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Document and Entity Information
9 Months Ended
Sep. 30, 2012
Oct. 29, 2012
Document and Entity Information [Abstract]
Entity Registrant Name Amgen Inc.
Entity Central Index Key 0000318154
Document Type 10-Q
Document Period End Date Sep 30, 2012
Amendment Flag false
Document Fiscal Year Focus 2012
Document Fiscal Period Focus Q3
Current Fiscal Year End Date --12-31
Entity Filer Category Large Accelerated Filer
Entity Common Stock, Shares Outstanding 767,355,259
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Condensed Consolidated Statements of Income (Unaudited) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Revenues:
Product sales $ 4,201 $ 3,877 $ 12,302 $ 11,388
Other revenues 118 67 542 221
Total revenues 4,319 3,944 12,844 11,609
Operating expenses:
Cost of sales (excludes amortization of certain acquired intangible assets presented separately) 705 605 2,066 1,771
Research and development 880 761 2,442 2,316
Selling, general and administrative 1,127 1,125 3,431 3,278
Amortization of certain acquired intangible assets 74 74 221 221
Other 110 854 195 873
Total operating expenses 2,896 3,419 8,355 8,459
Operating income 1,423 525 4,489 3,150
Interest expense, net 271 158 762 415
Interest and other income, net 111 87 359 364
Income before income taxes 1,263 454 4,086 3,099
Provision for income taxes 156 0 529 350
Net income $ 1,107 $ 454 $ 3,557 $ 2,749
Earnings per share:
Basic $ 1.44 $ 0.5 $ 4.57 $ 2.98
Diluted $ 1.41 $ 0.5 $ 4.51 $ 2.96
Shares used in calculation of earnings per share:
Basic 771 907 779 922
Diluted 783 914 789 930
Dividends paid per share $ 0.36 $ 0.28 $ 1.08 $ 0.28
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Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Statement of Other Comprehensive Income [Abstract]
Net income $ 1,107 $ 454 $ 3,557 $ 2,749
Other comprehensive income (loss), net of reclassification adjustments and income taxes (4) 73 (24) (35)
Comprehensive income $ 1,103 $ 527 $ 3,533 $ 2,714
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Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Current assets:
Cash and cash equivalents $ 5,823 $ 6,946
Marketable securities 19,551 13,695
Trade receivables, net 2,696 2,896
Inventories 2,769 2,484
Other current assets 1,766 1,572
Total current assets 32,605 27,593
Property, plant and equipment, net 5,381 5,420
Intangible assets, net 3,680 2,584
Goodwill 12,589 11,750
Other assets 1,193 1,524
Total assets 55,448 48,871
Current liabilities:
Accounts payable 878 642
Accrued liabilities 5,031 5,028
Current portion of long-term debt 2,458 84
Total current liabilities 8,367 5,754
Long-term debt 24,020 21,344
Other noncurrent liabilities 3,159 2,744
Contingencies and commitments      
Stockholders' equity:
Common stock and additional paid-in capital; $0.0001 par value; 2,750.0 shares authorized; outstanding - 768.1 shares in 2012 and 795.6 shares in 2011 29,103 27,777
Accumulated deficit (9,348) (8,919)
Accumulated other comprehensive income 147 171
Total stockholders' equity 19,902 19,029
Total liabilities and stockholders' equity $ 55,448 $ 48,871
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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
In Millions, except Per Share data, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Statement of Financial Position [Abstract]
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 768.1 795.6
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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Cash flows from operating activities:
Net income $ 3,557 $ 2,749
Depreciation and amortization 815 799
Stock-based compensation expense 271 245
Other items, net (72) 31
Changes in operating assets and liabilities, net of acquisitions:
Trade receivables, net 198 (386)
Inventories (175) (273)
Other assets 213 (243)
Accounts payable 189 (5)
Accrued income taxes (85) (329)
Other liabilities 159 947
Net cash provided by operating activities 5,070 3,535
Cash flows from investing activities:
Purchases of property, plant and equipment (489) (343)
Cash paid for acquisitions, net of cash acquired (1,990) (701)
Purchases of marketable securities (18,864) (18,481)
Proceeds from sales of marketable securities 12,544 18,373
Proceeds from maturities of marketable securities 878 575
Other (38) 11
Net cash used in investing activities (7,959) (566)
Cash flows from financing activities:
Repayment of debt (102) (2,500)
Net proceeds from issuance of debt 4,933 2,973
Net proceeds from issuance of commercial paper 0 300
Repurchases of common stock (3,390) (3,017)
Dividends paid (844) (255)
Net proceeds from issuance of common stock in connection with the Company's equity award programs 1,129 126
Other 40 8
Net cash provided by (used in) financing activities 1,766 (2,365)
Increase (decrease) in cash and cash equivalents (1,123) 604
Cash and cash equivalents at beginning of period 6,946 3,287
Cash and cash equivalents at end of period $ 5,823 $ 3,891
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Summary of significant accounting policies
9 Months Ended
Sep. 30, 2012
Accounting Policies [Abstract]
Summary of significant accounting policies
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 pioneer that discovers, develops, manufactures and delivers innovative human therapeutics.  Our medicines help millions of patients in the fight against cancer, kidney disease, rheumatoid arthritis, bone disease, and other serious illnesses.  We operate in one business segment: human therapeutics.

Basis of presentation
The financial information for the three and nine months ended September 30, 2012 and 2011, 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.
Certain prior-period amounts shown within Cash flows from operating activities in our Condensed Consolidated Statements of Cash Flows have been reclassified to conform to the current-period presentation.
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, 2011, and in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2012, and June 30, 2012.
Principles of consolidation
The condensed consolidated financial statements include the accounts of Amgen as well as its majority-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.
Property, plant and equipment, net
Property, plant and equipment is recorded at historical cost, net of accumulated depreciation and amortization of $6.4 billion and $5.8 billion as of September 30, 2012, and December 31, 2011, respectively.
Comprehensive income
In January 2012, we adopted a new accounting standard that requires additional disclosures for comprehensive income. As permitted under this standard, we have elected to present comprehensive income in two separate but consecutive financial statements, consisting of a statement of income followed by a separate statement of comprehensive income. This standard was required to be applied retrospectively beginning January 1, 2012, except for certain provisions for which adoption was delayed.
Cost savings initiatives
Included in Other operating expenses for the three and nine months ended September 30, 2012, are charges for certain cost savings initiatives of $36 million and $106 million, respectively, compared with $68 million and $79 million for the corresponding periods of the prior year.
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Business combinations
9 Months Ended
Sep. 30, 2012
Business Combinations [Abstract]
Business combinations
Business combinations
Micromet, Inc.
On March 7, 2012, we acquired Micromet, Inc. (Micromet), a publicly held biotechnology company focused on the discovery, development and commercialization of innovative antibody-based therapies for the treatment of cancer, that became a wholly owned subsidiary of Amgen. This transaction, which was accounted for as a business combination, provides us with an opportunity to further expand our oncology pipeline. Micromet’s operations have been included in our condensed consolidated financial statements commencing on the acquisition date.
The consideration to acquire Micromet totaled $1,146 million in cash which was allocated to the acquisition date fair values of assets acquired and liabilities assumed as follows (in millions):
Indefinite-lived intangible assets:
 
In-process research and development (IPR&D)
$
440

Contract assets
170

Finite-lived intangible assets — Developed technology
350

Goodwill
330

Cash and marketable securities
154

Deferred tax assets
43

Deferred tax liabilities
(317
)
Other assets (liabilities), net
(24
)
Total consideration
$
1,146


The estimated fair value of acquired IPR&D is related to blinatumomab which is in phase 2 clinical development for the treatment of acute lymphoblastic leukemia. The estimated fair value was determined using a probability-weighted income approach, which discounts expected future cash flows to present value using a discount rate that represents the estimated rate that market participants would use to value this intangible asset. The projected cash flows from blinatumomab were based on certain assumptions, including estimates of future revenues and expenses, the time and resources needed to complete development and the probabilities of obtaining marketing approval from the U.S. Food and Drug Administration (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 research and development (R&D) efforts.
The major risks and uncertainties associated with the timely and successful completion of development and commercialization of blinatumomab include our ability to confirm its safety and efficacy based on data from clinical trials, our ability to obtain necessary regulatory approvals and our ability to successfully complete these tasks within budgeted costs. We are not permitted to market a human therapeutic without obtaining regulatory approvals, and such approvals require completion of clinical trials that demonstrate a product candidate is safe and effective. Consequently, the eventual realized value of the acquired IPR&D may vary from its estimated fair value at the date of acquisition. The estimated incremental R&D costs to be incurred to obtain necessary regulatory approvals for blinatumomab are not material in any given year.
Contract assets represent the aggregate estimated fair values of receiving future milestone and royalty payments associated with various outlicensing arrangements entered into by Micromet prior to our acquisition of this company. The fair values of these contracts were determined by estimating the probability-weighted net cash flows associated with the agreements that may be received from the other parties discounted to present value using a discount rate that represents the estimated rate that market participants would use to value these intangible assets. These contract assets are considered indefinite-lived intangible assets and their assigned values will be expensed when the related revenues are earned or the associated R&D efforts are abandoned by the licensees. During the three months ended September 30, 2012, a non-key program under one of these outlicensing arrangements was terminated and resulted in an impairment charge of $19 million which was included in Other operating expenses.
The developed technology acquired relates to Micromet’s bi-specific T-cell engager technology platform which has produced various product candidates that are currently being developed as cancer treatments by Micromet and others and may lead to the development of additional product candidates. The fair value of this technology was determined by estimating the probability-weighted net cash flows attributable to this technology discounted to present value using a discount rate that represents the estimated rate that market participants would use to value this intangible asset. The fair value of this technology is being amortized on a straight-line basis over its estimated useful life of 10 years.
The excess of the acquisition date consideration over the fair values assigned to the assets acquired and the liabilities assumed of $330 million was recorded as goodwill, which is not deductible for tax purposes. Goodwill was revised by $38 million during the three months ended June 30, 2012, due primarily to the recognition of $43 million in deferred tax assets related to the adjustment of tax attributes acquired. Goodwill is attributable primarily to expected synergies and other benefits from combining Micromet with our oncology development and commercialization activities and the deferred tax consequences of indefinite-lived and finite-lived intangible assets recorded for financial statement purposes.
Mustafa Nevzat Pharmaceuticals
On June 12, 2012, we acquired 99.4% of the outstanding stock of Mustafa Nevzat Pharmaceuticals (MN), a privately held company that is a leading supplier of pharmaceuticals to the hospital sector and a major supplier of injectable medicines in Turkey. This transaction, which was accounted for as a business combination, provides us with the opportunity to expand our presence in Turkey and the surrounding region. MN’s operations have been included in our condensed consolidated financial statements commencing on the acquisition date.
The consideration to acquire MN totaled $677 million in cash which was allocated to the acquisition date fair values of assets acquired and liabilities assumed as follows (in millions):
Finite-lived intangible assets
$
163

Property, plant and equipment
100

Trade receivables
79

Inventories
52

Goodwill
382

Deferred tax liabilities
(45
)
Other assets (liabilities), net
(54
)
Total consideration
$
677


The finite-lived intangible assets acquired are related primarily to the fair values of MN’s regulatory approvals and customer relationships with regard to the marketing of pharmaceutical products and are being amortized on a straight-line basis over their estimated useful lives. The weighted average useful life of these intangible assets is eight years.
The excess of the acquisition date consideration over the fair values assigned to the assets acquired and the liabilities assumed of $382 million was recorded as goodwill, which is not deductible for tax purposes. Goodwill was revised by $12 million during the three months ended September 30, 2012, due primarily to adjustments to certain liabilities. Goodwill is attributable primarily to MN’s expected continued commercial presence in Turkey and other benefits.
Our accounting for this acquisition is preliminary and will be finalized upon completion of our analysis to determine the acquisition date fair values of certain assets acquired and liabilities assumed, including certain tax related items and residual goodwill.
KAI Pharmaceuticals
On July 5, 2012, we acquired all of the outstanding stock of KAI Pharmaceuticals (KAI), a privately held biotechnology company that is developing KAI-4169, its lead product candidate currently in phase 2 clinical development for the treatment of secondary hyperparathyroidism in patients with chronic kidney disease who are on dialysis. This transaction, which was accounted for as a business combination, provides us with an opportunity to further expand our nephrology pipeline. KAI's operations have been included in our condensed consolidated financial statements commencing on the acquisition date.
The consideration to acquire KAI totaled $332 million in cash which was allocated to the acquisition date fair values of assets acquired and liabilities assumed as follows (in millions):
Indefinite-lived intangible assets - IPR&D
$
260

Goodwill
146

Deferred tax liabilities
(100
)
Other assets (liabilities), net
26

Total consideration
$
332




The estimated fair value of acquired IPR&D is related to KAI-4169. The estimated fair value was determined using a probability-weighted income approach, which discounts expected future cash flows to present value using a discount rate that represents the estimated rate that market participants would use to value this intangible asset. The projected cash flows from KAI-4169 were based on certain assumptions, including estimates of future revenues and expenses, the time and resources needed to complete development and the probabilities of obtaining marketing approval from the FDA and other regulatory agencies.

The major risks and uncertainties associated with the timely and successful completion of development and commercialization of KAI-4169 include our ability to confirm its safety and efficacy based on data from clinical trials, our ability to obtain necessary regulatory approvals and our ability to successfully complete these tasks within budgeted costs. Consequently, the eventual realized value of the acquired IPR&D may vary from its estimated fair value at the date of acquisition. The estimated incremental R&D costs to be incurred to obtain necessary regulatory approvals for KAI-4169 are not material in any given year.

The excess of the acquisition date consideration over the fair values assigned to the assets acquired and the liabilities assumed of $146 million was recorded as goodwill, which is not deductible for tax purposes. Goodwill is attributable primarily to expected synergies and other benefits from combining KAI with our nephrology development and commercialization activities and the deferred tax consequences of indefinite-lived intangible assets recorded for financial statement purposes.

Our accounting for this acquisition is preliminary and will be finalized upon completion of our analysis to determine the acquisition date fair values of certain liabilities assumed and tax related items acquired.

