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2.2.0.25falsefalse10301 - Disclosure - Acquisitionstruefalsefalse1falsefalseUSDfalsefalse1/1/2010 - 12/31/2010 USD ($) USD ($) / shares $Duration_1_1_2010_To_12_31_2010http://www.sec.gov/CIK0000059478duration2010-01-01T00:00:002010-12-31T00:00:00Unit12Standardhttp://www.xbrl.org/2003/iso4217USDiso42170Unit15Dividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0Unit1Standardhttp://www.xbrl.org/2003/instancesharesxbrli0Unit14Standardhttp://www.xbrl.org/2003/instancepurexbrli0USDUSD$2true0lly_AcquisitionsAbstractllyfalsenadurationAcquisitions [Abstract]falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringAcquisitions [Abstract]falsefalseAcquisitions [Abstract]3false0lly_AcquisitionsTextBlockNewllyfalsenadurationDefinition: Description of a business combination (or series of individually immaterial business combinations) OR OTHER...falsefalsefalsefalsefalsefalsefalsefalsefalsefalseterselabel1falsefalsefalse00<div> <div> <div> Note 3: Acquisitions   <div> <div> During 2010 and 2008 we acquired several businesses.  These acquisitions were accounted for as business combinations under the acquisition method of accounting.  Under the acquisition method of accounting, the assets acquired and liabilities assumed were recorded at their respective fair values as of the acquisition date in our consolidated financial statements.  The determination of estimated fair value required management to make significant estimates and assumptions.  The excess of the purchase price over the fair value of the acquired net assets, where applicable, has been recorded as goodwill.  The results of operations of these acquisitions are included in our consolidated financial statements from the date of acquisition.    Most of these acquisitions included IPR&D, which represented compounds, new indications, or line extensions under development that had not yet achieved regulatory approval for marketing.  As discussed in Note 1, the fair values of IPR&D assets acquired as part of the acquisition of a business were expensed prior to 2009, but are capitalized as intangible assets for subsequent acquisitions. Accordingly, we capitalized IPR&D assets acquired in business combinations totaling $598.0 million in 2010 and expensed $4.71 billion in 2008 upon acquisition because the products had no alternative future use.  The ongoing expenses with respect to each of these products in development are not material to our total research and development expense currently and are not expected to be material to our total research and development expense on an annual basis in the future.   Some of these acquisitions included contingent consideration, which is recorded at fair value as a liability as of the acquisition date for acquisitions that closed after 2008. The fair value of the contingent consideration was determined by utilizing a probability weighted estimated cash flow stream adjusted for the expected timing of each payment.  Subsequent to the acquisition date, on a quarterly basis we remeasure the contingent consideration at current fair value with changes recorded in other—net, expense in the statement of operations.   In addition to the acquisitions of businesses, we also acquired several products in development.  The acquired IPR&D related to these products of $50.0 million, $90.0 million, and $122.0 million in 2010, 2009, and 2008, respectively, was written off by a charge to income immediately upon acquisition because the products had no alternative future use.   </div> <div> 2010 Acquisitions of Businesses   In 2010, we completed the acquisitions of Avid Radiopharmaceuticals, Inc. (Avid), Alnara Pharmaceuticals, Inc. (Alnara), and a group of animal health product lines, all of which have been accounted for as business combinations, and none of which were material to our consolidated financial statements.</div>   <div> Avid   On December 20, 2010, we acquired all of the outstanding stock of Avid, a company focusing on developing molecular radiopharmaceutical tracers in positron emission topography (PET) scan imaging with the potential for earlier and more effective detection, diagnosis, and monitoring of major chronic human diseases, for total purchase consideration of $346.1 million, which included an upfront payment of $286.3 million and up to $550 million in additional payments contingent upon potential future regulatory and commercial milestones.  The fair value of the contingent consideration at the acquisition date was $59.8 million.  Avid's lead product under development, florbetapir, is a PET agent indicated for imaging amyloid plaque pathology in the brain to aid the evaluation of patients with signs or symptoms of cognitive impairment, including Alzheimer's disease.  