Biocon Limited is India’s largest and fully­ integrated biopharmaceutical company that develops, manufactures and supplies advanced, life­saving biopharmaceuticals for diabetes, cancer and autoimmune conditions at price points that make them affordable and thus accessible. 

The company has built world­ class R&D competence and capability on the back of robust infrastructure and a talent pool that has extensive global product development experience. R&D’s core strategy is based on integrated discovery, stage­gated approach to development, core disease area expertise (autoimmune and inflammation, oncology and diabetes), and a first ­rate scientific advisory board. 

Research and Development

• Expenditure on research activities is recognized in statement of profit and loss as incurred. 

• Development expenditure is capitalized as part of the cost of the resulting intangible asset only if the expenditure can be measured reliably, the product or process is 3 technically and commercially feasible, future economic benefits are probable, and the company intends to and have sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognized in statement of profit and loss as incurred. Subsequent to initial recognition, the asset is measured at cost less accumulated amortization and any accumulated impairment losses.

Others 

• Other intangible assets are initially measured at cost. Subsequently, such intangible assets are measured at cost less accumulated amortization and any accumulated impairment losses. 

Subsequent Expenditure 

• Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in statement of profit and loss as incurred.

Amortisation 

• Goodwill is not amortized and is tested for impairment annually. 

• Other intangible assets are amortized on a straight line basis over the estimated useful life as follows: 

• Computer software 3–5 years Marketing and manufacturing rights 5–10 years 

• Customer related intangibles 5 years 

• Amortization method, useful lives and residual values are reviewed at the end of each financial year and adjusted, if appropriate.

Questions for Discussion

1. Biocon Limited is not capitalizing expenditure on research but development expenditure is capitalized. Explain the reasons. 

2. Briefly explain the accounting policy of Biocon relating to the initial and subsequent measurement of intangible assets. 

3. How is the amortization of goodwill by Biocon Limited different from amortization of other intangible assets?