Pro forma supplemental consolidated results of operations for the three and nine months ended September 30, 2012 and 2011, that assume the acquisitions of Micromet, MN and KAI occurred on January 1, 2011, are not provided because those results would not be materially different from our reported consolidated results of operations.
In addition to the increase in goodwill for the acquisitions of Micromet, MN and KAI discussed above, goodwill decreased by $19 million during the nine months ended September 30, 2012, due to changes in foreign currency exchange rates.
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Income taxes
9 Months Ended
Sep. 30, 2012
Income Tax Disclosure [Abstract]
Income taxes
Income taxes
The effective tax rates for the three and nine months ended September 30, 2012 and 2011, are different from the federal 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 of the United States. The effective tax rates for the three and nine months ended September 30, 2012 and 2011, were further reduced by foreign tax credits associated with the Puerto Rico excise tax described below. The federal R&D tax credit expired as of December 31, 2011, and was not reinstated as of September 30, 2012. Therefore our effective tax rates for the three and nine months ended September 30, 2012, do not include a benefit for the federal R&D tax credit.
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. The excise tax is imposed on the gross intercompany purchase price of the goods and services and is effective for a six-year period beginning in 2011, with the excise tax rate declining in each year (4% in 2011, 3.75% in 2012, 2.75% in 2013, 2.5% in 2014, 2.25% in 2015 and 1% 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, the excise tax results in foreign tax credits that are generally recognized in our provision for income taxes when the excise tax is incurred. Excluding the impact of the Puerto Rico excise tax and the legal settlement charge recorded in 2011 (see Note 13, Contingencies and commitments), our effective tax rates for the three and nine months ended September 30, 2012, would have been 17.7% and 18.3%, respectively, compared with 13.9% and 17.1% for the corresponding periods of the prior year.
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.
During the three and nine months ended September 30, 2012, the gross amount of our uncertain tax benefits (UTBs) increased by approximately $99 million and $249 million, respectively, as a result of tax positions taken during the current year. Substantially all of the UTBs as of September 30, 2012, if recognized, would affect our effective tax rate. As of September 30, 2012, we believe it is reasonably possible that our gross liabilities for UTBs may decrease by approximately $330 million within the succeeding 12 months due to the resolution of federal and state audits.
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Earnings per share
9 Months Ended
Sep. 30, 2012
Earnings Per Share [Abstract]
Earnings per share
Earnings per share
The computation of basic earnings per share (EPS) is based on the weighted-average number of our common shares outstanding. The computation of diluted EPS is based on the weighted-average number of our common shares outstanding and dilutive potential common shares, which include principally shares that may be issued under: our stock option, restricted stock and performance unit awards, determined using the treasury stock method; our outstanding 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 because their impact is always anti-dilutive.
Upon conversion of our 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. For the three months ended September 30, 2012, the conversion value of our convertible notes due in 2013 exceeded the related principal amount resulting in the assumed issuance of an additional 1 million shares for purposes of computing diluted EPS. The conversion values of our convertible notes for periods prior to the three months ended September 30, 2012, were less than the related principal amounts, and accordingly, no shares were assumed to be issued for purposes of computing diluted EPS for these periods.
The computation for basic and diluted EPS was as follows (in millions, except per-share data):
 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2012
 
2011
 
2012
 
2011
Income (Numerator):
 
 
 
 
 
 
 
Net income for basic and diluted EPS
$
1,107

 
$
454

 
$
3,557

 
$
2,749

 
 
 
 
 
 
 
 
Shares (Denominator):
 
 
 
 
 
 
 
Weighted-average shares for basic EPS
771

 
907

 
779

 
922

Effect of dilutive securities
12

 
7

 
10

 
8

Weighted-average shares for diluted EPS
783

 
914

 
789

 
930

 
 
 
 
 
 
 
 
Basic EPS
$
1.44

 
$
0.50

 
$
4.57

 
$
2.98

Diluted EPS
$
1.41

 
$
0.50

 
$
4.51

 
$
2.96


For the three and nine months ended September 30, 2012, there were employee stock-based awards, calculated on a weighted-average basis, to acquire 1 million and 8 million shares of our common stock, respectively, that are not included in the computation of diluted EPS because their impact would have been anti-dilutive. For the three and nine months ended September 30, 2011, there were employee stock-based awards, calculated on a weighted-average basis, to acquire 33 million and 34 million shares of our common stock, respectively, that are not included in the computation of diluted EPS because their impact would have been anti-dilutive. In addition, shares of our common stock that may be issued upon exercise of our warrants are not included in the computation of diluted EPS for any of the periods presented above because their impact would have been anti-dilutive.
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Collaborative arrangements
9 Months Ended
Sep. 30, 2012
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Collaborative arrangements
Collaborative arrangements
AstraZeneca Plc.
In March 2012, we entered into a collaboration agreement with AstraZeneca Plc. (AstraZeneca) to jointly develop and commercialize certain monoclonal antibodies from Amgen’s clinical inflammation portfolio, including brodalumab (AMG 827), AMG 139, AMG 157, AMG 181 and AMG 557. The agreement covers the worldwide development and commercialization, except for certain Asian countries for brodalumab and Japan for AMG 557, that are licensed to other third parties.
Under the terms of the agreement, approximately 65% of related development costs for the 2012-2014 periods will be funded by AstraZeneca, thereafter, the companies will share costs equally. If approved for sale, Amgen would receive a low-single-digit royalty rate for brodalumab and a mid-single-digit royalty rate for the rest of the portfolio, after which the worldwide commercialization profits and losses related to the collaboration would be shared equally. In connection with the transfer of technology rights, Amgen received a payment of $50 million which was recognized in Other revenues in the Condensed Consolidated Statement of Income for the nine months ended September 30, 2012. Cost recoveries recognized for development costs incurred under this agreement during the three and nine months ended September 30, 2012, were not material.
The collaboration agreement will continue in effect unless terminated earlier in accordance with its terms.
Takeda Pharmaceutical Company Limited
In 2008, we entered into an arrangement with Takeda Pharmaceutical Company Limited (Takeda), that provided Takeda both: (i) the exclusive rights to develop and commercialize for the Japanese market up to 12 molecules from our portfolio across a range of therapeutic areas, including oncology and inflammation (collectively the “Japanese market products”) and (ii) the right to collaborate with us on the worldwide (outside of Japan) development and commercialization of our product candidate, motesanib. The Japanese market products include Vectibix® and certain product candidates. In connection with this 2008 arrangement, we received upfront payments of $300 million that were deferred and were being recognized as Other revenues in our Consolidated Statements of Income over the estimated period of continuing involvement of approximately 20 years. In June 2012, this arrangement was modified and as of the date of modification, $230 million of this deferred revenue was on the balance sheet.
In 2011, we announced that the motesanib pivotal phase 3 trial (MONET1) had not met its primary objective of demonstrating an improvement in overall survival.
In June 2012, the parties materially modified this arrangement such that Amgen licensed all of its rights to motesanib to Takeda which now has control over the worldwide development and commercialization of motesanib. As a result of this modification, we will no longer participate in the development of motesanib and our obligations with respect to motesanib are limited primarily to closing the MONET1 clinical trial and transitioning certain existing development data and manufacturing capabilities (collectively “transition services”) from our contract manufacturer to Takeda. In exchange for licensing motesanib to Takeda, we received an additional upfront payment of $3 million and will receive incremental cost recoveries of approximately $21 million. We may also receive substantive success-based regulatory approval milestones and royalties on global sales of motesanib, if approved for sale, that are substantially lower than those under the 2008 arrangement.
Upon the modification of the arrangement, we determined that the remaining deliverables are: (i) the additional license rights to motesanib granted to Takeda and related transition services, (ii) commercial supply of Vectibix® and (iii) clinical and commercial supply and data relating to certain development activities, to the extent undertaken by Amgen, for the Japanese market products other than Vectibix®. We considered several factors in determining whether stand-alone value exists for each deliverable, including the rights and ability to perform the R&D activities, as well as the ability of parties to use a third party to perform their respective designated activities under the arrangement. The estimated selling prices for the undelivered items were determined by using third party evidence and best estimate of selling price (BESP) where applicable as of the date of modification. BESP was determined primarily using a probability-weighted discounted cash flow analysis. The fixed or determinable arrangement consideration was allocated to the undelivered items based on the relative selling price method and will be recognized as the services are performed or product is delivered. This amount was deducted from the sum of the consideration to be received in the future plus deferred revenue from the original 2008 arrangement as of the date of the modification of $230 million with the remainder of $206 million recognized as Other revenues in our Condensed Consolidated Statements of Income for the three months ended June 30, 2012. During the three months ended September 30, 2012, deferred revenue of $24 million was recognized as the related services were completed. In addition, we may also receive royalties and numerous individually immaterial milestones aggregating $337 million upon the achievement of various substantive success-based development and regulatory approval milestones. The receipt of these amounts, however, is contingent upon the occurrence of various future events that have a high degree of uncertainty of occurring.
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Available-for-sale investments
9 Months Ended
Sep. 30, 2012
Investments, Debt and Equity Securities [Abstract]
Available-for-sale investments
Available-for-sale investments
The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of available-for-sale investments by type of security were as follows (in millions):
Type of security as of September 30, 2012
 
Amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Estimated
fair
value
U.S. Treasury securities
 
$
3,936

 
$
24

 
$

 
$
3,960

Other government-related debt securities:
 
 
 
 
 
 
 
 
Obligations of U.S. government agencies and
FDIC-guaranteed bank debt
 
1,180

 
18

 

 
1,198

Foreign and other
 
1,656

 
56

 

 
1,712

Corporate debt securities:
 
 
 
 
 
 
 
 
Financial
 
3,158

 
99

 
(1
)
 
3,256

Industrial
 
4,208

 
114

 
(4
)
 
4,318

Other
 
420

 
12

 

 
432

Residential mortgage-backed securities
 
1,834

 
9

 
(7
)
 
1,836

Other mortgage- and asset-backed securities
 
2,062

 
10

 
(6
)
 
2,066

Money market mutual funds
 
4,000

 

 

 
4,000

Other short-term interest-bearing securities
 
2,105

 

 

 
2,105

Total debt security investments
 
24,559

 
342

 
(18
)
 
24,883

Equity securities
 
50

 
2

 

 
52

Total available-for-sale investments
 
$
24,609

 
$
344

 
$
(18
)
 
$
24,935


Type of security as of December 31, 2011
 
Amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Estimated
fair
value
U.S. Treasury securities
 
$
3,878

 
$
68

 
$

 
$
3,946

Other government-related debt securities:
 
 
 
 
 
 
 
 
Obligations of U.S. government agencies and
FDIC-guaranteed bank debt
 
1,548

 
23

 

 
1,571

Foreign and other
 
441

 
9

 

 
450

Corporate debt securities:
 
 
 
 
 
 
 
 
Financial
 
2,493

 
30

 
(15
)
 
2,508

Industrial
 
3,077

 
79

 
(10
)
 
3,146

Other
 
280

 
9

 

 
289

Residential mortgage-backed securities
 
518

 
3

 
(3
)
 
518

Other mortgage- and asset-backed securities
 
1,271

 
3

 
(7
)
 
1,267

Money market mutual funds
 
6,266

 

 

 
6,266

Total debt security investments
 
19,772

 
224

 
(35
)
 
19,961

Equity securities
 
42

 

 

 
42

Total available-for-sale investments
 
$
19,814

 
$
224

 
$
(35
)
 
$
20,003



The fair values of available-for-sale investments by classification in the Condensed Consolidated Balance Sheets were as follows (in millions):
Classification in the Condensed Consolidated Balance Sheets
 
September 30,
2012
 
December 31,
2011
Cash and cash equivalents
 
$
5,332

 
$
6,266

Marketable securities
 
19,551

 
13,695

Other assets — noncurrent
 
52

 
42

Total available-for-sale investments
 
$
24,935

 
$
20,003


Cash and cash equivalents in the table above excludes cash of $491 million and $680 million as of September 30, 2012, and December 31, 2011, respectively.
The fair values of available-for-sale debt security investments by contractual maturity, except for mortgage- and asset- backed securities that do not have a single maturity date, were as follows (in millions):
Contractual maturity
 
September 30,
2012
 
December 31,
2011
Maturing in one year or less
 
$
8,501

 
$
6,791

Maturing after one year through three years
 
4,998

 
5,855

Maturing after three years through five years
 
5,861

 
5,379

Maturing after five years through ten years
 
1,621

 
151

Mortgage- and asset-backed securities
 
3,902

 
1,785

Total debt security investments
 
$
24,883

 
$
19,961


For the three months ended September 30, 2012 and 2011, realized gains totaled $31 million and $32 million, and realized losses totaled $11 million and $12 million, respectively. For the nine months ended September 30, 2012 and 2011, realized gains totaled $147 million and $169 million, and realized losses totaled $41 million and $25 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 asset class 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 the 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. As of September 30, 2012, and December 31, 2011, we believe the cost bases for our available-for-sale investments were recoverable in all material respects.
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Inventories
9 Months Ended
Sep. 30, 2012
Inventory Disclosure [Abstract]
Inventories
Inventories
Inventories consisted of the following (in millions):
 
September 30,
2012
 
December 31,
2011
Raw materials
$
198

 
$
158

Work in process
1,755

 
1,802

Finished goods
816

 
524

Total inventories
$
2,769

 
$
2,484

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Intangible Assets
9 Months Ended
Sep. 30, 2012
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible assets
Intangible assets
Intangible assets consisted of the following (in millions):
 
September 30, 2012
 
December 31, 2011
 
Gross
carrying
amount
 
Accumulated
amortization
 
Intangible
assets, net
 
Gross
carrying
amount
 
Accumulated
amortization
 
Intangible
assets, net
Finite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
Acquired product technology rights:
 
 
 
 
 
 
 
 
 
 
 
Developed product technology
$
2,872

 
$
(1,955
)
 
$
917

 
$
2,872

 
$
(1,811
)
 
$
1,061

Core technology
1,348

 
(917
)
 
431

 
1,348

 
(850
)
 
498

Trade name
190

 
(129
)
 
61

 
190

 
(120
)
 
70

Acquired R&D technology rights
687

 
(370
)
 
317

 
350

 
(350
)
 

Other acquired intangible assets
897

 
(457
)
 
440

 
686

 
(406
)
 
280

Total finite-lived intangible assets
5,994

 
(3,828
)
 
2,166

 
5,446

 
(3,537
)
 
1,909

 
 
 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
IPR&D
1,358

 

 
1,358

 
675

 

 
675

Contract assets
156

 

 
156

 

 

 

Total indefinite-lived intangible assets
1,514

 

 
1,514

 
675

 

 
675

 
 
 
 
 
 
 
 
 
 
 
 
Total identifiable intangible assets
$
7,508

 
$
(3,828
)
 
$
3,680

 
$
6,121

 
$
(3,537
)
 
$
2,584


Acquired R&D technology rights, Other acquired intangible assets, IPR&D and Contract assets as of September 30, 2012, included the identifiable intangible assets acquired in connection with the acquisitions of Micromet, MN and KAI (see Note 2, Business combinations).
During the three months ended September 30, 2012 and 2011, we recognized amortization charges associated with our finite-lived intangible assets of $101 million and $93 million, respectively. During the nine months ended September 30, 2012 and 2011, we recognized amortization charges associated with our finite-lived intangible assets of $290 million and $289 million, respectively. The total estimated amortization charges for our finite-lived intangible assets for the three months ended December 31, 2012, and the years ended December 31, 2013, 2014, 2015, 2016 and 2017, are $103 million, $423 million, $406 million, $393 million, $372 million and $230 million, respectively.
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Financing arrangements
9 Months Ended
Sep. 30, 2012
Debt Disclosure [Abstract]
Financing arrangements
Financing arrangements
The carrying values and the fixed contractual coupon rates of our long-term borrowings were as follows (dollar amounts in millions):

September 30,
2012
 
December 31,
2011
0.375% convertible notes due 2013 (0.375% 2013 Convertible Notes)
$
2,452

 
$
2,346

1.875% notes due 2014 (1.875% 2014 Notes)
1,000

 
1,000

4.85% notes due 2014 (4.85% 2014 Notes)
1,000

 
1,000

2.30% notes due 2016 (2.30% 2016 Notes)
749

 
748

2.50% notes due 2016 (2.50% 2016 Notes)
999

 
999

2.125% notes due 2017 (2.125% 2017 Notes)
1,248

 

5.85% notes due 2017 (5.85% 2017 Notes)
1,099

 
1,099

6.15% notes due 2018 (6.15% 2018 Notes)
499

 
499

4.375% euro-denominated notes due 2018 (4.375% 2018 euro Notes)
710

 
714

5.70% notes due 2019 (5.70% 2019 Notes)
999

 
998

2.125% euro-denominated notes due 2019 (2.125% 2019 euro Notes)
871

 

4.50% notes due 2020 (4.50% 2020 Notes)
300

 
300

3.45% notes due 2020 (3.45% 2020 Notes)
897

 
897

4.10% notes due 2021 (4.10% 2021 Notes)
998

 
998

3.875% notes due 2021 (3.875% 2021 Notes)
1,745

 
1,745

3.625% notes due 2022 (3.625% 2022 Notes)
747

 

5.50% pound-sterling-denominated notes due 2026 (5.50% 2026 pound sterling Notes)
766

 
739

4.00% pound-sterling-denominated notes due 2029 (4.00% 2029 pound sterling Notes)
1,121

 

6.375% notes due 2037 (6.375% 2037 Notes)
899

 
899

6.90% notes due 2038 (6.90% 2038 Notes)
499

 
499

6.40% notes due 2039 (6.40% 2039 Notes)
996

 
996

5.75% notes due 2040 (5.75% 2040 Notes)
697

 
697

4.95% notes due 2041 (4.95% 2041 Notes)
595

 
595

5.15% notes due 2041 (5.15% 2041 Notes)
2,232

 
2,232

5.65% notes due 2042 (5.65% 2042 Notes)
1,244

 
1,244

5.375% notes due 2043 (5.375% 2043 Notes)
1,000

 

Other, including our zero-coupon convertible notes
116

 
184

Total debt
26,478

 
21,428

Less current portion
(2,458
)
 
(84
)
Total noncurrent debt
$
24,020

 
$
21,344


Debt repayments
During the nine months ended September 30, 2012, we repaid $102 million of debt, including the redemption of all of our outstanding zero-coupon convertible notes due in 2032 and debt assumed in the acquisition of MN.
Debt issuances
During the nine months ended September 30, 2012, we issued debt securities in the following offerings:

In May 2012, we issued $3.0 billion aggregate principal amount of notes, consisting of the 2.125% 2017 Notes, the 3.625% 2022 Notes and the 5.375% 2043 Notes.
In September 2012, we issued $2.0 billion aggregate principal amount of notes, consisting of the 2.125% 2019 euro Notes (€675 million aggregate principal amount) and the 4.00% 2029 pound sterling Notes (£700 million aggregate principal amount).

