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## RESULTS OF OPERATIONS 

## Net Sales 

The composition of the changes in net sales was as follows: 

<img src='content_image/251596.jpg'>

(a) Includes Puerto Rico. 

(b) Includes Russia and Turkey. 

(c) Includes Japan, China, Canada, Australia and Brazil, among other countries. 

(d) Includes royalty-related revenues and sales attributed to supply agreements. 

** Change in excess of 100%. 

The change in U.S. net sales in 2012 attributed to volume reflects the recent exclusivity losses of Plavix  and Avapro / Avalide , partially offset by increased demand for most key products and the addition of Byetta , Bydureon , and Symlin  following the completion of our acquisition of Amylin ($262 million). The change in U.S. net sales in 2011 attributed to volume reflects the launch of Yervoy  and increased demand for several key products partially offset by decreased prescription demand for Avapro / Avalide  and Plavix . The change in U.S. net sales attributed to price in both periods was a result of higher average net selling prices for  and Abilify partially offset by the reduction in our contractual share of Abilify  net sales from 58% to 53.5% in 2011 and a further reduction to 51.5% in 2012, and higher rebates and discounts resulting from U.S. healthcare reform legislation in 2011. See “—Key Products” for further discussion of sales by key product. 

Net sales in Europe decreased in 2012 primarily due to unfavorable foreign exchange and lower sales of certain mature brands from divestitures and generic competition as well as generic competition for Plavix  and Avapro / Avalide  partially offset by sales growth of most key products. Net sales in Europe increased in 2011 as favorable foreign exchange and sales growth of most key products more than offset the previously mentioned lower sales of certain mature brands and generic competition for Plavix  and Avapro / Avalide . Net sales in both periods were negatively impacted by continuing fiscal challenges in many European countries as healthcare payers, including government agencies, have reduced and are expected to continue to reduce the cost of healthcare through actions that directly or indirectly impose additional price reductions. These measures include, but are not limited to, mandatory discounts, rebates, other price reductions and other restrictive measures. 

Net sales in the Rest of the World decreased in 2012 as growth in certain key products in Japan, China, and South Korea was more than offset by generic competition for Plavix  and Avapro / Avalide,  the timing of government purchases in certain countries and lower sales of mature brands from generic competition and divestitures. Net sales in the Rest of the World increased in 2011 primarily due to growth in certain key products in Japan, China and South Korea and favorable foreign exchange, which were partially offset by generic competition for Avapro / Avalide  and lower sales of mature brands from generic competition and divestitures. 

Other net sales increased in 2012 because of enhanced royalty-related revenues and higher sales attributed to active pharmaceutical ingredients supply agreements resulting from recent divestitures of manufacturing facilities and restructured alliance agreements. Other net sales are expected to continue to increase in 2013 as a result of higher royalties and alliance revenue attributed to the restructured Sanofi agreement and new mature/over-the-counter brands collaborative agreements. 

No single country outside the U.S. contributed more than 10% of our total net sales in 2012, 2011 or 2010. 

In general, our business is not seasonal. For information on U.S. pharmaceutical prescriber demand, reference is made to the table within “—Estimated End-User Demand” below, which sets forth a comparison of changes in net sales to the estimated total prescription growth (for both retail and mail order customers) for certain of our key products. U.S. and non-U.S. net sales are categorized based upon the location of the customer. 

