FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Schedule of components and classification of financial assets and liabilities measured at fair value

The following fair value hierarchy table presents the components and classification of the Company’s financial assets and liabilities measured at fair value as of December 31, 2013 and 2012:

	2013										2012
	Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	$	171,339		$	171,339	$	—	$	—		$	306,604		$	306,604	$	—	$	—
Available-for-sale equity securities	—			—		—		—			4,410			4,410		—		—
Available-for-sale debt securities:
Auction rate floating securities	—			—		—		—			7,167			—		—		7,167
Total financial assets	$	171,339		$	171,339	$	—	$	—		$	318,181		$	311,014	$	—	$	7,167
Cash equivalents	$	171,339		$	171,339	$	—	$	—		$	306,604		$	306,604	$	—	$	—
Marketable securities	—			—		—		—			11,577			4,410		—		7,167
Total financial assets	$	171,339		$	171,339	$	—	$	—		$	318,181		$	311,014	$	—	$	7,167
Liabilities:
Acquisition-related contingent consideration	$	(355,765	)	$	—	$	—	$	(355,765	)	$	(455,082	)	$	—	$	—	$	(455,082	)

Schedule of reconciliation of contingent consideration obligations measured on a recurring basis using significant unobservable inputs (Level 3)

The following table presents a reconciliation of contingent consideration obligations measured on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2013 and 2012:

	2013			2012
Balance, beginning of year	$	(455,082	)	$	(420,084	)
Total unrealized gains:
Included in net (loss) income:
Arising during the year(1)	29,259			5,266
Reclassification from other comprehensive income (loss)	—			—
Included in other comprehensive income (loss):
Arising during the year	4,938			(784		)
Acquisition-related contingent consideration:
Issuances(2)	(76,064		)	(145,728		)
Payments(3)	141,184			106,248
Balance, end of year	$	(355,765	)	$	(455,082	)

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(1) For the year ended December 31, 2013, a net gain of $29.3 million was recognized as Acquisition-related contingent consideration in the consolidated statements of (loss) income. The acquisition-related contingent consideration net gain was primarily driven by a net gain related to the Elidel®/Xerese®/Zovirax® agreement entered into with Meda in June 2011 (the “Elidel®/Xerese®/Zovirax® agreement”). In April 2013, Mylan Inc. launched a generic Zovirax® ointment, which was earlier than we previously anticipated. Also, in April 2013, we entered into an agreement with Actavis to launch the authorized generic ointment for Zovirax®. Refer to note 5 titled “COLLABORATION AGREEMENTS” for further information regarding the agreement with Actavis. As a result of analysis in the third quarter of 2013 of performance trends since the generic entrant, the Company adjusted the projected revenue forecast, resulting in an acquisition-related contingent consideration net gain of $20.0 million in the year ended December 31, 2013. Also contributing to the acquisition-related contingent consideration net gain was a net gain of $6.9 million which resulted from the termination, in the third quarter of 2013, of the A007 (Lacrisert®) development program acquired by Valeant as part of Aton Pharma, Inc. (“Aton”) acquisition in May 2010, which impacted the probability associated with potential milestone payments. The termination of this program also resulted in an IPR&D impairment charge in the third quarter of 2013, as described in note 12 titled “INTANGIBLE ASSETS AND GOODWILL”.

For the year ended December 31, 2012, a net gain of $5.3 million was recognized as Acquisition-related contingent consideration in the consolidated statements of (loss) income. The Acquisition-related contingent consideration net gain was primarily driven by (i) a net gain of $10.3 million related to the iNova acquisition, primarily due to changes in the estimated probability of achieving the milestones, partially offset by (ii) a net loss of $6.5 million related to the Elidel®/Xerese®/Zovirax® agreement, primarily driven by fair value adjustments to reflect accretion for the time value of money, partially offset by changes in the projected revenue forecast.

(2) Relates to the 2013 acquisitions, primarily the Eisai acquisition and other smaller acquisitions, and the 2012 acquisitions, primarily the OraPharma, Gerot Lannach, QLT, and Atlantis acquisitions, as described in note 3 titled “BUSINESS COMBINATIONS”.

(3) Relates primarily to payments of acquisition-related contingent consideration related to the Elidel®/Xerese®/Zovirax® agreement and the OraPharma and the Gerot Lannach acquisitions. See note 3 titled “BUSINESS COMBINATIONS”.