
(In millions)	Developed Markets (1)		Greater China		JANZ		Emerging Markets (2)		Total



Balance at December 31, 2020:	$	9,184.5	$	738.3	$	864.0	$	1,560.2	$	12,347.0
Measurement period and other adjustments	67.7		220.4		(30.9)		38.4		295.6
Foreign currency translation	(528.8)		10.8		(56.8)		45.9		(528.9)
Balance at December 31, 2021:	$	8,723.4	$	969.5	$	776.3	$	1,644.5	$	12,113.7




Disposition (3)	(743.9)		(2.7)		(32.6)		(140.5)		(919.7)
Impairment	—		—		—		(117.0)		(117.0)
Foreign currency translation	(518.0)		(26.2)		(54.7)		(52.3)		(651.2)
Balance at December 31, 2022	$	7,461.5	$	940.6	$	689.0	$	1,334.7	$	10,425.8

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 Biocon Biologics Transaction (refer to Note 5 Divestitures for additional information) and the decline in the Company’s share price during the first quarter of 2022, the Company performed an interim goodwill impairment test as of March 31, 2022. The Company performed the annual goodwill impairment test as of April 1, 2022. There were no significant changes from the interim goodwill test performed at March 31, 2022 and the results were consistent with the interim goodwill impairment test.

The Company performed both its interim and annual goodwill impairment tests on a quantitative basis for its five reporting units, North America, Europe, Emerging Markets, JANZ, and Greater China. In estimating each reporting unit’s fair value, the Company performed an extensive valuation analysis, utilizing both income and market-based approaches. 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, 2022 and April 1, 2022, the allocation of the Company’s total goodwill (prior to the reclassification of goodwill to assets held for sale) was as follows: North America $3.61 billion, Europe $4.95 billion, Emerging Markets $1.64 billion, JANZ $0.78 billion and Greater China $0.97 billion.

As of March 31, 2022 and April 1, 2022, the Company determined that the fair value of the North America and Greater China reporting units was substantially in excess of the respective unit’s carrying value.

For the Europe reporting unit, the estimated fair value exceeded its carrying value by approximately $797 million or 5.3% for both the interim and annual goodwill impairment tests. As it relates to the income approach for the Europe reporting unit at March 31, 2022 and April 1, 2022, the Company forecasted cash flows for the next 10 years. During the forecast period, the revenue compound annual growth rate was approximately 0.5%. A terminal year value was calculated with a negative 1.0% revenue growth rate applied. The discount rate utilized was 9.5% and the estimated tax rate was 15.3%. Under the market-based approach, we utilized an estimated range of market multiples of 7.5 to 8.0 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 3.0% or an increase in discount rate by 1.5% would result in an impairment charge for the Europe reporting unit.

For the JANZ reporting unit, the estimated fair value exceeded its carrying value by approximately $231 million or 7.4% for both the interim and annual goodwill impairment tests. As it relates to the income approach for the JANZ reporting unit at March 31, 2022 and April 1, 2022, the Company forecasted cash flows for the next 10 years. During the forecast period, the revenue compound annual growth rate was approximately negative 4.8%. A terminal year value was calculated assuming no revenue growth rate. The discount rate utilized was 6.0% and the estimated tax rate was 30.4%. Under the market-based approach, we utilized an estimated market multiple of 6.0 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 2.0% would result in an impairment charge for the JANZ reporting unit.

For the Emerging Markets reporting unit, the estimated fair value exceeded its carrying value by approximately $816 million or 10.3% for both the interim and annual goodwill impairment tests. As it relates to the income approach for the Emerging Markets reporting unit at March 31, 2022 and April 1, 2022, the Company forecasted cash flows for the next 10 years. During the forecast period, the revenue compound annual growth rate was approximately 1.6%. A terminal year value was calculated with a 0.8% revenue growth rate applied. The discount rate utilized was 10.5% and the estimated tax rate was 18.4%. Under the market-based approach, we utilized an estimated market multiple of 7.5 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 approximately 8.5% or an increase in discount rate by 3.0% would result in an impairment charge for the Emerging Markets reporting unit.

Subsequent to the completion of the interim goodwill impairment test and in conjunction with the Biocon Biologics Transaction, the Company allocated goodwill to its biosimilars portfolio using a relative fair value approach and reclassified the amount to assets held for sale. Upon closing of the Biocon Biologics Transaction on November 29, 2022, we derecognized goodwill of $919.7 million allocated to the biosimilars portfolio.

In the fourth quarter of 2022, we determined that our Upjohn Distributor Markets should be classified as held for sale in the December 31, 2022 consolidated balance sheet. The Company allocated goodwill to its Upjohn Distributor Markets using a relative fair value approach and recorded a goodwill impairment charge of $117.0 million within the Emerging Markets reporting unit, which was recorded within SG&A in the consolidated statement of operations. The goodwill impairment charge was the result of the estimated proceeds less selling costs from the disposal of the Upjohn Distributor Markets being below the carrying value of the net assets of the disposal group.

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 they relate to the key assumptions detailed, could have a significant impact on the fair value of the reporting units.


