Biogen Inc. (BIIB)

In May 2014 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes all existing revenue recognition requirements, including most industry specific guidance. This standard requires a company to recognize revenues when it transfers goods or services to customers in an amount that reflects the consideration that Biogen expects to receive for those goods or services.

The FASB subsequently issued the following amendments to ASU 2014-09 that have the same effective date and transition date: ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations; ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing; ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients; and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. Biogen adopted these amendments with ASU 2014-09 (collectively, the new revenue standards).

The new revenue standards became effective for Biogen on January 1, 2018, and were adopted using the modified retrospective method. The adoption of the new revenue standards as of January 1, 2018, did not change Biogen’s revenue recognition as the majority of the revenues continue to be recognized when the customer takes control of the product. As Biogen did not identify any accounting changes that impacted the amount of reported revenues with respect to the product revenues, revenues from anti-CD20 therapeutic programs or other revenues, no adjustment to retained earnings was required upon adoption. However, the adoption of the new revenue standards will result in a change in the timing of revenue recognition related to certain of Biogen’s contract manufacturing activities based upon the terms of the underlying agreements.

Under the new revenue standards, Biogen recognizes revenues when the customer obtains control of promised goods or services, in an amount that reflects the consideration which Biogen expects to receive in exchange for those goods or services. Biogen recognizes revenues following the five-step model prescribed under ASU 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) Biogen satisfies the performance obligation.

As a result of the new revenue standards, other corporate revenue was higher by $75.8 million and cost of sales, excluding amortization and impairment of acquired intangible assets was higher by $42.4 million for the year ended December 31, 2018, compared to what would have been reported under the previous revenue guidance, primarily due to the earlier recognition of revenue associated with Biogen’s contract manufacturing agreements. Under the previous revenue guidance, these amounts would have been recognized in future periods upon shipment. The adoption of the new revenue standards did not have a material impact on any other balances within Biogen’s consolidated financial statements as of and for the year ended December 31, 2018.

Source: 10-K (filing date: 2019-02-06).

Biogen Inc., Income Statement, Revenues

US$ in thousands

	12 months ended	Dec 31, 2018		Dec 31, 2017		Dec 31, 2016		Dec 31, 2015		Dec 31, 2014
	Product revenues

Based on: 10-K (filing date: 2019-02-06), 10-K (filing date: 2018-02-01), 10-K (filing date: 2017-02-02), 10-K (filing date: 2016-02-03), 10-K (filing date: 2015-02-04).