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Goodwill and intangible assets | 12 Months Ended
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Dec. 31, 2022
Disclosure of detailed information about intangible assets [abstract] |
Goodwill and intangible assets | 11. Goodwill and intangible assets The following table summarizes the movements of goodwill and intangible assets in 2022:
|  | Goodwill |  | Intangible assets other than goodwill |
(USD millions) |  | Total |  | In-process research and development |  | Technologies |  | Currently marketed products |  | Other intangible assets |  | Total |
At January 1, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |
Cost |  | 29 900 |  | 8 013 |  | 1 080 |  | 56 213 |  | 2 905 |  | 68 211 |
Accumulated amortization and impairment |  | -305 |  | -2 514 |  | -903 |  | -29 107 |  | -1 505 |  | -34 029 |
Net book value |  | 29 595 |  | 5 499 |  | 177 |  | 27 106 |  | 1 400 |  | 34 182 |
At January 1, 2022 |  | 29 595 |  | 5 499 |  | 177 |  | 27 106 |  | 1 400 |  | 34 182 |
Impact of acquisitions of businesses |  | 161 |  | 1 209 |  |  |  |  |  |  |  | 1 209 |
Reclassifications 1 |  |  |  | -1 429 |  | 2 |  | 1 403 |  | 24 |  |  |
Additions |  |  |  | 330 |  |  |  | 1 175 |  | 588 |  | 2 093 |
Disposals and derecognitions 2 |  | -28 |  | -95 |  |  |  | -3 |  | -2 |  | -100 |
Amortization charge |  |  |  |  |  | -37 |  | -3 603 |  | -342 |  | -3 982 |
Impairment charge |  |  |  | -917 |  | -15 |  | -322 |  | -72 |  | -1 326 |
Currency translation effects |  | -427 |  | -176 |  | -6 |  | -243 |  | -7 |  | -432 |
At December 31, 2022 |  | 29 301 |  | 4 421 |  | 121 |  | 25 513 |  | 1 589 |  | 31 644 |
At December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |
Cost |  | 29 596 |  | 7 092 |  | 1 038 |  | 58 249 |  | 3 305 |  | 69 684 |
Accumulated amortization and impairment |  | -295 |  | -2 671 |  | -917 |  | -32 736 |  | -1 716 |  | -38 040 |
Net book value |  | 29 301 |  | 4 421 |  | 121 |  | 25 513 |  | 1 589 |  | 31 644 |
1 Reclassifications between various asset categories as a result of product launches of acquired in-process research and development and completion of software development
2 Derecognition of assets that are no longer being used or developed and are not considered to have a significant disposal value or other alternative use
The following table summarizes the movements of goodwill and intangible assets in 2021:
|  | Goodwill |  | Intangible assets other than goodwill |
(USD millions) |  | Total |  | In-process research and development |  | Technologies |  | Currently marketed products |  | Other intangible assets |  | Total |
At January 1, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |
Cost |  | 30 321 |  | 6 893 |  | 1 115 |  | 57 333 |  | 2 384 |  | 67 725 |
Accumulated amortization and impairment |  | -322 |  | -2 193 |  | -885 |  | -26 566 |  | -1 272 |  | -30 916 |
Net book value |  | 29 999 |  | 4 700 |  | 230 |  | 30 767 |  | 1 112 |  | 36 809 |
At January 1, 2021 |  | 29 999 |  | 4 700 |  | 230 |  | 30 767 |  | 1 112 |  | 36 809 |
Impact of acquisitions of businesses |  | 238 |  | 262 |  |  |  | 292 |  | 98 |  | 652 |
Reclassifications 1 |  |  |  | -20 |  | 15 |  | 5 |  |  |  |  |
Additions |  |  |  | 958 |  |  |  | 270 |  | 508 |  | 1 736 |
Disposals and derecognitions 2 |  |  |  |  |  |  |  | -36 |  | -1 |  | -37 |
Amortization charge |  |  |  |  |  | -41 |  | -3 607 |  | -255 |  | -3 903 |
Impairment charge |  |  |  | -350 |  | -17 |  | -1 |  | -35 |  | -403 |
Currency translation effects |  | -642 |  | -51 |  | -10 |  | -584 |  | -27 |  | -672 |
At December 31, 2021 |  | 29 595 |  | 5 499 |  | 177 |  | 27 106 |  | 1 400 |  | 34 182 |
At December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |
Cost |  | 29 900 |  | 8 013 |  | 1 080 |  | 56 213 |  | 2 905 |  | 68 211 |
Accumulated amortization and impairment |  | -305 |  | -2 514 |  | -903 |  | -29 107 |  | -1 505 |  | -34 029 |
Net book value |  | 29 595 |  | 5 499 |  | 177 |  | 27 106 |  | 1 400 |  | 34 182 |
1 Reclassifications between various asset categories as a result of product launches of acquired in-process research and development and completion of software development
2 Derecognition of assets that are no longer being used or developed and are not considered to have a significant disposal value or other alternative use
The following table summarizes the allocation of the net book values of goodwill and intangible assets by reporting segment at December 31, 2022:
|  | Goodwill1 |  | Intangible assets other than goodwill |
(USD millions) |  | Total |  | In-process research and development |  | Technologies |  | Currently marketed products |  | Other intangible assets |  | Total |
Innovative Medicines |  | 21 531 |  | 4 186 |  | 14 |  | 24 487 |  | 1 139 |  | 29 826 |
Sandoz |  | 7 770 |  | 235 |  | 107 |  | 1 026 |  | 92 |  | 1 460 |
Corporate |  |  |  |  |  |  |  |  |  | 358 |  | 358 |
Net book value at December 31, 2022 |  | 29 301 |  | 4 421 |  | 121 |  | 25 513 |  | 1 589 |  | 31 644 |
1 The Innovative Medicines and Sandoz Divisions’ represent the grouping of cash-generating units, to which goodwill is allocated.
