Goodwill and other intangible assets

6 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Changes in the carrying amounts of goodwill were as follows (in millions):



	Six months ended June 30,
	2017		2016
Beginning balance	$	14,751	$	14,787
Goodwill related to acquisitions of businesses⁽¹⁾	—		2
Currency translation adjustments	15		10
Ending balance	$	14,766	$	14,799


⁽¹⁾	Consists of goodwill recognized on the acquisition dates of business combinations and subsequent adjustments to these amounts resulting from changes to the acquisition date fair values of net assets acquired in the business combinations recorded during their respective measurement periods.

Identifiable intangible assets

Identifiable intangible assets consisted of the following (in millions):



	June 30, 2017							December 31, 2016
	Gross carrying amount		Accumulated amortization			Intangible assets, net		Gross carrying amount		Accumulated amortization			Intangible assets, net
Finite-lived intangible assets:
Developed product technology rights	$	12,562	$	(6,436	)	$	6,126	$	12,534	$	(5,947	)	$	6,587
Licensing rights	3,274		(1,450		)	1,824		3,275		(1,300		)	1,975
Marketing-related rights	1,326		(865		)	461		1,333		(793		)	540
Research and development technology rights	1,145		(755		)	390		1,122		(704		)	418
Total finite-lived intangible assets	18,307		(9,506		)	8,801		18,264		(8,744		)	9,520
Indefinite-lived intangible assets:
In-process research and development	760		—			760		759		—			759
Total identifiable intangible assets	$	19,067	$	(9,506	)	$	9,561	$	19,023	$	(8,744	)	$	10,279

Developed product technology rights consist of rights related to marketed products acquired in business combinations. Licensing rights consist primarily of contractual rights acquired in business combinations to receive future milestones, royalties and profit sharing payments, capitalized payments to third parties for milestones related to regulatory approvals to commercialize products and up-front payments associated with royalty obligations for marketed products. Marketing-related intangible assets consist primarily of rights related to the sale and distribution of marketed products. R&D technology rights consist of technology used in R&D with alternative future uses.

In-process research and development (IPR&D) consists of R&D projects acquired in a business combination that are not complete at the time of acquisition due to remaining technological risks and/or lack of receipt of required regulatory approvals. As of June 30, 2017, the primary projects are AMG 899 (formerly TA-8995), acquired in the acquisition of Dezima Pharma B.V. (Dezima) in 2015, and oprozomib, acquired in the acquisition of Onyx Pharmaceuticals, Inc. in 2013. The valuation of AMG 899 reflects delayed development pending competitor clinical trials in the class. Detailed information from these trials is expected in the third quarter of 2017 and may have a material impact on the value of our related IPR&D.

All IPR&D projects have major risks and uncertainties associated with the timely and successful completion of development and commercialization of product candidates, including our ability to confirm safety and efficacy based on data from clinical trials, our ability to obtain necessary regulatory approvals and our ability to successfully complete these tasks within budgeted costs. We are not permitted to market a human therapeutic without obtaining regulatory approvals, and such approvals require our completing clinical trials that demonstrate a product candidate is safe and effective. In addition, the availability and extent of coverage and reimbursement from third-party payers, including government healthcare programs and private insurance plans, as well as competitive product launches, impact the revenues a product can generate. Consequently, the eventual realized value, if any, of the acquired IPR&D projects may vary from their estimated fair values. We review IPR&D projects for impairment annually, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable and upon the establishment of technological feasibility or regulatory approval.

During both of the three months ended June 30, 2017 and 2016, we recognized amortization charges associated with our finite-lived intangible assets of $371 million. During the six months ended June 30, 2017 and 2016, we recognized amortization charges associated with our finite-lived intangible assets of $744 million and $740 million, respectively. The total estimated amortization charges for our finite-lived intangible assets for the remaining six months ending December 31, 2017, and the years ending December 31, 2018, 2019, 2020, 2021 and 2022, are $0.6 billion, $1.2 billion, $1.1 billion, $1.1 billion, $0.9 billion and $0.9 billion, respectively.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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