UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(MARK ONE)
☒
(MARK ONE)
xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
OR
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017
For the transition period from  to

Commission file number 001-35565
abbvieimage1a43.jpg
AbbVie Inc.
(Exact name of registrant as specified in its charter)
Delaware32-0375147
Delaware
(State or other jurisdiction of

incorporation or organization)
32-0375147
(I.R.S. employer

identification number)
1 North Waukegan Road
North Chicago, Illinois 60064-6400
(Address of principal executive offices) (Zip Code)
(847) 932-7900
(Telephone number)
1 North Waukegan Road
North Chicago, Illinois 60064-6400
(847) 932-7900
(Address, including zip code, and telephone number of principal executive offices)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per shareABBV
New York Stock Exchange
Chicago Stock Exchange
1.375% Senior Notes due 2024ABBV24New York Stock Exchange
1.250% Senior Notes due 2024ABBV24BNew York Stock Exchange
0.750% Senior Notes due 2027ABBV27New York Stock Exchange
2.125% Senior Notes due 2028ABBV28New York Stock Exchange
2.625% Senior Notes due 2028ABBV28BNew York Stock Exchange
2.125% Senior Notes due 2029ABBV29New York Stock Exchange
1.250% Senior Notes due 2031ABBV31New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes x ☒  No o☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
Yes o☐        No x☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes x☒       No o☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x☒       No o☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filerx
☒
Accelerated Filero
Non-accelerated Filer o
(Do not check if a
smaller reporting company)
☐
Non-Accelerated Filer
☐Smaller Reporting Company oreporting company☐
Emerging growth company
Emerging Growth Company o
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by checkmark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes o☐       No x☒
The aggregate market value of the 1,577,814,6961,748,902,939 shares of voting stock held by non-affiliates of the registrant, computed by reference to the closing price as reported on the New York Stock Exchange, as of the last business day of AbbVie Inc.'s most recently completed second fiscal quarter (June 30, 2017)2023), was $114,407,343,607.$235,629,692,915. AbbVie has no non-voting common equity.
Number of common shares outstanding as of February 2, 2018: 1,587,972,655January 31, 2024: 1,766,473,359
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 20182024 AbbVie Inc. Proxy Statement are incorporated by reference into Part III. The Definitive Proxy Statement will be filed on or about March 19, 2018.18, 2024.





ABBVIE INC.
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 20172023
TABLE OF CONTENTS
Page No.
BUSINESS
Item 2.
SELECTED FINANCIAL DATA








PART I
ITEM 1. BUSINESS
Overview
AbbVie(1) or "the company" refer to AbbVie Inc., or AbbVie Inc. and its consolidated subsidiaries, as the context requires. AbbVieis a global, diversified research-based biopharmaceutical company.company positioned for success with a comprehensive product portfolio that has leadership positions across immunology, oncology, aesthetics, neuroscience and eye care. AbbVie developsuses its expertise, dedicated people and marketsunique approach to innovation to develop and market advanced therapies that address some of the world'sworld’s most complex and serious diseases. AbbVie's products are focused on treating conditions such as chronic autoimmune diseases in rheumatology, gastroenterology and dermatology; oncology, including blood cancers; virology, including hepatitis C virus (HCV) and human immunodeficiency virus (HIV); neurological disorders, such as Parkinson's disease and multiple sclerosis; metabolic diseases, including thyroid disease and complications associated with cystic fibrosis; as well as other serious health conditions. AbbVie also has a pipeline of promising new medicines in clinical development across such important medical specialties as immunology, oncology and neurology, with additional targeted investment in cystic fibrosis and women's health.
AbbVie was incorporated in Delaware on April 10, 2012. On January 1, 2013, AbbVie became an independent, publicly-traded company as a result of the distribution by Abbott Laboratories (Abbott) of 100% of the outstanding common stock of AbbVie to Abbott's shareholders.
Segments
AbbVie operates as a single global business segment dedicated to the research and development, manufacturing, commercialization and sale of innovative medicines and therapies. This operating structure enables the Chief Executive Officer, as chief operating decision maker (CODM), to allocate resources and assess business performance on a global basis in oneorder to achieve established long-term strategic goals. Consistent with this structure, a global research and development and supply chain organization is responsible for the discovery, development, manufacturing and supply of products. Commercial efforts that coordinate the marketing, sales and distribution of these products are organized by geographic region or therapeutic area. All of these activities are supported by a global corporate administrative staff. The determination of a single business segment—pharmaceutical products.segment is consistent with the consolidated financial information regularly reviewed by the CODM for purposes of assessing performance, allocating resources and planning and forecasting future periods. See Note 1516, "Segment and Geographic Area Information" to the Consolidated Financial Statements included under Item 8, "Financial Statements and Supplementary Data" and the sales information related to HUMIRAAbbVie's key products and geographies included under Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations."
Products
AbbVie's portfolio of products includes a broad line of therapies that address some of the world's most complex and serious diseases.
        HUMIRA.    HUMIRAImmunology products. AbbVie maintains an extensive immunology portfolio across rheumatology, dermatology and gastroenterology. AbbVie's immunology products address unmet needs for patients with autoimmune diseases. These products are:
Humira.  Humira (adalimumab) is a biologic therapy administered as a subcutaneous injection. It is approved to treat the following autoimmune diseases in the United States, Canada and Mexico (collectively, North America) and in the European Union:
ConditionPrincipal Markets
ConditionPrincipal Markets
Rheumatoid arthritis (moderate to severe)North America, European Union
Psoriatic arthritisNorth America, European Union
Ankylosing spondylitisNorth America, European Union
Adult Crohn's disease (moderate to severe)North America, European Union
Plaque psoriasis (moderate to severe chronic)North America, European Union
Juvenile idiopathic arthritis (moderate to severe polyarticular)North America, European Union
Ulcerative colitis (moderate to severe)North America, European Union
Axial spondyloarthropathyEuropean Union
Pediatric Crohn's disease (moderate to severe)North America, European Union
Hidradenitis Suppurativasuppurativa (moderate to severe)North America, European Union
Pediatric enthesitis-related arthritisEuropean Union
Non-infectious intermediate, posterior and panuveitisNorth America, European Union
Pediatric ulcerative colitis (moderate to severe)U.S., Canada, European Union
Pediatric uveitisNorth America, European Union

HUMIRA
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Humira is also approved in Japan for the treatment of intestinal Behçet's disease.disease and pyoderma gangrenosum.
HUMIRAHumira is sold in numerous other markets worldwide, including Japan, China, Brazil and Australia, and accounted for approximately 65%27% of AbbVie's total net revenues in 2017. AbbVie continues2023.
Skyrizi. Skyrizi (risankizumab) is an interleukin-23 (IL-23) inhibitor that selectively blocks IL-23 by binding to work on HUMIRA formulationits p19 subunit. It is a biologic therapy approved to treat the following autoimmune diseases in North America, the European Union and delivery enhancementsJapan:
ConditionPrincipal Markets
Plaque psoriasis (moderate to severe)North America, European Union, Japan
Psoriatic arthritisU.S., European Union
Crohn's disease (moderate to severe)U.S., Canada, European Union
Skyrizi is also approved in Japan for the treatment of plaque psoriasis, psoriatic arthritis, erythrodermic psoriasis in patients who have an inadequate response to improve convenienceconventional therapies, and for induction and maintenance in moderately to severely active Crohn's disease.
Skyrizi is approved in multiple countries globally, including the United States, Canada and the overall patient experience.European Union, for the treatment of moderate to severe plaque psoriasis in adults who are candidates for systemic therapy or phototherapy.In psoriatic disease (psoriasis or psoriatic arthritis) Skyrizi is administered as a quarterly subcutaneous injection following two induction doses. When administered for Crohn’s disease, Skyrizi is given in three induction doses via IV infusion, followed by subcutaneous injection via an on-body injector every eight weeks.


Rinvoq. Rinvoq (upadacitinib) is an oral, once-daily selective and reversible JAK inhibitor that is approved to treat the following inflammatory diseases in North America, the European Union and Japan:
ConditionPrincipal Markets
(1)Rheumatoid arthritis (moderate to severe)As used throughout the text of this report onNorth America, European Union, Japan
Psoriatic arthritisU.S., Canada, European Union, Japan
Ankylosing spondylitisU.S., European Union
Atopic dermatitis (moderate to severe)U.S., Canada, European Union, Japan
Axial spondyloarthropathyU.S., European Union
Ulcerative colitis (moderate to severe)U.S., European Union
Crohn's disease (moderate to severe)U.S., European Union
In the United States, Rinvoq is indicated for both the treatment of moderate to severe active rheumatoid arthritis, for active psoriatic arthritis, for moderate to severe active ulcerative colitis, for active ankylosing spondylitis and for active non-radiographic axial spondyloarthritis in adult patients who have an inadequate response or intolerance to one or more TNF blockers. It is also indicated for the treatment of Crohn's disease in adult patients who have an inadequate response or intolerance to one or more TNF blockers and for moderate to severe atopic dermatitis in adults and children 12 years of age and older whose disease is not adequately controlled with other systemic drug products, including biologics, or when use of those therapies are inadvisable.
In the European Union, Rinvoq is indicated for the treatment of moderate to severe rheumatoid arthritis in adults, for active psoriatic arthritis in adults who have an inadequate response or intolerance to disease-modifying anti-rheumatic medicines (DMARDs), and for active axial spondyloarthritis in adults. It is also indicated for the treatment of Crohn's disease in adult patients who have an inadequate response or intolerance to one or more TNF blockers and for moderate to severe atopic dermatitis in adults and children 12 years of age and older, and for moderately to severely active ulcerative colitis in adults.





2023 Form 10-K the terms "AbbVie" or "the company" refer to AbbVie Inc., a Delaware corporation, or AbbVie Inc. and its consolidated subsidiaries, as the context requires.

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2017 Form 10-K  |    1

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Oncology products.AbbVie’s oncology products target some of the most complex and difficult-to-treat cancers. These products are:
IMBRUVICA.IMBRUVICAImbruvica.Imbruvica (ibrutinib) is a first-in-class,an oral, once-daily therapy that inhibits a protein called Bruton's tyrosine kinase (BTK). IMBRUVICAkinase. Imbruvica was one of the first medicines to receive an FDAa United States Food and Drug Administration (FDA) approval after being granted a Breakthrough Therapy Designation and IMBRUVICA is one of the few therapies to receive four separate designations. IMBRUVICAImbruvica currently is approved for the treatment of adult patients with:
Chronicwith blood cancers such as chronic lymphocytic leukemia (CLL)/Small lymphocytic lymphoma (SLL), as well as certain forms of non-Hodgkin lymphoma. Imbruvica is approved in adult and CLL/SLLpediatric patients one year and older with 17p deletion;

Mantle cell lymphoma (MCL) who have received at least one prior therapy*;

Waldenström’s macroglobulinemia (WM);

Marginal zone lymphoma (MZL) who require systemic therapy and have received at least one prior anti-CD20-based therapy*; and

Chronicchronic graft versus host disease (cGVHD) after failure of one or more lines of systemic therapy.

* Accelerated approval was granted for this indication based on overall response rate. Continued approval for this indication may be contingent upon verification of clinical benefit in confirmatory trials.
VENCLEXTA.VENCLEXTAVenclexta/Venclyxto. Venclexta (venetoclax) is approved to treat people with CLL with 17p deletion, who have received at least one prior treatment. VENCLEXTA is the first FDA-approved treatment that targets thea B-cell lymphoma 2 (BCL-2) protein, which supports cancer cell growth andinhibitor used to treat blood cancers. Venclexta is overexpressed in many patientsapproved by the FDA for adults with CLL. VENCLEXTA has beenCLL or small lymphocytic lymphoma. In addition, Venclexta is approved in the EU for the treatmentcombination with azacitidine, or decitabine, or low-dose cytarabine to treat adults with newly-diagnosed acute myeloid leukemia who are 75 years of CLL in patients with 17p deletionage or TP53 mutation and are unsuitable forolder or have failedother medical conditions that prevent the use of standard chemotherapy.
Epkinly. Epkinly (epcoritimab) is a product used to treat adults with certain types of diffuse large B-cell receptor pathway inhibitorlymphoma (DLBCL) and for thehigh-grade B-cell lymphoma that has recurred or that does not respond to previous treatment of CLL in absence of 17p deletionafter receiving two or TP53 mutation who have failed both chemoimmunotherapy andmore treatments. Epkinly is administered as a B-cell receptor pathway inhibitor.subcutaneous injection.
        Virology Products. AbbVie's virology products address unmet needs for patients living with HCV and HIV-1.
HCV products.    AbbVie's HCV products are:
VIEKIRA PAK AND TECHNIVIE. VIEKIRA PAK (ombitasvir, paritaprevir and ritonavir tablets; dasabuvir tablets)Elahere. Elahere (mirvetuximab soravtansine-gynx) is an all-oral, short-course, interferon-free therapy, with or without ribavirin,antibody-drug conjugate (ADC) used to treat certain types of cancer. On November 14, 2022, the FDA granted accelerated approval for the treatment of adult patients with genotype 1 chronic HCV, including those with compensated cirrhosis. In Europe, VIEKIRA PAKFRα positive, platinum-resistant epithelial ovarian, fallopian tube, or primary peritoneal cancer, who have received one to three prior systemic treatment regimens. Continued approval may be contingent upon verification and description of clinical benefit in a confirmatory trial.
Aesthetics products. AbbVie’s Aesthetics portfolio consists of facial injectables, plastics and regenerative medicine, body contouring and skincare products, which hold market-leading positions in the U.S. and in key markets around the world. These products are:
Botox Cosmetic. Botox Cosmetic is marketed as VIEKIRAX + EXVIERAan acetylcholine release inhibitor and a neuromuscular blocking agent indicated for treatment in three areas: temporary improvement in the appearance of moderate to severe glabellar lines (frown lines between the eyebrows), moderate to severe crow's feet and moderate to severe forehead lines in adults. Having received its initial FDA approval in 2002, Botox Cosmetic is now approved for use in all major markets around the world.
The Juvederm Collection of Fillers. The Juvederm Collection of Fillers is a portfolio of hyaluronic acid-based dermal fillers with a variety of approved indications in the U.S. and in other major markets around the world to augment or treat volume loss in the cheeks, chin, lips and lower face.
Other aesthetics. Other aesthetics products include, but are not limited to, Alloderm regenerative dermal tissue, CoolSculpting body contouring technology, Natrelle breast implants, the SkinMedica skincare line, Latisse eyelash solution and DiamondGlow dermabrasion technology.
Neuroscience products. AbbVie’s neuroscience products address some of the most difficult-to-treat neurologic diseases. These products are:
Botox Therapeutic. Botox Therapeutic (onabotulinumtoxinA injection) is an acetylcholine release inhibitor and a neuromuscular blocking agent that is injected into muscle tissue. In the United States, it is approved to treat numerous indications, including chronic migraine, overactive bladder in adults who have an inadequate response to an anticholinergic medication, and urinary incontinence due to detrusor overactivity associated with a neurologic condition in adults who have an inadequate response to an anticholinergic medication. In addition, Botox Therapeutic is approved to treat spasticity in patients two years of age and older, cervical dystonia in adults, as well as other conditions. Botox is marketed in other countries around the world and licenses will vary. Botox Therapeutic is marketed by GSK in Japan.
Vraylar. Vraylar (cariprazine) is a dopamine D3-preferring D3/D2 receptor partial agonist and a 5-HT1A receptor partial agonist. Vraylar is indicated for acute and maintenance treatment of schizophrenia in adults, acute treatment of manic or mixed episodes associated with genotype 1bipolar disorder in adults, acute treatment of depressive episodes associated with bipolar I disorder in adults and genotype 4 HCV.as an adjunctive treatment in major depressive disorder.
Duopa and Duodopa (carbidopa and levodopa).    AbbVie's TECHNIVIE (ombitasvir, paritaprevir and ritonavir) is FDA-approved for use in combination with ribavirinlevodopa-carbidopa intestinal gel for the treatment of adults with genotype 4 HCV infectionadvanced Parkinson's disease is marketed as Duopa in the United States and as Duodopa outside of the United States.
MAVYRET/MAVIRET. MAVYRET
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Ubrelvy. Ubrelvy (ubrogepant) is a calcitonin gene-related peptide receptor antagonist indicated for the acute treatment of migraine with or without aura in adults. Ubrelvy is commercialized in the United States, Israel, Saudi Arabia, United Arab Emirates and Canada.
Qulipta. Qulipta (atogepant) is a calcitonin gene-related peptide receptor antagonist indicated for the preventive treatment of episodic and chronic migraine in adults. Qulipta is commercialized in the United States and Canada and is approved in the European Union under the brand name Aquipta.
Eye care products. AbbVie’s eye care products address unmet needs and new approaches to help preserve and protect patients’ vision. These products are:
Ozurdex. Ozurdex (dexamethasone intravitreal implant) is a corticosteroid implant that slowly releases medication over time. Injected directly into the back of the eye, it dissolves naturally and does not need to be removed. Ozurdex is indicated for the treatment of adult patients with visual impairment due to diabetic macular oedema (DME), adult patients with macular oedema following either Branch Retinal Vein Occlusion (BRVO) or Central Retinal Vein Occlusion (CRVO) and patients with inflammation of the posterior segment of the eye presenting as non-infectious uveitis. Ozurdex® is commercially available in the United States and numerous markets around the world.
Lumigan/Ganfort. Lumigan (bimatoprost ophthalmic solution) 0.01% is a once daily, topical prostaglandin analog indicated for the reduction of elevated intraocular pressure (IOP) in patients with open angle glaucoma (OAG) or ocular hypertension (OHT). Ganfort is a once daily topical fixed combination of bimatoprost 0.03% and timolol 0.5% for the reduction of IOP in adult patients with OAG or OHT. Lumigan is sold in the United States and numerous markets around the world, while Ganfort is approved in the European Union and some markets in South America, the Middle East and Asia.
Alphagan/Combigan. Alphagan (brimonidine tartrate ophthalmic solution) is an alpha-adrenergic receptor agonist indicated for the reduction of elevated IOP in patients with open-angle glaucoma or ocular hypertension. Combigan (brimonidine tartrate/timolol maleate ophthalmic solution) is approved for reducing elevated IOP in patients with glaucoma who require additional or adjunctive IOP-lowering therapy. Both Alphagan and Combigan are available for sale in the United States and numerous markets around the world.
Restasis. Restasis is a calcineurin inhibitor immunosuppressant indicated to increase tear production in patients whose tear production is presumed to be suppressed due to ocular inflammation associated with keratoconjunctivitis sicca. Restasis is approved in the United States and a number of other markets in South America, the Middle East and Asia.
Other eye care. Other eye care products include Refresh/Optive, Xen and Durysta.
Other key products. AbbVie’s other key products include, among other things, treatments for patients with hepatitis C virus (HCV), metabolic and hormone products that target a number of conditions, including exocrine pancreatic insufficiency and hypothyroidism, as well as endocrinology products for the palliative treatment of advanced prostate cancer, treatment of endometriosis and central precocious puberty and for the preoperative treatment of patients with anemia caused by uterine fibroids. These products are:
Mavyret/Maviret. Mavyret (glecaprevir/pibrentasvir) is approved in the United States and European Union (MAVIRET)(Maviret) for the treatment of adult and pediatric patients (12 years and older or weighing at least 45 kilograms) with chronic HCV genotype 1-6 infection without cirrhosis and with compensated cirrhosis (Child-Pugh A). It is also indicated for the treatment of adult and pediatric patients (12 years and older or weighing at least 45 kilograms) with HCV genotype 1 infection, who previously have been treated with a regimen containing an HCV NS5A inhibitor or an NS3/4A protease inhibitor, but not both. It is an 8-week, pan-genotypic treatment for patients without cirrhosis and who are new to treatment.
            Additional Virology products.    AbbVie's additional virology products include:
KALETRA. KALETRA (lopinavir/ritonavir), which is also marketed as Aluvia in emerging markets, is a prescription anti-HIV-1 medicine that contains two protease inhibitors: lopinavir and ritonavir. KALETRA is used with other anti-HIV-1 medications as a treatment that maintains viral suppression in people with HIV-1.
NORVIR. NORVIR (ritonavir) is a protease inhibitor that is indicated in combination with other antiretroviral agents for the treatment of HIV-1 infection.
SYNAGIS. SYNAGIS (palivizumab) is a product marketed by AbbVie outside of the United States that protects at-risk infants from severe respiratory disease caused by RSV.

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Metabolics/Hormones products.    Metabolic and hormone products target a number of conditions, including testosterone deficiency due to certain underlying conditions, exocrine pancreatic insufficiency and hypothyroidism. These products include:
AndroGel.    AndroGel (testosterone gel) is a testosterone replacement therapy for males diagnosed with symptomatic low testosterone due to certain underlying conditions that is available in two strengths: 1 percent and 1.62 percent.
CREON.    CREONCreon.    Creon (pancrelipase) is a pancreatic enzyme therapy for exocrine pancreatic insufficiency, a condition that occurs in patients with cystic fibrosis, chronic pancreatitis and several other conditions.
Synthroid.    Synthroid (levothyroxine sodium tablets, USP) is used in the treatment of hypothyroidism.
AbbVie has the rights to sell AndroGel, CREON and Synthroid only in the United States.
Endocrinology products.Lupron. Lupron (leuprolide acetate), which is also marketed as Lucrin and LUPRON DEPOT,Lupron Depot, is a product for the palliative treatment of advanced prostate cancer, treatment of endometriosis and central precocious puberty and for the preoperative treatment of patients with anemia caused by uterine fibroids. Lupron is approved for daily subcutaneous injection and one-month, three-month, four-month and six-month intramuscular injection.
 Other products.    AbbVie's other products include:
DuopaLinzess/Constella. Linzess (linaclotide) is a once-daily guanylate cyclase-C agonist used in adults to treat irritable bowel syndrome with constipation (IBS‑C) and Duodopa (carbidopa and levodopa).     AbbVie's levodopa-carbidopa intestinal gel for the treatment of advanced Parkinson's diseasechronic idiopathic constipation. The product is marketed as DuopaLinzess in the United States and as DuodopaConstella outside of the United States.
Anesthesia products.    Sevoflurane (sold underSynthroid.   Synthroid (levothyroxine sodium tablets, USP) is used in the trademarks Ultanetreatment of hypothyroidism.
AbbVie has the rights to sell Creon and Sevorane) is an anesthesia product that AbbVie sells worldwide for human use.Synthroid only in the United States.
ZINBRYTA. ZINBRYTA (daclizumab) is a once-monthly, self-administered, subcutaneous treatment for relapsing forms of multiple sclerosis (MS), which was approved by the FDA in May 2016 and by the European Commission in July 2016. Due to the risk of serious liver damage, the use of ZINBRYTA is restricted to adult patients with relapsing forms of MS who have had an inadequate response to at least two disease modifying therapies (DMTs) and for whom treatment with any other DMT is contraindicated or otherwise unsuitable.
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Marketing, Sales and Distribution Capabilities
AbbVie utilizes a combination of dedicated commercial resources, regional commercial resources and distributorships to market, sell and distribute its products worldwide.
AbbVie directs its primary marketing efforts toward securing the prescription, or recommendation, of its brand of products by physicians, key opinion leadersexternal experts and other health care providers. Managed care providers (for example, health maintenance organizations and pharmacy benefit managers), hospitals and state and federal government agencies (for example, State Medicaid programs, the United States Department of Veterans Affairs and the United States Department of Defense) are also important customers. AbbVie also markets directly to consumers themselves, although in the United States allmany of the company's products must be sold pursuant to a prescription. Outside of the United States, AbbVie focuses its marketingpromotional and market access efforts on key opinion leaders,external experts, payers, physicians and country regulatory bodies.health systems. AbbVie also provides patient support programs closely related to its products.
AbbVie's products are generally sold worldwide directly to wholesalers, distributors, government agencies, health care facilities, specialty pharmacies and independent retailers from AbbVie-owned distribution centers and public warehouses. Certain products (including aesthetic products and devices) are also sold directly to physicians and other licensed healthcare providers. Although AbbVie's business does not have significant seasonality, AbbVie's product revenues may be affected by end customer and retail buying patterns, fluctuations in wholesaler inventory levels and other factors.
In the United States, AbbVie distributes pharmaceutical products principally through independent wholesale distributors, with some sales directly to retailers, pharmacies, and patients.patients or other customers. In 2017,2023, three wholesale distributors (McKesson Corporation, Cardinal Health, Inc. and AmerisourceBergen Corporation) accounted for substantially all of AbbVie's pharmaceutical product sales in the United States. No individual wholesaler accounted for greater than 42%39% of AbbVie's 20172023 gross revenues in the United States. Outside the United States, sales are made either directlyAbbVie sells products primarily to customerswholesalers or through distributors, and depending on the market served. These wholesalers purchase product from AbbVie under standard terms and conditions of sale.works through largely centralized national payers systems to agree on reimbursement terms.
Certain products are co-marketed or co-promoted with other companies. AbbVie has no single customer that, if the customer were lost, would have a material adverse effect on the company's business. No material portion of AbbVie's

2017 Form 10-K  |    3




business is subject to renegotiation of profits or termination of contracts at the election of the government. Orders are generally filled on a current basis and order backlog is not material to AbbVie's business.
Competition
The markets for AbbVie's products are highly competitive. AbbVie competes with other research-based pharmaceuticals and biotechnology companies that discover, manufacture, market and sell proprietary pharmaceutical products, therapies and biologics. For example, HUMIRA competesAbbVie's immunology products compete with anti-TNF products, JAK inhibitors and other competitive products intended to treat a number of disease states, and AbbVie's virologyoncology products compete with BTK inhibitors and other available HCV treatment options.competitive products intended to treat certain cancers. In addition, in the past few years, a number of other companies have started to develop, have successfully developed and/or are currently marketing products that are being positioned as competitors to Botox. The search for technological innovations in pharmaceutical products is a significant aspect of competition. The introduction of new products by competitors and changes in medical practices and procedures can result in product obsolescence. Price is also a competitive factor. In addition, the substitution of generic and biosimilar pharmaceutical products for branded pharmaceutical products creates competitive pressures on AbbVie's products that do not have patent protection. New products or treatments brought to market by AbbVie’s competitors could cause revenues for AbbVie’s products to decrease due to price reductions and sales volume decreases.
Biosimilars.    Competition for AbbVie’s biologic products is affected by the approval of follow-on biologics, also known as “biosimilars.” Biologics have added major therapeutic options for the treatment of many diseases, including some for which therapies were unavailable or inadequate. The advent of biologics has also raised complex regulatory issues and significant pharmacoeconomic concerns because the cost of developing and producing biologic therapies is typically dramatically higher than for conventional (small molecule)small molecule medications, and because many expensive biologic medications are used for ongoing treatment of chronic diseases, such as rheumatoid arthritis or inflammatory bowel disease, or for the treatment of previously untreatable cancer. Significant investments in biologics infrastructure and manufacturing are necessary to produce biologic products, as are significant investments in marketing, distribution,products.
Humira is facing direct biosimilar competition globally, and sales organization activities, which may limit the number of biosimilar competitors.AbbVie will continue to face competitive pressure from these biologics and from orally administered products.
In the United States, the FDA regulates biologics under the Federal Food, Drug, and Cosmetic Act (the FFDCA), the Public Health Service Act (PHSA) and the regulations implementing regulations.these statutes. The enactment of federal health care reform legislation in March 2010 provided a pathway for approval of biosimilars under the Public Health Service Act,PHSA, but the approval process for, and science behind, biosimilars is more complex than the approval process for, and science behind, generic or other follow-on versions of small molecule products. This added complexity is due to steps needed to ensure that the safety and efficacy of biosimilars is highly similar to that of an original biologic, such as HUMIRA. Ultimate approvalcomplex. Approval by the FDA is dependent upon many factors, including a showing that the biosimilar is "highly similar" to the original product and has no clinically meaningful differences from the original product in
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terms of safety, purity and potency. The types of data that could ordinarily be required in an application to show similarity may include analytical data, bioequivalence studies and studies to demonstrate chemical similarity, animal studies (including toxicity studies) and clinical studies. The law also requires that the biosimilar must be for a condition of use approved for the original biologic and that the manufacturing facility meets the standards necessary to assure that the biosimilar is safe, pure and potent.
Furthermore, the law provides that only a biosimilar product that is determined to be "interchangeable" will be considered by the FDA as substitutable for the original biologic product without the intervention of the health care provider who prescribed the original biologic product. To prove that a biosimilar product is interchangeable, the applicant must demonstrate that the product can be expected to produce the same clinical results as the original biologic product in any given patient, and if the product is administered more than once in a patient, that safety risks and potential for diminished efficacy of alternating or switching between the use of the interchangeable biosimilar biologic product and the original biologic product is no greater than the risk of using the original biologic product without switching. The law continues to be interpreted and implemented by the FDA. As a result, its full ultimate impact, implementation and meaning remains subject to substantial uncertainty.
In the European Union, while a pathway for the approval of biosimilars has existed since 2005, the products that have come to market to date have had a mixed impact on the market share of incumbent products, with significant variation by product.
 Other Competitive Products.    Although a number of competitive biologic branded products have been approved since HUMIRA was first introduced in 2003, most have gained only a modest share of the worldwide market. AbbVie will continue to face competitive pressure from these biologics and from orally administered products.
Intellectual Property Protection and Regulatory Exclusivity
Generally, upon approval, products may be entitled to certain kinds of exclusivity under applicable intellectual property and regulatory regimes. AbbVie’s intellectual property is materially valuable to the company, and AbbVie seeks patent protection, where available, in all significant markets and/or countries for each product in development. In the United States, the expiration date for patents is 20 years after the filing date. Given that patents relating to pharmaceutical products are

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often obtained early in the development process and given the amount of time needed to complete clinical trials and other development activities required for regulatory approval, the length of time between product launch and patent expiration is significantly less than 20 years. The Drug Price Competition and Patent Term Restoration Act of 1984 (commonly known as the Hatch-Waxman Act) permits a patent holder to seek a patent extension, commonly called a “patent term restoration,” for patents on products (or processes for making the product) regulated by the Federal Food, Drug, and Cosmetic Act.FFDCA. The length of the patent extension is roughly based on 50 percent of the period of time from the filing of an Investigational New Drug Application (NDA) for a compound to the submission of the NDA for such compound, plus 100 percent of the time period from NDA submission to regulatory approval. The extension, however, cannot exceed five years and the patent term remaining after regulatory approval cannot exceed 14 years. Biological products licensed under the Public Health Service ActPHSA are similarly eligible for terms of patent restoration.
Pharmaceutical products may be entitled to other forms of legal or regulatory exclusivity upon approval. The scope, length and requirements for each of these exclusivities vary both in the United States and in other jurisdictions. In the United States, if the FDA approves a conventional drug product that contains an active ingredient not previously approved, the product is typically entitled to five years of non-patent regulatory exclusivity. OtherSpecific conditions of use approved for individual products may also be entitled to three years of exclusivity if approval was based on the FDA’s reliance on new clinical studies essential to approval submitted by the NDA applicant. If the NDA applicant studies the product for use by children, the FDA may grant pediatric exclusivity, which extends by 180 days the longestall existing exclusivityexclusivities (patent orand regulatory) related to the product. For products that are either used to treat conditions that afflict a relatively small population or for which there is not a reasonable expectation that the research and development costs will be recovered, the FDA may designate the pharmaceutical as an orphan drug and grant it seven years of market exclusivity. Other types of regulatory exclusivity may also be available, such as Generating New Antibiotic Incentives Now (GAIN) exclusivity, which can provide new antibiotic or new antifungal drugs an additional five years of exclusivity to be added to certain exclusivities already provided for by law.
Applicable laws and regulations dictate the scope of any exclusivity to which a product or particular characteristics of a product is entitled upon its approval in any particular country. In certain instances, regulatory exclusivity may protect a productoffer protection where patent protection is no longer available or for a period of time in excess of patent protection. It is not possible to estimate for each product in development the total period and scope of exclusivity to which it may become entitled until regulatory approval is obtained.obtained or sometimes even later. However, given the length of time required to complete clinical development of a pharmaceutical product, the periods of exclusivity that might be achieved in any individual case would not generally be expected to exceed a minimum of three years and a maximum of 14 years. These estimates do not consider other factors, such as the difficulty of recreating the manufacturing process for a particular product or other proprietary knowledge that may delay the introduction of a generic or other follow-on product after the expiration of applicable patent and other regulatory exclusivity periods.
Biologics may be entitled to exclusivity under the Biologics Price Competition and Innovation Act, which was passed on March 23, 2010 as Title VII to the Patient Protection and Affordable Care Act. The law provides a pathway for approval of biosimilars following the expiration of 12 years of regulatory exclusivity for the innovator biologic and a potential additional 180 day-extension term for conducting pediatric studies. Biologics are also eligible for orphan drug exclusivity, as discussed above. The law also includes an extensive process for the innovator biologic and biosimilar manufacturer to litigate patent
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infringement, validity and enforceability. The European Union has also created a pathway for approval of biosimilars and has published guidelines for approval of certain biosimilar products. The more complex nature of biologics and biosimilar products has led to greaterclose regulatory scrutiny and more rigorous requirements for approval ofover follow-on biosimilar products than for small molecule generic pharmaceutical products, which can reduce the effect of biosimilars on sales of the innovator biologic as compared to the sales erosion caused by generic versions of small molecule pharmaceutical products.
AbbVie owns or has licensed rights to a substantial number of patents and patent applications. AbbVie licenses or owns a patent portfolio of thousands of patent families, each of which includes United States patent applications and/or issued patents and may also contain the non-United States counterparts to these patents and applications.
These patents and applications, including various patents that expire during the period 20182024 to the late 2030s,mid 2040s, in aggregate are believed to be of material importance in the operation of AbbVie’s business. However, AbbVie believes that no single patent, license, trademark (or related group of patents, licenses, or trademarks), except for those related to adalimumab (which is sold under the trademark HUMIRA), are material in relation to the company’s business as a whole. The United States composition of matter (that is, compound) patent covering adalimumab expired in December 2016, and the equivalent European Union patent is expected to expire in the majority of European Union countries in October 2018. In the United States, non-composition of matter patents covering adalimumab expire no earlier than 2022.
In addition, the following patents, licenses and trademarks are significant: those related to ibrutinib (which is sold under the trademark IMBRUVICA)Imbruvica), those related to ombitasvir/paritaprevir/ritonavir and dasabuvir (which are sold under the trademarks VIEKIRA PAK, VIEKIRAX, EXVIERA, and HOLKIRA PAK), those related to glecaprevir and pibrentasvir (which are sold under the trademarks MAVYRET and MAVIRET), and those related to testosteronerisankizumab (which is sold under the trademark AndroGel)Skyrizi) and those related to upadacitinib (which is sold under the trademark Rinvoq). The United States composition of matter patent covering ibrutinib is expected to expire in 2027. The United States

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composition of matter patents covering ombitasvir, paritaprevir and dasabuvir are2027, with pediatric regulatory exclusivity then extending until May 2028. However, no generic entry for any ibrutinib product is expected prior to expire in 2032, 2031 and 2029, respectively.March 30, 2032. The United States composition of matter patentspatent covering glecaprevir and pibrentasvir arerisankizumab is expected to expire in 2032.

2033. And the United States composition of matter patent covering upadacitinib is expected to expire in 2033.
AbbVie may rely, in some circumstances, on trade secrets to protect its technology. However, trade secrets are difficult to protect. AbbVie seeks to protect its technology and product candidates, in part, by confidentiality agreements with its employees, consultants, advisors, contractors and collaborators. These agreements may be breached and AbbVie may not have adequate remedies for any breach. In addition, AbbVie’s trade secrets may otherwise become known or be independently discovered by competitors. To the extent that AbbVie’s employees, consultants, advisors, contractors and collaborators use intellectual property owned by others in their work for the company, disputes may arise as to the rights in related or resulting know-how and inventions.
Licensing, Acquisitions and Other Arrangements
In addition to its independent efforts to develop and market products, AbbVie enters into arrangements such as acquisitions, option-to-acquire agreements, licensing arrangements, option-to-license arrangements, strategic alliances, co-promotion arrangements, co-development and co-marketing agreements and joint ventures. TheseThe acquisitions and option-to-acquire agreements typically include, among other terms and conditions, non-refundable purchase price payments or option fees, option exercise payments, milestones or earn-outs and other customary terms and obligations. The licensing and other arrangements typically include, among other terms and conditions, non-refundable upfront license fees, option fees and option exercise payments, milestone payments and royalty and/or profit sharing obligations. See Note 5, "Licensing, Acquisitions and Other Arrangements—Other Licensing & Acquisitions Activity," to the Consolidated Financial Statements included under Item 8, "Financial Statements and Supplementary Data."
Third Party Agreements
AbbVie has agreements with third parties for process development, product distribution, analytical services and manufacturing of certain products. AbbVie procures certain products and services from a limited number of suppliers and, in some cases, a single supply source. In addition, AbbVie has agreements with third parties for active pharmaceutical ingredient and product manufacturing, formulation and development services, fill, finish and packaging services, transportation and distribution and logistics services for certain products. AbbVie does not believe that these manufacturing relatedmanufacturing-related agreements are material because AbbVie's business is not substantially dependent on any individual agreement. In most cases, AbbVie maintains alternate supply relationships that it can utilize without undue disruption of its manufacturing processes if a third party fails to perform its contractual obligations. AbbVie also maintainsseeks to maintain sufficient inventory of product to minimize the impact of any supply disruption.
AbbVie is also party to certain collaborations and other arrangements, as discussed in Note 5, "Licensing, Acquisitions and Other Arrangements—Other Licensing & Acquisitions Activity," to the Consolidated Financial Statements included under Item 8, "Financial Statements and Supplementary Data."
Sources and Availability of Raw Materials
AbbVie purchases, in the ordinary course of business, raw materials and supplies essential to its operations from numerous suppliers around the world. In addition, certain medical devices and components necessary for the manufacture of
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AbbVie products are provided by unaffiliated third party suppliers. AbbVie has not experienced any recent significant availability problems or supply shortages that impacted fulfillment of product demand.robust business continuity and supplier monitoring programs.
Research and Development Activities
AbbVie makes a significant investment in research and development and has numerous compounds (and complementary devices) in clinical development, including potential treatments for complex, life-threatening diseases. AbbVie's ability to discover and develop new compounds is enhanced by the company's use of integrated discovery and development project teams, which include chemists, biologists, physicians and pharmacologists who work on the same compounds as a team. AbbVie also partners with third parties, such as biotechnology companies, other pharmaceutical companies and academic institutions to identify and prioritize promising new treatments that complement and enhance AbbVie’s existing portfolio. AbbVie also supplements its research and development efforts with acquisitions.
The research and development process generally begins with discovery research which focuses on the identification of a molecule that has a desired effect against a given disease. If preclinical testing of an identified compound proves successful, the compound moves into clinical development which generally includes the following phases:
•Phase 1—involves the first human tests in a small number of healthy volunteers or patients to assess safety, tolerability and potential dosing.doses for later phases.
•Phase 2—tests different doses of the drug's efficacy against the diseasedrug in a relatively small group of patients.disease state in order to assess efficacy.

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•Phase 3—tests a drug that demonstrates favorable results in the earlier phases in a significantly larger patient population to further demonstrate efficacy and safety based on regulatory criteria.in order to meet requirements to enable global approval.
ThePreclinical data and clinical trials from all of the development phases provide the data required to prepare and submit an NDA, a Biological License Application (BLA) or other submission for regulatory approval to the FDA or similar government agencies outside the United States. The specific requirements (e.g., scope of clinical trials) for obtaining regulatory approval vary across different countries and geographic regions.
The research and development process from discovery through a new drug launch typically takes 8 to 12 years and can be even longer. The research and development of new pharmaceutical products has a significant amount of inherent uncertainty. There is no guarantee when, or if, a molecule will receive the regulatory approval required to launch a new drug or indication.
In addition to the development of new products, delivery devices and new formulations, research and development projects also may include Phase 4 trials, sometimes called post-marketing studies. For such projects, clinical trials are designed and conducted to collect additional data regarding, among other parameters, the benefits and risks of an approved drug.
AbbVie spent approximately $5.0 billion in 2017, $4.4 billion in 2016 and $4.3 billion in 2015 on research to discover and develop new products, indications and processes and to improve existing products and processes. These expenses consisted primarily of salaries and related expenses for personnel, license fees, consulting payments, contract research, clinical drug supply manufacturing, the costs of laboratory equipment and facilities, clinical trial costs and collaboration fees and expenses.
Regulation—Discovery and Clinical Development
United States.    Securing approval to market a new pharmaceutical product in the United States requires substantial effort and financial resources and takes several years to complete. The applicant must complete preclinical tests and submit protocols to the FDA before commencing clinical trials. Clinical trials are intended to establish the safety and efficacy of the pharmaceutical product and typically are conducted in sequential phases, although the phases may overlap or be combined. If the required clinical testing is successful, the results are submitted to the FDA in the form of an NDA or BLA requesting approval to market the product for one or more indications. The FDA reviews an NDA or BLA to determine whether a product is safe and effective for its intended use and whether its manufacturing is compliant with current Good Manufacturing Practices (cGMP).
Compliance with regulatory requirements is assured through periodic, announced or unannounced inspections by the FDA and other regulatory authorities, and these inspections associated with clinical development may include the sponsor, investigator sites, laboratories, hospitals and manufacturing facilities of AbbVie's subcontractors or other third-party manufacturers. Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, including rejection of an NDA or BLA.
Even if an NDA or a BLA receives approval, the applicant must comply with post-approval requirements. For example, holders of an approval must report adverse reactions, provide updated safety and efficacy information and comply with requirements concerning advertising and promotional materials and activities. Also, quality control and manufacturing procedures must continue to conform to cGMP after approval, and certain changes to the manufacturing procedures and finished product must be included in the NDA or BLA,submitted and approved by the FDA.FDA prior to implementation. The FDA periodically inspects manufacturing facilities to assess compliance with cGMP, which imposes extensive procedural and record keeping requirements. In addition, as a condition of approval, the FDA may require post-marketing testing and surveillance to further
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assess and monitor the product's safety or efficacy after commercialization, which may require additional clinical trials, or patient registries, observational data or additional work on chemistry, manufacturing and controls. Any post-approval regulatory obligations, and the cost of complying with such obligations, could expand in the future. Further, the FDA continues to regulate product labeling, and prohibits the promotion of products for unapproved or “off-label” uses along with other labeling restrictions.
Outside the United States.    AbbVie is subject to similar regulatory requirements outside the United States.States for approval and marketing of pharmaceutical products. AbbVie must obtain approval of a clinical trial application or product from the applicable supervising regulatory authorities before it can commence clinical trials or marketing of the product.product in target markets. The approval requirements and process for each country can vary, and the time required to obtain approval may be longer or shorter than that required for FDA approval in the United States. For example, AbbVie may submit marketing authorizations in the European Union under either a centralized or decentralized procedure. The centralized procedure is mandatory for the approval of biotechnology products and many pharmaceutical products and provides for a single marketing authorization that is valid for all European Union member states. Under the centralized procedure, a single marketing authorization application is submitted to the European Medicines Agency (EMA).Agency. After the agency evaluates the application, it makes a recommendation to the European Commission, which then makes the final determination on whether to approve the application. The decentralized procedure provides for mutual recognition of individual national approval decisions and is available for products that are not subject to the centralized procedure.
In Japan, applications for approval of a new product are made through the Pharmaceutical and Medical Devices Agency (PMDA). BridgingJapan-specific trials and/or bridging studies to demonstrate that the non-Japanese clinical data applies to Japanese patients may beare usually required. After completing a comprehensive review, the PMDA reports to the Ministry of Health, Labour and Welfare, which then approves or denies the application.

