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Goodwill and Other Intangibles | 12 Months Ended
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Dec. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Other Intangibles | Goodwill and Other Intangibles The following table summarizes goodwill activity by segment:
| Pharmaceutical |  | Animal Health |  | All Other |  | Total
Balance January 1, 2019 | $ | 16,162 |  |  | $ | 1,870 |  |  | $ | 221 |  |  | $ | 18,253 |
Acquisitions | 19 |  |  | 1,322 |  |  | — |  |  | 1,341 |
Impairments | — |  |  | — |  |  | (162) |  |  | (162) |
Other (1) | — |  |  | — |  |  | (7) |  |  | (7) |
Balance December 31, 2019 (2) | 16,181 |  |  | 3,192 |  |  | 52 |  |  | 19,425 |
Acquisitions | 742 |  |  | 105 |  |  | — |  |  | 847 |
Divestitures | — |  |  | — |  |  | (54) |  |  | (54) |
Other (1) | 47 |  |  | (29) |  |  | 2 |  |  | 20 |
Balance December 31, 2020 (2) | $ | 16,970 |  |  | $ | 3,268 |  |  | $ | — |  |  | $ | 20,238 |
(1) Other includes cumulative translation adjustments on goodwill balances and certain other adjustments. (2) Accumulated goodwill impairment losses were $531 million at both December 31, 2020 and 2019. The additions to goodwill in the Pharmaceutical segment in 2020 were primarily related to the acquisitions of ArQule and Themis (see Note 3). The additions to goodwill within the Animal Health segment in 2019 primarily relate to the acquisition of Antelliq (see Note 3). The impairments of goodwill within other non-reportable segments in 2019 relate to certain businesses within the Healthcare Services segment. The Healthcare Services segment was fully divested in the first quarter of 2020. Other intangibles at December 31 consisted of:
| 2020 |  | 2019
| Gross Carrying Amount |  | Accumulated Amortization |  | Net |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net
Products and product rights | $ | 45,087 |  |  | $ | 39,925 |  |  | $ | 5,162 |  |  | $ | 45,947 |  |  | $ | 38,852 |  |  | $ | 7,095 |
Licenses | 4,177 |  |  | 1,387 |  |  | 2,790 |  |  | 3,185 |  |  | 824 |  |  | 2,361 |
IPR&D | 3,228 |  |  | — |  |  | 3,228 |  |  | 1,032 |  |  | — |  |  | 1,032 |
Trade names | 2,882 |  |  | 352 |  |  | 2,530 |  |  | 2,899 |  |  | 217 |  |  | 2,682 |
Other | 2,223 |  |  | 1,329 |  |  | 894 |  |  | 2,261 |  |  | 1,235 |  |  | 1,026 |
| $ | 57,597 |  |  | $ | 42,993 |  |  | $ | 14,604 |  |  | $ | 55,324 |  |  | $ | 41,128 |  |  | $ | 14,196 |
Acquired intangibles include products and product rights, licenses, trade names and patents, which are initially recorded at fair value, assigned an estimated useful life, and amortized primarily on a straight-line basis over their estimated useful lives. Some of the Company’s more significant acquired intangibles, on a net basis, related to human health marketed products (included in products and product rights above) at December 31, 2020 include Zerbaxa, $551 million; Implanon/Nexplanon, $354 million; Gardasil/Gardasil 9, $276 million; Dificid, $228 million; Bridion, $185 million; Sivextro, $154 million; and Simponi, $132 million. Additionally, the Company had $5.4 billion of net acquired intangibles related to animal health marketed products at December 31, 2020, of which $2.5 billion relate primarily to trade names obtained through the 2019 acquisition of Antelliq (see Note 3). Some of the Company’s more significant net intangible assets included in licenses above at December 31, 2020 include Lynparza, $1.3 billion and Lenvima, $1.1 billion as a result of collaborations with AstraZeneca and Eisai (see Note 4). At December 31, 2020, IPR&D primarily relates to MK-1026 obtained through the acquisition of ArQule in 2020 (see Note 3) and MK-7264 (gefapixant) obtained through the acquisition of Afferent Pharmaceuticals in 2016. The Company has an intangible asset related to a collaboration with Bayer (see Note 4) that had a carrying value of $849 million at December 31, 2020 reflected in “Other” in the table above. In 2020, the Company recorded an impairment charge of $1.6 billion within Cost of sales related to Zerbaxa for injection, a combination antibacterial and beta-lactamase inhibitor for the treatment of certain bacterial infections. In December 2020, the Company temporarily suspended sales of Zerbaxa, and subsequently issued a product recall, following the identification of product sterility issues. The recall constituted a triggering event requiring the evaluation of the Zerbaxa intangible asset for impairment. The Company revised its cash flow forecasts for Zerbaxa utilizing certain assumptions around the