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 $217.6 million and $219.0 million at December 31, 2018 and 2017, respectively. Amortization expense was $53.5 million, $61.4 million and $65.7 million for the years ended December 31, 2018, 2017 and 2016, respectively. The Company regularly assesses its amortizable intangible assets for impairment based on several factors, including estimated fair value and anticipated cash flows.

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, 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 2018, 18 IPR&D projects were impaired primarily due to anticipated market conditions and competition upon launch, reducing the viability for future development and resulting in impairment expenses of $139.5 million. In 2017 and 2016, three and one IPR&D projects were impaired resulting in impairment expenses $24.6 million and $3.9 million, respectively. Additionally, during 2018, 25 product licensing rights and other intangibles were impaired due to market conditions and increase in manufacturing costs resulting in impairment expenses of $91.6 million; compared to impairments expenses of $103.5 million on 10 product licensing rights in 2017, and $40.5 million on eight product licensing rights in 2016.

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, 2018 and determined that the fair value of its reporting units are in excess of its carrying value and, therefore, no goodwill impairment charge was necessary. As a result of the impacts of the termination of the Merger Agreement and the Delaware Opinion, as well as the Term loans downgrade, the Company performed additional impairment testing as of December 31, 2018 and determined that the fair value of its reporting units are in excess of its carrying value and, therefore, no goodwill impairment charge was necessary.

Changes in goodwill during the two years ended December 31, 2018 were as follows (in thousands):



	Goodwill
December 31, 2016	$	284,293
Foreign currency translation	1,017
December 31, 2017	$	285,310
Foreign currency translation	(1,431		)
December 31, 2018	$	283,879

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, 2018 for those assets that are not already fully amortized (in thousands):



	Gross Carrying Amount (2)		Accumulated Amortization			Reclassifications			Impairment (1)			Net Carrying Amount		Weighted Average Remaining Amortization Period (years)
Product licensing rights	$	597,960	$	(203,323	)	$	5,300		$	(131,306	)	$	268,631	9.2
IPR&D	149,161		—			(5,300		)	(139,461		)	4,400		N/A - Indefinite lived
Trademarks	16,000		(6,304		)	—			—			9,696		17.5
Customer relationships	4,225		(2,318		)	—			—			1,907		7.3
Other intangibles	11,235		(5,658		)	—			(5,235		)	342		0.3
	$	778,581	$	(217,603	)	$	—		$	(276,002	)	$	284,976

(1) Impairment of product licensing rights and other intangibles is stated at gross carrying cost of $131.3 million and $5.2 million less accumulated amortization of $42.8 million and $2.1 million as of the impairment dates. Accordingly, the total net impairment expense was $91.6 million, of which $88.5 million and $3.1 million, were recognized in product licensing rights and other intangibles respectively, for the year ended December 31, 2018.

(2) Differences in the Gross Amounts between periods are due to the write down of fully amortized assets.

Changes in intangible assets during the two years ended December 31, 2018 and 2017, were as follows (in thousands):



	Product licensing rights			IPR&D			Trademarks			Customer relationships			Other intangibles
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
Acquisitions	50			—			—			—			—
Amortization	(50,567		)	—			(928		)	(260		)	(1,717		)
Impairments	(88,492		)	(139,461		)	—			—			(3,133		)
Reclassifications	5,300			(5,300		)	—			—			—
December 31, 2018	$	268,631		$	4,400		$	9,696		$	1,907		$	342

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
2019	$	40,404
2020	31,594
2021	31,594
2022	31,594
2023 and thereafter	145,390
Total	$	280,576