All of the debt issued during 2012 may be redeemed at any time at our option, in whole or in part, at the principal amount of the notes being redeemed plus accrued interest and a “make-whole” amount, as defined. In the event of a change-in-control triggering event, as defined, we may be required to purchase all or a portion of these notes at a price equal to 101% of the principal amount of the notes plus accrued interest. Debt issuance costs incurred in connection with the issuance of this debt totaling approximately $25 million are being amortized over the respective lives of the notes and the related charges are included in Interest expense, net in the Condensed Consolidated Statements of Income.
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Stockholders' equity
9 Months Ended
Sep. 30, 2012
Equity [Abstract]
Stockholders' equity
Stockholders’ equity
Stock repurchase program
Activity under our stock repurchase program was as follows (in millions):
 
2012
 
2011
 
Shares    
 
Dollars    
 
Shares    
 
Dollars    
First quarter
21.0
 
$
1,429

 

 
$

Second quarter
17.4
 
1,203

 
12.9

 
732

Third quarter
9.7
 
797

 
45.4

 
2,421

Total stock repurchases
48.1
 
$
3,429

 
58.3

 
$
3,153


As of September 30, 2012, $1.6 billion remained available under our $10 billion Board of Directors-approved stock repurchase program.
Shares issued for stock-based compensation programs
Common stock issued in connection with the Company's equity award programs totaled 8.7 million shares and 20.6 million shares for the three and nine months ended September 30, 2012, respectively.
Dividends
On December 15, 2011, the Board of Directors declared a quarterly cash dividend of $0.36 per share of common stock, which was paid on March 7, 2012. On March 15, 2012, the Board of Directors declared a quarterly cash dividend of $0.36 per share of common stock, which was paid on June 7, 2012. On July 19, 2012, the Board of Directors declared a quarterly cash dividend of $0.36 per share of common stock, which was paid on September 7, 2012. On October 10, 2012, the Board of Directors declared a quarterly cash dividend of $0.36 per share of common stock, which will be paid on December 7, 2012, to all stockholders of record as of the close of business on November 15, 2012.
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Fair value measurement
9 Months Ended
Sep. 30, 2012
Fair Value Disclosures [Abstract]
Fair value measurement
Fair value measurement
To estimate the fair value of our financial assets and liabilities we use valuation approaches 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 divided 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 for measuring 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 fair value of each major class of the Company’s financial assets and liabilities measured at fair value on a recurring basis was as follows (in millions):
 
 
Quoted prices  in
active markets for
identical assets
(Level 1)
 
Significant
other  observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
 
 
Fair value measurement
 
 
 
 
 
as of September 30, 2012, using:
 
 
 
 
Total
Assets:
 
 
 
 
 
 
 
 
Available-for-sale securities:
 
 
 
 
 
 
 
 
U.S. Treasury securities
 
$
3,960

 
$

 
$

 
$
3,960

Other government-related debt securities:
 
 
 
 
 
 
 
 
Obligations of U.S. government agencies and FDIC-guaranteed bank debt
 

 
1,198

 

 
1,198

Foreign and other
 

 
1,712

 

 
1,712

Corporate debt securities:
 
 
 
 
 
 
 
 
Financial
 

 
3,256

 

 
3,256

Industrial
 

 
4,318

 

 
4,318

Other
 

 
432

 

 
432

Residential mortgage-backed securities
 

 
1,836

 

 
1,836

Other mortgage- and asset-backed securities
 

 
2,066

 

 
2,066

Money market mutual funds
 
4,000

 

 

 
4,000

Other short-term interest-bearing securities
 

 
2,105

 

 
2,105

Equity securities
 
52

 

 

 
52

Derivatives:
 
 
 
 
 
 
 
 
Foreign currency contracts
 

 
87

 

 
87

Cross-currency swap contracts
 

 
12

 

 
12

Total assets
 
$
8,012

 
$
17,022

 
$

 
$
25,034

Liabilities:
 
 
 
 
 
 
 
 
Derivatives:
 
 
 
 
 
 
 
 
Foreign currency contracts
 
$

 
$
55

 
$

 
$
55

Cross-currency swap contracts
 

 
27

 

 
27

Contingent consideration obligations in connection with a business combination
 

 

 
195

 
195

Total liabilities
 
$

 
$
82

 
$
195

 
$
277


 
 
Quoted prices  in
active markets for
identical assets
(Level 1)
 
Significant
other  observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
 
 
Fair value measurement
 
 
 
 
 
as of December 31, 2011, using:
 
 
 
 
Total
Assets:
 
 
 
 
 
 
 
 
Available-for-sale investments:
 
 
 
 
 
 
 
 
U.S. Treasury securities
 
$
3,946

 
$

 
$

 
$
3,946

Other government-related debt securities:
 
 
 
 
 
 
 
 
Obligations of U.S. government agencies and FDIC-guaranteed bank debt
 

 
1,571

 

 
1,571

Foreign and other
 

 
450

 

 
450

Corporate debt securities:
 
 
 
 
 
 
 
 
Financial
 

 
2,508

 

 
2,508

Industrial
 

 
3,146

 

 
3,146

Other
 

 
289

 

 
289

Residential mortgage-backed securities
 

 
518

 

 
518

Other mortgage- and asset-backed securities
 

 
1,267

 

 
1,267

Money market mutual funds
 
6,266

 

 

 
6,266

Equity securities
 
42

 

 

 
42

Derivatives:
 
 
 
 
 
 
 
 
Foreign currency contracts
 

 
172

 

 
172

Interest rate swap contracts
 

 
377

 

 
377

Total assets
 
$
10,254

 
$
10,298

 
$

 
$
20,552

Liabilities:
 
 
 
 
 
 
 
 
Derivatives:
 
 
 
 
 
 
 
 
Foreign currency contracts
 
$

 
$
48

 
$

 
$
48

Cross-currency swap contracts
 

 
26

 

 
26

Contingent consideration obligations in connection with a business combination
 

 

 
190

 
190

Total liabilities
 
$

 
$
74

 
$
190

 
$
264


The fair values 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.
Most of our other government-related and corporate debt securities are investment grade with maturity dates of five years or less from the balance sheet date. Our other government-related debt securities portfolio is composed of securities with weighted-average credit ratings of A+ by Standard & Poor’s (S&P) and AA- or equivalent by Moody’s Investors Service, 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 and Moody’s and A by Fitch. We estimate the fair values of these securities by 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 of and broker/dealer quotes on the same or similar securities; issuer credit spreads; benchmark securities; and other observable inputs.
Our residential mortgage-, other mortgage- and asset-backed securities portfolio is composed entirely of senior tranches, with credit ratings of AA+ by S&P and AAA or equivalent by Moody’s or Fitch. We estimate the fair values of these securities by 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 of and broker/dealer quotes on 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 primarily over a three-year time horizon and all are with counterparties that have minimum credit ratings of A- or equivalent by S&P, Moody’s or Fitch. We estimate the fair values of these contracts by 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 foreign currency rates, London Interbank Offered Rates (LIBOR), swap rates 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. (See Note 12, Derivative instruments.)
Our cross-currency swap contracts are with counterparties that have minimum credit ratings of A- or equivalent by S&P, Moody’s or Fitch. We estimate the fair values of these contracts by 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 foreign currency exchange rates, LIBOR, swap rates, obligor credit default swap rates and cross-currency basis swap spreads. (See Note 12, Derivative instruments.)
All of our interest rate swap contracts were terminated during the three months ended June 30, 2012 (See Note 12, Derivative instruments.) While outstanding, our interest rate swap contracts were with counterparties that had minimum credit ratings of A- or equivalent by S&P, Moody’s or Fitch. We estimated the fair values of these contracts by using an income-based industry standard valuation model for which all significant inputs were observable either directly or indirectly. These inputs included LIBOR, swap rates and obligor credit default swap rates.
As a result of our acquisition of BioVex Group, Inc. in March 2011, we are obligated to pay its former shareholders up to $575 million of additional consideration contingent upon achieving up to eight separate regulatory and sales-related milestones with regard to talimogene laherparepvec, which was acquired in the acquisition and is currently in phase 3 clinical development for the treatment of malignant melanoma. The three largest of these potential payments are $125 million each, including the amount due upon completion of the filing of a Biologics License Application with the FDA. Potential payments are also due upon the first commercial sale in each of the United States and the European Union (EU) following receipt of marketing approval which includes use of the product in specified patient populations and upon achievement of specified levels of sales within specified periods of time.
These contingent consideration obligations are recorded at their estimated fair values with any changes in fair value recognized in earnings. The fair value measurements of these obligations are based on significant unobservable inputs, including the estimated probabilities and timing of achieving the related regulatory events in connection with these milestones and, as applicable, estimated annual sales. Significant changes (increases or decreases) in these inputs would result in corresponding changes in the fair values of the contingent consideration obligations.
Annually, or whenever there are significant changes in underlying key assumptions, we estimate the fair values of these contingent consideration obligations by using a combination of probability-adjusted discounted cash flows, option pricing techniques and a simulation model of expected annual sales. Quarterly, a review of key assumptions is performed by management in our R&D and commercial sales organizations. In the absence of any significant changes in key assumptions, the quarterly determination of fair values of these contingent consideration obligations reflects the passage of time and changes in our credit risk adjusted rate used to discount obligations to present value. During the three and nine months ended September 30, 2012, there were no significant changes in underlying key assumptions; and the increases in the estimated aggregate fair value of $2 million and $5 million, respectively, were recorded in Other operating expenses in the Condensed Consolidated Statements of Income.
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 nine months ended September 30, 2012 and 2011, of assets and liabilities that are not measured at fair value on a recurring basis. See Note 2, Business combinations for further discussion on an impairment of an indefinite-lived intangible asset that we recognized during the three months ended September 30, 2012.
Summary of the fair value of other financial instruments
Borrowings
We estimate the fair values of our convertible notes (Level 2) by 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. The fair value of our convertible notes represents only the liability components of these instruments, because their equity components are included in Common stock and additional paid-in capital in the Condensed Consolidated Balance Sheets. We estimate the fair values of our other long-term notes (Level 2) by 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 of and broker/dealer quotes on the same or similar securities; credit spreads; benchmark yields; foreign currency exchange rates, as applicable; and other observable inputs. As of September 30, 2012, and December 31, 2011, the aggregate fair values of our long-term debt were $29.5 billion and $23.0 billion, respectively, and the carrying values were $26.5 billion and $21.4 billion, respectively.
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Derivative instruments
9 Months Ended
Sep. 30, 2012
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative instruments
Derivative instruments

The Company is exposed to foreign currency exchange rate and interest rate risks related to its business operations. To reduce our risks related to these exposures, we utilize or have utilized certain derivative instruments, including foreign currency forward, foreign currency option, cross-currency swap, forward interest rate and interest rate swap contracts. We do not use derivatives for speculative trading purposes.
Cash flow hedges
We are exposed to possible changes in the values of certain anticipated foreign currency cash flows resulting from changes in foreign currency exchange rates, associated primarily with our euro-denominated international product sales. Increases and decreases in the cash flows associated with our international product sales due to movements in foreign currency exchange rates are offset partially 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 in successive periods. As of September 30, 2012, and December 31, 2011, we had open foreign currency forward contracts with notional amounts of $3.0 billion and $3.5 billion, respectively, and open foreign currency option contracts with notional amounts of $261 million and $292 million, respectively. These foreign currency forward and option contracts, primarily euro based, have been designated as cash flow hedges, and accordingly, the effective portions 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.
To hedge our exposure to foreign currency exchange rate risk associated with certain of our long-term notes denominated in foreign currencies, we entered into cross-currency swap contracts. Under the terms of these contracts, we paid euros/pounds sterling and received U.S. dollars for the notional amounts at the inception of the contracts, and we exchange interest payments based on these notional amounts at fixed rates over the lives of the contracts in which we pay U.S. dollars and receive euros/pounds sterling. In addition, we will pay U.S. dollars to and receive euros/pounds sterling from the counterparties at the maturities of the contracts for these same notional amounts. The terms of these contracts correspond to the related hedged notes, effectively converting the interest payments and principal repayment on these notes from euros/pounds sterling to U.S. dollars. These cross-currency swap contracts have been designated as cash flow hedges, and accordingly, the effective portions of the unrealized gains and losses on these contracts are reported in AOCI and reclassified to earnings in the same periods during which the hedged debt affects earnings. The notional amounts and interest rates of our cross-currency swaps are as follows (notional amounts in millions):
 
 
Foreign currency
 
U.S. dollars
Hedged notes
 
Notional Amount
 
Interest rate
 
Notional Amount
 
Interest rate
2.125% 2019 euro Notes
 
675

 
2.125
%
 
$
864

 
2.6
%
5.50% 2026 pound sterling Notes
 
£
475

 
5.50
%
 
$
748

 
5.8
%
4.00% 2029 pound sterling Notes
 
£
700

 
4.00
%
 
$
1,122

 
4.3
%

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 effective portion of the unrealized gain/(loss) recognized in other comprehensive income for our derivative instruments designated as cash flow hedges was as follows (in millions):
 
 
Three months ended
 
Nine months ended
 
 
September 30,
 
September 30,
Derivatives in cash flow hedging relationships
 
2012
 
2011
 
2012
 
2011
Foreign currency contracts
 
$
(127
)
 