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Similarly, applications for a new product in China are submitted to the Center for Drug Evaluation of the National Medical Products Administration for technical review and approval of a product for marketing in China. Clinical data in Chinese subjects are usually required to support approval in China, requiring the inclusion of China in global pivotal studies, or a separate China/Asian clinical trial.
The regulatory process in many emerging markets continues to evolve. Many emerging markets, including those in Asia, generally require regulatory approval to have been obtained in a large developed market (such as the United States or Europe) before the country will begin or complete its regulatory review process. SomeSimilar to the requirements in Japan and China, certain countries (notably South Korea, Taiwan, India and Russia) also generally require that local clinical studies that include data from patients in those countries be conducted in order to obtainsupport local regulatory approval in the country.approval.
The requirements governing the conduct of clinical trials and product licensing also vary. In addition, post-approval regulatory obligations such as adverse event reporting and cGMP compliance generally apply and may vary by country. For example, after a marketing authorization has been granted in the European Union, periodic safety reports must be submitted and other pharmacovigilance measures may be required (such as Risk Management Plans).
Regulation—Commercialization, Distribution and Manufacturing
The manufacture,manufacturing, marketing, sale, promotion and distribution of AbbVie's products are subject to comprehensive government regulation. Government regulation by various national, regional, federal, state and local agencies, both in the United States and other countries, addresses (among other matters) inspection of, and controls over, research and laboratory procedures, clinical investigations, product approvals and manufacturing, labeling, packaging, marketing and promotion, pricing and reimbursement, sampling, distribution, quality control, post-marketing surveillance, record keeping, storage and disposal practices. AbbVie's operations are also affected by trade regulations in many countries that limit the import of raw materials and finished products and by laws and regulations that seek to prevent corruption and bribery in the marketplace (including the United States Foreign Corrupt Practices Act and the United Kingdom Bribery Act, which provide guidance on corporate interactions with government officials) and require safeguards for the protection of personal data. In addition, AbbVie is subject to laws and regulations pertaining to health care fraud and abuse, including state and federal anti-kickback and false claims laws in the United States. Prescription drug manufacturers such as AbbVie are also subject to taxes, as well as application, product, user establishment and other fees.
Compliance with these laws and regulations is costly and materially affects AbbVie's business. Among other effects, health care regulations substantially increase the time, difficulty and costs incurred in obtaining and maintaining approval to market newly developed and existing products. AbbVie expects compliance with these regulations to continue to require significant technical expertise and capital investment to ensure compliance. Failure to comply can delay the release of a new product or result in regulatory and enforcement actions, the seizure or recall of a product, the suspension or revocation of the authority necessary for a product's production and sale and other civil or criminal sanctions, including fines and penalties.
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In addition to regulatory initiatives, AbbVie's business can be affected by ongoing studies of the utilization, safety, efficacy and outcomes of health care products and their components that are regularly conducted by industry participants, government agencies and others. These studies can call into questionlead to updates to the data regarding utilization, safety and efficacy of previously marketed products. In some cases, these studies have resulted, and may in the future result, in the discontinuance of, or limitations on, marketing of such products domestically or worldwide, and may give rise to claims for damages from persons who believe they have been injured as a result of their use.
Access to human health care products continues to be a subject of oversight, investigation and action by governmental agencies, legislative bodies and private organizations in the United States and other countries. A major focus is cost containment. Efforts to reduce health care costs are also being made in the private sector, notably by health care payers and providers, which have instituted various cost reduction and containment measures. AbbVie expects insurers and providers to continue attempts to reduce the cost of health care products. Outside the United States, many countries control the price of health care products directly or indirectly, through reimbursement, payment, pricing, coverage limitations, or compulsory licensing. BudgetaryPolitical and budgetary pressures in the United States and in other countries may also heighten the scope and severity of pricing pressures on AbbVie's products for the foreseeable future.
 United States.    Specifically, U.S. federal laws require pharmaceutical manufacturers to pay certain statutorily-prescribed rebates to state Medicaid programs on prescription drugs reimbursed under state Medicaid plans, and the efforts by states to seek additional rebates may affect AbbVie's business. Similarly, the Veterans Health Care Act of 1992, as a prerequisite to participation in Medicaid and other federal health care programs, requires that manufacturers extend additional discounts on pharmaceutical products to various federal agencies, including the United States Department of Veterans Affairs, Department of Defense and Public Health Service entities and institutions. In addition, recent legislative changes would require similarly discounted prices to be offered to TRICARE program beneficiaries. The Veterans Health Care Act of 1992 also established the 340B drug discount program, which requires pharmaceutical manufacturers to provide products at reduced prices to various designated health care entities and facilities.
In the United States, most states also have generic substitution legislation requiring or permitting a dispensing pharmacist to substitute a different manufacturer's generic version of a pharmaceutical product for the one prescribed. In addition, the federal government follows a diagnosis-related group (DRG) payment system for certain institutional services provided under

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Medicare or Medicaid and has implemented a prospective payment system (PPS) for services delivered in hospital outpatient, nursing home and home health settings. DRG and PPS entitle a health care facility to a fixed reimbursement based on the diagnosis and/or procedure rather than actual costs incurred in patient treatment, thereby increasing the incentive for the facility to limit or control expenditures for many health care products. Medicare reimburses Part B drugs based on average sales price plus a certain percentage to account for physician administration costs, which have been reduced in the hospital outpatient setting. Medicare enters into contracts with private plans to negotiate prices for most patient-administered medicine delivered under Part D.
Under the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (together, the Affordable Care Act), AbbVie pays a fee related to its pharmaceuticals sales to government programs. In addition, AbbVie provides a discount of 50%70% for branded prescription drugs sold to patients who fall into the Medicare Part D coverage gap, or "donut hole."
The Affordable Care Act also includes provisions known as the Physician Payments Sunshine Act, which require manufacturers of drugs and biologics covered under Medicare and Medicaid to record any transfers of value to physicians and teaching hospitals and to report this data to the Centers for Medicare and Medicaid Services for subsequent public disclosure. Similar reporting requirements have also been enacted on the state level in the United States, and an increasing number of countries worldwide either have adopted or are considering similar laws requiring disclosure of interactions with health care professionals. Failure to report appropriate data may result in civil or criminal fines and/or penalties.
AbbVie expects debateThe Inflation Reduction Act of 2022 (the IRA) requires: (i) the government to continue during 2018 at all government levels worldwide overset prices for select high expenditure Medicare Part D drugs (prices effective beginning in 2026) and Part B drugs (prices effective beginning in 2028) that are more than nine years (for small-molecule drugs) or 13 years (for biological products) from their FDA approval, (ii) manufacturers to pay a rebate for Medicare Part B and Part D drugs when prices for those drugs increase faster than inflation beginning in 2022 for Part D and 2023 for Part B, and (iii) a Medicare Part D redesign replacing the marketing, availability, methodcurrent coverage gap provisions and establishing a $2,000 cap for out-of-pocket costs for Medicare beneficiaries beginning in 2025, with manufacturers being responsible for 10% of deliverycosts up to the $2,000 cap and payment for health care products and services. AbbVie believes20% after that future legislation and regulation incap is reached. In August 2023, the markets it serves could affect access to health care products and services, increase rebates, reduce prices or the rate of price increases for health care products and services, change health care delivery systems, create new fees and obligations for the pharmaceuticals industry, or require additional reporting and disclosure. It is not possible to predict the extent to which AbbVie or the health care industry in general might be affected by the matters discussed above.
AbbVie is subject to a Corporate Integrity Agreement (CIA) entered into by Abbott on May 7, 2012 that requires enhancements to AbbVie's compliance program and contains reporting obligations, including disclosure of financial payments to doctors. If AbbVie fails to comply with the CIA, the Office of Inspector General for the United StatesU.S. Department of Health and Human Services, may impose monetary penalties or exclude AbbVie from federal health care programs,through the Centers for Medicare & Medicaid Services (the CMS), selected Imbruvica as one of the first 10 medicines subject to government-set prices beginning in 2026. The price-setting process will conclude by August 1, 2024, and on September 1, 2024, the CMS will publish prices that will be applicable to the 10 drugs in the Medicare program beginning January 1, 2026. It is possible that more of our products, including Medicareproducts that generate substantial revenues,
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could be selected in future years, which could, among other things, accelerate revenue erosion prior to expiration of intellectual property protections. The effect of reducing prices and Medicaid.reimbursement would significantly impact revenues for certain of our products.
European Union.    The European Union has adopted directives and other legislation governing labeling, advertising, distribution, supply, pharmacovigilance and marketing of pharmaceutical products. Such legislation provides mandatory standards throughout the European Union and permits member states to supplement these standards with additional regulations. European governments also regulate pharmaceutical product prices through their control of national health care systems that fund a large part of the cost of such products to consumers. As a result, patients are unlikely to use a pharmaceutical product that is not reimbursed by the government. In many European countries, the government either regulates the pricing of a new product at launch or subsequent to launch through direct price controls or reference pricing. In recent years, many countries have also imposed new or additional cost containment measures on pharmaceutical products. Differences between national pricing regimes create price differentials within the European Union that can lead to significant parallel trade in pharmaceutical products.
Most governments also promote generic substitution by mandating or permitting a pharmacist to substitute a different manufacturer's generic version of a pharmaceutical product for the one prescribed and by permitting or mandating that health care professionals prescribe generic versions in certain circumstances. Many governments are also following a similar path for biosimilar therapies. In addition, governments use reimbursement lists to limit the pharmaceutical products that are eligible for reimbursement by national health care systems.
 Japan.    In Japan, the National Health Insurance system maintains a Drug Price List specifying which pharmaceutical products are eligible for reimbursement, and the Ministry of Health, Labour and Welfare sets the prices of the products on this list. The government generally introduces price cut rounds every other year and also mandates price decreases for specific products. New products judged innovative or useful, that are indicated for pediatric use, or that target orphan or small population diseases, however, may be eligible for a pricing premium. The government has also promoted the use of generics, where available.
 Emerging Markets.    Many emerging markets take steps to reduce pharmaceutical product prices, in some cases through direct price controls and in others through the promotion of genericgeneric/biosimilar alternatives to branded pharmaceuticals.
Since AbbVie markets its products worldwide, certain products of a local nature and variations of product lines must also meet other local regulatory requirements. Certain additional risks are inherent in conducting business outside the United

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States, including price and currency exchange controls, changes in currency exchange rates, limitations on participation in local enterprises, expropriation, nationalization and other governmental action.
Regulation – Medical Devices
Medical devices are subject to regulation by the FDA, state agencies and foreign government health authorities. FDA regulations, as well as various U.S. federal and state laws, govern the development, clinical testing, manufacturing, labeling, record keeping and marketing of medical device products agencies in the United States. AbbVie’s medical device product candidates, including AbbVie’s breast implants,must undergo rigorous clinical testing and an extensive government regulatory clearance or approval process prior to sale in the United States and other countries. The lengthy process of clinical development and submissions for clearance or approval, and the continuing need for compliance with applicable laws and regulations, require the expenditure of substantial resources. Regulatory clearance or approval, when and if obtained, may be limited in scope, and may significantly limit the indicated uses for which a product may be marketed. Cleared or approved products and their manufacturers are subject to ongoing review, and discovery of previously unknown problems with products may result in restrictions on their manufacture, sale and/or use or require their withdrawal from the market.
United States. AbbVie’s medical device products are subject to extensive regulation by the FDA in the United States. Unless an exemption applies, each medical device AbbVie markets in the United States must have a 510(k) clearance or a Premarket Approval Application (PMA) in accordance with the FFDCA and its implementing regulations. The FDA classifies medical devices into one of three classes, depending on the degree of risk associated with each medical device and the extent of controls that are needed to ensure safety and effectiveness. Devices deemed to pose a lower risk are placed in either Class I or Class II, and devices deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices, or a device deemed to be not substantially equivalent to a previously cleared 510(k) device, are placed in Class III. In general, a Class III device cannot be marketed in the United States unless the FDA approves the device after submission of a PMA, and any changes to the device subsequent to initial FDA approval must also be reviewed and approved by the FDA. The majority of AbbVie’s medical device products, including AbbVie’s breast implants, are regulated as Class III medical devices. A Class III device may have significant additional obligations imposed in its conditions of approval, and the time in which it takes
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to obtain approval can be long. Compliance with regulatory requirements is assured through periodic, unannounced facility inspections by the FDA and other regulatory authorities, and these inspections may include the manufacturing facilities of AbbVie’s subcontractors or other third-party manufacturers. Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include any of the following sanctions: warning letters or untitled letters; fines, injunctions and civil penalties; recall or seizure of AbbVie’ products; operating restrictions, partial suspension or total shutdown of production; refusing AbbVie’ request for 510(k) clearance or PMA approval of new products; withdrawing 510(k) clearance or PMA approvals that are already granted; and criminal prosecution.
A clinical trial is almost always required to support a PMA application and is sometimes required for a 510(k) premarket notification. Clinical trials generally require submission of an application for an investigational device exemption (IDE), which must be supported by appropriate data, such as animal and laboratory testing results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound. A study sponsor must obtain approval for its IDE from the FDA, and it must also obtain approval of its study from the Institutional Review Board overseeing the trial. The results of clinical testing may not be sufficient to obtain approval of the investigational device.
Once a device is approved, the manufacture and distribution of the device remains subject to continuing regulation by the FDA, including Quality System Regulation requirements, which involve design, testing, control, documentation and other quality assurance procedures during the manufacturing process. Medical device manufacturers and their subcontractors are required to register their establishments and list their manufactured devices with the FDA and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with regulatory requirements. Manufacturers must also report to the FDA if their devices may have caused or contributed to a death or serious injury or malfunctioned in a way that could likely cause or contribute to a death or serious injury, or if the manufacturer conducts a field correction or product recall or removal to reduce a risk to health posed by a device or to remedy a violation of the FFDCA that may present a health risk. Further, the FDA continues to regulate device labeling, and prohibits the promotion of products for unapproved or “off-label” uses along with other labeling restrictions.
European Union. Medical device products that are marketed in the European Union must comply with the requirements of the Medical Device Regulation (the MDR), which came into effect in May 2021. The MDR provides for regulatory oversight with respect to the design, manufacture, clinical trials, labeling and adverse event reporting for medical devices to ensure that medical devices marketed in the European Union are safe and effective for their intended uses. Medical devices that comply with the MDR are entitled to bear a Conformité Européenne marking evidencing such compliance and may be marketed in the European Union. Failure to comply with these domestic and international regulatory requirements could affect AbbVie’s ability to market and sell AbbVie’s products in these countries.
Environmental Matters
AbbVie believes that its operations comply in all material respects with applicable laws and regulations concerning environmental protection. Regulations under federal and state environmental laws impose stringent limitations on emissions and discharges to the environment from various manufacturing operations. AbbVie's capital expenditures for pollution control in 20172023 were approximately $17$16 million and operating expenditures were approximately $28$43 million. In 2018,2024, capital expenditures for pollution control are estimated to be approximately $3$22 million and operating expenditures are estimated to be approximately $30$45 million.
Abbott was identified as one of many potentially responsible parties in investigations and/or remediations at several locations in the United States, including Puerto Rico, under the Comprehensive Environmental Response, Compensation and Liability Act, commonly known as Superfund. Some of these locations were transferred to AbbVie in connection with the separation and distribution, and AbbVie has become a party to these investigations and remediations. Abbott was also engaged in remediation at several other sites, some of which have been transferred to AbbVie in connection with the separation and distribution, in cooperation with the Environmental Protection Agency or similar agencies. While it is not feasible to predict with certainty the final costs related to those investigations and remediation activities, AbbVie believes that such costs, together with other expenditures to maintain compliance with applicable laws and regulations concerning environmental protection, should not have a material adverse effect on the company's financial position, cash flows, or results of operations.
Employees
AbbVie employed approximately 29,000 persons50,000 employees in over 70 countries as of January 31, 2018.2024. Outside the United States, some of AbbVie's employees are represented by unions or works councils. AbbVie believes that it has good relations with its employees.
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Human Capital Management
Attracting, retaining and providing meaningful growth and development opportunities to AbbVie's employees is critical to the company's success in making a remarkable impact on people’s lives around the world. AbbVie leverages numerous resources to identify and enhance strategic and leadership capability, foster employee engagement and create a culture where talent is productive and engaged. AbbVie invests in its employees through competitive compensation, benefits and employee support programs and offers best-in-class development and leadership opportunities. AbbVie has developed a deep talent base through ongoing investment in functional and leadership training and by sourcing world-class external talent, ensuring a sustainable talent pipeline. AbbVie continuously cultivates and enhances its working culture and embraces equality, diversity and inclusion as fundamental to the company's mission.
Attracting and Developing Talent. Attracting and developing high-performing talent is essential to AbbVie’s continued success. AbbVie implements detailed talent attraction strategies, with an emphasis on STEM skill sets, a diverse talent base and other critical skillsets, including drug discovery, clinical development, market access and business development. AbbVie also invests in competitive compensation and benefits programs. In addition to offering a comprehensive suite of benefits ranging from medical and dental coverage to retirement, disability and life insurance programs, AbbVie also provides health promotion programs, mental health awareness campaigns and employee assistance programs in several countries, financial wellness support, on-site health screenings and immunizations in several countries and on-site fitness and rehabilitation centers. AbbVie has on-site health care clinics at certain locations, offering convenient and affordable access to quality healthcare, flu shots and vaccines. In addition, the AbbVie Employee Assistance Fund (a part of the AbbVie Foundation) supports two programs for global employees: the AbbVie Possibilities Scholarship for children of employees, which is an annual merit-based scholarship for use at accredited colleges, universities or vocational-technical schools; and the Employee Relief Program, which is financial assistance to support short term needs of employees when faced with large-scale disasters (e.g. a hurricane), individual disasters (e.g. a home fire) or financial hardship (e.g. the death of a spouse). Finally, AbbVie empowers managers and their teams with tools, tips and guidelines on effectively managing workloads, managing teams from a distance and supporting flexible work practices, including "Where We Work", AbbVie's hybrid work model, offering eligible employees predictable flexibility.
New AbbVie employees are given a tailored onboarding experience for faster integration and to support performance. One of AbbVie's mentorship programs allows employees to self-nominate as mentors or mentees and facilitates meaningful relationships supporting employees’ career and development goals.
AbbVie also provides structured, broad-based development opportunities, focusing on high-performance skills and leadership training. AbbVie's talent philosophy holds leaders accountable for building a high-performing organization, and the company provides development opportunities for all levels of leadership. AbbVie's Learn, Develop, Perform program offers year-long, self-directed leadership education, supplemented with tools and resources, and leverages leaders as role models and teachers. In addition, a foundational success factor to AbbVie's leadership pipeline is the company's Professional Development Programs, which attract graduates, postgraduates and post-doctoral talent to participate in formal development programs lasting up to three years, with the objective of strengthening functional and leadership capabilities.
Culture. AbbVie’s shared principles of transforming lives, acting with integrity, driving innovation, embracing diversity and inclusion and serving the community form the core of the company's culture. AbbVie articulates the behaviors associated with these values in the Ways We Work, a core set of working behaviors that emphasize how the company achieves results is equally as important as achieving them. The Ways We Work are designed to ensure that every AbbVie employee is aware of the company's cultural expectations. AbbVie integrates the Ways We Work into all talent processes, forming the basis for assessing performance, prioritizing development and ultimately rewarding employees. AbbVie believes its culture creates strong engagement, which is measured regularly through a confidential, third-party all-employee survey, and this engagement supports AbbVie’s mission of making a remarkable impact on people’s lives.
Equity, Equality, Diversity & Inclusion (EED&I). A cornerstone of AbbVie’s human capital management approach is to prioritize fostering an inclusive and diverse workforce. AbbVie's Equity, Equality, Diversity & Inclusion roadmap defines key global focus areas, objectives and associated initiatives, and includes implementation plans organized by business function and geography. AbbVie’s senior leaders have adopted formal goals aligned with executing this strategy. Through December 2023, women represented 52 percent of management positions globally and in the United States, 37 percent of AbbVie's workforce was comprised of members of historically underrepresented populations, consistent with 2022. Further, AbbVie is committed to pay equity and conducts pay equity analyses annually. A critical component of AbbVie's strategy is to instill an inclusive mindset in all AbbVie leaders and employees, so the company continues to realize the full value of its workforce from recruitment through retirement. AbbVie's Employee Resource Groups also help the company nurture an inclusive culture by building community and creating connections. Additional information about AbbVie's Equity, Equality, Diversity and
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Inclusion efforts can be found on the company's website at: https://www.abbvie.com/who-we-are/equity-equality-inclusion-diversity.html.
Internet Information
Copies of AbbVie's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through AbbVie's investor relations website (www.abbvieinvestor.cominvestors.abbvie.com) as soon as reasonably practicable after AbbVie electronically files the material with, or furnishes it to, the Securities and Exchange Commission (SEC).
AbbVie's corporate governance guidelines, outline of directorship qualifications, code of business conduct and the charters of AbbVie's audit committee, compensation committee, nominations and governance committee and public policy committee are all available on AbbVie's investor relations website (www.abbvieinvestor.cominvestors.abbvie.com).
ITEM 1A. RISK FACTORS
You should carefully consider the following risks and other information in this Form 10-K in evaluating AbbVie and AbbVie's common stock. Any of the following risks could materially and adversely affect AbbVie's results of operations, financial condition or cash flows. The risk factors generally have been separated into two groups: risks related to AbbVie's business and risks related to AbbVie's common stock. Based on the information currently known to it, AbbVie believes that the following information identifies the most significant risk factors affecting it in each of these categories of risks. However, the risks and uncertainties AbbVie faces are not limited to those set forth in the risk factors described below and may not be in order of importance or probability of occurrence. Additional risks and uncertainties not presently known to AbbVie or that AbbVie currently believes to be immaterial may also adversely affect its business. In addition, past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods.
If any of the following risks and uncertainties develops into actual events, these events could have a material adverse effect on AbbVie's business, results of operations, financial condition or cash flows. In such case, the trading price of AbbVie's common stock could decline.

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Risks Related to AbbVie's Business
The expiration or loss of patent protection and licenses, including the loss of exclusivity for Humira and increased competition from biosimilars, may adversely affect AbbVie's future revenues and operating earnings.
AbbVie relies on patent, trademark and other intellectual property protection in the discovery, development, manufacturing and sale of its products. In particular, patent protection is, in the aggregate, important in AbbVie's marketing of pharmaceutical products in the United States and most major markets outside of the United States. Patents covering AbbVie products normally provide market exclusivity, which is important for the profitability of many of AbbVie's products.
As patents for certain of its products expire, AbbVie will or could face competition from lower priced generic or biosimilar products. The expiration or loss of patent protection for a product typically is followed promptly by substitutes that may significantly reduce sales for that product in a short amount of time. If AbbVie's competitive position is compromised because of generics, biosimilars or otherwise, it could have a material adverse effect on AbbVie's business and results of operations. In addition, proposals emerge from time to time for legislation to further encourage the early and rapid approval of generic drugs.drugs or biosimilars. Any such proposals that are enacted into law could increase the impact of generic competition.
Large pharmaceutical companies and generics manufacturers of pharmaceutical products continue to expand into the biotechnology field and form partnerships to pursue biosimilars. Companies have developed and are developing biosimilars that compete with AbbVie’s biologic products, including Humira. As competitors obtain marketing approval for biosimilars referencing AbbVie’s biologic products, AbbVie’s products may become subject to competition from such biosimilars, with the attendant competitive pressure and consequences. Expiration of or successful challenges to AbbVie’s applicable patent rights could also trigger competition from other products, assuming any relevant exclusivity period has expired. As a result, AbbVie could face increased litigation and administrative proceedings with respect to the validity and/or scope of patents relating to its biologic products.
For example, Humira accounted for approximately 27% of AbbVie's total net revenues in 2023. Humira is facing competition from biosimilar products in the United States following the loss of exclusivity in 2023, which AbbVie anticipates will continue to cause a significant decline in Humira's revenue and could adversely affect AbbVie’s revenues and operating earnings.
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AbbVie's principal patents and trademarks are described in greater detail in Item 1, "Business—Intellectual Property Protection and Regulatory Exclusivity" and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations," and litigation regarding these patents is described in Item 3, "Legal Proceedings." The United States composition of matter patent for HUMIRA, which is AbbVie's largest product and had worldwide net revenues of approximately $18.4 billion in 2017, expired in December 2016, and the equivalent European Union patent is expected to expire in the majority of European Union countries in October 2018. Because HUMIRA is a biologic and biologics cannot be readily substituted, it is uncertain what impact the loss of patent protection would have on the sales of HUMIRA.

AbbVie's major products could lose patent protection earlier than expected, which could adversely affect AbbVie's future revenues and operating earnings.
A significant portion of AbbVie's revenue and operating earnings are derived from several major products. Third parties or government authorities may challenge or seek to invalidate or circumvent AbbVie's patents and patent applications. For example, manufacturers of generic pharmaceutical products file, and may continue to file, Abbreviated New Drug Applications with the FDA seeking to market generic forms of AbbVie's products prior to the expiration of relevant patents owned or licensed by AbbVie by asserting that the patents are invalid, unenforceable and/or not infringed. In addition, petitioners have filed, and may continue to file, challenges to the validity of AbbVieAbbVie's patents under the 2011 Leahy-Smith America Invents Act, which created inter partes review and post grant review procedures for challenging patent validity in administrative proceedings at the United States Patent and Trademark Office.
Although most of the challenges to AbbVie's intellectual property have come from other businesses, governments may also challenge intellectual property rights. For example, court decisions and potential legislation relating to patents, such as legislation regarding biosimilars, and other regulatory initiatives may result in further erosion of intellectual property protection. In addition, certain governments outside the United States have indicated that compulsory licenses to patents may be sought to further their domestic policies or on the basis of national emergencies, such as HIV/AIDS. If triggered, compulsory licenses couldmay diminish or eliminate sales and profits from those jurisdictions and negatively affect AbbVie's results of operations.
AbbVie normally responds to challenges by vigorously defending its patents, including by filing patent infringement lawsuits. Patent litigation, administrative proceedings and other challenges to AbbVie's patents are costly and unpredictable and may deprive AbbVie of market exclusivity for a patented product. To the extent AbbVie's intellectual property is successfully challenged, circumvented or circumventedweakened, or to the extent such intellectual property does not allow AbbVie to compete effectively, AbbVie's business will suffer. To the extent that countries do not enforce AbbVie's intellectual property rights or require compulsory licensing of AbbVie's intellectual property, AbbVie's future revenues and operating earnings will be reduced.

A third party's intellectual property may prevent AbbVie from selling its products or have a material adverse effect on AbbVie's future profitability and financial condition.
Third parties may claim that an AbbVie product infringes upon their intellectual property. In addition, in its pursuit of valid business opportunities, AbbVie may be required to challenge intellectual property rights held by others that it believes were improperly granted. Resolving an intellectual property infringement or other claim can be costly and time consuming and may require AbbVie to enter into license agreements. AbbVie cannot guarantee that it would be able to obtain license agreements on commercially reasonable terms. A successful claim of patent or other intellectual property infringement could subject AbbVie to significant damages or an injunction

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preventing the manufacture, sale, or use of the affected AbbVie product or products. Any of these events could have a material adverse effect on AbbVie's profitability and financial condition.

Any significant event that adversely affects HUMIRA revenues could have a material and negative impact on AbbVie's results of operations and cash flows.
HUMIRA accounted for approximately 65% of AbbVie's total net revenues in 2017. Any significant event that adversely affects HUMIRA's revenues could have a material adverse impact on AbbVie's results of operations and cash flows. These events could include loss of patent protection for HUMIRA, the commercialization of biosimilars of HUMIRA, the discovery of previously unknown side effects or impaired efficacy, increased competition from the introduction of new, more effective or less expensive treatments and discontinuation or removal from the market of HUMIRA for any reason.

AbbVie's research and development efforts may not succeed in developing and marketing commercially successful products and technologies, which may cause its revenues and profitability to decline.
To remain competitive, AbbVie must continue to launch new products and new indications and/or brand extensions for existing products, and suchproducts. Such launches must generate revenue sufficient both to cover its substantial research and development costs and to replace revenues of profitable products that are lost to or displaced by competing products or therapies. Failure to do so would have a material adverse effect on AbbVie's revenue and profitability. Accordingly, AbbVie commits substantial effort, funds and other resources to research and development and must make ongoing substantial expenditures without any assurance that its efforts will be commercially successful. A high rate of failure in the biopharmaceutical industry is inherent in the research and development of new products, and failure can occur at any point in the research and development process, including after significant funds have been invested. Products that appear promising in development may fail to reach the market for numerous reasons, including failure to demonstrate effectiveness, safety concerns, superior safety or efficacy of competing therapies, failure to achieve positive clinical or pre-clinical outcomes beyond the current standards of care, inability to obtain necessary regulatory approvals or delays in the approval of new products and new indications, limited scope of approved uses, excessive costs to manufacture or the failure to obtain or maintain intellectual property rights, or infringement of the intellectual property rights of others.
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Decisions about research studies made early in the development process of a pharmaceutical product candidate can affect the marketing strategy once such candidate receives approval. More detailed studies may demonstrate additional benefits that can help in the marketing, but they also consume time and resources and may delay submitting the pharmaceutical product candidate for regulatory approval. AbbVie cannot guarantee that a proper balance of speed and testing will be made with respect to each pharmaceutical product candidate or that decisions in this area would not adversely affect AbbVie's future results of operations.
Even if AbbVie successfully develops and markets new products or enhancements to its existing products, they may be quickly rendered obsolete by changing clinical preferences, changing industry standards, or competitors' innovations. AbbVie's innovations may not be accepted quickly in the marketplace because of existing clinical practices or uncertainty over third-party reimbursement. AbbVie cannot state with certainty when or whether any of its products under development will be launched, whether it will be able to develop, license, or otherwise acquire compounds or products, or whether any products will be commercially successful. Failure to launch successful new products or new indications for existing products may cause AbbVie's products to become obsolete, causing AbbVie's revenues and operating results to suffer.

AbbVie is subject to cost-containment efforts and pricing pressures that could cause a reduction in revenues and operating earnings, and changes in the terms of rebate and chargeback programs, which are common in the pharmaceuticals industry, could have a material adverse effect on AbbVie's operations.
Cost-containment efforts by governments and private organizations are described in greater detail in Item 1, "Business—Regulation—Commercialization, Distribution and Manufacturing." To the extent these cost containment efforts are not offset by greater demand, increased patient access to health care, or other factors, AbbVie's revenues and operating earnings will be reduced. In the United States, the European Union and other countries, AbbVie's business has experienced downward pressure on product pricing, and this pressure could increase in the future.
AbbVie is subject to increasing public and legislative pressure with respect to pharmaceutical pricing. In the United States, practices of managed care groups, and institutional and governmental purchasers, as well as federal laws and regulations related to Medicare and Medicaid, contribute to pricing pressures. In particular, the IRA will have the effect of reducing prices and reimbursements for certain of our products, which could significantly impact AbbVie’s results of operations. Under the IRA, the U.S Department of Health and Human Services can effectively set prices for certain single-source drugs and biologics reimbursed under Medicare Part B and Part D. Generally, these government prices can apply as soon as nine years (for small-molecule drugs) or 13 years (for biological products) from their FDA approval and will be capped at a statutory ceiling price that is likely to represent a significant discount from average prices to wholesalers and direct purchasers. In August 2023, the U.S. Department of Health and Human Services, through the CMS, selected Imbruvica as one of the first 10 medicines subject to government-set prices beginning in 2026. The price-setting process will conclude by August 1, 2024, and on September 1, 2024, the CMS will publish prices that will be applicable to the 10 drugs in the Medicare program beginning January 1, 2026. It is possible that more of our products, including products that generate substantial revenues, could be selected in future years, which could, among other things, accelerate revenue erosion prior to expiration of intellectual property protections. In addition, beginning in January 2025, under the IRA, the 70% coverage gap discount program will be replaced by a 10% manufacturer discount for all Medicare Part D beneficiaries that have met their deductible and incurred out of pocket drug costs below a $2,000 threshold and a 20% discount for beneficiaries that have incurred out of pocket drug costs above the $2,000 threshold under the new Part D benefit redesign. Manufacturers that fail to comply with the IRA may be subject to various penalties, including civil monetary penalties, which could be significant. The IRA has and will continue to meaningfully impact AbbVie’s business strategies and those of others in the pharmaceutical industry. The full impact of the IRA on AbbVie’s business and the pharmaceutical industry, including the implications to us of our or a competitor's product being selected for price setting, remains uncertain.
AbbVie continues to evaluate the impact that the IRA may have on the company. The potential for continuing changes to the health care system in the United States and the increased purchasing power of entities that negotiate on behalf of Medicare, Medicaid and private sector beneficiaries may result in additional pricing pressures. Additionally, changes to U.S. tax laws now require (i) a 15% alternative minimum tax generally applied to U.S. corporations on adjusted financial statement income beginning in 2023 and (ii) a non-deductible 1% excise tax provision on net stock repurchases.
In major markets worldwide, governments play a significant role in funding health care services and determining the pricing and reimbursement of pharmaceutical products. Consequently, in those markets, AbbVie is subject to government decision-making and budgetary actions with respect to its products. In particular, many European countries have ongoing government-mandated price reductions for many pharmaceutical products, and AbbVie anticipates continuing pricing pressures in Europe. Differences between countries' pricing regulations could lead to third-party cross-border trading in AbbVie's products that results in a reduction in revenues and operating earnings.
Rebates related to government programs, such as fee-for-service Medicaid or Medicaid managed care programs, arise from laws and regulations. AbbVie cannot predict with certainty if additional government initiatives to contain health care
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costs or other factors could lead to new or modified regulatory requirements that include higher or incremental rebates or discounts. Other rebate and discount programs arise from contractual agreements with private payers. Various factors, including market factors and the ability of private payers to control patient access to products, may provide payers the leverage to negotiate higher or additional rebates or discounts that could have a material adverse effect on AbbVie's operations.
A portion of AbbVie's near-term pharmaceutical pipeline relies on collaborations with third parties, which may adversely affect the development and sale of its products.
AbbVie depends on alliances and joint ventures with pharmaceutical and biotechnology companies for a portion of the products in its near-term pharmaceutical pipeline. For example, AbbVie is collaborating with Roche Holding AG to develop and commercialize a next-generation Bcl-2 inhibitor, Venclexta (venetoclax), for patients with relapsed/refractory chronic lymphocytic leukemia and AbbVie is investigating its efficacy for additional indications.
Failures by these parties to meet their contractual, regulatory, or other obligations to AbbVie, or any disruption in the relationships between AbbVie and these third parties, could have an adverse effect on AbbVie's pharmaceutical pipeline and business. In addition, AbbVie's collaborative relationships for research and development extend for many years and may give rise to disputes regarding the relative rights, obligations and revenues of AbbVie and its collaboration partners, including the ownership of intellectual property and associated rights and obligations. This could result in the loss of intellectual property rights or protection, delay the development and sale of potential pharmaceutical products, affect the effective sale and delivery of AbbVie's commercialized products and lead to lengthy and expensive litigation, administrative proceedings or arbitration.

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Biologics carry unique risks and uncertainties, which could have a negative impact on futureAbbVie's business and results of operations.
The successful discovery, development, manufacturing and sale of biologics is a long, expensive and uncertain process. There are unique risks and uncertainties with biologics. For example, access to and supply of necessary biological materials, such as cell lines, may be limited and current governmental regulations restrict access to and regulate the transport and use of such materials. In addition, the development, manufacturing and sale of biologics is subject to regulations that are often more complex and extensive than the regulations applicable to other pharmaceutical products. ManufacturingAs a result, manufacturing biologics, especially in large quantities, is often complex and may require the use of innovative technologies. Such manufacturing also requires facilities specifically designed and validated for this purpose and sophisticated quality assurance and quality control procedures. Biologics are also frequently costly to manufacture because production inputs are derived from living animal or plant material, and some biologics cannot be made synthetically. Failure to successfully discover, develop, manufacture and sell biologics—including HUMIRA—could adverselyHumira, Skyrizi and Botox —could have a negative impact on AbbVie's business and results of operations.

AbbVie's biologic products are subject to competition from biosimilars.
The Biologics Price Competition and Innovation Act creates a framework for the approval of biosimilars in the United States and could allow competitors to reference data from biologic products already approved. In Europe, the European Commission has granted marketing authorizations for several biosimilars pursuant to a set of general and product class-specific guidelines for biosimilar approvals issued over the past few years. In addition, companies are developing biosimilars in other countries that could compete with AbbVie’s biologic products. As competitors are able to obtain marketing approval for biosimilars referencing AbbVie’s biologic products, AbbVie’s products may become subject to competition from such biosimilars, with the attendant competitive pressure and consequences. Expiration or successful challenge of AbbVie’s applicable patent rights could also trigger competition from other products, assuming any relevant exclusivity period has expired. As a result, AbbVie could face more litigation and administrative proceedings with respect to the validity and/or scope of patents relating to its biologic products.

New products and technological advances by AbbVie's competitors may negatively affect AbbVie's results of operations.
AbbVie competes with other research-based pharmaceutical and biotechnology companies that discover,research, develop, manufacture, market and sell proprietary pharmaceutical products and biologics. For example, HUMIRAHumira competes with anti-TNF products and other competitive products intended to treat a number of disease states and AbbVie’s virology products competeMavyret/Maviret competes with other available hepatitis C treatment options. TheseIn addition, in the past few years, a number of other companies have started to develop, have successfully developed and/or are currently marketing products that are being positioned as competitors to Botox. All of these competitors may introduce new products or develop technological advances that compete with AbbVie’s products in therapeutic areas such as immunology, virology/liver disease, oncology, aesthetics, neuroscience and neuroscience.eye care. In addition, as AbbVie products lose exclusivity, competition surrounding such products will increase and generic and biosimilar products will increasingly penetrate the markets. AbbVie cannot predict with certainty the timing or impact of the introduction by competitors of new products or technological advances. Such competing products may be safer, more effective, more effectively marketed or sold, or have lower prices or better insurance coverage or reimbursement levels, or have superior performance features than AbbVie’s products, and this couldmay negatively impact AbbVie’s business and results of operations.

The manufacture of many of AbbVie's products is a highly exacting and complex process, and if AbbVie or one of its suppliers encounters problems manufacturing AbbVie's products, AbbVie's business could suffer.
The manufacture of many of AbbVie's products is a highly exacting and complex process, due in part to strict regulatory requirements. Problems may arise during manufacturing for a variety of reasons, including equipment malfunction, failure to follow specific protocols and procedures, problems with raw materials, delays related to the construction of new facilities or the expansion of existing facilities, including those intended to support future demand for AbbVie's products, changes in manufacturing production sites and limits to manufacturing capacity due to regulatory requirements, changes in the types of products produced, physical limitations that could inhibit continuous supply, man-made or natural disasters and environmental factors. If problems arise during the production of a batch of product, thatsuch batch of product may have to be
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discarded and AbbVie may experience product shortages or incur added expenses. This could, among other things, lead to increased costs, lost revenue, damage to customer relations, time and expense spent investigating the cause and, depending on the cause, similar losses with respect to other batches or products. If problems are not discovered before the product is released to the market, recall and product liability costs may also be incurred.

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AbbVie uses a number of productsraw materials and components in its pharmaceutical and biologic manufacturing processes, that areincluding those sourced from single suppliers, and an interruption in the supply of those productsraw materials and components could adversely affect AbbVie's business and results of operations.
AbbVie uses a number of productsraw materials and components in its pharmaceutical and biologic manufacturing processes that aremay be sourced from single suppliers. The failure of theseAbbVie's suppliers, and particularly its single-source suppliers, to fulfill their contractual obligations in a timely manner or as a result of regulatory noncompliance or physical disruption at a manufacturing site may impair AbbVie's ability to deliver its products to customers on a timely and competitive basis, which could adversely affect AbbVie's business and results of operations. Increases in demand on any of AbbVie's suppliers could result in delays and disruptions in the manufacturing, distribution and sale of its products and/or product shortages, leading to lost revenue. Finding an alternative supplier could take a significant amount of time and involve significant expense due to the nature of the products and the need to obtain regulatory approvals. AbbVie cannot guarantee that it will be able to reach agreement with alternative providers or that regulatory authorities would approve AbbVie's use of such alternatives. AbbVie does, however, carry businessBusiness interruption insurance which provides a degree of protectionmay not provide adequate compensation in the case of a failure by a single-source supplier.

Certain aspects of AbbVie’s operations are highly dependent upon third party service providers.
AbbVie relies on suppliers, vendors and other third party service providers to research, develop, manufacture, commercialize, promote and sell its products. Reliance on third party manufacturers reduces AbbVie’s oversight and control of the manufacturing process. Some of these third party providers are subject to legal and regulatory requirements, privacy and security risks and market risks of their own. The failure of a critical third party service provider to meet its obligations could have a material adverse impact on AbbVie’s operations and results. If any third party service providers have violated or are alleged to have violated any laws or regulations during the performance of their obligations to AbbVie, it is possible that AbbVie could suffer financial and reputational harm or other negative outcomes, including possible legal consequences.
Significant safety or efficacy issues could arise for AbbVie's products, which could have a material adverse effect on AbbVie's revenues and financial condition.
Pharmaceutical products receive regulatory approval based on data obtained in controlled clinical trials of limited duration. Following regulatory approval, these products will be used over longer periods of time in many patients. Investigators may also conduct additional,Additional, and perhaps more extensive, studies.studies may also be conducted, which may be sponsored by AbbVie but could also be sponsored by competitors, insurance companies, government institutions, scientists, investigators or other interested parties. If new safety or efficacy issues are reported or if new scientific information becomes available (including results of post-marketing Phase 4 trials), or if governments change standards regarding safety, efficacy or labeling, AbbVie may be required to amend the conditions of use for a product. For example, AbbVie may voluntarily provide or be required to provide updated information on a product's label or narrow its approved indication, either of which could reduce the product's market acceptance. If safety or efficacy issues with an AbbVie product arise, sales of the product could be halted by AbbVie or by regulatory authorities and regulatory action could be taken by such regulatory authorities. Safety or efficacy issues affecting suppliers' or competitors' products also may reduce the market acceptance of AbbVie'ssimilar AbbVie products.
New data about AbbVie's products, or products similar to its products, could negatively impact demand for AbbVie's products due to realactual or perceived safety issues or uncertainty regarding efficacy and, in some cases, could result in product withdrawal. Furthermore, new data and information, including information about product misuse, may lead government agencies, professional societies, practice management groups or organizations involved with various diseases to publish guidelines or recommendations related to the use of AbbVie's products or the use of related therapies or place restrictions on sales. Such guidelines or recommendations may lead to lower sales of AbbVie's products.

AbbVie is subject to product liability claims and other lawsuits that may adversely affect its business, and results of operations.operations and reputation.
In the ordinary course of business, AbbVie is the subject of product liability claims and lawsuits alleging that AbbVie's current or historical products or the products of other companies that it promotes have resulted or could result in an unsafe condition for or injury to patients. For example, lawsuits are pending against Allergan, AbbVie’s subsidiary, and certain of its former officers alleging they made misrepresentations and omissions regarding Allergan’s textured breast implants. Product liability claims and lawsuits and safety alerts or product recalls, regardless of their ultimate outcome, may have a material adverse effect on AbbVie's business, results of operations and reputation and on its ability to attract and retain customers.
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Consequences may also include additional costs, a decrease in market share for the product in question, lower incomerevenue and exposure to other claims. ProductAbbVie evaluates its risks and has determined that the cost of obtaining product liability insurance outweighs the likely benefits of the coverage that is available and, as such, AbbVie's product liability losses are self-insured.

AbbVie is also the subject to cost-containment effortsof other claims, legal proceedings and pricing pressures that could cause a reduction in future revenues and operating earnings, and changesinvestigations in the termsordinary course of rebate and chargeback programs,business, which are common in the pharmaceuticals industry, could have a material adverse effect on AbbVie's operations.
Cost-containment efforts by governments and private organizations are described in greater detail in Item 1, "Business—Regulation—Commercialization, Distribution and Manufacturing." To the extent these cost containment efforts are not offset by greater demand, increased patient accessrelate to health care, or other factors, AbbVie's future revenues and operating earnings will be reduced. In the United States, the European Unionintellectual property, commercial, securities and other countries, AbbVie'smatters. Adverse outcomes in such claims, legal proceedings and investigations may also adversely affect AbbVie’s business, has experienced downward pressure on product pricing,results of operations and this pressure could increase inreputation. See Note 15, "Legal Proceedings and Contingencies" to the future.Consolidated Financial Statements included under Item 8, "Financial Statements and Supplementary Data." AbbVie cannot predict with certainty the outcome of these proceedings.
AbbVie is subject to increasing public and legislative pressure with respect to pharmaceutical pricing. In the United States, practices of managed care groups, and institutional and governmental purchasers, and United States federal laws and regulations related to Medicare and Medicaid, including the Medicare Prescription Drug Improvement and Modernization Act of 2003 and the Patient Protection and Affordable Care Act, contribute to pricing pressures. The potential for continuing

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changes to the health care system in the United States and the increased purchasing power of entities that negotiate on behalf of Medicare, Medicaid and private sector beneficiaries could result in additional pricing pressures.
In numerous major markets worldwide, the government plays a significant role in funding health care services and determining the pricing and reimbursement of pharmaceutical products. Consequently, in those markets, AbbVie is subject to government decision-making and budgetary actions with respect to its products. In particular, many European countries have ongoing government-mandated price reductions for many pharmaceutical products, and AbbVie anticipates continuing pricing pressures in Europe. Differences between countries in pricing regulations could lead to third-party cross-border trading in AbbVie's products that results in a reduction in future revenues and operating earnings.
Rebates related to government programs, such as fee-for-service Medicaid or Medicaid managed care programs, arise from laws and regulations. AbbVie cannot predict if additional government initiatives to contain health care costs or other factors could lead to new or modified regulatory requirements that include higher or incremental rebates or discounts. Other rebate and discount programs arise from contractual agreements with private payers. Various factors, including market factors and the ability of private payers to control patient access to products, may provide payers the leverage to negotiate higher or additional rebates or discounts that could have a material adverse effect on AbbVie's operations.

AbbVie is subject to numerous governmental regulations, and it can be costly to comply with these regulations and to develop compliant products and processes.
AbbVie's products are subject to rigorous regulation by numerous international, supranational, federal and state authorities, as described in Item 1, "Business—Regulation—Discovery and Clinical Development."Development,” “Business—Regulation—Commercialization, Distribution and Manufacturing,” and “Business—Regulation—Medical Devices.” The process of obtaining regulatory approvals to market a pharmaceutical product can be costly and time consuming, and approvals mightmay not be granted for future products, or additional indications or uses of existing products, on a timely basis, if at all. Delays in the receipt of, or failure to obtain approvals for, future products, or new indications and uses, could result in delayed realization of product revenues, reduction in revenues and substantial additional costs.

The U.S. healthcare industry, in particular, is highly regulated and subject to frequent and substantial regulatory changes. It is expected that the U.S. healthcare industry will continue to be subject to increasing regulation as well as political and legal action, as future proposals to reform the healthcare system are considered by the executive branch, Congress and state legislatures. AbbVie cannot predict with certainty when additional changes in the healthcare industry in general, or the pharmaceutical industry in particular, will occur, or what the impact of such changes may be.

In addition, AbbVie cannot guarantee that it will remain compliant with applicable regulatory requirements once approval has been obtained for a product. These requirements include, among other things, regulations regarding manufacturing practices, product labeling and advertising and post-marketing reporting, including adverse event reports and field alerts due to manufacturing quality concerns. AbbVie must incur expense and spend time and effort to ensure compliance with these complex regulations.
Possible regulatory actions could result in substantial modifications to AbbVie's business practices and operations; refunds, recalls or seizures of AbbVie's products; a total or partial shutdown of production in one or more of AbbVie's or its suppliers' facilities while AbbVie or its supplier remedies the alleged violation; the inability to obtain future approvals; and withdrawals or suspensions of current products from the market. Any of these events could disrupt AbbVie's business and have a material adverse effect on its business and results of operations.

Laws and regulations affecting government benefit programs could impose new obligations on AbbVie, require it to change its business practices, and restrict its operations in the future.operations.
The health care industry is subject to various federal, state and international laws and regulations pertaining to government benefit programs reimbursement,program reimbursements, rebates, price reporting and regulation and health care fraud and abuse. In the United States, these laws include anti-kickback and false claims laws, the Medicaid Rebate Statute, the Veterans Health Care Act, the U.S. Physician Payments Sunshine Act, the TRICARE program, the government pricing rules applicable to the Medicaid, Medicare Part B, 340B Drug Pricing Program and individual state laws relating to pricing and sales and marketing practices. Violations of thesesuch laws and regulations may be punishable by criminal and/or civil sanctions, including, in some instances, substantial fines, imprisonment and exclusion from participation in federal and state health care programs, including Medicare, Medicaid and Veterans Administration health programs. Such violations may also lead to product recalls and seizures, interruption of production leading to product shortages, import bans or denials of import certifications, delays or denials in the approvals of new products or supplemental approvals of current products pending resolution of the issues, and reputational harm, any of which would adversely affect AbbVie's business. These laws and regulations are broad in scope and they are subject to change and evolving interpretations, which could require AbbVie to incur substantial costs associated with compliance or to alter one or more of its sales or marketing practices. In addition, violations of these laws and regulations, or allegations of such violations, could disrupt AbbVie's business and result in a material adverse effectimpose new obligations on AbbVie, require it to change its business practices and results ofrestrict its operations.

AbbVie could be subject to increased monetary penalties and/or other sanctions, including exclusion from federal health care programs, if it fails to comply with the terms of the May 7, 2012 resolution of the Department of Justice's investigation into sales and marketing activities for Depakote.
On May 7, 2012, Abbott settled United States federal and 49 state investigations into its sales and marketing activities for Depakote by pleading guilty to a misdemeanor violation of the Food, Drug and Cosmetic Act, agreeing to pay

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approximately $700 million in criminal fines and forfeitures and approximately $900 million to resolve civil claims, and submitting to a term of probation. The term of probation ended January 1, 2016 upon AbbVie satisfying all of the probation conditions. However, if AbbVie violates any remaining terms of the plea agreement, it may face additional monetary sanctions and otherPublic health outbreaks, epidemics or pandemics, such remedies as the court deems appropriate.coronavirus (COVID-19), have had, and could in the future have, an adverse impact on AbbVie’s operations and financial condition.
In addition, Abbott entered into a five-year CIA withPublic health outbreaks, epidemics or pandemics have had, and could in the Officefuture have, an adverse impact on AbbVie’s operations and financial condition. The pandemic caused by the novel strain of Inspector General forcoronavirus (COVID-19) caused many countries, including the United States, Departmentto declare national emergencies and implement preventive measures such as travel bans and shelter in place or total lock-down orders. The continuation or re-implementation of Healththese bans and Human Services (OIG).orders remains uncertain. The effective dateCOVID-19 pandemic caused AbbVie to modify certain of the CIA is October 11, 2012. The obligations of the CIA have transferred to and become fully binding on AbbVie. The CIA requires enhancements to AbbVie's compliance program, fulfillment of reporting and monitoring obligations, management certifications and resolutions from AbbVie's board of directors, among other requirements. Compliance with the requirements of the settlement will impose additional costs and burdens on AbbVie, including in the form of employee training, third party reviews, compliance monitoring, reporting obligations and management attention. If AbbVie fails to comply with the CIA, the OIG may impose monetary penalties or exclude AbbVie from federal health care programs, including Medicare and Medicaid. AbbVie and Abbott may be subject to third party claims and shareholder lawsuits in connection with the settlement,its business practices, and AbbVie may take further actions as may be required to indemnify allby government authorities or a portionas AbbVie determines are in the best interests of Abbott's costs.AbbVie’s employees, patients, customers and business partners.

The international nature of AbbVie's business subjects it to additional business risks that may cause its revenue and profitability to decline.
AbbVie's business is subject to risks associated with doing business internationally, including in emerging markets. Net revenues outside of the United States makemade up approximately 35%23% of AbbVie's total net revenues in 2017.2023. The risks associated with AbbVie's operations outside the United States include:
•fluctuations in currency exchange rates;
•changes in medical reimbursement policies and programs;programs and pricing restrictions;
•multiple legal and regulatory requirements that are subject to change and that could restrict AbbVie's ability to manufacture, market and sell its products;
•differing local product preferences and product requirements;
•trade protection measures and import or export licensing requirements;
•international trade disruptions or disputes;
•difficulty in establishing, staffing and managing operations;
•differing labor regulations;
•potentially negative consequences from changes in or interpretations of tax laws;
•political and economic instability, including instability;
•sovereign debt issues;
•price and currency exchange controls, limitations on participation in local enterprises, expropriation, nationalization and other governmental action;action and regulation;
•inflation, recession and fluctuations in interest rates;
•restrictions on transfers of funds;
•potential deterioration in the economic position and credit quality of certain non-U.S. countries, including in Europecountries; and Latin America; and
•potential penalties or other adverse consequences for violations of anti-corruption, anti-bribery and other similar laws and regulations, including the United States Foreign Corrupt Practices Act and the United Kingdom Bribery Act.
Events contemplated by these risks may, individually or in the aggregate, have a material adverse effect on AbbVie's revenues and profitability.

