Identifiable Intangible Assets

9 Months Ended

Sep. 30, 2020

NOTE 5 – Identifiable intangible assets:

Identifiable intangible assets consisted of the following:


	Gross carrying amount net of impairment				Accumulated amortization				Net carrying amount
	September 30,		December 31,		September 30,		December 31,		September 30,		December 31,
	2020		2019		2020		2019		2020		2019
	(U.S. $ in millions)
Product rights	$	19,520	$	19,663	$	11,665	$	10,640	$	7,856	$	9,023
Trade names		609		600		154		126		455		474
In process research and development		998		1,735		—		—		998		1,735

Total	$	21,128	$	21,998	$	11,819	$	10,766	$	9,308	$	11,232

Product rights and trade names

Product rights and trade names are assets presented at amortized cost. Product rights and trade names represent a portfolio of pharmaceutical products from various therapeutic categories from various acquisitions with a weighted average life of approximately 12 years.

Amortization of intangible assets was $251 million and $255 million in the three months ended September 30, 2020 and 2019, respectively.

Amortization of intangible assets was $758 million and $823 million in the

nine

months ended September 30, 2020 and 2019, respectively.

IPR&D

Teva’s

IPR&D are assets that have not yet been approved in major markets. Teva’s IPR&D is comprised mainly of various generic products from the Actavis Generics acquisition of $

964

million. IPR&D carries intrinsic risks that the asset might not succeed in advanced phases and may be impaired in future periods.

Intangible assets impairments

Impairments of long-lived intangible assets for the three months ended September 30, 2020 and 2019

were $509 million and $177 million, respectively.

Impairments in the third quarter of 2020 consisted of:

(a)

IPR&D assets

of $360

million,

inly

due to: (i) $262 million related to lenalidomide (generic equivalent of

Revlimid

)

due to modified competition assumptions as a result of settlements between the innovator and other generic filers; and (ii) $96 million related to generic pipeline products acquired from Actavis Generics resulting from development progress and changes in other key valuation indications (e.g., market size, competition assumptions, legal landscape, launch date) in the United States; and

(b)

Identifiable product rights

of $149

million, due to: (i) $110 million related to a change in the assumptions regarding competition for the

expected relaunch of

metformin tablets; and (ii) $39 million mainly related to updated market assumptions regarding price and volume of products acquired from Actavis Generics that are primarily marketed in the United States.

Impairments in the third quarter of 2019 consisted of:

(a)

Identifiable product rights of $99 million, mainly due to supply challenges in connection with products primarily marketed in Hong Kong; and

(b)

IPR&D assets of $78 million, mainly

to generic pipeline products acquired from Actavis Generics due to development progress and changes in other key valuation indications (e.g., market size, competition assumptions, legal landscape, launch date or discount rate) in the United States.

Impairments of long-lived intangible assets for the nine months ended September 30, 2020 and 2019, were $1,278 million and $1,206 million, respectively.

Impairments in the first nine months of 2020 consisted of:

(a)

IPR&D assets of $708 million,

mainly

due to: (i) $262 million related to lenalidomide (generic equivalent of Revlimid

) due to modified competition assumptions as a result of settlements between the innovator and other generic filers; (ii)

$211 million related to AUSTEDO for the treatment of Tourette syndrome in pediatric patients in the United States following clinical trial results

received in February 2020, which failed to meet their primary endpoints; and

(iii) $213

million related to generic pipeline products acquired from Actavis Generics resulting from development progress and changes in other key valuation indications (e.g., market size, competition assumptions, legal landscape, launch date) in the United States; and

(b)

Identifiable product rights of $570 million, mainly due to: (i) $271 million

to updated market assumptions regarding price and volume of products acquired from Actavis

Generics

that are

primarily marketed in the United States;

(ii) $165 million in Japan in connection with ongoing regulatory pricing reductions and generic

competition; and (iii) $110 million related to a change in the assumptions regarding competition for the

expected relaunch of

metformin

tablets

Impairments in the first nine months of 2019 consisted of:

(a)

Identifiable product rights of $667 million, mainly due to updated market assumptions regarding price and volume of products acquired from Actavis Generics and primarily marketed in the United States; and

(b)

IPR&D assets of $539 million: (i) $355 million of various generic pipeline products acquired from Actavis Generics due to development progress and changes in other key valuation indications (e.g., market size, competition assumptions, legal landscape, launch date or discount rate) in the United States, (ii) $125 million related to lenalidomide (generic equivalent of Revlimid

) due to modified competition assumptions as a result of settlements between the innovator and other generic filers; and (iii) $59 million related to a change in assumptions concerning the future market share of a number of products within Teva’s Actavis Generics pipeline in Europe.

The fair value measurement of the impaired intangible assets in the first nine months of 2020 is based on significant unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy. The discount rate applied ranged from 7.5% to 9%. A probability of success factor of 80% was used in the fair value calculation to reflect inherent regulatory and commercial risk of IPR&D.