INTANGIBLE ASSETS AND GOODWILL

6 Months Ended

Jun. 30, 2011

10. INTANGIBLE ASSETS AND GOODWILL

Intangible Assets

The major components of intangible assets as of June 30, 2011 and December 31, 2010 were as follows:

			As of June 30, 2011							As of December 31, 2010

			Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
	Product brands		$	4,947,614	$	(539,159	)	$	4,408,455	$	4,227,465	$	(404,951	)	$	3,822,514
	Corporate brands			177,966		(6,716	)		171,250		169,675		(2,191	)		167,484
	Product rights			876,739		(255,430	)		621,309		1,074,611		(279,275	)		795,336
	Partner relationships			135,754		(6,450	)		129,304		—		—			—
	Out-licensed technology and other			230,476		(36,148	)		194,328		205,332		(17,842	)		187,490

		Total finite-lived intangible assets		6,368,549		(843,903	)		5,524,646		5,677,083		(704,259	)		4,972,824
Indefinite-lived intangible assets:
	Acquired IPR&D			1,435,261		—			1,435,261		1,399,956		—			1,399,956

			$	7,803,810	$	(843,903	)	$	6,959,907	$	7,077,039	$	(704,259	)	$	6,372,780

The increase in intangible assets primarily reflects the acquisition of the PharmaSwiss, Elidel® and Xerese™ identifiable intangible assets (as described in note 3) and the rights to Zovirax® (as described in note 4), partially offset by the impact of the measurement period adjustments in connection with the Merger (as described in note 3) and the carrying amount of the Cloderm® intangible assets expensed on the out-license of the product rights (as described in note 4).

Amortization expense related to intangible assets was recorded as follows:

	Three Months Ended June 30				Six Months Ended June 30

	2011		2010		2011		2010
Alliance and royalty revenue	$	268	$	268	$	536	$	536
Cost of goods sold		2,025		2,025		4,051		4,051
Amortization expense		114,946		33,299		226,989		66,599

	$	117,239	$	35,592	$	231,576	$	71,186

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

			2011			2012			2013			2014			2015

	Amortization expense		$	568,585		$	532,388		$	529,162		$	519,943		$	506,252

Goodwill

The change in the carrying amount of goodwill in the six-month period ended June 30, 2011 was as follows:

	U.S. Neurology and Other		U.S. Dermatology			Canada and Australia			Branded Generics — Europe			Branded Generics — Latin America			Total

Balance, January 1, 2011	$	1,379,516	$	498,508		$	394,787		$	352,736		$	375,829		$	3,001,376
Additions^(a)		—		—			5,388			172,157			—			177,545
Adjustments^(b)		187,248		(338	)		(32,963	)		(24,623	)		(12,858	)		116,466
Foreign exchange and other		—		—			16,271			25,165			22,094			63,530

Balance, June 30, 2011	$	1,566,764	$	498,170		$	383,483		$	525,435		$	385,065		$	3,358,917

(a): Relates to the acquisitions of PharmaSwiss and Ganehill (as described in note 3).
(b): Reflects the impact of measurement period adjustments related to the Merger (as described in note 3).

As described in note 3, the allocation of the goodwill balance associated with the acquisition of PharmaSwiss is provisional and subject to the completion of the allocation of the consideration transferred to 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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