If AbbVie does not effectively and profitably commercialize IMBRUVICA,its products, AbbVie's revenues and financial condition could be adversely affected.
AbbVie must effectively and profitably commercialize IMBRUVICAits principal products by creating and meeting continued market demand; achieving market acceptance and generating product sales; ensuring that the active pharmaceutical ingredientingredient(s) for IMBRUVICAa product and the finished product are manufactured in sufficient quantities and in compliance with requirements of the FDA and similar foreign regulatory agencies and with acceptable quality and pricing to meet commercial demand; and ensuring that the entire supply chain efficiently and consistently delivers IMBRUVICAAbbVie's products to AbbVie'sits customers. The commercialization of

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IMBRUVICA AbbVie products may not be successful due to, among other things, unexpected challenges from competitors, new safety issues or concerns being reported that may impact or narrow the approved indications, the relative price of IMBRUVICAAbbVie's product as compared to alternative treatment options and changes to thea product's label for IMBRUVICA that further restrict its marketing. If the commercialization of IMBRUVICAAbbVie's principal products is unsuccessful, AbbVie's ability to generate revenue from product salesrevenues and realize the anticipated benefits of the merger with Pharmacyclics willfinancial condition could be adversely affected.

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AbbVie may acquire other businesses, license rights to technologies or products, form alliances, or dispose of assets, which could cause it to incur significant expenses and could negatively affect profitability.
AbbVie may pursuefrom time to time pursues acquisitions, technology licensing arrangements, joint ventures and strategic alliances, and/or disposedisposes of some of its assets, as part of its business strategy. AbbVie may not complete these transactions in a timely manner, on a cost-effective basis, or at all, and may not realize the expected benefits. If AbbVie is successful in making an acquisition, the products and technologies that are acquired may not be successful or may require significantly greater resources and investments than originally anticipated. AbbVie may not be able to integrate acquisitions successfully into its existing business and could incur or assume significant debt and unknown or contingent liabilities. AbbVie could also experience negative effects on its reported results of operations from acquisition or disposition-related charges, amortization of expenses related to intangibles and charges for impairment of long-term assets. These effects could cause a deterioration of AbbVie's credit rating and result in increased borrowing costs and interest expense.
Additionally, changes in AbbVie's structure, operations, revenues, costs, or efficiency resulting from major transactions such as acquisitions, divestitures, mergers, alliances, joint ventures, restructurings or other strategic initiatives, may result in greater than expected costs, may take longer than expected to complete or encounter other difficulties, including the need for regulatory approval where appropriate.

AbbVie is dependent on wholesale distributors for distribution of its products in the United States and, accordingly, its business and results of operations could be adversely affected if they encounter financial or other difficulties.
In 2017,2023, three wholesale distributors (McKesson Corporation, Cardinal Health, Inc. and AmerisourceBergen Corporation) accounted for substantially all of AbbVie's pharmaceutical product sales in the United States. If one of its significant wholesale distributors encounters financial or other difficulties, such distributor may decrease the amount of business that it does with AbbVie, and AbbVie may be unable to collect all the amounts that the distributor owes it on a timely basis or at all, which could negatively impactadversely affect AbbVie's business and results of operations.

AbbVie has debt obligations that could adversely affect its business and its ability to meet its obligations.
The amount of debt that AbbVie has incurred and intends to incur could have important consequences to AbbVie and its investors. These consequences include, among other things, requiring a portion of AbbVie's cash flow from operations to make interest payments on this debt and reducing the cash flow available to fund capital expenditures and other corporate purposes and to grow AbbVie's business. To the extent AbbVie incurs additional indebtedness or interest rates increase, these risks could increase.increase further. In addition, AbbVie's cash flow from operations may not be sufficient to repay all of the outstanding debt as it becomes due, and AbbVie may not be able to borrow money, sell assets, or otherwise raise funds on acceptable terms, or at all, to refinance its debt.

AbbVie may need additional financing in the future to meet its capital needs or to make opportunistic acquisitions, and such financing may not be available on favorable terms, if at all.
AbbVie may need to seek additional financing forin the future to meet its general corporate purposes.capital needs or to make opportunistic acquisitions. For example, it may need to increase its investment in research and development activities or need fundsactivities. The capital and credit markets may experience extreme volatility and disruption, which may lead to make acquisitions.uncertainty and liquidity issues for both borrowers and investors, and AbbVie may be unable to obtain any desired additional financing on terms favorable to it, if at all. If AbbVie loses its investment grade credit rating or adequate funds are not available on acceptable terms, AbbVie may be unable to fund its expansion, successfully develop or enhance products, or respond to competitive pressures, any of which could negatively affect AbbVie's business. If AbbVie raises additional funds by issuing debt or entering into credit facilities, it may be subject to limitations on its operations due to restrictive covenants. Failure to comply with these covenants could adversely affect AbbVie's business.

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AbbVie depends on information technology and a failure of, or significant disruption to, those systems could adversely affecthave a material adverse effect on AbbVie's business.
AbbVie relies on sophisticated software applications and complex information technology systems (including cloud services) to operate its business. These systemsbusiness, which are potentiallyinherently vulnerable to malicious intrusion, random attack, loss of data privacy, disruption, degradation or breakdown. Certain of these applications and systems are managed, hosted, provided or used by third parties. Data privacy or security breaches by employeesof our internal systems or othersthose of our information technology vendors may in the future result in the failure of critical business operations. Such breaches may cause sensitive data, including intellectual property, trade secrets or personal information belonging to AbbVie, its patients, customers or business partners, to be exposed to unauthorized persons or to the public. Although AbbVie has investedTo date, neither AbbVie’s business nor operations have been materially impacted by such incidents, however, the healthcare industry remains a target of cyber-attacks. Cybersecurity attacks and incidents are increasing in their frequency, sophistication and intensity and, due to the nature of some of these attacks, there
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is a risk that they may remain undetected for a period of time. AbbVie’s investments in the protection of its data and information technology and also monitorsits efforts to monitor its systems on an ongoing basis there canmay be no assurance that these efforts willinsufficient to prevent breakdowns or breachescompromises in AbbVie's information technology systems that could have a material adverse effect on AbbVie's business. Such adverse consequences could include loss of revenue or the loss of critical or sensitive information from AbbVie’s or third-party providers’ databases or information technology systems and could also result in legal, financial, reputational or business harm to AbbVie and potentially substantial remediation costs. In addition, AbbVie’s cyber insurance may not be sufficient to cover the financial, legal, business or reputational losses that may result from an interruption or breach of AbbVie systems or those of our third-party vendors.

AbbVie’s balances of intangible assets, including developed product rights and goodwill acquired, are subject to impairment testing and may result in impairment charges, which may adversely affect AbbVie’s results of operations and financial condition.
A significant amount of AbbVie’s total assets is related to acquired intangibles and goodwill. As of December 31, 2023, the carrying value of AbbVie’s developed product rights and other intangible assets was $55.6 billion and the carrying value of AbbVie’s goodwill was $32.3 billion.
AbbVie’s developed product rights are stated at cost, less accumulated amortization. AbbVie determines original fair value and amortization periods for developed product rights based on its assessment of various factors impacting estimated useful lives and cash flows of the acquired products. Significant adverse changes to any of these factors require AbbVie to perform an impairment test on the affected asset and, if evidence of impairment exists, require AbbVie to take an impairment charge with respect to the asset. For assets that are not impaired, AbbVie may adjust the remaining useful lives. Such a charge could adversely affect AbbVie’s results of operations and financial condition.
AbbVie’s other significant intangible assets include in-process research and development (IPR&D) intangible projects, acquired in recent business combinations, which are indefinite-lived intangible assets. For IPR&D assets, the risk of failure is significant, and there can be no certainty that these assets ultimately will yield successful products. AbbVie's business.ability to realize value on these significant investments is often contingent upon, among other things, regulatory approvals and market conditions. As such, IPR&D assets may become impaired and/or be written off at some point in the future if the associated research and development effort is abandoned or is curtailed.

Goodwill and AbbVie’s IPR&D intangible assets are tested for impairment annually, or when events occur, or circumstances change that could potentially reduce the fair value of the reporting unit or intangible asset. Impairment testing compares the fair value of the reporting unit or intangible asset to its carrying amount. A goodwill or IPR&D impairment, if any, would be recorded in operating income and could have a material adverse effect on AbbVie’s results of operations and financial condition.
Failure to attract, develop and retain highly qualified personnel could affect AbbVie’s ability to successfully develop and commercialize products.
AbbVie’s success is largely dependent on its continued ability to attract, develop and retain diverse, highly qualified scientific, technical and management personnel, as well as personnel with expertise in clinical research and development, governmental regulation and commercialization. Competition for qualified personnel in the biopharmaceutical field is intense and increasing. AbbVie cannot be sure that it will be able to attract and retain quality personnel or that the costs of doing so will not materially increase.
The illegal distribution and sale by third parties of counterfeit or unregistered versions of AbbVie products could have a material adverse impact on its reputation, business and results of operations.
Third parties may illegally obtain, distribute, and sell counterfeit or illegally diverted from their intended market versions of AbbVie products. These versions of product would not meet AbbVie's rigorous manufacturing, testing, distribution and quality standards. A patient who receives a counterfeit, stolen, or diverted drug may be at risk for a number of dangerous health consequences. The prevalence of counterfeit/diverted medicines is an industry-wide issue due to a variety of factors, including the adoption of e-commerce, which increased during the COVID-19 pandemic, greatly enhancing consumers' ability to obtain prescriptions and other medical treatments via the internet in lieu of traditional brick and mortar pharmacies. This can expose patients to greater risks as the internet is a preferred vehicle for dangerous counterfeit/diverted product offers and scams because of the anonymity it affords. AbbVie's reputation and business could suffer harm as a result of counterfeit
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or diverted drugs sold under its brand name which may also result in reduced revenues that could negatively affect our results of operation.
Other factors can have a material adverse effect on AbbVie's profitability and financial condition.
Many other factors can affect AbbVie's results of operations, cash flows and financial condition, including:
•changes in or interpretations of laws and regulations, including changes in accounting standards, taxation requirements, product marketing application standards, data privacy laws, particularly in the European Union and the United States and environmental laws;
•differences between the fair value measurement of assets and liabilities and their actual value, particularly for pension and post-employment benefits, stock-based compensation, intangibles and goodwill; and for contingent liabilities such as litigation and contingent consideration, the absence of a recorded amount, or an amount recorded at the minimum, compared to the actual amount;
•changes in the rate of inflation (including the cost of raw materials, commodities and supplies), interest rates, market value of AbbVie's equity investments and the performance of investments held by it or its employee benefit trusts;
•changes in the creditworthiness of counterparties that transact business with or provide services to AbbVie or its employee benefit trusts;
•environmental liabilities in connection with AbbVie’s manufacturing processes and distribution logistics, including the handling of hazardous materials;
•changes in the ability of third parties that provide information technology, accounting, human resources, payroll and other outsourced services to AbbVie to meet their contractual obligations to AbbVie;
•the failure, or perceived failure, of achieving environmental, social and governance objectives;
•information loss or damage to AbbVie's reputation, brand, image or goodwill due to increased use of social media platforms;
•business interruptions stemming from natural disasters, such as climate change, earthquakes, hurricanes, flooding, fires, or efforts taken by third parties to prevent or mitigate such disasters; and
•changes in business, economic and political conditions, including: war, political instability, terrorist attacks, the threat of future terrorist activity and related military action; natural disasters; the cost and availability of insurance due to any of the foregoing events; labor disputes, strikes, slow-downs, or other forms of labor or union activity; and pressure from third-party interest groups.

Risks Related to AbbVie's Common Stock

AbbVie cannot guarantee the timing, amount, or payment of dividends on its common stock or the repurchase of its common stock.
Although AbbVie expects to pay regular cash dividends, the timing, declaration, amount and payment of future dividends to stockholders will fall within the discretion of AbbVie's board of directors. The board's decisions regarding the payment of dividends will depend on many factors, such as AbbVie's financial condition, earnings, capital requirements, debt service obligations, industry practice, legal requirements, regulatory constraints and other factors that the board deems relevant. For more information, see Item 5, "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities." AbbVie's ability to pay dividends and repurchase shares under its share repurchase program will depend on its ongoing ability to generate cash from operations and access capital markets. AbbVie cannot guarantee that it will continue to pay a dividend in the future.

An AbbVie stockholder's percentage of ownership in AbbVie may be diluted in the future.
In the future, a stockholder's percentage ownership in AbbVie may be diluted because of equity issuances for capital market transactions, equity awards that AbbVie will be granting to AbbVie's directors, officers and employees, acquisitions or other purposes. AbbVie's employees have options to purchase shares of its common stock as a result of conversion of their Abbott stock options (in whole or in part) to AbbVie stock options. AbbVie anticipates its compensation committee will grant additional stock options or other stock-based awards to its employees. Such awards will have a dilutive effect on AbbVie's earnings per share, which could adversely affect the market price of AbbVie's common stock. From time to time, AbbVie will issue additional options or other stock-based awards to its employees under AbbVie's employee benefits plans.

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In addition, AbbVie's amended and restated certificate of incorporation authorizes AbbVie to issue, without the approval of AbbVie's stockholders, one or more classes or series of preferred stock having such designation, powers, preferences and relative, participating, optional and other special rights, including preferences over AbbVie's common stock respecting dividends and distributions, as AbbVie's board of directors generally may determine. The terms of one or more classes or series of preferred stock could dilute the voting power or reduce the value of AbbVie's common stock. For example, AbbVie could grant the holders of preferred stock the right to elect some number of AbbVie's directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences AbbVie could assign to holders of preferred stock could affect the residual value of the common stock.

Certain provisions in AbbVie's amended and restated certificate of incorporation and amended and restated by-laws, and of Delaware law, may prevent or delay an acquisition of AbbVie, which could decrease the trading price of AbbVie's common stock.
AbbVie's amended and restated certificate of incorporation and amended and restated by-laws contain, and Delaware law contains, provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the bidder and to encourageencouraging prospective acquirors to negotiate with AbbVie's board of directors rather than to attempt a hostile takeover. These provisions include, among others:
•the inability of AbbVie's stockholders to call a special meeting;
•the division of AbbVie's board of directors into three classes of directors, with each class serving a staggered three-year term;
•a provision that stockholders may only remove directors for cause;
•the ability of AbbVie's directors, and not stockholders, to fill vacancies on AbbVie's board of directors; and
•the requirement that the affirmative vote of stockholders holding at least 80% of AbbVie's voting stock is required to amend certain provisions in AbbVie's amended and restated certificate of incorporation and AbbVie's amended and restated by-laws relating to the number, term and election of AbbVie's directors, the filling of board vacancies, the calling of special meetings of stockholders and director and officer indemnification provisions.
In addition, Section 203 of the Delaware General Corporation Law provides that, subject to limited exceptions, persons that acquire, or are affiliated with a person that acquires, more than 15% of the outstanding voting stock of a Delaware corporation shall not engage in any business combination with that corporation, including by merger, consolidation or acquisitions of additional shares, for a three-year period following the date on which that person or its affiliates becomes the holder of more than 15% of the corporation's outstanding voting stock.
AbbVie believes these provisions protect its stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirors to negotiate with AbbVie's board of directors and by providing AbbVie's board of directors with more time to assess any acquisition proposal. These provisions are not intended to make the company immune from takeovers. However, these provisions apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that AbbVie's board of directors determines is not in the best interests of AbbVie and AbbVie's stockholders. These provisions may also prevent or discourage attempts to remove and replace incumbent directors.


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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains certain forward lookingforward-looking statements regarding business strategies, market potential, future financial performance and other matters. The words "believe," "expect," "anticipate," "project" and similar expressions among others,and uses of future or conditional verbs, generally identify "forward looking statements," which speak only as of the date the statements were made. The matters discussed in these forward lookingforward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those projected, anticipatedexpressed or implied in the forward lookingforward-looking statements. In particular, information included under Item 1, "Business," Item 1A, "Risk Factors," and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" contain forward looking statements. Where, in any forward looking statement, an expectation or belief as to future results or events is expressed or implied, such expectation or belief is based on the current plans and expectations of AbbVie management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. Factors that could cause actual results or events to differ materially from those anticipated include, but are not limited to, the matters described under Item 1A, "Risk Factors" and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations." AbbVie does not undertake, and specifically declines, any obligation to update the forward-looking statements included in this Annual Report on Form 10-K to reflect events or circumstances after the date hereof, unless AbbVie is required by applicable securities law to do so.

ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

ITEM 2. PROPERTIES1C. CYBERSECURITY
We rely on complex information technology systems and various software applications to operate our business. We have developed a comprehensive cybersecurity program designed to protect our systems and the confidentiality, integrity and availability of our data.

We have implemented processes that are intended to assess, identify, manage and reduce cybersecurity risks. We maintain a global incident response plan and disaster recovery management plan, each designed to protect against, identify, evaluate, respond to and recover from an incident. These plans anticipate an array of potential scenarios and provide for the assembly of a cybersecurity incident response team in the event of a cyber incident. The incident response team is a cross-functional group that may be composed of both company personnel and external service providers, and which is tailored to a particular incident so that individuals with appropriate experience and expertise are available. We regularly conduct exercises to help ensure the plans’ effectiveness and our overall preparedness.

We also have invested in tools and technologies to protect our and our patients', customers' and business partners' data and information technology, and we regularly monitor our information technology systems and infrastructure to identify and assess cybersecurity risks. We have designed a Threat Intelligence function that actively looks for risks that target the pharmaceutical industry generally or AbbVie specifically. We rely in part on third parties (including assessors, consultants, advisors and others) in connection with our processes for assessing, identifying, managing and reducing cyber risks.

In addition, we have implemented a cybersecurity awareness program designed to educate and train our entire employee network on how to identify and report cybersecurity threats. Training programs are conducted on a periodic basis and are focused on giving employees tools to manage and defend against the most relevant and prevalent cybersecurity risks to AbbVie. We also provide specialized training for employees in specialized information technology roles. We conduct regular drills, such as tabletop exercises, to help with our overall preparedness.

We take measures to regularly update and improve our cybersecurity program, including conducting independent program assessments, penetration testing and scanning of our systems for vulnerabilities. We follow the National Institute of Standards and Technology (NIST) Cybersecurity Framework and undergo a third-party assessment every two years to measure the maturity of our cybersecurity program against the NIST Cybersecurity Framework. In addition, we periodically engage third-party advisors to assess the effectiveness and capabilities of our cybersecurity program, strengthen our cybersecurity policies and practices and identify potential vulnerabilities of our systems.

With respect to third-party service providers, our information security program includes conducting due diligence of relevant service providers’ information security programs prior to onboarding. We also contractually require third-party service providers with access to our information technology systems, sensitive business data or personally identifiable
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information to implement and maintain appropriate security controls and contractually restrict their ability to use our data, including personally identifiable information, for purposes other than to provide services to us, except as required by law. To oversee the risks associated with these service providers, we work with them to help ensure that their cybersecurity protocols are appropriate to the risk presented by their access to or use of our systems and/or data, including notification and coordination concerning incidents occurring on third-party systems that may affect us. These relevant service providers are contractually required to notify us promptly of information security incidents that may affect our systems or data, including personally identifiable information. While we conduct due diligence on the security and business controls of our third-party service providers and take steps to monitor their compliance with our security requirements, we may not have the ability in all cases to effectively monitor or oversee the implementation of these control measures.

As of December 31, 2023, cybersecurity risks have not materially affected our business, strategy, results of operations, or financial condition. Although we have invested in the protection of our data and information technology and monitor our systems on an ongoing basis, there can be no assurance that such efforts will in the future prevent material compromises to our information technology systems that could have a material adverse effect on our business. We maintain cybersecurity insurance coverage to mitigate our financial exposure to certain incidents. For additional information about our cybersecurity risks, see Item 1A, "Risk Factors - AbbVie depends on information technology and a failure of, or significant disruption to, those systems could have a material adverse effect on AbbVie's business."

Our board of directors has risk oversight responsibility for AbbVie and administers this responsibility both directly and with assistance from its committees. Each of the committees periodically reports to the board of directors on its risk oversight activities. Cybersecurity is a critical component of our enterprise risk management program, which is designed to be business aligned, risk-focused and multi-faceted to protect our and our patients', customers' and business partners' data. Our board of directors is actively involved in reviewing our information security and technology risks and opportunities (including cybersecurity) and discusses these topics on a regular basis.

The Audit Committee, comprised solely of independent directors, oversees our enterprise risk management program and assists the board of directors in fulfilling its oversight responsibility with respect to our information security and technology risks (including cybersecurity), which are fully integrated into our enterprise risk management program. The Audit Committee reviews and discusses our information security and technology risks (such as cybersecurity), including our information security and risk management programs.

Our cybersecurity program is led by our Chief Information Security Officer, who is responsible for assessing and managing our information security and technology risks (including cybersecurity). He has more than 25 years of experience in information security and information technology risk management, holding chief information security officer positions with Fortune 500 companies in the retail, healthcare and life sciences industries. He has also served on the Health-ISAC board of directors and is a Certified Information System Security Professional (CISSP).

Our Chief Information Security Officer meets regularly with our information technology teams as well as other members of management to review and discuss our cybersecurity and other information technology risks and opportunities. Our global incident response plan sets forth a detailed security incident management and reporting protocol, with escalation timelines and responsibilities.

The Audit Committee receives regular updates from the Chief Information Security Officer and other members of management on our cybersecurity program, including on information security and technology risks, program assessments, and risk management practices. Our Chief Information Security Officer also provides similar topical updates to the full board of directors at least annually.

2023 Form 10-K | abbvieimage3.gif
26
ITEM 2. PROPERTIES
AbbVie's corporate offices are located at 1 North Waukegan Road, North Chicago, Illinois 60064-6400. As of December 31, 2023, AbbVie owns or leases approximately 620 facilities worldwide, containing an aggregate of approximately 19.5 million square feet of floor space dedicated to production, distribution and administration. AbbVie's significant manufacturing facilities are in the following locations:
United StatesOutside the United States
Abbott Park, Illinois*Campoverde di Aprilia, Italy
Barceloneta, Puerto RicoCork,Clonshaugh, Ireland
Jayuya, Puerto RicoBranchburg, New Jersey*Ludwigshafen, GermanyLa Aurora, Costa Rica
Campbell, CaliforniaLudwigshafen, Germany
Cincinnati, OhioPringy, France
Dublin, California*Singapore*
Irvine, CaliforniaSligo, Ireland
North Chicago, IllinoisSingapore*Westport, Ireland*
Waco, Texas
Worcester, Massachusetts*Sligo, Ireland
Wyandotte, Michigan*

*Leased property.
In addition to the above, AbbVie has other manufacturing facilities worldwide. *    Leased property.
AbbVie believes its facilities are suitable and provide adequate production capacity.capacity for its current and projected operations. There are no material encumbrances on AbbVie's owned properties.
InAbbVie distributes products through a network of central and regional distribution centers, with its central distribution centers located in the United States, including Puerto Rico, AbbVie has one distribution center.U.S. and Europe. AbbVie also has research and development facilities in the United States located at: Abbott Park, Illinois; Branchburg, New Jersey; Cambridge, Massachusetts; Irvine, California; Madison, New Jersey; North Chicago, Illinois; Redwood City,Pleasanton, California; South San Francisco, California; Sunnyvale, California; Cambridge, Massachusetts; and Worcester, Massachusetts. Outside the United States, AbbVie's principal research and development facilities are located in Ludwigshafen, Germany.


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ITEM 3. LEGAL PROCEEDINGS
Information pertaining to legal proceedings is provided in Note 14,15, "Legal Proceedings and Contingencies" to the Consolidated Financial Statements included under Item 8, "Financial Statements and Supplementary Data," and is incorporated by reference herein.

ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.


2017 Form 10-K  |    21




EXECUTIVE OFFICERS OF THE REGISTRANT
The following table lists AbbVie's executive officers, each of whom was first appointed as an AbbVie corporate officer in December 2012, except as otherwise indicated:

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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
NameAgePosition
NameAgePosition
Richard A. Gonzalez7064Chairman of the Board and Chief Executive Officer
Carlos AlbanRobert A. Michael5355Executive Vice President Commercial Operationsand Chief Operating Officer
William J. ChaseScott T. Reents5650Executive Vice President, Chief Financial Officer
Henry O. Gosebruch*Nicholas J. Donoghoe, M.D.4345Executive Vice President, Chief Business and Chief Strategy Officer
LauraTimothy J. SchumacherRichmond5754Executive Vice President, Chief Human Resources Officer
Azita Saleki-Gerhardt, Ph.D.60Executive Vice President, External Affairs,Chief Operations Officer
Perry C. Siatis49Executive Vice President, General Counsel and Corporate Secretary
Michael E. Severino, M.D.*Jeffrey R. Stewart5552Executive Vice President, Research and Development and Chief ScientificCommercial Officer
Timothy J. RichmondKevin K. Buckbee5851Senior Vice President, Human ResourcesController
Azita Saleki-Gerhardt, Ph.D.Thomas J. Hudson, M.D.6254Senior Vice President, OperationsChief Scientific Officer, Global Research
Robert A. Michael*Roopal Thakkar, M.D.5247Senior Vice President, ControllerChief Medical Officer, Global Therapeutics

*Mr. Gosebruch was first appointed as a corporate officer in December 2015; Dr. Severino was first appointed as a corporate officer in June 2014; and Mr. Michael was first appointed as a corporate officer in December 2015.


Mr. Gonzalez is the Chairman and Chief Executive Officer of AbbVie.AbbVie, a position he has held since 2013. He served as Abbott’s Executive Vice President of the Pharmaceutical Products Grouppharmaceutical products group from July 2010 to December 2012, and was responsible for Abbott’s worldwide pharmaceutical business, including commercial operations, research and development, and manufacturing. He also served as President, Abbott Ventures Inc., Abbott’s medical technology investment arm, from 2009 to 2011. Mr. Gonzalez joined Abbott in 1977 and held various management positions before briefly retiring in 2007, including: Abbott’s President and Chief Operating Officer;Officer; President, Chief Operating Officer of Abbott’s Medical Products Group;Group; Senior Vice President and President of Abbott’s former Hospital Products Division;Division; Vice President and President of Abbott’s Health Systems Division;Division; and Divisional Vice President and General Manager for Abbott’s Diagnostics Operations in the United States and Canada. On February 14, 2024, the Board of Directors of AbbVie unanimously selected Mr. Michael to succeed Mr. Gonzalez as the Company's Chief Executive Officer. Mr. Gonzalez will retire from the role of Chief Executive Officer and become Executive Chairman of the Board of Directors, effective July 1, 2024.

Mr. AlbanMichael is AbbVie'sAbbVie’s President and Chief Operating Officer. Mr. Michael previously served as Vice Chairman and President from June 2022 to July 2023, as Vice Chairman, Finance and Commercial Operations and Chief Financial Officer from June 2021 to June 2022, as Executive Vice President, Commercial Operations. He served as Abbott's Senior Vice President, Proprietary Pharmaceutical Products, Global Commercial OperationsChief Financial Officer from 20112019 to 2012,2021, as Senior Vice President, International PharmaceuticalsChief Financial Officer from 20092018 to 2011, as Vice President, Western Europe and Canada from 2007 to 2009,2019 and as Vice President, EuropeanController from 2017 to 2018. He served as AbbVie’s Vice President, Treasurer from 2015 to 2016, as Vice President, Controller, Commercial Operations from 20062013 to 2007.2015 and as Vice President, Financial Planning and Analysis from 2012 to 2013. At Abbott, Mr. AlbanMichael served as Division Controller, Nutrition Supply Chain from 2010 to 2012. Mr. Michael joined Abbott in 1986.1993 and was first appointed as an AbbVie corporate officer in March 2017. On February 14, 2024, the Board of Directors of AbbVie unanimously selected Mr. Michael to succeed Mr. Gonzalez as the Company's Chief Executive Officer. Mr. Gonzalez will retire from the role of Chief Executive Officer and become Executive Chairman of the Board of Directors, effective July 1, 2024. The Board also appointed Mr. Michael as a member of the Board of Directors as a Class II director, effective July 1, 2024.

Mr. ChaseReents is AbbVie'sAbbVie’s Executive Vice President, Chief Financial Officer. He previously served as Abbott'sSenior Vice President, Licensing and AcquisitionsChief Financial Officer from 2010June 2022 to 2012,November 2022, as Vice President, TreasurerTax and Treasury from 20072019 to 2010,June 2022, and as Divisional Vice President, Controller of Abbott InternationalTax from 20042013 to 2007.2019. Mr. ChaseReents joined Abbott in 1989.2008 and was first appointed as an AbbVie corporate officer in June 2022.
Mr. Gosebruch
Dr. Donoghoe is AbbVie'sAbbVie’s Executive Vice President, Chief Business and Chief Strategy Officer. He worked for more than 20 years in the Mergers & Acquisitions Group at J.P. Morgan Securities LLC, servinghas previously served as Managing Director since 2007 and as Co-Head of M&A North America during 2015. Mr. Gosebruch joined AbbVie in 2015.
Ms. Schumacher is AbbVie's ExecutiveAbbVie’s Senior Vice President, External Affairs, General Counsel and Corporate Secretary, responsible for AbbVie's externally-facing functions of Health Economics Outcomes Research, Government Affairs, Corporate Responsibility, Brand and Communications. She also leads AbbVie's legal functions. PriorChief Operating Officer, R&D from 2022 to AbbVie's separation from Abbott, Ms. Schumacher served2023, as ExecutiveSenior Vice President, General CounselPortfolio Innovation from 2021 to 2022, as Senior Vice President, Global Strategy and Corporate SecretaryOperations, Allergan Aesthetics, from 20072020 to 2012,2021, and as Senior Vice President, Corporate SecretaryEnterprise Innovation from 2019 to 2020. Prior to joining AbbVie in 2019, he served as a Partner at McKinsey & Company where he was a leader of the firm's Pharma and General Counsel from 2005 to 2007. Both at Abbott and AbbVie, Ms. Schumacher also led Licensing and Acquisition and Ventures and Early Stage Collaborations. At Abbott, Ms. Schumacher was also responsibleBiotechnology practice for its Office of Ethics and Compliance. Ms. Schumacher joined Abbott in 1990. She serves on the board of General Dynamics Corporation.over a decade.
Dr. Severino
Mr. Richmond is AbbVie'sAbbVie’s Executive Vice President, Research and Development and Chief ScientificHuman Resources Officer. Dr. SeverinoHe served at Amgen Inc. as Senior Vice President, Global Development and Corporate Chief Medical OfficerHuman Resources from 20122013 to 2014, as Vice President, Global Development from 2010 to 2012 and as Vice President, Therapeutic Area Head, General Medicine and Inflammation Global Clinical Development from 2007 to 2012. He joined AbbVie in 2014.

22    |2017 Form 10-K



2018. Mr. Richmond is AbbVie's Senior Vice President, Human Resources. He served as Abbott'sAbbott’s Divisional Vice President of Compensation & Benefits from 2008 to 2012, as Group Vice President of Talent and Rewards from 2007 to 2008 and as Divisional Vice President of Talent Acquisition from 2006 to 2007. Mr. Richmond joined Abbott in 2006.2006 and was first appointed as an AbbVie corporate officer in December 2012.


2023 Form 10-K | abbvieimage3.gif
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Dr. Saleki-Gerhardt is AbbVie'sAbbVie’s Executive Vice President, Chief Operations Officer. She served as Executive Vice President, Operations from 2018 to July 2023, and as Senior Vice President, Operations. SheOperations from 2013 to 2018. Dr. Saleki-Gerhardt served as Abbott'sAbbott’s Vice President, Pharmaceuticals Manufacturing and Supply from 2011 to 2012, and as Divisional Vice President, Quality Assurance, Global Pharmaceutical Operations from 2008 to 2011. Dr. Saleki-Gerhardt joined Abbott in 1993.1993 and was first appointed as an AbbVie corporate officer in December 2012. She serves on the board of Entegris Inc.

Mr. Michael has beenSiatis is AbbVie’s Executive Vice President, Controller, since March 1, 2017. He becameGeneral Counsel and Secretary. Mr. Siatis previously served as Senior Vice President, Deputy General Counsel from September 2021 until October 2022. From 2013 until 2021, Mr. Siatis also served in various roles including as Senior Vice President, Legal and Chief Ethics and Compliance Officer; Senior Vice President of Legal Transactions and R&D/Alliance Management and Chief Ethics and Compliance Officer; and Vice President, Biologic Strategic Development and Legal Regulatory. Mr. Siatis joined Abbott in 2005 and was first appointed as an AbbVie corporate officer in 2015October 2022.

Mr. Stewart is AbbVie’s Executive Vice President, Chief Commercial Officer. He previously served as Senior Vice President, U.S. Commercial Operations from 2018 to 2020 and as AbbVie’s President, Commercial Operations from 2013 to 2018. Prior to AbbVie’s separation from Abbott, he served as Vice President, Abbott Proprietary Pharmaceutical Division, United States. Mr. Stewart joined Abbott in 1992 and was first appointed as an AbbVie corporate officer in December 2018.

Mr. Buckbee is AbbVie’s Senior Vice President, Controller. Mr. Buckbee previously served as AbbVie’s Vice President, TreasurerController, Global Commercial Operations from 2015 toJanuary 2016 until March 2023, and as Vice President, Controller, US Commercial Operations from AbbVie’s separation from Abbott in 2013 to 2015 and Vice President, Financial Planning and Analysis from 2012 to 2013. At Abbott,until December 2015. Mr. Michael served as Division Controller, Nutrition Supply Chain from 2010 to 2012. Mr. MichaelBuckbee joined Abbott in 1993.1991 and held several positions in the finance organization.

Dr. Hudson is AbbVie's Senior Vice President, Chief Scientific Officer, Global Research. He previously served as Senior Vice President, Research & Development and Chief Scientific Officer from 2019 to 2023, and as Vice President, Head of Oncology Discovery and Early Development from 2016 to 2019. Prior to joining AbbVie, Dr. Hudson served at the Ontario Institute for Cancer Research as President and Scientific Director. He also previously served as Founder and Director of the McGill University and Genome Quebec Innovation Centre and Assistant Director of the Whitehead/MIT Center for Genome Research. Dr. Hudson was first appointed as an AbbVie corporate officer in July 2019.

Dr. Thakkar serves as AbbVie's Senior Vice President, Chief Medical Officer, Global Therapeutics. He previously served as Senior Vice President of Development and Regulatory Affairs and Chief Medical Officer at AbbVie from late 2022 until early December 2023, as Vice President, Global Regulatory Affairs and R&D Quality Assurance from 2019 to 2022, and as Vice President, Global Regulatory Affairs from 2015 to 2019. Dr. Thakkar joined Abbott in 2003 and was first appointed as a corporate officer in December 2023.
The executive officers of AbbVie are elected annually by the board of directors. All other officers are elected by the board or appointed by the Chairman of the Board. All officers are either elected at the first meeting of the board of directors held after the annual stockholder meeting or appointed by the Chairman of the Board after that board meeting. Each officer holds office until a successor has been duly elected or appointed and qualified or until the officer's death, resignation, or removal. There are no family relationships between any of the executive officers listed above.


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2017Image3.gif|2023 Form 10-K|    23




PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Principal Market
The principal market for AbbVie's common stock is the New York Stock Exchange (NYSE)(Symbol: ABBV). AbbVie's common stock is also listed on the Chicago Stock Exchange and traded on various regional and electronic exchanges.
 Market Price Per Share
 2017 2016
 HighLow HighLow
First Quarter$66.79$59.27 $59.81$50.71
Second Quarter$73.67$63.12 $65.37$56.36
Third Quarter$90.95$69.38 $68.12$61.77
Fourth Quarter$99.10$85.24 $65.05$55.06

Stockholders
There were 50,09542,369 stockholders of record of AbbVie common stock as of January 31, 2018.2024.
Dividends
The following table summarizes quarterly cash dividends declared for the years ended December 31, 2017 and 2016:

2017 2016
Date Declared
Payment Date
Dividend Per Share Date Declared Payment Date Dividend Per Share
10/27/17 02/15/18 $0.71 10/28/16 02/15/17 $0.64
09/08/17 11/15/17 $0.64 09/09/16 11/15/16 $0.57
06/22/17 08/15/17 $0.64 06/16/16 08/15/16 $0.57
02/16/17 05/15/17 $0.64 02/18/16 05/16/16 $0.57

On October 27, 2017, AbbVie's board of directors declared an increase in the quarterly cash dividend from $0.64 per share to $0.71 per share, payable on February 15, 2018 to stockholders of record as of January 12, 2018. The timing, declaration, amount of and payment of any dividends by AbbVie in the future is within the discretion of its board of directors and will depend upon many factors, including AbbVie's financial condition, earnings, capital requirements of its operating subsidiaries, covenants associated with certain of AbbVie's debt service obligations, legal requirements, regulatory constraints, industry practice, ability to access capital markets and other factors deemed relevant by its board of directors. Moreover, if AbbVie determines to pay any dividend in the future, there can be no assurance that it will continue to pay such dividends or the amount of such dividends.
Performance Graph
The following graph compares the cumulative total returns of AbbVie, the S&P 500 Index and the NYSE Arca Pharmaceuticals Index. This graph coversIndex for the period from January 2, 2013 (the first day AbbVie's common stock began "regular-way" trading on the NYSE)December 31, 2018 through December 31, 2017.2023. This graph assumes $100 was invested in AbbVie common stock and each index on January 2, 2013December 31, 2018 and also assumes the reinvestment of dividends. The stock price performance on the following graph is not necessarily indicative of future stock price performance.

24    |2017 Form 10-K



866
This performance graph is furnished and shall not be deemed "filed" with the SEC or subject to Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any of AbbVie's filings under the Securities Act of 1933, as amended.
2023 Form 10-K | abbvieimage3.gif
30
Dividends
On October 26, 2023, AbbVie's board of directors declared an increase in the quarterly cash dividend from $1.48 per share to $1.55 per share, payable on February 15, 2024, to stockholders of record as of January 16, 2024. The timing, declaration, amount of and payment of any dividends by AbbVie in the future is within the discretion of its board of directors and will depend upon many factors, including AbbVie's financial condition, earnings, capital requirements of its operating subsidiaries, covenants associated with certain of AbbVie's debt service obligations, legal requirements, regulatory constraints, industry practice, ability to access capital markets and other factors deemed relevant by its board of directors. Moreover, if AbbVie determines to pay any dividend in the future, there can be no assurance that it will continue to pay such dividends or the amount of such dividends.
Issuer Purchases of Equity Securities
Period Total
Number
of Shares
(or Units)
Purchased		Average
Price
Paid per Share
(or Unit)		Total
Number of
Shares (or Units)
Purchased as Part
of Publicly
Announced
Plans or
Programs		Maximum Number (or
Approximate Dollar Value) of
Shares (or Units) that May
Yet Be Purchased Under the
Plans or Programs
October 1, 2023 - October 31, 2023952 (1)$147.82 (1)— $4,808,991,028 
November 1, 2023 - November 30, 20231,175 (1)$141.94 (1)— $4,808,991,028 
December 1, 2023 - December 31, 202326,320 (1)$153.02 (1)— $4,808,991,028 
Total28,447 (1)$152.39 (1)— $4,808,991,028 

Period
(a) Total
Number
of Shares
(or Units)
Purchased
 
(b) Average
Price
Paid per Share
(or Unit)
 
(c) Total
Number of
Shares (or Units)
Purchased as Part
of Publicly
Announced
Plans or
Programs
 
(d) Maximum Number (or
Approximate Dollar Value) of
Shares (or Units) that May
Yet Be Purchased Under the
Plans or Programs
October 1, 2017 - October 31, 20178,469
(1) 
$94.35
 —
 $4,536,288,945
November 1, 2017 - November 30, 20175,279,237
(1) 
$94.76
 5,276,274
 $4,036,289,077
December 1, 2017 - December 31, 201720,588
(1) 
$97.85
 —
 $4,036,289,077
Total5,308,294
(1) 
94.77
 5,276,274
 $4,036,289,077

1.1.    In addition to AbbVie shares repurchased on the open market under a publicly announced program, if any, these shares included the shares deemed surrendered to AbbVie to pay the exercise price in connection with the exercise of employee stock options – 4,552 in October; 1,855 in November; and 5,368 in December, with average exercise prices of $95.96 in October; $93.36 in November; and $97.33 in December.

These shares also included the shares purchased on the open market for the benefit of participants in the AbbVie Employee Stock Purchase Plan – 3,917952 in October; 1,1081,175 in November; and 15,22026,320 in December.


2017 Form 10-K  |    25




These shares do not include the shares surrendered to AbbVie to satisfy minimum tax withholding obligations in connection with the vesting or exercise of stock-based awards.
On February 15, 2018, AbbVie's board of directors authorized a new $10.0 billion stock repurchase program, which superseded AbbVie's previous stock repurchase program. The new stock repurchase program permits purchases of AbbVie shares from time to time in open-market or private transactions, including accelerated share repurchases, at management’s discretion. The program has no time limit and can be discontinued at any time.

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ITEM 6. [RESERVED]

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| abbvieimage3.gif


ITEM 6. SELECTED FINANCIAL DATA
32

The selected financial information should be read in conjunction with the financial statements and accompanying notes included under Item 8, "Financial Statements and Supplementary Data" and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations."

as of and for the years ended December 31 (in millions, except per share data)2017 2016 2015 2014 2013 
Statement of earnings data          
Net revenues$28,216
 $25,638
 $22,859
 $19,960
 $18,790
 
Net earnings5,309
 5,953
 5,144
 1,774
 4,128
 
Basic earnings per share$3.31
 $3.65
 $3.15
 $1.11
 $2.58
 
Diluted earnings per share$3.30
 $3.63
 $3.13
 $1.10
 $2.56
 
Cash dividends declared per common share$2.63
 $2.35
 $2.10
 $1.75
 $2.00
 (a) 
Weighted-average basic shares outstanding1,596
 1,622
 1,625
 1,595
 1,589
 
Weighted-average diluted shares outstanding1,603
 1,631
 1,637
 1,610
 1,604
 
Balance sheet data          
Total assets (b)(c)
$70,786
 $66,099
 $53,050
 $27,513
 $29,241
 
Long-term debt and lease obligations (b)(c)(d)
36,968
 36,465
 31,265
 14,552
 14,353
 
(a)AbbVie declared regular quarterly cash dividends in 2013 aggregating $1.60 per share of common stock. In addition, a cash dividend of $0.40 per share of common stock was declared from pre-separation earnings on January 4, 2013 and was recorded as a reduction of additional paid-in capital.
(b)
In May 2015, AbbVie acquired Pharmacyclics for approximately $20.8 billion, including cash consideration of $12.4 billion and equity consideration of approximately 128 million shares of AbbVie common stock valued at $8.4 billion. In connection with the acquisition, AbbVie issued $16.7 billion aggregate principal amount of unsecured senior notes, of which approximately $11.5 billion was used to finance the acquisition and approximately $5.0 billion was used to finance an accelerated share repurchase (ASR) program. See Note 5 to the Consolidated Financial Statements for information regarding the acquisition of Pharmacyclics, Note 9 for information on the senior notes and Note 12 for information on the ASR.
(c)
In June 2016, AbbVie acquired Stemcentrx for approximately $6.4 billion, including cash consideration of $1.9 billion, equity consideration of approximately 62.4 million shares of AbbVie common stock valued at $3.9 billion and contingent consideration of approximately $620 million. In connection with the acquisition, AbbVie issued $7.8 billion aggregate principal amount of unsecured senior notes. Of the $7.7 billion net proceeds, approximately $1.9 billion was used to finance the acquisition, approximately $3.8 billion was used to finance an ASR and approximately $2.0 billion was used to repay the company's outstanding term loan that was due to mature in November 2016. See Note 5 to the Consolidated Financial Statements for information regarding the acquisition of Stemcentrx, Note 9 for information on the senior notes and Note 12 for information on the ASR.
(d)Includes current portion of both long-term debt and lease obligations.

2017 Form 10-K  |    27




ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion and analysis of the financial condition of AbbVie Inc. (AbbVie or the company) as of December 31, 2017 and 2016 and results of operations for each of the three years in the period ended December 31, 2017.. This commentary should be read in conjunction with the consolidated financial statementsConsolidated Financial Statements and accompanying notes appearing in Item 8, "Financial Statements and Supplementary Data." This section of Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
EXECUTIVE OVERVIEW
Company Overview
AbbVie is a global, diversified research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories (Abbott). AbbVie's mission is to usepositioned for success with a comprehensive product portfolio that has leadership positions across immunology, oncology, aesthetics, neuroscience and eye care. AbbVie uses its expertise, dedicated people and unique approach to innovation to develop and market advanced therapies that address some of the world'sworld’s most complex and serious diseases. AbbVie's products are focused on treating conditions such as chronic autoimmune diseases in rheumatology, gastroenterology and dermatology; oncology, including blood cancers; virology, including hepatitis C (HCV) and human immunodeficiency virus (HIV); neurological disorders, such as Parkinson's disease and multiple sclerosis; metabolic diseases, including thyroid disease and complications associated with cystic fibrosis; as well as other serious health conditions. AbbVie also has a pipeline of promising new medicines across such important medical specialties as immunology, oncology and neurology, with additional targeted investment in cystic fibrosis and women's health.
AbbVie's products are generally sold worldwide directly to wholesalers, distributors, government agencies, health care facilities, specialty pharmacies and independent retailers from AbbVie-owned distribution centers and public warehouses. Certain products (including aesthetic products and devices) are also sold directly to physicians and other licensed healthcare providers. In the United States, AbbVie distributes pharmaceutical products principally through independent wholesale distributors, with some sales directly to retailers, pharmacies, and patients.patients or other customers. Outside the United States, sales are made either directlyAbbVie sells products primarily to customerswholesalers or through distributors, and depending on the market served.works through largely centralized national payers systems to agree on reimbursement terms. Certain products are co-marketed or co-promoted with other companies. AbbVie operates as a single global business segment and has approximately 29,00050,000 employees.
2024 Strategic Objectives
AbbVie's mission is to discover and develop innovative medicines and products that solve serious health issues today and address the medical challenges of tomorrow while achieving top-tier financial performance through outstanding execution. AbbVie operatesintends to execute its strategy and advance its mission in one business segment—pharmaceutical products.a number of ways, including: (i) maximizing the benefits of a diversified revenue base with multiple long-term growth drivers; (ii) leveraging AbbVie's commercial strength and international infrastructure across therapeutic areas and ensuring strong commercial execution of new product launches; (iii) continuing to invest in and expand its pipeline in support of opportunities in immunology, oncology, aesthetics, neuroscience and eye care as well as continued investment in key on-market products; (iv) generating substantial operating cash flows to support investment in innovative research and development, and return cash to shareholders via a strong and growing dividend while also continuing to repay debt. In addition, AbbVie anticipates several regulatory submissions and data readouts from key clinical trials in the next 12 months.
2017AbbVie expects to achieve its strategic objectives through:
•Skyrizi and Rinvoq revenue growth driven by increasing market share and Skyrizi indication expansion.
•Successful integration of the ImmunoGen, Inc. and proposed Cerevel Therapeutics acquisitions.
•Advancing our oncology portfolio driven by Venclexta, strong commercial execution of Epkinly, Elahere and other new product launches and effectively managing regulatory, market and competitive challenges impacting Imbruvica.
•Aesthetics revenue growth driven by global expansion, increasing market penetration of Botox and Juvederm Collection and strong commercial execution of new product launches.
•Neuroscience revenue growth driven by Vraylar, Botox Therapeutic, Ubrelvy and Qulipta as well as strong commercial execution of new product launches.
•Maximizing AbbVie's existing eye care portfolio.
•Continuing to effectively manage the impact of Humira biosimilar erosion.
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Image3.gif|2023 Form 10-K
•The favorable impact of pipeline products and indications recently approved or currently under regulatory review where approval is expected in 2024. These products are described in greater detail in the section labeled "Research and Development" included as part of this Item 7.
2023 Financial Results
AbbVie's strategy has focused on delivering strong financial results, maximizing the benefits of a diversified revenue base, advancing and investing in its pipeline and returning value to shareholders while ensuring a strong, sustainable growth business over the long term. The company's financial performance in 20172023 included delivering worldwide net revenues of $28.2$54.3 billion, operating earnings of $9.6$12.8 billion, and diluted earnings per share of $3.30.$2.72 and cash flows from operations of $22.8 billion. Worldwide net revenues grewdecreased by 10%6% on a reported and constant currency basis driven primarily by the continued strength of HUMIRA, revenue growth relateddue to IMBRUVICA and other key products including Creon and Duodopa and the launch of HCV product MAVYRET. These increases wereHumira biosimilar competition which was partially offset by a decline in net revenues of HCVgrowth across the non-Humira product VIEKIRA.portfolio.
Diluted earnings per share in 20172023 was $3.30$2.72 and included net charges related to the December 2017 enactment of the Tax Cuts and Jobs Act. The net charges included $4.5following after-tax costs: (i) $6.7 billion for the one-time mandatory repatriation of previously untaxed earnings of foreign subsidiaries, partially offset by after-tax benefits of $3.3 billion due to the remeasurement of net deferred tax liabilities and other related impacts.
Additional after-tax costs that impacted 2017 diluted earnings per share included the following: (i) $809 million related to the amortization of intangible assets; (ii) $625 million$5.0 billion for the change in fair value of contingent consideration liabilities; (iii) $327 million for acquired in-process research and development (IPR&D); (iv) litigation reserve charges of $286 million; (v) an$3.5 billion related to intangible asset impairment chargeimpairment; and (iv) $122 million of $244 million; (vi) milestone payments of $143 million;acquisition and (vii) acquisition related costs of $49 million.integration expenses. These costs were partially offset by an after-tax benefitgain of $91$381 million duerelated to a tax audit settlement. 2017favorable settlement of a litigation matter. Additionally, financial results also reflected continued added funding to support all stages of AbbVie’s emerging mid- and late-stage pipeline assets and continued investment in AbbVie’s growthon-market brands.
In 2017, the company generated cash flows from operationsRegulation
The Inflation Reduction Act of $10.0 billion, which AbbVie utilized to2022 has and will continue to enhance its pipelinehave a significant impact on how drugs are covered and paid for under the Medicare program, including through licensingthe creation of financial penalties for drugs whose price increases outpace inflation, the redesign of Medicare Part D benefits to shift a greater portion of the costs to manufacturers, and collaboration activities, pay cash dividendsthrough government price-setting for certain Medicare Part B and Part D drugs. In 2023, Imbruvica was selected as one of the first 10 medicines subject to stockholders of $4.1 billiongovernment-set prices beginning in 2026. The price-setting process will conclude in 2024 and repurchase approximately 13 million sharesthe Centers for $1.0 billion in the open market. In October 2017, AbbVie's board of directors declared a quarterly cash dividend of $0.71 per share of common stock payable in February 2018. This reflected an increase of approximately 11% over the previous quarterly dividend of $0.64 per share of common stock.

