap contracts [Member] | Significant unobservable inputs (Level 3) [Member]
Liabilities
Interest rate swap contracts 0
Contingent consideration obligations in connection with a business combination [Member] | Significant unobservable inputs (Level 3) [Member]
Liabilities
Contingent consideration in connection with a business combination 190
Significant unobservable inputs (Level 3) [Member]
Liabilities
Total liabilities 190 0
US Treasury securities [Member]
Assets
Total available-for-sale securities 3,557 5,080
Other government related debt securities - Obligations of U.S. government agencies and FDIC guaranteed bank debt [Member]
Assets
Total available-for-sale securities 1,671 2,208
Other government related debt securities - Foreign and other [Member]
Assets
Total available-for-sale securities 810 852
Corporate debt securities - Financial [Member]
Assets
Total available-for-sale securities 3,001 2,296
Corporate debt securities - Industrial [Member]
Assets
Total available-for-sale securities 3,197 2,507
Corporate debt securities - Other [Member]
Assets
Total available-for-sale securities 361 316
Total debt securities [Member]
Assets
Total available-for-sale securities 15,167 17,277
Mortgage and asset backed securities [Member]
Assets
Total available-for-sale securities 1,495 841
Money market mutual funds [Member]
Assets
Total available-for-sale securities 1,075 3,030
Other short-term interest bearing securities [Member]
Assets
Total available-for-sale securities 147
Equity securities [Member]
Assets
Total available-for-sale securities 48 48
Foreign currency contracts [Member]
Assets
Foreign currency contracts 57 154
Liabilities
Foreign currency contracts 189 103
Interest rate swap contracts [Member]
Assets
Interest rate swap contracts 160 195
Liabilities
Interest rate swap contracts 12
Contingent consideration obligations in connection with a business combination [Member]
Liabilities
Contingent consideration in connection with a business combination  $ 190
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Fair value measurements (Details 1) (USD  $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Carrying value and estimated fair value of borrowings
Convertible notes current  $ 83  $ 2,488
Convertible notes 2,246 2,296
Notes payable 8,578 8,578
Total notes payable, fair value 11,740 14,547
Other notes including our zero coupon convertible notes 183 183
Other notes including our zero coupon convertible notes, fair value 204 214
Total borrowings 10,907 13,362
0.125% convertible notes due 2011 (2011 Convertible notes) [Member]
Carrying value and estimated fair value of borrowings
Convertible notes current 0 2,488
Convertible notes payable, fair value 0 2,501
0.375% convertible notes due 2013 (2013 Convertible notes) [Member]
Carrying value and estimated fair value of borrowings
Convertible notes 2,246 2,213
Convertible notes payable, fair value 2,480 2,479
5.85% notes due 2017 (2017 Notes) [Member]
Carrying value and estimated fair value of borrowings
Notes payable 1,099 1,099
Total notes payable, fair value 1,245 1,280
4.85% notes due 2014 (2014 Notes) [Member]
Carrying value and estimated fair value of borrowings
Notes payable 1,000 1,000
Total notes payable, fair value 1,094 1,101
5.70% notes due 2019 (2019 Notes) [Member]
Carrying value and estimated fair value of borrowings
Notes payable 998 998
Total notes payable, fair value 1,107 1,139
6.40% notes due 2039 (2039 Notes) [Member]
Carrying value and estimated fair value of borrowings
Notes payable 996 996
Total notes payable, fair value 1,089 1,149
6.375% notes due 2037 (2037 Notes) [Member]
Carrying value and estimated fair value of borrowings
Notes payable 899 899
Total notes payable, fair value 974 1,027
3.45% notes due October 2020 (October 2020 Notes) [Member]
Carrying value and estimated fair value of borrowings
Notes payable 897 897
Total notes payable, fair value 836 857
5.75% notes due 2040 (2040 Notes) [Member]
Carrying value and estimated fair value of borrowings
Notes payable 696 696
Total notes payable, fair value 699 734
4.95% notes due 2041 (2041 Notes) [Member]
Carrying value and estimated fair value of borrowings
Notes payable 595 595
Total notes payable, fair value 546 564
6.15% notes due 2018 (2018 Notes) [Member]
Carrying value and estimated fair value of borrowings
Notes payable 499 499
Total notes payable, fair value 568 584
6.90% notes due 2038 (2038 Notes) [Member]
Carrying value and estimated fair value of borrowings
Notes payable 499 499
Total notes payable, fair value 591 607
4.50% notes due March 2020 (March 2020 Notes) [Member]
Carrying value and estimated fair value of borrowings
Notes payable 300 300
Total notes payable, fair value  $ 307  $ 311
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Fair value measurements (Details Textuals) (USD  $)
Mar. 31, 2011
Dec. 31, 2010
Fair Value Measurement (Textuals) [Abstract]
Interest rate swap contracts - fair value hedge - notional amounts  $ 3,600,000,000  $ 3,600,000,000
Foreign currency forward contracts [Member]
Fair Value Measurement (Textuals) [Abstract]
Foreign currency open contracts - cash flow hedges - notional amounts 3,400,000,000 3,200,000,000
Foreign currency open contracts - not designated as hedges - notional amounts 788,000,000 670,000,000
Foreign currency option contracts [Member]
Fair Value Measurement (Textuals) [Abstract]
Foreign currency open contracts - cash flow hedges - notional amounts  $ 300,000,000  $ 398,000,000
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Derivative instruments (Details) (Derivatives in cash flow hedging relationships [Member], USD  $)
In Millions
