17. Goodwill and other intangible assets

Changes in intangible assets in 2008 were as follows:

	Acquired goodwill	Patents	Trade- marks	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, 2007	8,215	10,008	3,726	819	2,012	1,345	1,888	28,013
Changes in scope of consolidation	1	-	-	-	3	-	-	4
Acquisitions	380	222	232	33	9	67	18	961
Capital expenditures	4	28	-	94	-	52	118	296
Retirements	-	(7)	-	-	-	-	(93)	(100)
Transfers	-	-	(7)	47	123	(120)	(40)	3
Changes from revaluation (IFRS 3)	-	-	-	5	2	-	-	7
Exchange differences	47	14	34	6	(7)	15	34	143
December 31, 2008	8,647	10,265	3,985	1,004	2,142	1,359	1,925	29,327

Accumulated amortization and write-downs, December 31, 2007	-	1,811	662	295	987	155	1,333	5,243
Changes in scope of consolidation	-	-	-	-	-	-	-	-
Retirements	-	(6)	-	-	-	-	(86)	(92)
Amortization and write-downs in 2008	-	962	173	87	174	20	134	1,550
Amortization	-	930	161	87	174	-	134	1,486
Write-downs	-	32	12	-	-	20	-	64
Write-backs	-	-	-	-	-	-	-	-
Transfers	-	-	(2)	3	10	(2)	(9)	-
Exchange differences	-	(1)	-	1	(5)	-	33	28
December 31, 2008	-	2,766	833	386	1,166	173	1,405	6,729
Carrying amount, December 31, 2008	8,647	7,499	3,152	618	976	1,186	520	22,598
Carrying amount, December 31, 2007	8,215	8,197	3,064	524	1,025	1,190	555	22,770

Costs of €20 million for internally generated software incurred during the application development phase were capitalized in 2008. The carrying amount of internally generated software is €31 million (2007: €27 million) and is recognized in other rights and advance payments.

Write-downs of intangible assets totaled €64 million. These were mainly attributable to the following two events: negative study results rendered the Spheramine® development project worthless, leading to a €20 million impairment charge; futhermore, the global marketing rights for the contrast agent Vasovist® were returned to the cooperation partner, resulting in a €42 million asset write-down.

Details of acquisitions and divestitures are contained in Notes [6.2] and [6.3]. Further details of the impairment testing procedure for goodwill are given in Note [4].

Changes in intangible assets in 2007 were as follows:

	Acquired goodwill	Patents	Trade- marks	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, 2006	8,227	10,115	3,688	818	1,994	1,317	2,039	28,198
Changes in scope of consolidation	-	-	-	-	-	-	-	-
Acquisitions	210	16	4	6	24	-	129	389
Capital expenditures	-	5	130	24	6	61	85	311
Retirements	(28)	(15)	(2)	(3)	(10)	(41)	(215)	(314)
Transfers	58	(66)	15	(2)	-	27	(14)	18
Exchange differences	(252)	(47)	(109)	(24)	(2)	(19)	(136)	(589)
December 31, 2007	8,215	10,008	3,726	819	2,012	1,345	1,888	28,013

Accumulated amortization and write-downs, December 31, 2006	-	1,021	526	230	828	41	1,518	4,164
Changes in scope of consolidation	-	-	-	-	-	-	-	-
Retirements	-	(10)	(1)	(2)	(7)	(41)	(208)	(269)
Amortization and write-downs in 2007	-	810	152	77	167	155	133	1,494
Amortization	-	810	152	77	165	3	131	1,338
Write-downs	-	-	-	-	2	152	2	156
Write-backs	-	-	-	-	-	-	(1)	(1)
Transfers	-	(1)	2	4	-	-	(3)	2
Exchange differences	-	(9)	(17)	(14)	(1)	-	(106)	(147)
December 31, 2007	-	1,811	662	295	987	155	1,333	5,243
Carrying amount, December 31, 2007	8,215	8,197	3,064	524	1,025	1,190	555	22,770
Carrying amount, December 31, 2006	8,227	9,094	3,162	588	1,166	1,276	521	24,034

Over the next five years, amortization of the intangible assets recognized in 2008 is expected to be as follows:

	€ million
2009	1,457
2010	1,277
2011	1,188
2012	1,109
2013	1,079

Possible future acquisitions and / or divestments of intangible assets are not taken into account in computing these amounts and may therefore cause them to vary.