28    |2017 Form 10-K



2018 Strategic Objectives
AbbVie's mission is toMedicare & Medicaid Services will publish prices that will be an innovation-driven, patient-focused specialty biopharmaceutical company capable of achieving top-tier financial performance through outstanding execution and a consistent stream of innovative new medicines. AbbVie intends to continue to advance its mission in a number of ways, including: (i) growing revenues by diversifying revenue streams, driving late-stage pipeline assetsapplicable to the market10 selected drugs beginning in 2026. It is possible that more of our products, including products that generate substantial revenues, could be selected in future years, which could, among other things, accelerate revenue erosion prior to expiration of intellectual property protections. The effect of reducing prices and ensuring strong commercial executionreimbursement for certain of new product launches; (ii) continued investmentour products would significantly impact our results of operations. See Part I, Item 1 “Business – Regulation – Commercialization, Distribution and expansion in its pipeline in support of opportunities in immunology, oncologyManufacturing,” Part I, Item 1A “Risk Factors” and neurology as well as continued investment in key on-market products; (iii) expanding operating margins; and (iv) returning cashNote 7 to shareholders via dividends and share repurchases. In addition, AbbVie anticipates several regulatory submissions and key data readouts from key clinical trials in the next twelve months.consolidated financial statements for additional information.
AbbVie expects to achieve its strategic objectives through:
HUMIRA sales growth by driving biologic penetration across disease categories, maintaining market leadership and effectively managing biosimilar erosion.
IMBRUVICA revenue growth driven by increasing market share with its eight currently approved indications in six different disease areas.
The strong execution of new product launches, including MAVYRET.
The favorable impact of pipeline products approved in 2017 or currently under regulatory review where approval is expected in 2018. These products are described in greater detail in the section labeled "Research and Development" included as part of this Item 7.
AbbVie remains committed to driving continued expansion of operating margins and expects to achieve this objective through continued leverage from revenue growth, the reduction of HUMIRA royalty expense, productivity initiatives in supply chain and ongoing efficiency programs to optimize manufacturing, commercial infrastructure, administrative costs and general corporate expenses.
Research and Development
Research and innovation are the cornerstones of AbbVie's business as a global biopharmaceutical company. AbbVie's long-term success depends to a great extent on its ability to continue to discover and develop innovative pharmaceutical products and acquire or collaborate on compounds currently in development by other biotechnology or pharmaceutical companies.
AbbVie's pipeline currently includes more than 60approximately 90 compounds, devices or indications in clinical development individually or under collaboration or license agreements and is focused on such important medical specialties as immunology, oncology, aesthetics, neuroscience and neurology along with targeted investments in cystic fibrosis and women's health.eye care. Of these programs, more than 30approximately 50 are in mid- and late-stage development.
The following sections summarize transitions of significant programs from Phase 2mid-stage development to Phase 3late-stage development as well as developments in significant Phase 3late-stage and registration programs. AbbVie expects multiple Phase 2mid-stage programs to transition into Phase 3late-stage programs in the next twelve12 months.
Significant Programs and Developments
Immunology
UpadacitinibRinvoq
•In June 2017,March 2023, the European Commission (EC) issued their final decision on the European Medicines Agency’s (EMA) review of the benefit-risk of medicines in the JAK inhibitor class for the treatment of inflammatory diseases, including Rinvoq. Confirming the Committee for Medicinal Products for Human Use (CHMP) opinion, the previously approved Rinvoq indication statements were not changed and the dosage and special warnings for all JAK inhibitors were updated to include additional information about the risks associated with JAK inhibitors.
2023 Form 10-K | abbvieimage3.gif
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•In April 2023, AbbVie announced that top-line results from the Phase 3 SELECT-NEXT clinical trial evaluating upadacitinib (ABT-494),EC approved Rinvoq for the company’s selective JAK1 inhibitor currently in late-stage development for rheumatoid arthritis (RA), met all primary and ranked secondary endpoints in patients with moderate to severe RA who did not adequately respond to treatment with conventional synthetic disease modifying anti-rheumatic drugs (DMARDs). The safety profile of upadacitinib was consistent with previously reported Phase 2 trials and no new safety signals were detected.

In September 2017, AbbVie announced that top-line results from the Phase 3 SELECT-BEYOND clinical trial evaluating upadacitinib met all primary and ranked secondary endpoints in patients with moderate to severe RA who did not adequately respond or were intolerant to treatment with biologic DMARDs. The safety profile of upadacitinib was consistent with previously reported Phase 2 trials and the Phase 3 SELECT-NEXT clinical trial, with no new safety signals detected.

2017 Form 10-K  |    29





In December 2017, AbbVie announced that top-line results from the Phase 3 SELECT-MONOTHERAPY clinical trial evaluating upadacitinib met all primary and key secondary endpoints in patients with moderate to severe RA who did not adequately respond to treatment with methotrexate. The safety profile of upadacitinib was consistent with previously reported Phase 3 SELECT clinical trials and Phase 2 trials, with no new safety signals detected.

In 2017, AbbVie initiated Phase 3 clinical trials to evaluate the safety and efficacy of upadacitinib in subjectsadults with moderately to severely active Crohn’s disease and in subjects with moderatelywho have had an inadequate response, lost response or were intolerant to severely active psoriatic arthritis.either conventional therapy or a biologic agent.

•In January 2018,May 2023, AbbVie announced that the U.S. Food and Drug Administration (FDA) granted breakthroughapproved Rinvoq for the treatment of adults with moderately to severely active Crohn’s disease who have had an inadequate response or intolerance to one or more tumor necrosis factor (TNF) blockers.
•In July 2023, AbbVie initiated its Phase 3 Step-Up HS study to evaluate efficacy and safety of Rinvoq in adults and adolescents with moderate to severe hidradenitis suppurativa (HS) who have failed anti-TNF therapy designationand/or one approved non-anti-TNF inhibitor therapy for upadacitinibHS.

•In August 2023, AbbVie initiated its Phase 3 Select-SLE study to evaluate Rinvoq in moderate to severe systemic Lupus Erythematosus.

•In January 2024, AbbVie initiated a Phase 3 study to evaluate Rinvoq in adults and adolescents with non-segmental vitiligo who are eligible for systemic therapy.
Skyrizi
•In March 2023, AbbVie announced positive top-line results from its Phase 3 induction study, INSPIRE, for Skyrizi in patients with moderately to severely active ulcerative colitis met the primary and all secondary endpoints.
•In June 2023, AbbVie announced positive top-line results from its Phase 3 maintenance study, COMMAND, for Skyrizi in patients with moderately to severely active ulcerative colitis met the primary and key secondary endpoints.
•In July 2023, AbbVie announced results from the head-to-head Phase 4 IMMpulse study that evaluated the efficacy and safety of Skyrizi compared to Otezla among adult patients with moderate to severe atopic dermatitis who are candidatesplaque psoriasis (PsO) eligible for systemic therapy. In the study, significantly more patients achieved co-primary endpoints with Skyrizi versus Otezla. Skyrizi was well-tolerated with no new safety signals identified.

Risankizumab
•In October 2017,August 2023, AbbVie announced that top-line results from three Phase 3 clinical trials evaluating risankizumab, an investigational interleukin-23 (IL-23) inhibitor, with 12-week dosing comparedsubmitted regulatory applications to ustekinumabFDA and adalimumab met all co-primary and ranked secondary endpointsEMA for Skyrizi for the treatment of adults with moderately to severely active ulcerative colitis.
•In September 2023, AbbVie announced results from the head-to-head Phase 3 SEQUENCE study that evaluated the efficacy and safety of Skyrizi compared to Stelara among adult patients with moderately to severely active Crohn’s disease. In the study, Skyrizi met both primary endpoints at week 24 and achieved superiority of endoscopic remission at week 48 versus Stelara. In addition, all secondary endpoints achieved statistical significance for superiority versus Stelara. Skyrizi was well-tolerated with no new safety signals identified.
Lutikizumab
•In January 2024, AbbVie announced Phase 2 results showing adults with moderate to severe chronic plaque psoriasis. The safety profile was consistent with allhidradenitis suppurativa (HS) who had previously reported studies, and there were no new safety signals detected acrossfailed anti-TNF therapy who received lutikizumab achieved higher response rates than placebo in the three studies.primary endpoint of achieving HS Clinical Response at week 16. Based on these data, AbbVie will advance its clinical program of lutikizumab in HS to Phase 3.

Oncology
Epkinly
•In December 2017, AbbVie announced that top-line results from the Phase 3 IMMhance clinical trial evaluating risankizumab at 16 weeks and 52 weeks of treatment compared to placebo met all primary and ranked secondary endpoints for the treatment of patients with moderate to severe plaque psoriasis. The safety profile was consistent with all previously reported Phase 3 studies, and there were no new safety signals detected across the Phase 3 program.

In December 2017,March 2023, AbbVie initiated a Phase 3 clinical trial to evaluate the safety and efficacy of risankizumabepcoritamab in subjectscombination with moderatelyR-CHOP compared to severely active Crohn’s disease.R-CHOP in patients with newly diagnosed diffuse large B-cell lymphoma (DLBCL).

Oncology
IMBRUVICA
•In January 2017,May 2023, AbbVie announced that the FDA approved IMBRUVICAEpkinly (epcoritamab) as the first bispecific antibody to treat adult patients with relapsed or refractory (R/R) DLBCL.
•In September 2023, AbbVie announced that the EC approved Tepkinly (epcoritamab) for adults with R/R DLBCL after two or more lines of systemic therapy.
•In November 2023, AbbVie announced that the FDA granted Breakthrough Therapy Designation to Epkinly for the treatment of adult patients with R/R follicular lymphoma after two or more therapies. Additionally, the EMA has validated a Type II application for Tepkinly for the same indication.
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Image3.gif|2023 Form 10-K
•In December 2023, AbbVie and Genmab submitted a supplemental biological license application to the FDA for epcoritamab for the treatment of patients with relapsed/refractoryR/R follicular lymphoma.
Imbruvica
•In May 2023, AbbVie voluntarily withdrew, in the U.S., accelerated Imbruvica approvals for patients with mantle cell lymphoma (MCL) who have received at least one prior therapy and with marginal zone lymphoma (MZL) who require systemic therapy and have received at least one prior anti-CD20-based therapy. This indicationvoluntary action is approved underdue to requirements related to the accelerated approval based on overall response rate (ORR) and continued approval may be contingent upon verification and description of clinical benefit in a confirmatory trial. MZL is a slow-growing form of non-Hodgkin's lymphoma.

In August 2017,status granted by the FDA for MCL and MZL. Other approved IMBRUVICAindications for Imbruvica in the treatment of adult patients with chronic graft-versus-host-disease (cGVHD) after failure of one or more lines of systemic therapy. IMBRUVICA is the first therapy specifically approved for adults with cGVHD, a severe and potentially life-threatening consequence of stem cell or bone marrow transplant. This marked the sixth U.S. disease indication for IMBRUVICA since the medication's initial approval in 2013 and the first approved indication outside of cancer.are not affected.

Navitoclax
•In December 2017,July 2023, AbbVie announced that the Phase 3 iNNOVATE clinical trial evaluating IMBRUVICA in combination with rituximab in patients with untreated (treatment-naïve) and previously-treated Waldenström’s macroglobulinemia (WM) met its primary endpoint. This is the first and only treatment approved for newly or previously-treated patients with WM.

VENCLEXTA
In February 2017, AbbVie initiated a Phase 3 clinical trial to study the safety and efficacy of venetoclax in combination with azacitidine in treatment-naïve elderly subjects with acute myeloid leukemia (AML) who are ineligible for standard induction therapy (high-dose chemotherapy).

30    |2017 Form 10-K




In May 2017, AbbVie initiated a Phase 3 clinical trial to evaluate if venetoclax when co-administered with low dose cytarabine (LDAC) improves overall survival (OS) versus LDAC and placebo, in treatment naïve subjects with AML.

In September 2017, AbbVie announced that top-line results from the Phase 3 MURANOTRANSFORM-1 clinical trial evaluating venetoclax tablets in combination with Rituxan (rituximab) met the primary endpoint of prolonged progression-free survival compared with bendamustine in combination with Rituxan in patients with relapsed/refractory chronic lymphocytic leukemia (CLL).

In December 2017, AbbVie submitted a supplemental New Drug Application (sNDA) to the FDA for VENCLEXTA (venetoclax) in combination with Rituxan in patients with relapsed or refractory CLL and in January 2018, AbbVie submitted an sNDA for VENCLEXTA monotherapy in patients with CLL who have relapsed or are refractory to B-cell receptor inhibitors.

Rova-T
In February 2017, AbbVie initiated a Phase 3 clinical trial to evaluate the efficacy of rovalpituzumab tesirine (Rova-T) as maintenance therapy following first-line platinum based chemotherapy in participants with extensive stage small cell lung cancer (SCLC).

In April 2017, AbbVie initiated a Phase 3 clinical trial to evaluate Rova-T compared with topotecan for subjects with advanced or metastatic SCLC with high levels of delta-like protein 3 who have first disease progression during or following front-line platinum-based chemotherapy.

ABT-414

In November 2017, AbbVie presented results from the INTELLANCE-2 trial, a potential registration-enabling Phase 2 study evaluating depatuxizumab mafodotin (ABT-414), an investigational, antibody drug conjugate (ADC) targeting epidermal growth factor receptor (EGFR) alone or in combination with temozolomide (TMZ) in subjects with recurrent glioblastoma multiforme (GBM). Results from the INTELLANCE-2 study failed to meet the primary endpoint of overall survival and AbbVie will not be submitting regulatory applications for ABT-414 in recurrent GBM. In INTELLANCE-2, the combination of ABT-414 and TMZ performed numerically better than lomustine or TMZ and a positive trend in overall survival was observed. While AbbVie will not file in recurrent GBM based on these data, the Phase 2/3 INTELLANCE-1 trial evaluating the safety and efficacy of ABT-414 in combination with TMZ in subjects with newly diagnosed GBM with EGFR amplification is ongoing.

Veliparib
In April 2017, AbbVie announced that two Phase 3 studies evaluating veliparib, an investigational, oral poly (adenosine diphosphate-ribose) polymerase (PARP)navitoclax, a BCL-XL/BCL-2 inhibitor, in combination with chemotherapyruxolitinib in adult patients with primary or secondary myelofibrosis (MF). The combination of navitoclax and ruxolitinib met the study’s primary endpoint, demonstrating statistically significant improvement in the number of patients who achieved Spleen Volume Reduction of at least 35 percent at week 24 compared to treatment with ruxolitinib and a placebo. The study did not meet their primary endpoints.the first ranked secondary endpoint of improvement in patients’ Total Symptom Score from baseline to week 24. The studies evaluated veliparib in combinationcompany plans to engage with carboplatin and paclitaxelregulatory agencies regarding potential next steps.
Teliso-V
•In November 2023, AbbVie announced positive top-line results from the Phase 2 LUMINOSITY trial evaluating telisotuzumab-vedotin (Teliso-V) in patients with squamousc-Met protein overexpression, epidermal growth factor receptor wild type, advanced/metastatic nonsquamous non-small cell lung cancer (NSCLC)cancer. The results demonstrated a compelling overall response rate per independent central review of 35 percent and triple negative breast cancer (TNBC). Ongoing23 percent across c-Met High and c-Met Intermediate patients, with no new safety risks detected. AbbVie will discuss with global health authorities the potential to support an accelerated approval.
Venclexta
•In September 2023, AbbVie announced top-line results from the Phase 3 studies include non-squamous non-small cell lung cancer, BRCA1/2 breast cancerCANOVA study evaluating the safety and ovarian cancer.

Virology/Liver Disease
In February 2017, the European Committee for Medicinal Products for Human Use (CHMP) granted a positive opinion for a shorter, eight-week treatmentefficacy of VIEKIRAX (ombitasvir/paritaprevir/ritonavir tablets) + EXVIERA (dasabuvir tablets) as an option for previously untreated adult patients with genotype 1b chronic HCV and minimal to moderate fibrosis.

In July 2017, the European Commission granted marketing authorization for MAVIRET (glecaprevir/pibrentasvir), a once-daily, ribavirin-free treatment for adults with HCV infection across all major genotypes (GT1-6). MAVIRET is also indicatedVenclexta plus dexamethasone (VenDex) for patients with specifict(11;14)-positive relapsed or refractory (R/R) multiple myeloma who have received two or more prior treatments. The data did not demonstrate that the treatment challenges, including thosecombination significantly improved progression-free survival (PFS), the primary endpoint of the trial. Patients receiving VenDex showed improvement in median PFS with compensated cirrhosis across all major genotypes,the combination of study comparator pomalidomide and those who previously had limited treatment options, suchdexamethasone (PomDex); however, the results did not reach statistical significance. The company is discussing the data with health authorities to further understand the potential of Venclexta as patients with severe chronic kidney disease (CKD) or those with genotype 3 chronic HCV infection.a biomarker-driven therapy in multiple myeloma.

Aesthetics
Juvederm Collection
•In August 2017,May 2023, AbbVie announced that the FDA approved MAVYRET (glecaprevir/pibrentasvir)Skinvive by Juvederm to improve skin smoothness of the cheeks in adults over the age of 21.
Botox Cosmetic
•In September 2023, AbbVie announced positive top-line results from the second of three Phase 3 clinical studies evaluating Botox Cosmetic for the treatment of patientsmoderate to severe platysma prominence associated with chronic HCV genotype 1-6 infection without cirrhosisplatysma muscle activity. All primary and secondary endpoints were met in the second Phase 3 study and results were consistent with compensated cirrhosis (Child-Pugh A). MAVYRET is alsofindings from the first Phase 3 study.

2017 Form 10-K  |    31




indicated•In December 2023, AbbVie submitted regulatory application to the FDA for Botox Cosmetic for the treatment of adult patientsmoderate to severe platysma prominence associated with HCV genotype 1 infection,platysma muscle activity.



2023 Form 10-K | abbvieimage3.gif
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BoNT/E
•In October 2023, AbbVie announced positive top-line results from two pivotal Phase 3 clinical studies evaluating trenibotulinumtoxinE (BoNT/E) for the treatment of moderate to severe glabellar lines. All primary and secondary endpoints were met for both Phase 3 studies and results support BoNT/E as a novel botulinum neurotoxin serotype E characterized by a rapid onset of action as early as 8 hours after administration and short duration of effect within 2-3 weeks.
Neuroscience
Qulipta
•In April 2023, AbbVie announced that the FDA approved Qulipta for the preventive treatment of chronic migraine in adults.
•In August 2023, AbbVie announced that the EC approved Aquipta (Qulipta) for the preventive treatment of migraine in adults who previously have been treated withfour or more migraine days per month.
ABBV-951
•In March 2023, AbbVie announced that the FDA issued a regimen containing an HCV NS5A inhibitor or an NS3/4A protease inhibitor, but not both. MAVYRET/MAVIRET is an 8-week, pan-genotypic treatmentComplete Response Letter (CRL) for patients without cirrhosis and who are new to treatment.

Other
In September 2017, AbbVie submitted athe New Drug Application to(NDA) for ABBV-951 (foscarbidopa/foslevodopa) for the treatment of motor fluctuations in adults with advanced Parkinson’s disease. In its letter, the FDA for elagolix, an investigational, orally administered gonadotropin-releasing hormone (GnRH) antagonist, being evaluated forrequested additional information about the managementdevice (pump) as part of endometriosis with associated pain. In October,the NDA review. The CRL did not request that AbbVie was granted priority review for elagolix by the FDA for the management of endometriosis with associated pain. In November, AbbVie announced detailed results from two replicate Phase 3 extension studies evaluating the long-termconduct additional efficacy and safety of elagolix, being evaluated fortrials related to the management of endometriosis with associated pain.drug.

•In December 2017,2023, AbbVie submitted the Complete Response Resubmission for NDA for ABBV-951.
•In January 2024, AbbVie announced the strategic decision to close the SONAR study, a Phase 3 clinical trial evaluating the effectslaunch of the investigational compound atrasentan on progression of kidney disease in patients with stage 2 to 4 chronic kidney disease and type 2 diabetes when added to standard of care. The ongoing monitoring of renal events observedProduodopa (ABBV-951) in the study revealed considerably fewer endpoints than expected atEuropean Union for the timetreatment of analysis, which will likely affect the ability to test the SONAR study hypothesis. Therefore, AbbVie determined that it cannot justify continuing the participationadvanced Parkinson's disease with severe motor fluctuations and hyperkinesia (excessive movement) or dyskinesia (involuntary movement), and when available combinations of patients in the study. The decision to close the SONAR study early wasParkinson's medicinal products have not related to any safety concerns.given satisfactory results.

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Image3.gif|2023 Form 10-K
RESULTS OF OPERATIONS
Net Revenues
The comparisons presented at constant currency rates reflect comparative local currency net revenues at the prior year's foreign exchange rates. This measure provides information on the change in net revenues assuming that foreign currency exchange rates had not changed between the prior and the current periods. AbbVie believes that the non-GAAP measure of change in net revenues at constant currency rates, when used in conjunction with the GAAP measure of change in net revenues at actual currency rates, may provide a more complete understanding of the company's operations and can facilitate analysis of the company's results of operations, particularly in evaluating performance from one period to another.
Percent change
At actual currency ratesAt constant currency rates
years ended (dollars in millions)2023202220212023202220232022
United States$41,883 $45,713 $43,510 (8.4)%5.1 %(8.4)%5.1 %
International12,435 12,341 12,687 0.8 %(2.7)%3.4 %5.5 %
Net revenues$54,318 $58,054 $56,197 (6.4)%3.3 %(5.9)%5.1 %
       Percent change
       At actual currency rates At constant currency rates
for the years ended (dollars in millions)2017 2016 2015 2017 2016 2017 2016
United States$18,251
 $15,947
 $13,561
 14.4% 17.6% 14.4% 17.6%
International9,965
 9,691
 9,298
 2.8% 4.2% 2.1% 7.3%
Net revenues$28,216
 $25,638
 $22,859
 10.1% 12.2% 9.8% 13.5%




32    |20172023 Form 10-K

| abbvieimage3.gif
38


The following table details AbbVie's worldwide net revenues:
Percent change
At actual currency ratesAt constant currency rates
years ended December 31 (dollars in millions)2023202220212023202220232022
Immunology
HumiraUnited States$12,160 $18,619 $17,330 (34.7)%7.4 %(34.7)%7.4 %
International2,244 2,618 3,364 (14.3)%(22.2)%(11.8)%(14.9)%
Total$14,404 $21,237 $20,694 (32.2)%2.6 %(31.9)%3.8 %
SkyriziUnited States$6,753 $4,484 $2,486 50.6 %80.4 %50.6 %80.4 %
International1,010 681 453 48.3 %50.4 %50.3 %67.1 %
Total$7,763 $5,165 $2,939 50.3 %75.7 %50.6 %78.3 %
RinvoqUnited States$2,824 $1,794 $1,271 57.4 %41.2 %57.4 %41.2 %
International1,145 728 380 57.3 %91.4 %60.7 %>100.0 %
Total$3,969 $2,522 $1,651 57.4 %52.8 %58.4 %58.1 %
Oncology
ImbruvicaUnited States$2,665 $3,426 $4,321 (22.2)%(20.7)%(22.2)%(20.7)%
Collaboration revenues931 1,142 1,087 (18.5)%5.1 %(18.5)%5.1 %
Total$3,596 $4,568 $5,408 (21.3)%(15.5)%(21.3)%(15.5)%
VenclextaUnited States$1,087 $1,009 $934 7.8 %8.0 %7.8 %8.0 %
International1,201 1,000 886 20.1 %12.9 %22.3 %24.6 %
Total$2,288 $2,009 $1,820 13.9 %10.4 %15.0 %16.1 %
EpkinlyCollaboration Revenues$28 $— $— n/mn/mn/mn/m
International3 — — n/mn/mn/mn/m
Total$31 $— $— n/mn/mn/mn/m
Aesthetics
Botox CosmeticUnited States$1,670 $1,654 $1,424 1.0 %16.2 %1.0 %16.2 %
International1,012 961 808 5.3 %18.9 %9.7 %28.8 %
Total$2,682 $2,615 $2,232 2.6 %17.2 %4.2 %20.8 %
Juvederm CollectionUnited States$519 $548 $658 (5.4)%(16.7)%(5.4)%(16.7)%
International859 880 877 (2.4)%0.3 %1.9 %8.9 %
Total$1,378 $1,428 $1,535 (3.6)%(7.0)%(0.9)%(2.1)%
Other AestheticsUnited States$1,060 $1,122 $1,268 (5.6)%(11.5)%(5.6)%(11.5)%
International174 168 198 3.3 %(14.9)%8.1 %(8.3)%
Total$1,234 $1,290 $1,466 (4.4)%(12.0)%(3.8)%(11.1)%
Neuroscience
Botox TherapeuticUnited States$2,476 $2,255 $2,012 9.8 %12.1 %9.8 %12.1 %
International515 464 439 11.1 %5.6 %15.5 %15.3 %
Total$2,991 $2,719 $2,451 10.0 %10.9 %10.8 %12.6 %
VraylarUnited States$2,755 $2,037 $1,728 35.2 %17.9 %35.2 %17.9 %
International4 1 — >100.0 %n/m>100.0 %n/m
Total$2,759 $2,038 $1,728 35.4 %17.9 %35.4 %17.9 %
DuodopaUnited States$97 $95 $102 3.0 %(6.7)%3.0 %(6.7)%
International371 363 409 2.1 %(11.3)%1.8 %(0.8)%
Total$468 $458 $511 2.3 %(10.4)%2.1 %(2.0)%
UbrelvyUnited States$803 $680 $552 18.2 %23.2 %18.2 %23.2 %
International12 — — >100.0 %n/m>100.0 %n/m
Total$815 $680 $552 19.9 %23.2 %19.9 %23.2 %
QuliptaUnited States$405 $158 $— >100.0 %>100.0 %>100.0 %>100.0 %
International3 — — >100.0 %n/m>100.0 %n/m
Total$408 $158 $— >100.0 %>100.0 %>100.0 %>100.0 %

       Percent change
       At actual currency rates At constant currency rates
Years ended December 31
(dollars in millions)
2017 2016 2015 2017 2016 2017 2016
HUMIRA             
United States$12,361
 $10,432
 $8,405
 18.5 % 24.1 % 18.5 % 24.1 %
International6,066
 5,646
 5,607
 7.4 % 0.7 % 6.7 % 4.3 %
Total$18,427
 $16,078
 $14,012
 14.6 % 14.7 % 14.4 % 16.1 %
IMBRUVICA             
United States$2,144
 $1,580
 $659
 35.8 % >100.0 % 35.8 % >100.0 %
Collaboration revenues429
 252
 95
 70.0 % >100.0 % 70.0 % >100.0 %
Total$2,573
 $1,832
 $754
 40.5 % >100.0 % 40.5 % >100.0 %
HCV             
United States$338
 $342
 $804
 (1.4)% (57.4)% (1.4)% (57.4)%
International936
 1,180
 835
 (20.6)% 41.3 % (20.5)% 42.7 %
Total$1,274
 $1,522
 $1,639
 (16.3)% (7.1)% (16.2)% (6.4)%
Lupron             
United States$669
 $663
 $653
 0.8 % 1.5 % 0.8 % 1.5 %
International160
 158
 173
 1.4 % (8.5)% 0.5 % (5.2)%
Total$829
 $821
 $826
 0.9 % (0.6)% 0.7 % 0.1 %
Creon             
United States$831
 $730
 $632
 13.9 % 15.5 % 13.9 % 15.5 %
Synagis             
International$738
 $730
 $740
 1.2 % (1.5)% 0.6 % (0.4)%
Synthroid             
United States$781
 $763
 $755
 2.3 % 1.1 % 2.3 % 1.1 %
AndroGel             
United States$577
 $675
 $694
 (14.5)% (2.8)% (14.5)% (2.8)%
Kaletra             
United States$71
 $116
 $163
 (38.6)% (28.8)% (38.6)% (28.8)%
International352
 433
 537
 (18.8)% (19.3)% (21.1)% (13.3)%
Total$423
 $549
 $700
 (22.9)% (21.5)% (24.7)% (16.9)%
Sevoflurane             
United States$78
 $80
 $81
 (2.1)% (1.0)% (2.1)% (1.0)%
International332
 348
 393
 (4.6)% (11.4)% (3.7)% (6.9)%
Total$410
 $428
 $474
 (4.1)% (9.7)% (3.4)% (6.0)%
Duodopa             
United States$61
 $37
 $12
 66.1 % >100.0 % 66.1 % >100.0 %
International294
 256
 219
 14.6 % 16.9 % 13.1 % 18.1 %
Total$355
 $293
 $231
 21.1 % 26.9 % 19.8 % 28.1 %
All other$998
 $1,217
 $1,402
 (18.0)% (13.2)% (18.2)% (12.3)%
Total net revenues$28,216
 $25,638
 $22,859
 10.1 % 12.2 % 9.8 % 13.5 %



39
2017Image3.gif|2023 Form 10-K|    33




Percent change
At actual currency ratesAt constant currency rates
years ended December 31 (dollars in millions)2023202220212023202220232022
Other NeuroscienceUnited States$254 $456 $667 (44.4)%(30.5)%(44.4)%(30.5)%
International22 19 18 20.2 %4.8 %24.4 %9.0 %
Total$276 $475 $685 (41.9)%(29.6)%(41.7)%(29.5)%
Eye Care
OzurdexUnited States$143 $139 $130 2.7 %6.9 %2.7 %6.9 %
International329 289 288 14.0 %0.3 %15.9 %12.9 %
Total$472 $428 $418 10.3 %2.4 %11.6 %11.0 %
Lumigan/GanfortUnited States$173 $242 $273 (28.4)%(11.0)%(28.4)%(11.0)%
International259 272 306 (4.8)%(11.3)%(3.6)%(3.0)%
Total$432 $514 $579 (15.9)%(11.2)%(15.3)%(6.8)%
Alphagan/CombiganUnited States$121 $202 $373 (40.1)%(45.8)%(40.1)%(45.8)%
International151 144 156 4.9 %(7.9)%10.4 %2.5 %
Total$272 $346 $529 (21.4)%(34.6)%(19.1)%(31.5)%
RestasisUnited States$382 $621 $1,234 (38.5)%(49.6)%(38.5)%(49.6)%
International54 45 56 19.3 %(20.2)%25.3 %(13.8)%
Total$436 $666 $1,290 (34.6)%(48.3)%(34.2)%(48.0)%
Other Eye CareUnited States$433 $399 $393 9.0 %0.8 %9.0 %0.8 %
International370 348 358 6.1 %(2.4)%8.7 %5.4 %
Total$803 $747 $751 7.6 %(0.7)%8.8 %3.0 %
Other Key Products
MavyretUnited States$659 $755 $754 (12.7)%0.2 %(12.7)%0.2 %
International771 786 956 (1.9)%(17.8)%1.0 %(8.5)%
Total$1,430 $1,541 $1,710 (7.2)%(9.9)%(5.7)%(4.7)%
CreonUnited States$1,268 $1,278 $1,191 (0.8)%7.3 %(0.8)%7.3 %
Linzess/ConstellaUnited States$1,073 $1,003 $1,006 7.1 %(0.4)%7.1 %(0.4)%
International35 32 32 8.8 %0.3 %9.7 %7.6 %
Total$1,108 $1,035 $1,038 7.1 %(0.3)%7.1 %(0.1)%
All other$3,035 $4,137 $5,019 (26.7)%(17.6)%(25.7)%(16.3)%
Total net revenues$54,318 $58,054 $56,197 (6.4)%3.3 %(5.9)%5.1 %
n/m – Not meaningful
The following discussion and analysis of AbbVie's net revenues by product is presented on a constant currency basis.
Global HUMIRAHumira sales increased 14%decreased 32% in 2017 and 16% in 2016. The sales increases in 2017 and 2016 were driven by market growth across therapeutic categories and geographies as well as favorable pricing in certain geographies. The sales increase in 2016 was also driven by the approval of new indications.2023. In the United States, HUMIRAHumira sales increased 18%decreased 35% in 2017 and 24% in 2016. The sales increase in 2017 was2023 primarily driven by direct biosimilar competition following loss of exclusivity on January 31, 2023. Internationally, Humira revenues decreased 12% in 2023 primarily driven by the continued impact of direct biosimilar competition. AbbVie continues to pursue strategies to maintain broad formulary access of Humira and manage the impact of biosimilar erosion.
Net revenues for Skyrizi increased 51% in 2023 primarily driven by continued strong market share uptake as well as market growth across all indications, and favorablepartially offset by unfavorable pricing. The sales increase
Net revenues for Rinvoq increased 58% in 2016 was2023 primarily driven by continued strong market share uptake as well as market growth across all indications, higher market share and favorablepartially offset by unfavorable pricing. Internationally, HUMIRA revenues increased 7% in 2017 and 4% in 2016, driven primarily by market growth across indications. AbbVie continues to pursue strategies intended to further differentiate HUMIRA from competing products and add to the sustainability and future growth of HUMIRA.
Net revenues for IMBRUVICAImbruvica represent product revenues in the United States and collaboration revenues outside of the United States related to AbbVie's 50% share of IMBRUVICAImbruvica profit. AbbVie's global Imbruvica revenues decreased 21% in 2023 primarily driven by decreased demand and lower market share in the United States as well as decreased collaboration revenues.
Net revenues for IMBRUVICA commenced followingVenclexta increased 15% in 2023. In the completion of the Pharmacyclics acquisition on May 26, 2015. Global IMBRUVICA salesUnited States, Venclexta net revenues increased 40% in 2017 as a result of8% driven by continued penetration of IMBRUVICA as a first-line treatment for patients with CLLmarket growth across all indications, market share uptake as well as favorable pricing. The sales increase in 2016 wasInternationally, Venclexta net revenues increased 22% primarily driven by continued market share gains following the FDAuptake and EMA approval of IMBRUVICA as a first-line treatment for patients with CLL as well as having a full year of sales in 2016.
Global HCV sales decreased 16% in 2017 and 6% in 2016. The sales decrease in 2017 and 2016 was a result of market contraction, lower market share and price erosion of VIEKIRA. These factors were partially offset for 2017 by the launch of MAVYRET in certain geographies during the second half of 2017.growth across all indications.
Net revenues for CreonBotox Cosmetic increased 14%4% in 2017 and 15% in 2016,2023. In the United States, Botox Cosmetic net revenues increased 1% driven primarily by continued market growth and higher market share. Creon maintains market leadershipincreased consumer demand due to economic recovery in the pancreatic enzymetoxin market.
Global Kaletra Internationally, Botox Cosmetic net revenues decreased 25%increased 10% primarily driven by recovery from COVID-19 in 2017China and 17% in 2016, primarily due to lower market share resulting from the impact of increasing competition in the HIV marketplace. AbbVie expects net revenues for Kaletra to continue to decline in 2018.increased consumer demand across other key international markets.
2023 Form 10-K | abbvieimage3.gif
40
Net revenues for DuodopaJuvederm Collection decreased 1% in 2023. In the United States, Juvederm Collection net revenues decreased 5% primarily driven by decreased consumer demand due to economic pressures, partially offset by new product launches. Internationally, Juvederm Collection revenue increased 2% driven by increased consumer demand across key international markets and price.
Net revenues for Botox Therapeutic increased 11% in 2023 driven by market growth and market share uptake, partially offset by unfavorable pricing.
Net revenues for Vraylar increased 35% in 2023 primarily driven by continued market share uptake as well as market growth. Net revenues were also favorably impacted by the regulatory approval of Vraylar as an adjunctive therapy for the treatment of major depressive disorder in adults.
Net revenues for Ubrelvy increased 20% in 2017 and 28%2023 primarily driven by continued market share uptake as well as market growth.
Net revenues for Qulipta increased greater than 100% in 2016,2023 primarily driven by continued strong market share uptake as a resultwell as market growth. Net revenues were also favorably impacted by the regulatory approval of market penetration and geographic expansion.Qulipta for the preventive treatment of chronic migraine in adults.
Gross Margin
       Percent change
years ended December 31 (dollars in millions)2017
2016
2015
2017
2016
Gross margin$21,176
 $19,805
 $18,359
 7% 8%
as a percent of net revenues75% 77% 80%    
Percent change
years ended December 31 (dollars in millions)20232022202120232022
Gross margin$33,903 $40,640 $38,751 (17)%5 %
as a percent of net revenues62 %70 %69 %
Gross margin as a percentage of net revenues in 20172023 decreased from 2016 primarily duecompared to an2022. Gross margin percentage for 2023 was unfavorably impacted by intangible asset impairment chargecharges of $354 million in 2017, as well as the unfavorable impacts of$3.6 billion primarily related to Imbruvica, CoolSculpting and Liletta, higher intangible asset amortization and the IMBRUVICA profit sharing arrangement. These drivers were partially offset by lower amortization of the fair market value step-up of acquisition-date inventory of Pharmacyclics as well as favorableintangibles and changes in product mix, and operational efficiencies.
Gross margin as a percentage of net revenues in 2016 decreased from 2015 primarily due to unfavorable foreign exchange rates as well as unfavorable impacts of higher intangible asset amortization, the IMBRUVICA profit sharing arrangement and higher amortization of the fair market value step-up of acquisition-date inventory of Pharmacyclics. Additionally, 2016 gross margin included an intangible asset impairment charge of $39 million and 2015 gross margin included milestone revenue of $40 million from an oncology collaboration partner. These drivers were partially offset by the favorable tax law changes in product mix and operational efficiencies.Puerto Rico.

34    |2017 Form 10-K



Selling, General and Administrative
Percent change
years ended December 31 (dollars in millions)20232022202120232022
Selling, general and administrative$12,872 $15,260 $12,349 (16)%24 %
as a percent of net revenues24 %26 %22 %
       Percent change
years ended December 31 (dollars in millions)2017
2016
2015
2017
2016
Selling, general and administrative$6,275
 $5,855
 $6,387
 7% (8)%
as a percent of net revenues22% 23% 28%    

SG&ASelling, general and administrative (SG&A) expenses as a percentage of net revenues decreased in 2017 decreased from 20162023 compared to the prior year primarily due to continued leverage from revenue growth partially offsetincome of $485 million driven by a favorable settlement of a litigation matter in 2023 compared to litigation reserve charges of $370 million$2.5 billion in 20172022, partially offset by the unfavorable impact of increased brand investments and new product launch expenses.lower net revenues primarily driven by the Humira loss of exclusivity in the United States.

SG&AResearch and Development
Percent change
years ended December 31 (dollars in millions)20232022202120232022
Research and development$7,675 $6,510 $6,922 18 %(6)%
as a percent of net revenues14 %11 %12 %
Research and development (R&D) expenses as a percentage of net revenues increased in 2016 decreased from 2015 due2023 compared to continued leverage from revenue growth and lower costs in 2016. SG&A expenses in 2015 included costs associated with the separation from Abbott of $265 million, Pharmacyclics acquisition and integration costs of $294 million and litigation reserve charges of $165 million. Additionally, SG&A2022. R&D expense in 2015 reflected marketing supportpercentage for the global launch of VIEKIRA.
Research and Development and Acquired In-Process Research and Development
       Percent change
years ended December 31 (dollars in millions)2017 2016 2015 2017 2016
Research and development$4,982
 $4,366
 $4,285
 14% 2%
as a percent of net revenues18% 17% 19%    
Acquired in-process research and development$327
 $200
 $150
 64% 33%

Research and Development(R&D) expenses in 2017 increased from 2016 principally due to2023 was unfavorably impacted by increased funding to support all stages of the company’s emerging mid- and late-stagecompany's pipeline assets and lower net revenues primarily driven by the impactHumira loss of exclusivity in the post-acquisitionUnited States. R&D expensesexpense percentage in 2023 was also unfavorably impacted by an intangible asset impairment charge of Stemcentrx$630 million.

41
Image3.gif|2023 Form 10-K
Acquired IPR&D and Boehringer Ingelheim (BI) compoundsMilestones
years ended December 31 (in millions)202320222021
Upfront charges$582 $445 $962 
Development milestones196 252 162 
Acquired IPR&D and milestones$778 $697 $1,124 
Acquired IPR&D and an increasemilestones expense in development milestones of $63 million. These factors were partially offset by a decrease in acquisition related costs of $135 million.

R&D expenses in 2016 increased from 2015 due primarily to increased funding to support the company’s emerging mid- and late-stage pipeline assets. This increase was partially offset by the following factors: (i) 2015 R&D expenses2022 included a $350 million charge related to the purchaseupfront payment of a priority review voucher from a third party; (ii) development milestones decreased by $53 million; and (iii) 2015 results included restructuring charges of $32 million.
Acquired in-process research and development (IPR&D) expenses reflect upfront payments related$130 million to various collaborations. Acquired IPR&D expense in 2017 included a charge of $205 million as a result of entering into a global strategic collaboration with Alector, Inc. (Alector) to develop and commercialize medicines to treat Alzheimer’s disease and other neurodegenerative disorders. There were no individually significant transactions or cash flows during 2016. Acquired IPR&D expense in 2015 included a charge of $100 million as a result of entering into an exclusive worldwide license agreement with C2N Diagnostics (C2N) to develop and commercialize anti-tau antibodies for the treatment of Alzheimer's disease and other neurological disorders.acquire Syndesi Therapeutics SA. See Note 5 to the Consolidated Financial Statements for additional information regarding the Alector and C2N agreements.information.
Other Non-Operating ExpensesOperating Expense (Income), Net
years ended December 31 (in millions) 2017 2016 2015
Interest expense $1,150
 $1,047
 $719
Interest income (146) (82) (33)
Interest expense, net $1,004
 $965

$686
       
Net foreign exchange loss $348
 $303
 $193
Other expense, net 513
 232
 13
InterestOther operating expense (income), net included a gain of $169 million in 2017 increased compared to 2016 due2023 and a charge of $229 million in 2022 related to a full year of expensedevelopment liability associated with the May 2016 issuancean asset divested as part of $7.8 billion aggregate principal amount of senior notes which were issued primarily to finance the acquisition of Stemcentrx and to repay an outstanding term loan.