$
105

 
$
(25
)
 
$
(113
)
Cross-currency swap contracts
 
38

 

 
11

 

Forward interest rate contracts
 

 

 
(7
)
 

Total
 
$
(89
)
 
$
105

 
$
(21
)
 
$
(113
)

    
The location in the Condensed Consolidated Statements of Income and the effective portion of the gain/(loss) reclassified from AOCI into earnings for our derivative instruments designated as cash flow hedges were as follows (in millions):
 
 
 
 
Three months ended
 
Nine months ended
 
 
 
 
September 30,
 
September 30,
Derivatives in cash flow hedging
relationships
 
Statements of Income location
 
2012
 
2011
 
2012
 
2011
Foreign currency contracts
 
Product sales
 
$
38

 
$
(41
)
 
$
67

 
$
(82
)
Cross-currency swap contracts
 
Interest and other income, net
 
58

 

 
54

 

Forward interest rate contracts
 
Interest expense, net
 

 
(1
)
 
(1
)
 
(1
)
Total
 
 
 
$
96

 
$
(42
)
 
$
120

 
$
(83
)

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 losses for both the three and nine months ended September 30, 2012. The ineffective portions of these hedging instruments were approximately $1 million of gains for both the three and nine months ended September 30, 2011. As of September 30, 2012, the amounts expected to be reclassified from AOCI into earnings over the next 12 months are approximately $3 million of net gains on our foreign currency and cross-currency swap 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 rates on our long-term debt, we entered into interest rate swap contracts, which qualified and were designated as fair value hedges. The terms of these interest rate swap contracts corresponded to the related hedged debt instruments and effectively converted a fixed interest rate coupon to a floating LIBOR-based coupon over the lives of the respective notes. While outstanding, the rates on these swaps ranged from LIBOR plus 0.3% to LIBOR plus 2.6%. As of December 31, 2011, we had interest rate swap contracts with aggregate notional amounts of $3.6 billion with respect to our 4.85% 2014 Notes, 5.85% 2017 Notes, 6.15% 2018 Notes and 5.70% 2019 Notes. Due to historically low interest rates, during the three months ended June 30, 2012, we terminated all of these interest rate swap contracts resulting in the receipt of $397 million from the counterparties, which was included in Net cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows for the current year period. This amount is being recognized in Interest expense, net in the Condensed Consolidated Statements of Income over the remaining lives of the related debt issuances.
For derivative instruments that are designated and qualify as fair value hedges, 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 is recognized in current earnings. While the interest rate swaps were outstanding, for the nine months ended September 30, 2012, we included the unrealized losses on the hedged debt of $20 million in the same line item, Interest expense, net, in the Condensed Consolidated Statements of Income, as the offsetting unrealized gains of $20 million on the related interest rate swap contracts. For the three and nine months ended September 30, 2011, we included the unrealized losses on the hedged debt of $149 million and $186 million, respectively, in the same line item, Interest expense, net, in the Condensed Consolidated Statements of Income, as the offsetting unrealized gains of $149 million and $186 million, respectively, on the related interest rate swap agreements.
Derivatives not designated as hedges
We enter into foreign currency forward contracts that are not designated as hedging transactions to reduce our exposure to foreign currency fluctuations of certain assets and liabilities denominated in foreign currencies. These exposures are hedged on a month-to-month basis. As of September 30, 2012, and December 31, 2011, the total notional amounts of these foreign currency forward contracts were $743 million and $389 million, respectively.
The location in the Condensed Consolidated Statements of Income and the amount of gain/(loss) recognized in earnings for our derivative instruments not designated as hedging instruments were as follows (in millions):
 
 
 
 
Three months ended
 
Nine months ended
  
 
 
 
September 30,
 
September 30,
Derivatives not designated as
hedging instruments
 
Statements of Income location
 
2012
 
2011
 
2012
 
2011
Foreign currency contracts
 
Interest and other income, net
 
$
3

 
$
50

 
$
13

 
$
(10
)


The fair values of derivatives included in the Condensed Consolidated Balance Sheets were as follows (in millions):
 
 
Derivative assets
 
Derivative liabilities
September 30, 2012
 
Balance Sheet location
 
Fair value
 
Balance Sheet location
 
Fair value
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
Cross-currency swap contracts
 
Other current assets/ Other noncurrent assets
 
$
12

 
Accrued liabilities/ Other noncurrent liabilities
 
$
27

Foreign currency contracts
 
Other current assets/ Other noncurrent assets
 
82

 
Accrued liabilities/ Other noncurrent liabilities
 
54

Total derivatives designated as hedging instruments
 
 
 
94

 
 
 
81

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
Foreign currency contracts
 
Other current assets
 
5

 
Accrued liabilities
 
1

Total derivatives not designated as hedging instruments
 
 
 
5

 
 
 
1

Total derivatives
 
 
 
$
99

 
 
 
$
82

 
 
Derivative assets
 
Derivative liabilities
December 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 noncurrent assets
 
$
377

 
Accrued liabilities/ Other noncurrent liabilities
 
$

Cross-currency swap contracts
 
Other current assets/ Other noncurrent assets
 

 
Accrued liabilities/ Other noncurrent liabilities
 
26

Foreign currency contracts
 
Other current assets/ Other noncurrent assets
 
172

 
Accrued liabilities/ Other noncurrent liabilities
 
48

Total derivatives designated as hedging instruments
 
 
 
549

 
 
 
74

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
Foreign currency contracts
 
Other current assets
 

 
Accrued liabilities
 

Total derivatives not designated as hedging instruments
 
 
 

 
 
 

Total derivatives
 
 
 
$
549

 
 
 
$
74


Our derivative contracts that were in liability positions as of September 30, 2012, contain certain credit-risk-related contingent provisions that would be 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 for the nine months ended September 30, 2012 and 2011, are included within Net cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows.
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Contingencies and commitments
9 Months Ended
Sep. 30, 2012
Commitments and Contingencies Disclosure [Abstract]
Contingencies and commitments
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, that are complex in nature and have outcomes that are difficult to predict. See Note 18, Contingencies and commitments to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2011, and Note 13, Contingencies and commitments to our condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2012, and June 30, 2012, for further discussion of certain of our legal proceedings and other matters.
We record accruals for loss contingencies to the extent that we conclude that it is probable that a liability has been incurred and the amount of the related loss can be reasonably estimated. We evaluate, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that has been accrued previously. Excluding fees paid to our external counsel, as of September 30, 2012, the Company has accrued $806 million associated with the previously-announced proposed settlement of the allegations arising out of the federal civil and criminal investigations pending in the U.S. Attorney’s Offices for the Eastern District of New York and the Western District of Washington (the Federal Investigations) and the proposed settlement of an additional civil qui tam matter we now expect to be resolved in connection with the Federal Investigations (see Government Investigations and Qui Tam Actions below), which includes accrued interest potentially due on the proposed settlement.
Our legal proceedings range from cases brought by a single plaintiff to a class action with thousands of putative class members. These legal proceedings, as well as other matters, involve various aspects of our business and a variety of claims (including but not limited to patent infringement, marketing, pricing and trade practices and securities law), some of which present novel factual allegations and/or unique legal theories. Except for the proposed settlement of the allegations arising out of the Federal Investigations and the settlement of the additional civil qui tam expected to be resolved in connection with the Federal Investigations, in each of the matters described in this filing, in Note 18 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2011, or in Note 13 to our condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2012, and June 30, 2012, plaintiffs seek an award of a not-yet-quantified amount of damages or an amount that is not material. In addition, a number of the matters pending against us are at very early stages of the legal process (which in complex proceedings of the sort faced by us often extend for several years). As a result, except for the proposed settlement of the allegations arising out of the Federal Investigations and the settlement of the additional civil qui tam expected to be resolved in connection with the Federal Investigations, none of the matters described in these filings have progressed sufficiently through discovery and/or development of important factual information and legal issues to enable us to estimate a range of possible loss, if any, or such amounts are not material. While it is not possible to accurately predict or determine the eventual outcomes of these items, an adverse determination in one or more of these items currently pending, including further adverse determinations associated with the pending investigations described above, could have a material adverse effect on our consolidated results of operations, financial position or cash flows.
Certain recent developments concerning our legal proceedings and other matters are discussed below:
Co-Pay Litigation 
A class action lawsuit titled American Federation of State, County and Municipal Employees District Council 37 Health & Security Plan and Sergeants Benevolent Association Health and Welfare Fund, individually and on behalf of all others similarly situated v. Amgen and Pfizer Inc. (Pfizer) was filed on March 7, 2012 in the U.S. District Court for the Eastern District of New York. That suit was dismissed and re-filed in the U.S. District Court for the Southern District of New York on March 27, 2012. The complaint challenged the lawfulness of prescription co-pay assistance programs implemented by Amgen and Pfizer for certain of their products, including Amgen's Enbrel® and Sensipar®. On October 4, 2012, all claims against Amgen in this lawsuit were voluntarily dismissed.  

Government Investigations and Qui Tam Actions
In October 2011, Amgen announced it had reached an agreement in principle to settle allegations relating to its sales and marketing practices arising out of the Federal Investigations. Amgen continues to engage in productive settlement discussions with government representatives and currently expects that the agreement in principle will be formalized in a written settlement agreement (the Settlement Agreement) before the end of 2012. Amgen continues to expect that the Settlement Agreement will resolve the Federal Investigations, the related state Medicaid claims and the claims in U.S. ex rel. Westmoreland v. Amgen, et al. and nine other Qui Tam Actions described in Note 18, Contingencies and commitments to its consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2011, in a manner that will not result in exclusion from U.S. federally-funded health care programs. Amgen now expects that the Settlement Agreement will also resolve the claims of one of the other civil qui tam actions that were not included in the agreement in principle but of which Amgen was made aware during settlement discussions. (See Note 18, Contingencies and commitments to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2011.) The additional qui tam action that Amgen expects will be resolved by the Settlement Agreement (the Additional Qui Tam) includes allegations that Amgen's promotional, contracting, sales and marketing activities and arrangements relating to ENBREL caused the submission of various false claims under the Federal Civil False Claims Act and various State False Claims Acts. Until the Settlement Agreement is signed, the Additional Qui Tam will remain under seal in the U.S. federal court in which it was filed.
In connection with entering into the Settlement Agreement, Amgen expects to also enter into a corporate integrity agreement with the Office of Inspector General of the U.S. Department of Health and Human Services. The proposed settlement remains subject to continuing discussions regarding the components of the Settlement Agreement and the corporate integrity agreement and the completion and execution of all required documentation, and until the proposed settlement and the corporate integrity agreement each become final, there can be no guarantee that these matters will be resolved by the agreement in principle.
As previously disclosed, as part of the settlement discussions described above, Amgen was made aware that it is a defendant in several other civil qui tam actions (the Other Qui Tams) in addition to those included in the agreement in principle. As stated above, we now expect that one of the Other Qui Tams (the Additional Qui Tam) will be resolved by the Settlement Agreement. Amgen has been informed that it has been dismissed from two of the Other Qui Tams: U.S. ex rel. May v. Amgen, et al. and another matter that continues under seal against other defendants. Amgen has reached a separate agreement in principle and expects to enter into a written settlement agreement to resolve a fourth Other Qui Tam, for which Amgen has accrued an immaterial amount, before the end of 2012; that matter will remain under seal in the U.S. federal court where it was filed until the settlement agreement is signed. The fifth and final Other Qui Tam action remains under seal in the U.S. federal court in which it was filed and includes allegations that Amgen's promotional, contracting, sales and marketing activities and arrangements relating to Aranesp®, NEUPOGEN®, Neulasta®, XGEVA®, Prolia®, Vectibix® and Nplate® caused the submission of various false claims under the Federal Civil False Claims Act and various State False Claims Acts. Amgen continues to cooperate fully with the government in its investigation of these allegations.
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Summary of significant accounting policies (Policies)
9 Months Ended
Sep. 30, 2012
Accounting Policies [Abstract]
Business
Business
Amgen Inc. (including its subsidiaries, referred to as “Amgen,” “the Company,” “we,” “our” or “us”) is a global biotechnology pioneer that discovers, develops, manufactures and delivers innovative human therapeutics.  Our medicines help millions of patients in the fight against cancer, kidney disease, rheumatoid arthritis, bone disease, and other serious illnesses.  We operate in one business segment: human therapeutics.
Basis of presentation
Basis of presentation
The financial information for the three and nine months ended September 30, 2012 and 2011, 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.
Certain prior-period amounts shown within Cash flows from operating activities in our Condensed Consolidated Statements of Cash Flows have been reclassified to conform to the current-period presentation.
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, 2011, and in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2012, and June 30, 2012.
Principles of consolidation
Principles of consolidation
The condensed consolidated financial statements include the accounts of Amgen as well as its majority-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.
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 $6.4 billion and $5.8 billion as of September 30, 2012, and December 31, 2011, respectively.
Comprehensive income
Comprehensive income
In January 2012, we adopted a new accounting standard that requires additional disclosures for comprehensive income. As permitted under this standard, we have elected to present comprehensive income in two separate but consecutive financial statements, consisting of a statement of income followed by a separate statement of comprehensive income. This standard was required to be applied retrospectively beginning January 1, 2012, except for certain provisions for which adoption was delayed.
Cost savings initiatives
Cost savings initiatives
Included in Other operating expenses for the three and nine months ended September 30, 2012, are charges for certain cost savings initiatives of $36 million and $106 million, respectively, compared with $68 million and $79 million for the corresponding periods of the prior year.
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Business combinations (Tables)
9 Months Ended
Sep. 30, 2012
Micromet, Inc. [Member]
Business Combinations [Line Items]
Allocation of the total consideration to the acquisition date fair values of assets acquired and liabilities assumed
The consideration to acquire Micromet totaled $1,146 million in cash which was allocated to the acquisition date fair values of assets acquired and liabilities assumed as follows (in millions):
Indefinite-lived intangible assets:
 
In-process research and development (IPR&D)
$
440

Contract assets
170

Finite-lived intangible assets — Developed technology
350

Goodwill
330

Cash and marketable securities
154

Deferred tax assets
43

Deferred tax liabilities
(317
)
Other assets (liabilities), net
(24
)
Total consideration
$
1,146

Mustafa Nevzat Pharmaceuticals [Member]
Business Combinations [Line Items]
Allocation of the total consideration to the acquisition date fair values of assets acquired and liabilities assumed
The consideration to acquire MN totaled $677 million in cash which was allocated to the acquisition date fair values of assets acquired and liabilities assumed as follows (in millions):
Finite-lived intangible assets
$
163

Property, plant and equipment
100

Trade receivables
79

Inventories
52

Goodwill
382

Deferred tax liabilities
(45
)
Other assets (liabilities), net
(54
)
Total consideration
$
677

KAI Pharmaceuticals [Member]
Business Combinations [Line Items]
Allocation of the total consideration to the acquisition date fair values of assets acquired and liabilities assumed
The consideration to acquire KAI totaled $332 million in cash which was allocated to the acquisition date fair values of assets acquired and liabilities assumed as follows (in millions):
Indefinite-lived intangible assets - IPR&D
$
260

Goodwill
146

Deferred tax liabilities
(100
)
Other assets (liabilities), net
26

Total consideration
$
332

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Earnings per share (Tables)
9 Months Ended
Sep. 30, 2012
Earnings Per Share [Abstract]
Computation for basic and diluted earnings per share
The computation for basic and diluted EPS was as follows (in millions, except per-share data):
 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2012
 
