Goodwill and Other Intangible Assets, Net

3 Months Ended

Mar. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets, Net

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.

During the three month periods ended March 31, 2018 and 2017, accumulated amortization of intangible assets was $232.2 million and $208.7 million, respectively. The Company recorded amortization expense of $13.2 million and $15.5 million during the three month periods ended March 31, 2018 and 2017, 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 recognized impairment expense of $0.9 million for product licensing rights during the three month period ended March 31, 2018. Of the $0.9 million of impairment for product licensing rights, $0.4 million was recognized in R&D expense due to changes in market conditions expected upon launch of one acquired asset and $0.5 million of impairment was related to the Company's decision to discontinue certain currently marketed products. 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 a qualitative assessment of goodwill and did not identify any indicators of impairment during the quarter.

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 quarter 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.

During the three month periods ended March 31, 2018, three IPR&D projects were impaired due to the Company's expectations of market conditions upon launch, resulting in an impairment expense of $17.9 million, while in the same period prior year the Company recognized impairment expense of $0.2 million for the milestone payment related to the abandonment of one product. These impairments were recorded in R&D expenses in the Consolidated Statements of Comprehensive (Loss) Income in the three month periods ended March 31, 2018 and 2017.

The following table provides a summary of the activity in goodwill by segment for the three month period ended March 31, 2018 (in thousands):



	Consumer Health		Prescription Pharmaceuticals			Total
Balances at December 31, 2017	$	16,717	$	268,593		$	285,310
Currency translation adjustments	—		(330		)	(330		)
Acquisitions	—		—			—
Impairments	—		—			—
Dispositions	—		—			—
Balances at March 31, 2018	$	16,717	$	268,263		$	284,980

The following table sets forth the major categories of the Company’s intangible assets as of March 31, 2018 and December 31, 2017, and the weighted average remaining amortization period as of March 31, 2018 and December 31, 2017 (dollar amounts in thousands):



	Gross Amount		Accumulated Amortization			Reclass-ifications			Gross Impairment			Net Balance		Wtd Avg Remaining Amortization Period (years)
March 31, 2018
Product licensing rights	$	607,889	$	(218,006	)	$	5,300		$	(950	)	$	394,233	9.6
IPR&D	149,161		—			(5,300		)	(17,873		)	125,988		N/A - Indefinite lived
Trademarks	16,000		(5,608		)	—			—			10,392		17.7
Customer relationships	4,225		(2,123		)	—			—			2,102		8.1
Other intangibles	11,235		(6,472		)	—			—			4,763		5.6
	$	788,510	$	(232,209	)	$	—		$	(18,823	)	$	537,478
December 31, 2017
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

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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