Notes to the Statements of Financial Position

Goodwill and Other Intangible Assets

Changes in intangible assets in 2016 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, 2015

 

16,096

 

13,069

 

10,952

 

1,944

 

2,172

 

946

 

2,600

 

47,779

Changes in scope of consolidation

 

 

 

 

 

 

 

 

Acquisitions

 

9

 

1

 

 

 

 

(23)

 

 

(13)

Capital expenditures

 

 

55

 

3

 

47

 

5

 

96

 

157

 

363

Retirements

 

 

(6)

 

(47)

 

(14)

 

(25)

 

(108)

 

(80)

 

(280)

Transfers

 

 

5

 

 

50

 

3

 

(43)

 

(15)

 

Transfers (IFRS 5)

 

 

(5)

 

(8)

 

(15)

 

(16)

 

 

(11)

 

(55)

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

Changes in scope of consolidation

 

 

 

 

 

 

 

(1)

 

(1)

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)

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

The capitalized patents and technologies include an amount pertaining to the active ingredient alemtuzumab (product name: Lemtrada™) for the treatment of multiple sclerosis. Bayer gave back the worldwide distribution rights for alemtuzumab to Genzyme Corp., United States, in 2009 and in return received global co-promotion rights and an entitlement to royalties and revenue-based milestone payments. Genzyme Corp. received marketing approval for alemtuzumab in Europe in 2013 and in the United States in 2014. Bayer has decided not to exercise its co-promotion rights.

Impairment losses of €676 million were recognized on intangible assets, net of €1 million in impairment loss reversals. In the Pharmaceuticals reporting segment, the current assessment of the market environment and lower revenue expectations led to impairment losses of €391 million on intangible assets in connection with the product Essure™. In addition, impairment losses of €56 million were recognized on research and development projects, mainly in the oncology area. In the Consumer Health reporting segment, impairment losses of €132 million on a dermatology product trademark in Russia and €28 million on a nutritional supplement trademark in the United States were recognized due to a weaker market environment. In the Crop Science reporting segment, recent research findings necessitated impairment losses of €20 million on production rights in the Environmental Science unit, and a €20 million impairment loss was also recognized on a research and development project in Crop Protection due to a delayed market introduction.

The remaining impairment losses pertained to intangible assets in the Crop Science (€11 million), Pharmaceuticals (€9 million), Covestro (€9 million) and Consumer Health (€1 million) segments. A €1 million impairment loss in the Animal Health segment was reversed.

Details of acquisitions and divestments are provided in the Note “Scope of consolidation; subsidiaries and affiliates”. The impairment testing procedure for goodwill and other intangible assets is explained in the Note “Basic principles, methods and critical accounting estimates”.

Changes in intangible assets in 2015 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, 2014

 

15,347

 

12,827

 

10,242

 

1,808

 

2,168

 

882

 

3,189

 

46,463

Changes in scope of consolidation

 

 

4

 

 

 

 

 

1

 

5

Acquisitions

 

(5)

 

39

 

53

 

 

 

26

 

(20)

 

93

Capital expenditures

 

 

77

 

 

52

 

 

107

 

152

 

388

Retirements

 

 

(33)

 

(35)

 

(55)

 

 

(7)

 

(966)

 

(1,096)

Transfers

 

 

40

 

 

75

 

(2)

 

(113)

 

 

Transfers (IFRS 5)

 

(34)

 

(2)

 

(14)

 

(33)

 

 

 

(20)

 

(103)

Inflation adjustment (IAS 29)

 

7

 

 

 

 

 

 

 

7

Exchange differences

 

781

 

117

 

706

 

97

 

6

 

51

 

264

 

2,022

December 31, 2015

 

16,096

 

13,069

 

10,952

 

1,944

 

2,172

 

946

 

2,600

 

47,779

Accumulated amortization and impairment losses, December 31, 2014

 

 

7,428

 

2,588

 

1,039

 

1,911

 

153

 

2,344

 

15,463

Changes in scope of consolidation

 

 

4

 

 

 

 

 

 

4

Retirements

 

 

(17)

 

(31)

 

(55)

 

 

(7)

 

(949)

 

(1,059)

Amortization and impairment losses in 2015

 

 

801

 

447

 

148

 

106

 

66

 

183

 

1,751

Amortization

 

 

801

 

422

 

147

 

106

 

 

161

 

1,637

Impairment losses

 

 

 

25

 

1

 

 

66

 

22

 

114

Impairment loss reversals

 

 

 

 

 

 

 

 

Transfers

 

 

 

1

 

1

 

(2)

 

 

 

Transfers (IFRS 5)

 

 

(1)

 

 

(25)

 

 

 

(19)

 

(45)

Exchange differences

 

 

62

 

78

 

26

 

6

 

13

 

206

 

391

December 31, 2015

 

 

8,277

 

3,083

 

1,134

 

2,021

 

225

 

1,765

 

16,505

Carrying amounts, December 31, 2015

 

16,096

 

4,792

 

7,869

 

810

 

151

 

721

 

835

 

31,274

Carrying amounts, December 31, 2014

 

15,347

 

5,399

 

7,654

 

769

 

257

 

729

 

845

 

31,000

Changes in the carrying amounts of goodwill for the reporting segments in 2016 and 2015 were as follows:

Goodwill by Reporting Segment

 

 

Pharma­ceuticals

 

Consumer Health

 

Crop Science

 

Animal Health

 

Covestro

 

Bayer Group

 

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

2015 figures restated

Carrying amounts, January 1, 2015

 

7,215

 

5,698

 

2,137

 

54

 

243

 

15,347

Change in scope of consolidation

 

 

 

 

 

 

Acquisitions

 

(133)

 

71

 

50

 

 

7

 

(5)

Retirements

 

 

 

 

 

 

Impairment losses in 2015

 

 

 

 

 

 

Transfers

 

 

 

 

 

 

Transfers (IFRS 5)

 

 

(34)

 

 

 

 

(34)

Inflation adjustment (IAS 29)

 

1

 

6

 

 

 

 

7

Exchange differences

 

234

 

446

 

90

 

 

11

 

781

Carrying amounts, December 31, 2015

 

7,317

 

6,187

 

2,277

 

54

 

261

 

16,096

Change in scope of consolidation

 

 

 

 

 

 

Acquisitions

 

(3)

 

(1)

 

13

 

 

 

9

Retirements

 

 

 

 

 

 

Impairment losses in 2016

 

 

 

 

 

 

Transfers

 

 

 

 

 

 

Transfers (IFRS 5)

 

 

 

 

 

 

Inflation adjustment (IAS 29)

 

 

3

 

 

 

 

3

Exchange differences

 

84

 

84

 

31

 

2

 

3

 

204

Carrying amounts, December 31, 2016

 

7,398

 

6,273

 

2,321

 

56

 

264

 

16,312

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

 

Material intangible assets with indefinite useful life

Reporting segment

 

 

 

€ million

 

€ million

Pharmaceuticals

 

Pharmaceuticals

 

6,114

 

454

Consumer Health

 

Consumer Care

 

6,273

 

22

Crop Science

 

Crop Protection

 

1,291

 

63

Crop Science

 

Seeds

 

540

 

129

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 €652 million as of the end of 2016 (2015: €721 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.