2011
 
2012
 
2011
Income (Numerator):
 
 
 
 
 
 
 
Net income for basic and diluted EPS
$
1,107

 
$
454

 
$
3,557

 
$
2,749

 
 
 
 
 
 
 
 
Shares (Denominator):
 
 
 
 
 
 
 
Weighted-average shares for basic EPS
771

 
907

 
779

 
922

Effect of dilutive securities
12

 
7

 
10

 
8

Weighted-average shares for diluted EPS
783

 
914

 
789

 
930

 
 
 
 
 
 
 
 
Basic EPS
$
1.44

 
$
0.50

 
$
4.57

 
$
2.98

Diluted EPS
$
1.41

 
$
0.50

 
$
4.51

 
$
2.96

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Available-for-sale investments (Tables)
9 Months Ended
Sep. 30, 2012
Investments, Debt and Equity Securities [Abstract]
Amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of available-for-sale investments by type of security
The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of available-for-sale investments by type of security were as follows (in millions):
Type of security as of September 30, 2012
 
Amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Estimated
fair
value
U.S. Treasury securities
 
$
3,936

 
$
24

 
$

 
$
3,960

Other government-related debt securities:
 
 
 
 
 
 
 
 
Obligations of U.S. government agencies and
FDIC-guaranteed bank debt
 
1,180

 
18

 

 
1,198

Foreign and other
 
1,656

 
56

 

 
1,712

Corporate debt securities:
 
 
 
 
 
 
 
 
Financial
 
3,158

 
99

 
(1
)
 
3,256

Industrial
 
4,208

 
114

 
(4
)
 
4,318

Other
 
420

 
12

 

 
432

Residential mortgage-backed securities
 
1,834

 
9

 
(7
)
 
1,836

Other mortgage- and asset-backed securities
 
2,062

 
10

 
(6
)
 
2,066

Money market mutual funds
 
4,000

 

 

 
4,000

Other short-term interest-bearing securities
 
2,105

 

 

 
2,105

Total debt security investments
 
24,559

 
342

 
(18
)
 
24,883

Equity securities
 
50

 
2

 

 
52

Total available-for-sale investments
 
$
24,609

 
$
344

 
$
(18
)
 
$
24,935


Type of security as of December 31, 2011
 
Amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Estimated
fair
value
U.S. Treasury securities
 
$
3,878

 
$
68

 
$

 
$
3,946

Other government-related debt securities:
 
 
 
 
 
 
 
 
Obligations of U.S. government agencies and
FDIC-guaranteed bank debt
 
1,548

 
23

 

 
1,571

Foreign and other
 
441

 
9

 

 
450

Corporate debt securities:
 
 
 
 
 
 
 
 
Financial
 
2,493

 
30

 
(15
)
 
2,508

Industrial
 
3,077

 
79

 
(10
)
 
3,146

Other
 
280

 
9

 

 
289

Residential mortgage-backed securities
 
518

 
3

 
(3
)
 
518

Other mortgage- and asset-backed securities
 
1,271

 
3

 
(7
)
 
1,267

Money market mutual funds
 
6,266

 

 

 
6,266

Total debt security investments
 
19,772

 
224

 
(35
)
 
19,961

Equity securities
 
42

 

 

 
42

Total available-for-sale investments
 
$
19,814

 
$
224

 
$
(35
)
 
$
20,003

Fair values of available-for-sale investments by classification in the Consolidated Balance Sheets
The fair values of available-for-sale investments by classification in the Condensed Consolidated Balance Sheets were as follows (in millions):
Classification in the Condensed Consolidated Balance Sheets
 
September 30,
2012
 
December 31,
2011
Cash and cash equivalents
 
$
5,332

 
$
6,266

Marketable securities
 
19,551

 
13,695

Other assets — noncurrent
 
52

 
42

Total available-for-sale investments
 
$
24,935

 
$
20,003

Fair values of available-for-sale debt security investments by contractual maturity
The fair values of available-for-sale debt security investments by contractual maturity, except for mortgage- and asset- backed securities that do not have a single maturity date, were as follows (in millions):
Contractual maturity
 
September 30,
2012
 
December 31,
2011
Maturing in one year or less
 
$
8,501

 
$
6,791

Maturing after one year through three years
 
4,998

 
5,855

Maturing after three years through five years
 
5,861

 
5,379

Maturing after five years through ten years
 
1,621

 
151

Mortgage- and asset-backed securities
 
3,902

 
1,785

Total debt security investments
 
$
24,883

 
$
19,961

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Inventories (Tables)
9 Months Ended
Sep. 30, 2012
Inventory Disclosure [Abstract]
Inventories
Inventories consisted of the following (in millions):
 
September 30,
2012
 
December 31,
2011
Raw materials
$
198

 
$
158

Work in process
1,755

 
1,802

Finished goods
816

 
524

Total inventories
$
2,769

 
$
2,484

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Intangible Assets (Tables)
9 Months Ended
Sep. 30, 2012
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible assets
Intangible assets consisted of the following (in millions):
 
September 30, 2012
 
December 31, 2011
 
Gross
carrying
amount
 
Accumulated
amortization
 
Intangible
assets, net
 
Gross
carrying
amount
 
Accumulated
amortization
 
Intangible
assets, net
Finite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
Acquired product technology rights:
 
 
 
 
 
 
 
 
 
 
 
Developed product technology
$
2,872

 
$
(1,955
)
 
$
917

 
$
2,872

 
$
(1,811
)
 
$
1,061

Core technology
1,348

 
(917
)
 
431

 
1,348

 
(850
)
 
498

Trade name
190

 
(129
)
 
61

 
190

 
(120
)
 
70

Acquired R&D technology rights
687

 
(370
)
 
317

 
350

 
(350
)
 

Other acquired intangible assets
897

 
(457
)
 
440

 
686

 
(406
)
 
280

Total finite-lived intangible assets
5,994

 
(3,828
)
 
2,166

 
5,446

 
(3,537
)
 
1,909

 
 
 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
IPR&D
1,358

 

 
1,358

 
675

 

 
675

Contract assets
156

 

 
156

 

 

 

Total indefinite-lived intangible assets
1,514

 

 
1,514

 
675

 

 
675

 
 
 
 
 
 
 
 
 
 
 
 
Total identifiable intangible assets
$
7,508

 
$
(3,828
)
 
$
3,680

 
$
6,121

 
$
(3,537
)
 
$
2,584

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Financing arrangements (Tables)
9 Months Ended
Sep. 30, 2012
Debt Disclosure [Abstract]
Carrying values and the fixed contractual coupon rates of long-term borrowings
The carrying values and the fixed contractual coupon rates of our long-term borrowings were as follows (dollar amounts in millions):

September 30,
2012
 
December 31,
2011
0.375% convertible notes due 2013 (0.375% 2013 Convertible Notes)
$
2,452

 
$
2,346

1.875% notes due 2014 (1.875% 2014 Notes)
1,000

 
1,000

4.85% notes due 2014 (4.85% 2014 Notes)
1,000

 
1,000

2.30% notes due 2016 (2.30% 2016 Notes)
749

 
748

2.50% notes due 2016 (2.50% 2016 Notes)
999

 
999

2.125% notes due 2017 (2.125% 2017 Notes)
1,248

 

5.85% notes due 2017 (5.85% 2017 Notes)
1,099

 
1,099

6.15% notes due 2018 (6.15% 2018 Notes)
499

 
499

4.375% euro-denominated notes due 2018 (4.375% 2018 euro Notes)
710

 
714

5.70% notes due 2019 (5.70% 2019 Notes)
999

 
998

2.125% euro-denominated notes due 2019 (2.125% 2019 euro Notes)
871

 

4.50% notes due 2020 (4.50% 2020 Notes)
300

 
300

3.45% notes due 2020 (3.45% 2020 Notes)
897

 
897

4.10% notes due 2021 (4.10% 2021 Notes)
998

 
998

3.875% notes due 2021 (3.875% 2021 Notes)
1,745

 
1,745

3.625% notes due 2022 (3.625% 2022 Notes)
747

 

5.50% pound-sterling-denominated notes due 2026 (5.50% 2026 pound sterling Notes)
766

 
739

4.00% pound-sterling-denominated notes due 2029 (4.00% 2029 pound sterling Notes)
1,121

 

6.375% notes due 2037 (6.375% 2037 Notes)
899

 
899

6.90% notes due 2038 (6.90% 2038 Notes)
499

 
499

6.40% notes due 2039 (6.40% 2039 Notes)
996

 
996

5.75% notes due 2040 (5.75% 2040 Notes)
697

 
697

4.95% notes due 2041 (4.95% 2041 Notes)
595

 
595

5.15% notes due 2041 (5.15% 2041 Notes)
2,232

 
2,232

5.65% notes due 2042 (5.65% 2042 Notes)
1,244

 
1,244

5.375% notes due 2043 (5.375% 2043 Notes)
1,000

 

Other, including our zero-coupon convertible notes
116

 
184

Total debt
26,478

 
21,428

Less current portion
(2,458
)
 
(84
)
Total noncurrent debt
$
24,020

 
$
21,344

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Stockholders' equity (Tables)
9 Months Ended
Sep. 30, 2012
Equity [Abstract]
Summary of activity under our stock repurchase program
Activity under our stock repurchase program was as follows (in millions):
 
2012
 
2011
 
Shares    
 
Dollars    
 
Shares    
 
Dollars    
First quarter
21.0
 
$
1,429

 

 
$

Second quarter
17.4
 
1,203

 
12.9

 
732

Third quarter
9.7
 
797

 
45.4

 
2,421

Total stock repurchases
48.1
 
$
3,429

 
58.3

 
$
3,153

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Fair value measurement (Tables)
9 Months Ended
Sep. 30, 2012
Fair Value Disclosures [Abstract]
Fair value of each major class of financial assets and liabilities measured at fair value on a recurring basis
The fair value of each major class of the Company’s financial assets and liabilities measured at fair value on a recurring basis was as follows (in millions):
 
 
Quoted prices  in
active markets for
identical assets
(Level 1)
 
Significant
other  observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
 
 
Fair value measurement
 
 
 
 
 
as of September 30, 2012, using:
 
 
 
 
Total
Assets:
 
 
 
 
 
 
 
 
Available-for-sale securities:
 
 
 
 
 
 
 
 
U.S. Treasury securities
 
$
3,960

 
$

 
$

 
$
3,960

Other government-related debt securities:
 
 
 
 
 
 
 
 
Obligations of U.S. government agencies and FDIC-guaranteed bank debt
 

 
1,198

 

 
1,198

Foreign and other
 

 
1,712

 

 
1,712

Corporate debt securities:
 
 
 
 
 
 
 
 
Financial
 

 
3,256

 

 
3,256

Industrial
 

 
4,318

 

 
4,318

Other
 

 
432

 

 
432

Residential mortgage-backed securities
 

 
1,836

 

 
1,836

Other mortgage- and asset-backed securities
 

 
2,066

 

 
2,066

Money market mutual funds
 
4,000

 

 

 
4,000

Other short-term interest-bearing securities
 

 
2,105

 

 
2,105

Equity securities
 
52

 

 

 
52

Derivatives:
 
 
 
 
 
 
 
 
Foreign currency contracts
 

 
87

 

 
87

Cross-currency swap contracts
 

 
12

 

 
12

Total assets
 
$
8,012

 
$
17,022

 
$

 
$
25,034

Liabilities:
 
 
 
 
 
 
 
 
Derivatives:
 
 
 
 
 
 
 
 
Foreign currency contracts
 
$

 
$
55

 
$

 
$
55

Cross-currency swap contracts
 

 
27

 

 
27

Contingent consideration obligations in connection with a business combination
 

 

 
195

 
195

Total liabilities
 
$

 
$
82

 
$
195

 
$
277

 
 
Quoted prices  in
active markets for
identical assets
(Level 1)
 
Significant
other  observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
 
 
Fair value measurement
 
 
 
 
 
as of December 31, 2011, using:
 
 
 
 
Total
Assets:
 
 
 
 
 
 
 
 
Available-for-sale investments:
 
 
 
 
 
 
 
 
U.S. Treasury securities
 
$
3,946

 
$

 
$

 
$
3,946

Other government-related debt securities:
 
 
 
 
 
 
 
 
Obligations of U.S. government agencies and FDIC-guaranteed bank debt
 

 
1,571

 

 
1,571

Foreign and other
 

 
450

 

 
450

Corporate debt securities:
 
 
 
 
 
 
 
 
Financial
 

 
2,508

 

 
2,508

Industrial
 

 
3,146

 

 
3,146

Other
 

 
289

 

 
289

Residential mortgage-backed securities
 

 
518

 

 
518

Other mortgage- and asset-backed securities
 

 
1,267

 

 
1,267

Money market mutual funds
 
6,266

 

 

 
6,266

Equity securities
 
42

 

 

 
42

Derivatives:
 
 
 
 
 
 
 
 
Foreign currency contracts
 

 
172

 

 
172

Interest rate swap contracts
 

 
377

 

 
377

Total assets
 
$
10,254

 
$
10,298

 
$

 
$
20,552

Liabilities:
 
 
 
 
 
 
 
 
Derivatives:
 
 
 
 
 
 
 
 
Foreign currency contracts
 
$

 
$
48

 
$

 
$
48

Cross-currency swap contracts
 

 
26

 

 
26

Contingent consideration obligations in connection with a business combination
 

 

 
190

 
190

Total liabilities
 
$

 
$
74

 
$
190

 
$
264

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Derivative instruments (Tables)
9 Months Ended
Sep. 30, 2012
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Schedule of Notional Amounts and Interest Rates for Cross-Currency Swaps [Table Text Block]
The notional amounts and interest rates of our cross-currency swaps are as follows (notional amounts in millions):
 
 
Foreign currency
 
U.S. dollars
Hedged notes
 
Notional Amount
 
Interest rate
 
Notional Amount
 
Interest rate
2.125% 2019 euro Notes
 
675

 
2.125
%
 
$
864

 
2.6
%
5.50% 2026 pound sterling Notes
 
£
475

 
5.50
%
 
$
748

 
5.8
%
4.00% 2029 pound sterling Notes
 
£
700

 
4.00
%
 
$
1,122

 
4.3
%
Effective portion of the unrealized gain (loss) recognized in Other Comprehensive Income for our derivative instruments designated as cash flow hedges
The effective portion of the unrealized gain/(loss) recognized in other comprehensive income for our derivative instruments designated as cash flow hedges was as follows (in millions):
 
 
Three months ended
 
Nine months ended
 
 
September 30,
 
September 30,
Derivatives in cash flow hedging relationships
 
2012
 
2011
 
2012
 
2011
Foreign currency contracts
 
$
(127
)
 
$
105

 
$
(25
)
 
$
(113
)
Cross-currency swap contracts
 
38

 

 
11

 

Forward interest rate contracts
 

 

 
(7
)
 

Total
 
$
(89
)
 
$
105

 
$
(21
)
 
$
(113
)
Location in the Condensed Consolidated Statements of Income and the effective portion of gain (loss) reclassified from Accumulated Other Comprehensive Income into earnings for our derivative instruments designated as cash flow hedges
The location in the Condensed Consolidated Statements of Income and the effective portion of the gain/(loss) reclassified from AOCI into earnings for our derivative instruments designated as cash flow hedges were as follows (in millions):
 
 
 
 
Three months ended
 
Nine months ended
 
 
 