2017 Form 10-K  |    35




InterestAllergan acquisition. Other operating expense (income), net in 2016 increased compared to 2015 due to a full year of expense associated with the May 2015 issuance of $16.7 billion aggregate principal amount of senior notes which were issued primarily to finance the acquisition of Pharmacyclics in addition to the incremental expense associated with the May 2016 senior notes issuance discussed above. Interest expense in 20162022 also included a debt extinguishment charge$172 million of $39 millionincome related to the redemptionsale of the 1.75% senior notes that were due toworldwide commercial rights of a mature in November 2017. These increases were partially offset by the absence of bridge financing-related costs of $86 million in 2015 incurred in connection with the acquisition of Pharmacyclics. Interest income continued to increase in both 2017 and 2016 due to growth in the company’s investment securities.
Net foreign exchange loss in 2017 included $316 million of historical currency translation losses that were reclassified from accumulated other comprehensive income (AOCI) related to the liquidation of certain foreign entities following the enactment of U.S. tax reform. Net foreign exchange loss in 2016 included losses totaling $298 million related to the devaluation of AbbVie’s net monetary assets denominated in the Venezuelan bolivar.brand Pylera. See Note 105 to the Consolidated Financial Statements for additional information regardinginformation.
Other Non-Operating Expenses
years ended December 31 (in millions)202320222021
Interest expense$2,224 $2,230 $2,423 
Interest income(540)(186)(39)
Interest expense, net$1,684 $2,044 $2,384 
Net foreign exchange loss$146 $148 $51 
Other expense, net4,677 2,448 2,500 
Interest expense in 2023 decreased compared to 2022 primarily driven by lower average debt balances as a result of deleveraging, partially offset by the Venezuelan devaluation. Net foreign exchange lossimpact of higher interest rates.
Interest income in 2015 included losses of $170 million2023 increased compared to complete the liquidation of the company’s remaining foreign currency positions related2022 primarily due to the terminated proposed combination with Shire.impact of higher interest rates.
Other expense, net included charges related to the changechanges in fair value of the BI and Stemcentrx contingent consideration liabilities of $626 million$5.1 billion in 20172023 and $228 million$2.8 billion in 2016.2022. The fair value of contingent consideration liabilities is impacted by the passage of time and multiple other inputs, including the probability of success of achieving regulatory/commercial milestones, discount rates, the estimated amount of future sales of the acquired products still in development and other market-based factors. In 2017,2023, the change in fair value represented mainlyreflected higher probabilities of success,estimated Skyrizi sales driven by stronger market share uptake, the passage of time and declining interestlower discount rates. In 2016,2022, the change in fair value represented mainlyreflected higher estimated Skyrizi sales driven by stronger market share uptake and the passage of time, as increases to the BI contingent consideration liability due to higher probabilities of success were fullypartially offset by the effects of rising interest rates and changes in other market-based assumptions. See Note 5 to the Consolidated Financial Statements for additional information regarding the acquisitions of Stemcentrx and BI compounds. Other expense, net for 2017 also included realized gains on available-for-sale investment securities of $90 million. Other expense, net for 2015 included impairment charges totaling $36 million related to certain of the company's equity investment securities.higher discount rates.
Income Tax Expense
The effective income tax rate was 31%22% in 2017, 24%2023, 12% in 20162022 and 23%11% in 2015.2021. The effective income tax rate in each periodrates differed from the statutory tax rate principally due to the benefit fromimpact of foreign operations which reflects the impact ofwith lower income tax rates in locations outside the United States, the U.S. global minimum tax, changes in fair value of contingent consideration, tax credits and incentives in the United States, Puerto Rico and other foreign tax jurisdictions, and business development activities. The increase in the effective tax rate for 2017 over the prior year was principally due to the estimated tax effects of the enactment of the Tax Cuts and Jobs Act (the “Act”) in 2017. The effectiveincome tax rate in 2017 included2023 was higher than prior periods due to increased changes in fair value of contingent consideration, intangible asset impairments and the impacts of the transition from the Puerto Rico excise tax expenseto an income tax.
In 2022, Puerto Rico enacted Act 52-2002 (the “Puerto Rico Act”) allowing for a transition from a Puerto Rico excise tax levied on gross inventory purchases to an income-based tax beginning in 2023. The company completed the transition requirements of $4.5 billionthe Puerto Rico Act in 2022, resulting in the remeasurement of certain deferred tax assets and liabilities based on income tax rates at which they are expected to reverse in the one-time mandatory repatriation of previously untaxed earnings of foreign subsidiaries, partially offset by a $3.6 billionfuture. The net tax benefit forrecognized in 2022 from the remeasurement of deferred taxes related to the Puerto Rico Act was $323 million.
Our net earnings and foreigncash flows could be affected by future tax policy and law changes in the jurisdictions in which we operate, including changes in tax law changes.
The Act significantly changed the U.S. corporate tax system. The Act reduces the U.S. federal corporate tax rate from 35% to 21% and creates a territorial tax system that includes new taxes on certain foreign sourced earnings. As a result, the effective income tax rate may change significantly in future periods. See Note 13 to the Consolidated Financial Statements for additional information regarding the Act.
The effective tax rate in 2016 included additional expense of $187 million related to the recognitionprojects undertaken by the Organization for Economic Cooperation and Development ("OECD"). These projects include a global minimum tax rate of 15%, referred to as "Pillar Two", and the creation of a new global system to tax income based on the location to which products are sold, referred to as "Pillar One." Numerous countries have agreed to a statement in support of the tax effectOECD model rules and European Union member states have agreed to
2023 Form 10-K | abbvieimage3.gif
42
implement Pillar Two. This implementation includes aspects of regulations issued by the Internal Revenue Service on December 7, 2016legislation that changed the determinationare effective starting in 2024. More widespread implementation of Pillar Two is expected to continue, and incremental aspects of the U.S. taxability of foreign currency gainslegislation may start in 2025. Significant details around the provision are still emerging. These changes increase tax uncertainty and losses related to certain foreign operations. The effectivemay adversely impact income tax rateexpense in 2015 included a tax benefit of $103 million from a reduction of state valuation allowances.future years. We will continue to monitor pending legislation and implementation by individual countries and evaluate the potential impact on our business in future periods.
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
years ended December 31 (in millions)202320222021
Cash flows provided by (used in)
Operating activities$22,839 $24,943 $22,777 
Investing activities(2,009)(623)(2,344)
Financing activities(17,222)(24,803)(19,039)
years ended December 31 (in millions)2017 2016 2015
Cash flows from:     
Operating activities$9,960
 $7,041
 $7,535
Investing activities(274) (6,074) (12,936)
Financing activities(5,512) (3,928) 5,752

Operating cash flows in 2017 increased2023 decreased from 20162022 primarily due to improveddecreased results of operations resulting from revenue growth, an improvement in operating earningsdriven by lower net revenues and a decrease inhigher income tax payments. Operating cash flows in 2016

36    |2017 Form 10-K



decreased from 2015 primarily due to improved results of operations resulting from revenue growth and an improvement in operating margin,payments, partially offset by income tax payments. Realized excess tax benefits associated with stock-based compensation totaled $71 million in 2017 and were presented within operating cash flows as a resultthe timing of the adoption of a new accounting pronouncement. Prior to the adoption of the new accounting pronouncement, realized excess benefits of $55 million in 2016 and $61 million in 2015 were presented within cash flows from financing activities. See Note 2 to the Consolidated Financial Statements for additional information regarding the adoption of this new accounting pronouncement.working capital. Operating cash flows also reflected AbbVie's voluntary contributions, primarily to its principal domestic defined benefit plan of $150 million in 2017, 2016 and 2015. In 2018, AbbVie plans to make voluntaryAbbVie’s contributions to its various defined benefit plans of $366 million in excess of $750 million.2023 and $357 million in 2022.
Investing cash flows in 20172023 included capital expenditures of $529 million and payments made for other acquisitions and investments of $308$1.2 billion, capital expenditures of $777 million, partially offset byand net sales and maturitiespurchases of investmentinvestments securities totaling $563$22 million. Investing cash flows in 2016 primarily2022 included $1.9 billionpayments made for capital expenditures of $695 million, other acquisitions and investments of $539 million, $255 million cash consideration paid to acquire Stemcentrx in June 2016, a $595 million upfront payment to acquire certain rights from BI in April 2016,DJS Antibodies Ltd offset by cash acquired and net purchasesrevenues and maturities of investmentinvestments securities totaling $3.0$92 million.
Financing cash flows in 2023 included repayment of $1.0 billion and capital expenditures of $479 million. Investing activities in 2015 primarily included $11.5 billion of cash consideration paid to acquire Pharmacyclics in May 2015 (net of cash acquired of $877 million). Investing activities in 2015 also included cash outflows related to other acquisitions and investments of $964 million, including a $500 million payment to Calico, $100 million related to an exclusive worldwide license agreement with C2N to develop and commercialize anti-tau antibodies for the treatment of Alzheimer's disease and other neurological disorders and $130 million paid to Infinity due to the achievement of a development milestone under the collaboration agreement. Cash flows from investing activities in 2015 also included capital expenditures of $532 million.
In 2017, 2016 and 2015, the company issued and redeemed commercial paper. The balance of commercial paper outstanding was $400 million as of December 31, 2017 and $377 million as of December 31, 2016. AbbVie may issue additional commercial paper or retire commercial paper to meet liquidity requirements as needed.
In November 2016, the company issued €3.6floating rate three-year term loan, $1.0 billion aggregate principal amount of unsecuredthe company's 2.85% senior Euronotes and $350 million aggregate principal amount of the company's 2.80% senior notes. TheDuring the quarter ended December 31, 2023 the company used the proceeds to redeem $4.0also repaid €500 million aggregate principal amount of 1.50% senior euro notes and $1.3 billion aggregate principal amount of 1.75%3.75% senior notes that were due to matureat maturity.
Financing cash flows in November 2017. In connection with the offering, AbbVie incurred $17 million2022 included repayment of issuance costs. In May 2016, the company issued $7.8$3.1 billion aggregate principal amount of senior notes. Approximately $2.0 billion of the net proceeds were used to repay an outstanding term loan that was due to mature in November 2016, approximately $1.9 billion of the net proceeds were used to finance the acquisition of Stemcentrx and approximately $3.8 billion of the net proceeds were used to finance an ASR. See Note 12 to the Consolidated Financial Statements for additional information on the ASR transactions. In connection with the May 2016 issuance ofcompany's 2.9% senior notes, AbbVie incurred $52 million of issuance costs.
In May 2015, the company issued $16.7$3.0 billion aggregate principal amount of unsecuredthe company's 2.3% senior notes, $2.9 billion aggregate principal amount of the company's 3.45% senior notes, $1.7 billion aggregate principal amount of the company's 3.25% senior notes, $1.0 billion aggregate principal amount of the company’s 3.2% senior notes and $750 million aggregate principal amount of the company's floating rate senior notes. Approximately $11.5Additionally financing cash flows included repayment of a $2.0 billion floating term loan due May 2025 and issuance of a new $2.0 billion floating rate term loan as part of the net proceeds were used to finance the acquisition of Pharmacyclics and $5.0 billion of the net proceeds were used to finance an ASR. In 2015, the company paid $86 million of costs relating to an $18.0 billion, 364-Day Bridge Term Loan Credit Agreement (the bridge loan) as well as $93 million of costs relating to the May 2015 issuance of senior notes. No amounts were drawn under the bridge loan, which was terminated as a result of the issuance of the senior notes. In September 2015, AbbVie entered into a three-year $2.0 billion term loan credit facility and a 364-day $2.0 billion term loan credit facility. In November 2015, AbbVie drew on these term facilities and used the proceeds to refinance its $4.0 billion of senior notes that maturedrefinancing in 2015.February 2022.
CashFinancing cash flows also included cash dividend payments totaled $4.1of $10.5 billion in 2017, $3.72023 and $10.0 billion in 2016 and $3.3 billion in 2015.2022. The increase in cash dividend payments was primarily due to an increase in the dividend rate. On October 27, 2017, AbbVie announced that its board of directors declared an increase in the company's quarterly cash dividend from $0.64 per share to $0.71 per share beginning with the dividend payable on February 15, 2018 to stockholders of record as of January 12, 2018. This reflectsdriven by an increase of approximately 11% over the previous quarterly rate. On February 15, 2018, AbbVie announced that its board of directors declared an increase in the company's quarterly cash dividend from $0.71 per share to $0.96 per share beginning with the dividend payable on May 15, 2018 to stockholders of record as of April 13, 2018. rate.
The timing, declaration, amount of and payment of any dividends by AbbVie in the future is within the discretion of its board of directors and will depend upon many factors, including AbbVie's financial condition, earnings, capital requirements of its operating subsidiaries, covenants associated with certain of AbbVie's debt service obligations, legal requirements, regulatory constraints, industry practice, ability to access capital markets and other factors deemed relevant by its board of directors.
In addition to the ASRs, under AbbVie's existing stock repurchase program, the company repurchased approximately 13 million shares for $1.0 billion in 2017, approximately 34 million shares for $2.1 billion in 2016 and approximately 46 million shares for $2.8 billion in 2015 . AbbVie cash-settled $285 million of its December 2016 open market purchases in January 2017 and cash-settled $300 million of its December 2015 open market purchases in January 2016. Thecompany's stock repurchase authorization permits purchases of AbbVie shares from time to time in open-market or private transactions at management's

2017 Form 10-K  |    37




discretion. The program has no time limit and can be discontinued at any time. AbbVie's remaining stock repurchase authorization was $4.0 billion as of December 31, 2017. On February 15, 2018, AbbVie's board of directors authorized a new $10.0 billion stock repurchase program, which superseded AbbVie's previous stock repurchase program. The new stock repurchase program permits purchases of AbbVie shares from time to time in open-market or private transactions, including accelerated share repurchases, at management’s discretion. The program has no time limit and can be discontinued at any time.
In 2017, AbbVie paid $305repurchased 10 million shares for $1.6 billion in 2023 and 8 million shares for $1.1 billion in 2022. AbbVie's remaining stock repurchase authorization was $4.8 billion as of contingent consideration to BI related toDecember 31, 2023. On February 16, 2023, AbbVie's board of directors authorized a Phase 3 enrollment milestone. $268 million of this milestone was included in financing cash flows and $37 million was included in operating cash flows.
Cash and equivalents were impacted by net favorable exchange rate changes totaling $29 million in 2017, net unfavorable exchange rate changes totaling $338 million in 2016 and $300 million in 2015. The favorable exchange rate changes in 2017 were primarily due$5.0 billion increase to the strengtheningexisting stock repurchase authorization.
No commercial paper borrowings were issued during 2023 or 2022 and there were no commercial paper borrowings outstanding as of December 31, 2023 or December 31, 2022. Subsequent to 2023, AbbVie issued commercial paper borrowings of which $1.7 billion were outstanding as of the Euro and other foreign currenciesdate of filing this Annual Report on the translation of the company's Euro-denominated assets and cash denominated in foreign currencies. The unfavorable exchange rate changes in 2016 were primarily dueForm 10-K. AbbVie may issue additional commercial paper or retire commercial paper to the devaluation of AbbVie's net monetary assets denominated in the Venezuelan bolivar. The unfavorable exchange rate changes in 2015 were principally due to the weakening of the Euro and other foreign currencies on the translation of the company's Euro-denominated assets and cash denominated in foreign currencies.
Prior to the enactment of the Tax Cuts and Jobs Act in December 2017, a significant portion of cash and equivalents were considered reinvested indefinitely in foreign subsidiaries. The enactment of U.S. tax reform significantly changed the U.S. corporate tax system, including imposing a mandatory one-time transition tax on previously untaxed earnings of foreign subsidiaries and the creation of a territorial tax system that generally allows the repatriation of future foreign sourced earnings without incurring additional U.S. taxes. The company has not fully completed its analysis and calculation of foreign earnings subject to the transition tax. The provisional estimate of the one-time transition tax was $4.5 billion and is generally payable in eight annual installments. AbbVie does not expect the transition tax liability to materially affect itsmeet liquidity and capital resources.requirements as needed.
Credit Risk
AbbVie monitors economic conditions, the creditworthiness of customers and government regulations and funding, both domestically and abroad. AbbVie regularly communicates with its customers regarding the status of receivable balances, including their payment plans and obtains positive confirmation of the validity of the receivables. AbbVie establishes an allowance againstfor credit losses equal to the estimate of future losses over the contractual life of outstanding accounts receivable when it is probable they will not be collected.receivable. AbbVie may also utilize factoring arrangements to mitigate credit risk, although the receivables included in such arrangements have historically not been a significant amount of total outstanding receivables.
AbbVie continues to do business with foreign governments in certain countries, including Greece, Portugal, Italy and Spain, which have historically experienced challenges in credit and economic conditions. Substantially all of AbbVie's trade receivables in Greece, Portugal, Italy and Spain are with government health systems. Outstanding governmental receivables in these countries, net of allowances for doubtful accounts, totaled $255 million as of December 31, 2017 and $244 million at December 31, 2016. The company also continues to do business with foreign governments in certain oil-exporting countries that have experienced a deterioration in economic conditions, including Saudi Arabia and Russia, which may result in delays in the collection of receivables. Outstanding governmental receivables related to Saudi Arabia, net of allowances for doubtful accounts, were $149 million as of December 31, 2017 and $122 million as of December 31, 2016. Outstanding governmental receivables related to Russia, net of allowances for doubtful accounts, were $152 million as of December 31, 2017 and $110 million as of December 31, 2016. Global economic conditions and customer-specific factors may require the company to periodically re-evaluate the collectability of its receivables and the company could potentially incur credit losses.
Currently, AbbVie does not believe the economic conditions in oil-exporting countries will have a significant impact on the company's liquidity, cash flow or financial flexibility. However, if government funding were to become unavailable in these countries or if significant adverse changes in their reimbursement practices were to occur, AbbVie may not be able to collect the entire balance outstanding as of December 31, 2017.
43
Image3.gif|2023 Form 10-K
Credit Facility, Access to Capital and Credit Ratings
Credit Facility
In March 2023, AbbVie currently has a $3.0 billionentered into an amended and restated five-year revolving credit facility. The amendment increased the unsecured revolving credit facility which matures in October 2019. The revolvingcommitments from $4.0 billion to $5.0 billion and extended the maturity date of the facility from August 2023 to March 2028. This credit facility enables the company to borrow funds on an unsecured basis at variable interest rates and contains various covenants. At December 31, 2017,2023, the company was in compliance with all its credit facility covenants. Commitmentcovenants, and commitment fees under the credit facility were insignificant. ThereNo amounts were no amounts outstanding under the company's credit facility as of December 31, 20172023, December 31, 2022, or December 31, 2021.
In connection with the acquisition of ImmunoGen and 2016.proposed acquisition of Cerevel Therapeutics, AbbVie entered into a $9.0 billion 364-day bridge credit agreement and a 364-day term loan credit agreement with an aggregate principal amount of $5.0 billion. No amounts were drawn under the bridge credit agreement or term loan credit agreement as of December 31, 2023.

38    |2017 Form 10-K



Subsequent to 2023, on February 12, 2024, AbbVie borrowed $5.0 billion under the term loan credit agreement. See Note 5 and Note 10 to the consolidated financial statements for additional information.
Access to Capital
The company intends to fund short-term and long-term financial obligations as they mature through cash on hand, future cash flows from operations or by issuinghas the ability to issue additional debt. The company's ability to generate cash flows from operations, issue debt or enter into financing arrangements on acceptable terms could be adversely affected if there is a material decline in the demand for the company's products or in the solvency of its customers or suppliers, deterioration in the company's key financial ratios or credit ratings, or other material unfavorable changes in business conditions. At the current time, the company believes it has sufficient financial flexibility to issue debt, enter into other financing arrangements and attract long-term capital on acceptable terms to support the company's growth objectives.
Credit Ratings
There were no changes in the company’sIn 2023, Moody’s Investors Service upgraded AbbVie’s senior unsecured long-term credit rating to A3 with a stable outlook from Baa1 with a positive outlook and affirmed AbbVie’s Prime-2 short-term credit rating. In addition, Standard and Poor's Global ratings in 2017.upgraded AbbVie's long-term issuer credit rating to A- with a stable outlook from BBB+ with a positive outlook. Unfavorable changes to the ratings may have an adverse impact on future financing arrangements; however, they would not affect the company'scompany’s ability to draw on its credit facility and would not result in an acceleration of scheduled maturities of any of the company'scompany’s outstanding debt.

2017 Form 10-K  |    39




Future Cash Requirements
Contractual Obligations
The following table summarizes AbbVie's estimated material contractual obligations as of December 31, 2017:2023:
(in millions)TotalCurrentLong-term
Long-term debt, including current portion$59,245 $7,170 $52,075 
Interest on long-term debt(a)
26,273 2,313 23,960 
Contingent consideration liabilities(b)
19,890 1,952 17,938 
(a)Includes estimated future interest payments on long-term debt. Interest payments on debt are calculated for future periods using forecasted interest rates in effect at the end of 2023. Projected interest payments include the related effects of interest rate swap agreements. Certain of these projected interest payments may differ in the future based on changes in floating interest rates or other factors or events. The projected interest payments only pertain to obligations and agreements outstanding at December 31, 2023. See Note 10 to the Consolidated Financial Statements for additional information regarding the company's debt instruments and Note 11 for additional information on the interest rate swap agreements outstanding at December 31, 2023.
(b)Includes contingent consideration liabilities which are recorded at fair value on the consolidated balance sheet. Potential contingent consideration payments that exceed the fair value recorded on the consolidated balance sheet are not included in the table of contractual obligations. See Note 11 to the Consolidated Financial Statements for additional information regarding these liabilities.
(in millions)Total 
Less than
 one year
 
One to
 three years
 
Three to
 five years
 
More than
 five years
Short-term borrowings$400
 $400
 $—
 $—
 $—
Long-term debt and capital lease obligations, including current portion37,612
 6,026
 5,469
 5,938
 20,179
Interest on long-term debt(a)
15,617
 1,154
 2,250
 2,080
 10,133
Future minimum non-cancelable operating lease commitments957
 143
 235
 151
 428
Purchase obligations and other(b)
1,135
 972
 115
 46
 2
Other long-term liabilities(c) (d) (e) (f)
10,605
 1,135
 1,610
 1,331
 6,529
Total$66,326
 $9,830
 $9,679
 $9,546
 $37,271

(a)
2023 Form 10-K | abbvieimage3.gif
Includes estimated future interest payments on long-term debt and capital lease obligations. Interest payments on debt are calculated for future periods using forecasted interest rates in effect at the end of 2017. Projected interest payments include the related effects of interest rate swap agreements. Certain of these projected interest payments may differ in the future based on changes in floating interest rates or other factors or events. The projected interest payments only pertain to obligations and agreements outstanding at December 31, 2017. See Note 9 to the Consolidated Financial Statements for additional information regarding the company's debt instruments and Note 10 for additional information on the interest rate swap agreements outstanding at December 31, 2017.
44
(b)Includes the company's significant unconditional purchase obligations. These commitments do not exceed the company's projected requirements and are made in the normal course of business.
(c)
Amounts less than one year includes voluntary contributions in excess of $750 million that AbbVie plans to make to its various defined benefit plans subsequent to December 31, 2017. Amounts otherwise exclude pension and other post-employment benefits and related deferred compensation cash outflows. Timing of funding is uncertain and dependent on future movements in interest rates and investment returns, changes in laws and regulations and other variables. Also included in this amount are components of other long-term liabilities including restructuring. See Note 8 to the Consolidated Financial Statements for additional information on restructuring and Note 11 for additional information on the pension and other post-employment benefit plans.
(d)
Excludes liabilities associated with the company's unrecognized tax benefits as it is not possible to reliably estimate the timing of the future cash outflows related to these liabilities. See Note 13 to the Consolidated Financial Statements for additional information on these unrecognized tax benefits.
(e)
Includes $4.5 billion of contingent consideration liabilities related to the acquisitions of Stemcentrx and BI compounds which are recorded at fair value on the consolidated balance sheet. Potential contingent consideration payments that exceed the fair value recorded on the consolidated balance sheet are not included in the table of contractual obligations. See Notes 5 and 10 to the Consolidated Financial Statements for additional information regarding these liabilities.
(f)
Includes a one-time transition tax liability on a mandatory deemed repatriation of previously untaxed earnings of foreign subsidiaries resulting from U.S. tax reform, enacted in 2017. The one-time transition tax is generally payable in eight annual installments. See Note 13 to the Consolidated Financial Statements for additional information regarding the provisional estimates of these tax liabilities.
AbbVie enters into R&D collaborationcertain unconditional purchase obligations and other commitments in the normal course of business. There have been no changes to these commitments that would have a material impact on the company’s ability to meet either short-term or long-term future cash requirements.
Income Taxes
Future income tax cash requirements include a one-time transition tax liability on a mandatory deemed repatriation of previously untaxed earnings of foreign subsidiaries resulting from U.S. tax reform enacted in 2017. The one-time transition tax liability was $3.0 billion as of December 31, 2023 and is payable in three future annual installments.
Liabilities for unrecognized tax benefits totaled $6.7 billion as of December 31, 2023. It is not possible to reliably estimate the timing of the future cash outflows related to these liabilities. See Note 14 to the Consolidated Financial Statements for additional information on these unrecognized tax benefits.
Quarterly Cash Dividend
On October 26, 2023, AbbVie announced that its board of directors declared an increase in the quarterly cash dividend from $1.48 per share to $1.55 per share beginning with the dividend payable on February 15, 2024, to stockholders of record as of January 16, 2024. This reflects an increase of approximately 4.7% over the previous quarterly rate. The timing, declaration, amount of and payment of any dividends by AbbVie in the future is within the discretion of its board of directors and will depend upon many factors, including AbbVie's financial condition, earnings, capital requirements of its operating subsidiaries, covenants associated with certain of AbbVie's debt service obligations, legal requirements, regulatory constraints, industry practice, ability to access capital markets and other factors deemed relevant by its board of directors.
Acquisitions
In the fourth quarter of 2023, AbbVie entered into a definitive agreement to acquire Cerevel Therapeutics for a total value of approximately $8.7 billion. The transaction is expected to close in 2024 subject to regulatory approvals and other customary closing conditions.
Subsequent to 2023, on February 12, 2024, AbbVie completed its previously announced acquisition of ImmunoGen for a total value of approximately $10.1 billion.
In connection with these acquisitions, AbbVie entered into several debt and financing arrangements. See Note 5 and Note 10 to the consolidated financial statements for additional information.
Collaborations, Licensing and Other Arrangements
AbbVie enters into collaborative, licensing and other arrangements with third parties that may require future milestone payments to third parties contingent upon the achievement of certain development, regulatory, or commercial milestones. Individually, these arrangements are insignificant in any one annual reporting period. However, if milestones for multiple products covered by these arrangements would happen to be reached in the same reporting period, the aggregate charge to expense could be material to the results of operations in that period. From a business perspective, the payments are viewed as positive because they signify that the product is successfully moving through development and is now generating or is more likely to generate future cash flows from product sales. It is not possible to predict with reasonable certainty whether these milestones will be achieved or the timing for achievement. As a result, these potential payments are not included in the table of contractual obligations. See Note 5 to the Consolidated Financial Statements for additional information on these collaboration arrangements.

40    |2017 Form 10-K



CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in accordance with generally accepted accounting principles in the United States requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses. A summary of the company's significant accounting policies is included in Note 2 to the Consolidated Financial Statements. Certain of these policies are considered critical as these most significantly impact the company's financial condition and results of operations and require the most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Actual results may vary from these estimates.
Revenue Recognition
AbbVie recognizes revenue when persuasive evidencecontrol of promised goods or services is transferred to the company’s customers, in an arrangement exists, delivery has occurred,amount that reflects the sales price is fixedconsideration AbbVie expects to be entitled to in exchange for those goods or determinableservices. Sales, value add and collectability of the sales price is reasonably assured. Revenueother taxes collected concurrent with revenue-producing activities are excluded from revenue. AbbVie
45
Image3.gif|2023 Form 10-K
generates revenue primarily from product sales. For the majority of sales, is recognized when titlethe company transfers control, invoices the customer and risk of loss have passedrecognizes revenue upon shipment to the customer.
Rebates
AbbVie provides rebates to pharmacy benefit managers, state government Medicaid programs, insurance companies that administer Medicare drug plans, wholesalers, group purchasing organizations and other government agencies and private entities.
Rebate and chargeback accruals are accounted for as variable consideration and are recorded as a reduction to revenue in the period the related product is sold. RebatesProvisions for rebates and chargebacks totaled $12.9$56.8 billion in 2017, $10.82023, $41.4 billion in 20162022 and $8.6$33.9 billion in 2015.2021. Rebate amounts are typically based upon the volume of purchases using contractual or statutory prices, which may vary by product and by payer. For each type of rebate, the factors used in the calculations of the accrual for that rebate include the identification of the products subject to the rebate, the applicable price terms and the estimated lag time between sale and payment of the rebate, which can be significant.
In order to establish its rebate and chargeback accruals, the company uses both internal and external data to estimate the level of inventory in the distribution channel and the rebate claims processing lag time for each type of rebate. To estimate the rebate percentage or net price, the company tracks sales by product and by customer or payer. The company evaluates inventory data reported by wholesalers, available prescription volume information, product pricing, historical experience and other factors in order to determine the adequacy of its reserves. AbbVie regularly monitors its reserves and records adjustments when rebate trends, rebate programs and contract terms, legislative changes, or other significant events indicate that a change in the reserve is appropriate. Historically, adjustments to rebate accruals have not been material to net earnings.
The following table is an analysis of the three largest rebate accruals for rebates and chargeback allowances,chargebacks, which comprise approximately 92%94% of the total consolidated rebate and chargebacks recorded as reductions to revenues in 2017.2023. Remaining rebate provisions charged against gross revenues are not significant in the determination of operating earnings.
(in millions)Medicaid
 and
 Medicare
 Rebates		Managed
 Care
 Rebates		Wholesaler
Chargebacks
Balance as of December 31, 2020$2,945 $2,907 $741 
Provisions9,622 11,306 11,286 
Payments(8,751)(11,116)(11,125)
Balance as of December 31, 20213,816 3,097 902 
Provisions11,713 14,119 13,070 
Payments(10,331)(12,974)(12,829)
Balance as of December 31, 20225,198 4,242 1,143 
Provisions15,153 23,978 14,191 
Payments(15,054)(21,200)(14,162)
Balance as of December 31, 2023$5,297 $7,020 $1,172 
Other Allowances
(in millions)
Medicaid
 and
 Medicare
 Rebates
 
Managed
 Care
 Rebates
 
Wholesaler
Chargebacks
Balance at December 31, 2014$712
 $476
 $253
Provisions1,716
 2,215
 3,866
Payments(1,396) (1,771) (3,756)
Balance at December 31, 20151,032
 920
 363
Provisions2,606
 3,146
 3,987
Payments(2,471) (2,899) (3,967)
Balance at December 31, 20161,167
 1,167
 383
Provisions2,909
 3,990
 5,026
Payments(2,736) (3,962) (4,887)
Balance at December 31, 2017$1,340
 $1,195
 $522


2017 Form 10-K  |    41




Cash Discounts and Product Returns
CashOther allowances include cash discounts, and product returns, sales incentives and other adjustments, which totaled $1.3 billion in 2017, $964 million in 2016are accounted for as variable consideration and $898 million in 2015, are recorded as a reduction to revenue in the same period the related product is sold. The reserveReserves for cash discounts isand sales incentives are readily determinable because the company's experience of payment history is fairly consistent. Product returns can be reliably estimated based on the company's historical return experience. Cash discounts totaled $2.0 billion in 2023, $1.8 billion in 2022 and $1.6 billion in 2021. Allowances other than cash discounts are not significant.
Pension and Other Post-Employment Benefits
AbbVie engages outside actuaries to assist in the determination of the obligations and costs under the pension and other post-employment benefit plans that are direct obligations of AbbVie. The valuation of the funded status and the net periodic benefit cost for these plans are calculated using actuarial assumptions. The significant assumptions, which are reviewed annually, include the discount rate, the expected long-term rate of return on plan assets and the health care cost trend rates. The significant assumptions used in determining these calculationsrates and are disclosed in Note 1112 to the Consolidated Financial Statements.
2023 Form 10-K | abbvieimage3.gif
46
The discount rate is selected based on current market rates on high-quality, fixed-income investments at December 31 each year. AbbVie employs a yield-curve approach for countries where a robust bond market exists. The yield curve is developed using high-quality bonds. The yield curveyield-curve approach reflects the plans' specific cash flows (i.e. duration) in calculating the benefit obligations by applying the corresponding individual spot rates along the yield curve. Beginning in 2016, AbbVie also reflectedreflects the plans' specific cash flows and appliedapplies them to the corresponding individual spot rates along the yield curve in calculating the service cost and interest cost portions of expense. For other countries, AbbVie reviews various indices such as corporate bond and government bond benchmarks to estimate the discount rate.
AbbVie's assumed discount rates have a significant effect on the amounts reported for defined benefit pension and other post-employment plans as of December 31, 2017.2023. A 50 basis point change in the assumed discount rate would have had the following effects on AbbVie's calculation of net periodic benefit costs in 20182024 and projected benefit obligations as of December 31, 2017:
 50 basis point
(in millions) (brackets denote a reduction)Increase Decrease
Defined benefit plans   
Service and interest cost$(64) $72
Projected benefit obligation(572) 652
Other post-employment plans   
Service and interest cost$(9) $11
Projected benefit obligation(77) 89

Effective December 31, 2015, AbbVie elected to change the method it uses to estimate the service and interest cost components of net periodic benefit costs. Historically, AbbVie estimated these service and interest cost components of this expense utilizing a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. In late 2015, AbbVie elected to utilize a full yield curve approach in the estimation of these components by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. AbbVie elected to make this change to provide a more precise measurement of service and interest costs by improving the correlation between projected benefit cash flows to the corresponding spot yield curve rates. AbbVie accounted for this change prospectively as a change in accounting estimate that is inseparable from a change in accounting principle. This change reduced AbbVie’s net periodic benefit cost by approximately $41 million in 2016. This change had no effect on the 2015 expense and did not affect the measurement of AbbVie’s total benefit obligations.2023:
50 basis point
(in millions) (brackets denote a reduction)IncreaseDecrease
Defined benefit plans
Net periodic benefit cost$(49)$70 
Projected benefit obligation(674)756 
Other post-employment plans
Net periodic benefit cost$(6)$7 
Projected benefit obligation(53)59 
The expected long-term rate of return is based on the asset allocation, historical performance and the current view of expected future returns. AbbVie considers these inputs with a long-term focus to avoid short-term market influences. The current long-term rate of return on plan assets for each plan is supported by the historical performance of the trust's actual and target asset allocation. AbbVie's assumed expected long-term rate of return has a significant effect on the amounts reported for defined benefit pension plans as of December 31, 20172023 and will be used in the calculation of net periodic benefit cost in 2018.2024. A one percentage point change in assumed expected long-term rate of return on plan assets would increase or decrease the net period benefit cost of these plans in 20182024 by $54$106 million.
The health care cost trend rate is selected by reviewing historical trends and current views on projected future health care cost increases. The current health care cost trend rate is supported by the historical trend experience of each plan. Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans as of

42    |2017 Form 10-K



December 31, 20172023 and will be used in the calculation of net periodic benefit cost in 2018. A one percentage point change in assumed health care cost trend rates would have the following effects on AbbVie's calculation of net periodic benefit costs in 2018 and the projected benefit obligation as of December 31, 2017:
 One percentage point
(in millions) (brackets denote a reduction)Increase Decrease
Service and interest cost$31
 $(24)
Projected benefit obligation183
 (140)

2024.
Income Taxes
AbbVie accounts for income taxes under the asset and liability method. Provisions for federal, state and foreign income taxes are calculated on reported pretaxpre-tax earnings based on current tax laws. Deferred taxes are provided using enacted tax rates on the future tax consequences of temporary differences, which are the differences between the financial statement carrying amount of assets and liabilities and their respective tax bases and the tax benefits of carryforwards. A valuation allowance is established or maintained when, based on currently available information, it is more likely than not that all or a portion of a deferred tax asset will not be realized.
Litigation
The company is subject to contingencies, such as various claims, legal proceedings and investigations regarding product liability, intellectual property, commercial, securities and other matters that arise in the normal course of business. See Note 1415 to the Consolidated Financial Statements for additional information. Loss contingency provisions are recorded for probable losses at management's best estimate of a loss, or when a best estimate cannot be made, a minimum loss contingency amount within a probable range is recorded. Accordingly, AbbVie is often initially unable to develop a best estimate of loss and therefore, the minimum amount, which could be zero, is recorded. As information becomes known, either the minimum loss amount is increased, resulting in additional loss provisions, or a best estimate can be made, also resulting in additional loss provisions. Occasionally, a best estimate amount is changed to a lower amount when events result in an expectation of a more favorable outcome than previously expected.
Valuation of Goodwill and Intangible Assets
AbbVie has acquired and may continue to acquire significant intangible assets in connection with business combinations that AbbVie records at fair value. Transactions involving the purchase or sale of intangible assets occur with some frequency between companies in
47
Image3.gif|2023 Form 10-K
the pharmaceuticals industry and valuations are usually based on a discounted cash flow analysis incorporating the stage of completion. The discounted cash flow model requires assumptions about the timing and amount of future net cash flows, risk, cost of capital, terminal values and market participants. Each of these factors can significantly affect the value of the intangible asset. IPR&DIn-process research and development (IPR&D) acquired in a business combination is capitalized as an indefinite-lived intangible asset until regulatory approval is obtained, at which time it is accounted for as a definite-lived asset and amortized over its estimated useful life, or discontinuation, at which point the intangible asset will be written off. IPR&D acquired in transactions that are not business combinations is expensed immediately, unless deemed to have an alternative future use. Payments made to third parties subsequent to regulatory approval are capitalized and amortized over the remaining useful life.
AbbVie reviews the recoverability of definite-lived intangible assets whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Goodwill and indefinite-lived intangible assets are reviewed for impairment annually or when an event occurs that could result in an impairment. See Note 2 to the Consolidated Financial Statements for furtheradditional information.
Annually, the company tests its goodwill for impairment by first assessing qualitative factors to determine whether it is more likely than not that the fair value is less than its carrying amount. Some of the factors considered in the assessment include general macro-economic conditions, conditions specific to the industry and market, cost factors, which could have a significant effect on earnings or cash flows, the overall financial performance and whether there have been sustained declines in the company's share price. If the company concludes it is more likely than not that the fair value of the reporting unit is less than its carrying amount, a quantitative impairment test is performed. AbbVie tests indefinite-lived intangible assets usingfor impairment by first assessing qualitative factors to determine whether it is more likely than not that the fair value is less than its carrying amount. If the company concludes it is more likely than not that the fair value is less than its carrying amount, a quantitative impairment test.test is performed.
For its quantitative impairment tests, the company uses an estimated future cash flow approach that requires significant judgment with respect to future volume, revenue and expense growth rates, changes in working capital use, foreign currency exchange rates, the selection of an appropriate discount rate, asset groupings and other assumptions and estimates. The

2017 Form 10-K  |    43




estimates and assumptions used are consistent with the company's business plans and a market participant's views of a company and similar companies.views. The use of alternative estimates and assumptions could increase or decrease projected cash flows and the estimated fair value of the assetsrelated intangible assets. Future changes to these estimates and potentially result in different impacts toassumptions could have a material impact on the company's results of operations. Actual results may differ from the company's estimates.
ContingentConsideration
The fair value measurements of contingent consideration liabilities are determined as of the acquisition date based on significant unobservable inputs, including the discount rate, estimated probabilities and timing of achieving specified development, regulatory and commercial milestones and the estimated amount of future sales of the acquired products still in development.products. Contingent consideration liabilities are revalued to fair value at each subsequent reporting date until the related contingency is resolved. The potential contingent consideration payments are estimated by applying a probability-weighted expected payment model for contingent milestone payments and a Monte Carlo simulation model for contingent royalty payments, which are then discounted to present value. Changes to the fair value of the contingent consideration liabilities can result from changes to one or a number of inputs, including discount rates, the probabilities of achieving the milestones, the time required to achieve the milestones and estimated future sales. Significant judgment is employed in determining the appropriateness of certain of these inputs.inputs, which are disclosed in Note 11 to the Consolidated Financial Statements. Changes to the inputs described above could have a material impact on the company's financial position and results of operations in any given period. At December 31, 2017, a 50 basis point increase/decrease in the assumed discount rate would have decreased/increased the value of the contingent consideration liabilities by approximately $170 million. Additionally, at December 31, 2017, a five percentage point increase/decrease in the assumed probability of success across all potential indications would have increased/decreased the value of the contingent consideration liabilities by approximately $390 million.
Recent Accounting Pronouncements
See Note 2 to the Consolidated Financial Statements for additional information on recent accounting pronouncements.


44    |20172023 Form 10-K

| abbvieimage3.gif
48


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The company is exposed to risk that its earnings, cash flows and equity could be adversely impacted by changes in foreign exchange rates and interest rates. Certain derivative instruments are used when available on a cost-effective basis to hedge the company's underlying economic exposures. See Note 1011 to the Consolidated Financial Statements for additional information regarding the company's financial instruments and hedging strategies.
Foreign Currency Risk
AbbVie's primary net foreign currency exposures are the Euro, Japanese yen, Canadian dollar, Chinese yuan and British pound. The following table reflects the total foreign currency forward exchange contracts outstanding at December 31, 20172023 and 2016:
 2017 2016
(in millions)
Contract
 amount
 
Weighted
 average
 exchange
 rate
 
Fair and
 carrying
 value
 receivable/(payable)
 
Contract
 amount
 
Weighted
 average
 exchange
 rate
 
Fair and
 carrying
 value
 receivable
Receive primarily U.S. dollars in exchange for the following currencies:           
Euro$6,366
 1.175
 $(88) $5,544
 1.078
 $102
Japanese yen940
 112.4
 2
 935
 111.6
 39
British pound760
 1.310
 (22) 611
 1.303
 35
All other currencies1,877
 n/a
 (18) 1,693
 n/a
 11
Total$9,943
   $(126) $8,783
   $187

2022:
20232022
as of December 31 (in millions)Contract amountWeighted average exchange rateFair and carrying value receivable/(payable)Contract amountWeighted average exchange rateFair and carrying value receivable/(payable)
Receive primarily U.S. dollars in exchange for the following currencies:
Euro$10,707 1.107 $(99)$8,507 1.071 $9 
Canadian dollar1,244 1.329 (8)1,302 1.312 40 
Japanese yen726 139.636 2 567 133.271 (3)
British pound505 1.271 (1)772 1.234 (8)
Chinese yuan479 7.104 — 596 7.024 (5)
All other currencies2,263 n/a(31)1,954 n/a(2)
Total$15,924 $(137)$13,698 $31 
The company estimates that a 10% appreciation in the underlying currencies being hedged from their levels against the U.S. dollar, with all other variables held constant, would decrease the fair value of foreign exchange forward contracts by $1.0$1.6 billion at December 31, 2017.2023. If realized, this appreciation would negatively affect earnings over the remaining life of the contracts. However, gains and losses on the hedging instruments offset losses and gains on the hedged transactions and reduce the earnings and stockholders' equity volatility relating to foreign exchange. A 10% appreciation is believed to be a reasonably possible near-term change in foreign currencies.
In November 2016,As of December 31, 2023, the company issued €3.6has €5.4 billion aggregate principal amount of unsecured senior Euro notes outstanding, which are exposed to foreign currency risk. The company has designated these foreign currency denominated notes as hedges of its net investments in certain foreign subsidiaries and affiliates. As a result, any foreign currency translation gains or losses related to the Euro notes will be included in accumulated other comprehensive income.loss. See Note 9 to the Consolidated Financial Statements for additional information related to the senior Euro note issuance and Note 10 to the Consolidated Financial Statements for additional information relatedregarding the senior Euro notes and Note 11 to the Consolidated Financial Statements for additional information regarding the net investment hedging program.
The functional currency of the company’s Venezuela operations is the U.S. dollar due to the hyperinflationary status of the Venezuelan economy. During the first quarter of 2016, in consideration of declining economic conditions in Venezuela and a decline in transactions settled at the official rate, AbbVie determined that its net monetary assets denominated in the Venezuelan bolivar (VEF) were no longer expected to be settled at the official rate of 10 VEF per U.S. dollar, but rather at the Divisa Complementaria (DICOM) rate. Therefore, during the first quarter of 2016, AbbVie recorded a charge of $298 million to net foreign exchange loss to revalue its bolivar-denominated net monetary assets using the DICOM rate then in effect of approximately 270 VEF per U.S. dollar. As of December 31, 2017, AbbVie’s net monetary assets in Venezuela were insignificant.
Interest Rate Risk
The company estimates that an increase in interest rates of 100 basis points would adversely impact the fair value of AbbVie's interest rate swap contracts by approximately $509$216 million at December 31, 2017.2023. If realized, the fair value reduction would affect earnings over the remaining life of the contracts. The company estimates that an increase of 100 basis points in long-term interest rates would decrease the fair value of long-term debt by $2.2$3.9 billion at December 31, 2017.2023. A 100 basis point change is believed to be a reasonably possible near-term change in interest rates.

2017 Form 10-K  |    45




Market Price Risk
AbbVie’s debt securities investment portfolio (the portfolio) is its main exposure to market price risk. The portfolio is subject to changes in fair value as a result of interest rate fluctuations and other market factors. It is AbbVie’s policy to mitigate market price risk by maintaining a diversified portfolio that limits the amount of exposure to a particular issuer and security type while placing limits on the amount of time to maturity. AbbVie’s investment policy limits investments to investment grade credit ratings. The company estimates that an increase in interest rates of 100 basis points would decrease the fair value of the portfolio by approximately $34 million as of December 31, 2017. If the portfolio were to be liquidated, the fair value reduction would affect the income statement in the period sold.
Non-Publicly Traded Equity Securities
AbbVie holds equity securities in other pharmaceutical and biotechnology companies that are not traded on public stock exchanges. The carrying value of these investments was $48 million as of December 31, 2017 and $42 million as of December 31, 2016. AbbVie monitors these investments for other than temporary declines in market value and charges impairment losses to net earnings when an other than temporary decline in estimated value occurs. In 2017 and 2016, impairment charges recorded were insignificant. In 2015, AbbVie recorded impairment charges totaling $36 million related to certain of the company's investments in non-publicly traded equity securities.


4649
Image3.gif|20172023 Form 10-K



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page

Page
Consolidated Financial Statements
4851
4952
5053
5154
5255
Notes to Consolidated Financial Statements
56
56
61
62
62
65
66
67
69
71
73
79
83
88
90
92
95
9496




20172023 Form 10-K|abbvieimage3.gif47

50



AbbVie Inc. and Subsidiaries
Consolidated Statements of Earnings



years ended December 31 (in millions, except per share data)202320222021
Net revenues$54,318 $58,054 $56,197 
Cost of products sold20,415 17,414 17,446 
Selling, general and administrative12,872 15,260 12,349 
Research and development7,675 6,510 6,922 
Acquired IPR&D and milestones778 697 1,124 
Other operating expense (income), net(179)56 432 
Total operating costs and expenses41,561 39,937 38,273 
Operating earnings12,757 18,117 17,924 
Interest expense, net1,684 2,044 2,384 
Net foreign exchange loss146 148 51 
Other expense, net4,677 2,448 2,500 
Earnings before income tax expense6,250 13,477 12,989 
Income tax expense1,377 1,632 1,440 
Net earnings4,873 11,845 11,549 
Net earnings attributable to noncontrolling interest10 9 7 
Net earnings attributable to AbbVie Inc.$4,863 $11,836 $11,542 
Per share data
Basic earnings per share attributable to AbbVie Inc.$2.73 $6.65 $6.48 
Diluted earnings per share attributable to AbbVie Inc.$2.72 $6.63 $6.45 
Weighted-average basic shares outstanding1,768 1,771 1,770 
Weighted-average diluted shares outstanding1,773 1,778 1,777 
years ended December 31 (in millions, except per share data)2017 2016 2015
Net revenues$28,216
 $25,638
 $22,859
      
Cost of products sold7,040
 5,833
 4,500
Selling, general and administrative6,275
 5,855
 6,387
Research and development4,982
 4,366
 4,285
Acquired in-process research and development327
 200
 150
Total operating costs and expenses18,624
 16,254
 15,322
Operating earnings9,592
 9,384
 7,537
      
Interest expense, net1,004
 965
 686
Net foreign exchange loss348
 303
 193
Other expense, net513
 232
 13
Earnings before income tax expense7,727
 7,884
 6,645
Income tax expense2,418
 1,931
 1,501
Net earnings$5,309
 $5,953
 $5,144
      
Per share data     
Basic earnings per share$3.31
 $3.65
 $3.15
Diluted earnings per share$3.30
 $3.63
 $3.13
Cash dividends declared per common share$2.63
 $2.35
 $2.10
      
Weighted-average basic shares outstanding1,596
 1,622
 1,625
Weighted-average diluted shares outstanding1,603
 1,631
 1,637


The accompanying notes are an integral part of these consolidated financial statements.



4851
Image3.gif|20172023 Form 10-K



AbbVie Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income



years ended December 31 (in millions)202320222021
Net earnings$4,873 $11,845 $11,549 
Foreign currency translation adjustments, net of tax expense (benefit) of $15 in 2023, $(10) in 2022 and $(35) in 2021407 (943)(1,153)
Net investment hedging activities, net of tax expense (benefit) of $(109) in 2023, $152 in 2022 and $193 in 2021(399)555 699 
Pension and post-employment benefits, net of tax expense (benefit) of $(6) in 2023, $272 in 2022 and $124 in 2021(30)1,088 521 
Cash flow hedging activities, net of tax expense (benefit) of $(19) in 2023, $5 in 2022 and $20 in 2021(84)— 151 
Other comprehensive income (loss)$(106)$700 $218 
Comprehensive income4,767 12,545 11,767 
Comprehensive income attributable to noncontrolling interest10 9 7 
Comprehensive income attributable to AbbVie Inc.$4,757 $12,536 $11,760 
years ended December 31 (in millions)2017 2016 2015
Net earnings$5,309
 $5,953
 $5,144
      
Foreign currency translation adjustments, net of tax expense (benefit) of $34 in 2017, $(31) in 2016 and $(139) in 2015996
 (165) (667)
Net investment hedging activities, net of tax expense (benefit) of $(194) in 2017, $79 in 2016 and $— in 2015(343) 140
 —
Pension and post-employment benefits, net of tax expense (benefit) of $(94) in 2017, $(75) in 2016 and $96 in 2015(406) (135) 230
Marketable security activities, net of tax expense (benefit) of $(8) in 2017, $(11) in 2016 and $22 in 2015(46) (1) 44
Cash flow hedging activities, net of tax expense (benefit) of $(26) in 2017, $18 in 2016 and $(6) in 2015(342) 136
 (137)
Other comprehensive loss(141) (25) (530)
Comprehensive income$5,168
 $5,928
 $4,614


The accompanying notes are an integral part of these consolidated financial statements.



20172023 Form 10-K|abbvieimage3.gif49

52



AbbVie Inc. and Subsidiaries
Consolidated Balance Sheets

as of December 31 (in millions, except share data)2017 2016
Assets   
Current assets   
Cash and equivalents$9,303
 $5,100
Short-term investments486
 1,323
Accounts receivable, net5,088
 4,758
Inventories1,605
 1,444
Prepaid expenses and other4,741
 3,562
Total current assets21,223
 16,187
    
Investments2,090
 1,783
Property and equipment, net2,803
 2,604
Intangible assets, net27,559
 28,897
Goodwill15,785
 15,416
Other assets1,326
 1,212
Total assets$70,786
 $66,099
    
Liabilities and Equity   
Current liabilities   
Short-term borrowings$400
 $377
Current portion of long-term debt and lease obligations6,015
 25
Accounts payable and accrued liabilities10,226
 9,379
Total current liabilities16,641
 9,781
    
Long-term debt and lease obligations30,953
 36,440
Deferred income taxes2,490
 6,890
Other long-term liabilities15,605
 8,352
    
Commitments and contingencies

 

    
Stockholders�� equity   
Common stock, $0.01 par value, 4,000,000,000 shares authorized, 1,768,738,550 shares issued as of December 31, 2017 and 1,754,900,486 as of December 31, 201618
 18
Common stock held in treasury, at cost, 176,607,525 shares as of December 31, 2017 and 162,387,762 as of December 31, 2016(11,923) (10,852)
Additional paid-in-capital14,270
 13,678
Retained earnings5,459
 4,378
Accumulated other comprehensive loss(2,727) (2,586)
Total stockholders’ equity5,097
 4,636
    
Total liabilities and equity$70,786
 $66,099

   The accompanying notes are an integral part of these consolidated financial statements.