The residual carrying amounts of goodwill for our operating subgroups and reporting segments are as follows:

	Pharma- ceuticals	Consumer Health	HealthCare	Crop Protection	Environ- mental Science/ BioScience	Crop- Science
	€ million	€ million	€ million	€ million	€ million	€ million
Carrying amounts January 1, 2007	5,727	863	6,590	1,136	389	1,525
Changes in scope of consolidation	-	-	-	-	-	-
Acquisitions	8	4	12	4	152	156
Capital expenditures	-	-	-	-	-	-
Retirements	-	-	-	(9)	(19)	(28)
Amortization and write-downs in 2007	-	-	-	-	-	-
Transfers	58	-	58	-	-	-
Exchange differences	(154)	(42)	(196)	(17)	(36)	(53)
Carrying amounts, December 31, 2007	5,639	825	6,464	1,114	486	1,600
Changes in scope of consolidation	1	-	1	-	-	-
Acquisitions	232	128	360	-	-	-
Capital expenditures	1	-	1	-	-	-
Retirements	-	-	-	-	-	-
Amortization and write-downs in 2008	-	-	-	-	-	-
Transfers	-	-	-	3	(3)	-
Exchange differences	63	(13)	50	(29)	23	(6)
Carrying amounts, December 31, 2008	5,936	940	6,876	1,088	506	1,594

	Materials	Systems	Material- Science	Recon- ciliation	Bayer Group
	€ million	€ million	€ million	€ million	€ million
Carrying amounts January 1, 2007	91	21	112	-	8,227
Changes in scope of consolidation	-	-	-	-	-
Acquisitions	33	9	42	-	210
Capital expenditures	-	-	-	-	-
Retirements	-	-	-	-	(28)
Amortization and write-downs in 2007	-	-	-	-	-
Transfers	-	-	-	-	58
Exchange differences	(2)	(1)	(3)	-	(252)
Carrying amounts, December 31, 2007	122	29	151	-	8,215
Changes in scope of consolidation	-	-	-	-	1
Acquisitions	-	20	20	-	380
Capital expenditures	3	-	3	-	4
Retirements	-	-	-	-	-
Amortization and write-downs in 2008	-	-	-	-	-
Transfers	-	-	-	-	-
Exchange differences	2	1	3	-	47
Carrying amounts, December 31, 2008	127	50	177	-	8,647

Goodwill and other intangible assets with an indefinite useful life that are of material significance for the Bayer Group are allocated to the following strategic business entities or cash-generating units:

Reporting segment	Cash-generating unit	Goodwill	Intangible assets with indefinite useful life
		€ million	€ million
Pharmaceuticals	Women´s Healthcare	2,821	644
Pharmaceuticals	Diagnostic Imaging	1,192	643
Pharmaceuticals	Specialized Therapeutics	1,196	214
Pharmaceuticals	Oncology	459	221
Consumer Health	Consumer Care	915	22

Since it is uncertain whether acquired research and development projects or capitalized milestone payments will eventually result in the production of saleable products, the period over which the corresponding asset is expected to generate an economic benefit for the company cannot be determined. Development projects in the amount of €1,186 million were capitalized as of the end of 2008.

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, is recognized as an intangible asset with an indefinite useful life. The company names “Schering” and “Medrad,” which passed to Bayer with the acquisition of Schering AG, Berlin, Germany, in 2006, also have an indefinite useful life. The period for which the Bayer Group will derive an economic benefit from these names cannot be determined as it intends to make continued use of them. The Bayer Cross is capitalized at €107 million, while the “Schering” and “Medrad” names are carried at €405 million and €293 million respectively.

Patents

We seek to protect our products with patents in major markets. Depending on the jurisdiction, patent protection may be available for:

individual active ingredients,
specific compounds, formulations and combinations containing active ingredients,
manufacturing processes,
working methods,
equipment,
intermediates useful in the manufacture of products,
genomic research and
new uses for existing active ingredients or products.

The protection that a patent provides varies from country to country, depending on the type of claim granted, the scope of the claim’s coverage and the legal remedies available for enforcement.

The advance of genomic research has increased our patent filings for biological products. We typically seek protection upon determining a gene’s function.

We currently hold thousands of patents, and have applications pending for a significant number of new patents. Although the patents on info

Avalox®/

Avelox®,

Betaferon®/ info

Betaseron®, info

Kogenate®, info

Magnevist®, info

Ultravist®, info

YAZ®,

Yasmin® and info

Yasminelle® are particularly important to our business, we believe that no single patent (or group of related patents) is material to our business as a whole.

Term and expiration of patents

Patents are valid for varying periods, depending on the laws of the jurisdiction granting the patent. In some jurisdictions, patent protection begins from the date a patent application was filed; in others, it begins on the date the patent is granted.

