INTANGIBLE ASSETS AND GOODWILL

9 Months Ended

Sep. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

The major components of intangible assets as of September 30, 2014 and December 31, 2013 were as follows:



	As of September 30, 2014							As of December 31, 2013
	Gross Carrying Amount		Accumulated Amortization, Including Impairments			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization, Including Impairments			Net Carrying Amount
Finite-lived intangible assets:
Product brands	$	10,378.0	$	(3,384.1	)	$	6,993.9	$	10,554.2	$	(2,729.1	)	$	7,825.1
Corporate brands	379.0		(67.3		)	311.7		365.6		(44.4		)	321.2
Product rights	3,193.1		(1,101.3		)	2,091.8		3,021.0		(876.9		)	2,144.1
Partner relationships	195.9		(104.2		)	91.7		194.0		(83.2		)	110.8
Out-licensed technology and other	250.8		(111.9		)	138.9		264.0		(93.8		)	170.2
Total finite-lived intangible assets	14,396.8		(4,768.8		)	9,628.0		14,398.8		(3,827.4		)	10,571.4
Indefinite-lived intangible assets:
Acquired IPR&D⁽¹⁾	294.9		—			294.9		579.3		—			579.3
Corporate brand⁽²⁾	1,697.5		—			1,697.5		1,697.5		—			1,697.5
	$	16,389.2	$	(4,768.8	)	$	11,620.4	$	16,675.6	$	(3,827.4	)	$	12,848.2

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(1)	In the third quarter of 2014, the Company wrote-off IPR&D assets of $19.9 million primarily related to analysis of Phase 2 study data for a dermatological product candidate acquired in the December 2012 Medicis acquisition.

In the third quarter of 2013, the Company wrote-off an IPR&D asset of $93.8 million related to a modified-release formulation of ezogabine/retigabine.

The write-offs of the IPR&D assets were recorded in In-process research and development impairments and other charges in the consolidated statements of income (loss).


(2)	Represents the B&L corporate trademark, which has an indefinite useful life and is not amortizable. See note 3 “BUSINESS COMBINATIONS” for further information.

The decrease in intangible assets, net primarily reflects (i) the divestitures of filler and toxin assets and Metronidazole 1.3% in July 2014, (ii) amortization expense, and (iii) the negative impact of foreign currency exchange. These factors were partially offset by the acquisition of the PreCision and Solta Medical identifiable intangible assets (as described in note 3). See note 4 “DIVESTITURES” for further information related to the divestitures of filler and toxin assets and Metronidazole 1.3%. The reduction in Acquired IPR&D is largely driven by the reclassification to finite-lived intangible assets with respect to Jublia®, which received regulatory approval in the first half of 2014.

Amortization and impairments of finite-lived intangible assets amounted to $393.1 million and $1,113.9 million in the three-month and nine-month periods ended September 30, 2014, respectively, and $910.2 million and $1,540.0 million in the three-month and nine-month periods ended September 30, 2013, respectively.

Amortization and impairments of finite-lived intangible assets in the nine-month period ended September 30, 2014 included a $32.4 million write-off in the third quarter of 2014 related to Grifulvin®, an anti-fungal product within the Developed Markets segment. The write-off was driven by withdrawal of the supplemental Abbreviated New Drug Application, which resulted from assessment of extended timelines and increased costs associated with a change in the supplier and the manufacturing process, based on feedback received from the FDA.

Amortization and impairments of finite-lived intangible assets in the nine-month period ended September 30, 2013 included a $551.6 million impairment charge in the third quarter of 2013 related to ezogabine/retigabine (immediate-release formulation), which is included within the Developed Markets segment. This product is co-developed and marketed under a collaboration agreement with GlaxoSmithKline (“GSK”). This impairment charge was driven by analysis of expected future cash flows based on the communication received from the FDA in September 2013 regarding labeling changes and a required modification of the approved risk evaluation and mitigation strategy (REMS), which includes restrictions on distribution and additional patient monitoring. Further, as a result of this feedback received from the FDA, GSK decided that all sales force promotion for the product would be eliminated in the U.S., and they will not launch the product in certain other planned territories. Under the terms of the collaboration agreement with GSK, GSK controls all sales force promotion for the product. Such changes are expected to have a significant impact on future cash flows of ezogabine/retigabine.

Estimated aggregate amortization expense for each of the five succeeding years ending December 31 is as follows:



	2014		2015		2016		2017		2018
Amortization expense⁽¹⁾	$	1,421.7	$	1,379.9	$	1,289.2	$	1,231.1	$	1,108.6

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(1)	Estimated amortization expense shown in the table above does not include potential future impairments of finite-lived intangible assets, if any.

Goodwill

The changes in the carrying amount of goodwill in the nine-month period ended September 30, 2014 were as follows:



	Developed Markets			Emerging Markets			Total
Balance, January 1, 2014	$	7,428.7		$	2,323.4		$	9,752.1
Additions^(a)	259.5			61.6			321.1
Adjustments^(b)	10.3			(4.3		)	6.0
Divestitures^(c)	(428.9		)	—			(428.9		)
Foreign exchange and other	(111.8		)	(70.7		)	(182.5		)
Balance, September 30, 2014	$	7,157.8		$	2,310.0		$	9,467.8

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(a)	Primarily relates to the PreCision and Solta Medical acquisitions (as described in note 3).


(b)	Primarily reflects the impact of measurement period adjustments related to the B&L Acquisition (as described in note 3).


(c)	See note 4, titled “DIVESTITURES” for additional information.

As described in note 3, the allocation of the goodwill balance associated with the PreCision and Solta Medical acquisitions is provisional and subject to the completion of the valuation of the assets acquired and liabilities assumed.

- 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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