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Associated companies | 12 Months Ended
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Dec. 31, 2020
Disclosure of associates [abstract] |
Associated companies | 4. Associated companies
|  | Net income statement effect |  | Other comprehensive income effect |  | Total comprehensive income effect |
(USD millions) |  | 2020 |  | 2019 |  | 2018 |  | 2020 |  | 2019 |  | 2018 1 |  | 2020 |  | 2019 |  | 2018 |
Roche Holding AG, Switzerland |  | 677 |  | 662 |  | 526 |  | – 56 |  | – 94 |  | 75 |  | 621 |  | 568 |  | 601 |
GlaxoSmithKline Consumer Healthcare Holdings Ltd., UK |  |  |  |  |  | 5 910 |  |  |  |  |  | – 557 |  |  |  |  |  | 5 353 |
Others |  | – 4 |  | – 3 |  | 2 |  |  |  |  |  |  |  | – 4 |  | – 3 |  | 2 |
Associated companies related to continuing operations |  | 673 |  | 659 |  | 6 438 |  | – 56 |  | – 94 |  | – 482 |  | 617 |  | 565 |  | 5 956 |
1 In 2018, Novartis share of other comprehensive income recognized by associated companies, net of taxes of USD 511 million was recycled into the consolidated income statement as a result of the divestment of the investment in GSK Consumer Healthcare Holdings Ltd. No Novartis share of other comprehensive income recognized by associated companies, net of taxes was recycled into the consolidated income statement in 2020 and 2019.
Novartis has a significant investment in Roche Holding AG, Basel (Roche), as well as certain other smaller investments that are accounted for as associated companies. The investment in GlaxoSmithKline Consumer Healthcare Holdings Ltd., Brentford, Middlesex, UK, was divested on June 1, 2018, to GlaxoSmithKline plc, Great Britain.
|  | Balance sheet value |
(USD millions) |  | December 31, 2020 |  | December 31, 2019 |
Roche Holding AG, Switzerland |  | 9 407 |  | 8 445 |
Others |  | 225 |  | 199 |
Total |  | 9 632 |  | 8 644 |
Roche Holding AG The Group’s holding in Roche voting shares was 33.3% at December 31, 2020, 2019 and 2018. This investment represents approximately 6.2% of Roche’s total outstanding voting and non-voting equity instruments at December 31, 2020, 2019 and 2018. Since full-year 2020 financial data for Roche is not available when Novartis produces its consolidated financial results, a survey of analyst estimates is used to estimate the Group’s share of Roche’s net income. Any differences between these estimates and actual results will be adjusted in the Group’s 2021 consolidated financial statements when available. The following tables show summarized financial information for Roche, including current values of fair value adjustments made at the time of the acquisition of the shares, for the year ended December 31, 2019, and for the six months ended June 30, 2020 (since full-year 2020 data is not yet available):
(CHF billions) |  | Current assets |  | Non-current assets |  | Current liabilities |  | Non-current liabilities |
December 31, 2019 |  | 31.3 |  | 56.4 |  | 24.1 |  | 23.1 |
June 30, 2020 |  | 27.7 |  | 55.7 |  | 22.5 |  | 23.1 |
(CHF billions) |  | Revenue |  | Net income |  | Other comprehen- sive income |  | Total comprehen- sive income |
December 31, 2019 |  | 63.8 |  | 12.3 |  | – 0.9 |  | 11.4 |
June 30, 2020 |  | 30.4 |  | 7.2 |  | – 0.7 |  | 6.5 |
A purchase price allocation was performed on the basis of publicly available information at the time of acquisition of the investment. The December 31, 2020, balance sheet value allocation is as follows:
(USD millions) |  | December 31, 2020 |
Novartis share of Roche’s estimated net assets |  | 2 585 |
Novartis share of reappraised intangible assets |  | 117 |
Implicit Novartis goodwill |  | 3 233 |
Current value of share in net identifiable assets and goodwill |  | 5 935 |
Accumulated equity accounting adjustments and translation effects less dividends received |  | 3 472 |
Balance sheet value |  | 9 407 |
The identified intangible assets principally relate to the value of currently marketed products and are amortized on a straight-line basis over their estimated average useful life of 20 years. In 2020, dividends received from Roche in relation to the distribution of its 2019 net income amounted to USD 487 million (2019: USD 460 million in relation to the distribution of its 2018 net income). The consolidated income statement effects from applying Novartis accounting principles for this investment in 2020, 2019 and 2018 are as follows:
(USD millions) |  | 2020 |  | 2019 |  | 2018 |
Novartis share of Roche's estimated current-year consolidated net income |  | 913 |  | 910 |  | 799 |
Prior-year adjustment |  | – 64 |  | – 129 |  | – 125 |
Amortization of fair value adjustments relating to intangible assets, net of taxes of USD 26 million (2019: USD 24 million; 2018: USD 40 million) |  | – 172 |  | – 162 |  | – 148 |
Partial release of deferred tax liability recognized |  |  |  | 43 |  |  |
Net income effect |  | 677 |  | 662 |  | 526 |
The publicly quoted market value of the Novartis interest in Roche (SIX symbol: RO) at December 31, 2020, was USD 18.8 billion (2019: USD 16.9 billion). GlaxoSmithKline Consumer Healthcare Holdings Ltd. On March 27, 2018, Novartis entered into an agreement with GlaxoSmithKline plc, Great Britain (GSK), to divest its 36.5% stake in GSK Consumer Healthcare Holdings Ltd. (GSK Consumer Healthcare) to GSK for USD 13.0 billion in cash. As a result, Novartis discontinued the use of equity method accounting starting from April 1, 2018. The divestment transaction closed on June 1, 2018, and Novartis realized a pre-tax gain of USD 5.8 billion, recorded in income from associated companies. See Note 2. GSK Consumer Healthcare was formed in March 2015 via contribution of businesses from both Novartis and GSK. Until June 1, 2018, Novartis had a 36.5% interest in GSK Consumer Healthcare and had four of 11 seats on the GSK Consumer Healthcare board of directors. Furthermore, Novartis had customary minority rights as well as exit rights at a predefined, market-based pricing mechanism. The consolidated income statement effects from applying Novartis accounting principles for this investment in 2018 are as follows:
(USD millions) |  | 2018 |
Novartis share of GSK Consumer Healthcare's estimated current-year consolidated net income |  | 119 |
Prior-year adjustment |  | 4 |
Amortization of fair value adjustments relating to intangible assets and inventory, net of taxes of USD 1 million |  | – 3 |
Pre-tax gain on divestment of GSK Consumer Healthcare |  | 5 790 |
Net income effect |  | 5 910 |

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