Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

A. Goodwill

The following table provides the components of and changes in the carrying amount of Goodwill:



(MILLIONS OF DOLLARS)	Primary Care			Specialty Care and Oncology			Established Products and Emerging Markets			Other Operating Segments^(a)		Total
Balance, December 31, 2012	$	6,152		$	16,885		$	18,603		$	3,032	$	44,672
Derecognition^(b)	—			—			(272		)	—		(272		)
Other^(c)	(97		)	(266		)	(288		)	3		(648		)
Balance, March 31, 2013	$	6,055		$	16,619		$	18,043		$	3,035	$	43,752


^(a)	Reflects amounts associated with Animal Health (Zoetis) and Consumer Healthcare.


^(b)	Reflects the goodwill derecognized as part of the transfer of certain product rights, which constituted a business, to our equity-method investment in China. For additional information, see Note 2D. Acquisitions, Divestitures, Collaborative Arrangement and Equity-Method Investment: Equity-Method Investment.


^(c)	Primarily reflects the impact of foreign exchange.

B. Other Intangible Assets

Balance Sheet Information

The following table provides the components of Identifiable intangible assets:



	March 31, 2013							December 31, 2012
(MILLIONS OF DOLLARS)	Gross Carrying Amount		Accumulated Amortization			Identifiable Intangible Assets, less Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization			Identifiable Intangible Assets, less Accumulated Amortization
Finite-lived intangible assets
Developed technology rights	$	73,310	$	(38,857	)	$	34,453	$	73,112	$	(37,069	)	$	36,043
Brands	1,880		(809		)	1,071		1,873		(781		)	1,092
License agreements and other	1,078		(817		)	261		1,085		(793		)	292
	76,268		(40,483		)	35,785		76,070		(38,643		)	37,427
Indefinite-lived intangible assets
Brands	7,571		—			7,571		7,828		—			7,828
In-process research and development	681		—			681		688		—			688
Trademarks/tradenames	72		—			72		70		—			70
	8,324		—			8,324		8,586		—			8,586
Identifiable intangible assets^(a)	$	84,592	$	(40,483	)	$	44,109	$	84,656	$	(38,643	)	$	46,013

^(a)

The decrease is primarily related to amortization, an asset impairment charge and the transfer of certain product rights to our equity-method investment in China. For additional information about the asset impairment charge, see Note 4. Other Deductions—Net. For additional information about the transfer of certain product rights, see Note 2D. Acquisitions, Divestitures, Collaborative Arrangement and Equity-Method Investment: Equity-Method Investment.

As of March 31, 2013, our identifiable intangible assets are associated with the following, as a percentage of total identifiable intangible assets, less accumulated amortization:


•	Developed Technology Rights: Specialty Care (66%); Established Products (19%); Primary Care (13%); Animal Health (Zoetis) (1%); and Oncology (1%);


•	Brands, finite-lived: Consumer Healthcare (64%); Established Products (24%); and Animal Health (Zoetis) (12%);


•	Brands, indefinite-lived: Consumer Healthcare (68%); and Established Products (31%); and Animal Health (Zoetis) (1%); and


•	IPR&D: Worldwide Research and Development (55%); Established Products (20%); Primary Care (12%); Specialty Care (11%); and Animal Health (Zoetis) (2%).

There are no percentages for our Emerging Markets business unit as it is a geographic-area unit, not a product-based unit. The carrying value of the assets associated with our Emerging Markets business unit is included within the assets associated with the other four biopharmaceutical business units.

Amortization

Amortization expense related to finite-lived acquired intangible assets that contribute to our ability to sell, manufacture, research, market and distribute products, compounds and intellectual property is included in Amortization of intangible assets as these intangible assets benefit multiple business functions. Amortization expense related to intangible assets that are associated with a single function is included in Cost of sales, Selling, informational and administrative expenses or Research and development expenses, as appropriate. Total amortization expense for finite-lived intangible assets was $1.3 billion for the first quarter of 2013 and $1.5 billion for the first quarter of 2012.

Impairment Charges

For information about impairments of intangible assets, see Note 4. Other Deductions––Net.

For IPR&D assets, the risk of failure is significant and there can be no certainty that these assets ultimately will yield a successful product. The nature of the biopharmaceutical business is high-risk and, as such, we expect that many of these IPR&D assets will become impaired and be written off at some time in the future.

- 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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