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Financial Statements
Financial Statements

17. Goodwill and other intangible assets

Changes in intangible assets in 2007 were as follows:
 Acquired goodwillPatentsTrade-marksMarketing and distribution rightsProduction rightsR&D
projects		Other
rights and advance payments		Total
€ million        
Gross carrying amounts, December 31, 20068,22710,1153,6888181,9941,3172,03928,198
Acquisitions2101646240129389
Capital expenditures-51302466185311
Retirements(28)(15)(2)(3)(10)(41)(215)(314)
Transfers58(66)15(2)-27(14)18
Exchange differences(252)(47)(109)(24)(2)(19)(136)(589)
Gross carrying amounts, December 31, 20078,21510,0083,7268192,0121,3451,88828,013
         
Accumulated amortization and write-downs, December 31, 2006 -1,021526230828411,5184,164
Retirements-(10)(1)(2)(7)(41)(208)(269)
Amortization and write-downs in 2007 -810152771671551331,494
   of which
   write-downs		----21522156
Write-backs------(1)(1)
Transfers-(1)24--(3)2
Exchange differences-(9)(17)(14)(1)-(106)(147)
Accumulated amortization and write-downs, December 31, 2007-1,8116622959871551,3335,243
Net carrying amounts, December 31, 20078,2158,1973,0645241,0251,19055522,770
Write-downs of intangible assets totaled €156 million, mainly including a €152 million impairment charge arising from the BEYOND study for infoBetaferon®/infoBetaseron®.
 
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 2006 were as follows:
 Acquired goodwillPatentsTrade-marksMarketing and distribution rightsProduction rightsR&D
projects		Other
rights and advance payments		Total
€ million        
Gross carrying amounts, December 31, 20052,6231,7052,1278801,990-2,10811,433
Acquisitions5,8048,8801,666174-1,21817917,921
Capital expenditures-1001391110578343
Retirements(2)(12)(23)(1)(3)-(31)(72)
Reclassifications to current assets(42)(397)(4)(313)0-(101)(857)
Transfers0(6)230-(53)(54)
Exchange differences(156)(65)(80)(64)(4)(6)(141)(516)
Gross carrying amounts, December 31, 20068,22710,1153,6888181,9941,3172,03928,198
         
Accumulated amortization and write-downs, December 31, 2005-735436312667-1,5953,745
Retirements-(11)(20)(1)(1)-(24)(57)
Reclassifications to current assets-(210)(2)(149)0-(72)(433)
Amortization and write-downs in 2006 -533126101164411351,100
   of which
   write-downs		-0-20-41465
Write-backs--------
Transfers-01(3)0-(1)(3)
Exchange differences-(26)(15)(30)(2)-(115)(188)
Accumulated amortization and write-downs, December 31, 2006-1,021526230828411,5184,164
Net carrying amounts, December 31, 20068,2279,0943,1625881,1661,27652124,034
Over the next five years, amortization of the intangible assets recognized in 2007 is expected to be as follows:
  
€ million 
20081,375
20091,318
20101,073
20111,058
20121,003
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 the operating subgroups and reporting segments are as follows:
 Pharma-
ceuticals		Consumer HealthHealth-
Care		Crop ProtectionEnviron-
mental
Science/
BioScience		Crop-
Science
€ million      
Net carrying amounts, January 1, 200628958971,1654151,580
Acquisitions5,772245,796257
Retirements---(2)-(2)
Reclassifications to current assets-(11)(11)---
Amortization and write-downs in 2006 ------
Exchange differences(47)(45)(92)(29)(31)(60)
Net carrying amounts, December 31, 20065,7278636,5901,1363891,525
Acquisitions84124152156
Retirements000(9)(19)(28)
Amortization and write-downs in 2007000000
Transfers58058000
Exchange differences(154)(42)(196)(17)(36)(53)
Net carrying amounts, December 31, 20075,6398256,4641,1144861,600
 MaterialsSystemsMaterial-
Science		Recon-
ciliation		Bayer
Group
€ million     
Net carrying amounts, January 1, 200612422146-2,623
Acquisitions101-5,804
Retirements----(2)
Reclassifications to current assets(31)-(31)-(42)
Amortization and write-downs in 2006 -----
Exchange differences(3)(1)(4)-(156)
Net carrying amounts, December 31, 20069121112-8,227
Acquisitions33942-210
Retirements000-(28)
Amortization and write-downs in 2007000-0
Transfers000-58
Exchange differences(2)(1)(3)-(252)
Net carrying amounts, December 31, 200712229151-8,215

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 accelerated 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 patents are important to our business, we believe that, with the exception of the patents covering infoAvelox®, Betaferon®/Betaseron®, infoCampath®, infoLeukine®, infoLevitra®, infoMagnevist®, infoMirena®, infoNexavar®, infoUltravist®, infoYasmin®, infoYasminelle®, infoYAZ® and infoZevalin®, 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 Avelox®, Betaferon®/Betaseron®, Campath®, Leukine®, Levitra®, Magnevist®, Mirena®, Nexavar®, Ultravist®, Yasmin®, Yasminelle®, YAZ® and Zevalin®.
Market
 GermanyFranceU.K.ItalySpainJapanU.S.A.Canada
Products        
Avelox®        
   Active ingredient20142014201420142014201420142015
   Active ingredient monohydrate20162016201620162016201620162016
   Tablets20192019201920192019201920192019
Betaferon®/Betaseron® active ingredient20082008200820082008200820072016
Campath® active ingredient20142014201420142014201420152014
Leukine® active ingredient------20122017
Levitra® active ingredient20182018201820182018202020182018
Magnevist®        
   Active ingredient---2007--2011-
   Formulation20072007200720072007200720092010
   Process------2013-
Mirena®        
   Applicator20152015201520152015-20152015
   Process20132013201320132013201320132013
Nexavar® active ingredient20202020202020202020202020222020
Ultravist® active ingredient---2009----
Yasmin®        
   Formulation2020a2020a2020a2020a2020a2020ab2020a2020a
   Production process20172017201720172017201720172017
Yasminelle®        
   Formulation 2020a2020a2020a2020a2020a2020ab2020a2020a
   Production process20172017201720172017201720172017
YAZ®        
   Formulation2020a2020a2020a2020a2020a2020ab2020a2020a
   Dosage regimen201420142014201420142014b20142014b
   Production process20172017201720172017201720172017
Zevalin® active ingredient201820182018201820182013c20152013
a Composition containing micronized drosperinone and ethinyl estradiol
b Patent pending
c An application has been submitted to extend patent protection through 2018.
Information on specific patent disputes is given in Note [32] “Legal risks.”

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.
 
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.
 
Our trademarks include:
 
Bayer HealthCare: infoAdalat®, infoAleve®, infoAlka-Seltzer®, infoAscensia®, infoAspirin®, Avalox®/Avelox®, infoBepanthen®, Betaferon®/Betaseron®, infoCanesten®, infoCiprobay®/infoCipro®, infoKogenate®, Levitra®, Magnevist®, infoRennie® and Yasmin®.
 
Bayer CropScience: infoBasta®/infoLiberty®, infoConfidor®/infoGaucho®/infoAdmire®/infoMerit®, infoFlint®, infoFolicur® and infoPuma®.
 
Bayer MaterialScience: infoBayblend®, BaySystems®, infoDesmodur®, infoDesmopan®, infoDesmophen®, infoMakrolon® and infoVulkollan®.
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