Dispositions

3 Months Ended

Mar. 31, 2023

Divestitures [Abstract]

Dispositions

Sale of Joint Venture Equity Interest in Samsung Bioepis

In April 2022 we completed the sale of our 49.9% equity interest in Samsung Bioepis to Samsung BioLogics. Under the terms of this transaction, we received approximately $1.0 billion in cash at closing and expect to receive approximately $1.3 billion in cash to be deferred over two payments. The first payment of approximately $812.5 million was received in April 2023 and the second payment of approximately $437.5 million is due at the second anniversary of the closing of this transaction.

Prior to the sale, the carrying value of our investment in Samsung Bioepis totaled $581.6 million. During the second quarter of 2022 we recognized a pre-tax gain of approximately $1.5 billion related to this transaction, which was recorded in other (income) expense, net in our condensed consolidated statements of income. This pre-tax gain included reclassifications from AOCI to net income of approximately $58.9 million in cumulative translation losses, partially offset by approximately $57.0 million in gains resulting from the termination of our net investment hedge.

We elected the fair value option and measured the payments due to us from Samsung BioLogics at fair value. As of March 31, 2023, the estimated fair values of the first and second payments using risk-adjusted discount rates of 5.9% and 5.8%, respectively, were approximately $809.9 million and $411.6 million, respectively. These payments have been classified as Level 3 measurements and are reflected in other current assets and investments and other assets, respectively, in our condensed consolidated balance sheets.

For the three months ended March 31, 2023, we recognized a gain of approximately $11.1 million and $6.2 million to reflect the changes in fair value related to the first and second payments due to us, respectively. These changes were recorded in other (income) expense, net in our condensed consolidated statements of income.

As part of this transaction, we are also eligible to receive up to an additional $50.0 million upon the achievement of certain commercial milestones. Our policy for contingent payments of this nature is to recognize the payments in the period that they become realizable, which is generally the same period in which the payments are earned.