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Other Intangible Assets, Net
12 Months Ended
Dec. 31, 2012
Intangible Assets, Net (Excluding Goodwill) [Abstract]  
Other Intangible Assets Disclosure

12.       Other intangible assets, net

  December 31,December 31,
  20122011
  $’M $’M
  ________________________________
Amortized intangible assets  
 Intellectual property rights acquired for currently marketed products2,462.02,500.7
 Acquired product technology710.0710.0
 Other intangible assets44.523.2
  ________________________________
  3,216.53,233.9
Unamortized intangible assets  
 Intellectual property rights acquired for IPR&D231.0119.8
  ________________________________
  3,447.53,353.7
    
Less: Accumulated amortization(1,059.4)(860.7)
  ________________________________
  2,388.12,493.0
  ________________________________

As at December 31, 2012 the net book value of intangible assets allocated to the SP segment was $ 1,238.0 million (December 31, 2011: $1,348.3 million), to the HGT segment was $474.6 million (December 31, 2011: $453.2 million) and to the RM segment was $675.5 million (December 31, 2011: $691.5 million).

 

The change in the net book value of other intangible assets for the year to December 31, 2012 and 2011 is shown in the table below:

 

 Other intangible assets
 20122011
 $’M$’M
 ________________________________
As at January 1, 2,493.01,978.9
Acquisitions281.6717.1
Amortization charged (194.8)(166.7)
Impairment charges(197.9)(16.0)
Foreign currency translation6.2(20.3)
 ________________________________
As at December 31, 2,388.12,493.0
 ________________________________

In the year to December 31, 2012 the Company acquired intangible assets totaling $281.6 million, principally relating to intangible assets acquired with FerroKin and from Pervasis (see Note 3 for further details) and the license acquired from Mt. Sinai School of Medicine of New York University (see Note 17 for further details). The weighted average amortization period of acquired amortizable intangible assets is 7 years.

 

In the year to December 31, 2012 the Company identified indicators of impairment in respect of its RESOLOR intangible assets. These indicators included the increasing challenges in the European reimbursement environment subsequent to the acquisition of Movetis and the results of an evaluation of alternative sales and marketing strategies for RESOLOR in the EU which have led to lower actual and projected revenue and profitability levels than those initially forecast at the time of the acquisition.

The Company therefore reviewed the recoverability of both its RESOLOR IPR&D assets (with a carrying value of $111.9 million) and its amortizing intangible asset for the RESOLOR currently marketed product (with a carrying value of $253.5 million).

 

Subsequently the Company recorded pre-tax non-cash impairment charges in the consolidated statement of income to write down these assets to their fair value. $126.7 million was recorded within SG&A expenses in the fourth quarter of 2012 in respect of the amortizing intangible asset for the RESOLOR currently marketed product and $71.2 million was recorded within R&D expenses in respect of the RESOLOR IPR&D assets. These impairment charges have been recorded in the SP operating segment. The fair values of these assets were determined using the income approach, which used significant unobservable (Level 3) inputs (see Note 20 for further details).

 

After these impairment charges the carrying value of the amortizing intangible asset for the RESOLOR currently marketed product is $126.8 million and the RESOLOR IPR&D assets is $40.7 million as at December 31, 2012.

 

Management estimates that the annual amortization charge in respect of intangible assets held at December 31, 2012 will be approximately $200 million for each of the five years to December 31, 2017. Estimated amortization expense can be affected by various factors including future acquisitions, disposals of product rights, regulatory approval and subsequent amortization of acquired IPR&D projects, foreign exchange movements and the technological advancement and regulatory approval of competitor products.