INTANGIBLE ASSETS AND GOODWILL

3 Months Ended

Mar. 31, 2012

9. INTANGIBLE ASSETS AND GOODWILL

Intangible Assets

The major components of intangible assets as of March 31, 2012 and December 31, 2011 were as follows:

			As of March 31, 2012							As of December 31, 2011

			Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
Product brands			$	6,635,172	$	(932,183	)	$	5,702,989	$	6,442,371	$	(737,876	)	$	5,704,495
	Corporate brands			217,553		(14,626	)		202,927		181,349		(10,630	)		170,719
	Product rights			1,415,268		(328,790	)		1,086,478		1,302,748		(306,936	)		995,812
	Partner relationships			164,590		(20,889	)		143,701		135,095		(15,633	)		119,462
	Out-licensed technology and other			184,240		(42,893	)		141,347		174,873		(38,915	)		135,958

		Total finite-lived intangible assets		8,616,823		(1,339,381	)		7,277,442		8,236,436		(1,109,990	)		7,126,446

Indefinite-lived intangible assets:
	Acquired IPR&D			531,372		—			531,372		531,352		—			531,352

			$	9,148,195	$	(1,339,381	)	$	7,808,814	$	8,767,788	$	(1,109,990	)	$	7,657,798

The increase in intangible assets primarily reflects the acquisition of Gerot Lannach and Probiotica identifiable intangible assets (as described in note 3).

For the three-month periods ended March 31, 2012 and 2011, amortization expense related to intangible assets was recorded as follows:

	Three Months Ended March 31

	2012		2011
Alliance and royalty revenue	$	—	$	268
Cost of goods sold		2,026		2,026
Amortization expense		200,643		112,043

	$	202,669	$	114,337

The increase in amortization expense in the three-month period ended March 31, 2012 primarily reflected the amortization of ezogabine/retigabine which was reclassified from IPR&D to a finite-lived intangible asset in December 2011 and the amortization of the acquired identifiable intangible assets from the acquisitions of iNova, Dermik, Ortho Dermatologics, Sanitas and PharmaSwiss, as well as the license agreement for Elidel®/Xerese®.

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

			2012			2013			2014			2015			2016

	Amortization expense		$	825,622		$	831,278		$	821,745		$	802,754		$	802,521

Goodwill

The changes in the carrying amount of goodwill in the three-month period ended March 31, 2012 were as follows:

	U.S. Dermatology		U.S. Neurology and Other		Canada and Australia		Emerging Markets		Total

Balance, January 1, 2012^(a)	$	491,651	$	1,542,203	$	498,198	$	1,066,734	$	3,598,786
Additions^(b)		1,479		—		—		54,843		56,322
Adjustments^(c)		—		—		13,209		—		13,209
Foreign exchange and other		—		—		9,708		52,254		61,962

Balance, March 31, 2012	$	493,130	$	1,542,203	$	521,115	$	1,173,831	$	3,730,279

(a): Effective in the first quarter of 2012, the Company has four reportable segments: U.S. Dermatology, U.S. Neurology and Other, Canada and Australia and Emerging Markets. Accordingly, the Company has restated prior period segment information to conform to the current period presentation. For further details, see note 18 titled "SEGMENT INFORMATION".
(b): Relates to the Gerot Lannach, Probiotica and Eyetech acquisitions (as described in note 3).
(c): Reflects the impact of measurement period adjustments related to the iNova and Afexa acquisitions (as described in note 3).

As described in note 3, the allocation of the goodwill balance associated with the Gerot Lannach, Probiotica, iNova, Dermik, Ortho Dermatologics, Afexa and Sanitas 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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