Goodwill and Other Intangible Assets

Intangible assets consist primarily of Goodwill, which is carried at its initial value, subject to evaluation for impairment, In-Process Research and Development (“IPR&D”), which is accounted for as an indefinite-lived intangible asset, subject to impairment testing until completion or abandonment of the project, and product licensing costs, trademarks and other such costs, which are capitalized and amortized on a straight-line basis over their useful lives, normally ranging from one to thirty years. Accumulated amortization of intangible assets was $219.0 million and $195.3 million at December 31, 2017 and 2016, respectively. Amortization expense was $61.4 million, $65.7 million and $66.3 million for the years ended December 31, 2017, 2016 and 2015, respectively. The Company regularly assesses its amortizable intangible assets for impairment based on several factors, including estimated fair value and anticipated cash flows, and through this analysis incurred impairment expense for intangible assets during the years ended December 31, 2017, 2016 and 2015, of $103.5 million, $40.5 million and $30.4 million, respectively.

During 2017 of the $103.5 million of impairment for product licensing rights, $10.9 million was recognized in R&D expense due to changes in market conditions expected upon launch of two assets acquired through the Hi-Tech acquisition and $92.6 million of impairment was related to competition and changing market dynamics of eight currently marketed products acquired through the Hi-Tech and VersaPharm acquisitions. If the Company incurs additional costs to renew or extend the life of an intangible asset, such costs are added to the remaining unamortized cost of the asset, if any, and the sum is amortized over the extended remaining life of the asset.

Goodwill is tested for impairment annually or more frequently if changes in circumstances or the occurrence of events suggest that impairment may exist. The Company uses widely accepted valuation techniques to determine the fair value of its reporting units used in its annual goodwill impairment analysis. The Company’s valuation is primarily based on qualitative and quantitative assessments regarding the fair value of the reporting unit relative to its carrying value. The Company also models the fair value of the reporting unit based on projected earnings and cash flows of the reporting unit. The Company performed its annual impairment test on October 1, 2017 and determined that the fair value of its reporting units are substantially in excess of its carrying value and, therefore, no goodwill impairment charge was necessary.

IPR&D intangible assets represent the value assigned to acquired R&D projects that principally represent rights to develop and sell a product that the Company has acquired which have not yet been completed or approved. These assets are subject to impairment testing until completion or abandonment of each project. Impairment testing requires the development of significant estimates and assumptions involving the determination of estimated net cash flows for each year for each project or product (including net revenue, cost of sales, R&D costs, selling and marketing costs and other costs which may be allocated), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, the potential regulatory and commercial success risks, and competitive trends impacting the asset and each cash flow stream as well as other factors. The major risks and uncertainties associated with the timely and successful completion of the IPR&D projects include legal risk, market risk and regulatory risk. If applicable, upon abandonment of the IPR&D product, the assets are impaired. In 2017, three IPR&D project were impaired due to the Company's expectations of market conditions upon launch, resulting in an impairment expense of $24.6 million, while in 2016, one IPR&D project was partially impaired due to the Company's expectations of market conditions upon launch, resulting in an impairment expense of $3.9 million. These impairments were recorded in R&D expenses in the Consolidated Statements of Comprehensive Income for the years ended December 31, 2017 and 2016.

Changes in goodwill during the two years ended December 31, 2017 were as follows (in thousands):



	Goodwill
December 31, 2015	$	284,710
Foreign currency translation	(417		)
December 31, 2016	$	284,293
Foreign currency translation	1,017
December 31, 2017	$	285,310

The following table sets forth the major categories of the Company’s intangible assets and the weighted-average remaining amortization period as of December 31, 2017 for those assets that are not already fully amortized (dollar amounts in thousands):



	Gross Carrying Amount		Accumulated Amortization			Reclassifications		Impairment (1)			Net Carrying Amount		Weighted Average Remaining Amortization Period (years)
Product licensing rights	$	747,106	$	(205,549	)	$	—	$	(139,217	)	$	402,340	9.8
IPR&D	173,757		—			—		(24,596		)	149,161		N/A - Indefinite lived
Trademarks	16,000		(5,376		)	—		—			10,624		17.8
Customer relationships	4,225		(2,058		)	—		—			2,167		8.3
Other intangibles	11,235		(6,043		)	—		—			5,192		5.7
	$	952,323	$	(219,026	)	$	—	$	(163,813	)	$	569,484

(1) Impairment of product licensing rights is stated at gross carrying cost of $139.2 million less accumulated amortization of $35.7 million as of the impairment date. Accordingly, the net impairment expense recognized in product licensing rights was $103.5 million as of and for the year ended December 31, 2017.

Changes in intangible assets during the two years ended December 31, 2017 and 2016, were as follows (in thousands):



	Product licensing rights			IPR&D			Trademarks			Customer relationships			Other intangibles			Non-compete agreements
December 31, 2015	$	653,627		$	186,932		$	13,018		$	2,777		$	8,635		$	—
Acquisitions	3,872			75			—			—			—			—
Amortization	(62,375		)	—			(1,262		)	(350		)	(1,726		)	—
Impairments	(40,519		)	(3,850		)	—			—			—			—
Reclassifications	9,400			(9,400		)	—			—			—			—
December 31, 2016	$	564,005		$	173,757		$	11,756		$	2,427		$	6,909		$	—
Acquisitions	200			—			—			—			—			—
Amortization	(58,335		)	—			(1,132		)	(260		)	(1,717		)	—
Impairments	(103,530		)	(24,596		)	—			—			—			—
December 31, 2017	$	402,340		$	149,161		$	10,624		$	2,167		$	5,192		$	—

The amortization expense of acquired intangible assets for each of the following periods are expected to be as follows (in thousands):



Year ending December 31,	Amortization Expense
2018	$	52,427
2019	49,601
2020	41,819
2021	41,819
2022 and thereafter	234,657
Total	$	420,323