Identifiable Intangible Assets

12 Months Ended

Dec. 31, 2021

NOTE 6—Identifiable intangible assets:

Identifiable intangible assets consisted of the following:


	Gross carrying amount net of impairment				Accumulated amortization				Net carrying amount
	December 31,
	2021		2020		2021		2020		2021		2020
	(U.S. $ in millions)
Product rights	$	18,815	$	19,650	$	12,318	$	12,094	$	6,497	$	7,556
Trade names		590		621		198		165		392		456
In-process research and development (IPR&D)		577		911		—		—		577		911

Total	$	19,982	$	21,182	$	12,516	$	12,259	$	7,466	$	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 categories with a weighted average life of approximately 10 years. Amortization of intangible assets amounted to $802 million, $1,020 million and $1,113 million in the years ended December 31, 2021, 2020 and 2019, respectively.

As of December 31, 2021, the estimated aggregate amortization of intangible assets for the years 2022 to 2026 is as follows: 2022—$689 million; 2023—$711 million; 2024—$651 million; 2025—$630 million and 2026—$652 million. These estimates do not include the impact of IPR&D that is expected to be successfully completed and reclassified to product rights.

IPR&D

Teva’s IPR&D are assets that have not yet been approved in major markets. IPR&D carries intrinsic risks that the asset might not succeed in advanced phases and may be impaired in future periods.

During 2021, Teva reclassified $192 million of products from IPR&D to product rights, of which $153 million were reclassified in connection with lenalidomide (generic equivalent of Revlimid

Intangible assets impairment

Impairments of identifiable intangible assets were $424 million, $1,502 million and $1,639 million in the years ended December 31, 2021, 2020 and 2019, respectively. These amounts are recorded in the statement of income (loss) under intangible assets impairments.

Impairments in 2021 consisted of:

(a)

Identifiable product rights and trade names of $297 million due to: (i) $267 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, (ii) $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

(b)

IPR&D assets of $127 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 2020 consisted of:

(a)

IPR&D assets of $797 million, mainly due to: (i) $300 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; (ii) $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; (iii) $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

(b)

Identifiable product rights of $705 million, mainly due to: (i) $398 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.

Impairments in 2019 consisted of:

(a)

Identifiable product rights of $958 million, mainly due to: (i) $647 million due to updated market assumptions regarding price and volume of certain products acquired from Actavis Generics and primarily marketed in the United States, (ii) $128 million related to a decrease in future expected sales in Japan as a result of generic competition, and (iii) $123 million related to the discontinuation of certain products from Actavis Generics’ portfolio in several international markets; and

(b)

IPR&D assets of $681 million, due to: (i) $497 million related to 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 European market share of a number of pipeline products acquired from Actavis Generics.

The fair value measurement of the impaired intangible assets in 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.