(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 € 131 million (2023: € 173 million). Material costs amounted to € 3,753 million in fiscal 2024 (2023: € 3,709 million) and were reported under cost of sales. The cost of sales also included royalties of € 111 million (2023: € 55 million) for Bavencio® as a result of the agreement terminating the strategic alliance with Pfizer Inc., United States, effective June 30, 2023 (see Note (7) “Collaboration and licensing agreements”).
Impairment losses on inventories amounted to € 329 million in the reporting period (2023: € 424 million), while reversals of impairment losses amounted to € 278 million (2023: € 237 million).