Intangible Assets and Goodwill

6 Months Ended

Jun. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets: Our finite-lived intangible assets primarily consist of developed product rights and technology obtained from the Pharmion Corp. (Pharmion), Gloucester, Abraxis BioScience, Inc. (Abraxis), Avila and Quanticel acquisitions. Our indefinite lived intangible assets consist of acquired IPR&D product rights from the Receptos, Nogra and Gloucester acquisitions. The remaining weighted-average amortization period for finite-lived intangible assets not fully amortized is approximately 9.5 years.

Intangible assets outstanding as of June 30, 2016 and December 31, 2015 are summarized as follows:



June 30, 2016	Gross Carrying Value		Accumulated Amortization			Intangible Assets, Net
Amortizable intangible assets:
Acquired developed product rights	$	3,405.9	$	(1,570.9	)	$	1,835.0
Technology	482.6		(257.1		)	225.5
Licenses	66.9		(24.5		)	42.4
Other	42.8		(29.2		)	13.6
	3,998.2		(1,881.7		)	2,116.5
Non-amortized intangible assets:
Acquired IPR&D product rights	8,470.6		—			8,470.6
Total intangible assets	$	12,468.8	$	(1,881.7	)	$	10,587.1

December 31, 2015	Gross Carrying Value		Accumulated Amortization			Intangible Assets, Net
Amortizable intangible assets:
Acquired developed product rights	$	3,405.9	$	(1,448.3	)	$	1,957.6
Technology	565.7		(197.1		)	368.6
Licenses	66.7		(22.3		)	44.4
Other	44.0		(27.1		)	16.9
	4,082.3		(1,694.8		)	2,387.5
Non-amortized intangible assets:
Acquired IPR&D product rights	8,470.6		—			8,470.6
Total intangible assets	$	12,552.9	$	(1,694.8	)	$	10,858.1

The gross carrying value of intangible assets decreased during the six-month period ended June 30, 2016 primarily due to an $83.1 million impairment charge included in Amortization of acquired intangible assets, to write down the technology platform asset obtained in the acquisition of Avila. The impairment charge was due to revised estimates of the probability-weighted forecasted future cash flows expected to be produced from the technology platform compared to prior estimates. An adjustment was also made to the probability and timing of future potential milestone payments, which resulted in an $81.1 million reduction in the fair value of our contingent consideration payable to the former shareholders of Avila (see Note 6).

Amortization expense, including the 2016 impairment change, related to intangible assets was $176.5 million and $65.0 million for the three-month periods ended June 30, 2016 and 2015, respectively and $270.0 million and $130.1 million for the six-month periods ended June 30, 2016 and 2015, respectively. The amortization expense increase for the three-month and six-month periods primarily related to the impairment of the technology platform noted above, the amortization of the technology platform received in the October 2015 acquisition of Quanticel and a reduction in the estimated useful lives of intangible assets related to the acquisition of Gloucester following the grant to Fresenius Kabi USA, LLC of a non-exclusive, royalty-free sublicense to manufacture and market a generic version of romidepsin for injection as of February 1, 2018. See Note 18 of Notes to Consolidated Financial Statements in our 2015 Annual Report on Form 10-K for additional details. Assuming no changes in the gross carrying amount of intangible assets, the future annual amortization expense, including the 2016 impairment change, related to intangible assets is expected to be approximately $447.2 million in 2016, $354.2 million in 2017, $252.2 million in 2018, $155.4 million in 2019, and $154.2 million in 2020.

Goodwill: At June 30, 2016, our goodwill related to the 2015 acquisitions of Receptos and Quanticel, the 2014 acquisition of Nogra, the 2012 acquisition of Avila, the 2010 acquisitions of Abraxis and Gloucester, the 2008 acquisition of Pharmion and the 2004 acquisition of Penn T Limited.

The carrying value of goodwill decreased by $2.5 million to $4.877 billion as of June 30, 2016 compared to December 31, 2015 due to the sale of our LifebankUSA business (see Note 3).

- 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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