Note 8: Goodwill and Other Intangibles
Goodwill and other indefinite-lived intangible assets at December 31 were as follows: |
| | | | | | | |
| 2013 | | 2012 |
Goodwill (by segment): | | | |
Human pharmaceutical products | $ | 1,354.7 |
| | $ | 1,364.2 |
|
Animal health | 162.1 |
| | 137.1 |
|
Total goodwill | 1,516.8 |
| | 1,501.3 |
|
In-process research and development | 33.6 |
| | 65.0 |
|
Total indefinite-lived intangible assets | $ | 1,550.4 |
| | $ | 1,566.3 |
|
No impairments occurred with respect to the carrying value of goodwill for the years ended December 31, 2013, 2012, and 2011.
IPR&D consists of the acquisition date fair value of products under development acquired in business combinations that have not yet achieved regulatory approval for marketing adjusted for subsequent impairments. Examples of such products acquired in business combinations include liprotamase and Amyvid®, which are discussed further below. As discussed in Note 1, we use the "income method" to calculate the fair value of the IPR&D assets, which is a Level 3 fair value measurement.
No material impairments occurred with respect to the carrying value of IPR&D for the year ended December 31, 2013.
In 2012, we recorded impairment charges of $205.0 million related to liprotamase as a result of changes in key assumptions used in the valuation, based upon additional communications with the FDA regarding the clinical trial that would be required for resubmission, and our expectations for the product.
In 2011, we recorded impairment charges of $151.5 million due primarily to the impairment of the IPR&D assets related to Amyvid and liprotamase. The impairment of Amyvid was due to a delay in product launch and lower sales projections during the early part of the product’s expected life cycle. In April 2011, we received a complete response letter from the FDA for the New Drug Application (NDA) for liprotamase, which communicated the need for us to conduct an additional clinical trial prior to a resubmission, resulting in an impairment of liprotamase.
The components of finite-lived intangible assets at December 31 were as follows:
|
| | | | | | | | | | | | | | | | | | | | | | | |
| 2013 | | 2012 |
Description | Carrying Amount— Gross | | Accumulated Amortization | | Carrying Amount— Net | | Carrying Amount— Gross | | Accumulated Amortization | | Carrying Amount— Net |
Marketed products | $ | 5,136.1 |
| | $ | (2,447.2 | ) | | $ | 2,688.9 |
| | $ | 5,107.9 |
| | $ | (1,987.0 | ) | | $ | 3,120.9 |
|
Other | 164.8 |
| | (73.0 | ) | | 91.8 |
| | 129.5 |
| | (64.0 | ) | | 65.5 |
|
Total finite-lived intangible assets | $ | 5,300.9 |
| | $ | (2,520.2 | ) | | $ | 2,780.7 |
| | $ | 5,237.4 |
| | $ | (2,051.0 | ) | | $ | 3,186.4 |
|
Marketed products consist of the amortized cost of the rights to assets acquired in business combinations and approved for marketing in a significant global jurisdiction (U.S., Europe, and Japan) and capitalized milestone payments. Other intangibles consist primarily of the amortized cost of licensed platform technologies that have alternative future uses in research and development, manufacturing technologies, and customer relationships from business combinations. No material impairments occurred with respect to the carrying value of finite-lived intangible assets for the years ended December 31, 2013, 2012 and 2011.
See Note 3 for further discussion of intangible assets acquired in recent business combinations.
As of December 31, 2013, the remaining weighted-average amortization period for finite-lived intangible assets is approximately 8 years. Amortization expense was $555.0 million, $563.0 million, and $469.0 million for 2013, 2012, and 2011, respectively. The estimated amortization expense associated with our current finite-lived intangible assets for each of the next five years approximates $530 million in 2014, $490 million in 2015, $380 million in 2016, $200 million in 2017, and $180 million in 2018. Amortization expense is included in either cost of sales, marketing, selling, and administrative or research and development depending on the nature of the intangible asset being amortized.