The New Drug Application (NDA) was submitted to the U.S. Food and Drug Administration (FDA) in the third quarter of 2010, and the FDA assigned priority review designation to the marketing application. In connection with this acquisition, we preliminarily recorded $334.0 million of acquired IPR&D assets, $132.5 million of goodwill, and $116.9 million of deferred tax liability.</div>   <div> Alnara   On July 20, 2010, we acquired all of the outstanding stock of Alnara, a privately-held company developing protein therapeutics for the treatment of metabolic diseases, for total purchase consideration of $291.7 million, which included an upfront payment of $188.7 million and up to $200 million in additional payments contingent upon potential future regulatory and commercial milestones. The fair value of the contingent consideration at the acquisition date was $103.0 million.  Alnara's lead product in development is liprotamase, a non-porcine pancreatic enzyme replacement therapy. Liprotamase is under review by the FDA for the treatment of exocrine pancreatic insufficiency. In connection with this acquisition, we preliminarily recorded $264.0 million of acquired IPR&D assets, $100.5 million of goodwill, and $92.4 million of deferred tax liability.</div></div>   <div> <div> Animal Health Product Lines   On May 28, 2010, we acquired the European marketing rights to several animal health product lines divested by Pfizer Inc. as part of its acquisition of Wyeth, Inc., for total purchase consideration of $148.4 million paid in cash. These products, including vaccines, parasiticides, and feed additives, serve both the production animal and companion animal markets. We also acquired a manufacturing facility in Sligo, Ireland, currently used in the production of animal vaccines. In connection with this acquisition, we preliminarily recorded $76.2 million of developed product technology.  In connection with these 2010 acquisitions, certain estimated fair values are not yet finalized and are subject to change. We expect to finalize these amounts as soon as possible, but no later than one year from the acquisition date. Although the final determination may result in asset and liability fair values that are different than the preliminary estimates of these amounts included herein, it is not expected that those differences will be material to our financial results. The amortization of the Avid and Alnara acquired IPR&D assets will not be deductible for tax purposes. </div></div> <div> <div>   <div> 2008 Acquisitions of Businesses   ImClone   On November 24, 2008, we acquired all of the outstanding shares of ImClone Systems Inc. (ImClone), a biopharmaceutical company focused on advancing oncology care, for a total purchase price of approximately $6.5 billion, which was financed through borrowings.  This strategic combination offered both targeted therapies and oncolytic agents along with a pipeline spanning all phases of clinical development.  The combination also expanded our biotechnology capabilities.    The acquisition was accounted for as a business combination under the purchase method of accounting, resulting in goodwill of $425.9 million.  No portion of this goodwill was or is expected to be deductible for tax purposes.    Allocation of Purchase Price   The purchase price was allocated based on the fair value of assets acquired and liabilities assumed as of the date of acquisition.    <table class="MsoNormalTable" style="font-size: 10pt; margin-left: 5.4pt; font-family: 'Times New Roman','serif'; border-collapse: collapse;" cellspacing="0" cellpadding="0" border="0"> <tr style="height: 1pt;"><td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 261.35pt; padding-top: 0in; height: 1pt;" valign="top" width="348">  </td> <td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 99pt; padding-top: 0in; height: 1pt;" valign="top" width="132"> Fair Value</td></tr> <tr style="height: 1pt;"><td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 261.35pt; padding-top: 0in; height: 1pt;" valign="top" width="348">  </td> <td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 99pt; padding-top: 0in; border-bottom: windowtext 1pt solid; height: 1pt;" valign="top" width="132"> at November 24, 2008</td></tr> <tr style="height: 1pt;"><td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 261.35pt; padding-top: 0in; height: 1pt;" valign="top" width="348">  </td> <td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 99pt; padding-top: 0in; height: 1pt;" valign="top" width="132">  </td></tr> <tr style="height: 1pt;"><td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 261.35pt; padding-top: 0in; height: 1pt;" valign="top" width="348"> Cash and short-term investments </td> <td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 99pt; padding-top: 0in; height: 