[23] Intangible assets 

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 divestment 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 acquisition 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 million. 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 expectations. 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 translating 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 responsible 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 statement 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”.

The book values of “Patents, licenses and similar rights, brands, trademarks and other” as well as goodwill can be attributed to the divisions as follows:

Intangible assets with an indefinite useful life primarily relate to rights that Merck has acquired for products or technologies that are still in the research and development stage. Amortization will only begin once the products start to be marketed.