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Goodwill and Intangible Assets
 6 Months Ended
Jun. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Goodwill and Intangible Assets
Goodwill
The changes in the carrying amount of goodwill for the six months ended June 30, 2022 are as follows:
(In millions)Developed MarketsGreater ChinaJANZEmerging MarketsTotal
Balance at December 31, 2021:
Goodwill$9,108.4 $969.5 $776.3 $1,644.5 $12,498.7 
Accumulated impairment losses(385.0)— — — (385.0)
8,723.4 969.5 776.3 1,644.5 12,113.7 
Reclassification to assets held for sale (1)
(746.0)(2.8)(33.2)(154.9)(936.9)
Foreign currency translation(525.5)(14.8)(53.8)(59.7)(653.8)
$7,451.9 $951.9 $689.3 $1,429.9 $10,523.0 
Balance at June 30, 2022:
Goodwill$7,836.9 $951.9 $689.3 $1,429.9 $10,908.0 
Accumulated impairment losses(385.0)— — — (385.0)
$7,451.9 $951.9 $689.3 $1,429.9 $10,523.0 
____________
(1)Primarily reflects goodwill relating to the biosimilars portfolio.

The Company reviews goodwill for impairment annually on April 1st or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. As a result of the Biocon Biologics Transaction (refer to Note 6 Balance Sheet Components for additional information) and the decline in the Company’s share price during the first quarter of 2022, the Company performed an interim goodwill impairment test as of March 31, 2022. The Company performed the annual goodwill impairment test as of April 1, 2022. There were no significant changes from the interim goodwill test performed at March 31, 2022 and the results were consistent with the interim goodwill impairment test.
The Company performed both its interim and annual goodwill impairment tests on a quantitative basis for its five reporting units, North America, Europe, Emerging Markets, JANZ, and Greater China. In estimating each reporting unit’s fair value, the Company performed an extensive valuation analysis, utilizing both income and market-based approaches. The determination of the fair value of the reporting units requires the Company to make significant estimates and assumptions that affect the reporting unit’s expected future cash flows. These estimates and assumptions, utilizing Level 3 inputs, primarily include, but are not limited to, market multiples, control premiums, the discount rate, terminal growth rates, operating income before depreciation and amortization, and capital expenditures forecasts.
As of March 31, 2022 and April 1, 2022, the allocation of the Company’s total goodwill (prior to the reclassification of goodwill to assets held for sale) was as follows: North America $3.61 billion, Europe $4.95 billion, Emerging Markets $1.64 billion, JANZ $0.78 billion and Greater China $0.97 billion.
As of March 31, 2022 and April 1, 2022, the Company determined that the fair value of the North America and Greater China reporting units was substantially in excess of the respective unit’s carrying value.
For the Europe reporting unit, the estimated fair value exceeded its carrying value by approximately $797 million or 5.3% for both the interim and annual goodwill impairment tests. As it relates to the income approach for the Europe reporting unit at March 31, 2022 and April 1, 2022, the Company forecasted cash flows for the next 10 years. During the forecast period, the revenue compound annual growth rate was approximately 0.5%. A terminal year value was calculated with a negative 1.0% revenue growth rate applied. The discount rate utilized was 9.5% and the estimated tax rate was 15.3%. Under the market-based approach, we utilized an estimated range of market multiples of 7.5 to 8.0 times EBITDA plus a control premium of 15.0%. If all other assumptions are held constant, a reduction in the terminal value growth rate by 3.0% or an increase in discount rate by 1.5% would result in an impairment charge for the Europe reporting unit.

For the JANZ reporting unit, the estimated fair value exceeded its carrying value by approximately $231 million or 7.4% for both the interim and annual goodwill impairment tests. As it relates to the income approach for the JANZ reporting unit at March 31, 2022 and April 1, 2022, the Company forecasted cash flows for the next 10 years. During the forecast period, the revenue compound annual growth rate was approximately negative 4.8%. A terminal year value was calculated assuming no revenue growth. The discount rate utilized was 6.0% and the estimated tax rate was 30.4%. Under the market-based approach, we utilized an estimated market multiple of 6.0 times EBITDA plus a control premium of 15.0%. If all other assumptions are held constant, a reduction in the terminal value growth rate by 3.5% or an increase in discount rate by 2.0% would result in an impairment charge for the JANZ reporting unit.
For the Emerging Markets reporting unit, the estimated fair value exceeded its carrying value by approximately $816 million or 10.3% for both the interim and annual goodwill impairment tests. As it relates to the income approach for the Emerging Markets reporting unit at March 31, 2022 and April 1, 2022, the Company forecasted cash flows for the next 10 years. During the forecast period, the revenue compound annual growth rate was approximately 1.6%. A terminal year value was calculated with a 0.8% revenue growth rate applied. The discount rate utilized was 10.5% and the estimated tax rate was 18.4%. Under the market-based approach, we utilized an estimated market multiple of 7.5 times EBITDA plus a control premium of 15.0%. If all other assumptions are held constant, a reduction in the terminal value growth rate by approximately 8.5% or an increase in discount rate by 3.0% would result in an impairment charge for the Emerging Markets reporting unit.
Due to the inherent uncertainty involved in making these estimates, actual results could differ from those estimates. In addition, changes in underlying assumptions, especially as they relate to the key assumptions detailed, could have a significant impact on the fair value of the reporting units.
Subsequent to the completion of the interim goodwill impairment test, the Company allocated goodwill of $926.9 million as of June 30, 2022 to its biosimilars portfolio using a relative fair value approach and then reclassified the amount to assets held for sale in conjunction with the Biocon Biologics Transaction.
Intangible Assets, Net
Intangible assets consist of the following components at June 30, 2022 and December 31, 2021:
(In millions)Weighted Average Life (Years)Original CostAccumulated AmortizationNet Book Value
June 30, 2022
Product rights, licenses and other (1)
15$37,498.2 $13,440.9 $24,057.3 
In-process research and development43.8 — 43.8 
$37,542.0 $13,440.9 $24,101.1 
December 31, 2021
Product rights, licenses and other (1)
15$39,006.2 $12,918.5 $26,087.7 
In-process research and development46.5 — 46.5 
$39,052.7 $12,918.5 $26,134.2 
____________
(1)Represents amortizable intangible assets. Other intangible assets consists principally of customer lists and contractual rights.
Amortization expense, which is classified primarily within cost of sales in the condensed consolidated statements of operations for the three and six months ended June 30, 2022 and 2021 totaled:
Three Months EndedSix Months Ended
June 30,June 30,
(In millions)2022202120222021
Intangible asset amortization expense$634.1 $681.6 $1,282.2 $1,366.0 
Intangible asset impairment charges— — — 83.4 
Total intangible asset amortization expense (including impairment charges)$634.1 $681.6 $1,282.2 $1,449.4 
On April 30, 2021, the Company completed an agreement to divest a group of OTC products in the U.S. As a result of this transaction, the Company recognized an intangible asset impairment charge of approximately $83.4 million during the six months ended June 30, 2021.
Intangible asset amortization expense over the remainder of 2022 and for the years ending December 31, 2023 through 2026 is estimated to be as follows:
(In millions)
2022$1,250 
20232,341 
20242,247 
20252,151 
20262,098