Notes to the Statements of Financial Position

Goodwill and Other Intangible Assets

Changes in intangible assets in 2017 were as follows:

Changes in Intangible Assets

 

 

Acquired goodwill

 

Patents and technologies

 

Trademarks

 

Marketing and distribution rights

 

Production rights

 

R&D projects

 

Other rights and advance payments

 

Total

 

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

Cost of acquisition or generation, December 31, 2016

 

16,312

 

13,162

 

11,045

 

2,044

 

2,138

 

887

 

2,666

 

48,254

Acquisitions

 

51

 

 

85

 

 

4

 

 

 

140

Capital expenditures

 

 

78

 

 

54

 

 

458

 

167

 

757

Retirements

 

 

(61)

 

(31)

 

(4)

 

 

(220)

 

(365)

 

(681)

Transfers

 

 

 

1

 

45

 

 

17

 

(63)

 

Transfers (IFRS 5)

 

(481)

 

(123)

 

(40)

 

(14)

 

(118)

 

(43)

 

(403)

 

(1,222)

Divestments / changes in the scope of consolidation

 

(254)

 

(31)

 

(5)

 

(105)

 

(96)

 

 

(322)

 

(813)

Inflation adjustment (IAS 29)

 

5

 

 

 

 

 

 

 

5

Exchange differences

 

(882)

 

(164)

 

(602)

 

(109)

 

(5)

 

(55)

 

(116)

 

(1,933)

December 31, 2017

 

14,751

 

12,861

 

10,453

 

1,911

 

1,923

 

1,044

 

1,564

 

44,507

Accumulated amortization and impairment losses, December 31, 2016

 

 

9,312

 

3,673

 

1,268

 

2,027

 

235

 

1,860

 

18,375

Retirements

 

 

(36)

 

(20)

 

(4)

 

 

(201)

 

(356)

 

(617)

Amortization and impairment losses in 2017

 

 

596

 

580

 

170

 

21

 

98

 

228

 

1,693

Amortization

 

 

596

 

369

 

133

 

21

 

 

118

 

1,237

Impairment losses

 

 

 

211

 

37

 

 

98

 

110

 

456

Impairment loss reversals

 

 

 

 

 

 

 

 

Transfers

 

 

 

 

1

 

 

 

(1)

 

Transfers (IFRS 5)

 

 

(86)

 

(39)

 

(9)

 

(118)

 

(2)

 

(199)

 

(453)

Divestments / changes in the scope of consolidation

 

 

(13)

 

(5)

 

(77)

 

(90)

 

 

(295)

 

(480)

Exchange differences

 

 

(135)

 

(148)

 

(66)

 

(4)

 

(13)

 

(70)

 

(436)

December 31, 2017

 

 

9,638

 

4,041

 

1,283

 

1,836

 

117

 

1,167

 

18,082

Carrying amounts, December 31, 2017

 

14,751

 

3,223

 

6,412

 

628

 

87

 

927

 

397

 

26,425

Carrying amounts, December 31, 2016

 

16,312

 

3,850

 

7,372

 

776

 

111

 

652

 

806

 

29,879

Capital expenditures for research and development projects include an advance payment to Loxo Oncology, Inc., in the amount of US$400 million as part of an exclusive global collaboration relating to the development and marketing of larotrectinib.

Impairment losses of €456 million were recognized on intangible assets. In the Pharmaceuticals segment, impairment losses of €69 million were recognized on intangible assets in the oncology area (OncoMed). In addition, impairment losses of €59 million were recognized on a drug candidate for the treatment of lung infections (Amikacin Inhale) due to new research findings. Furthermore, impairment losses of €65 million were recognized on intangible assets in the women’s health and ophthalmology areas. In the Consumer Health segment, a weaker market environment led to impairment losses of €155 million for a sunscreen product brand (Coppertone™) and €47 million on a trademark in the allergies area (Aerius™). In the Crop Science segment, an impairment loss of €41 million was recognized in connection with the termination of a research project.

The remaining impairment losses pertained to intangible assets in the Pharmaceuticals (€2 million), Consumer Health (€3 million), Crop Science (€5 million) and Animal Health (€9 million) segments along with All Other Segments (€1 million).