50    |2017 Form 10-K



AbbVie Inc. and Subsidiaries
Consolidated Statements of Equity


years ended December 31 (in millions)
Common
shares
outstanding
 
Common
stock
 
Treasury
stock
 
Additional
paid-in
capital
 
Retained
earnings
 
Accumulated
other
comprehensive
loss
 Total
Balance at December 31, 20141,591
 $16
 $(972) $4,194
 $535
 $(2,031) $1,742
Net earnings—
 —
 —
 —
 5,144
 —
 5,144
Other comprehensive loss, net of tax—
 —
 —
 —
 —
 (530) (530)
Dividends declared—
 —
 —
 —
 (3,431) —
 (3,431)
Common shares issued to Pharmacyclics stockholders128
 1
 —
 8,404
 —
 —
 8,405
Purchases of treasury stock(119) —
 (7,886) —
 —
 —
 (7,886)
Stock-based compensation plans and other10
 —
 19
 482
 —
 —
 501
Balance at December 31, 20151,610
 17
 (8,839) 13,080
 2,248
 (2,561) 3,945
Net earnings—
 —
 —
 —
 5,953
 —
 5,953
Other comprehensive loss, net of tax—
 —
 —
 —
 —
 (25) (25)
Dividends declared—
 —
 —
 —
 (3,823) —
 (3,823)
Common shares issued to Stemcentrx stockholders63
 —
 3,958
 (35) —
 —
 3,923
Purchases of treasury stock(94) —
 (6,018) —
 —
 —
 (6,018)
Stock-based compensation plans and other14
 1
 47
 633
 —
 —
 681
Balance at December 31, 20161,593
 18
 (10,852) 13,678
 4,378
 (2,586) 4,636
Net earnings—
 —
 —
 —
 5,309
 —
 5,309
Other comprehensive loss, net of tax—
 —
 —
 —
 —
 (141) (141)
Dividends declared—
 —
 —
 —
 (4,221) —
 (4,221)
Purchases of treasury stock(15) —
 (1,125) —
 —
 —
 (1,125)
Stock-based compensation plans and other14
 —
 54
 592
 (7) —
 639
Balance at December 31, 20171,592
 $18
 $(11,923) $14,270
 $5,459
 $(2,727) $5,097

as of December 31 (in millions, except share data)20232022
Assets
Current assets
Cash and equivalents$12,814 $9,201 
Short-term investments2 28 
Accounts receivable, net11,155 11,254 
Inventories4,099 3,579 
Prepaid expenses and other4,932 4,401 
Total current assets33,002 28,463 
Investments304 241 
Property and equipment, net4,989 4,935 
Intangible assets, net55,610 67,439 
Goodwill32,293 32,156 
Other assets8,513 5,571 
Total assets$134,711 $138,805 
Liabilities and Equity
Current liabilities
Short-term borrowings$— $1 
Current portion of long-term debt and finance lease obligations7,191 4,135 
Accounts payable and accrued liabilities30,650 25,402 
Total current liabilities37,841 29,538 
Long-term debt and finance lease obligations52,194 59,135 
Deferred income taxes1,952 2,190 
Other long-term liabilities32,327 30,655 
Commitments and contingencies
Stockholders' equity
Common stock, $0.01 par value, 4,000,000,000 shares authorized, 1,823,046,087 shares issued as of December 31, 2023 and 1,813,770,294 as of December 31, 202218 18 
Common stock held in treasury, at cost, 57,105,354 shares as of December 31, 2023 and 44,589,000 as of December 31, 2022(6,533)(4,594)
Additional paid-in capital20,180 19,245 
Retained earnings (accumulated deficit)(1,000)4,784 
Accumulated other comprehensive loss(2,305)(2,199)
Total stockholders' equity10,360 17,254 
Noncontrolling interest37 33 
Total equity10,397 17,287 
Total liabilities and equity$134,711 $138,805 
The accompanying notes are an integral part of these consolidated financial statements.


53
2017Image3.gif|2023 Form 10-K|    51




AbbVie Inc. and Subsidiaries
Consolidated Statements of Cash FlowsEquity

years ended December 31 (in millions) (brackets denote cash outflows)2017 2016 2015
Cash flows from operating activities     
Net earnings$5,309
 $5,953
 $5,144
Adjustments to reconcile net earnings to net cash from operating activities:     
Depreciation425
 425
 417
Amortization of intangible assets1,076
 764
 419
Change in fair value of contingent consideration liabilities626
 228
 —
Stock-based compensation365
 353
 282
Upfront costs and milestones related to collaborations470
 280
 280
Devaluation loss related to Venezuela—
 298
 —
Intangible asset impairment354
 39
 —
Impacts related to U.S. tax reform1,242
 —
 —
Other, net84
 390
 489
Changes in operating assets and liabilities, net of acquisitions:     
Accounts receivable(391) (71) (1,076)
Inventories93
 (38) (434)
Prepaid expenses and other assets(118) (393) 511
Accounts payable and other liabilities425
 (1,187) 1,503
Cash flows from operating activities9,960
 7,041
 7,535
      
Cash flows from investing activities     
Acquisition of businesses, net of cash acquired—
 (2,495) (11,488)
Other acquisitions and investments(308) (262) (964)
Acquisitions of property and equipment(529) (479) (532)
Purchases of investment securities(2,230) (5,315) (851)
Sales and maturities of investment securities2,793
 2,359
 899
Other—
 118
 —
Cash flows from investing activities(274) (6,074) (12,936)
      
Cash flows from financing activities     
Net change in short-term borrowings22
 (29) (19)
Proceeds from issuance of long-term debt—
 11,627
 20,660
Repayments of long-term debt and lease obligations(25) (6,010) (4,018)
Debt issuance costs—
 (69) (182)
Dividends paid(4,107) (3,717) (3,294)
Purchases of treasury stock(1,410) (6,033) (7,586)
Proceeds from the exercise of stock options254
 268
 155
Payments of contingent consideration liabilities(268) —
 —
Other, net22
 35
 36
Cash flows from financing activities(5,512) (3,928) 5,752
Effect of exchange rate changes on cash and equivalents29
 (338) (300)
Net change in cash and equivalents4,203
 (3,299) 51
Cash and equivalents, beginning of year5,100
 8,399
 8,348
      
Cash and equivalents, end of year$9,303
 $5,100
 $8,399
      
Other supplemental information     
Interest paid, net of portion capitalized$1,099
 $986
 $536
Income taxes paid1,696
 3,563
 1,108
Supplemental schedule of non-cash investing and financing activities     
Issuance of common shares associated with acquisitions of businesses—
 3,923
 8,405
years ended December 31 (in millions)Common shares outstandingCommon stockTreasury stockAdditional paid-in capital Retained earnings (accumulated deficit)Accumulated other comprehensive lossNoncontrolling interestTotal
Balance at December 31, 20201,765 $18 $(2,264)$17,384 $1,055 $(3,117)$21 $13,097 
Net earnings attributable to AbbVie Inc.— — — — 11,542 — — 11,542 
Other comprehensive income, net of tax— — — — — 218 — 218 
Dividends declared— — — — (9,470)— — (9,470)
Purchases of treasury stock(8)— (934)— — — — (934)
Stock-based compensation plans and other11 — 55 921 — — — 976 
Change in noncontrolling interest— — — — — — 7 7 
Balance at December 31, 20211,768 18 (3,143)18,305 3,127 (2,899)28 15,436 
Net earnings attributable to AbbVie Inc.— — — — 11,836 — — 11,836 
Other comprehensive income, net of tax— — — — — 700 — 700 
Dividends declared— — — — (10,179)— — (10,179)
Purchases of treasury stock(10)— (1,487)— — — — (1,487)
Stock-based compensation plans and other11 — 36 940 — — — 976 
Change in noncontrolling interest— — — — — — 5 5 
Balance at December 31, 20221,769 18 (4,594)19,245 4,784 (2,199)33 17,287 
Net earnings attributable to AbbVie Inc.— — — — 4,863 — — 4,863 
Other comprehensive loss, net of tax— — — — — (106)— (106)
Dividends declared— — — — (10,647)— — (10,647)
Purchases of treasury stock(12)— (1,978)— — — — (1,978)
Stock-based compensation plans and other9 — 39 935 — — — 974 
Change in noncontrolling interest— — — — — — 4 4 
Balance at December 31, 20231,766 $18 $(6,533)$20,180 $(1,000)$(2,305)$37 $10,397 

The accompanying notes are an integral part of these consolidated financial statements.

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AbbVie Inc. and Subsidiaries
Consolidated Statements of Cash Flows
years ended December 31 (in millions) (brackets denote cash outflows)202320222021
Cash flows from operating activities
Net earnings$4,873 $11,845 $11,549 
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation752 778 803 
Amortization of intangible assets7,946 7,689 7,718 
Deferred income taxes(2,889)(1,931)(898)
Change in fair value of contingent consideration liabilities5,128 2,761 2,679 
Payments of contingent consideration liabilities(870)(164)(91)
Stock-based compensation747 671 692 
Acquired IPR&D and milestones778 697 1,124 
Other charges related to collaborations— — 500 
Gain on divestitures— (172)(68)
Non-cash litigation reserve adjustments, net of cash payments(443)2,243 163 
Impairment of intangible assets4,229 770 50 
Other, net(225)(150)(213)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable66 (1,455)(1,321)
Inventories(417)(686)(142)
Prepaid expenses and other assets(188)(264)(197)
Accounts payable and other liabilities3,840 1,769 1,719 
Income tax assets and liabilities, net(488)542 (1,290)
Cash flows from operating activities22,839 24,943 22,777 
Cash flows from investing activities
Acquisition of businesses, net of cash acquired— (255)(525)
Other acquisitions and investments(1,223)(539)(1,377)
Acquisitions of property and equipment(777)(695)(787)
Purchases of investment securities(77)(1,438)(119)
Sales and maturities of investment securities55 1,530 98 
Other, net13 774 366 
Cash flows from investing activities(2,009)(623)(2,344)
Cash flows from financing activities
Proceeds from issuance of long-term debt— 2,000 1,000 
Repayments of long-term debt and finance lease obligations(4,149)(14,433)(9,414)
Debt issuance costs(38)— — 
Dividends paid(10,539)(10,043)(9,261)
Purchases of treasury stock(1,972)(1,487)(934)
Proceeds from the exercise of stock options180 262 244 
Payments of contingent consideration liabilities(752)(1,132)(698)
Other, net48 30 24 
Cash flows from financing activities(17,222)(24,803)(19,039)
Effect of exchange rate changes on cash and equivalents5 (62)(97)
Net change in cash and equivalents3,613 (545)1,297 
Cash and equivalents, beginning of year9,201 9,746 8,449 
Cash and equivalents, end of year$12,814 $9,201 $9,746 
Other supplemental information
Interest paid, net of portion capitalized$2,469 $2,546 $2,712 
Income taxes paid4,702 2,988 3,648 
The accompanying notes are an integral part of these consolidated financial statements.
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AbbVie Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1 Background and Basis of Presentation
Background
The principal business of AbbVie Inc. (AbbVie or the company) is the discovery, development, manufacturemanufacturing and sale of a broad line of pharmaceutical products.therapies that address some of the world's most complex and serious diseases. AbbVie's products are generally sold worldwide directly to wholesalers, distributors, government agencies, health care facilities, specialty pharmacies and independent retailers from AbbVie-owned distribution centers and public warehouses. Substantially all of AbbVie's net revenues inCertain products (including aesthetic products and devices) are also sold directly to physicians and other licensed healthcare providers. In the United States, areAbbVie distributes pharmaceutical products principally through independent wholesale distributors, with some sales directly to three wholesalers.retailers, pharmacies, patients or other customers. Outside the United States, AbbVie sells products are sold primarily to customerswholesalers or through distributors, and depending on the market served.

works through largely centralized national payers systems to agree on reimbursement terms.
AbbVie was incorporated in Delaware on April 10, 2012. On January 1, 2013, AbbVie became an independent, publicly-traded company as a result of the distribution by Abbott Laboratories (Abbott) of 100% of the outstanding common stock of AbbVie to Abbott's shareholders. AbbVie incurred separation-related expenses of $270 million in 2015, which were principally classified in selling, general and administrative expenses (SG&A) in the consolidated statements of earnings.
Basis of Historical Presentation
For a certain portion of AbbVie’s operations, the legal transfer of AbbVie’s assets (net of liabilities) did not occur with the separation of AbbVie on January 1, 2013 due to the time required to transfer marketing authorizations and satisfy other regulatory requirements in certain countries. Under the terms of the separation agreement with Abbott, AbbVie was responsible for the business activities conducted by Abbott on its behalf and was subject to the risks and entitled to the benefits generated by these operations and assets. As a result, the related assets and liabilities and results of operations were reported in AbbVie’s consolidated financial statements. All of these operations were transferred to AbbVie as of December 31, 2016. Net revenues related to these operations were insignificant in 2016 and were $213 million in 2015.
Note 2 Summary of Significant Accounting Policies
Use of Estimates
The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and necessarily include amounts based on estimates and assumptions by management. Actual results could differ from those amounts. Significant estimates include amounts for rebates, pension and other post-employment benefits, income taxes, litigation, valuation of goodwill and intangible assets, contingent consideration liabilities, financial instruments and inventory and accounts receivable exposures.
Basis of Consolidation
The consolidated financial statements include the accounts of AbbVie and all of its subsidiaries in which a controlling interest is maintained. Controlling interest is determined by majority ownership interest and the absence of substantive third-party participating rights or, in the case of variable interest entities, where AbbVie is determined to be the primary beneficiary. Investments in companies over which AbbVie has a significant influence but not a controlling interest are accounted for using the equity method with AbbVie's share of earnings or losses reported in other expense, net in the consolidated statements of earnings. All other investments are generally accounted for using the cost method. Intercompany balances and transactions are eliminated.
Certain reclassifications have been made to conform the prior period consolidated financial statements to the current period presentation.
Revenue Recognition
AbbVie recognizes revenue when persuasive evidencecontrol of promised goods or services is transferred to the company’s customers, in an arrangement exists, delivery has occurred,amount that reflects the sales price is fixedconsideration AbbVie expects to be entitled to in exchange for those goods or determinableservices. Sales, value add and collectability of the sales price is reasonably assured. Revenueother taxes collected concurrent with revenue-producing activities are excluded from revenue. AbbVie generates revenue primarily from product sales. For the majority of sales, is recognized when titlethe company transfers control, invoices the customer and risk of loss have passedrecognizes revenue upon shipment to the customer. The company recognizes shipping and handling costs as an expense in cost of products sold when the company transfers control to the customer. Payment terms vary depending on the type and location of the customer, are based on customary commercial terms and are generally less than one year. AbbVie does not adjust revenue for the effects of a significant financing component for contracts where AbbVie expects the period between the transfer of the good or service and collection to be one year or less.
Cash discounts, rebates and chargebacks, sales incentives, product returns and certain other adjustments are accounted for as variable consideration. Provisions for discounts, rebates, sales incentives to customers, returnsvariable consideration are based on current pricing, executed contracts, government pricing legislation and other adjustmentshistorical data and are provided for in the period the related revenues are recorded. Rebate amounts are typically based upon the volume of purchases using contractual or statutory prices, which may vary by product and by payer. For each type of rebate, the factors used in the calculationscalculation of the accrual include the identification of the
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products subject to the

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rebate, the applicable price terms and the estimated lag time between sale and payment of the rebate, which can be significant. Sales incentives
In addition to revenue from contracts with customers, are insignificant. Historical data is readily availablethe company also recognizes certain collaboration revenues. See Note 6 for additional information related to the collaborations with Janssen Biotech, Inc. and reliableGenentech, Inc. Additionally, see Note 16 for disaggregation of revenue by product and is used for estimating the amount of the reduction in gross revenues. Revenue from the launch of a new product, from an improved version of an existing product, or for shipments in excess of a customer's normal requirements are recorded when the conditions noted above are met. In those situations, management records a returns reserve for such revenue, if necessary. Sales of product rights for marketable products are recorded as revenue upon disposition of the rights.geography.
Research and Development Expenses
Internal research and development (R&D)R&D costs are expensed as incurred. Clinical trial costs incurred by third parties are expensed as the contracted work is performed.
Acquired IPR&D and Milestones Expenses
In an asset acquisition, payments incurred prior to regulatory approval to acquire rights to in-process R&D projects are expensed as acquired IPR&D and milestones expense in the consolidated statements of earnings unless the project has an alternative future use. These costs include upfront and development milestone payments related to R&D collaborations, licensing arrangements, or other asset acquisitions that provide rights to develop, manufacture and/or sell pharmaceutical products. Where contingent development milestone payments are due to third parties, under research and development collaborations for pre-commercialization milestones,prior to regulatory approval, the milestone payment obligations are expensed when the milestone results are achieved. PaymentsRegulatory and commercial milestone payments made to third parties subsequent to regulatory approval are capitalized as intangible assets and amortized to cost of products sold over the remaining useful life of the related product.
Business Combinations
AbbVie utilizes the acquisition method of accounting for business combinations. This method requires, among other things, that results of operations of acquired companies are included in AbbVie's results of operations beginning on the acquisition date and that assets acquired and liabilities assumed are recognized at fair value as of the acquisition date. Any excess of the fair value of consideration transferred over the fair value of the net assets acquired is recognized as goodwill. Contingent consideration liabilities are recognized at the estimated fair value on the acquisition date. Subsequent changes to the fair value of contingent consideration liabilities are recognized in other expense, net in the consolidated statements of earnings. The fair value of assets acquired and liabilities assumed in certain cases may be subject to revision based on the final determination of fair value during a period of time not to exceed 12 months from the acquisition date. Legal costs, due diligence costs, business valuation costs and all other business acquisition costs are expensed when incurred.
In a business combination, the fair value of IPR&D projects acquired is capitalized and accounted for as indefinite-lived intangible assets until the underlying project receives regulatory approval, at which point the intangible asset will be accounted for as a definite-lived intangible asset, or discontinuation, at which point the intangible asset will be written off. R&D costs incurred by the company after the acquisition are expensed to R&D as incurred.
Collaborations and Other Arrangements
The company enters into collaborative agreements with third parties to develop and commercialize drug candidates. Collaborative activities may include joint research and development and commercialization of new products. AbbVie generally receives certain licensing rights under these arrangements. These collaborations often require upfront payments and may include additional milestone, research and development cost sharing, royalty or profit share payments, contingent upon the occurrence of certain future events linked to the success of the asset in development and commercialization. Upfront payments associated with collaborative arrangements during the development stage are expensed to acquired in-process research and development (IPR&D) expenses in the consolidated statements of earnings. Subsequentsubsequent payments made to the partner for the achievement of development milestones during the development stageprior to regulatory approval are expensed to Racquired IPR&D and milestones expense in the consolidated statements of earnings when theearnings. Regulatory and commercial milestone is achieved. Milestone payments made to the partner subsequent to regulatory approval are capitalized as intangible assets and amortized to cost of products sold over the estimated useful life of the related asset. Royalties are expensed to cost of products sold in the consolidated statements of earnings when incurred.
Advertising
Costs associated with advertising are expensed as incurred and are included in SG&Aselling, general and administrative (SG&A) expense in the consolidated statements of earnings. Advertising expenses were $846 million$2.2 billion in 2017, $764 million2023, $2.0 billion in 20162022 and $704 million$2.1 billion in 2015.2021.
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Pension and Other Post-Employment Benefits
AbbVie records annual expenses relating to its defined benefit pension and other post-employment benefit plans based on calculations which utilize various actuarial assumptions including discount rates, rates of return on assets, compensation increases, turnover rates and health care cost trend rates. AbbVie reviews its actuarial assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends. Actuarial gains and losses are deferred in accumulated other comprehensive lossincome (loss) (AOCI), net of tax and are amortized over the remaining service attribution periods of the employees under the corridor method. Differences between the expected long-term return on plan assets and the actual annual return are generally amortized to net periodic benefit cost over a five-year period.
Income Taxes
Income taxes are accounted for under the asset and liability method. Provisions for federal, state and foreign income taxes are calculated on reported pretaxpre-tax earnings based on current tax laws. Deferred taxes are provided using enacted tax rates on the future tax consequences of temporary differences, which are the differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases and the tax benefits of carryforwards. A valuation allowance is established or maintained when, based on currently available information, it is more likely than not that all or a portion of a deferred tax asset will not be realized.
Cash and Equivalents
Cash and equivalents include money market funds and time deposits with original maturities of three months or less.
Investments
Investments consist primarily of time deposits, marketable debtequity securities, held-to-maturity debt securities, marketable debt securities and equity securities.time deposits. Investments in equity securities that have readily determinable fair values are recorded at fair value. Investments in equity securities that do not have readily determinable fair values are recorded at cost and are remeasured to fair value based on certain observable price changes or impairment events as they occur. Held-to-maturity debt securities are recorded at cost. Gains or losses on investments are included in other expense, net in the consolidated statements of earnings. Investments in marketable debt securities are classified as available-for-sale and are recorded at fair value with any unrealized holding gains or losses, net of tax, included in AOCI on the consolidated balance sheets. Investmentssheets until realized, at which time the gains or losses are recognized in equity securities that are not traded on public stock exchanges and held-to-maturity debt securities are recorded at cost.

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earnings.
AbbVie periodically assesses its investmentmarketable debt securities for other-than-temporary impairment and credit losses. This evaluation is based onWhen a number of factors, including the length of time and the extent to whichdecline in the fair value has been belowof marketable debt security is due to credit related factors, an allowance for credit losses is recorded with a corresponding charge to other expense, net in the cost basis and adverse conditions related specifically to the security, including any changes to the credit ratingconsolidated statements of the security, intent to sell, or whether AbbVie will more likely than not be required to sell the security before recovery of its amortized cost basis. AbbVie also considers industry factors and general market trends.earnings. When AbbVie determines that an other than temporary declinea non-credit related impairment has occurred, athe amortized cost basis of the investment, net of allowance for credit losses, is written down with a charge to other expense, (income), net in the consolidated statements of earnings and an available-for-sale investment's unrealized loss is reclassified from AOCI to other expense, (income), net in the consolidated statements of earnings. Realized gains and losses on sales of investments are computed using the first-in, first-out method adjusted for any other-than-temporary declines in fair valueimpairments and credit losses that were recorded in net earnings.
Accounts Receivable
Accounts receivable are stated at their net realizable value.amortized cost less allowance for credit losses. The allowance for doubtful accountscredit losses reflects the best estimate of probablefuture losses inherent inover the receivables portfoliocontractual life of outstanding accounts receivable and is determined on the basis of historical experience, specific allowances for known troubled accounts, and other currently available information. Accounts receivable are written off after all reasonable means to collect the full amount (including litigation, where appropriate) have been exhausted. The allowance for doubtful accounts was $58 million at December 31, 2017information including customer financial condition and $72 million at December 31, 2016.both current and forecasted economic conditions.
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Inventories
Inventories are valued at the lower of cost (first-in, first-out basis) or market. Cost includes material and conversion costs. Inventories consisted of the following:
as of December 31 (in millions)20232022
Finished goods$1,356 $1,162 
Work-in-process1,643 1,417 
Raw materials1,100 1,000 
Inventories$4,099 $3,579 
as of December 31 (in millions)2017 2016
Finished goods$610
 $223
Work-in-process822
 1,080
Raw materials173
 141
Inventories$1,605
 $1,444
Property and Equipment
as of December 31 (in millions)2017 2016
Land$48
 $46
Buildings1,428
 1,344
Equipment5,991
 5,726
Construction in progress604
 410
Property and equipment, gross8,071
 7,526
Less accumulated depreciation(5,268) (4,922)
Property and equipment, net$2,803
 $2,604

as of December 31 (in millions)20232022
Land$286 $286 
Buildings2,827 2,737 
Equipment7,449 7,107 
Construction in progress1,073 856 
Property and equipment, gross11,635 10,986 
Less accumulated depreciation(6,646)(6,051)
Property and equipment, net$4,989 $4,935 
Depreciation for property and equipment is recorded on a straight-line basis over the estimated useful lives of the assets. The estimated useful life for buildings ranges from 10 to 50 years. Buildings include leasehold improvements which are amortized over the lesser of the remainder of the lease term or the useful life of the related facility lease (including any renewal periods, if appropriate) or the asset, whichever is shorter.leasehold improvement. The estimated useful life for equipment ranges from 2 to 25 years. Equipment includes certain computer software and software development costs incurred in connection with developing or obtaining software for internal use and is amortized over 3 to 10 years. Depreciation expense was $425$752 million in 2017, $4252023, $778 million in 20162022 and $417$803 million in 2015. Assets related2021.
Leases
Short-term leases with a term of 12 months or less are not recorded on the balance sheet. For leases commencing or modified in 2019 or later, AbbVie does not separate lease components from non-lease components.
The company records lease liabilities based on the present value of lease payments over the lease term. AbbVie generally uses an incremental borrowing rate to capital leases were insignificant at December 31, 2017discount its lease liabilities, as the rate implicit in the lease is typically not readily determinable. Certain lease agreements include renewal options that are under the company's control. AbbVie includes optional renewal periods in the lease term only when it is reasonably certain that AbbVie will exercise its option.
Variable lease payments include payments to lessors for taxes, maintenance, insurance and 2016.other operating costs as well as payments that are adjusted based on an index or rate. The company's lease agreements do not contain any significant residual value guarantees or restrictive covenants.
Litigation and Contingencies
Loss contingency provisions are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated based on existing information. When a best estimate cannot be made, the minimum loss contingency amount in a probable range is recorded. Legal fees are expensed as incurred. AbbVie accrues for product liability claims on an undiscounted basis. The liabilities are evaluated quarterly and adjusted if necessary as additional information becomes available. Receivables for insurance recoveries for product liability claims, if any, are recorded as assets on an undiscounted basis when it is probable that a recovery will be realized.

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Business Combinations
AbbVie utilizes the acquisition method of accounting for business combinations. This method requires, among other things, that results of operations of acquired companies are included in AbbVie's results of operations beginning on the respective acquisition dates and that assets acquired and liabilities assumed are recognized at fair value as of the acquisition date. Any excess of the fair value of consideration transferred over the fair values of the net assets acquired is recognized as goodwill. Contingent consideration liabilities are recognized at the estimated fair value on the acquisition date. Subsequent changes to the fair value of contingent consideration liabilities are recognized in other expense (income), net in the consolidated statements of earnings. The fair value of assets acquired and liabilities assumed in certain cases may be subject to revision based on the final determination of fair value during a period of time generally not to exceed twelve months from the acquisition date. Legal costs, due diligence costs, business valuation costs and all other business acquisition costs are expensed when incurred.
Goodwill and Intangible Assets
Intangible assets acquired in a business combination are recorded at fair value using a discounted cash flow model. The discounted cash flow model requires assumptions about the timing and amount of future net cash flows, risk, the cost of capital and terminal values of market participants. Definite-lived intangibles are amortized over their estimated useful lives using the estimated pattern of economic benefit. AbbVie reviews the recoverability of definite-lived intangible assets whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. AbbVie first compares the projected undiscounted cash flows to be generated by the asset to its carrying value. If the undiscounted cash
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flows of an intangible asset are less than the carrying value, the intangible asset is written down to its fair value. Where cash flows cannot be identified for an individual asset, the review is applied at the lowest level for which cash flows are largely independent of the cash flows of other assets and liabilities.
Goodwill and indefinite-lived assets are not amortized but are subject to an impairment review annually and more frequently when indicators of impairment exist. An impairment of goodwill could occur if the carrying amount of a reporting unit exceeded the fair value of that reporting unit. An impairment of indefinite-lived intangible assets would occur if the fair value of the intangible asset is less than the carrying value.
The company tests its goodwill for impairment by first assessing qualitative factors to determine whether it is more likely than not that the fair value is less than its carrying amount. If the company concludes it is more likely than not that the fair value of the reporting unit is less than its carrying amount, a quantitative impairment test is performed. AbbVie tests indefinite-lived intangible assets usingfor impairment by first assessing qualitative factors to determine whether it is more likely than not that the fair value is less than its carrying amount. If the company concludes it is more likely than not that the fair value is less than its carrying amount, a quantitative impairment test.test is performed. For its quantitative impairment tests, the company uses an estimated future cash flow approach that requires significant judgment with respect to future volume, revenue and expense growth rates, changes in working capital use, future foreign currency exchange rates, the selection of an appropriate discount rate, asset groupings and other assumptions and estimates. The estimates and assumptions used are consistent with the company's business plans and a market participant's views of a company and similar companies.views. The use of alternative estimates and assumptions could increase or decrease projected cash flows and the estimated fair value of the assetsrelated intangible assets. Future changes to these estimates and potentially result in different impacts toassumptions could have a material impact on the company's results of operations. Actual results may differ from the company's estimates.
Acquired In-Process Research and Development
In an asset acquisition, the initial costs of rights to IPR&D projects acquired are expensed as IPR&D in the consolidated statements of earnings unless the project has an alternative future use. These costs include initial payments incurred prior to regulatory approval in connection with research and development collaboration agreements that provide rights to develop, manufacture, market and/or sell pharmaceutical products. In a business combination, the fair value of IPR&D projects acquired are capitalized and accounted for as indefinite-lived intangible assets until the underlying project receives regulatory approval, at which point the intangible asset will be accounted for as a definite-lived intangible asset, or discontinuation, at which point the intangible asset will be written off. R&D costs incurred after the acquisition are expensed as incurred.

Foreign Currency Translation
Foreign subsidiary earnings are translated into U.S. dollars using average exchange rates. The net assets of foreign subsidiaries are translated into U.S. dollars using period-end exchange rates. The U.S. dollar effects that arise from translating the net assets of these subsidiaries at changing rates are recognized in other comprehensive (loss) income (OCI)(loss) in the consolidated statements of comprehensive income. The net assets of subsidiaries in highly inflationary economies are remeasured as if the functional currency were the reporting currency. The remeasurement is recognized in net foreign exchange loss in the consolidated statements of earnings.

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Derivatives
All derivative instruments are recognized as either assets or liabilities at fair value on the consolidated balance sheets and are classified as current or long-term based on the scheduled maturity of the instrument.
For derivatives formally designated as hedges, the company assesses at inception and quarterly thereafter whether the hedging derivatives are highly effective in offsetting changes in the fair value or cash flows of the hedged item. The changes in fair value of a derivative designated as a fair value hedge and of the hedged item attributable to the hedged risk are recognized in earnings immediately. The effective portions of changes in the fair value of a derivative designated as a cash flow hedge are reported in AOCI and are subsequently recognized in earnings consistent with the underlying hedged item. If it is determined that a derivative is no longer highly effective as a hedge, the company discontinues hedge accounting prospectively. If a hedged forecasted transaction becomes probable of not occurring, any gains or losses are reclassified from AOCI to earnings. Derivatives that are not designated as hedges are adjusted to fair value through current earnings.
The company also uses derivative instruments or foreign currency denominated debt to hedge its net investments in certain foreign subsidiaries and affiliates. Realized and unrealized gains and losses from these hedges are included in AOCI.
Derivative cash flows, with the exception of net investment hedges, are principally classified in the operating section of the consolidated statements of cash flows, consistent with the underlying hedged item. Cash flows related to net investment hedges are classified in the investing section of the consolidated statements of cash flows.





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Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements
In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The standard provides clarifying guidance to assist in the evaluation of whether transactions are treated as business combinations or asset acquisitions. AbbVie elected to early adopt the changes prospectively in the first quarter of 2017.
In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. AbbVie adopted the standard in the first quarter of 2017. As a result, all excess tax benefits associated with stock-based awards are recognized in the statement of earnings when the awards vest or settle, rather than in stockholders' equity. In addition, excess tax benefits in the statement of cash flows are now classified as an operating activity rather than as a financing activity. AbbVie adopted these changes prospectively. Accordingly, the company recognized excess tax benefits in income tax expense of $71 million in 2017 and classified them within cash flows from operating activities.
Recent Accounting Pronouncements Not Yet Adopted
In May 2014, the FASB issued ASU No. 2014-09, Summary and Amendments That Create Revenue from Contracts with Customers2023-09
In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09, Income Taxes (Topic 606) and Other Assets and Deferred Costs-Contracts with Customers (Subtopic 340-40). The amendments in this standard supersede most current revenue recognition requirements. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. AbbVie can apply the amendments using one of the following two methods: (i) retrospectively to each prior reporting period presented, or (ii) modified retrospectively with the cumulative effect of initially applying the amendments recognized at the date of initial application. AbbVie will adopt the standard effective the first quarter of 2018 and apply the amendments using the modified retrospective method. The company has completed its assessment of the new standard as of December 31, 2017. AbbVie does not expect significant changes to the amounts or timing of revenue recognition for product sales, which is its primary revenue stream. However, the adoption of the new standard will require a cumulative-effect adjustment to retained earnings on January 1, 2018 of approximately $120 million, net of tax, primarily related to certain deferred license revenues that were originally expected to be recognized through early 2020.
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities740). The standard requires several targeted changes including that equity investments (except those accounted for under the equity method of accounting, or those that result in consolidationdisaggregation of the investee) be measured at fair value with changes in fair value recognized in net earnings. These provisions will not impact the accounting for AbbVie's investments in debt securities.effective rate reconciliation into standard categories, enhances disclosure of income taxes paid, and modifies other income tax-related disclosures. The new guidance also changes certain disclosure requirements and other aspects of current U.S. GAAP. Amendments are to be applied as a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. This standard will be effective for AbbVie starting with the

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first quarter of 2018. Based on historical trends, AbbVie does not believe the adoption will have a material impact on its consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The standard outlines a comprehensive lease accounting model that supersedes the current lease guidance and requires lessees to recognize lease liabilities and corresponding right-of-use assets for all leases with lease terms greater than 12 months. The guidance also changes the definition of a lease and expands the disclosure requirements of lease arrangements. The new standard must be adopted using the modified retrospective approach and will be effective for AbbVie starting with the first quarter of 2019,in annual periods in 2025, with early adoption permitted. AbbVie will adopt the standard effective in the first quarter of 2019 and is currently assessing the impact of adopting this guidance on its consolidated financial statements.
ASU No. 2023-07
In June 2016,November 2023, the FASB issued ASU No. 2016-13, Financial Instruments2023-07 Segment Reporting - Credit LossesImproving Reportable Segment Disclosures (Topic 326)280). The standard changes how credit lossesrequires disclosures to include significant segment expenses that are measured for most financial assetsregularly provided to the chief operating decision maker (CODM), a description of other segment items by reportable segment, and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other financial instruments, the standard requires the useany additional measures of a new forward-looking "expected credit loss" model that generally will result insegment's profit or loss used by the earlier recognition of allowances for losses. For available-for-sale debt securities with unrealized losses, the standard nowCODM when deciding how to allocate resources. The ASU also requires allowancesall annual disclosures currently required by Topic 280 to be recorded instead of reducing the amortized cost of the investment. Additionally, theincluded in interim periods. The standard requires new disclosures and will beis effective for AbbVie starting in annual periods in 2024 and interim periods in 2025, with the first quarter of 2020. Earlyearly adoption beginningpermitted and requires retrospective application to all prior periods presented in the first quarter of 2019 is permitted. With certain exceptions, adjustments are to be applied using a modified-retrospective approach by reflecting adjustments through a cumulative-effect impact to retained earnings as of the beginning of the fiscal year of adoption.financial statements. AbbVie is currently assessing the impact and timing of adopting this guidance on its consolidated financial statements.
In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740). The new standard requires entities to recognize the income tax consequences of an intercompany transfer of an asset other than inventory when the transfer occurs. Under current U.S. GAAP, the income tax consequences of these intercompany asset transfers are deferred until the asset is sold to a third party or otherwise recovered through use. The standard will be effective for AbbVie starting with the first quarter of 2018. Adjustments for this update are to be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings with any adjustments reflected as of the beginning of the fiscal year of adoption. The company has completed its assessment of the new standard as of December 31, 2017. The adoption will require a cumulative-effect adjustment to retained earnings on January 1, 2018 of approximately $1.8 billion related to prepaid income tax assets that will be affected by this standard, of which $1.4 billion was included in prepaid expenses
Note 3 Supplemental Financial Information
Interest Expense, Net
years ended December 31 (in millions)202320222021
Interest expense$2,224 $2,230 $2,423 
Interest income(540)(186)(39)
Interest expense, net$1,684 $2,044 $2,384 
Accounts Payable and other on the consolidated balance sheet as of December 31, 2017.Accrued Liabilities
as of December 31 (in millions)20232022
Sales rebates$13,627 $10,717 
Dividends payable2,783 2,680 
Accounts payable3,688 2,934 
Current portion of contingent consideration liabilities1,952 1,469 
Salaries, wages and commissions1,802 1,371 
Royalty and license arrangements360 412 
Other6,438 5,819 
Accounts payable and accrued liabilities$30,650 $25,402 
In March 2017, the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The standard requires that an employer continue to report the service cost component of net periodic benefit cost in the same income statement line item or items as other employee compensation costs arising from services rendered during the period. The other components of net periodic benefit cost are required to be presented separately outside of income from operations and are not eligible for capitalization. The standard will be effective for AbbVie starting with the first quarter of 2018. Upon adoption, the company will apply the income statement classification provisions of this standard retrospectively and will reclassify income of $47 million from operating earnings to non-operating income for the year ended December 31, 2017. Additionally, the company preliminarily expects to record approximately $20 million of non-operating income in 2018 which would have been recorded in operating earnings under the previous guidance.Other Long-Term Liabilities
as of December 31 (in millions)20232022
Contingent consideration liabilities$17,938 $14,915 
Liabilities for unrecognized tax benefits6,681 6,502 
Income taxes payable2,182 2,985 
Pension and other post-employment benefits1,538 1,638 
Other3,988 4,615 
Other long-term liabilities$32,327 $30,655 
In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The standard simplifies the application of hedge accounting and more closely aligns the accounting with an entity’s risk management activities. AbbVie will early adopt the standard effective in the first quarter of 2018 and does not believe the adoption will have a material impact on its consolidated financial statements.


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Note 3 Supplemental Financial Information
Interest Expense, Net
years ended December 31 (in millions)2017 2016 2015
Interest expense$1,150
 $1,047
 $719
Interest income(146) (82) (33)
Interest expense, net$1,004
 $965
 $686

Accounts Payable and Accrued Liabilities
as of December 31 (in millions)2017 2016
Sales rebates$3,069
 $2,887
Accounts payable1,474
 1,407
Dividends payable1,143
 1,028
Salaries, wages and commissions763
 644
Royalty and license arrangements514
 434
Other3,263
 2,979
Accounts payable and accrued liabilities$10,226
 $9,379

Other Long-Term Liabilities
as of December 31 (in millions)2017 2016
Contingent consideration liabilities$4,266
 $3,941
Pension and other post-employment benefits2,740
 2,085
Liabilities for unrecognized tax benefits2,683
 1,166
Income taxes payable4,675
 —
Other1,241
 1,160
Other long-term liabilities$15,605
 $8,352
Note 4 Earnings Per Share
AbbVie grants certain restricted stock awards (RSAs) and restricted stock units (RSUs) that are considered to be participating securities. Due to the presence of participating securities, AbbVie calculates earnings per share (EPS) using the more dilutive of the treasury stock or the two-class method. For all periods presented, the two-class method was more dilutive.

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The following table summarizes the impact of the two-class method:
 Years ended December 31,
(in millions, except per share information)2017 2016 2015
Basic EPS     
Net earnings$5,309
 $5,953
 $5,144
Earnings allocated to participating securities26
 30
 26
Earnings available to common shareholders$5,283

$5,923

$5,118
Weighted-average basic shares outstanding1,596
 1,622
 1,625
Basic earnings per share$3.31
 $3.65
 $3.15
      
Diluted EPS     
Net earnings$5,309
 $5,953
 $5,144
Earnings allocated to participating securities26
 30
 26
Earnings available to common shareholders$5,283
 $5,923
 $5,118
Weighted-average shares of common stock outstanding1,596
 1,622
 1,625
Effect of dilutive securities7
 9
 12
Weighted-average diluted shares outstanding1,603
 1,631
 1,637
Diluted earnings per share$3.30
 $3.63
 $3.13
As further described in Note 12, AbbVie entered into and executed an accelerated share repurchase agreement (ASR) with third party financial institutions in 2016 and 2015. For purposes of calculating EPS, AbbVie reflected the ASR as a repurchase of AbbVie common stock in the relevant periods.
Years ended December 31,
(in millions, except per share data)202320222021
Basic EPS
Net earnings attributable to AbbVie Inc.$4,863 $11,836 $11,542 
Earnings allocated to participating securities43 54 74 
Earnings available to common shareholders$4,820 $11,782 $11,468 
Weighted average basic shares of common stock outstanding1,768 1,771 1,770 
Basic earnings per share attributable to AbbVie Inc.$2.73 $6.65 $6.48 
Diluted EPS
Net earnings attributable to AbbVie Inc.$4,863 $11,836 $11,542 
Earnings allocated to participating securities43 54 74 
Earnings available to common shareholders$4,820 $11,782 $11,468 
Weighted average shares of common stock outstanding1,768 1,771 1,770 
Effect of dilutive securities5 7 7 
Weighted average diluted shares of common stock outstanding1,773 1,778 1,777 
Diluted earnings per share attributable to AbbVie Inc.$2.72 $6.63 $6.45 
Certain shares issuable under stock-based compensation plans were excluded from the computation of EPS because the effect would have been antidilutive. The number of common shares excluded was insignificant for all periods presented.
Note 5 Licensing, Acquisitions and Other Arrangements
Proposed Acquisition of Cerevel Therapeutics Holdings, Inc.
On December 6, 2023, AbbVie announced that it entered into a definitive agreement under which AbbVie will acquire Cerevel Therapeutics Holdings, Inc. (Cerevel Therapeutics). Under the terms of the agreement, AbbVie will acquire all outstanding shares of Cerevel Therapeutics for $45.00 per share in cash for a total value of approximately $8.7 billion. The transaction is expected to close in 2024 subject to regulatory approvals and other customary closing conditions.
Cerevel Therapeutics is a clinical-stage biotechnology company focused on the discovery and development of differentiated therapies for Neuroscience diseases. Cerevel Therapeutics neuroscience pipeline includes multiple clinical-stage and preclinical candidates with the potential to treat several diseases including schizophrenia, Parkinson's disease and mood disorders.
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Acquisition of StemcentrxImmunoGen, Inc.

On June 1, 2016,Subsequent to 2023, on February 12, 2024, AbbVie completed its previously announced acquisition of ImmunoGen, Inc. (ImmunoGen). Under the terms of the agreement, AbbVie acquired all outstanding shares of ImmunoGen for $31.26 per share in cash for a total value of approximately $10.1 billion.
Due to the proximity of the outstanding equity interestsclosing date of the acquisition to the date of filing this Annual Report on Form 10-K, the initial accounting for the acquisition is not complete. Significant, relevant information needed to complete the initial accounting, including the identification and measurement of the fair value of assets acquired and liabilities assumed, is pending. As a result, it is not practicable to disclose the preliminary allocation of the purchase price to assets acquired and liabilities assumed or provide other related disclosures. The accounting impact of this acquisition and the operating results of ImmunoGen will be included in Stemcentrx,the consolidated financial statements beginning in the first quarter of 2024.
ImmunoGen is a privately-heldcommercial-stage biotechnology company. The transaction expanded AbbVie’scompany focused on the discovery, development and commercialization of antibody-drug conjugates (ADC) for cancer patients. ImmunoGen's oncology pipeline by adding the late-stage asset rovalpituzumab tesirine (Rova-T), four additional early-stage clinical compounds in solid tumor indicationsportfolio includes its flagship cancer therapy Elahere, a first-in-class ADC approved for platinum-resistant ovarian cancer, and a significant portfoliopipeline of pre-clinical assets. Rova-Tpromising next-generation ADC's targeting hematologic malignancies and solid tumors.
In connection with these acquisitions, AbbVie entered into several debt and financing arrangements. See Note 10 for additional information.
Acquisition of DJS Antibodies Ltd
In October 2022, AbbVie entered into an agreement to acquire DJS Antibodies Ltd (DJS) including its lead program DJS-002 and proprietary HEPTAD platform. DJS-002 is an LPAR1 antagonist antibody currently in registrational trialspreclinical studies for small cell lung cancer.

the treatment of Idiopathic Pulmonary Fibrosis and other fibrotic diseases. HEPTAD platform is a potential novel approach to antibody discovery with specific capabilities targeting transmembrane protein targets. The aggregate purchase price of $287 million was comprised of a $255 million upfront cash payment and $32 million for the acquisition date fair value of Stemcentrxcontingent consideration liabilities, for which AbbVie may owe up to $95 million in future payments upon achievement of certain development milestones. The transaction was accounted for as a business combination using the acquisition method of accounting. The aggregate upfront consideration for the acquisition of Stemcentrx consisted of approximately 62.4 million shares of AbbVie common stock, issued from common stock held in treasury, and cash. AbbVie may make certain contingent payments upon the achievement of defined development and regulatory milestones. As of the acquisition date, the maximum aggregate amount payableAbbVie acquired $233 million of intangible assets for in-process research and development, $22 million of intangible assets for developed product rights and regulatory milestones was $4.0 billion. The acquisition-date fair value$60 million of these milestones was $620 million and was estimated using a combination of probability-weighted discounted cash flow models and Monte Carlo simulation models. The estimate was determined based on significant inputs that are not observable in the market, referred to as Level 3 inputs, as described in more detail in Note 10.

The following table summarizes total consideration:
(in millions) 
Cash$1,883
Fair value of AbbVie common stock3,923
Contingent consideration620
Total consideration$6,426


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The following table summarizes fair values ofdeferred tax liabilities. Other assets acquired and liabilities assumed as of the June 1, 2016were insignificant. The acquisition date:
(in millions) 
Assets acquired and liabilities assumed 
Accounts receivable$1
Prepaid expenses and other7
Property and equipment17
Intangible assets - Indefinite-lived research and development6,100
Accounts payable and accrued liabilities(31)
Deferred income taxes(1,933)
Other long-term liabilities(7)
Total identifiable net assets4,154
Goodwill2,272
Total assets acquired and liabilities assumed$6,426

Intangible assets were related to IPR&D for Rova-T, four additional early-stage clinical compounds in solid tumor indications and several additional pre-clinical compounds. The estimated fair value of the acquired IPR&D was determined using the multi-period excess earnings model of the “income approach,” which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. Some of the more significant assumptions inherentresulted in the developmentrecognition of those asset valuations include the estimated annual cash flows for each asset or product (including net revenues, cost$92 million of sales, R&D costs, selling and marketing costs and working capital/contributory asset charges), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, the regulatory approval probabilities, commercial success risks, competitive landscape as well as other factors.

The goodwill recognized represents expected synergies, including the ability to: (i) leverage the respective strengths of each business; (ii) expand the combined company’s product portfolio; (iii) accelerate AbbVie's clinical and commercial presence in oncology; and (iv) establish a strong leadership position in oncology. Goodwill was also impacted by the establishment of a deferred tax liability for the acquired identifiable intangible assets which have no tax basis. The goodwill is not deductible for tax purposes.

Acquisition of Soliton, Inc.
FollowingIn December 2021, AbbVie completed its previously announced acquisition of Soliton, Inc. (Soliton). Soliton's RESONIC (Rapid Acoustic Pulse device) has U.S. Food and Drug Administration (FDA) 510(k) clearance for the acquisition date, the operating results of Stemcentrx have been includedlong-term improvement in the company's financial statements. AbbVie’s consolidated statementappearance of earnings for the year ended December 31, 2016 included no net revenues and an operating loss of $165 million associated with Stemcentrx's operations. This operating loss included $43 million of post-acquisition stock-based compensation expense for Stemcentrx options and excluded interest expense and certain acquisition costs.

Pro Forma Financial Information

cellulite up to one year. The following table presents the unaudited pro forma combined results of operations of AbbVie and Stemcentrx for the years ended December 31, 2016 and 2015 as if the acquisition of Stemcentrx had occurred on January 1, 2015:
 Years ended December 31,
(in millions, except per share information)2016 2015
Net revenues$25,641
 $22,869
Net earnings5,907
 4,894
Basic earnings per share$3.58
 $2.90
Diluted earnings per share$3.56
 $2.88

The unaudited pro forma financial information was prepared using the acquisition method of accounting and was based on the historical financial information of AbbVie and Stemcentrx. In order to reflect the occurrence of the acquisition on January 1, 2015 as required, the unaudited pro forma financial information includes adjustments to reflect the additional interest expense associated with the issuance of debt to finance the acquisition and the reclassification of acquisition,

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integration and financing-related costs incurred during the year ended December 31, 2016 to the year ended December 31, 2015. The unaudited pro forma financial information is not necessarily indicative of what the consolidated results of operations would have been had the acquisition been completed on January 1, 2015. In addition, the unaudited pro forma financial information is not a projection of the future results of operations of the combined company nor does it reflect the expected realization of any cost savings or synergies associated with the acquisition.

Acquisition of BI 655066 and BI 655064 from Boehringer Ingelheim

On April 1, 2016, AbbVie acquired all rights to risankizumab (BI 655066), an anti-IL-23 monoclonal biologic antibody in Phase 3 development for psoriasis, from Boehringer Ingelheim (BI) pursuant to a global collaboration agreement. AbbVie is also evaluating the potential of this biologic therapy in other indications, including Crohn’s disease, psoriatic arthritis and asthma. In addition to risankizumab, AbbVie also gained rights to an anti-CD40 antibody, BI 655064, currently in Phase 1 development. BI will retain responsibility for further development of BI 655064, and AbbVie may elect to advance the program after completion of certain clinical achievements. The acquired assets include all patents, data, know-how, third-party agreements, regulatory filings and manufacturing technology related to BI 655066 and BI 655064.

