Dispositions

6 Months Ended

Jun. 30, 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 in exchange for total consideration of approximately $2.3 billion. Under the terms of this transaction, we received approximately $1.0 billion in cash at closing, with approximately $1.3 billion in cash to be deferred over two payments. The first payment of $812.5 million was received in April 2023 and the second payment of $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 for the three and six months ended June 30, 2022. 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 June 30, 2023, the estimated fair value of the remaining second payment using a risk-adjusted discount rate of 6.6% was approximately $415.2 million. This payment has been classified as a Level 3 measurement and is reflected in other current assets within our condensed consolidated balance sheets as of June 30, 2023.

For the three and six months ended June 30, 2023, we recognized gains of approximately $2.6 million and $13.7 million, respectively, to reflect the changes in fair value related to the first payment due to us, which was received in April 2023. Additionally, for the three and six months ended June 30, 2023, we recognized gains of approximately $3.6 million and $9.8 million, respectively, to reflect the changes in fair value related to the second payment due to us. 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 the payments become realizable, which is generally the same period in which the payments are earned.

For additional information on our collaboration arrangements with Samsung Bioepis, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our 2022 Form 10-K.