1pt;" valign="top" width="132"> $    982.9</td></tr> <tr style="height: 1pt;"><td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 261.35pt; padding-top: 0in; height: 1pt;" valign="top" width="348"> Inventories </td> <td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 99pt; padding-top: 0in; height: 1pt;" valign="top" width="132">      136.2</td></tr> <tr style="height: 1pt;"><td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 261.35pt; padding-top: 0in; height: 1pt;" valign="top" width="348"> Developed product technology (Erbitux)1 </td> <td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 99pt; padding-top: 0in; height: 1pt;" valign="top" width="132">   1,057.9</td></tr> <tr style="height: 1pt;"><td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 261.35pt; padding-top: 0in; height: 1pt;" valign="top" width="348"> Goodwill </td> <td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 99pt; padding-top: 0in; height: 1pt;" valign="top" width="132">      425.9</td></tr> <tr style="height: 1pt;"><td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 261.35pt; padding-top: 0in; height: 1pt;" valign="top" width="348"> Property and equipment </td> <td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 99pt; padding-top: 0in; height: 1pt;" valign="top" width="132">      338.9</td></tr> <tr style="height: 1pt;"><td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 261.35pt; padding-top: 0in; height: 1pt;" valign="top" width="348"> Debt assumed </td> <td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 99pt; padding-top: 0in; height: 1pt;" valign="top" width="132">     (600.0)</td></tr> <tr style="height: 1pt;"><td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 261.35pt; padding-top: 0in; height: 1pt;" valign="top" width="348"> Deferred taxes </td> <td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 99pt; padding-top: 0in; height: 1pt;" valign="top" width="132">     (311.5)</td></tr> <tr style="height: 1pt;"><td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 261.35pt; padding-top: 0in; height: 1pt;" valign="top" width="348"> Deferred income </td> <td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 99pt; padding-top: 0in; height: 1pt;" valign="top" width="132">     (127.7)</td></tr> <tr style="height: 1pt;"><td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 261.35pt; padding-top: 0in; height: 1pt;" valign="top" width="348"> Other assets and liabilities ‑ net </td> <td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 99pt; padding-top: 0in; height: 1pt;" valign="top" width="132">      (92.6)</td></tr> <tr style="height: 1pt;"><td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 261.35pt; padding-top: 0in; height: 1pt;" valign="top" width="348"> Acquired in-process research and development </td> <td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 99pt; padding-top: 0in; border-bottom: windowtext 1pt solid; height: 1pt;" valign="top" width="132">   4,690.0</td></tr> <tr style="height: 3.5pt;"><td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 261.35pt; padding-top: 0in; height: 3.5pt;" valign="top" width="348">   Total purchase price </td> <td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 99pt; padding-top: 0in; border-bottom: windowtext 1.5pt solid; height: 3.5pt;" valign="top" width="132"> $6,500.0</td></tr></table>   1 This intangible asset is being amortized on a straight-line basis through 2023 in the U.S. and 2018 in the rest of the world.   All of the estimated fair value of the acquired IPR&D was attributable to oncology-related products in development, including $1.33 billion to line extensions for Erbitux.  A significant portion ( 81 percent) of the remaining value of acquired IPR&D was attributable to ramucirumab, necitumumab, and cixutumumab.  At the time of the acquisition, ramucirumab was in Phase III clinical testing, while necitumumab and cixutumumab were in Phase II clinical testing.  The charge for acquired IPR&D of $4.69 billion was recorded in the fourth quarter of 2008 and was not deductible for tax purposes.   Pro Forma Financial Information (unaudited)   The following pro forma financial information presents the combined results of our operations with ImClone as if the acquisition and the financing for the acquisition had occurred as of the beginning of the year presented.  We have adjusted the historical consolidated financial information to give effect to pro forma events that are directly attributable to the acquisition.  The pro forma financial information is not necessarily indicative of what our consolidated results of operations actually would have been had we completed the acquisition at the beginning of the year.  In addition, the pro forma financial information does not attempt to project the future results of operations of our combined company.    <table class="MsoNormalTable" style="font-size: 10pt; margin-left: 41.75pt; font-family: 'Times New Roman','serif'; border-collapse: collapse;" cellspacing="0" cellpadding="0" border="0"> <tr style="height: 1pt;"><td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 2.25in; padding-top: 0in; height: 1pt;" valign="top" width="216">  </td> <td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 63pt; padding-top: 0in; border-bottom: windowtext 1pt solid; height: 1pt;" valign="top" width="84"> 2008</td></tr> <tr style="height: 1pt;"><td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 2.25in; padding-top: 0in; height: 1pt;" valign="top" width="216">  </td> <td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 63pt; padding-top: 0in; height: 1pt;" valign="top" width="84">  </td></tr> <tr style="height: 1pt;"><td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 2.25in; padding-top: 0in; height: 1pt;" valign="top" width="216"> Revenue </td> <td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 63pt; padding-top: 0in; height: 1pt;" valign="top" width="84"> $20,732.2</td></tr> <tr style="height: 1pt;"><td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 2.25in; padding-top: 0in; height: 1pt;" valign="top" width="216"> Net income1 </td> <td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 63pt; padding-top: 0in; height: 1pt;" valign="top" width="84"> 2,356.2</td></tr> <tr style="height: 1pt;"><td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 2.25in; padding-top: 0in; height: 1pt;" valign="top" width="216"> Earnings per share:</td> <td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 63pt; padding-top: 0in; height: 1pt;" valign="top" width="84">  </td></tr> <tr style="height: 1pt;"><td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 2.25in; padding-top: 0in; height: 1pt;" valign="top" width="216">    Basic and diluted </td> <td style="padding-right: 5.75pt; padding-left: 5.75pt; padding-bottom: 0in; width: 63pt; padding-top: 0in; height: 1pt;" valign="top" width="84">          2.15</td></tr></table>   1The pro forma financial information above excludes the non-recurring charge incurred for acquired IPR&D of $4.69 billion and other merger-related costs.     The pro forma financial information above reflects the following:   <ul style="margin-top: 0in; margin-bottom: 0in;" type="disc"> <li class="MsoNormal" style="font-size: 10pt; margin: 0in 0in 0pt; font-family: 'Times New Roman','serif'; text-align: left;">a reduction of the amortization of ImClone's deferred income of $86.2 million;  </li></ul>   <ul style="margin-top: 0in; margin-bottom: 0in;" type="disc"> <li class="MsoNormal" style="font-size: 10pt; margin: 0in 0in 0pt; font-family: 'Times New Roman','serif'; text-align: left;">the increase of amortization expense of $78.8 million related to the estimated fair value of identifiable intangible assets from the purchase price allocation which are being amortized over their estimated useful lives through 2023 in the U.S. and through 2018 in the rest of the world.  The change in depreciation expense related to the change in the estimated fair value of property and equipment from the book value at the time of the acquisition was not material;</li></ul>   <ul style="margin-top: 0in; margin-bottom: 0in;" type="disc"> <li class="MsoNormal" style="font-size: 10pt; margin: 0in 0in 0pt; font-family: 'Times New Roman','serif'; text-align: left;">the adjustment to increase interest expense related to the debt incurred to finance the acquisition and the adjustment to decrease interest income related to the lost interest income on the cash used to purchase ImClone by a total of $301.0 million; </li></ul>   <ul style="margin-top: 0in; margin-bottom: 0in;" type="disc"> <li class="MsoNormal" style="font-size: 10pt; margin: 0in 0in 0pt; font-family: 'Times New Roman','serif'; text-align: left;">the reduction of ImClone's income tax expense to provide for income taxes at the statutory tax rate and the adjustment to income taxes for pro forma adjustments at the statutory tax rate, totaling $139.3 million.  This excludes the acquired IPR&D charge of $4.69 billion, which was not tax deductible;</li></ul>   <ul style="margin-top: 0in; margin-bottom: 0in;" type="disc"> <li class="MsoNormal" style="font-size: 10pt; margin: 0in 0in 0pt; font-family: 'Times New Roman','serif'; text-align: left;">certain reclassifications to conform to accounting policies and classifications that are consistent with our practices (e.g., ImClone's license fees and milestones were classified as other—net, expense, rather than net sales).