The following table summarizes the allocation of the net book values of goodwill and intangible assets by reporting segment at December 31, 2021:
|  | Goodwill1 |  | Intangible assets other than goodwill |
(USD millions) |  | Total |  | In-process research and development |  | Technologies |  | Currently marketed products |  | Other intangible assets |  | Total |
Innovative Medicines |  | 21 562 |  | 5 313 |  | 15 |  | 25 938 |  | 1 091 |  | 32 357 |
Sandoz |  | 8 026 |  | 186 |  | 162 |  | 1 168 |  | 61 |  | 1 577 |
Corporate |  | 7 |  |  |  |  |  |  |  | 248 |  | 248 |
Net book value at December 31, 2021 |  | 29 595 |  | 5 499 |  | 177 |  | 27 106 |  | 1 400 |  | 34 182 |
1 The Innovative Medicines and Sandoz Divisions’ and Corporate represent the grouping of cash-generating units, to which goodwill is allocated.
As at December 31, 2022, the most significant intangible assets within currently marketed products category are Leqvio (Innovative Medicines: acquisition of The Medicines Company) and Zolgensma (Innovative Medicines: acquisition of Avexis Inc.). As at December 31, 2022, the carrying value and remaining amortization period for Leqvio is USD 7.4 billion and 13 years, respectively (2021: USD 7.9 billion and 14 years, respectively), and for Zolgensma USD 5.9 billion and 8 years, respectively (2021: USD 6.6 billion and 9 years, respectively). The Innovative Medicines and Sandoz Divisions’ cash-generating units, to which goodwill is allocated, each comprise a group of smaller cash-generating units. The valuation method of the recoverable amount of the group of cash-generating units, to which goodwill is allocated, is based on the fair value less costs of disposal. The following assumptions are used in the calculations:
(As a percentage) |  | Innovative Medicines |  | Sandoz |
Terminal growth rate |  | 1.5 |  | 1.0 |
Discount rate (post-tax) |  | 8.0 |  | 8.0 |
The discount rates for all divisions consider the Group’s weighted average cost of capital, adjusted to approximate the weighted average cost of capital of a comparable market participant. The fair value less costs of disposal, for all cash-generating units containing goodwill, is reviewed for the impact of reasonably possible changes in key assumptions. In particular, we considered an increase in the discount rate, a decrease in the terminal growth rate, and certain negative impacts on the forecasted cash flows. These reasonably possible changes in key assumptions did not indicate an impairment. “Note 1. Significant accounting policies—Impairment of goodwill and intangible assets” provides additional disclosures on how the Group performs goodwill and intangible asset impairment testing. The following table shows the intangible asset impairment charges and reversals by reporting segment:
|  | Impairment charges |  | Impairment reversals |
(USD millions) |  | 2022 |  | 2021 |  | 2020 |  | 2022 |  | 2021 |  | 2020 |
Innovative Medicines 1 |  | -1 299 |  | -367 |  | -768 |  |  |  |  |  |  |
Sandoz |  | -25 |  | -28 |  | -141 |  |  |  |  |  |  |
Corporate |  | -2 |  | -8 |  | -5 |  |  |  |  |  |  |
Total |  | -1 326 |  | -403 |  | -914 |  |  |  |  |  |  |
1 2022 includes an impairment of USD 0.6 billion related to the write-down of IPR&D related to cessation of clinical development program UNR844.
2021 includes an impairment of USD 0.2 billion related to the write-down of IPR&D related to cessation of clinical development program GTX312.
2020 includes an impairment of USD 0.5 billion related to the write-down of IPR&D related to cessation of clinical development program ZPL389 for atopic dermatitis and USD 0.2 billion related to a partial write-down of the Votrient currently marketed product (Votrient carrying value was USD 0.9 billion in 2022 and USD 1.3 billion in 2021).

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- Definition The disclosure of intangible assets and goodwill. [Refer: Intangible assets and goodwill] + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Name IAS -Number 1 -IssueDate 2022-03-24 -Paragraph 10 -Subparagraph e -URI https://taxonomy.ifrs.org/xifrs-link?type=IAS&num=1&code=ifrs-tx-2022-en-r&anchor=para_10_e&doctype=Standard -URIDate 2022-03-24 + Details
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