The European Union member countries as well as the United States, Japan and certain other countries extend patent terms or issue supplementary protection certificates to compensate for patent term loss due to regulatory review and for the substantial investments in product research and development. Our policy is to obtain these extensions wherever possible.

Patent protection in our major markets for some of our key products is scheduled to expire in the near term. Although the expiration of a patent for an active ingredient often results in the loss of market exclusivity, we may continue to reap protection provided by:

patents on processes and intermediates used in manufacturing an active ingredient,
patents relating to specific uses for an active ingredient,
patents relating to novel compositions and formulations, and
in certain markets (including the United States), market exclusivity under laws other than
patent laws.

The following table sets forth the expiration dates in our major markets of the most important patents covering Avalox®/Avelox®, Betaferon®/Betaseron®, Kogenate®, Levitra®, Magnevist®, Mirena®, Nexavar®, Ultravist®, Xarelto®, YAZ®, Yasmin® and Yasminelle®.

	Market
	Germany	France	U.K.	Italy	Spain	Japan	U.S.A.	Canada
Products
Avalox®/Avelox®
Active ingredient	2014	2014	2014	2014	2014	2014	2014	2015
Active ingredient monohydrate	2016	2016	2016	2016	2016	2016	2016	2016
Tablets	2019	2019	2019	2019	2019	2019	2019	2019
Betaferon®/Betaseron® active ingredient	2008	2008	2008	2008	-	2008	-	2016
Kogenate®
Active ingredient	2009	-	2009	-	-	-	2014	2019
Formulation	2017	2017	2017	2017	2017	2017	2017	2017
Levitra® active ingredient	2018	2018	2018	2018	2018	2020	2018	2018
Magnevist®
Active ingredient	-	-	-	-	-	-	2011	-
Formulation	-	-	-	-	-	-	2009	2010
Process	-	-	-	-	-	-	2013	-
Mirena®
Applicator	2015	2015	2015	2015	2015	-	2015	2015
Process	2013	2013	2013	2013	2013	2013	2013	2013
Nexavar® active ingredient	2020^a	2021	2021	2021	2021	2020^a	2022	2020
Ultravist® active ingredient	-	-	-	2009	-	-	-	-
Xarelto® active ingredient	2020	2020	2020	2020	2020	2020	2021	2020
Yasmin®
Formulation	2020	2020	2020	2020	2020	2020^b	2020^c	2020
Production process	2025	2025	2025	2025	2025	2026^b	2025	2026^b
Yasminelle®
Formulation	2020	2020	2020	2020	2020	2020^b	2020^c	2020
Production process	2025	2025	2025	2025	2025	2026^b	2025	2026^b
YAZ®
Formulation	2020	2020	2020	2020	2020	2020^b	2020^c	2020
Dosage regimen	2014	2014	2014	2014	2014	2014^b	2014	2014^b
Production process	2025	2025	2025	2025	2025	2026^b	2025	2026^b
An application has been submitted to extend patent protection through 2021. b Patent pending. c Patent invalidated, appeal by Bayer against this ruling is pending. See Note [32].

Information on specific patent disputes is given in Note [32] .

Trademarks

We seek to obtain extensive trademark protection for our products in all jurisdictions in which they are marketed or are to be marketed in the near future. As well as product names, we also register particularly distinctive slogans, logos, graphic elements and designs as global trademarks.

Wherever possible, trademarks are registered through supranational trademark protection systems, for example as European Community Trademarks or international trademarks, and additionally with the national trademark registration offices. The protection actually provided by a trademark may vary considerably from one country to another depending on the distinctiveness of the trademark.

Our trademarks include:

Bayer HealthCare: info

Adalat®,

Aleve®,

Alka-Seltzer®, info

Aspirin®, Avalox®/Avelox®, info

Bepanthen®, Betaferon®/Betaseron®, info

Canesten®, info

Ciprobay®/ info

Cipro®, Contour®, Kogenate®, Levitra®, Magnevist®, Nexavar®, info

Rennie®, Xarelto® and Yasmin®.

Bayer CropScience: info

Confidor®/ info

Merit®,

Flint®,

Folicur® and info

Puma®.

Bayer MaterialScience: info

Bayblend®, info

BaySystems®, info

Desmodur®, info

Desmopan®, info

Desmophen®, info

Makrolon® and info

Vulkollan®.

We currently have many thousands of registered and pending trademarks. Trademarks are particularly important for those products that are not protected by patents and are exposed to strong competitive pressure from generics. However, with the exception of the company name “Bayer” and the “Bayer Cross” logo, we do not believe that any single trademark is crucial to our business as a whole.

back to overview