The company concluded that the acquired assets met the definition of a business and accounted for the transaction as a business combination using the acquisition method of accounting. Under the terms of the agreement, AbbVie made an upfront payment of $595 million. Additionally, $18 million of payments to BI, pursuant to a contractual obligation to reimburse BI for certain development costs it incurred prior to the acquisition date, were initially deferred. AbbVie may make certain contingent payments upon the achievement of defined development, regulatory and commercial milestones, as well as royalty payments based on net revenues of licensed products. As of the acquisition date, the maximum aggregate amount payable for development and regulatory milestones was approximately $1.6 billion. The acquisition-date fair value of these milestones was $606 million. The acquisition-date fair value of contingent royalty payments was $2.8 billion. The potential contingent consideration payments were estimated by applying a probability-weighted expected payment model for contingent milestone payments and a Monte Carlo simulation model for contingent royalty payments, which were then discounted to present value. The fair value measurements were based on Level 3 inputs.

The following table summarizes total consideration:
(in millions) 
Cash$595
Deferred consideration payable18
Contingent consideration3,365
Total consideration$3,978

The following table summarizes fair values of assets acquired as of the April 1, 2016 acquisition date:
(in millions) 
Assets acquired 
Identifiable intangible assets - Indefinite-lived research and development$3,890
Goodwill88
Total assets acquired$3,978

The estimated fair value of the acquired IPR&D was determined using the multi-period excess earnings model of the “income approach.” The goodwill recognized represents expected synergies, including an expansion of the company’s immunology product portfolio.

Pro forma results of operations for this acquisition have not been presented because this acquisition is insignificant to AbbVie’s consolidated results of operations.
Acquisition of Pharmacyclics
On May 26, 2015, AbbVie acquired Pharmacyclics, a biopharmaceutical company that develops and commercializes novel therapies for people impacted by cancer. Pharmacyclics markets IMBRUVICA (ibrutinib), a Bruton's tyrosine kinase (BTK) inhibitor, targeting B-cell malignancies.

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The acquisition of Pharmacyclics was accounted for as a business combination using the acquisition method of accounting. The totalTotal consideration fortransferred allocated to the acquisition of Pharmacyclicspurchase price consisted of cash and approximately 128consideration of $535 million sharespaid to holders of AbbVieSoliton common stock, equity-based awards and is summarized as follows:
(in millions) 
Cash$12,365
Fair value of AbbVie common stock8,405
Total consideration$20,770

The following table summarizes the fair values of assets acquired and liabilities assumed aswarrants. As of the May 26, 2015 acquisition date:

(in millions) 
Assets acquired and liabilities assumed 
Cash and equivalents$877
Short-term investments11
Accounts receivable106
Inventories492
Other assets212
Intangible assets 
Definite-lived developed product rights4,590
Definite-lived license agreements6,780
Indefinite-lived research and development7,180
Accounts payable and accrued liabilities(381)
Deferred income taxes(6,453)
Other long-term liabilities(254)
Total identifiable net assets13,160
Goodwill7,610
Total assets acquired and liabilities assumed$20,770

The amortizationtransaction date, AbbVie acquired $407 million of the fair market value step-up for acquired inventory was included in cost of products sold and R&D in the consolidated statements of earnings. The related amortization was $58 million in 2017, $274 million in 2016 and $113 million in 2015.
Intangibleintangible assets were related to the IMBRUVICAfor developed product rights IPR&Dand assumed deferred tax liabilities totaling $63 million. Other assets and liabilities were insignificant. The acquisition resulted in the United States for additional IMBRUVICA indications and the contractual rights to IMBRUVICA profits and losses outside the United States as a resultrecognition of the collaboration agreement with Janssen Biotech, Inc. and its affiliates (Janssen), one$177 million of the Janssen Pharmaceutical companies of Johnson & Johnson. See Note 6 for additional information regarding the collaboration with Janssen. The acquired definite-lived intangible assets are being amortized over a weighted-average estimated useful life of 12 years using the estimated pattern of economic benefit. The estimated fair value of the IPR&D and identifiable intangible assets was determined using the "income approach."
The goodwill recognized from the acquisition of Pharmacyclics includes expected synergies, including the ability to leverage the respective strengths of each business, expanding the combined company's product portfolio, acceleration of clinical and commercial presence in oncology and establishment of a strong leadership position in hematological oncology. The goodwillwhich is not deductible for tax purposes.
From the acquisition date through December 31, 2015, AbbVie's 2015 consolidated statement of earnings included net revenues of $774 million and an operating loss of $519 million associated with Pharmacyclics' operations. The operating loss included $346 million of acquisition-related compensation expense, $261 million of inventory step-up and intangible asset amortization and $100 million of transaction and integration costs. Of these costs, $294 million was recorded within SG&A expenses, $152 million within R&D expense and $261 million within cost of products sold in the 2015 consolidated statement of earnings.

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Pro Forma Financial Information
The following table presents the unaudited pro forma combined results of operations of AbbVie and Pharmacyclics for 2015 as if the acquisition of Pharmacyclics had occurred on January 1, 2014:
year ended December 31 (in millions, except per share information) 2015
Net revenues$23,215
Net earnings5,345
Basic earnings per share$3.18
Diluted earnings per share$3.16

The unaudited pro forma financial information was prepared using the acquisition method of accounting and was based on the historical financial information of AbbVie and Pharmacyclics. In order to reflect the occurrence of the acquisition on January 1, 2014 as required, the unaudited pro forma financial information includes adjustments to reflect the incremental amortization expense to be incurred based on the fair values of the identifiable intangible assets acquired; the incremental cost of products sold related to the fair value adjustments associated with the acquisition-date inventory; the additional interest expense associated with the issuance of debt to finance the acquisition; and the reclassification of acquisition, integration and financing-related costs incurred during the year ended December 31, 2015 to the year ended December 31, 2014. The unaudited pro forma financial information is not necessarily indicative of what the consolidated results of operations would have been had the acquisition been completed on January 1, 2014. In addition, the unaudited pro forma financial information is not a projection of the future results of operations of the combined company nor does it reflect the expected realization of any cost savings or synergies associated with the acquisition.
Other Licensing & Acquisitions Activity
Excluding the acquisitions above, cashCash outflows related to other acquisitions and investments totaled $308$1.2 billion in 2023, $539 million in 2017, $2622022 and $1.4 billion in 2021. AbbVie recorded acquired IPR&D and milestones expense of $778 million in 2016 and $9642023, $697 million in 2015. AbbVie recorded IPR&D charges of $327 million2022 and $1.1 billion in 2017, $200 million in 2016 and $150 million in 2015.2021. Significant arrangements impacting 2017, 20162023, 2022 and 2015,2021, some of which require contingent milestone payments, are summarized below.
Alector, Inc.Syndesi Therapeutics SA
In October 2017,February 2022, AbbVie entered into a global strategic collaboration with Alector, Inc. (Alector) to developacquired Syndesi Therapeutics SA and commercialize medicines to treat Alzheimer’s disease and other neurodegenerative disorders. AbbVie and Alector have agreed to research aits portfolio of antibody targets and AbbVie has an option to global development and commercial rights to two targets. The termsnovel modulators of the arrangement included an initial upfront payment of $205 million, which was expensed to IPR&D in the fourth quarter of 2017. Alector will conduct exploratory research, drug discoverysynaptic vesicle protein 2A, including its lead molecule ABBV-552, previously named SDI-118, and development for lead programs up to the conclusion of the proof of concept studies. If the option is exercised, AbbVie will lead development and commercialization activities and could make additional payments to Alector of up to $986 million upon achievement of certain development and regulatory milestones. Alector and AbbVie will co-fund development and commercialization and will share global profits equally.
C2N Diagnostics
In March 2015, AbbVie entered into an exclusive worldwide license agreement with C2N Diagnostics (C2N) to develop and commercialize anti-tau antibodiesaccounted for the treatment of Alzheimer's disease and other neurological disorders. As parttransaction as an asset acquisition. ABBV-552 is a small molecule, which is being evaluated to target nerve terminals to enhance synaptic efficiency. Under the terms of the agreement, AbbVie made an initial upfront payment of $100$130 million which was expensedrecorded to acquired IPR&D and milestones expense in 2015. AbbVie made the consolidated statement of earnings in the first quarter of 2022. The agreement also includes
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additional future payments of $35up to $870 million in both 2016 and 2017, which were recorded in R&D expense, due to the achievement of development milestones under the license agreement. Uponupon the achievement of certain development, regulatory and commercial milestones.
Juvise Pharmaceuticals
In June 2022, AbbVie and Laboratories Juvise Pharmaceuticals (Juvise) entered into an asset purchase agreement where Juvise acquired worldwide commercial rights of a mature brand Pylera, which is used for the treatment of peptic ulcers with an infection by the bacterium Helicobacter pylori. The transaction was accounted for as the sale of an asset. Upon completion of the transaction, AbbVie received net cash proceeds of $215 million and recognized a pre-tax gain of $172 million which was recorded in other operating income in the consolidated statement of earnings in the second quarter of 2022.
Calico Life Sciences LLC
In July 2021, AbbVie and Calico Life Sciences LLC (Calico) entered into an extension of their collaboration to discover, develop and bring to market new therapies for patients with age-related diseases, including neurodegeneration and cancer. This is the second collaboration extension and builds on the partnership established in 2014 and extended in 2018. Under the terms of the agreement, AbbVie and Calico will each contribute an additional $500 million, and the term is extended for an additional three years. AbbVie’s contribution is payable in two equal installments beginning in 2023. Calico will be responsible for research and early development until 2025 and will advance collaboration projects into Phase 2a through 2030. Following completion of the Phase 2a studies, AbbVie will have the option to exclusively license the collaboration compounds. Upon exercise, AbbVie would be responsible for late-stage development and commercial activities. Collaboration costs and profits will be shared equally by both parties post option exercise. During the third quarter of 2021, AbbVie recorded $500 million as other operating expense in the consolidated statement of earnings related to its commitments under the agreement.
TeneoOne and TNB-383B
In September 2021, AbbVie acquired TeneoOne, an affiliate of Teneobio, Inc., and TNB-383B, a BCMA-targeting immunotherapeutic for the potential treatment of relapsed or refractory multiple myeloma (R/R MM). In February 2019, AbbVie and TeneoOne entered a strategic transaction to develop and commercialize TNB-383B, a bispecific antibody that simultaneously targets BCMA and CD3 and is designed to direct the body's own immune system to target and kill BCMA-expressing tumor cells. AbbVie exercised its exclusive right to acquire TeneoOne and TNB-383B based on an interim analysis of an ongoing Phase 1 study and accounted for the transaction as an asset acquisition. Under the terms of the agreement, AbbVie made an exercise payment of $400 million which was recorded to acquired IPR&D and milestones AbbVie could makeexpense in the consolidated statement of earnings in the third quarter of 2021. The agreement also included additional payments of up to $615$250 million as well asupon the achievement of certain development, regulatory and commercial milestones.
REGENXBIO Inc.
In September 2021, AbbVie and REGENXBIO Inc. (REGENXBIO) entered into a collaboration to develop and commercialize RGX-314, an investigational gene therapy for wet age-related macular degeneration, diabetic retinopathy and other chronic retinal diseases. The collaboration provides AbbVie with an exclusive global license to develop and commercialize RGX-314. REGENXBIO will be responsible for completion of ongoing trials, AbbVie and REGENXBIO will collaborate and share costs of additional trials and AbbVie will lead the clinical development and commercialization of RGX-314 globally. REGENXBIO and AbbVie will share equally in pre-tax profits from net revenues of RGX-314 in the U.S. and AbbVie will pay REGENXBIO tiered royalties on net revenues.revenues outside the U.S. Upon closing in the fourth quarter of 2021, AbbVie made an upfront payment of $370 million to exclusively license RGX-314 which was recorded to acquired IPR&D and milestones expense in the consolidated statement of earnings for the year ended December 31, 2021. The agreement also included additional payments of up to $1.4 billion upon the achievement of certain development, regulatory and commercial milestones.
Other Arrangements
In addition to the significant arrangements described above, AbbVie entered into several other arrangements resulting in charges related to IPR&Dupfront payments of $122$582 million in 2017, $2002023, $315 million in 20162022 and $50$192 million in 2015.2021. In connection with the other individually insignificant early stageearly-stage arrangements entered into in 2017,2023, AbbVie could make additional payments of up to $2.4$10.9 billion upon the achievement of certain development, regulatory and commercial milestones.

Acquired IPR&D and milestones expense also included development milestones of $196 million in 2023, $252 million in 2022 and $162 million in 2021.
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Other Activity
Priority Review Voucher (PRV)
In August 2015, AbbVie entered into an agreement to purchase a rare pediatric disease PRV from a third party. The PRV entitles AbbVie to receive an FDA priority review of a single New Drug Application or Biologics License Application, which reduces the target review time and could lead to an expedited approval. In exchange for the PRV, AbbVie made a payment of $350 million, which was recorded in R&D expense in the consolidated statement of earnings and as an operating cash outflow in the consolidated statement of cash flows for 2015. AbbVie intends to use the PRV for an existing R&D project.
Note 6 Collaborations
The company has ongoing transactions with other entities through collaboration agreements. The following represent the significant collaboration agreements impacting 2023, 2022 and 2021.
Collaboration with Janssen Biotech, Inc.
In December 2011, Pharmacyclics, a wholly-owned subsidiary of AbbVie, entered into a worldwide collaboration and license agreement with Janssen Biotech, Inc. and its affiliates (Janssen), one of the Janssen Pharmaceutical companies of Johnson & Johnson, for the joint development and commercialization of IMBRUVICA,Imbruvica, a novel, orally active, selective covalent inhibitor of BTKBruton's tyrosine kinase and certain compounds structurally related to IMBRUVICA,Imbruvica, for oncology and other indications, excluding all immune and inflammatory mediated diseases or conditions and all psychiatric or psychological diseases or conditions, in the United States and outside the United States.
The collaboration provides Janssen with an exclusive license to commercialize IMBRUVICAImbruvica outside of the United States and co-exclusively with AbbVie in the United States. Both parties are responsible for the development, manufacturing and marketing of any products generated as a result of the collaboration. The collaboration has no set duration or specific expiration date and provides for potential future development, regulatory and approval milestone payments of up to $200 million to AbbVie. The collaboration also includes a cost sharing arrangement for associated collaboration activities. Except in certain cases, Janssen is responsible for approximately 60% of collaboration development costs and AbbVie is responsible for the remaining 40% of collaboration development costs.
In the United States, both parties have co-exclusive rights to commercialize the products; however, AbbVie is the principal in the end customerend-customer product sales. AbbVie and Janssen share pre-tax profits and losses equally from the commercialization of products. Sales of IMBRUVICAImbruvica are included in AbbVie's net revenues. Janssen's share of profits is included in AbbVie's cost of products sold. Other costs incurred under the collaboration are reported in their respective expense line items, net of Janssen's share.

Outside the United States, Janssen is responsible for and has exclusive rights to commercialize IMBRUVICA.Imbruvica. AbbVie and Janssen share pre-tax profits and losses equally from the commercialization of products. AbbVie's share of profits is included in AbbVie's net revenues. Other costs incurred under the collaboration are reported in their respective expense line items, net of Janssen's share.

The following table shows the profit and cost sharing relationship between Janssen and AbbVie:
years ended December 31 (in millions)202320222021
United States - Janssen's share of profits (included in cost of products sold)$1,245 $1,607 $2,018 
International - AbbVie's share of profits (included in net revenues)931 1,142 1,087 
Global - AbbVie's share of other costs (included in respective line items)228 268 304 

AbbVie’s receivable from Janssen, included in accounts receivable, net, was $236 million at December 31, 2023 and $295 million at December 31, 2022. AbbVie’s payable to Janssen, included in accounts payable and accrued liabilities, was $307 million at December 31, 2023 and $379 million at December 31, 2022.
Collaboration with Genentech, Inc.
AbbVie and Genentech, Inc. (Genentech), a member of the Roche Group, are parties to a collaboration and license agreement executed in 2007 to jointly research, develop and commercialize human therapeutic products containing BCL-2 inhibitors and certain other compound inhibitors which includes Venclexta, a BCL-2 inhibitor used to treat certain hematological malignancies. AbbVie shares equally with Genentech all pre-tax profits and losses from the development and commercialization of Venclexta in the United States. AbbVie pays royalties on Venclexta net revenues outside the United States.
AbbVie manufactures and distributes Venclexta globally and is the principal in the end-customer product sales. Sales of Venclexta are included in AbbVie's net revenues. Genentech's share of United States profits is included in AbbVie's cost of products sold. AbbVie records sales and marketing costs associated with the United States collaboration as part of SG&A expenses and global development costs as part of R&D expenses, net of Genentech’s share. Royalties paid for Venclexta revenues outside the United States are also included in AbbVie’s cost of products sold.
years ended December 31 (in millions) 2017 2016 2015
United States - Janssen's share of profits (included in cost of products sold) $1,001
 $735
 $306
International - AbbVie's share of profits (included in net revenues) 429
 252
 95
Global - AbbVie's share of other costs (included in respective line items) 288
 262
 159

65
2017Image3.gif|2023 Form 10-K|    65




The following table shows the profit and cost sharing relationship between Genentech and AbbVie:
years ended December 31 (in millions)202320222021
Genentech's share of profits, including royalties (included in cost of products sold)$869 $778 $703 
AbbVie's share of sales and marketing costs from U.S. collaboration (included in SG&A)41 37 40 
AbbVie's share of development costs (included in R&D)109 121 140 
Note 7 Goodwill and Intangible Assets
Goodwill
The following table summarizes the changes in the carrying amount of goodwill:
(in millions)
Balance as of December 31, 2021$32,379 
Additions(a)
92 
Foreign currency translation adjustments and other(315)
Balance as of December 31, 202232,156 
Foreign currency translation adjustments and other137 
Balance as of December 31, 2023$32,293 
(in millions) 
Balance as of December 31, 2015$13,168
Additions (see Note 5)2,360
Foreign currency translation(112)
Balance as of December 31, 201615,416
Foreign currency translation369
Balance as of December 31, 2017$15,785

(a)Goodwill additions related to the acquisition of DJS in the fourth quarter of 2022 (see Note 5).
The latestcompany performs its annual goodwill impairment assessment of goodwill was completed in the third quarter of 2017. As of December 31, 2017, there were no accumulated goodwill impairment losses. Future impairment tests for goodwill will be performed annually in the third quarter, or earlier if impairment indicators exist. As of December 31, 2023 and 2022, there were no accumulated goodwill impairment losses.
Intangible Assets, Net
The following table summarizes intangible assets:
20232022
as of December 31 (in millions)Gross
 carrying
 amount		Accumulated
 amortization		Net
 carrying
 amount		Gross
 carrying
 amount		Accumulated
 amortization		Net
 carrying
 amount
Definite-lived intangible assets
Developed product rights$75,142 $(22,455)$52,687 $87,698 $(25,003)$62,695 
License agreements8,191 (5,571)2,620 8,474 (4,642)3,832 
Total definite-lived intangible assets83,333 (28,026)55,307 96,172 (29,645)66,527 
Indefinite-lived intangible assets303 — 303 912 — 912 
Total intangible assets, net$83,636 $(28,026)$55,610 $97,084 $(29,645)$67,439 
Definite-Lived Intangible Assets
In the fourth quarter of 2023, the company made a decision to reduce current sales and marketing investment related to both CoolSculpting, a body contouring technology for aesthetic nonsurgical fat reduction, and Liletta, an on-market women’s health product. Each of these strategic decisions contributed to significant decreases in the estimated future cash flows for the respective products and represented triggering events that required an evaluation of the underlying definite-lived intangible assets for impairment. The company used a discounted cash flow analysis for both products. For CoolSculpting, the fair value of $290 million was lower than the carrying value of $1.3 billion resulting in a partial impairment of both the gross and net carrying amount. For Liletta, the fair value of $241 million was lower than the carrying value of $561 million resulting in a partial impairment of both the gross and net carrying amount. Based on the revised cash flows, the company recorded a pre-tax impairment charge of $1.4 billion to costs of products sold in the consolidated statement of earnings for the fourth quarter of 2023.

 2017 2016
as of December 31 (in millions)
Gross
 carrying
 amount
 
Accumulated
 amortization
 
Net
 carrying
 amount
 
Gross
 carrying
 amount
 
Accumulated
 amortization
 
Net
 carrying
 amount
Definite-lived intangible assets           
Developed product rights$16,138
 $(4,982) $11,156
 $16,464
 $(4,256) $12,208
License agreements7,822
 (1,409) 6,413
 7,809
 (1,110) 6,699
Total definite-lived intangible assets23,960
 (6,391) 17,569
 24,273
 (5,366) 18,907
Indefinite-lived research and development9,990
 —
 9,990
 9,990
 —
 9,990
Total intangible assets, net$33,950
 $(6,391) $27,559
 $34,263
 $(5,366) $28,897
2023 Form 10-K | abbvieimage3.gif
66
In August 2023, as part of the Inflation Reduction Act of 2022, the company’s oncology product Imbruvica sold in the United States (U.S.) was included on the list of products selected for negotiation by the Centers for Medicare & Medicaid Services. The selection resulted in a significant decrease in the estimated future cash flows for the product and represented a triggering event which required the company to evaluate the underlying definite-lived intangible asset for impairment. The company utilized a discounted cash flow analysis to determine the fair value of $1.9 billion, which was lower than the carrying value of $4.0 billion and resulted in a partial impairment of both the gross and net carrying amount as of August 29, 2023. Based on the revised cash flows, the company recorded a pre-tax impairment charge of $2.1 billion to cost of products sold in the consolidated statement of earnings for the third quarter of 2023.
In September 2022, the company made a strategic decision to reduce ongoing sales and marketing investment related to Vuity, an on-market product to treat presbyopia. This strategic decision contributed to a significant decrease in the estimated future cash flows for the product and represented a triggering event which required the company to evaluate the underlying definite lived-intangible asset for impairment. The company utilized a discounted cash flow analysis to estimate the fair value of the intangible asset resulting in a full impairment of both the gross and net carrying amount. Based on the revised cash flows, the company recorded a pre-tax impairment charge of $770 million to cost of products sold in the consolidated statement of earnings for the third quarter of 2022.
Fair value measurements for the above evaluations were based on Level 3 inputs including estimated net revenues, cost of products sold, R&D costs, selling and marketing costs and discount rate.
Definite-lived intangible assets are amortized over their estimated useful lives, which range between 21 to 16 years with an average of 12 years for developed product rights and 11 years for license agreements. Amortization expense was $1.1$7.9 billion in 2017, $764 million2023, $7.7 billion in 20162022 and $419 million$7.7 billion in 20152021 and was included in cost of products sold in the consolidated statements of earnings. The anticipated annual amortization expense for definite-lived intangible assets recorded as of December 31, 20172023 is as follows:
(in billions)20242025202620272028
Anticipated annual amortization expense$7.4 $7.0 $6.3 $5.6 $5.7 
(in billions)2018 2019 2020 2021 2022
Anticipated annual amortization expense$1.3
 $1.5
 $1.7
 $1.9
 $2.1
In 2017, an impairment charge of $354 million was recorded related to ZINBRYTA that reduced both the gross carrying amount and net carrying amount of the underlying intangible assets due to lower expected future cash flows for the product. In 2016, an impairment charge of $39 million was recorded related to certain developed product rights in the United States due to a decline in the market for the product. In 2015, no intangible asset impairment charges were recorded. The 2017 and 2016 impairment charges were based on discounted cash flow analyses and were included in cost of products sold in the consolidated statements of earnings.Indefinite-Lived Intangible Assets
Indefinite-lived intangible assets represent acquired IPR&D associated with products that have not yet received regulatory approval. Indefinite-lived intangible assets as of December 31, 2017 and 2016 related to the acquisitions of Stemcentrx and BI compounds. See Note 5 for additional information.
The latestcompany performs its annual impairment assessment of indefinite-lived intangible assets was completed in the third quarter of 2017. No impairment charges were recorded in 2017, 2016 and 2015. Future impairment tests for indefinite-lived intangible assets will be performed annually in the third quarter, or earlier if impairment indicators exist.

During the first quarter of 2023, the company made a decision to revise the research and development plan for AGN-151607, a novel investigational neurotoxin for the prevention of postoperative atrial fibrillation in cardiac surgery patients. This decision contributed to a delay in the estimated timing of regulatory approval as well as a significant decrease in estimated future cash flows of the product and represented a triggering event which required the company to evaluate the underlying indefinite-lived intangible asset for impairment. The company utilized a discounted cash flow analysis to estimate the fair value which was below the carrying value of the intangible asset. Based on the revised cash flows, the company recorded a pre-tax impairment charge of $630 million to research and development expense in the consolidated statement of earnings for the first quarter of 2023.
Note 8 Integration and Restructuring Plans
Allergan Integration Plan
Following the closing of the Allergan acquisition, AbbVie implemented an integration plan designed to reduce costs, integrate and optimize the combined organization and incurred total cumulative charges of $2.5 billion through 2023. These costs consisted of severance and employee benefit costs (cash severance, non-cash severance, including accelerated equity award compensation expense, retention and other termination benefits) and other integration expenses.
6667
Image3.gif|20172023 Form 10-K



The following table summarizes the charges associated with the Allergan acquisition integration plan:
year ended December 31 (in millions)202320222021
Cost of products sold$89 $117 $132 
Research and development7 23 102 
Selling, general and administrative192 399 353 
Total charges$288 $539 $587 
Note 8 Restructuring Plans
The following table summarizes the cash activity in the recorded liability associated with the integration plan:
year ended December 31 (in millions)
Accrued balance as of December 31, 2020$387 
Charges526 
Payments and other adjustments(658)
Accrued balance as of December 31, 2021255 
Charges377 
Payments and other adjustments(525)
Accrued balance as of December 31, 2022107 
Charges274 
Payments and other adjustments(338)
Accrued balance as of December 31, 2023$43 
Other Restructuring
AbbVie continuously evaluates its operations to identify opportunities to optimize its manufacturing and R&D operations, commercial infrastructure and administrative costs and to respond to changes in its business environment, for example, in conjunction with the loss and expected loss of exclusivity of certain products.environment. As a result, AbbVie management periodically approves individual restructuring plans to achieve these objectives. In 2017, 20162023, 2022 and 2015,2021, no such plans were individually significant. Restructuring charges recorded were $86$132 million in 2017, $522023, $241 million in 20162022 and $138$59 million in 20152021 and were primarily related to employee severance and contractual obligations. These charges were recorded in cost of products sold, R&D expense and SG&A expenses in the consolidated statements of earnings based on the classification of the affected employees or operations.
The following table summarizes the cash activity in the restructuring reserve for 2017, 20162023, 2022 and 2015:2021:
(in millions)
Accrued balance as of December 31, 2020$90 
Charges54 
Payments and other adjustments(111)
Accrued balance as of December 31, 202133 
Charges193 
Payments and other adjustments(50)
Accrued balance as of December 31, 2022176 
Charges107 
Payments and other adjustments(87)
Accrued balance as of December 31, 2023$196 
(in millions) 
Accrued balance at December 31, 2014$122
2015 restructuring charges126
Payments and other adjustments(100)
Accrued balance at December 31, 2015148
2016 restructuring charges52
Payments and other adjustments(113)
Accrued balance at December 31, 201687
2017 restructuring charges86
Payments and other adjustments(87)
Accrued balance at December 31, 2017$86

2023 Form 10-K | abbvieimage3.gif
68
Note 9 Leases    
AbbVie's lease portfolio primarily consists of real estate properties, vehicles and equipment. The following table summarizes the amounts and location of operating and finance leases on the consolidated balance sheets:
as of December 31 (in millions)Balance sheet caption20232022
Assets
OperatingOther assets$744 $737 
FinanceProperty and equipment, net35 25 
Total lease assets$779 $762 
Liabilities
Operating
CurrentAccounts payable and accrued liabilities$166 $166 
NoncurrentOther long-term liabilities735 754 
Finance
CurrentCurrent portion of long-term debt and finance lease obligations15 17 
NoncurrentLong-term debt and finance lease obligations27 17 
Total lease liabilities$943 $954 
The following table summarizes the lease costs recognized in the consolidated statements of earnings:
years ended December 31 (in millions)202320222021
Operating lease cost$189 $201 $226 
Short-term lease cost28 67 56 
Variable lease cost88 71 71 
Total lease cost$305 $339 $353 
In December 2022, the company entered into an agreement to sublease a portion of its Madison, New Jersey office space through the end of the original lease maturity in 2030. As a result of this agreement, the company recognized an impairment loss on its right-of-use asset of $69 million and wrote-off the related leasehold improvements of $37 million. These losses were recorded to SG&A expense in the consolidated statements of earnings for the year ended December 31, 2022. The company used a discounted cash flows method to value the right-of-use asset to determine the impairment amount.
Sublease income and finance lease costs were insignificant in 2023, 2022 and 2021.
69
Image3.gif|2023 Form 10-K
The following table presents the weighted-average remaining lease term and weighted-average discount rate for operating and finance leases:
years ended December 31202320222021
Weighted-average remaining lease term (years)
Operating787
Finance323
Weighted-average discount rate
Operating3.0 %2.6 %2.4 %
Finance3.6 %1.5 %1.1 %
The following table presents supplementary cash flow information regarding the company's leases:
years ended December 31 (in millions)202320222021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$214 $212 $236 
Right-of-use assets obtained in exchange for new operating lease liabilities173 235 66 
Finance lease cash flows were insignificant in 2023, 2022 and 2021.
The following table summarizes the future maturities of AbbVie's operating and finance lease liabilities as of December 31, 2023:
(in millions)Operating
leases		Finance
leases
Total(a)
2024$194 $15 $209 
2025169 14 183 
2026145 12 157 
2027115 2 117 
202893 — 93 
Thereafter292 — 292 
Total lease payments1,008 43 1,051 
Less: Interest107 1 108 
Present value of lease liabilities$901 $42 $943 
(a)Lease payments recognized as part of lease liabilities for optional renewal periods are insignificant.
20172023 Form 10-K|abbvieimage3.gif67

70



Note 910 Debt, Credit Facilities and Commitments and Contingencies
The following table summarizes long-term debt:
as of December 31 (dollars in millions)
2023 Effective
interest rate (a)
2023
2022 Effective
interest rate (a)
2022
1.50-3.75% aggregate notes due 20230.49-3.84%$— 0.49-3.84%$3,132 
Floating rate term loans due 20235.07 %— 2.45 %1,000 
2.60% senior notes due 20242.69 %3,750 2.69 %3,750 
1.375% senior euro notes due 2024 (€1,450 principal)1.46 %1,610 1.46 %1,543 
3.85% senior notes due 20242.07 %1,032 2.07 %1,032 
1.25% senior euro notes due 2024 (€700 principal)0.65 %777 0.65 %745 
3.60% senior notes due 20253.66 %3,750 3.66 %3,750 
3.80% senior notes due 20252.09 %3,021 2.09 %3,021 
Floating rate term loans due 20255.95 %2,000 2.82 %2,000 
2.95% senior notes due 20263.02 %4,000 3.02 %4,000 
3.20% senior notes due 20263.28 %2,000 3.28 %2,000 
0.75% senior euro notes due 2027 (€750 principal)0.86 %833 0.86 %798 
4.25% senior notes due 20284.38 %1,750 4.38 %1,750 
2.125% senior euro notes due 2028 (€750 principal)2.18 %833 2.18 %798 
2.625% senior euro notes due 2028 (€500 principal)1.20 %555 1.20 %532 
3.20% senior notes due 20293.25 %5,500 3.25 %5,500 
2.125% senior euro notes due 2029 (€550 principal)1.19 %611 1.19 %585 
1.25% senior euro notes due 2031 (€650 principal)1.30 %722 1.30 %691 
4.55% senior notes due 20353.52 %1,789 3.52 %1,789 
4.50% senior notes due 20354.58 %2,500 4.58 %2,500 
4.30% senior notes due 20364.37 %1,000 4.37 %1,000 
4.05% senior notes due 20394.11 %4,000 4.11 %4,000 
4.40% senior notes due 20424.46 %2,600 4.46 %2,600 
4.625% senior notes due 20424.00 %457 4.00 %457 
4.85% senior notes due 20444.11 %1,074 4.11 %1,074 
4.70% senior notes due 20454.73 %2,700 4.73 %2,700 
4.75% senior notes due 20454.20 %881 4.20 %881 
4.45% senior notes due 20464.50 %2,000 4.50 %2,000 
4.875% senior notes due 20484.94 %1,750 4.94 %1,750 
4.25% senior notes due 20494.29 %5,750 4.29 %5,750 
Fair value hedges(266)(346)
Unamortized bond discounts(106)(116)
Unamortized deferred financing costs(198)(222)
Unamortized bond premiums(b)
668 793 
Other42 33 
Total long-term debt and finance lease obligations59,385 63,270 
Current portion7,191 4,135 
Noncurrent portion$52,194 $59,135 
(a)Excludes the effect of any related interest rate swaps.
(b)Represents unamortized purchase price adjustments of Allergan debt.


as of December 31 (dollars in millions)
Effective
interest rate
in 2017(a)
 2017 
Effective
interest rate
in 2016(a)
 2016
Senior notes issued in 2012       
2.00% notes due 20182.15% 1,000
 2.15% 1,000
2.90% notes due 20222.97% 3,100
 2.97% 3,100
4.40% notes due 20424.46% 2,600
 4.46% 2,600
Senior notes issued in 2015       
1.80% notes due 20181.92% 3,000
 1.92% 3,000
2.50% notes due 20202.65% 3,750
 2.65% 3,750
3.20% notes due 20223.28% 1,000
 3.28% 1,000
3.60% notes due 20253.66% 3,750
 3.66% 3,750
4.50% notes due 20354.58% 2,500
 4.58% 2,500
4.70% notes due 20454.73% 2,700
 4.73% 2,700
Senior notes issued in 2016       
2.30% notes due 20212.40% 1,800
 2.40% 1,800
2.85% notes due 20232.91% 1,000
 2.91% 1,000
3.20% notes due 20263.28% 2,000
 3.28% 2,000
4.30% notes due 20364.37% 1,000
 4.37% 1,000
4.45% notes due 20464.50% 2,000
 4.50% 2,000
Senior Euro notes issued in 2016       
0.38% notes due 2019 (€1,400 principal)0.55% 1,673
 0.55% 1,464
1.38% notes due 2024 (€1,450 principal)1.46% 1,733
 1.46% 1,516
2.13% notes due 2028 (€750 principal)2.18% 896
 2.18% 784
Term loan facilities       
Floating rate notes due 20182.26% 2,000
 1.64% 2,000
Other

 110
 

 113
Fair value hedges  (401)   (338)
Unamortized bond discounts  (97)   (110)
Unamortized deferred financing costs  (146)   (164)
Total long-term debt and lease obligations  36,968
   36,465
Current portion  6,015
   25
Noncurrent portion  $30,953
   $36,440

(a)
71
Excludes the effect of any related interest rate swaps.
Image3.gif|2023 Form 10-K

In November 2016, the company issued €3.6 billion aggregate principal amount of unsecured senior Euro notes. These seniorSenior notes rank equally with all other unsecured and unsubordinated indebtedness of the company. AbbVie may redeem the senior notesfloating rate term loans are redeemable prior to maturity at a redemption price equal to the principal amount of the senior notes redeemed plus a make-whole premium.premium and AbbVie may redeem the senior notesthese debt securities at par between one and three months prior to maturity. In connection with the offering, debt issuance costs totaled $17 million and debt discounts incurred totaled $9 million and are being amortized over the respective terms of the senior notes to interest expense, net in the consolidated statements of earnings. The company used the proceeds to redeem $4.0 billion aggregate principal amount of 1.75% senior notes that were due to mature in November 2017. As a result of this redemption, the company incurred a charge of $39 million ($25 million after tax) related to the make-whole premium, write-off of unamortized debt issuance costs and other expenses. The charge was recorded in interest expense, net in the consolidated statement of earnings.

68    |2017 Form 10-K




In May 2016, the company issued $7.8 billion aggregate principal amount of unsecured senior notes. These senior notes rank equally with all other unsecured and unsubordinated indebtedness of the company. AbbVie may redeem the senior notes prior to maturity at a redemption price equal to the principal amount of the senior notes redeemed plus a make-whole premium. AbbVie may redeem the senior notes at pargenerally between one and six months prior to maturity. In connection with the offering, debt issuance costs totaled $52 million and debt discounts incurred totaled $29 million and are being amortized over the respective terms of the senior notes to interest expense, net in the consolidated statements of earnings. Of the $7.7 billion net proceeds, $2.0 billion was used to repay the company’s outstanding term loan that was due to mature in November 2016, approximately $1.9 billion was used to finance the acquisition of Stemcentrx and approximately $3.8 billion was used to finance an ASR with a third party financial institution. See Note 5 for additional information related to the acquisition of Stemcentrx and Note 12 for additional information related to the ASR.
In September 2015, AbbVie entered into a $2.0 billion three-year term loan credit agreement and a $2.0 billion 364-day term loan credit agreement (collectively, the term loan facilities). In November 2015, AbbVie drew on these term loan facilities and used the proceeds to refinance its $4.0 billion of senior notes that matured in November 2015. In connection with the May 2016 unsecured senior notes issuance, AbbVie repaid the 364-day term loan credit agreement. The borrowings under the term loan facilities bear interest at variable rates which are adjusted based on AbbVie's public debt ratings.
In May 2015, the company issued $16.7 billion aggregate principal amount of unsecured senior notes. The senior notes rank equally with all other unsecured and unsubordinated indebtedness of the company. AbbVie may redeem the senior notes prior to maturity at a redemption price equal to the principal amount of the senior notes redeemed plus a make-whole premium and, except for the 1.80% notes due 2018, AbbVie may redeem the senior notes at par between one and six months prior to maturity. Debt issuance costs incurred in connection with the offering totaled $93 million and are being amortized over the respective terms of the senior notes to interest expense, net in the consolidated statements of earnings. Approximately $11.5 billion of the net proceeds were used to finance the acquisition of Pharmacyclics and approximately $5.0 billion of the net proceeds were used to finance an ASR with a third party financial institution. See Note 5 for additional information related to the acquisition of Pharmacyclics and Note 12 for additional information related to the ASR.
In March 2015, AbbVie entered into an $18.0 billion bridge loan in support of the then planned acquisition of Pharmacyclics. No amounts were drawn under the bridge loan, which was terminated as a result of the company's May 2015 senior notes issuance. Interest expense, net in 2015 included $86 million of costs related to the bridge loan.
AbbVie has outstanding $6.7 billion aggregate principal amount of unsecured senior notes which were issued in 2012. AbbVie may redeem all of the senior notes of each series, at any time, or some of the senior notes of each series, from time to time, at a redemption price equal to the principal amount of the senior notes redeemed plus a make-whole premium.
At December 31, 2017,2023, the company was in compliance with its senior note covenants and term loan covenants.
Maturities of Long-Term Debt
as of and for the years ending December 31 (in millions)
2024$7,170 
20258,771 
20266,000 
2027833 
20283,138 
Thereafter33,333 
Total obligations and commitments59,245 
Fair value hedges, unamortized bond premiums/discounts, deferred financing costs and finance lease obligations140 
Total long-term debt and finance lease obligations$59,385 
Repayment and Issuance of Long-Term Debt
In 2023, the company repaid a $1.0 billion floating rate three-year term loan, $350 million aggregate principal amount of 2.80% senior notes and $1.0 billion aggregate principal amount of 2.85% senior notes at maturity. During the quarter ended December 31, 2023, the company also repaid €500 million aggregate principal amount of 1.50% senior euro notes and $1.3 billion aggregate principal amount of 3.75% senior notes at maturity.
In 2022, the company repaid $2.9 billion aggregate principal amount of 3.450% senior notes, $1.7 billion aggregate principal amount of 3.25% senior notes and$1.0 billion aggregate principal amount of 3.2% senior notes. These repayments were made by exercising, under the terms of the notes ranging between 60 and 90-day early redemptions at 100% of the principal amount. During the quarter ended December 31, 2022, the company also paid $3.1 billion aggregate principal amount of 2.9% senior notes, $3.0 billion aggregate principal amount of 2.3% senior notes and $750 million aggregate principal amount of floating rate senior notes at maturity. Additionally in 2022, the company refinanced its $2.0 billion floating rate five-year term loan. As part of the refinancing, the company repaid the existing $2.0 billion term loan due May 2025 and borrowed $2.0 billion under a new term loan at a lower floating rate. All other significant terms of the loan, including the maturity date, remained unchanged after the refinancing.
Financing Related to ImmunoGen and Cerevel Therapeutics Acquisitions
In connection with the acquisition of ImmunoGen and proposed acquisition of Cerevel Therapeutics, on December 6, 2023, AbbVie entered into a $9.0 billion 364-day bridge credit agreement and on December 21, 2023, AbbVie entered into a 364-day term loan credit agreement with an aggregate principal amount of $5.0 billion. No amounts were drawn under the bridge credit agreement or term loan credit agreement as of December 31, 2023.
Subsequent to 2023, on February 12, 2024, AbbVie borrowed $5.0 billion under the term loan credit agreement. See Note 5 for additional information.
Short-Term Borrowings
Short-termNo commercial paper borrowings includedwere issued during 2023 or 2022 and there were no commercial paper borrowings outstanding as of December 31, 2023 and December 31, 2022. Subsequent to 2023, AbbVie issued commercial paper borrowings of $400 million at December 31, 2017 and $377 million at December 31, 2016. The weighted-average interest ratewhich $1.7 billion were outstanding as of the date of filing this Annual Report on commercial paper borrowings was 1.3% in 2017, 0.6% in 2016 and 0.3% in 2015.Form 10-K.
In October 2014,March 2023, AbbVie entered into a $3.0 billionan amended and restated five-year revolving credit facility, which matures in October 2019.facility. The amendment increased the unsecured revolving credit facility commitments from $4.0 billion to $5.0 billion and extended the maturity date of the facility from August 2023 to March 2028. This amended facility enables the company to borrow funds on an unsecured basis at variable interest rates and contains various covenants. At December 31, 2017,2023, the company was in compliance with all itscovenants, and commitment fees under the credit facility covenants. Commitment fees under AbbVie's revolving credit facilities were insignificant in 2017, 2016 and 2015.insignificant. No amounts were outstanding under the company's credit facilityfacilities as of December 31, 20172023 and December 31, 2016.2022.