 
September 30,
 
September 30,
Derivatives in cash flow hedging
relationships
 
Statements of Income location
 
2012
 
2011
 
2012
 
2011
Foreign currency contracts
 
Product sales
 
$
38

 
$
(41
)
 
$
67

 
$
(82
)
Cross-currency swap contracts
 
Interest and other income, net
 
58

 

 
54

 

Forward interest rate contracts
 
Interest expense, net
 

 
(1
)
 
(1
)
 
(1
)
Total
 
 
 
$
96

 
$
(42
)
 
$
120

 
$
(83
)
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
The location in the Condensed Consolidated Statements of Income and the amount of gain/(loss) recognized in earnings for our derivative instruments not designated as hedging instruments were as follows (in millions):
 
 
 
 
Three months ended
 
Nine months ended
  
 
 
 
September 30,
 
September 30,
Derivatives not designated as
hedging instruments
 
Statements of Income location
 
2012
 
2011
 
2012
 
2011
Foreign currency contracts
 
Interest and other income, net
 
$
3

 
$
50

 
$
13

 
$
(10
)
Fair values of derivatives included in the Condensed Consolidated Balance Sheets
The fair values of derivatives included in the Condensed Consolidated Balance Sheets were as follows (in millions):
 
 
Derivative assets
 
Derivative liabilities
September 30, 2012
 
Balance Sheet location
 
Fair value
 
Balance Sheet location
 
Fair value
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
Cross-currency swap contracts
 
Other current assets/ Other noncurrent assets
 
$
12

 
Accrued liabilities/ Other noncurrent liabilities
 
$
27

Foreign currency contracts
 
Other current assets/ Other noncurrent assets
 
82

 
Accrued liabilities/ Other noncurrent liabilities
 
54

Total derivatives designated as hedging instruments
 
 
 
94

 
 
 
81

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
Foreign currency contracts
 
Other current assets
 
5

 
Accrued liabilities
 
1

Total derivatives not designated as hedging instruments
 
 
 
5

 
 
 
1

Total derivatives
 
 
 
$
99

 
 
 
$
82

 
 
Derivative assets
 
Derivative liabilities
December 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 noncurrent assets
 
$
377

 
Accrued liabilities/ Other noncurrent liabilities
 
$

Cross-currency swap contracts
 
Other current assets/ Other noncurrent assets
 

 
Accrued liabilities/ Other noncurrent liabilities
 
26

Foreign currency contracts
 
Other current assets/ Other noncurrent assets
 
172

 
Accrued liabilities/ Other noncurrent liabilities
 
48

Total derivatives designated as hedging instruments
 
 
 
549

 
 
 
74

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
Foreign currency contracts
 
Other current assets
 

 
Accrued liabilities
 

Total derivatives not designated as hedging instruments
 
 
 

 
 
 

Total derivatives
 
 
 
$
549

 
 
