Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and intangible assets

GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table summarizes the changes in the carrying amount of goodwill:

(in millions)	Amount
Balance at December 31, 2019	$	4,117
Goodwill resulting from the acquisition of Immunomedics	3,991
Balance at December 31, 2020	$	8,108

We perform an annual goodwill impairment assessment in the fourth quarter, or earlier if impairment indicators exist. As of December 31, 2020, there were no accumulated goodwill impairment losses.

Intangible Assets

The following table summarizes our Intangible assets, net:

	December 31, 2020								December 31, 2019
(in millions)	Gross  Carrying Amount		Accumulated Amortization		Foreign Currency Translation Adjustment		Net Carrying Amount		Gross  Carrying Amount		Accumulated Amortization		Foreign Currency Translation Adjustment		Net Carrying Amount
Finite-lived assets
Intangible asset - sofosbuvir	$	10,720	$	(4,952)	$	—	$	5,768	$	10,720	$	(4,253)	$	—	$	6,467
Intangible asset - axicabtagene ciloleucel (DLBCL)	6,200		(1,105)		—		5,095		6,200		(761)		—		5,439
Intangible asset - Trodelvy for mTNBC	4,600		(63)		—		4,537		—		—		—		—
Other	1,377		(540)		(1)		836		1,098		(454)		(6)		638
Total finite-lived assets	22,897		(6,660)		(1)		16,236		18,018		(5,468)		(6)		12,544
Indefinite-lived assets - IPR&D(1)	16,890		—		—		16,890		1,247		—		(5)		1,242
Total intangible assets	$	39,787	$	(6,660)	$	(1)	$	33,126	$	19,265	$	(5,468)	$	(11)	$	13,786

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(1)     Includes indefinite-lived assets - IPR&D recognized as part of the Immunomedics acquisition in October 2020. See Note 6. Acquisitions for additional information.

Aggregate amortization expense related to finite-lived intangible assets was $1.2 billion, $1.1 billion and $1.2 billion for the years ended December 31, 2020, 2019 and 2018, respectively, and is primarily included in Cost of goods sold on our Consolidated Statements of Income.

Amounts capitalized as IPR&D are subject to impairment testing until the completion or abandonment of the associated R&D efforts. During 2020, we performed quantitative impairment testing of our IPR&D intangible assets using a probability-weighted income approach that discounts expected future cash flows to present value using a discount rate of 8%. No IPR&D impairment charges were recorded in 2020. During 2019, we performed quantitative impairment testing of our IPR&D intangible assets using a probability-weighted income approach that discounts expected future cash flows to present value. The estimated net cash flows were discounted using a discount rate of 9.5%, which is based on the estimated weighted-average cost of capital for companies with profiles similar to our profile and represents the rate that market participants would use to value the intangible assets. The discounted cash flow models used in valuing these intangible assets also require the use of Level 3 fair value measurements and inputs including estimated revenues, costs, and probability of technical and regulatory success. In comparison to the 2018 assessment, we used lower estimated revenues in 2019 due to changes in the estimated market opportunities as new therapies or combinations of existing therapies were approved. The lower estimated revenues reduced the fair value of the IPR&D intangible assets, primarily related to axicabtagene ciloleucel for the treatment of indolent B-cell non-Hodgkin lymphoma (“iNHL”), below carrying value resulting in the recognition of an impairment charge of $800 million, which was recorded within Research and development expenses on our Consolidated Statements of Income.

In 2018, we concluded that the KITE-585 program did not justify further efforts based on the totality of the clinical data gathered and discontinued the program. As a result, the carrying value of the IPR&D relating to the KITE-585 program was written down to zero and we recorded an impairment charge of $820 million within Research and development expenses on our Consolidated Statements of Income.

The following table summarizes the estimated future amortization expense associated with our finite-lived intangible assets as of December 31, 2020:

(in millions)	Amount
2021	$	1,527
2022	1,527
2023	1,527
2024	1,527
2025	1,521
Thereafter	8,607
Total	$	16,236