(In millions)	Weighted Average Life (Years)	Cost		Accumulated Amortization		Net Book Value
December 31, 2022
Product rights, licenses and other (1)	15	$	37,490.5	$	14,923.6	$	22,566.9
In-process research and development		40.2		—		40.2
		$	37,530.7	$	14,923.6	$	22,607.1
December 31, 2021
Product rights, licenses and other (1)	15	$	39,006.2	$	12,918.5	$	26,087.7
In-process research and development		46.5		—		46.5
		$	39,052.7	$	12,918.5	$	26,134.2

Product rights and licenses are primarily comprised of the products marketed at the time of acquisition. These product rights and licenses relate to numerous individual products, the net book value of which, by product category, is as follows:


(In millions)	Developed Markets		Greater China		JANZ		Emerging Markets		December 31, 2022
Brands	$	8,762.2	$	5,632.3	$	1,061.3	$	3,122.5	$	18,578.3
Complex Gx and Biosimilars	177.5		—		0.9		—		178.4
Generics	3,271.4		10.6		263.3		263.9		3,809.2
Total Product Rights and Licenses	$	12,211.1	$	5,642.9	$	1,325.5	$	3,386.4	$	22,565.9


(In millions)	Developed Markets		Greater China		JANZ		Emerging Markets		December 31, 2021
Brands	$	10,066.6	$	6,102.9	$	1,174.8	$	3,801.7	$	21,146.0
Complex Gx and Biosimilars	226.8		—		1.5		—		228.3
Generics	4,020.2		12.1		319.5		358.4		4,710.2
Total Product Rights and Licenses	$	14,313.6	$	6,115.0	$	1,495.8	$	4,160.1	$	26,084.5

Amortization expense and intangible asset disposal & impairment charges, which are included as a component of amortization expense, are classified primarily within cost of sales in the consolidated statements of operations, and were as follows for the years ended December 31, 2022, 2021 and 2020:


	Year ended December 31,
(In millions)	2022		2021		2020
Intangible asset amortization expense	$	2,504.6	$	2,702.2	$	1,605.8
IPR&D intangible asset impairment charges	0.6		19.4		37.4
Finite-lived intangible asset disposal & impairment charges	172.9		83.4		45.0
Total intangible asset amortization expense (including disposal & impairment charges)	$	2,678.1	$	2,805.0	$	1,688.2

The assessment for impairment of finite-lived intangibles is based on our ability to recover the carrying value of the long-lived assets or asset grouping by analyzing the expected future undiscounted pre-tax cash flows specific to the asset or asset grouping. If the carrying amount is greater than the undiscounted cash flows, the Company recognizes an impairment loss for the excess of the carrying amount over the estimated fair value based on discounted cash flows.

Significant management judgment is involved in estimating the recoverability of these assets and is dependent upon the accuracy of the assumptions used in making these estimates, as well as how the estimates compare to the eventual future operating performance of the specific asset or asset grouping. The fair value of finite-lived intangible assets was calculated as the present value of the estimated future net cash flows using a market rate of return. The assumptions inherent in the estimated future cash flows include, among other things, the impact of the current competitive environment and future market expectations. A discount rate of 9.0% was utilized in the valuations performed during the years ended December 31, 2021 and 2020. Any future long-lived assets impairment charges could have a material impact in the Company’s consolidated financial condition and results of operations.

In the fourth quarter of 2022, the Company recognized an intangible asset charge of approximately $172.9 million, which was recorded within Cost of Sales in the consolidated statement of operations, to write down the disposal group to fair value, less cost to sell, related to our Upjohn Distributor Markets, which was classified as held for sale. The Company has approximately $230.3 million of intangible assets related to the Upjohn Distributor Markets that have been classified as held for sale in the December 31,2022 consolidated balance sheet. Refer to Note 5 Divestitures for additional information.

On April 30, 2021, the Company completed an agreement to divest a group of OTC products in the U.S. As a result of this transaction, the Company recognized an intangible asset impairment charge of approximately $83.4 million during the year ended December 31, 2021.

The Company’s IPR&D assets are tested at least annually for impairment or upon the occurrence of a triggering event. Impairment is determined to exist when the fair value of IPR&D assets, which is based upon updated forecasts and commercial development plans, is less than the carrying value of the assets being tested. The fair value of IPR&D was calculated as the present value of the estimated future net cash flows using a market rate of return. The assumptions inherent in the estimated

future cash flows include, among other things, the impact of changes to the development programs, the projected development and regulatory time frames and the current competitive environment. A discount rate of 10.5% was utilized in the valuations performed during the year ended December 31, 2022. Discount rates ranging between 7.0% and 9.0%, and 9.0% and 11.0% were utilized in the valuations performed during the years ended December 31, 2021 and 2020, respectively.

The fair value of both IPR&D and finite-lived intangible assets was determined based upon detailed valuations employing the income approach which utilized Level 3 inputs, as defined in Note 10, Financial Instruments and Risk Management. Changes to any of the Company’s assumptions including changes to or abandonment of development programs, regulatory timelines, discount rates or the competitive environment related to the assets could lead to future material impairment charges.