Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table summarizes the changes in the carrying amount of Goodwill:


	December 31,
(in millions)	2022		2021
Beginning balance	$	8,332	$	8,108
Goodwill resulting from acquisitions	—		226
Measurement period adjustments	(18)		(2)
Ending balance	$	8,314	$	8,332

In 2022, goodwill decreased by $18 million as a result of finalizing the amount of acquired net operating losses of MYR, which resulted in a decrease to the net deferred tax liability acquired. As of December 31, 2022, there were no accumulated goodwill impairment losses.

Intangible Assets

The following table summarizes our Intangible assets, net:


	December 31, 2022								December 31, 2021
(in millions)	Gross Carrying Amount		Accumulated Amortization		Foreign Currency Translation Adjustment		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Foreign Currency Translation Adjustment		Net Carrying Amount
Finite-lived assets:
Intangible asset – sofosbuvir	$	10,720	$	(6,350)	$	—	$	4,370	$	10,720	$	(5,651)	$	—	$	5,069
Intangible asset – axicabtagene ciloleucel	7,110		(1,908)		—		5,202		7,110		(1,501)		—		5,609
Intangible asset – Trodelvy	5,630		(973)		—		4,657		5,630		(507)		—		5,123
Intangible asset – Hepcludex	845		(158)		—		687		845		(72)		—		773
Other	1,489		(733)		1		758		1,610		(650)		1		961
Total finite-lived assets	25,794		(10,121)		1		15,674		25,915		(8,381)		1		17,535
Indefinite-lived assets – IPR&D(1)	13,220		—		—		13,220		15,920		—		—		15,920
Total intangible assets	$	39,014	$	(10,121)	$	1	$	28,894	$	41,835	$	(8,381)	$	1	$	33,455

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(1) In February 2023, FDA granted approval of Trodelvy for use in adult patients with unresectable locally advanced or metastatic HR+/HER2- breast cancer who have received endocrine-based therapy and at least two additional systemic therapies in the metastatic setting. Accordingly, the related IPR&D intangible asset of $6.1 billion will be reclassified to finite-lived assets in the first quarter of 2023.

Amortization Expense

Aggregate amortization expense related to finite-lived intangible assets was $1.8 billion, $1.7 billion and $1.2 billion for the years ended December 31, 2022, 2021 and 2020, respectively, and is primarily included in Cost of goods sold on our Consolidated Statements of Income.

The following table summarizes the estimated future amortization expense associated with our finite-lived intangible assets as of December 31, 2022:


(in millions)	Amount
2023	$	1,777
2024	1,777
2025	1,771
2026	1,763
2027	1,763
Thereafter	6,824
Total	$	15,674

Impairment Assessments

No indicators of impairment were noted for the years ended December 31, 2022, 2021 and 2020, except as described under “2022 IPR&D Impairment” below. The weighted-average discount rates used in our quantitative assessments for IPR&D intangible assets during those years, other than for the assessment described below, were 7.5%, 6.5% and 8.0%, respectively.

2022 IPR&D Impairment

In connection with our acquisition of Immunomedics in 2020, we allocated a portion of the purchase price to acquired IPR&D intangible assets. Approximately $8.8 billion was assigned to IPR&D intangible assets related to Trodelvy for treatment of patients with HR+/HER2- breast cancer. In March 2022, we received data from the Phase 3 TROPiCS-02 study evaluating Trodelvy in patients with HR+/HER2- metastatic breast cancer who have received prior endocrine therapy, cyclin-dependent kinase 4/6 inhibitors and two to four lines of chemotherapy (“third-line plus patients”). Based on our evaluation of the study results, and in connection with the preparation of the financial statements for the first quarter, we updated our estimate of the fair value of our HR+/HER2- IPR&D intangible asset to $6.1 billion as of March 31, 2022. Our estimate of fair value used a probability-weighted income approach that discounts expected future cash flows to the present value, which requires the use of Level 3 fair value measurements and inputs, including estimated revenues, costs, and probability of technical and regulatory success. The expected cash flows included cash flows from HR+/HER2- metastatic breast cancer for third-line plus patients and patients in earlier lines of therapy which are the subject of separate clinical studies. Our revised discounted cash flows were lower primarily due to a delay in launch timing for third-line plus patients which caused a decrease in our market share assumptions based on the expected competitive environment. As of March 2022, there were no changes in our plans or assumptions related to our estimated cash flows for patients in the earlier lines of therapy. We used a discount rate of 6.75% which is based on the estimated weighted-average cost of capital for companies with profiles similar to ours and represents the rate that market participants would use to value the intangible assets. We determined the revised estimated fair value was below the carrying value of the asset and, as a result, we recognized a partial impairment charge of $2.7 billion in In-process research and development impairment on our Consolidated Statements of Income during the three months ended March 31, 2022.