Identifiable Intangible Assets

9 Months Ended

Sep. 30, 2021

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,
	2021		2020		2021		2020		2021		2020

	(U.S. $ in millions)
Product rights	$	19,034	$	19,650	$	12,234	$	12,094	$	6,800	$	7,556
Trade names		635		621		226		165		409		456
In process research and development		623		911		—		—		623		911

Total	$	20,292	$	21,182	$	12,460	$	12,259	$	7,832	$	8,923

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 10 years.

Amortization of intangible assets was $199 million and $251 million in the three months ended September 30, 2021 and 2020, respectively.

Amortization of intangible assets was $613 million and $758 million in the nine months ended September 30, 2021 and 2020, 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 $589 million. IPR&D carries intrinsic risks that the asset might not succeed in advanced phases and may be impaired in future periods.

In the first nine months of 2021, Teva reclassified $162 million of products from IPR&D to product rights, of which $123 million were reclassified in connection with lenalidomide (generic equivalent of Revlimid

Intangible assets impairments

Impairments of long-lived intangible assets for the three months ended September 30, 2021 and 2020, were $21 million and $509 million, respectively.

Impairments in the third quarter of 2020 consisted of:

(a)

IPR&D assets of $360 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; 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 of long-lived intangible assets for the nine months ended September 30, 2021 and 2020, were $295 million and $1,278 million, respectively.

Impairments in the first nine months of 2021 consisted of:

(a)

Identifiable product rights and trade names of

209 million due to: (i) $30 million related to lenalidomide (generic equivalent of Revlimid

), resulting from modified competition assumptions as a result of settlements between the innovator and other generic filers, and (ii) $

179 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; and

(b)

IPR&D assets of $86 million, mainly due 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.

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 related 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.

The fair value measurement of the impaired intangible assets in the first nine months of 2021 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 7.25% to 10%. A probability of success factor ranging from 20% to 90% was used in the fair value calculation to reflect inherent regulatory and commercial risk of IPR&D.