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Associated companies
 12 Months Ended
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