 
$
74

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Summary of significant accounting policies (Details) (USD $)
Sep. 30, 2012
Dec. 31, 2011
Sep. 30, 2012
Other operating expense [Member]
Sep. 30, 2011
Other operating expense [Member]
Sep. 30, 2012
Other operating expense [Member]
Sep. 30, 2011
Other operating expense [Member]
Component of Operating Other Cost and Expense [Line Items]
Cost savings initiative charges $ 36,000,000 $ 68,000,000 $ 106,000,000 $ 79,000,000
Summary of significant accounting policies (Textual) [Abstract]
Accumulated depreciation and amortization on property, plant and equipment $ 6,400,000,000 $ 5,800,000,000
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Business combinations (Details) (USD $)
In Millions, unless otherwise specified
Mar. 07, 2012
Micromet Inc [Member]
Mar. 07, 2012
Micromet Inc [Member]
Developed technology [Member]
Mar. 07, 2012
Micromet Inc [Member]
In-process Research and Development [Member]
Mar. 07, 2012
Micromet Inc [Member]
Contract Assets [Member]
Jun. 12, 2012
Mustafa Nevzat Pharmaceuticals [Member]
Jul. 05, 2012
KAI Pharmaceuticals [Member]
Jul. 05, 2012
KAI Pharmaceuticals [Member]
In-process Research and Development [Member]
Allocation of the total consideration to the acquisition date fair values of assets acquired and liabilities assumed
Indefinite-lived intangible assets $ 440 $ 170 $ 260
Finite-lived intangible assets 350 163
Property, plant and equipment 100
Trade receivables 79
Inventories 52
Goodwill 330 382 146
Cash and marketable securities 154
Deferred tax assets 43
Deferred tax liabilities (317) (45) (100)
Other assets (liabilities), net (24) (54) 26
Total consideration $ 1,146 $ 677 $ 332
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Business combinations (Details Textual) (USD $)
In Millions, unless otherwise specified
9 Months Ended 3 Months Ended 1 Months Ended 3 Months Ended
Sep. 30, 2012
Sep. 30, 2012
Micromet, Inc. [Member]
Jun. 30, 2012
Micromet, Inc. [Member]
Mar. 07, 2012
Micromet, Inc. [Member]
Mar. 07, 2012
Micromet, Inc. [Member]
Developed technology [Member]
Jun. 12, 2012
Mustafa Nevzat Pharmaceuticals [Member]
Sep. 30, 2012
Mustafa Nevzat Pharmaceuticals [Member]
Jul. 05, 2012
KAI Pharmaceuticals [Member]
Business Combinations (Textual) [Abstract]
Percentage of equity interest in acquisition 99.40%
Total consideration $ 1,146 $ 677 $ 332
Impairment charge 19
Finite-lived intangible assets, estimated useful life (in years) 10 years 8 years
Goodwill 330 382 146
Goodwill, translation adjustments (19)
Goodwill, other increases (decreases) (38) 12
Deferred tax assets $ 43
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Income taxes (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Puerto Rico Excise Tax Rate [Line Items]
Effective tax rate for the period excluding the impact of the tax credits associated with the new Pr excise tax and legal settlement charge 17.70% 13.90% 18.30% 17.10%
Income taxes (Textual) [Abstract]
Increase in gross amount of unrecognized tax benefits for period $ 99 $ 249
Decrease in unrecognized tax benefits that is reasonably possible within the succeeding 12 months due to resolution of federal and state audits $ 330 $ 330
Puerto Rico Excise Tax [Member]
Puerto Rico Excise Tax Rate [Line Items]
Period that excise tax is imposed 6 years
Effective excise tax rate for 2011 4.00%
Effective excise tax rate for 2012 3.75%
Effective excise tax rate for 2013 2.75%
Effective excise tax rate for 2014 2.50%
Effective excise tax rate for 2015 2.25%
Effective excise tax rate for 2016 1.00%
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Earnings per share (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Income (Numerator):
Net income for basic and diluted earnings per share $ 1,107 $ 454 $ 3,557 $ 2,749
Shares (Denominator):
Weighted-average shares for basic earnings per share 771 907 779 922
Effect of dilutive securities 12 7 10 8
Weighted-average shares for diluted earnings per share 783 914 789 930
Basic earnings per share $ 1.44 $ 0.5 $ 4.57 $ 2.98
Diluted earnings per share $ 1.41 $ 0.5 $ 4.51 $ 2.96
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Earnings per share (Details Textual)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Earnings per share (Textual) [Abstract]
Antidilutive securities excluded from computation of diluted earnings per share, amount 1 33 8 34
0.375% convertible notes due 2013 (0.375% 2013 Convertible Notes) [Member]
Incremental Common Shares [Line Items]
Additional shares assumed to be issued for the purpose of computing diluted EPS 1
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Collaborative arrangements (Details Textual) (Collaborative arrangement with AstraZeneca PLC [Member], USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2012
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percentage of related development costs for the 2012-2014 periods will be funded by partner 65.00%
Ratio of development cost sharing after 2014 the companies will share costs equally
Ratio of profits and losses shared with partner profits and losses related to the collaboration would be shared equally
Other revenues [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Milestone payments received 50
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Collaborative Arrangements (Details Textual 1) (USD $)
In Millions, unless otherwise specified
9 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended 6 Months Ended
Sep. 30, 2012
Takeda Pharmaceutical Company Limited [Member]
Jun. 29, 2012
Takeda Pharmaceutical Company Limited [Member]
Dec. 31, 2008
Takeda Pharmaceutical Company Limited [Member]
Japanese market products [Member]
Molecule
Sep. 30, 2012
Takeda Pharmaceutical Company Limited [Member]
Other revenues [Member]
Jun. 30, 2012
Takeda Pharmaceutical Company Limited [Member]
Other revenues [Member]
Dec. 31, 2008
Takeda Pharmaceutical Company Limited [Member]
Milestone payments deferred or capitalized [Member]
Jun. 30, 2012
License arrangement for Motesanib with Takeda Pharmaceutical Company Limited [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of molecules developed and commercialized as per collaborations 12
Milestone payment received $ 300
Amortization period of payments received and deferred under collaborative arrangements, in years 20 years
Deferred revenue as of the date of modification of the original arrangement 230
Milestone payments received under arrangements 3
Incremental cost to be recovered 21
Revenue previously deferred recognized as a result of a material modification to the agreement 24 206
Payments that may be received upon the achievement of various substantive success-based development and regulatory approval milestones $ 337
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Available-for-sale investments (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of available-for-sale investments by type of security
Amortized cost $ 24,609 $ 19,814
Gross unrealized gains 344 224
Gross unrealized losses (18) (35)
Estimated fair value 24,935 20,003
U.S. Treasury securities [Member]
Amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of available-for-sale investments by type of security
Amortized cost 3,936 3,878
Gross unrealized gains 24 68
Gross unrealized losses 0 0
Estimated fair value 3,960 3,946
Other government-related debt securities - Obligations of U.S. government agencies and FDIC-guaranteed bank debt [Member]
Amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of available-for-sale investments by type of security
Amortized cost 1,180 1,548
Gross unrealized gains 18 23
Gross unrealized losses 0 0
Estimated fair value 1,198 1,571
Other government-related debt securities - Foreign and other [Member]
Amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of available-for-sale investments by type of security
Amortized cost 1,656 441
Gross unrealized gains 56 9
Gross unrealized losses 0 0
Estimated fair value 1,712 450
Corporate debt securities - Financial [Member]
Amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of available-for-sale investments by type of security
Amortized cost 3,158 2,493
Gross unrealized gains 99 30
Gross unrealized losses (1) (15)
Estimated fair value 3,256 2,508
Corporate debt securities - Industrial [Member]
Amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of available-for-sale investments by type of security
Amortized cost 4,208 3,077
Gross unrealized gains 114 79
Gross unrealized losses (4) (10)
Estimated fair value 4,318 3,146
Corporate debt securities - Other [Member]
Amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of available-for-sale investments by type of security
Amortized cost 420 280
Gross unrealized gains 12 9
Gross unrealized losses 0 0
Estimated fair value 432 289
Residential mortgage-backed securities [Member]
Amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of available-for-sale investments by type of security
Amortized cost 1,834 518
Gross unrealized gains 9 3
Gross unrealized losses (7) (3)
Estimated fair value 1,836 518
Other mortgage- and asset-backed securities [Member]
Amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of available-for-sale investments by type of security
Amortized cost 2,062 1,271
Gross unrealized gains 10 3
Gross unrealized losses (6) (7)
Estimated fair value 2,066 1,267
Money market mutual funds [Member]
Amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of available-for-sale investments by type of security
Amortized cost 4,000 6,266
Gross unrealized gains 0 0
Gross unrealized losses 0 0
Estimated fair value 4,000 6,266
Other short-term interest bearing securities [Member]
Amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of available-for-sale investments by type of security
Amortized cost 2,105
Gross unrealized gains 0
Gross unrealized losses 0
Estimated fair value 2,105
Total debt security investments [Member]
Amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of available-for-sale investments by type of security
Amortized cost 24,559 19,772
Gross unrealized gains 342 224
Gross unrealized losses (18) (35)
Estimated fair value 24,883 19,961
Equity securities [Member]
Amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of available-for-sale investments by type of security
Amortized cost 50 42
Gross unrealized gains 2 0
Gross unrealized losses 0 0
Estimated fair value $ 52 $ 42
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Available-for-sale investments (Details 1) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Sep. 30, 2011
Dec. 31, 2010
Fair values of available-for-sale investments by classification in the Consolidated Balance Sheets
Cash and cash equivalents $ 5,823 $ 6,946 $ 3,891 $ 3,287
Marketable securities 19,551 13,695
Other assets - noncurrent 1,193 1,524
Total available-for-sale investments 24,935 20,003
Available-for-sale investments [Member]
Fair values of available-for-sale investments by classification in the Consolidated Balance Sheets
Cash and cash equivalents 5,332 6,266
Other assets - noncurrent $ 52 $ 42
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Available-for-sale investments (Details 2) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Fair values of available-for-sale debt security investments by contractual maturity
Maturing in one year or less $ 8,501 $ 6,791
Maturing after one year through three years 4,998 5,855
Maturing after three years through five years 5,861 5,379
Maturing after five years through ten years 1,621 151
Mortgage- and asset- backed securities 3,902 1,785
Total available-for-sale investments 24,935 20,003
Total debt security investments [Member]
Fair values of available-for-sale debt security investments by contractual maturity
Total available-for-sale investments $ 24,883 $ 19,961
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Available-for-sale investments (Details Textual) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Dec. 31, 2011
Available-for-sale investments (Textual) [Abstract]
Cash $ 491 $ 491 $ 680
Total realized gains 31 32 147 169
Total realized losses $ 11 $ 12 $ 41 $ 25
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Inventories (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Inventories
Raw materials $ 198 $ 158
Work in process 1,755 1,802
Finished goods 816 524
Total inventories $ 2,769 $ 2,484
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Intangible Assets (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Finite-lived intangible assets:
Total finite-lived intangible assets, gross carrying amount $ 5,994 $ 5,446
Total finite-lived intangible assets, accumulated amortization (3,828) (3,537)
Total finite-lived intangible assets, net 2,166 1,909
Indefinite-lived intangible assets:
Total indefinite-lived intangible assets, gross carrying value 1,514 675
Total identifiable intangible assets, gross carrying value 7,508 6,121
Total identifiable intangible assets, accumulated amortization (3,828) (3,537)
Total identifiable intangible assets, net 3,680 2,584
Acquired product technology rights - Developed product technology [Member]
Finite-lived intangible assets:
Total finite-lived intangible assets, gross carrying amount 2,872 2,872
Total finite-lived intangible assets, accumulated amortization (1,955) (1,811)
Total finite-lived intangible assets, net 917 1,061
Acquired product technology rights - Core technology [Member]
Finite-lived intangible assets:
Total finite-lived intangible assets, gross carrying amount 1,348 1,348
Total finite-lived intangible assets, accumulated amortization (917) (850)
Total finite-lived intangible assets, net 431 498
Acquired product technology rights - Trade name [Member]
Finite-lived intangible assets:
Total finite-lived intangible assets, gross carrying amount 190 190
Total finite-lived intangible assets, accumulated amortization (129) (120)
Total finite-lived intangible assets, net 61 70
Acquired Research and Development technology rights [Member]
Finite-lived intangible assets:
Total finite-lived intangible assets, gross carrying amount 687 350
Total finite-lived intangible assets, accumulated amortization (370) (350)
Total finite-lived intangible assets, net 317 0
Other acquired intangible assets [Member]
Finite-lived intangible assets:
Total finite-lived intangible assets, gross carrying amount 897 686
Total finite-lived intangible assets, accumulated amortization (457) (406)
Total finite-lived intangible assets, net 440 280
In-process Research and Development [Member]
Indefinite-lived intangible assets:
Total indefinite-lived intangible assets, gross carrying value 1,358 675
Contract Assets [Member]
Indefinite-lived intangible assets:
Total indefinite-lived intangible assets, gross carrying value $ 156 $ 0
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Intangible Assets (Details Textual) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Intangible Assets (Textual) [Abstract]
Amortization charges associated with our finite-lived intangible assets $ 101 $ 93 $ 290 $ 289
Total estimated amortization charges for finite-lived intangible assets for the remainder of the current fiscal year 103 103
Total estimated amortization charges for finite-lived intangible assets for 2013 423 423
Total estimated amortization charges for finite-lived intangible assets for 2014 406 406
Total estimated amortization charges for finite-lived intangible assets for 2015 393 393
Total estimated amortization charges for finite-lived intangible assets for 2016 372 372
Total estimated amortization charges for finite-lived intangible assets for 2017 $ 230 $ 230
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Financing arrangements (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Carrying values of long-term borrowings
Other, including our zero-coupon convertible notes while outstanding $ 116 $ 184
Total debt 26,478 21,428
Less current portion (2,458) (84)
Total noncurrent debt 24,020 21,344
0.375% convertible notes due 2013 (0.375% 2013 Convertible Notes) [Member]
Carrying values of long-term borrowings
Convertible notes, current 2,452
Convertible notes 2,346
1.875% notes due 2014 (1.875% 2014 Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 1,000 1,000
4.85% notes due 2014 (4.85% 2014 Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 1,000 1,000
2.30% notes due 2016 (2.30% 2016 Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 749 748
2.50% notes due 2016 (2.50% 2016 Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 999 999
2.125% notes due 2017 (2.125% 2017 Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 1,248
5.85% notes due 2017 (5.85% 2017 Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 1,099 1,099
6.15% notes due 2018 (6.15% 2018 Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 499 499
4.375% euro denominated notes due 2018 (4.375% 2018 euro Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 710 714
5.70% notes due 2019 (5.70% 2019 Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 999 998
2.125% euro denominated notes due 2019 (2.125% 2019 euro Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 871
4.50% notes due 2020 (4.50% 2020 Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 300 300
3.45% notes due 2020 (3.45% 2020 Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 897 897
4.10% notes due 2021 (4.10% 2021 Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 998 998
3.875% notes due 2021 (3.875% 2021 Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 1,745 1,745
3.625% notes due 2022 (3.625% 2022 Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 747
5.50% pound sterling denominated notes due 2026 (5.50% 2026 pound sterling Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 766 739
4.00% pound sterling denominated notes due 2029 (4.00% 2029 pound sterling Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 1,121
6.375% notes due 2037 (6.375% 2037 Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 899 899
6.90% notes due 2038 (6.90% 2038 Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 499 499
6.40% notes due 2039 (6.40% 2039 Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 996 996
5.75% notes due 2040 (5.75% 2040 Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 697 697
4.95% notes due 2041 (4.95% 2041 Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 595 595
5.15% notes due 2041 (5.15% 2041 Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 2,232 2,232
5.65% notes due 2042 (5.65% 2042 Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt 1,244 1,244
5.375% notes due 2043 (5.375% 2043 Notes) [Member]
Carrying values of long-term borrowings
Total noncurrent debt $ 1,000
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Financing arrangements (Details Textual)
In Millions, unless otherwise specified
9 Months Ended 9 Months Ended 9 Months Ended 9 Months Ended 9 Months Ended 9 Months Ended
Sep. 30, 2012
USD ($)
Sep. 30, 2011
USD ($)
May 31, 2012
USD ($)
Sep. 30, 2012
0.375% convertible notes due 2013 (0.375% 2013 Convertible Notes) [Member]
Dec. 31, 2011
0.375% convertible notes due 2013 (0.375% 2013 Convertible Notes) [Member]
Sep. 30, 2012
1.875% notes due 2014 (1.875% 2014 Notes) [Member]
Dec. 31, 2011
1.875% notes due 2014 (1.875% 2014 Notes) [Member]
Sep. 30, 2012
4.85% notes due 2014 (4.85% 2014 Notes) [Member]
Dec. 31, 2011
4.85% notes due 2014 (4.85% 2014 Notes) [Member]
Sep. 30, 2012
2.30% notes due 2016 (2.30% 2016 Notes) [Member]
Dec. 31, 2011
2.30% notes due 2016 (2.30% 2016 Notes) [Member]
Sep. 30, 2012
2.50% notes due 2016 (2.50% 2016 Notes) [Member]
Dec. 31, 2011
2.50% notes due 2016 (2.50% 2016 Notes) [Member]
Sep. 30, 2012
2.125% notes due 2017 (2.125% 2017 Notes) [Member]
Sep. 30, 2012
5.85% notes due 2017 (5.85% 2017 Notes) [Member]
Dec. 31, 2011
5.85% notes due 2017 (5.85% 2017 Notes) [Member]
Sep. 30, 2012
6.15% notes due 2018 (6.15% 2018 Notes) [Member]
Dec. 31, 2011
6.15% notes due 2018 (6.15% 2018 Notes) [Member]
Sep. 30, 2012
4.375% euro denominated notes due 2018 (4.375% 2018 euro Notes) [Member]
Dec. 31, 2011
4.375% euro denominated notes due 2018 (4.375% 2018 euro Notes) [Member]
Sep. 30, 2012
2.125% euro denominated notes due 2019 (2.125% 2019 euro Notes) [Member]
EUR (€)
Sep. 30, 2012
5.70% notes due 2019 (5.70% 2019 Notes) [Member]
Dec. 31, 2011
5.70% notes due 2019 (5.70% 2019 Notes) [Member]
Sep. 30, 2012
4.50% notes due 2020 (4.50% 2020 Notes) [Member]
Dec. 31, 2011
4.50% notes due 2020 (4.50% 2020 Notes) [Member]
Sep. 30, 2012
3.45% notes due 2020 (3.45% 2020 Notes) [Member]
Dec. 31, 2011
3.45% notes due 2020 (3.45% 2020 Notes) [Member]
Sep. 30, 2012
4.10% notes due 2021 (4.10% 2021 Notes) [Member]
Dec. 31, 2011
4.10% notes due 2021 (4.10% 2021 Notes) [Member]
Sep. 30, 2012
3.875% notes due 2021 (3.875% 2021 Notes) [Member]
Dec. 31, 2011
3.875% notes due 2021 (3.875% 2021 Notes) [Member]
Sep. 30, 2012
3.625% notes due 2022 (3.625% 2022 Notes) [Member]
Sep. 30, 2012
5.50% pound sterling denominated notes due 2026 (5.50% 2026 pound sterling Notes) [Member]
Dec. 31, 2011
5.50% pound sterling denominated notes due 2026 (5.50% 2026 pound sterling Notes) [Member]
Sep. 30, 2012
4.00% pound sterling denominated notes due 2029 (4.00% 2029 pound sterling Notes) [Member]
GBP (£)
Sep. 30, 2012
6.375% notes due 2037 (6.375% 2037 Notes) [Member]
Dec. 31, 2011
6.375% notes due 2037 (6.375% 2037 Notes) [Member]
Sep. 30, 2012
6.90% notes due 2038 (6.90% 2038 Notes) [Member]
Dec. 31, 2011
6.90% notes due 2038 (6.90% 2038 Notes) [Member]
Sep. 30, 2012
6.40% notes due 2039 (6.40% 2039 Notes) [Member]
Dec. 31, 2011
6.40% notes due 2039 (6.40% 2039 Notes) [Member]
Sep. 30, 2012
5.75% notes due 2040 (5.75% 2040 Notes) [Member]
Dec. 31, 2011
5.75% notes due 2040 (5.75% 2040 Notes) [Member]
Sep. 30, 2012
4.95% notes due 2041 (4.95% 2041 Notes) [Member]
Dec. 31, 2011
4.95% notes due 2041 (4.95% 2041 Notes) [Member]
Sep. 30, 2012
5.15% notes due 2041 (5.15% 2041 Notes) [Member]
Dec. 31, 2011
5.15% notes due 2041 (5.15% 2041 Notes) [Member]
Sep. 30, 2012
5.65% notes due 2042 (5.65% 2042 Notes) [Member]
Dec. 31, 2011
5.65% notes due 2042 (5.65% 2042 Notes) [Member]
Sep. 30, 2012
5.375% notes due 2043 (5.375% 2043 Notes) [Member]
Debt Instruments [Line Items]
Aggregate principal amount of notes issued $ 2,000 $ 3,000 € 675 £ 700
Stated contractual interest rate on note 0.38% 0.38% 1.88% 1.88% 4.85% 4.85% 2.30% 2.30% 2.50% 2.50% 2.13% 5.85% 5.85% 6.15% 6.15% 4.38% 4.38% 2.13% 5.70% 5.70% 4.50% 4.50% 3.45% 3.45% 4.10% 4.10% 3.88% 3.88% 3.63% 5.50% 5.50% 4.00% 6.38% 6.38% 6.90% 6.90% 6.40% 6.40% 5.75% 5.75% 4.95% 4.95% 5.15% 5.15% 5.65% 5.65% 5.38%
Redemption price as a percentage of the principal amount of notes that may be required to be paid in the event of a change in control triggering event 101.00% 101.00% 101.00% 101.00% 101.00%
Financing arrangements (Textual) [Abstract]
Repayment of debt 102 2,500
Total debt issuance costs $ 25
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Stockholders' equity (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Sep. 30, 2012
Sep. 30, 2011
