Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

he components of, and changes in, the carrying amount of goodwill follow:

(MILLIONS OF DOLLARS)	U.S.		International		Total
Balance, December 31, 2019	$	1,367	$	1,225	$	2,592
Additions / Adjustments(a)	58		17		75
Other(b)	—		27		27
Balance, December 31, 2020	$	1,425	$	1,269	$	2,694
Adjustments	(1)		4		3
Other(b)	—		(15)		(15)
Balance, December 31, 2021	$	1,424	$	1,258	$	2,682

(a)     For 2020, primarily relates to the acquisitions of Performance Livestock Analytics, Fish Vet Group and Virtual Recall. See Note 5. Acquisitions and Divestitures.

(b)     Includes adjustments for foreign currency translation.

The gross goodwill balance was $3,218 million as of December 31, 2021 and $3,230 million as of December 31, 2020. Accumulated goodwill impairment losses (generated entirely in fiscal 2002) was $536 million as of December 31, 2021 and 2020.

B. Other Intangible Assets

The components of identifiable intangible assets follow:

	As of December 31, 2021						As of December 31, 2020
					Identifiable						Identifiable
	Gross				Intangible Assets,		Gross				Intangible Assets,
	Carrying		Accumulated		Less Accumulated		Carrying		Accumulated		Less Accumulated
(MILLIONS OF DOLLARS)	Amount		Amortization		Amortization		Amount		Amortization		Amortization
Finite-lived intangible assets:
Developed technology rights	$	1,933	$	(949)	$	984	$	1,968	$	(809)	$	1,159
Brands and tradenames	426		(260)		166		427		(243)		184
Other	473		(335)		138		474		(306)		168
Total finite-lived intangible assets	2,832		(1,544)		1,288		2,869		(1,358)		1,511
Indefinite-lived intangible assets:
Brands and tradenames	91		—		91		104		—		104
In-process research and development	88		—		88		88		—		88
Product rights	7		—		7		7		—		7
Total indefinite-lived intangible assets	186		—		186		199		—		199
Identifiable intangible assets	$	3,018	$	(1,544)	$	1,474	$	3,068	$	(1,358)	$	1,710

Developed Technology Rights

Developed technology rights represent the amortized cost associated with developed technology, which has been acquired from third parties and which can include the right to develop, use, market, sell and/or offer for sale the product, compounds and intellectual property that we have acquired with respect to products, compounds and/or processes that have been completed. These assets include technologies related to the care and treatment of dogs, cats, horses, cattle, swine, poultry, fish and sheep.

Brands and Tradenames

Brands and tradenames represent the amortized or unamortized cost associated with product name recognition, as the products themselves do not receive patent protection and legal trademark and tradenames. The more significant finite-lived brands are Platinum Performance, Excenel and Lutalyse and the most significant indefinite-lived brand is the Linco family of products. The more significant finite-lived trademarks and tradenames are finite-lived trademarks and tradenames acquired from Abaxis. The more significant components of indefinite-lived trademarks and tradenames are indefinite-lived trademarks and tradenames acquired from SmithKlineBeecham.

In-Process Research and Development

IPR&D assets represent R&D assets that have not yet received regulatory approval in a major market. The majority of these IPR&D assets were acquired in connection with our acquisition of an Irish biologic therapeutics company.

IPR&D assets are required to be classified as indefinite-lived assets until the successful completion or abandonment of the associated R&D effort. Accordingly, during the development period after the date of acquisition, these assets will not be amortized until approval is obtained in a major market, typically either the U.S. or the EU, or in a series of other countries, subject to certain specified conditions and management judgment. At that time, we will determine the useful life of the asset, reclassify the asset out of IPR&D and begin amortization. If the associated R&D effort is abandoned, the related IPR&D assets will be written-off and we will record an impairment charge.

There can be no certainty that IPR&D assets ultimately will yield a successful product.

Product Rights

Product rights represent product registration and application rights that were acquired from Pfizer in 2014.

C. Amortization

The weighted average life of our total finite-lived intangible assets is approximately 9 years. Total amortization expense for finite-lived intangible assets was $204 million in 2021, $230 million in 2020 and $237 million in 2019.

The annual amortization expense expected for the years 2022 through 2026 is as follows:

(MILLIONS OF DOLLARS)	2022		2023		2024		2025		2026
Amortization expense	$	190	$	181	$	162	$	148	$	139