Taxation

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income Tax Disclosure

17.       Taxation

For thethree and six months ended June 30, 2016,the effective tax rate on income from continuing operations was -427% (2015: -37%) and 2% (2015: 2%), respectively.

The effective tax rate for the three and six months ended June 30, 2016 is affected by the combined impact of the relative quantum of the profit before tax for the period by jurisdiction and of the reversal of deferred tax liabilities from the Baxalta acquisition (including in higher tax territoriessuch as the U.S.) of inventory and intangible assets amortization as well as significant acquisition and integration costs.

The effective tax rate for the three months ended June 30, 2015 was negative primarily due to the reduction in deferred tax liabilities in relation to the impairment of IPR&D intangible assets, the re-measurement of uncertain tax positions relating to ongoing tax audits and the release of certain valuation allowances all recognized during the second quarter of 2015.

The Company has historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full year to ordinary income or loss for the reporting period.  For the three and six months ended June 30, 2016, the impact of certain items arising from the Baxalta acquisition has caused significant variations in the estimated effective tax rate when compared to the three and six months ended June 30, 2015.  As a result, the Company has applied a permitted exception to the general rule by including the actual income tax effect of certain portions of its business discretelywhen calculating the provision for income taxes for the three and six months ended June 30, 2016.