Amgen 2002 Annual Report Download - page 51

Page 49
AMGEN 2002 ANNUAL REPORT
accordance with SFAS No. 142, “Goodwill and Other
Intangible Assets”, effective January 1, 2002, goodwill is
no longer amortized, but is subject to periodic impairment
tests. As of December 31, 2002, intangible asset and
goodwill balances, net of accumulated amortization were as
follows (amounts in millions):
Weighted average Historical Accumulated
Intangible assets subject to amortization amortization period cost amortization Net
Acquired product technology rights:
Developed product technology 14.5 years $3,264.5 $108.2 $3,156.3
Core technology 15 years 1,348.3 41.2 1,307.1
Tradename 15 years 190.4 5.8 184.6
4,803.2 155.2 4,648.0
Other intangible assets 15 years 164.5 10.6 153.9
Total $4,967.7 $165.8 $4,801.9
Intangible assets not subject to amortization
Goodwill $9,878.5 $7.4 $9,871.1
Acquired product technology rights relate to the
identifiable intangible assets acquired in connection with
the Immunex acquisition. Amortization of acquired
product technology rights is included in “Amortization
of acquired intangible assets” in the accompanying con-
solidated statements of operations. Other intangible assets
primarily consist of rights related to the commercial-
ization of certain products (see Note 12, “Acquisition of
certain rights from Roche”). Amortization of other intan-
gible assets is principally included in “Selling, general and
administrative” expense in the accompanying consolidated
statements of operations.
Product sales
Product sales primarily consist of sales of EPOGEN
®
(Epoetin
alfa), Aranesp
®
(darbepoetin alfa), NEUPOGEN
®
(Filgrastim),
Neulasta
™
(pegfilgrastim), and, commencing July 16, 2002,
ENBREL
®
(etanercept).
The Company has the exclusive right to sell Epoetin
alfa for dialysis, certain diagnostics and all non-human,
non-research uses in the United States. The Company sells
Epoetin alfa under the brand name EPOGEN
®
. Amgen has
granted to Ortho Pharmaceutical Corporation (which has
assigned its rights under the product license agreement to
Ortho Biotech Products, L.P.), a subsidiary of Johnson &
Johnson (“Johnson & Johnson”), a license relating to Epoetin
alfa for sales in the United States for all human uses except
dialysis and diagnostics. The license agreement, which is
perpetual, can be terminated upon mutual agreement of
the parties, or default. Pursuant to this license, the Company
and Johnson & Johnson are required to compensate each
other for Epoetin alfa sales that either party makes into the
other party’s exclusive market, sometimes referred to as
“spillover”. Accordingly, Amgen does not recognize prod-
uct sales it makes into the exclusive market of Johnson &
Johnson and does recognize the product sales made by
Johnson & Johnson into Amgen’s exclusive market. Sales
in Amgen’s exclusive market are derived from the Company’s
sales to its customers, as adjusted for spillover. The Company
is employing an arbitrated audit methodology to measure
each party’s spillover based on estimates of and subsequent
adjustments thereto of third-party data on shipments to
end users and their usage.
Sales of the Company’s other products are recog-
nized when shipped and title has passed. Product sales are
recorded net of reserves for estimated discounts, incentives,
and rebates.
Corporate partner revenues
Corporate partner revenues are primarily comprised of
amounts earned from Kirin-Amgen, Inc. (“Kirin-Amgen”)
for certain research and development (“R&D”) activities
and are generally earned as the R&D activities are per-
formed and the amounts become due (see Note 2, “Related
party transactions”). In addition, corporate partner rev-
enues include license fees and milestone payments associ-