Other reports

Operating Activities

(10) Cost of sales

Accounting and measurement policies
Cost of sales

The cost of sales primarily includes the cost of manufactured products sold and the merchandise sold.

Cost comprises the following items: directly attributable costs, such as cost of materials; personnel and energy costs; depreciation and amortization; overheads attributable to the production process; and inventory impairment losses and their reversals.

The cost of sales included amortization of intangible assets (excluding amortization of internally generated or separately acquired software) in the amount of € 173 million (2022: € 207 million). Material costs amounted to € 3,709 million in fiscal 2023 (2022: € 3,996 million) and were largely reported under cost of sales. For the first time, the cost of sales also included royalties of € 55 million for Bavencio® as a result of the agreement terminating the strategic alliance with Pfizer Inc., United States, which came into force on June 30, 2023 (see Note (7) “Collaboration and licensing agreements”).

Impairment losses on inventories amounted to € 424 million (2022: € 279 million) in the reporting period, while reversals of impairment losses amounted to € 237 million (2022: € 197 million).

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