for a definition of these “Adjusted Income” components.

(d) Includes costs associated with (i) purchase accounting adjustments; (ii) acquisition-related costs; and (iii) certain significant items, which are substantive,

unusual items that are evaluated on an individual basis by management. For additional information about these reconciling items and/or our Non-GAAP Adjusted measure of performance, see the “Adjusted Income” section of this Financial Review.

(e) As our operations were not managed under the new structure until the beginning of the first quarter of 2014, certain costs and expenses could not be directly attributed to one of the new operating segments. As a result, our operating segment results for 2013 and 2012 include allocations. The amounts subject to allocation methods in 2013 and 2012 were approximately $2.1 billion and $2.3 billion, respectively, of selling, informational and administrative expenses and approximately $800 million and $990 million, respectively, of research and development expenses.

• The selling, informational and administrative expenses were allocated using proportional allocation methods based on associated selling costs, revenues or product-specific costs, as applicable.

• The research and development expenses were allocated based on product-specific R&D costs or revenue metrics, as applicable. Management believes that the allocations are reasonable.

Global Innovative Pharmaceutical Operating Segment

2014 vs. 2013

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Revenues decreased 3% to $13,861 million in 2014, compared to $14,317 million in the same period in 2013, which includes a decrease in operational revenues of 2% in 2014, primarily due to:

the expiration of the co-promotion term of the collaboration agreement for Enbrel in the U.S. and Canada on October 31, 2013 (approximately $1.4 billion in 2014); and

loss of exclusivity for Lyrica in Canada in February 2013 (a decline of approximately $67 million in 2014),

partially offset by:

strong operational growth from Lyrica, primarily in the U.S. and Japan, and Enbrel outside the U.S. and Canada, as well as the performance of recently launched products, including Eliquis, primarily in the U.S. and most other developed markets, and Xeljanz primarily in the U.S. (a combined increase of approximately $1.1 billion in 2014).

The unfavorable impact of foreign exchange of 1% in 2014 also contributed to the decrease in GIP revenues.

Total GIP revenues from emerging markets were $1.6 billion in 2014.

• Cost of sales as a percentage of Revenues increased in 2014, compared to 2013, due to the loss of Enbrel alliance revenue after October 31, 2013 when the co-promotion term of the collaboration agreement for Enbrel in the U.S. and Canada expired as well as an unfavorable change in product mix. The increase in Cost of sales primarily reflects an unfavorable change in product mix.

• Selling, informational and administrative expenses increased 13% in 2014 compared to 2013, reflecting increased investment in recently launched products and certain in-line products.

• Research and development expenses increased 31% in 2014 compared to 2013, reflecting incremental investment in late-stage pipeline