</li></ul></div> <div>   Other 2008 Acquisitions of Businesses   In addition to the ImClone acquisition noted above, in 2008, we completed the acquisitions of rights to Posilac from Monsanto Company (Monsanto) and SGX Pharmaceuticals, Inc. (SGX), both of which have been accounted for as business combinations, and neither of which are material individually or in the aggregate to our consolidated financial statements.   Posilac   On October 1, 2008, we acquired the worldwide rights to the dairy cow supplement Posilac, as well as the product's supporting operations, from Monsanto.  The acquisition of Posilac provides us with a product that complements those of our animal health business.  Under the terms of the agreement, we acquired the rights to the Posilac brand, as well as the product's U.S. sales force and manufacturing facility, for a $300.0 million upfront payment, transaction costs, and contingent consideration to Monsanto based on estimated future Posilac sales.   SGX Pharmaceuticals, Inc.   On August 20, 2008, we acquired all of the outstanding common stock of SGX.  The acquisition allowed us to integrate SGX's structure-guided drug discovery platform into our drug discovery efforts.  It also gave us access to FASTTM, SGX's fragment-based, protein structure guided drug discovery technology, and to a portfolio of preclinical oncology compounds focused on a number of kinase targets.  Under the terms of the agreement, the outstanding shares of SGX common stock were redeemed for an aggregate purchase price of $66.8 million.      In connection with the Monsanto and SGX acquisitions, we recorded $210.0 million of identifiable intangible assets, $167.6 million of inventories, $102.8 million of property and equipment and $133.1 million of liabilities. <div>   Product Acquisitions   In March 2010, we entered into a license agreement with Acrux Limited to acquire the exclusive rights to commercialize its proprietary testosterone solution with the proposed tradename Axiron.  In the fourth quarter of 2010, the product was approved by the FDA for the treatment of testosterone deficiency in men; however, at the time of the licensing the product had not yet been approved and had no alternative future use. The charge of $50.0 million for acquired IPR&D related to this arrangement was included as expense in the first quarter of 2010 and is deductible for tax purposes.   In December 2009, we entered into a licensing and collaboration agreement with Incyte Corporation to acquire rights to its compound, and certain follow-on compounds, for the treatment of inflammatory and autoimmune diseases.  The lead compound was in the development stage (Phase II clinical trials for rheumatoid arthritis) and had no alternative future use.  The charge of $90.0 million for acquired IPR&D related to this arrangement was included in expense in the fourth quarter of 2009 and is deductible for tax purposes.  As part of this agreement, Incyte has the option to co-develop these compounds and the option to co-promote in the United States.   In June 2008, we entered into a licensing and development agreement with TransPharma Medical Ltd. (TransPharma) to acquire rights to its product and related drug delivery system for the treatment of osteoporosis. The charge of $35.0 million for acquired IPR&D related to this arrangement was included as expense in the second quarter of 2008 and is deductible for tax purposes. <p class="MsoBodyText3" style="font-size: 10pt; margin: 0in 0in 0pt; text-transform: uppercase; font-family: 'Univers','sans-serif'; letter-spacing: -0.1pt; text-align: left; text-decoration: underline; text-underline: single;" align="left">   In January 2008, our agreement with BioMS Medical Corp. to acquire the rights to its compound for the treatment of multiple sclerosis became effective.  In the third quarter of 2009, data from the Phase III clinical trials showed there were no statistically significant differences between dirucotide and placebo on the primary or secondary endpoints of the study, and ongoing clinical trials and the arrangement were discontinued.  The charge of $87.0 million for acquired IPR&D related to this arrangement was included as expense in the first quarter of 2008 and is deductible for tax purposes.   In connection with these arrangements, our partners are generally entitled to future milestones and royalties based on sales should these products be approved for commercialization. </div></div></div></div></div></div> </div>Note 3: Acquisitions   During 2010 and 2008 we acquired several businesses.  These acquisitions were accounted for as business combinationsfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDefinition: Description of a business combination (or series of individually immaterial business combinations) OR OTHER ACQUISITION (e.g. license or asset) completed during the period, including background, timing, and recognized assets and liabilities. 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