3 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Effective portion of the unrealized gain/(loss) recognized in Other Comprehensive Income for our cash flow hedge contracts
Unrealized gain (loss) on derivative instruments recognized in Other Comprehensive Income, effective portion, net  $ (197)  $ 175
Forward interest rate contracts [Member]
Effective portion of the unrealized gain/(loss) recognized in Other Comprehensive Income for our cash flow hedge contracts
Unrealized gain (loss) on derivative instruments recognized in Other Comprehensive Income, effective portion, net 0 0
Foreign currency contracts [Member]
Effective portion of the unrealized gain/(loss) recognized in Other Comprehensive Income for our cash flow hedge contracts
Unrealized gain (loss) on derivative instruments recognized in Other Comprehensive Income, effective portion, net  $ (197)  $ 175
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Derivative instruments (Details 1) (USD  $)
In Millions
3 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Location in the Consolidated Statements of Income and the effective portion of gain/(loss) reclassified from Accumulated Other Comprehensive Income into earnings for our cash flow hedge contracts
Total  $ (8)  $ (6)
Forward interest rate contracts [Member]
Location in the Consolidated Statements of Income and the effective portion of gain/(loss) reclassified from Accumulated Other Comprehensive Income into earnings for our cash flow hedge contracts
The amount of gain (loss) recognized in interest expense, net 0 0
Foreign currency contracts [Member]
Location in the Consolidated Statements of Income and the effective portion of gain/(loss) reclassified from Accumulated Other Comprehensive Income into earnings for our cash flow hedge contracts
The amount of gain (loss) recognized in product sales  $ (8)  $ (6)
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Derivative instruments (Details 2) (Foreign currency contracts [Member], Interest and other income, net [Member], USD  $)
In Millions
3 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Location in the Consolidated Statements of Income and the amount of gain/(loss) recognized in earnings for the derivative instruments not designated as hedging instruments
Derivatives not designated as hedging instruments  $ (51)  $ 23
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Derivative instruments (Details 3) (USD  $)
In Millions
Mar. 31, 2011
Dec. 31, 2010
Assets
Total derivatives designated as hedging instruments  $ 217  $ 349
Total derivatives not designated as hedging instruments 0 0
Total derivatives 217 349
Liabilities
Total derivatives designated as hedging instruments 201 103
Total derivatives not designated as hedging instruments 0 0
Total derivatives 201 103
Interest rate swap contracts [Member] | Accrued liabilities/other noncurrent liabilities [Member]
Liabilities
Total derivatives designated as hedging instruments 12 0
Interest rate swap contracts [Member] | Other current assets/other non-current assets [Member]
Assets
Total derivatives designated as hedging instruments 160 195
Foreign currency contracts [Member] | Accrued liabilities/other noncurrent liabilities [Member]
Liabilities
Total derivatives designated as hedging instruments 189 103
Foreign currency contracts [Member] | Accrued Liabilities[ Member]
Liabilities
Total derivatives not designated as hedging instruments 0 0
Foreign currency contracts [Member] | Other current assets/other non-current assets [Member]
Assets
Total derivatives designated as hedging instruments 57 154
Foreign currency contracts [Member] | Other Current Assets [Member]
Assets
Total derivatives not designated as hedging instruments  $ 0  $ 0
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Derivative instruments (Details Textuals) (USD  $)
3 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Dec. 31, 2010
Derivative instruments (Textuals) [Abstract]
Length of time hedged in foreign currency cash flow hedge Approximately 3 years
Ineffective portions of cash flow hedging instruments (approximately)  $ (1,000,000)  $ 1,000,000
Interest rate swap contracts - fair value hedge - notional amounts 3,600,000,000 3,600,000,000
Unrealized gain (loss) on the hedged debt 47,000,000 (17,000,000)
Offsetting unrealized gain (loss) on related interest rate swaps (47,000,000) 17,000,000
Derivative lower range variable interest rate LIBOR plus 0.3%
Derivative higher range variable interest rate LIBOR plus 2.6%
Foreign currency forward contracts [Member]
Derivative instruments (Textuals) [Abstract]
Foreign currency open contracts - cash flow hedges - notional amounts 3,400,000,000 3,200,000,000
Foreign currency open contracts - not designated as hedges - notional amounts 788,000,000 670,000,000
Foreign currency option contracts [Member]
Derivative instruments (Textuals) [Abstract]
Foreign currency open contracts - cash flow hedges - notional amounts 300,000,000 398,000,000
Foreign currency forward and option contracts [Member]
Derivative instruments (Textuals) [Abstract]
Amounts expected to be reclassified from accumulated other comprehensive income into income over the next 12 months - gain (loss) (104,000,000)
Forward interest rate contracts [Member]
Derivative instruments (Textuals) [Abstract]
Amounts expected to be reclassified from accumulated other comprehensive income into income over the next 12 months - gain (loss)  $ (1,000,000)
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Subsequent events (Details) (Bergamo [Member], USD  $)
In Millions, unless otherwise specified
1 Months Ended
Apr. 30, 2011
Subsequent events (Textuals) [Abstract]
Number of staff in acquired company 400
Cash payment for acquisition  $ 215
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