Amgen 2012 Annual Report Download - page 113

F-14
In connection with this acquisition, we are obligated to make additional payments to the former shareholders of BioVex of
up to $575 million contingent upon the achievement of various regulatory and sales milestones with regard to talimogene
laherparepvec, including the filing of a Biologics License Application (BLA) with the FDA; the first commercial sale in each of
the United States and the European Union (EU) following receipt of marketing approval, which includes use of the product in
specified patient populations; and upon achieving specified levels of sales. The estimated fair values of the contingent consideration
obligations aggregated $190 million as of the acquisition date and were determined using a combination of valuation techniques.
(See Note 16, Fair value measurement for information regarding the estimated fair values of these obligations as of December 31,
2012.) The contingent consideration obligations to make regulatory milestone payments were valued based on assumptions
regarding the probability of achieving the milestones and making the related payments, with such amounts discounted to present
value based on our credit risk. The contingent consideration obligations to make sales milestone payments were valued based on
assumptions regarding the probability of achieving specified product sales thresholds to determine the required payments, with
such amounts discounted to present value based on our credit risk.
We allocated the total consideration to the acquisition date fair values of assets acquired and liabilities assumed as follows
(in millions):
Indefinite-lived intangible assets — IPR&D $ 675
Goodwill 170
Deferred tax assets (liabilities), net (246)
Other assets (liabilities), net (2)
Total consideration $ 597
The estimated fair value of acquired IPR&D is related to talimogene laherparepvec. The estimated fair value was determined
using a probability-weighted income approach, which discounts expected future cash flows to present value by using a discount
rate that represents the estimated rate that market participants would use to value this intangible asset. The projected cash flows
from talimogene laherparepvec were based on certain assumptions, including estimates of future revenue and expenses, the time
and resources needed to complete development and the probabilities of obtaining marketing approval from the FDA and other
regulatory agencies.
The excess of the acquisition date consideration over the fair values assigned to the assets acquired and the liabilities assumed
of $170 million was recorded as goodwill, which is not deductible for tax purposes. Goodwill is attributable primarily to the
deferred tax consequences of acquired IPR&D recorded for financial statement purposes.
Other acquisitions
We also acquired the businesses described below, which were accounted for as business combinations, and accordingly, their
operations have been included in our consolidated financial statements commencing on their respective acquisition dates.
On April 7, 2011, we acquired all of the outstanding stock of Laboratório Químico Farmacêutico Bérgamo Ltda (Bergamo),
a privately held Brazilian pharmaceutical company. Upon its acquisition, Bergamo became a wholly owned subsidiary of Amgen.
On May 16, 2011, we acquired a manufacturing facility in Dun Laoghaire, Ireland, from Pfizer Inc. (Pfizer) (Dun Laoghaire).
Under the terms of the agreement, most staff at the facility became Amgen employees, and we agreed to manufacture certain
products for Pfizer at the facility for a certain period.
On June 15, 2011, we reacquired rights to distribute certain of our products in the Brazilian pharmaceutical market from our
local distributor in Brazil and its parent company, Hypermarcas, and in connection therewith acquired all business operations
related to these products in Brazil.
The aggregate acquisition date consideration for these businesses was approximately $453 million, composed primarily of
cash paid to the former owners of the businesses. The aggregate acquisition date consideration was allocated to (i) goodwill of
$265 million, of which $130 million related to Bergamo was tax deductible: (ii) property, plant and equipment of $99 million;
(iii) amortizable intangible assets composed primarily of licenses to distribute products and customer contracts of $58 million;
and (iv) other assets, net of $31 million. Goodwill resulting from these acquisitions is attributable primarily to the benefits of
immediate, direct access to the Brazilian market for expediting our international expansion efforts and geographic diversification
to assist in risk mitigation efforts related to our manufacturing operations.