2012 Annual Report  Note 3 ALLIANCES AND COLLABORATIONS  Sanofi Alliances and collaborations are utilized with third parties for the development and commercialization of certain products. These  collaborations can include arrangements for access to intellectual property, research, development, manufacturing and/or commercial  capabilities. The arrangements are often entered into in order to share risks and rewards related to a specific program or product or as  part of a specific divestiture strategy. Unless otherwise noted, operating results associated with the alliances and collaborations are  generally treated as follows: product revenues from BMS sales are included in net sales; royalties, collaboration, profit sharing and  distribution fees are included in cost of goods sold; post-approval milestone payments to partners are deferred and amortized over the  useful life of the related products in cost of products sold; cost sharing reimbursements offset the applicable operating expense;  payments to BMS attributed to upfront, pre-approval based milestone and other licensing payments are deferred and amortized over  the estimated useful life of the related products in other income/expense or as a reduction to cost of products sold for the Amylin  diabetes collaboration; income and expenses attributed to a collaboration’s non-core activities, such as supply and manufacturing  arrangements and compensation for opting-out of commercialization in certain countries, are included in other income/expense;  partnerships and joint ventures are either consolidated or accounted for under the equity method of accounting and related cash  receipts and distributions are treated as operating cash flow.  BMS has agreements with Sanofi for the codevelopment and cocommercialization of  Avapro / Avalide , an angiotensin II receptor  antagonist indicated for the treatment of hypertension and diabetic nephropathy, and  Plavix , a platelet aggregation inhibitor. The  worldwide alliance operates under the framework of two geographic territories; one in the Americas (principally the U.S., Canada,  Puerto Rico and Latin American countries) and Australia and the other in Europe and Asia. Accordingly, territory partnerships were  formed to manage central expenses, such as marketing, research and development and royalties, and to supply finished product to the  individual countries. In general, at the country level, agreements either to copromote (whereby a partnership was formed between the  parties to sell each brand) or to comarket (whereby the parties operate and sell their brands independently of each other) are in place.  BMS acts as the operating partner and owns a 50.1% majority controlling interest in the territory covering the Americas and Australia  and consolidates all country partnership results for this territory with Sanofi’s 49.9% share of the results reflected as a noncontrolling  interest. BMS recognizes net sales in this territory and in comarketing countries outside this territory (e.g. Germany, Italy for  irbesartan only, Spain and Greece). Royalties owed to Sanofi are included in cost of products sold (other than development royalties). Sanofi acts as the operating partner and owns a 50.1% majority controlling interest in the territory covering Europe and Asia. BMS  has a 49.9% ownership interest in this territory which is included in equity in net income of affiliates. Distributions of profits relating  to the partnerships are included in operating activities.  BMS and Sanofi have a separate partnership governing the copromotion of irbesartan in the U.S. Sanofi paid BMS $350 million for  their acquisition of an interest in the irbesartan license for the U.S. upon formation of the alliance.  Summarized financial information related to this alliance is as follows:  Year Ended December 31,  Dollars in Millions 2012 2011 2010 Territory covering the Americas and Australia: Net sales $  2,766  $  7,761 $ 7,464  Royalty expense  530  1,583 1,527  Noncontrolling interest – pre-tax  844  2,323 2,074  Distributions to Sanofi  742  2,335 2,093  Territory covering Europe and Asia:  Equity in net income of affiliates  201  298 325  Distributions to BMS  229  283 313  Other:  Net sales in Europe comarketing countries and other  284  279 378  Amortization (income)/expense – irbesartan license fee (29) (31) (31) Supply activities and development and opt-out royalty (income)/expense (142) 23 (3) December 31, Dollars in Millions 2012  2011  Investment in affiliates – territory covering Europe and Asia $  9  $ 37  Deferred income – irbesartan license fee   -  29  Noncontrolling interest  (30) (131) 37 