return to market timeline and anticipated uptake in sales thereafter. These revised cash flow forecasts indicated that the Zerbaxa intangible asset value was not fully recoverable on an undiscounted cash flows basis. The Company utilized market participant assumptions to determine its best estimate of the fair value of the intangible asset related to Zerbaxa that, when compared with its related carrying value, resulted in the impairment charge noted above. The Company also wrote-off inventory of $120 million to Cost of sales in 2020 related to the Zerbaxa recall. The remaining intangible asset balance related to Zerbaxa was $551 million at December 31, 2020. In 2019, the Company recorded impairment charges related to marketed products and other intangibles of $705 million. Of this amount, $612 million related to Sivextro, a product for the treatment of acute bacterial skin and skin structure infections caused by designated susceptible Gram-positive organisms. As part of a reorganization and reprioritization of its internal sales force, the Company made the decision to cease promotion of Sivextro in the U.S. market by the end of 2019. This decision resulted in reduced cash flow projections for Sivextro, which indicated that the Sivextro intangible asset value was not fully recoverable on an undiscounted cash flows basis. The Company utilized market participant assumptions to determine its best estimate of the fair value of the intangible asset related to Sivextro that, when compared with its related carrying value, resulted in the impairment charge noted above. IPR&D that the Company acquires through business combinations represents the fair value assigned to incomplete research projects which, at the time of acquisition, have not reached technological feasibility. Amounts capitalized as IPR&D are accounted for as indefinite-lived intangible assets, subject to impairment testing until completion or abandonment of the projects. Upon successful completion of each project, the Company will make a separate determination as to the then useful life of the asset and begin amortization. In 2020, the Company recorded a $90 million IPR&D impairment charge within Research and development expenses related to a decision to discontinue the development program for COVID-19 vaccine candidate V591 following Merck’s review of findings from a Phase 1 clinical study for the vaccine. In the study, V591 was generally well tolerated, but the immune responses were inferior to those seen following natural infection and those reported for other SARS-CoV-2/COVID-19 vaccines. The discontinuation of this development program also resulted in a reversal of the related liability for contingent consideration of $45 million (see Note 6). In 2019, the Company recorded $172 million of IPR&D impairment charges. Of this amount, $155 million relates to the write-off of the intangible asset balance for programs obtained in connection with the acquisition of IOmet Pharma Ltd following a review of clinical trial results conducted by Merck, along with external clinical trial results for similar compounds. The discontinuation of this clinical development program also resulted in a reversal of the related liability for contingent consideration of $11 million. In 2018, the Company recorded $152 million of IPR&D impairment charges. Of this amount, $139 million relates to the write-off of the remaining intangible asset balance for a program obtained in connection with the SmartCells acquisition following a decision to terminate the program due to product development issues. The discontinuation of this clinical development program also resulted in a reversal of the related liability for contingent consideration of $60 million. The IPR&D projects that remain in development are subject to the inherent risks and uncertainties in drug development and it is possible that the Company will not be able to successfully develop and complete the IPR&D programs and profitably commercialize the underlying product candidates. The Company may recognize additional non-cash impairment charges in the future related to other marketed products or pipeline programs and such charges could be material. Aggregate amortization expense primarily recorded within Cost of sales was $1.9 billion in 2020, $2.0 billion in 2019 and $3.1 billion in 2018. The estimated aggregate amortization expense for each of the next five years is as follows: 2021, $1.5 billion; 2022, $1.5 billion; 2023, $1.4 billion; 2024, $1.3 billion; 2025, $1.2 billion.

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