Stock repurchase program
Stock repurchases, in shares 9.7 17.4 21 45.4 12.9 0 48.1 58.3
Stock repurchases, in dollars $ 797 $ 1,203 $ 1,429 $ 2,421 $ 732 $ 0 $ 3,429 $ 3,153
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Stockholders' equity (Details Textual) (USD $)
In Billions, except Share data in Millions, unless otherwise specified
1 Months Ended 3 Months Ended 9 Months Ended 1 Months Ended
Oct. 10, 2012
Sep. 07, 2012
Jul. 19, 2012
Jun. 07, 2012
Mar. 15, 2012
Mar. 07, 2012
Dec. 15, 2011
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Dec. 07, 2012
Dividend to be paid [Member]
Common stock, dividends declared per share $ 0.36 $ 0.36 $ 0.36 $ 0.36
Dividends paid per share $ 0.36 $ 0.36 $ 0.36 $ 0.36 $ 0.28 $ 1.08 $ 0.28 $ 0.36
Amount available for stock repurchases under a board approved stock repurchase plan $ 1.6
Stock Repurchase Program, Authorized Amount $ 10
Common stock issued 8.7 20.6
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Fair value measurement (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Assets:
Total available-for-sale investments $ 24,935 $ 20,003
Fair Value, Measurements, Recurring [Member]
Derivative Assets:
Interest rate swap contracts 377
Total assets 25,034 20,552
Derivative Liabilities:
Contingent consideration obligations in connection with a business combination 195 190
Total liabilities 277 264
Fair Value, Measurements, Recurring [Member] | Foreign currency contracts [Member]
Derivative Assets:
Foreign currency contracts 87 172
Derivative Liabilities:
Foreign currency contracts 55 48
Fair Value, Measurements, Recurring [Member] | Cross currency swap contracts [Member]
Derivative Assets:
Foreign currency contracts 12
Derivative Liabilities:
Foreign currency contracts 27 26
Fair Value, Measurements, Recurring [Member] | U.S. Treasury securities [Member]
Assets:
Total available-for-sale investments 3,960 3,946
Fair Value, Measurements, Recurring [Member] | Other government-related debt securities - Obligations of U.S. government agencies and FDIC-guaranteed bank debt [Member]
Assets:
Total available-for-sale investments 1,198 1,571
Fair Value, Measurements, Recurring [Member] | Other government-related debt securities - Foreign and other [Member]
Assets:
Total available-for-sale investments 1,712 450
Fair Value, Measurements, Recurring [Member] | Corporate debt securities - Financial [Member]
Assets:
Total available-for-sale investments 3,256 2,508
Fair Value, Measurements, Recurring [Member] | Corporate debt securities - Industrial [Member]
Assets:
Total available-for-sale investments 4,318 3,146
Fair Value, Measurements, Recurring [Member] | Corporate debt securities - Other [Member]
Assets:
Total available-for-sale investments 432 289
Fair Value, Measurements, Recurring [Member] | Residential mortgage-backed securities [Member]
Assets:
Total available-for-sale investments 1,836 518
Fair Value, Measurements, Recurring [Member] | Other mortgage- and asset-backed securities [Member]
Assets:
Total available-for-sale investments 2,066 1,267
Fair Value, Measurements, Recurring [Member] | Money market mutual funds [Member]
Assets:
Total available-for-sale investments 4,000 6,266
Fair Value, Measurements, Recurring [Member] | Other short-term interest bearing securities [Member]
Assets:
Total available-for-sale investments 2,105
Fair Value, Measurements, Recurring [Member] | Equity securities [Member]
Assets:
Total available-for-sale investments 52 42
Fair Value, Measurements, Recurring [Member] | Quoted prices in active markets for identical assets (Level 1) [Member]
Derivative Assets:
Interest rate swap contracts 0
Total assets 8,012 10,254
Derivative Liabilities:
Contingent consideration obligations in connection with a business combination 0 0
Total liabilities 0 0
Fair Value, Measurements, Recurring [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | Foreign currency contracts [Member]
Derivative Assets:
Foreign currency contracts 0 0
Derivative Liabilities:
Foreign currency contracts 0 0
Fair Value, Measurements, Recurring [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | Cross currency swap contracts [Member]
Derivative Assets:
Foreign currency contracts 0
Derivative Liabilities:
Foreign currency contracts 0 0
Fair Value, Measurements, Recurring [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | U.S. Treasury securities [Member]
Assets:
Total available-for-sale investments 3,960 3,946
Fair Value, Measurements, Recurring [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | Other government-related debt securities - Obligations of U.S. government agencies and FDIC-guaranteed bank debt [Member]
Assets:
Total available-for-sale investments 0 0
Fair Value, Measurements, Recurring [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | Other government-related debt securities - Foreign and other [Member]
Assets:
Total available-for-sale investments 0 0
Fair Value, Measurements, Recurring [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | Corporate debt securities - Financial [Member]
Assets:
Total available-for-sale investments 0 0
Fair Value, Measurements, Recurring [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | Corporate debt securities - Industrial [Member]
Assets:
Total available-for-sale investments 0 0
Fair Value, Measurements, Recurring [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | Corporate debt securities - Other [Member]
Assets:
Total available-for-sale investments 0 0
Fair Value, Measurements, Recurring [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | Residential mortgage-backed securities [Member]
Assets:
Total available-for-sale investments 0 0
Fair Value, Measurements, Recurring [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | Other mortgage- and asset-backed securities [Member]
Assets:
Total available-for-sale investments 0 0
Fair Value, Measurements, Recurring [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | Money market mutual funds [Member]
Assets:
Total available-for-sale investments 4,000 6,266
Fair Value, Measurements, Recurring [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | Other short-term interest bearing securities [Member]
Assets:
Total available-for-sale investments 0
Fair Value, Measurements, Recurring [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | Equity securities [Member]
Assets:
Total available-for-sale investments 52 42
Fair Value, Measurements, Recurring [Member] | Significant other observable inputs (Level 2) [Member]
Derivative Assets:
Interest rate swap contracts 377
Total assets 17,022 10,298
Derivative Liabilities:
Contingent consideration obligations in connection with a business combination 0 0
Total liabilities 82 74
Fair Value, Measurements, Recurring [Member] | Significant other observable inputs (Level 2) [Member] | Foreign currency contracts [Member]
Derivative Assets:
Foreign currency contracts 87 172
Derivative Liabilities:
Foreign currency contracts 55 48
Fair Value, Measurements, Recurring [Member] | Significant other observable inputs (Level 2) [Member] | Cross currency swap contracts [Member]
Derivative Assets:
Foreign currency contracts 12
Derivative Liabilities:
Foreign currency contracts 27 26
Fair Value, Measurements, Recurring [Member] | Significant other observable inputs (Level 2) [Member] | U.S. Treasury securities [Member]
Assets:
Total available-for-sale investments 0 0
Fair Value, Measurements, Recurring [Member] | Significant other observable inputs (Level 2) [Member] | Other government-related debt securities - Obligations of U.S. government agencies and FDIC-guaranteed bank debt [Member]
Assets:
Total available-for-sale investments 1,198 1,571
Fair Value, Measurements, Recurring [Member] | Significant other observable inputs (Level 2) [Member] | Other government-related debt securities - Foreign and other [Member]
Assets:
Total available-for-sale investments 1,712 450
Fair Value, Measurements, Recurring [Member] | Significant other observable inputs (Level 2) [Member] | Corporate debt securities - Financial [Member]
Assets:
Total available-for-sale investments 3,256 2,508
Fair Value, Measurements, Recurring [Member] | Significant other observable inputs (Level 2) [Member] | Corporate debt securities - Industrial [Member]
Assets:
Total available-for-sale investments 4,318 3,146
Fair Value, Measurements, Recurring [Member] | Significant other observable inputs (Level 2) [Member] | Corporate debt securities - Other [Member]
Assets:
Total available-for-sale investments 432 289
Fair Value, Measurements, Recurring [Member] | Significant other observable inputs (Level 2) [Member] | Residential mortgage-backed securities [Member]
Assets:
Total available-for-sale investments 1,836 518
Fair Value, Measurements, Recurring [Member] | Significant other observable inputs (Level 2) [Member] | Other mortgage- and asset-backed securities [Member]
Assets:
Total available-for-sale investments 2,066 1,267
Fair Value, Measurements, Recurring [Member] | Significant other observable inputs (Level 2) [Member] | Money market mutual funds [Member]
Assets:
Total available-for-sale investments 0 0
Fair Value, Measurements, Recurring [Member] | Significant other observable inputs (Level 2) [Member] | Other short-term interest bearing securities [Member]
Assets:
Total available-for-sale investments 2,105
Fair Value, Measurements, Recurring [Member] | Significant other observable inputs (Level 2) [Member] | Equity securities [Member]
Assets:
Total available-for-sale investments 0 0
Fair Value, Measurements, Recurring [Member] | Significant unobservable inputs (Level 3) [Member]
Derivative Assets:
Interest rate swap contracts 0
Total assets 0 0
Derivative Liabilities:
Contingent consideration obligations in connection with a business combination 195 190
Total liabilities 195 190
Fair Value, Measurements, Recurring [Member] | Significant unobservable inputs (Level 3) [Member] | Foreign currency contracts [Member]
Derivative Assets:
Foreign currency contracts 0 0
Derivative Liabilities:
Foreign currency contracts 0 0
Fair Value, Measurements, Recurring [Member] | Significant unobservable inputs (Level 3) [Member] | Cross currency swap contracts [Member]
Derivative Assets:
Foreign currency contracts 0
Derivative Liabilities:
Foreign currency contracts 0 0
Fair Value, Measurements, Recurring [Member] | Significant unobservable inputs (Level 3) [Member] | U.S. Treasury securities [Member]
Assets:
Total available-for-sale investments 0 0
Fair Value, Measurements, Recurring [Member] | Significant unobservable inputs (Level 3) [Member] | Other government-related debt securities - Obligations of U.S. government agencies and FDIC-guaranteed bank debt [Member]
Assets:
Total available-for-sale investments 0 0
Fair Value, Measurements, Recurring [Member] | Significant unobservable inputs (Level 3) [Member] | Other government-related debt securities - Foreign and other [Member]
Assets:
Total available-for-sale investments 0 0
Fair Value, Measurements, Recurring [Member] | Significant unobservable inputs (Level 3) [Member] | Corporate debt securities - Financial [Member]
Assets:
Total available-for-sale investments 0 0
Fair Value, Measurements, Recurring [Member] | Significant unobservable inputs (Level 3) [Member] | Corporate debt securities - Industrial [Member]
Assets:
Total available-for-sale investments 0 0
Fair Value, Measurements, Recurring [Member] | Significant unobservable inputs (Level 3) [Member] | Corporate debt securities - Other [Member]
Assets:
Total available-for-sale investments 0 0
Fair Value, Measurements, Recurring [Member] | Significant unobservable inputs (Level 3) [Member] | Residential mortgage-backed securities [Member]
Assets:
Total available-for-sale investments 0 0
Fair Value, Measurements, Recurring [Member] | Significant unobservable inputs (Level 3) [Member] | Other mortgage- and asset-backed securities [Member]
Assets:
Total available-for-sale investments 0 0
Fair Value, Measurements, Recurring [Member] | Significant unobservable inputs (Level 3) [Member] | Money market mutual funds [Member]
Assets:
Total available-for-sale investments 0 0
Fair Value, Measurements, Recurring [Member] | Significant unobservable inputs (Level 3) [Member] | Other short-term interest bearing securities [Member]
Assets:
Total available-for-sale investments 0
Fair Value, Measurements, Recurring [Member] | Significant unobservable inputs (Level 3) [Member] | Equity securities [Member]
Assets:
Total available-for-sale investments $ 0 $ 0
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Fair value measurements (Details Textual) (USD $)
9 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended
Sep. 30, 2012
Dec. 31, 2011
Sep. 30, 2012
BioVex Group Inc [Member]
ContingentConsideration
Sep. 30, 2012
BioVex Group Inc [Member]
Other operating expense [Member]
Sep. 30, 2012
BioVex Group Inc [Member]
Other operating expense [Member]
Business Combinations [Line Items]
Maximum additional consideration due contingent on certain milestones $ 575,000,000
Maximum number of contingent consideration payments for achieving regulatory and sales related milestones 8
The number of payments that will potentially be made that each equal the largest potential contingent consideration payment 3
Largest potential contingent consideration payments 125,000,000
Change in fair values of contingent consideration obligations 2,000,000 5,000,000
Fair Value Measurement (Textual) [Abstract]
Length of time hedged in foreign currency contracts primarily over a three-year time horizon
Aggregate fair value of long-term debt 29,500,000,000 23,000,000,000
Carrying value of long-term debt $ 26,478,000,000 $ 21,428,000,000
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Derivative instruments Derivative Instruments (Details) (Cash flow hedge [Member], Cross currency swap contracts [Member])
In Millions, unless otherwise specified
Sep. 30, 2012
2.125% euro denominated notes due 2019 (2.125% 2019 euro Notes) [Member]
USD ($)
Sep. 30, 2012
2.125% euro denominated notes due 2019 (2.125% 2019 euro Notes) [Member]
EUR (€)
Sep. 30, 2012
5.50% pound sterling denominated notes due 2026 (5.50% 2026 pound sterling Notes) [Member]
USD ($)
Sep. 30, 2012
5.50% pound sterling denominated notes due 2026 (5.50% 2026 pound sterling Notes) [Member]
GBP (£)
Sep. 30, 2012
4.00% pound sterling denominated notes due 2029 (4.00% 2029 pound sterling Notes) [Member]
USD ($)
Sep. 30, 2012
4.00% pound sterling denominated notes due 2029 (4.00% 2029 pound sterling Notes) [Member]
GBP (£)
Sep. 30, 2012
Interest rate paid [Member]
2.125% euro denominated notes due 2019 (2.125% 2019 euro Notes) [Member]
Sep. 30, 2012
Interest rate paid [Member]
5.50% pound sterling denominated notes due 2026 (5.50% 2026 pound sterling Notes) [Member]
Sep. 30, 2012
Interest rate paid [Member]
4.00% pound sterling denominated notes due 2029 (4.00% 2029 pound sterling Notes) [Member]
Sep. 30, 2012
Interest rate received [Member]
2.125% euro denominated notes due 2019 (2.125% 2019 euro Notes) [Member]
Sep. 30, 2012
Interest rate received [Member]
5.50% pound sterling denominated notes due 2026 (5.50% 2026 pound sterling Notes) [Member]
Sep. 30, 2012
Interest rate received [Member]
4.00% pound sterling denominated notes due 2029 (4.00% 2029 pound sterling Notes) [Member]
Derivative [Line Items]
Notional Amount $ 864 € 675 $ 748 £ 475 $ 1,122 £ 700
Fixed Interest Rate 2.60% 5.80% 4.30% 2.13% 5.50% 4.00%
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Derivative instruments (Details 1) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Effective portion of the unrealized gain (loss) recognized in Other Comprehensive Income for our derivative instruments designated as cash flow hedges
Unrealized gain (loss) on derivative instruments recognized in Other Comprehensive Income, effective portion, net $ (89) $ 105 $ (21) $ (113)
Foreign currency contracts [Member]
Effective portion of the unrealized gain (loss) recognized in Other Comprehensive Income for our derivative instruments designated as cash flow hedges
Unrealized gain (loss) on derivative instruments recognized in Other Comprehensive Income, effective portion, net (127) 105 (25) (113)
Cross currency swap contracts [Member]
Effective portion of the unrealized gain (loss) recognized in Other Comprehensive Income for our derivative instruments designated as cash flow hedges
Unrealized gain (loss) on derivative instruments recognized in Other Comprehensive Income, effective portion, net 38 0 11 0
Forward interest rate contracts [Member]
Effective portion of the unrealized gain (loss) recognized in Other Comprehensive Income for our derivative instruments designated as cash flow hedges
Unrealized gain (loss) on derivative instruments recognized in Other Comprehensive Income, effective portion, net $ 0 $ 0 $ (7) $ 0
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Derivative instruments (Details 2) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Location in the Consolidated Statements of Income and the effective portion of gain (loss) reclassified from Accumulated Other Comprehensive Income into earnings for our derivative instruments designated as cash flow hedges
Total $ 96 $ (42) $ 120 $ (83)
Foreign currency contracts [Member] | Product sales [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 derivative instruments designated as cash flow hedges
The amount of gain (loss) recognized in product sales 38 (41) 67 (82)
Cross currency swap 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 derivative instruments designated as cash flow hedges
The amount of gain (loss) recognized in interest and other income, net 58 0 54 0
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 derivative instruments designated as cash flow hedges
The amount of gain (loss) recognized in interest expense, net $ 0 $ (1) $ (1) $ (1)
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Derivative instruments (Details 3) (Foreign currency contracts [Member], Interest and other income, net [Member], USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Foreign currency contracts [Member] | Interest and other income, net [Member]
Location in the Condensed Consolidated Statements of Income and the amount of gain (loss) recognized in earnings for our derivative instruments not designated as hedging instruments
Amount of gain (loss) recognized in interest and other income, net $ 3 $ 50 $ 13 $ (10)
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Derivative instruments (Details 4) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Assets
Total derivative assets, fair value $ 99 $ 549
Liabilities
Total derivative liabilities, fair value 82 74
Derivatives designated as hedging instrument [Member]
Assets
Total derivative assets, fair value 94 549
Liabilities
Total derivative liabilities, fair value 81 74
Derivatives not designated as hedging instrument [Member]
Assets
Total derivative assets, fair value 5 0
Liabilities
Total derivative liabilities, fair value 1 0
Interest rate swap contracts [Member] | Other current assets/Other noncurrent assets [Member] | Derivatives designated as hedging instrument [Member]
Assets
Total derivative assets, fair value 377
Interest rate swap contracts [Member] | Accrued liabilities/Other noncurrent liabilities [Member] | Derivatives designated as hedging instrument [Member]
Liabilities
Total derivative liabilities, fair value 0
Cross currency swap contracts [Member] | Other current assets/Other noncurrent assets [Member] | Derivatives designated as hedging instrument [Member]
Assets
Total derivative assets, fair value 12 0
Cross currency swap contracts [Member] | Accrued liabilities/Other noncurrent liabilities [Member] | Derivatives designated as hedging instrument [Member]
Liabilities
Total derivative liabilities, fair value 27 26
Foreign currency contracts [Member] | Other current assets/Other noncurrent assets [Member] | Derivatives designated as hedging instrument [Member]
Assets
Total derivative assets, fair value 82 172
Foreign currency contracts [Member] | Other current assets [Member] | Derivatives not designated as hedging instrument [Member]
Assets
Total derivative assets, fair value 5 0
Foreign currency contracts [Member] | Accrued liabilities/Other noncurrent liabilities [Member] | Derivatives designated as hedging instrument [Member]
Liabilities
Total derivative liabilities, fair value 54 48
Foreign currency contracts [Member] | Accrued liabilities [Member] | Derivatives not designated as hedging instrument [Member]
Liabilities
Total derivative liabilities, fair value $ 1 $ 0
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Derivative instruments (Details Textual) (USD $)
3 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Dec. 31, 2011
Jun. 30, 2012
Net cash provided by operating activities [Member]
Sep. 30, 2011
Interest expense, net [Member]
Sep. 30, 2012
Interest expense, net [Member]
Sep. 30, 2011
Interest expense, net [Member]
Sep. 30, 2012
Foreign currency forward contracts [Member]
Dec. 31, 2011
Foreign currency forward contracts [Member]
Sep. 30, 2012
Foreign currency option contracts [Member]
Dec. 31, 2011
Foreign currency option contracts [Member]
Sep. 30, 2012
Foreign currency and cross currency swap contracts [Member]
Sep. 30, 2012
Forward interest rate contracts [Member]
Jun. 30, 2012
Rate adjustment to LIBOR on Interest Rate Swap Agreements [Member]
Derivative Instruments Gain Loss [Line Items]
Notional amount $ 3,000,000,000 $ 3,500,000,000 $ 261,000,000 $ 292,000,000
Amounts expected to be reclassified from Accumulated Other Comprehensive Income into earnings over the next 12 months - gains (losses) 3,000,000
Amounts expected to be reclassified from Accumulated Other Comprehensive Income into earnings over the next 12 months - gain (loss) (1,000,000)
Derivative lower range variable interest rate 0.30%
Derivative higher range variable interest rate 2.60%
Receipt from counterparties upon termination of interest rate swap contracts 397,000,000
Unrealized gain (loss) on the hedged debt (149,000,000) (20,000,000) (186,000,000)
Unrealized gain (loss) on interest rate swaps 149,000,000 20,000,000 186,000,000
Foreign currency open contracts - not designated as hedges - notional amounts 743,000,000 389,000,000
Derivative instruments (Textual) [Abstract]
Length of time hedged in foreign currency contracts primarily over a three-year time horizon
Ineffective portions of cash flow hedging instruments (approximately), Gain (loss) (1,000,000) 1,000,000 (1,000,000) 1,000,000
Interest rate swap contracts - fair value hedge - notional amounts $ 3,600,000,000
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Contingencies and commitments (Details) (Proposed settlement of Federal Investigation [Member], USD $)
In Millions, unless otherwise specified
Sep. 30, 2012
Proposed settlement of Federal Investigation [Member]
Contingencies and Commitments (Textual) [Abstract]
Accrued liability for proposed settlement of allegations $ 806
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