Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2023

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, 2021	$	1,424	$	1,258	$	2,682
Additions(a)	61		44		105
Other(c)	—		(41)		(41)
Balance, December 31, 2022	$	1,485	$	1,261	$	2,746
Additions(a)	24		14		38
Transfers/Adjustments(b)	25		(34)		(9)
Other(c)	(2)		(14)		(16)
Balance, December 31, 2023	$	1,532	$	1,227	$	2,759

(a)     For 2023, primarily relates to the acquisitions of PetMedix and adivo. See Note 5. Acquisitions and Divestitures.

For 2022, primarily relates to the acquisitions of Basepaws and Jurox. See Note 5. Acquisitions and Divestitures.

(b)     For 2023, primarily relates to asset transfers from international markets to the U.S.

(c)     Includes adjustments for foreign currency translation. In 2023, also includes the sale of a majority interest in our pet insurance business within our U.S. segment.

The gross goodwill balance was $3,295 million as of December 31, 2023 and $3,282 million as of December 31, 2022. Accumulated goodwill impairment losses (generated entirely in fiscal 2002) were $536 million as of December 31, 2023 and 2022.

B. Other Intangible Assets

The components of identifiable intangible assets follow:

	As of December 31, 2023						As of December 31, 2022
					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(a)	$	1,986	$	(1,101)	$	885	$	1,918	$	(975)	$	943
Brands and tradenames	383		(246)		137		395		(237)		158
Other	270		(190)		80		337		(233)		104
Total finite-lived intangible assets	2,639		(1,537)		1,102		2,650		(1,445)		1,205
Indefinite-lived intangible assets:
Brands and tradenames	88		—		88		91		—		91
In-process research and development(a)(b)	141		—		141		77		—		77
Product rights	7		—		7		7		—		7
Total indefinite-lived intangible assets	236		—		236		175		—		175
Identifiable intangible assets	$	2,875	$	(1,537)	$	1,338	$	2,825	$	(1,445)	$	1,380

(a)     During 2023, certain intangible assets related to the acquisition of an Irish biologic therapeutics company, acquired in 2017, were placed into service.

(b)     As of December 31, 2023, primarily includes intangible assets related to the acquisitions of PetMedix and adivo in 2023.

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. The most significant finite-lived brands and tradenames are related to Abaxis, Platinum Performance, and Lutalyse. The most significant indefinite-lived brands and tradenames were acquired from SmithKlineBeecham and the Linco family of products.

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 two research and development stage animal health biopharmaceutical companies, PetMedix and adivo.

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., U.K. 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 $185 million in 2023, $193 million in 2022 and $204 million in 2021.

The annual amortization expense expected for the years 2024 through 2028 is as follows:

(MILLIONS OF DOLLARS)	2024		2025		2026		2027		2028
Amortization expense	$	171	$	159	$	153	$	148	$	119