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Goodwill and Intangible Assets
 6 Months Ended
Jun. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Goodwill and Intangible Assets
The changes in the carrying amount of goodwill for the six months ended June 30, 2020 are as follows:
(In millions)North America SegmentEurope SegmentRest of World SegmentTotal
Balance at December 31, 2019:
Goodwill$3,708.4  $4,548.6  $1,718.6  $9,975.6  
Accumulated impairment losses(385.0) —  —  (385.0) 
3,323.4  4,548.6  1,718.6  9,590.6  
Foreign currency translation(39.0) 4.6  (32.9) (67.3) 
$3,284.4  $4,553.2  $1,685.7  $9,523.3  
Balance at June 30, 2020:
Goodwill$3,669.4  $4,553.2  $1,685.7  $9,908.3  
Accumulated impairment losses(385.0) —  —  (385.0) 
$3,284.4  $4,553.2  $1,685.7  $9,523.3  

Intangible assets consist of the following components at June 30, 2020 and December 31, 2019:
(In millions)Weighted Average Life (Years)Original CostAccumulated AmortizationNet Book Value
June 30, 2020
Product rights, licenses and other (1)
15$20,088.2  $9,247.3  $10,840.9  
In-process research and development115.0  —  115.0  
$20,203.2  $9,247.3  $10,955.9  
December 31, 2019
Product rights, licenses and other (1)
15$20,109.1  $8,579.5  $11,529.6  
In-process research and development120.3  —  120.3  
$20,229.4  $8,579.5  $11,649.9  
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(1)Represents amortizable intangible assets. Other intangible assets consists principally of customer lists and contractual rights.
        During the three and six months ended June 30, 2019, the Company recognized impairment charges of $40.4 million and $69.9 million, respectively, which have been recorded as a component of amortization expense, for the impairment of certain finite-lived and in-process research and development (“IPR&D”) assets acquired as part of the acquisition of the non-sterile, topicals-focused business of Renaissance Acquisition Holdings, LLC. No impairment charges were recognized during the three and six months ended June 30, 2020. The impairment testing involved calculating the fair value of the assets based upon detailed valuations employing the income approach which utilized Level 3 inputs, as defined in Note 11 Financial Instruments and Risk Management. These valuations reflect, among other things, the impact of changes to the development programs, the projected development and regulatory time frames and the current competitive environment. Changes in any of the Company’s assumptions may result in a further reduction to the estimated fair values of these assets and could result in additional future impairment charges.
        The Company reviews goodwill for impairment annually on April 1st or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. As a result of the decline in the Company’s share price during the first quarter of 2020, and the general uncertainty and volatility in the economic environments in which the Company operates, including the impacts of the COVID-19 pandemic, the Company performed an interim goodwill impairment test as of March 31, 2020. The Company performed the annual goodwill impairment test as of April 1, 2020. There were no significant changes from the interim goodwill test performed at March 31, 2020 and the results were consistent with the interim goodwill impairment test.
        The Company has performed both the interim goodwill impairment test and its annual goodwill impairment test on a quantitative basis for its four reporting units, North America Generics, North America Brands, Europe and Rest of World. In estimating each reporting unit’s fair value, the Company performed an extensive valuation analysis, utilizing both income and market-based approaches, except for the North America Brands reporting unit where the fair value was estimated utilizing the income approach. The determination of the fair value of the reporting units requires the Company to make significant estimates and assumptions that affect the reporting unit’s expected future cash flows. These estimates and assumptions, utilizing Level 3 inputs, primarily include, but are not limited to, market multiples, control premiums, the discount rate, terminal growth rates, operating income before depreciation and amortization, and capital expenditures forecasts.
As of March 31, 2020 and April 1, 2020, the allocation of the Company’s total goodwill was as follows: North America Generics $2.60 billion, North America Brands $0.65 billion, Europe $4.43 billion and Rest of World $1.65 billion.
As of March 31, 2020 and April 1, 2020, the Company determined that the fair value of the North America Generics, North America Brands and Rest of World reporting units was substantially in excess of the respective unit’s carrying value. However, when compared to the April 1, 2019 test, the fair value of our overall business declined because of future forecasts and the decline in our share price.
For the Europe reporting unit, the estimated fair value exceeded its carrying value by approximately $1.3 billion or 11.0% for both the interim and annual goodwill impairment test. The excess fair value for the Europe reporting unit is consistent with the result of the Company’s 2019 annual impairment test. As it relates to the income approach for the Europe reporting unit at March 31, 2020 and April 1, 2020, the Company forecasted cash flows for the next 5 years. During the forecast period, the revenue compound annual growth rate was approximately 7.5%. A terminal year value was calculated with a 2.0% revenue growth rate applied. The discount rate utilized was 11.0% and the estimated tax rate was 25.5%. Under the market-based approach, we utilized an estimated range of market multiples of 8.0 to 9.5 times EBITDA plus a control premium of 15.0%. If all other assumptions are held constant, a reduction in the terminal value growth rate by 3.5% or an increase in discount rate by 3.5% would result in an impairment charge for the Europe reporting unit.
Due to the inherent uncertainty involved in making these estimates, actual results could differ from those estimates. In addition, changes in underlying assumptions, especially as it relates to the key assumptions detailed, could have a significant impact on the fair value of the reporting units.
        Amortization expense, which is classified primarily within cost of sales in the condensed consolidated statements of operations for the three and six months ended June 30, 2020 and 2019 totaled:
Three Months EndedSix Months Ended
June 30,June 30,
(In millions)2020201920202019
Intangible asset amortization expense$351.6  $399.2  $702.8  $804.7  
IPR&D intangible asset impairment charges—  —  —  29.5  
Finite-lived intangible asset impairment charges—  40.4  —  40.4  
Total intangible asset amortization expense (including impairment charges)$351.6  $439.6  $702.8  $874.6  
Intangible asset amortization expense over the remainder of 2020 and for the years ended December 31, 2021 through 2024 is estimated to be as follows (excludes the potential impact of the Combination):
(In millions)
2020$718  
20211,358  
20221,289  
20231,126  
20241,015