Other Intangible Assets, Net

6 Months Ended

Jun. 30, 2014

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Other Intangible Assets Disclosure

11.       Other intangible assets, net

		June 30,	December 31,
		2014	2013
		$’M	$’M
		________________	________________
Amortized intangible assets
	Intellectual property rights acquired for currently marketed products	4,911.7	2,573.3
	Other intangible assets	30.0	46.1
		________________	________________
		4,941.7	2,619.4
Unamortized intangible assets
	Intellectual property rights acquired for IPR&D	1,760.5	951.5
		________________	________________
		6,702.2	3,570.9
Less: Accumulated amortization		(1,376.7)	(1,258.3)
		________________	________________
		5,325.5	2,312.6
		________________	________________

The change in the net book value of other intangible assets for the six monthsto June 30, 2014 and 2013is shown in the table below:

	Other intangible assets
	2014	2013
	$’M	$’M
	________________	________________
As at January 1,	2,312.6	2,388.1
Acquisitions	3,321.4	732.8
Amortization charged	(119.0)	(72.0)
Amortization charged on DERMAGRAFT product technology, presented within discontinued operations in the consolidated income statement	-	(19.7)
Impairment charges	(188.0)	(19.9)
Foreign currency translation	(1.5)	(11.2)
	________________	________________
As at June 30,	5,325.5	2,998.1
	________________	________________

In the six months to June 30, 2014 the Company acquired intangible assets totaling $3,321.4 million, primarily relating to the preliminary fair value of currently marketed intangible assets of $2,320.0 million and IPR&D assets of $997 million, which were acquired with ViroPharmaand Lumena(see Note 2 for further details).

The Company reviews its intangible assets for impairment whenever events or circumstances suggest that their carrying value may not be recoverable. In the six months to June 30, 2014 the Company identified indicators of impairment in respect of its SHP602 (iron chelating agent for the treatment of iron overload secondary to chronic transfusion) and SHP613 (for the treatment of improvement in patency of arteriovenous access in hemodialysis patients)IPR&D assets.

The indicators of impairment related to SHP602 included the decision in the first quarter of 2014 to place the ongoing Phase 2 clinical trial in pediatric and adult patients on hold while certain nonclinical findings are analyzed and evaluated. The Company therefore reviewed the recoverability of its SHP602 IPR&D asset in the first quarter of 2014 and recorded an impairment charge of $166.0 million within R&D expenses in the consolidated statement of income to record the SHP602 IPR&D asset to its revised fair value. This fair value was based on the revised discounted cash flow forecasts associated with SHP602, which included a reduced probability of commercial launch, and an overall delay in the forecast timing of launch.

The indicators of impairment related to SHP613 comprised the decision in the second quarter of 2014 to discontinue further development of this asset based on portfolio prioritization as well as unexpected challenges and complexities with the development program. In the second quarter of 2014 the Company recorded an impairment charge of $22.0 million within R&D expenses in the consolidated statement of income to fully write-off the SHP613 IPR&D asset.

Management estimates that the annual amortization charge in respect of intangible assets held at June 30, 2014will be approximately $232million for each of the five years to June 30, 2019.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.