Merck 2010 Annual Report Download - page 162

Research and development costs rose in 2010 by 3.9% to EUR 1,397.1 million. The increase relates
entirely to the Chemicals divisions, including Merck Millipore. Reimbursements for R & D amounting
to EUR 21.9 million (2009: EUR 13.3 million) were offset against research and development costs.
The breakdown of research and development costs by business sector and division is presented in
the Segment Reporting.
Due to the particular significance of the amortization of intangible assets, this item is disclosed
separately in the income statement. It primarily comprises amortization and impairment losses in
connection with the purchase price allocations resulting from the Serono and Millipore acquisitions.
In 2010, this amount includes EUR 579.4 million for the amortization of intangible assets of Merck
Serono and EUR 95.8 million for the first-time amortization of intangible assets of Merck Millipore.
Additionally, impairment losses of EUR 134.0 million were incurred owing to a reassessment of the
future sales potential of safinamide. The reassessment was based on the results of a Phase III study
conducted by our development partner Newron, which led to a reevaluation of the market potential,
especially with regard to the achievable indications. The decision also takes into account a delay in
the project and an increase in R&D costs due to more stringent regulatory requirements. To a lesser
extent this item also includes amortization of other intangible assets, for example from milestone
payments. Amortization of software is allocated to functional costs instead.
EUR million 2010 2009
Investment result from associates (equity method) 0.9 0.1
Other investment income/expense 3.2 3.4
4.1 3.5
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Exceptional items comprise:
EUR million 2010 2009
Gain from divestment of Théramex 68.6 –
Litigation Dey Inc., USA –67.2 –
Selling price adjustments for the Electronic Chemicals business –1.2 –
Transaction costs divestment of the Crop BioScience business –1.0 –
Exit cost Raptiva ® – –39.7
Divestment of natural substances business in Brazil – 10.6
Release of provisions – 1.1
Exceptional items –0.8 –28.0

The gain on the sale of Théramex amounting to EUR 68.6 million is recorded under this item. More
information on this transaction can be found under “Scope of consolidation”. In connection with
litigation relating to our former subsidiary Dey Inc., USA, having allegedly reported certain price
information falsely, a settlement payment was made to the U.S. Department of Justice in 2010. The
resulting expenses of EUR 67.2 million were recorded as an exceptional item. Although Dey Inc. was
transferred to Mylan, Inc., USA, as part of the sale of the Generics business in 2007, Merck remains
liable to Mylan for the costs of this litigation (see Note [32]).
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158 Merck Annual Report 2010