Merck 2010 Annual Report Download - page 172

The changes in scope of consolidation include additions amounting to EUR 5,263.9 million (2009:
EUR 20.6 million) and disposals of EUR 159.7 million (2009: EUR 0.2 million). The additions relate
almost exclusively to the acquisition of Millipore. Details of this transaction are presented under
“Scope of consolidation – Acquisition of Millipore”. At the time of the acquisition, the goodwill of
Millipore amounted to EUR 2,704.4 million and the fair value of the other intangible assets was
EUR 2,559.5 million. The disposals from the scope of consolidation relate in particular to the divest-
ment of Théramex.
The change in currency translation differences relative to 2009 is due mainly to the translation of
intangible assets reported in U.S. dollars and Swiss francs into euros – the reporting currency of
the Merck Group.
The net carrying amount of “Patents, licenses and similar rights, brands, trademarks and other”
with finite useful lives amounting to EUR 7,567.4 million mainly include the recognized assets
from the Millipore purchase price allocation in 2010 and the Serono purchase price allocation in
2007. The vast majority is attributable to technologies and know-how. The remaining useful lives
of these assets range between 8 and 15.5 years. This item also includes licenses from this acquisi-
tion with remaining useful lives of between 2 and 7 years.
In fiscal 2010, impairment losses on intangible assets with finite useful lives totaled EUR 17.1 mil-
lion. Of this amount, EUR 16.4 million was attributable to the Liquid Crystals business unit. This
impairment was required due to amended market estimates and the related decline in sales expecta-
tions. This is reflected within “Other operating expenses” in the income statement. The changes in
goodwill caused by currency effects resulted almost exclusively from translating the goodwill for
Serono from Swiss francs into euros, the reporting currency of the Merck Group, and from translat-
ing the goodwill for Millipore, half of which is carried in U.S. dollars, into euros.
Since goodwill and intangible assets with indefinite useful lives are not amortized, these are
subjected to an annual impairment test. Here, book values were compared with values in use.
Consequently, impairment losses of EUR 164.4 million result in fiscal 2010. Safinamide is respon-
sible for EUR 134.0 million of this amount. Owing to a reassessment of the sales potential, this
impairment resulted in a residual value of EUR 63.4 million. This is disclosed in the income state-
ment under “Amortization of intangible assets”. The reassessment was based on the results of a
Phase III study conducted by our cooperation partner Newron, which led to a reevaluation of the
market potential, especially as regards potential indications. The decision also takes into account
a delay in the project and an increase in R&D costs due to more stringent requirements set by the
U.S. Food and Drug Administration.
The other impairment losses amounting to EUR 17.2 million relate to write-offs of the capitalized
assets related to the termination of research projects from the Merck Serono division and are
recorded under “Other operating expenses”. Owing to the outlicensing of an active ingredient
attributable to an acquisition, its net present value was remeasured. This led to the need for an
impairment loss of EUR 13.2 million in the Merck Serono division, which was recognized under
“Other operating expenses”.
168 Merck Annual Report 2010