Details of acquisitions and divestments are provided in Notes “Business Combinations and Other Acquisitions” and “Divestments, Material Sale Transactions and Discontinued Operations”. The impairment testing procedure for goodwill and other intangible assets is explained in Note “Basic Principles, Methods and Critical Accounting Estimates”.

Changes in intangible assets in 2016 were as follows:

Changes in Intangible Assets (Previous Year)

 

 

Acquired goodwill

 

Patents and technologies

 

Trademarks

 

Marketing and distribution rights

 

Production rights

 

R&D projects

 

Other rights and advance payments

 

Total

 

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

Cost of acquisition or generation, December 31, 2015

 

16,096

 

13,069

 

10,952

 

1,944

 

2,172

 

946

 

2,600

 

47,779

Acquisitions

 

9

 

1

 

 

 

 

(23)

 

 

(13)

Capital expenditures

 

 

55

 

3

 

47

 

5

 

96

 

157

 

363

Retirements

 

 

(6)

 

(39)

 

(14)

 

(25)

 

(108)

 

(80)

 

(272)

Transfers

 

 

5

 

 

50

 

3

 

(43)

 

(15)

 

Transfers (IFRS 5)

 

 

(5)

 

(8)

 

(15)

 

(16)

 

 

(11)

 

(55)

Divestments / changes in the scope of consolidation

 

 

 

(8)

 

 

 

 

 

(8)

Inflation adjustment (IAS 29)

 

3

 

 

 

 

 

 

 

3

Exchange differences

 

204

 

43

 

145

 

32

 

(1)

 

19

 

15

 

457

December 31, 2016

 

16,312

 

13,162

 

11,045

 

2,044

 

2,138

 

887

 

2,666

 

48,254

Accumulated amortization and impairment losses, December 31, 2015

 

 

8,277

 

3,083

 

1,134

 

2,021

 

225

 

1,765

 

16,505

Retirements

 

 

(2)

 

(38)

 

(14)

 

(25)

 

(106)

 

(66)

 

(251)

Amortization and impairment losses in 2016

 

 

1,007

 

604

 

144

 

48

 

109

 

160

 

2,072

Amortization

 

 

708

 

393

 

137

 

28

 

 

129

 

1,395

Impairment losses

 

 

299

 

211

 

7

 

20

 

109

 

31

 

677

Impairment loss reversals

 

 

 

(1)

 

 

 

 

 

(1)

Transfers

 

 

 

 

 

 

 

 

Transfers (IFRS 5)

 

 

(5)

 

(8)

 

(15)

 

(16)

 

 

(11)

 

(55)

Divestments / changes in the scope of consolidation

 

 

 

 

 

 

 

(1)

 

(1)

Exchange differences

 

 

35

 

33

 

19

 

(1)

 

7

 

13

 

106

December 31, 2016

 

 

9,312

 

3,673

 

1,268

 

2,027

 

235

 

1,860

 

18,375

Carrying amounts, December 31, 2016

 

16,312

 

3,850

 

7,372

 

776

 

111

 

652

 

806

 

29,879

Carrying amounts, December 31, 2015

 

16,096

 

4,792

 

7,869

 

810

 

151

 

721

 

835

 

31,274

Goodwill and other intangible assets with an indefinite useful life that are of material significance for the Bayer Group are allocated to the following cash-generating units or unit groups as of the end of the reporting period:

Intangible Assets with an Indefinite Useful Life

 

 

Cash-generating unit / unit group

 

Goodwill (€ million)

 

Material intangible assets with indefinite useful life (€ million)

Reporting segment

 

 

 

€ million

 

€ million

Pharmaceuticals

 

Pharmaceuticals

 

7,105

 

857

Consumer Health

 

Consumer Care

 

5,854

 

24

Crop Science

 

Crop Protection

 

1,120

 

41

Crop Science

 

Seeds

 

122

 

98

In the case of research and development projects, the point in time from which a capitalized asset can be expected to generate an economic benefit for the company cannot be determined. Such assets are therefore classified as having an indefinite useful life. Development projects were capitalized at a total amount of €927 million as of the end of 2017 (2016: €652 million).

Another intangible asset classified as having an indefinite useful life is the Bayer Cross, which was reacquired for the North America region in 1994, having been awarded to the United States and Canada under the reparations agreements at the end of the First World War. The period for which the Bayer Group will derive an economic benefit from this name cannot be determined as Bayer intends to make continuous use of it. The Bayer Cross is capitalized at €108 million.

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