Fair Value Measurement

3 Months Ended

Mar. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Disclosures

18.       Fair Value Measurement

Assets and liabilities that are measured at fair value on a recurring basis

As of March 31, 2016 and December 31, 2015 the following financial assets and liabilities are measured at fair value on a recurring basis using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3).

	Fair value
	Total	Level 1	Level 2	Level 3
At March 31, 2016	$'M	$'M	$'M	$'M
	____________	___________	___________	___________
Financial assets:
Marketable equity securities	16.9	16.9	-	-
Contingent consideration receivable	15.3	-	-	15.3
Derivative contracts	3.0	-	3.0	-
Financial liabilities:
Derivative contracts	13.9	-	13.9	-
Contingent consideration payable	882.5	-	-	882.5
	____________	___________	___________	___________
	Total	Level 1	Level 2	Level 3
At December 31, 2015	$'M	$'M	$'M	$'M
	____________	___________	___________	___________
Financial assets:
Marketable equity securities	17.2	17.2	-	-
Contingent consideration receivable	13.8	-	-	13.8
Derivative contracts	1.9	-	1.9	-
Financial liabilities:
Derivative contracts	11.5	-	11.5	-
Contingent consideration payable	475.9	-	-	475.9
	____________	___________	___________	___________

Marketable equity securities are included within Investments in the UnauditedConsolidated Balance Sheets.Contingent consideration receivable is included within Prepaid expenses and Other current assets and other non-current assets in the UnauditedConsolidated Balance Sheets.Contingent consideration payable is included within Other current liabilities and Other non-current liabilities in the UnauditedConsolidated Balance Sheets.

Certain estimates and judgments were required to develop the fair value amounts. The estimated fair value amounts shown above are not necessarily indicative of the amounts that the Company would realize upon disposition, nor do they indicate the Company's intent or ability to dispose of the financial instrument.

The following methods and assumptions were used to estimate the fair value of each material class of financial instrument:

• Marketable equity securities – the fair values of marketable equity securities are estimated based on quoted market prices for those investments.
• Contingent consideration receivable – the fair value of the contingent consideration receivable has been estimated using the income approach (using a probability weighted discounted cash flow method).
• Derivative contracts – the fair values of the swap and forward foreign exchange contracts have been determined using themonth-end interest rate and foreign exchange rates, respectively.
• Contingent consideration payable – the fair value of the contingent consideration payable has been estimated using the income approach (using a probability weighted discounted cash flow method).

Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

The following table provides a roll forward of the fair values of our contingent consideration receivable and payables which include Level 3 measurements:

Contingent consideration receivable
	2016	2015
	$'M	$'M
	____________	____________
Balance at January 1,	13.8	15.9
Change in fair value included in earnings	4.2	5.2
Reclassification out from contingencies for payment	(3.0)	(5.9)
Currency Translation	0.3	(0.2)
Balance at March 31,	15.3	15.0
Contingent consideration payable
	2016	2015
	$'M	$'M
	____________	____________
Balance at January 1,	475.9	629.9
Additions	396.4	92.1
Change in fair value included in earnings	11.4	2.4
Reclassification out from contingencies for payment	(2.0)	(2.1)
Other	0.8	1.7
Balance at March 31,	882.5	724.0

The increase in contingent consideration payable is related to the Company's acquisition of Dyax. Other primarily relates to foreign currency adjustments.

Of the $882.5million of contingent consideration payable as ofMarch 31, 2016,$19.6million is recorded within Other current liabilities and $862.9million is recorded within Other non-current liabilities in the Company's balance sheet.

Quantitative Information about Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

Quantitative information about the Company's recurring Level 3 fair value measurements is as follows:

Financial assets:	Fair Value at the Measurement Date
At March 31, 2016	Fair value	Valuation Technique	Significant unobservable Inputs	Range
	$'M
	____________	___________	___________	___________
Contingent consideration receivable	15.3	Income approach (probability weighted discounted cash flow)	• Probability weightings applied to different sales scenarios • Future forecast consideration receivable based on contractual terms with purchaser • Assumed market participant discount rate	• 10 to 90% • $0 to $26 million • 8.4%
	____________	____________	____________	____________
Financial liabilities:	Fair Value at the Measurement Date
At March 31, 2016	Fair value	Valuation Technique	Significant unobservable Inputs	Range
	$'M
	____________	___________	___________	___________
Contingent consideration payable	882.5	Income approach (probability weighted discounted cash flow)	• Cumulative probability of milestones being achieved • Assumed market participant discount rate • Periods in which milestones are expected to be achieved • Forecast quarterly royalties payable on net sales of relevant products	• 4 to 90% • 1.2 to 12.4% • 2016 to 2030 • $2.2 to $6.6 million
	____________	____________	____________	____________

Contingent consideration payable represents future milestones and royalties the Company may be required to pay in conjunction with various business combinations and license agreements, respectively.

The fair value of the Company's contingent consideration receivable and payable could significantly increase or decrease due to changes in certain assumptions which underpin the fair value measurements. Each set of assumptions is specific to the individual contingent consideration receivable or payable.

The carrying amounts of other financial assets and liabilities approximate their estimated fair value due totheir short-term nature, such as liquidity and maturity of these amounts or because there have been no significant changes since the asset or liability was last re-measured to fair value on a non-recurring basis.