Commitments and Contingencies

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure

Commitments and Contingencies

Fumapharm AG

In 2006, we acquired Fumapharm AG. As part of this acquisition we acquired FUMADERM and TECFIDERA (together, Fumapharm Products). We paid $220.0 million upon the closing of the transaction and agreed to pay an additional $15.0 million if a Fumapharm Product was approved for MS in the U.S. or E.U. In the second quarter of 2013, we paid this $15.0 million contingent payment as TECFIDERA was approved in the U.S. for MS by the U.S. Food and Drug Administration (FDA). We are also required to make additional contingent payments to former shareholders of Fumapharm AG or holders of their rights based on the attainment of certain cumulative sales levels of Fumapharm Products and the level of total net sales of Fumapharm Products in the prior twelve month period, as defined in the acquisition agreement.

During the six months ended June 30, 2015, we paid a $250.0 million contingent payment as we reached the $4.0 billion cumulative sales level related to the Fumapharm Products in the fourth quarter of 2014 and accrued $300.0 million upon reaching $5.0 billion in total cumulative sales of Fumapharm Products in the second quarter of 2015.

We will owe an additional $300.0 million contingent payment for every additional $1.0 billion in cumulative sales level of Fumapharm Products reached if the prior 12 months sales of the Fumapharm Products exceed $3.0 billion, until such time as the cumulative sales level reaches $20.0 billion, at which time no further contingent payments shall be due. These payments will be accounted for as an increase to goodwill as incurred, in accordance with the accounting standard applicable to business combinations when we acquired Fumapharm. Any portion of the payment which is tax deductible will be recorded as a reduction to goodwill. Payments are due within 60 days following the end of the quarter in which the applicable cumulative sales level has been reached.

Solothurn, Switzerland Facility

On June 30, 2015, we signed an agreement to purchase land in Solothurn, Switzerland for 65.1 million Swiss Francs. The contract also includes certain environmental remediation costs. Our obligation to purchase the land under the contract is subject to customary closing conditions as well as a condition that no material adverse changes in our business such as a decision to discontinue our aducanumab program have occurred during the period.