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72



Maturities of Long-Term Debt and Capital Lease Obligations
The following table summarizes AbbVie's future minimum lease payments under non-cancelable operating leases, debt maturities and future minimum lease payments for capital lease obligations as of December 31, 2017:
as of and for the years ending December 31 (in millions)
Operating
 leases
 
Debt maturities
 and capital leases
2018$143
 $6,026
2019126
 1,698
2020109
 3,771
202185
 1,836
202266
 4,102
Thereafter428
 20,179
Total obligations and commitments957
 37,612
Fair value hedges, unamortized bond discounts and deferred financing costs

 (644)
Total long-term debt and lease obligations$957
 $36,968
Lease expense was $169 million in 2017, $159 million in 2016 and $146 million in 2015. AbbVie's operating leases generally include renewal options and provide for the company to pay taxes, maintenance, insurance and other operating costs of the leased property. As of December 31, 2017, annual future minimum lease payments for capital lease obligations were insignificant.
Contingencies and Guarantees
In connection with the separation, AbbVie has indemnified Abbott for all liabilities resulting from the operation of AbbVie's business other than income tax liabilities with respect to periods prior to the distribution date and other liabilities as agreed to by AbbVie and Abbott. AbbVie has no material exposures to off-balance sheet arrangements and no special-purpose entities. In the ordinary course of business, AbbVie has periodically entered into third-party agreements, such as the assignment of product rights, which have resulted in AbbVie becoming secondarily liable for obligations for which AbbVie had previously been primarily liable. Based upon past experience, the likelihood of payments under these agreements is remote.
Note 1011 Financial Instruments and Fair Value Measures
Risk Management Policy
The company is exposed to foreign currency exchange rate and interest rate risks related to its business operations. AbbVie's hedging policy attempts to manage these risks to an acceptable level based on the company's judgment of the appropriate trade-off between risk, opportunity and costs. The company uses derivative and nonderivative instruments to reduce its exposure to foreign currency exchange rates. AbbVie also periodically enters into interest rate swaps in which the company agrees to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional amount. Derivative instruments are not used for trading purposes or to manage exposure to changes in interest rates for investment securities, and none of the company's outstanding derivative instruments contain credit risk related contingent features; collateral is generally not required.
Financial Instruments
Various AbbVie foreign subsidiaries enter into foreign currency forward exchange contracts to manage exposures to changes in foreign exchange rates for anticipated intercompany transactions denominated in a currency other than the functional currency of the local entity. These contracts, with notional amounts totaling $2.2$1.8 billion at December 31, 20172023 and $2.2$1.7 billion at December 31, 2016,2022, are designated as cash flow hedges and are recorded at fair value. The durations of these forward exchange contracts were generally less than eighteen18 months. Accumulated gains and losses as of December 31, 2017 will be2023 are reclassified from AOCI and included in cost of products sold at the time the products are sold, generally not exceeding six months from the date of settlement.
In 2019, the company entered into treasury rate lock agreements with notional amounts totaling $10.0 billion to hedge exposure to variability in future cash flows resulting from changes in interest rates related to the issuance of long-term debt in connection with the acquisition of Allergan. The treasury rate lock agreements were designated as cash flow hedges and recorded at fair value. The agreements were net settled upon issuance of the senior notes in 2019 and the resulting net gain was included in AOCI . This gain is reclassified to interest expense, net over the term of the related debt.
The company was a party to interest rate swap contracts designated as cash flow hedges that matured in November 2022. The effect of the hedge contracts was to change a floating-rate interest obligation to a fixed rate for that portion of the floating-rate debt. Realized and unrealized gains or losses were included in AOCI and reclassified to interest expense, net over the lives of the floating-rate debt.
In June 2023, the company entered into a cross-currency swap contract that matured in November 2023 with a notional amount totaling €433 million to hedge the company’s exposure to changes in future cash flows of foreign currency denominated debt related to changes in foreign exchange rates. The cross-currency swap contract was designated as a cash flow hedge and effectively converted the interest and principal payments of the related foreign currency denominated debt to U.S. dollars. The unrealized gains and losses on the contract were included in AOCI and reclassified to net foreign exchange loss over the term of the related debt.
The company also enters into foreign currency forward exchange contracts to manage its exposure to foreign currency denominated trade payables and receivables and intercompany loans. These contracts are not designated as hedges and are recorded at fair value. Resulting gains or losses are reflected in net foreign exchange gains or loss in the consolidated statements of

70    |2017 Form 10-K



earnings and are generally offset by losses or gains on the foreign currency exposure being managed. These contracts had notional amounts totaling $7.7$7.9 billion at December 31, 20172023 and $6.6$6.5 billion at December 31, 2016.2022.
The company also uses foreign currency forward exchange contracts or foreign currency denominated debt to hedge its net investments in certain foreign subsidiaries and affiliates. In the fourth quarter of 2016, theThe company issued €3.6 billionhad an aggregate principal amount of senior Euro notes and designated the principal amounts of this foreign denominated debt as net investment hedges. Concurrently,hedges of €5.4 billion at December 31, 2023 and €5.9 billion December 31, 2022. In addition, the company settledhad foreign currency forward exchange contracts designated as net investment hedges with aggregate notional amounts totaling €4.9 billion, SEK1.4 billion, CAD750 million and CHF50 million at December 31, 2023 and €4.3 billion,
73
Image3.gif|2023 Form 10-K
SEK2.0 billion, CAD750 million and CHF90 million at December 31, 2022. The company uses the spot method of €3.5 billion that wereassessing hedge effectiveness for derivative instruments designated as net investment hedges. Realized and unrealized gains and losses from these hedges are included in AOCI and the initial fair value of hedge components excluded from the assessment of effectiveness is recognized in interest expense, net over the life of the hedging instrument.
AbbVieThe company is a party to interest rate hedgeswap contracts designated as fair value hedges with notional amounts totaling $11.8$5.0 billion at December 31, 20172023 and $11.8$4.5 billion at December 31, 2016.2022. The effect of the hedge contracts is to change a fixed-rate interest obligation to a floating rate for that portion of the debt. AbbVie records the contracts at fair value and adjusts the carrying amount of the fixed-rate debt by an offsetting amount.
No amounts are excluded from the assessment of effectiveness for cash flow hedges or fair value hedges.
The following table summarizes the amounts and location of AbbVie's derivative instruments on the consolidated balance sheets:
 
Fair value -
Derivatives in asset position
 
Fair value -
Derivatives in liability position
as of December 31 (in millions)Balance sheet caption20172016 Balance sheet caption20172016
Foreign currency forward exchange contracts       
Designated as cash flow hedgesPrepaid expenses and other$1
$170
 Accounts payable and accrued liabilities$120
$5
Not designated as hedgesPrepaid expenses and other22
55
 Accounts payable and accrued liabilities29
33
Interest rate swaps designated as fair value hedgesPrepaid expenses and other—
—
 Accounts payable and accrued liabilities8
—
Interest rate swaps designated as fair value hedgesOther assets—
—
 Other long-term liabilities393
338
Total derivatives $23
$225
  $550
$376
Fair value -
Derivatives in asset position
Fair value -
Derivatives in liability position
as of December 31 (in millions)Balance sheet caption20232022Balance sheet caption20232022
Foreign currency forward exchange contracts
Designated as cash flow hedgesPrepaid expenses and other$12 $49 Accounts payable and accrued liabilities$32 $8 
Designated as cash flow hedgesOther assets— 1 Other long-term liabilities— — 
Designated as net investment hedgesPrepaid expenses and other13 6 Accounts payable and accrued liabilities66 36 
Designated as net investment hedgesOther assets— 74 Other long-term liabilities69 47 
Not designated as hedgesPrepaid expenses and other41 33 Accounts payable and accrued liabilities36 41 
Interest rate swap contracts
Designated as fair value hedgesPrepaid expenses and other— — Accounts payable and accrued liabilities— 17 
Designated as fair value hedgesOther assets— — Other long-term liabilities293 375 
Total derivatives$66 $163  $496 $524 
While certain derivatives are subject to netting arrangements with the company's counterparties, the company does not offset derivative assets and liabilities within the consolidated balance sheets.
The following table presents the pre-tax amounts of gains (losses) from derivative instruments recognized in other comprehensive loss:income (loss):
years ended in December 31 (in millions)202320222021
Foreign currency forward exchange contracts
Designated as cash flow hedges$(2)$103 $82 
Designated as net investment hedges(144)395 341 
Cross-currency swap contracts designated as cash flow hedges(6)— — 
Interest rate swap contracts designated as cash flow hedges— 6 2 
  2017 2016 2015
years ended December 31 (in millions) 
Cash Flow
 Hedges
Net Investment HedgesTotal 
Cash Flow
Hedges
Net Investment HedgesTotal Cash Flow
Hedges		Net Investment HedgesTotal
Foreign currency forward exchange contracts $(250)$—
$(250) $174
$118
$292
 $122
$—
$122
The amount of hedge ineffectiveness was insignificant for all periods presented. Assuming market rates remain constant through contract maturities, the company expects to transferreclassify pre-tax unrealized lossesgains of $174$7 million into cost of products sold for foreign currency cash flow hedges and pre-tax gains of $23 million into interest expense, net for treasury rate lock agreement cash flow hedges during the next 12 months.
The company recognized, in other comprehensive loss, pre-tax losses of $537 million in 2017 and pre-tax gains of $101 million in 2016 relatedRelated to AbbVie’s non-derivative, foreign currency denominated debt designated as net investment hedges.

hedges, the company recognized in other comprehensive income (loss) pre-tax losses of $252 million in 2023, pre-tax gains of $406 million in 2022 and pre-tax gains of $577 million in 2021.
20172023 Form 10-K|abbvieimage3.gif71

74



The following table summarizes the pre-tax amounts and location of derivative instrument net gains (losses) recognized in the consolidated statements of earnings, including the effective portions of the net gains (losses) reclassified out of AOCI into net earnings. See Note 1213 for the amount of net gains (losses) reclassified out of AOCI.
years ended December 31 (in millions)Statement of earnings caption2017 2016 2015
Foreign currency forward exchange contracts      
    Designated as cash flow hedgesCost of products sold$118
 $20
 $265
    Not designated as hedgesNet foreign exchange loss(96) 6
 (155)
Non-designated treasury rate lock agreementsOther expense, net—
 (12) —
Interest rate swaps designated as fair value hedgesInterest expense, net(63) (266) 108
Total $(41) $(252) $218

The gain (loss) related to outstanding interest rate swaps designated as fair value hedges is recognized in interest expense, net and directly offsets the (loss) gain on the underlying hedged item, the fixed-rate debt, resulting in no net impact to interest expense, net for all periods presented.
years ended December 31 (in millions)Statement of earnings caption202320222021
Foreign currency forward exchange contracts
Designated as cash flow hedgesCost of products sold$77 $82 $(87)
Designated as net investment hedgesInterest expense, net112 94 26 
Not designated as hedgesNet foreign exchange loss33 (156)(100)
Treasury rate lock agreements designated as cash flow hedgesInterest expense, net24 23 24 
Cross-currency swap contracts designated as cash flow hedgesNet foreign exchange loss(6)— — 
Interest rate swap contracts
Designated as cash flow hedgesInterest expense, net— (1)(24)
Designated as fair value hedgesInterest expense, net98 (402)(127)
Debt designated as hedged item in fair value hedgesInterest expense, net(98)402 127 
Fair Value Measures
The fair value hierarchy consists of the following three levels:
•Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets that the company has the ability to access;
•Level 2—Valuations based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuations in which all significant inputs are observable in the market; and
•Level 3—Valuations using significant inputs that are unobservable in the market and include the use of judgment by the company's management about the assumptions market participants would use in pricing the asset or liability.
75
Image3.gif|2023 Form 10-K
The following table summarizes the bases used to measure certain assets and liabilities that were carried at fair value on a recurring basis on the consolidated balance sheet as of December 31, 2017:2023:
Basis of fair value measurement
(in millions)TotalQuoted prices in active markets for
 identical assets
 (Level 1)		Significant other observable
 inputs
 (Level 2)		Significant unobservable inputs
 (Level 3)
Assets
Cash and equivalents$12,814 $6,223 $6,591 $— 
Money market funds and time deposits10 — 10 — 
Debt securities26 — 26 — 
Equity securities111 86 25 — 
Foreign currency contracts66 — 66 — 
Total assets$13,027 $6,309 $6,718 $— 
Liabilities
Interest rate swap contracts$293 $— $293 $— 
Foreign currency contracts203 — 203 — 
Contingent consideration19,890 — — 19,890 
Total liabilities$20,386 $— $496 $19,890 
   Basis of fair value measurement
(in millions)Total 
Quoted prices in active markets for
 identical assets
 (Level 1)
 
Significant other
 observable
 inputs
 (Level 2)
 
Significant
 unobservable
 Inputs
 (Level 3)
Assets       
Cash and equivalents$9,303
 $849
 $8,454
 $—
Debt securities2,524
 —
 2,524
 —
Equity securities4
 4
 —
 —
Foreign currency contracts23
 —
 23
 —
Total assets$11,854
 $853
 $11,001
 $—
Liabilities       
Interest rate hedges$401
 $—
 $401
 $—
Foreign currency contracts149
 —
 149
 —
Contingent consideration4,534
 —
 —
 4,534
Total liabilities$5,084
 $—
 $550
 $4,534


72    |2017 Form 10-K



The following table summarizes the bases used to measure certain assets and liabilities that were carried at fair value on a recurring basis on the consolidated balance sheet as of December 31, 2016:2022:
Basis of fair value measurement
(in millions)TotalQuoted prices in active markets for identical assets
(Level 1)		Significant other observable
 inputs
 (Level 2)		Significant unobservable inputs
 (Level 3)
Assets
Cash and equivalents$9,201 $4,201 $5,000 $— 
Money market funds and time deposits21 — 21 — 
Debt securities28 — 28 — 
Equity securities91 59 32 — 
Foreign currency contracts163 — 163 — 
Total assets$9,504 $4,260 $5,244 $— 
Liabilities
Interest rate swap contracts$392 $— $392 $— 
Foreign currency contracts132 — 132 — 
Contingent consideration16,384 — — 16,384 
Total liabilities$16,908 $— $524 $16,384 
   Basis of fair value measurement
(in millions)Total 
Quoted prices in active markets for
 identical assets
 (Level 1)
 
Significant other
 observable
 inputs
 (Level 2)
 
Significant
 unobservable
 Inputs
 (Level 3)
Assets       
Cash and equivalents$5,100
 $1,191
 $3,909
 $—
Time deposits1,014
 —
 1,014
 —
Debt securities1,974
 —
 1,974
 —
Equity securities76
 76
 —
 —
Foreign currency contracts225
 —
 225
 —
Total assets$8,389
 $1,267
 $7,122
 $—
Liabilities       
Interest rate hedges$338
 $—
 $338
 $—
Foreign currency contracts38
 —
 38
 —
Contingent consideration

4,213
 —
 —
 4,213
Total liabilities$4,589
 $—
 $376
 $4,213

The fair values ofMoney market funds and time deposits approximate their amortized cost due to the short maturities of these instruments. The fair values of available-for-sale debtare valued using relevant observable market inputs including quoted prices for similar assets and interest rate curves. Equity securities were determined based on prices obtained from commercial pricing services. Available-for-sale equity securities consistsprimarily consist of investments for which the fair values were determined by using the published market priceprices per unit multiplied by the number of units held, without consideration of transaction costs. The derivatives entered into by the company were valued using publicized spot curves forobservable market inputs including published interest rate hedgescurves and publicizedboth forward curvesand spot prices for foreign currency contracts. currencies.
The fair value measurements of the contingent consideration liabilities were determined based on significant unobservable inputs, including the discount rate, estimated probabilities and timing of achieving specified development, regulatory and commercial milestones and the estimated amount of future sales of the acquired products still in development.products. The potential contingent consideration payments are estimated by applying a probability-weighted expected payment model for contingent milestone payments and a Monte Carlo simulation model for contingent royalty payments, which are then discounted to present value. Changes to the fair value of the contingent consideration liabilities can result from changes to one or a number of inputs, including discount rates, the probabilities of achieving the milestones, the time required to achieve the milestones and estimated future sales. Significant judgment is employed in determining the appropriateness of certain of these inputs.
2023 Form 10-K | abbvieimage3.gif
76
Changes to the inputs described above could have a material impact on the company's financial position and results of operations in any given period. At December 31, 2017, a 50 basis point increase/decrease in
The fair value of the assumed discount rate would have decreased/increasedcompany's contingent consideration liabilities was calculated using the following significant unobservable inputs:
20232022
years ended December 31 (in millions)Range
Weighted Average(a)
Range
Weighted Average(a)
Discount rate4.3% - 5.9%4.5%4.7% - 5.1%4.8 %
Probability of payment for unachieved milestones(b)
N/A - N/AN/A100% - 100%100 %
Probability of payment for royalties by indication(C)
89% - 100%99%56% - 100%99 %
Projected year of payments2024 - 203420272023 - 20342028
(a)Unobservable inputs were weighted by the relative fair value of the contingent consideration liabilities by approximately $170 million. Additionally,liabilities.
(b)All significant milestones were achieved and paid as of December 31, 2023.
(c)Excluding approved indications, the estimated probability of payment was 89% at December 31, 2017, a five percentage point increase/decrease in the assumed probability of success across all potential indications would have increased/decreased the value of the contingent consideration liabilities by approximately $390 million.2023 and was 56% at December 31, 2022.
There have been no transfers of assets or liabilities betweeninto or out of Level 3 of the fair value measurement levels.hierarchy. The following table presents the changes in fair value of contingent consideration liabilities which are measured using Level 3 inputs:
years ended December 31 (in millions)202320222021
Beginning balance$16,384 $14,887 $12,997 
Additions(a)
— 32 — 
Change in fair value recognized in net earnings5,128 2,761 2,679 
Payments(1,622)(1,296)(789)
Ending balance$19,890 $16,384 $14,887 
years ended December 31 (in millions)

 2017 2016
Beginning balance $4,213
 $—
Additions (See Note 5) —
 3,985
Change in fair value recognized in net earnings 626
 228
Milestone payments (305) —
Ending balance $4,534
 $4,213
(a)Additions during the year ended December 31, 2022, represent contingent consideration liabilities assumed in the DJS acquisition.
The change in fair value recognized in net earnings wasis recorded in other expense, net in the consolidated statements of earnings and included charges of $5.1 billion in 20172023, $2.8 billion in 2022 and 2016.$2.7 billion in 2021. In 2023, the change in fair value reflected higher estimated Skyrizi sales driven by stronger market share uptake, the passage of time and lower discount rates. In 2022, the change in fair value reflected higher estimated Skyrizi sales driven by stronger market share uptake and the passage of time, partially offset by higher discount rates. In 2021, the change in fair value reflected higher estimated Skyrizi sales driven by stronger market share uptake, favorable clinical trial results and the passage of time, partially offset by higher discount rates.

Contingent consideration payments of amounts up to the initial acquisition date fair value are classified as cash outflows from financing activities and payments of amounts in excess of the initial acquisition date fair value are classified as cash outflows from operating activities in the consolidated statements of cash flows.
77
2017Image3.gif|2023 Form 10-K|    73




In addition to the financial instruments that the company carries at fair value on the consolidated balance sheets, certainCertain financial instruments are carried at historical cost or some basis other than fair value. The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of December 31, 20172023 are shown in the table below:
Basis of fair value measurement
(in millions)Book valueApproximate fair valuesQuoted prices in active markets for identical assets
 (Level 1)		Significant other observable inputs
 (Level 2)		Significant unobservable inputs
 (Level 3)
Liabilities
Current portion of long-term debt and finance lease obligations, excluding fair value hedges$7,191 $7,069 $6,862 $207 $— 
Long-term debt and finance lease obligations, excluding fair value hedges52,460 49,541 48,983 558 — 
Total liabilities$59,651 $56,610 $55,845 $765 $— 
    Basis of fair value measurement
(in millions)Book Value
Approximate
fair values
 
Quoted prices in active markets for
 identical assets
 (Level 1)
 
Significant other
 observable
 inputs
 (Level 2)
 
Significant
 unobservable
 Inputs
 (Level 3)
Assets        
Investments$48
$48
 $—
 $—
 $48
Total assets$48
$48
 $—
 $—
 $48
Liabilities        
Short-term borrowings$400
$400
 $—
 $400
 $—
Current portion of long-term debt and lease obligations, excluding fair value hedges6,023
6,034
 4,004
 2,030
 —
Long-term debt and lease obligations, excluding fair value hedges31,346
32,846
 32,763
 83
 —
Total liabilities$37,769
$39,280
 $36,767
 $2,513
 $—

The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of December 31, 20162022 are shown in the table below:
Basis of fair value measurement
(in millions)Book valueApproximate fair valuesQuoted prices in active markets for identical assets
 (Level 1)		Significant other observable inputs
 (Level 2)		Significant unobservable inputs
 (Level 3)
Liabilities
Short-term borrowings$1 $1 $— $1 $— 
Current portion of long-term debt and finance lease obligations, excluding fair value hedges4,152 4,121 3,930 191 — 
Long-term debt and finance lease obligations, excluding fair value hedges59,463 54,073 53,365 708 — 
Total liabilities$63,616 $58,195 $57,295 $900 $— 
    Basis of fair value measurement
(in millions)Book Value
Approximate
fair values
 
Quoted prices in active markets for
 identical assets
 (Level 1)
 
Significant other
 observable
 inputs
 (Level 2)
 
Significant
 unobservable
 Inputs
 (Level 3)
Assets        
Investments$42
$42
 $—
 $5
 $37
Total assets$42
$42
 $—
 $5
 $37
Liabilities        
Short-term borrowings$377
$377
 $—
 $377
 $—
Current portion of long-term debt and lease obligations, excluding fair value hedges25
25
 —
 25
 —
Long-term debt and lease obligations, excluding fair value hedges36,778
36,664
 34,589
 2,075
 —
Total liabilities$37,180
$37,066
 $34,589
 $2,477
 $—

Investments primarily consist ofAbbVie also holds investments in equity securities that do not have readily determinable fair values. The company records these investments at cost method investments, for which the company takes into consideration recent transactions and financial information of the investee, which represents a Level 3 basis ofremeasures them to fair value measurement.based on certain observable price changes or impairment events as they occur. The fair values of short-term borrowings approximate the carrying values due to the short maturitiesamount of these instruments.
The fair values of long-term debt, excluding fair value hedges and the term loans, were determined by using the published market price for the debt instruments, without consideration of transaction costs, which represents a Level 1 basis of fair value measurement. The fair values of the term loans were determined based on a discounted cash flow analysis using quoted market rates, which represents a Level 2 basis of fair value measurement. The counterparties to financial instruments consist of select major international financial institutions.

74    |2017 Form 10-K



Available-for-sale Securities
Substantially all of the company’s investments in debt and equity securities were classified as available-for-sale. Debt securities classified as short-term were $482was $159 million as of December 31, 20172023 and $309$129 million as of December 31, 2016. Long-term debt securities mature primarily within five years. Estimated fair values of available-for-sale securities were based on prices obtained from commercial pricing services.

The following table summarizes available-for-sale securities by type2022. No significant cumulative upward or downward adjustments have been recorded for these investments as of December 31, 2017:
 Amortized Cost Gross unrealized Fair Value
(in millions) Gains Losses 
Asset backed securities$930
 $1
 $(3) $928
Corporate debt securities1,451
 4
 (2) 1,453
Other debt securities144
 —
 (1) 143
Equity securities4
 2
 (2) 4
Total$2,529
 $7
 $(8) $2,528

The following table summarizes available-for-sale securities by type as of December 31, 2016:
 Amortized Cost Gross unrealized Fair Value
(in millions) Gains Losses 
Asset backed securities$891
 $1
 $(4) $888
Corporate debt securities961
 1
 (2) 960
Other debt securities127
 —
 (1) 126
Equity securities18
 60
 (2) 76
Total$1,997
 $62
 $(9) $2,050

AbbVie had no other-than-temporary impairments as of December 31, 2017. Net realized gains were $90 million in 2017. Net realized gains in 2016 and 2015 were insignificant.2023.
Concentrations of Risk
The company invests excess cash in time deposits, money market funds and debt securities to diversify the concentration of cash among different financial institutions. The company has established credit exposure limits and monitors concentrations of credit risk associated with financial institution deposits.
The functional currency of the company's Venezuela operations is the U.S. dollar due to the hyperinflationary status of the Venezuelan economy. During the first quarter of 2016, in consideration of declining economic conditions in Venezuela and a decline in transactions settled at the official rate, AbbVie determined that its net monetary assets denominated in the Venezuelan bolivar (VEF) were no longer expected to be settled at the official rate of 10 VEF per U.S. dollar, but rather at the Divisa Complementaria (DICOM) rate. Therefore, during the first quarter of 2016, AbbVie recorded a charge of $298 million to net foreign exchange loss to revalue its bolivar-denominated net monetary assets using the DICOM rate then in effect of approximately 270 VEF per U.S. dollar. As of December 31, 2017 and 2016, AbbVie’s net monetary assets in Venezuela were insignificant.
AbbVie continues to do business with foreign governments in certain countries, including Greece, Portugal, Italy and Spain, which have historically experienced challenges in credit and economic conditions. Substantially all of AbbVie’s trade receivables in Greece, Portugal, Italy and Spain are with government health systems. Outstanding governmental receivables in these countries, net of allowances for doubtful accounts, totaled $255 million as of December 31, 2017 and $244 million as of December 31, 2016. The company also continues to do business with foreign governments in certain oil-exporting countries that have experienced a deterioration in economic conditions, including Saudi Arabia and Russia, which may result in delays in the collection of receivables. Outstanding governmental receivables related to Saudi Arabia, net of allowances for doubtful accounts, were $149 million as of December 31, 2017 and $122 million at December 31, 2016. Outstanding governmental receivables related to Russia, net of allowances for doubtful accounts, were $152 million as of December 31, 2017 and $110 million as of December 31, 2016. Global economic conditions and customer-specific factors may require the company to periodically re-evaluate the collectability of its receivables and the company could potentially incur credit losses.


2017 Form 10-K  |    75




Of total net accounts receivable, three U.S. wholesalers accounted for 56%81% as of December 31, 20172023 and 51%82% as of December 31, 2016,2022, and substantially all of AbbVie's pharmaceutical product net revenues in the United States were to these three wholesalers.

HUMIRAHumira (adalimumab) is AbbVie's single largest product and accounted for approximately 65%27% of AbbVie's total net revenues in 2017, 63%2023, 37% in 20162022 and 61%37% in 2015.
Note 11 Post-Employment Benefits2021.
2023 Form 10-K | abbvieimage3.gif
78
Note 12 Post-Employment Benefits
AbbVie sponsors various pension and other post-employment benefit plans, including defined benefit, defined contribution and termination indemnity plans, which cover most employees worldwide. In addition, AbbVie provides medical benefits, primarily to eligible retirees in the United States and Puerto Rico, through other post-retirement benefit plans. Net obligations for these plans have been reflected on the consolidated balance sheets as of December 31, 20172023 and 2016.2022.
AbbVie's principal domestic defined benefit plan is the AbbVie Pension Plan. AbbVie made voluntary contributions of $150 million in 2017, 2016 and 2015 to this plan. In 2018, AbbVie plans to make voluntary contributions to its various defined benefit plans in excess of $750 million.
The following table summarizes benefit plan information for the global AbbVie-sponsored defined benefit and other post-employment plans:
Defined benefit plansOther post-employment plans
as of and for the years ended December 31 (in millions)2023202220232022
Projected benefit obligations
Beginning of period$8,588 $12,006 $667 $850 
Service cost270 454 37 51 
Interest cost432 297 37 23 
Employee contributions— 1 — — 
Amendments— — — (2)
Actuarial (gain) loss491 (3,668)89 (229)
Benefits paid(316)(294)(35)(25)
Other, primarily foreign currency translation adjustments79 (208)1 (1)
End of period9,544 8,588 796 667 
Fair value of plan assets
Beginning of period8,472 10,655 — — 
Actual return on plan assets1,230 (2,031)— — 
Company contributions366 357 35 25 
Employee contributions— 1 — — 
Benefits paid(316)(294)(35)(25)
Other, primarily foreign currency translation adjustments87 (216)— — 
End of period9,839 8,472 — — 
Funded status, end of period$295 $(116)$(796)$(667)
Amounts recognized on the consolidated balance sheets
Other assets$1,086 $896 $— $— 
Accounts payable and accrued liabilities(17)(14)(32)(27)
Other long-term liabilities(774)(998)(764)(640)
Net obligation$295 $(116)$(796)$(667)
Actuarial loss, net$2,290 $2,365 $282 $205 
Prior service cost (credit)1 3 (297)(333)
Accumulated other comprehensive loss (income)$2,291 $2,368 $(15)$(128)
 
Defined
benefit plans
 
Other
post-employment
plans
as of and for the years ended December 31 (in millions)2017 2016 2017 2016
Projected benefit obligations       
Beginning of period$5,829
 $5,387
 $627
 $557
Service cost236
 210
 26
 25
Interest cost204
 201
 24
 24
Employee contributions2
 1
 —
 —
Actuarial loss714
 313
 149
 33
Benefits paid(173) (163) (15) (12)
Other, primarily foreign currency translation adjustments173
 (120) 2
 —
End of period6,985
 5,829
 813
 627
Fair value of plan assets       
Beginning of period4,572
 4,174
 —
 —
Actual return on plan assets684
 383
 —
 —
Company contributions246
 273
 15
 12
Employee contributions2
 1
 —
 —
Benefits paid(173) (163) (15) (12)
Other, primarily foreign currency translation adjustments68
 (96) —
 —
End of period5,399
 4,572
 —
 —
Funded status, end of period$(1,586) $(1,257) $(813) $(627)
        
Amounts recognized on the consolidated balance sheets       
Other assets$388
 $240
 $—
 $—
Accounts payable and accrued liabilities(32) (25) (15) (14)
Other long-term liabilities(1,942) (1,472) (798) (613)
Net obligation$(1,586) $(1,257) $(813) $(627)
Actuarial loss, net$2,471
 $2,118
 $320
 $179
Prior service cost (credit)12
 14
 (29) (37)
Accumulated other comprehensive loss$2,483
 $2,132
 $291
 $142

76    |2017 Form 10-K



TheRelated to international defined benefit plans the projected benefit obligations (PBO) in the table above included $2.0$2.4 billion at December 31, 20172023 and $1.7$2.1 billion at December 31, 2016, related to international defined benefit plans.2022.
For plans reflected in the table above, the accumulated benefit obligations (ABO) were $6.3$8.6 billion at December 31, 20172023 and $5.3$7.7 billion at December 31, 2016. For those2022.
The 2023 actuarial loss of $491 million for qualified pension plans reflectedand actuarial loss of $89 million for other post-employment plans were primarily driven by a decrease in the table abovediscount rate and changes to experience impact and medical trends assumptions. The 2022 actuarial gain of $3.7 billion for qualified pension plans and actuarial gain of $229 million for other post-employment plans were primarily driven by an increase in which the ABO exceededdiscount rate.
79
Image3.gif|2023 Form 10-K
Information For Pension Plans With An Accumulated Benefit Obligation In Excess Of Plan Assets
as of December 31 (in millions)20232022
Accumulated benefit obligation$1,410 $1,211 
Fair value of plan assets890 746 
Information For Pension Plans With A Projected Benefit Obligation In Excess Of Plan Assets
as of December 31 (in millions)20232022
Projected benefit obligation$6,343 $5,592 
Fair value of plan assets5,552 4,580 
AbbVie's U.S. pension plan assets at December 31, 2017,was modified to close the ABOplan to new entrants effective January 1, 2022. In addition, a change to AbbVie's U.S. retiree health benefit plan was $3.8 billion, the PBO was $4.4 billionapproved in 2020 and aggregate plan assets were $2.5 billion.communicated to employees and retirees in October 2020. Beginning in 2022, Medicare-eligible retirees and Medicare-eligible dependents choose health care coverage from insurance providers through a private Medicare exchange. AbbVie will continue to provide financial support to Medicare-eligible retirees.
Amounts Recognized in Other Comprehensive LossIncome (Loss)
The following table summarizes the pre-tax gains and losses (gains) included in other comprehensive loss:income (loss):
years ended December 31 (in millions)202320222021
Defined benefit plans
Actuarial gain$(16)$(925)$(345)
Amortization of prior service cost(1)(2)(2)
Amortization of actuarial loss(16)(231)(288)
Foreign exchange loss (gain) and other(44)17 (27)
Total gain$(77)$(1,141)$(662)
Other post-employment plans
Actuarial loss (gain)$89 $(229)$10 
Prior service credit— (2)— 
Amortization of prior service credit36 38 39 
Amortization of actuarial loss(12)(26)(32)
Total loss (gain)$113 $(219)$17 
years ended December 31 (in millions)2017 2016 2015
Defined benefit plans     
Actuarial loss (gain)$412
 $284
 $(117)
Amortization of actuarial loss and prior service cost(107) (85) (127)
Foreign exchange gain (loss)46
 (22) (37)
Total pre-tax loss (gain) recognized in other comprehensive loss$351
 $177
 $(281)
Other post-employment plans     
Actuarial loss (gain)$149
 $33
 $(17)
Amortization of actuarial loss and prior service cost (credit)—
 —
 (2)
Total pre-tax loss (gain) recognized in other comprehensive loss$149
 $33
 $(19)

Net Periodic Benefit Cost
years ended December 31 (in millions)202320222021
Defined benefit plans
Service cost$270 $454 $440 
Interest cost432 297 237 
Expected return on plan assets(723)(712)(663)
Amortization of prior service cost1 2 2 
Amortization of actuarial loss16 231 288 
Net periodic benefit cost (credit)$(4)$272 $304 
Other post-employment plans
Service cost$37 $51 $48 
Interest cost37 23 19 
Amortization of prior service credit(36)(38)(39)
Amortization of actuarial loss12 26 32 
Net periodic benefit cost$50 $62 $60 
The pre-tax amountcomponents of actuarial loss and prior service cost included in AOCI at December 31, 2017 that is expected to be recognized in net periodic benefit cost other than service cost are included in 2018 is $149 million for defined benefit plans and $14 million for other post-employment plans.expense, net in the consolidated statements of earnings.

Net Periodic Benefit Cost

years ended December 31 (in millions)2017 2016 2015
Defined benefit plans     
Service cost$236
 $210
 $227
Interest cost204
 201
 219
Expected return on plan assets(382) (354) (325)
Amortization of actuarial loss and prior service cost107
 85
 127
Net periodic benefit cost$165
 $142
 $248
Other post-employment plans     
Service cost$26
 $25
 $25
Interest cost24
 24
 23
Amortization of actuarial loss and prior service cost—
 —
 2
Net periodic benefit cost$50
 $49
 $50

2023 Form 10-K | abbvieimage3.gif
80
Weighted-Average Assumptions Used in Determining Benefit Obligations at the Measurement Date

as of December 312017 2016
Defined benefit plans   
Discount rate3.4% 3.9%
Rate of compensation increases4.5% 4.4%
Other post-employment plans   
Discount rate3.9% 4.7%


2017 Form 10-K  |    77




as of December 3120232022
Defined benefit plans
Discount rate4.8 %5.0 %
Rate of compensation increases4.8 %5.5 %
Cash balance interest crediting rate4.4 %2.7 %
Other post-employment plans
Discount rate5.1 %5.3 %
The assumptions used in calculating the December 31, 20172023 measurement date benefit obligations will be used in the calculation of net periodic benefit cost in 2018.2024.
Weighted-Average Assumptions Used in Determining Net Periodic Benefit Cost
years ended December 312017 2016 2015
Defined benefit plans     
Discount rate for determining service cost3.9% 4.4% 3.9%
Discount rate for determining interest cost3.7% 4.0% 3.9%
Expected long-term rate of return on plan assets7.8% 7.9% 7.8%
Expected rate of change in compensation4.4% 4.4% 4.4%
Other post-employment plans     
Discount rate for determining service cost4.9% 5.1% 4.5%
Discount rate for determining interest cost4.1% 4.3% 4.5%

Effective December 31, 2015, AbbVie elected to change the method it uses to estimate the service and interest cost components of net periodic benefit costs. Historically, AbbVie estimated these service and interest cost components of this expense utilizing a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. In late 2015, AbbVie elected to utilize a full yield curve approach in the estimation of these components by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. AbbVie elected to make this change to provide a more precise measurement of service and interest costs by improving the correlation between projected benefit cash flows to the corresponding spot yield curve rates. AbbVie accounted for this change prospectively as a change in accounting estimate that is inseparable from a change in accounting principle. This change reduced AbbVie's net periodic benefit cost by approximately $41 million in 2016. This change had no effect on the 2015 expense and did not affect the measurement of AbbVie's total benefit obligations.
years ended December 31202320222021
Defined benefit plans
Discount rate for determining service cost5.0 %3.0 %2.6 %
Discount rate for determining interest cost4.9 %2.6 %2.2 %
Expected long-term rate of return on plan assets7.3 %7.1 %7.1 %
Expected rate of change in compensation4.8 %5.2 %4.6 %
Cash balance interest crediting rate2.7 %2.7 %2.8 %
Other post-employment plans
Discount rate for determining service cost5.3 %3.3 %3.0 %
Discount rate for determining interest cost5.1 %2.7 %2.2 %
For the December 31, 20172023 post-retirement health care obligations remeasurement, the company assumed a 7.7%7.4% pre-65 (9.5%(2.1% post-65) annual rate of increase in the per capita cost of covered health care benefits. The pre-65 rate was assumed to decrease gradually to 4.5% (1.8% post-65) in 20502032 and remain at that level thereafter. For purposes of measuring the 20172023 post-retirement health care costs, the company assumed a 6.8%6.2% pre-65 (7.8%(2.0% post-65) annual rate of increase in the per capita cost of covered health care benefits. The pre-65 rate was assumed to decrease gradually to 4.5% (1.8% post-65) for 20642030 and remain at that level thereafter.
Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans. As of December 31, 2017, a one percentage point change in assumed health care cost trend rates would have the following effects:
 One percentage point
year ended December 31, 2017 (in millions) (brackets denote a reduction)Increase Decrease
Service cost and interest cost$11
 $(9)
Projected benefit obligation183
 (140)

81
Image3.gif|2023 Form 10-K

Defined Benefit Pension Plan Assets
Basis of fair value measurement
as of December 31 (in millions)2023Quoted prices in active markets for identical assets
 (Level 1)		Significant other observable inputs
 (Level 2)		Significant unobservable inputs
 (Level 3)
Equities
U.S. large cap(a)
$1,018 $1,018 $— $— 
U.S. mid cap(b)
173 173 — — 
International(c)
488 488 — — 
Fixed income securities
U.S. government securities(d)
246 62 184 — 
Corporate debt instruments(d)
714 155 559 — 
Non-U.S. government securities(d)
461 301 160 — 
Other(d)
126 124 2 — 
Absolute return funds(e)
155 66 89 — 
Other(f)
414 413 1 — 
Total$3,795 $2,800 $995 $— 
Total assets measured at NAV6,044 
Fair value of plan assets$9,839 
Basis of fair value measurement
as of December 31 (in millions)2022Quoted prices in active markets for identical assets
 (Level 1)		Significant other observable inputs
 (Level 2)		Significant unobservable inputs
 (Level 3)
Equities
U.S. large cap(a)
$949 $949 $— $— 
U.S. mid cap(b)
157 157 — — 
International(c)
327 327 — — 
Fixed income securities
U.S. government securities(d)
237 69 168 — 
Corporate debt instruments(d)
680 144 536 — 
Non-U.S. government securities(d)
548 402 146 — 
Other(d)
84 81 3 — 
Absolute return funds(e)
91 4 87 — 
Real assets9 9 — — 
Other(f)
278 277 1 — 
Total$3,360 $2,419 $941 $— 
Total assets measured at NAV5,112 
Fair value of plan assets$8,472 
(a)A mix of index funds and actively managed equity accounts that are benchmarked to various large cap indices.
(b)A mix of index funds and actively managed equity accounts that are benchmarked to various mid cap indices.
(c)A mix of index funds and actively managed equity accounts that are benchmarked to various non-U.S. equity indices in both developed and emerging markets.
(d)Securities held by actively managed accounts, index funds and mutual funds.
(e)Primarily funds having global mandates with the flexibility to allocate capital broadly across a wide range of asset classes and strategies, including but not limited to equities, fixed income, commodities, financial futures, currencies and other securities, with objectives to outperform agreed upon benchmarks of specific return and volatility targets.
(f)Investments in cash and cash equivalents.
78    |20172023 Form 10-K

| abbvieimage3.gif
82


Defined Benefit Pension Plan Assets
   Basis of fair value measurement
as of December 31 (in millions)2017 
Quoted prices in
 active markets for
 identical assets
 (Level 1)
 
Significant other
 observable
 inputs
 (Level 2)
 
Significant
 unobservable
 inputs
 (Level 3)
Equities       
U.S. large cap(a)
$597
 $597
 $—
 $—
U.S. mid cap(b)
74
 74
 —
 —
International(c)
63
 63
 —
 —
Fixed income securities       
U.S. government securities(d)
110
 6
 104
 —
Corporate debt instruments(d)
238
 132
 106
 —
Non-U.S. government securities(d)
59
 25
 34
 —
Other(d)
265
 260
 5
 —
Absolute return funds(e)
262
 4
 258
 —
Real assets7
 7
 —
 —
Other(f)
40
 40
 —
 —
Total$1,715
 $1,208
 $507
 $—
Total assets measured at NAV3,684
      
Fair value of plan assets$5,399
 

 

 


   Basis of fair value measurement
as of December 31 (in millions)2016 
Quoted prices in
 active markets for
 identical assets
 (Level 1)
 
Significant other
 observable
 inputs
 (Level 2)
 
Significant
 unobservable
 inputs
 (Level 3)
Equities       
U.S. large cap(a)
$519
 $519
 $—
 $—
U.S. mid cap(b)
63
 63
 —
 —
International(c)
97
 97
 —
 —
Fixed income securities       
U.S. government securities(d)
94
 —
 94
 —
Corporate debt instruments(d)
243
 162
 81
 —
Non-U.S. government securities(d)
32
 30
 2
 

Other(d)
184
 179
 5
 —
Absolute return funds(e)
228
 3
 225
 —
Real assets31
 31
 —
 —
Other(f)
61
 61
 —
 —
Total$1,552
 $1,145
 $407
 $—
Total assets measured at NAV3,020
      
Fair value of plan assets$4,572
 

 

 


(a)A mix of index funds and actively managed equity accounts that are benchmarked to various large cap indices.
(b)A mix of index funds and actively managed equity accounts that are benchmarked to various mid cap indices.

2017 Form 10-K  |    79




(c)A mix of index funds and actively managed equity accounts that are benchmarked to various non-U.S. equity indices in both developed and emerging markets.
(d)Securities held by actively managed accounts, index funds and mutual funds.
(e)Primarily funds having global mandates with the flexibility to allocate capital broadly across a wide range of asset classes and strategies, including but not limited to equities, fixed income, commodities, financial futures, currencies and other securities, with objectives to outperform agreed upon benchmarks of specific return and volatility targets.
(f)Investments in cash and cash equivalents.

Equities and registered investment companies having quoted prices are valued at the published market prices. Fixed income securities that are valued using significant other observable inputs are quoted at prices obtained from independent financial service industry-recognized vendors. Investments held in pooled investment funds, common collective trusts or limited partnerships are valued at the net asset value (NAV) practical expedient to estimate fair value. The NAV is provided by the fund administrator and is based on the value of the underlying assets owned by the fund minus its liabilities.
The investment mix of equity securities, fixed income and other asset allocation strategies is based upon achieving a desired return, balancing higher return, more volatile equity securities and lower return, less volatile fixed income securities. Investment allocations are established for each plan and are generally made across a range of markets, industry sectors, capitalization sizes and in the case of fixed income securities, maturities and credit quality. The 2023 target investment allocationsallocation for the AbbVie Pension Plan is 35%was 62.5% in equity securities, 20%22.5% in fixed income securities and 45%15% in asset allocation strategies and other holdings. There are no known significant concentrations of risk in the plan assets of the AbbVie Pension Plan or of any other plans.
The expected return on plan assets assumption for each plan is based on management's expectations of long-term average rates of return to be achieved by the underlying investment portfolio. In establishing this assumption, management considers historical and expected returns for the asset classes in which the plans are invested, as well as current economic and capital market conditions.
Expected Benefit Payments
The following table summarizes total benefit payments expected to be paid to plan participants including payments funded from both plan and company assets:
years ending December 31 (in millions)
Defined
 benefit plans
 
Other
 post-employment
 plans
2018$192
 $16
2019206
 19
2020218
 20
2021232
 22
2022246
 24
2023 to 20271,474
 153
years ending December 31 (in millions)Defined
 benefit plans		Other
 post-employment plans
2024$339 $33 
2025364 37 
2026387 41 
2027413 44 
2028434 47 
2029 to 20332,580 292 
Defined Contribution Plan
AbbVie's principalAbbVie maintains defined contribution plan issavings plans for the AbbVie Savings Plan. AbbVie recordedbenefit of its eligible employees. The expense of $82recognized for these plans was $398 million in 2017, $752023, $474 million in 20162022 and $73$267 million in 2015 related to this plan.2021. AbbVie provides certain other post-employment benefits, primarily salary continuation arrangements, to qualifying employees and accrues for the related cost over the service lives of the employees.

Note 13 Equity
80    |2017 Form 10-K



Note 12 Equity
Stock-Based Compensation
In May 2021, stockholders of the company approved the AbbVie Amended and Restated 2013 Incentive Stock Program (the Amended Plan), which amends and restates the AbbVie 2013 Incentive Stock Program (2013 ISP). AbbVie grants stock-based awards to eligible employees pursuant to the AbbVie 2013 Incentive Stock Program (2013 ISP),Amended Plan, which provides for several different forms of benefits, including nonqualifiednon-qualified stock options, RSAs, RSUs and various performance-based awards. Under the 2013 ISP, 100Amended Plan, a total of 144 million shares of AbbVie common stock werehave been reserved for issuance as awards to AbbVie employees. The 2013 ISP also facilitated the assumption of certain awards granted under Abbott’s incentive stock program, which were adjusted and converted into Abbott and AbbVie stock-based awards as a result of AbbVie's separation from Abbott.
AbbVie measures compensation expense for stock-based awards based on the grant date fair value of the awards and the estimated number of awards that are expected to vest. Forfeitures are estimated based on historical experience at the time of grant and are revised in subsequent periods if actual forfeitures differ from those estimates. Compensation cost for stock-based awards is amortized over the service period, which could be shorter than the vesting period if an employee is retirement eligible. Retirement eligible employees generally are those who are age 55 or older and have at least ten10 years of service.
83
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Stock-based compensation expense is principally related to awards issued pursuant to the 2013 ISP and the Amended Plan and is summarized as follows:
years ended December 31 (in millions)202320222021
Cost of products sold$46 $38 $46 
Research and development278 232 226 
Selling, general and administrative423 401 420 
Pre-tax compensation expense747 671 692 
Tax benefit136 122 126 
After-tax compensation expense$611 $549 $566 
 Years ended December 31,
(in millions)2017 2016 2015
Cost of products sold$23
 $22
 $21
Research and development159
 193
 111
Selling, general and administrative183
 181
 150
Pre-tax compensation expense365
 396
 282
Tax benefit73
 104
 89
After-tax compensation expense$292
 $292
 $193
Stock-based compensation expense for the year ended December 31, 2016 also included the post-combination impact related to Stemcentrx options. See Note 5 for additional information related to the Stemcentrx acquisition.
The realizedRealized excess tax benefits associated with stock-based compensation totaled $71$90 million in 2017, $552023, $116 million in 20162022 and $61$50 million in 2015. Beginning in 2017, all excess tax benefits associated with stock-based awards are recognized in the statement of earnings when the awards vest or settle, rather than in stockholders' equity as a result of the adoption of a new accounting pronouncement. See Note 2 for additional information regarding the adoption of this new accounting pronouncement.2021.
Stock Options
Stock options awarded pursuant to the 2013 ISPemployees typically have a contractual term of 10 years and generally vest in one-third increments over a three-year3-year period. The exercise price is equal to at least 100% of the market value on the date of grant. The fair value is determined using the Black-Scholes model. The weighted-average grant-date fair values of stock options granted were $9.80$29.89 in 2017, $9.292023, $22.83 in 20162022 and $9.96$16.28 in 2015.2021.

2017 Form 10-K  |    81




The following table summarizes AbbVie stock option activity in 2017:
(options in thousands, aggregate intrinsic value in millions)Options 
Weighted-
 average
 exercise price
 
Weighted-
 average
 remaining
 life (in years)
 
Aggregate
 intrinsic value
Outstanding at December 31, 201615,962
 $33.63
 3.7 $463
Granted1,241
 61.36
    
Exercised(8,836) 30.06
    
Lapsed(51) 32.58
    
Outstanding at December 31, 20178,316
 $41.69
 5.1 $458
Exercisable at December 31, 20175,661
 $35.51
 3.6 $346

2023:
(options in thousands, aggregate intrinsic value in millions)OptionsWeighted- average
 exercise price		Weighted-average remaining
 life (in years)		Aggregate intrinsic value
Outstanding at December 31, 20229,320 $91.84 4.8$650 
Granted642 149.30 
Exercised(2,410)73.21 
Lapsed and forfeited(71)90.43 
Outstanding at December 31, 20237,481 $102.80 5.0$390 
Exercisable at December 31, 20235,954 $93.85 4.2$364 
The total intrinsic value of options exercised was $371$189 million in 2017, $3252023, $295 million in 20162022 and $216$239 million in 2015.2021. The total fair value of options vested during 20172023 was $32$21 million. On June 1, 2016, AbbVie issued stock options for 1.1 million AbbVie shares to holders of unvested Stemcentrx options as a result of the conversion of such options in connection with the Stemcentrx acquisition. These options were fair-valued using a lattice valuation model. See Note 5 for additional information related to the Stemcentrx acquisition.

As of December 31, 2017, $142023, $6 million of unrecognized compensation cost related to stock options is expected to be recognized as expense over approximately the next two years.

RSAs, RSUs and Performance Shares
RSUs awarded to employees other than senior executives and other key employees pursuant to the 2013 ISP generally vest in one-thirdratable increments over a three year or four-year period. Recipients of these RSUs are entitled to receive dividend equivalents as dividends are declared and paid during the RSU vesting period.
The majority of the equity awards AbbVie grants to its senior executives and other key employees under the 2013 ISP are performance-based. SuchEquity awards granted before 2016 consisted of RSAs (or RSUs to the extent necessary for global employees) that generally vest in one-third increments over a three-to-five year period, with vesting contingent upon AbbVie achieving a minimum annual return on equity (ROE). Recipients are entitled to receive dividends (or dividend equivalents for RSUs) as dividends are declared and paid during the award vesting period.
In 2016, AbbVie redesigned certain aspects of its long-term incentive program. As a result, equity awards granted in 2016 and 2017 to senior executives and other key employees consistedconsist of a combination of performance-vested RSUs and performance shares.shares as well as non-qualified stock options described above. The performance-vested RSUs have the potential to vest in one-third increments during a three-year performance period and may be earned based on AbbVie’s ROEreturn on invested capital (ROIC) performance relative to a defined peer group of pharmaceutical, biotech and life sciencesscience companies. The recipient may receive one share of AbbVie common stock for each vested award. The performance shares have the potential to vest over a three-year performance period and may be earned based on AbbVie’s EPS achievement and AbbVie’s total stockholder return (TSR) (a market condition) relative to a defined peer group of pharmaceutical, biotech and life sciences companies. Dividend equivalents on performance-vested RSUs and performance shares accrue during the performance period and are payable at vesting only to the extent that shares are earned.
The weighted-average grant-date fair value of RSAs, RSUs and performance shares generally is determined based on the number of shares/units granted and the quoted price of AbbVie’s common stock on the date of grant. The weighted-average grant-date fair values of performance shares with a TSR market condition are determined using the Monte Carlo simulation model.



82    |20172023 Form 10-K

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84


The following table summarizes AbbVie RSA, RSU and performance share activity for 2017:
(share units in thousands)Share units 
Weighted-average
 grant date fair value
Outstanding at December 31, 201610,715
 $56.47
Granted6,109
 61.89
Vested(5,532) 56.34
Forfeited(610) 59.50
Outstanding at December 31, 201710,682
 $59.47

2023:
(share units in thousands)Share unitsWeighted-average grant date fair value
Outstanding at December 31, 202213,031 $116.84 
Granted5,872 141.63 
Vested(6,790)107.96 
Forfeited(1,374)113.65 
Outstanding at December 31, 202310,739 $136.42 
The fair market value of RSAs, RSUs and performance shares (as applicable) vested was $348$1.0 billion in 2023, $1.0 billion in 2022 and $718 million in 2017, $362 million in 2016 and $335 million in 2015.2021.
As of December 31, 2017, $2502023, $571 million of unrecognized compensation cost related to RSAs, RSUs and performance shares is expected to be recognized as expense over approximately the next two years.
Cash Dividends
Cash dividends declared per common share totaled $5.99 in 2023, $5.71 in 2022 and $5.31 in 2021. The following table summarizes quarterly cash dividends declared for the years ended December 31, 2017during 2023, 2022 and 2016:
2017 2016
Date Declared Payment Date Dividend Per Share Date Declared Payment Date Dividend Per Share
10/27/17 02/15/18 $0.71 10/28/16 02/15/17 $0.64
09/08/17 11/15/17 $0.64 09/09/16 11/15/16 $0.57
06/22/17 08/15/17 $0.64 06/16/16 08/15/16 $0.57
02/16/17 05/15/17 $0.64 02/18/16 05/16/16 $0.57
On February 15, 2018, AbbVie announced that its board of directors declared an increase in the company's quarterly cash dividend from $0.71 per share to $0.96 per share beginning with the dividend payable on May 15, 2018 to stockholders of record as of April 13, 2018.2021:
202320222021
Date DeclaredPayment DateDividend Per ShareDate DeclaredPayment DateDividend Per ShareDate DeclaredPayment DateDividend Per Share
10/26/2302/15/24$1.5510/28/2202/15/23$1.4810/29/2102/15/22$1.41
09/08/2311/15/23$1.4809/09/2211/15/22$1.4109/10/2111/15/21$1.30
06/22/2308/15/23$1.4806/23/2208/15/22$1.4106/17/2108/16/21$1.30
02/16/2305/15/23$1.4802/17/2205/16/22$1.4102/18/2105/14/21$1.30
Stock Repurchase Program
The company's stock repurchase authorization permits purchases of AbbVie shares from time to time in open-market or private transactions at management’s discretion. The program has no time limit and can be discontinued at any time. Shares repurchased under these programsthis program are recorded at acquisition cost, including related expenses and are available for general corporate purposes. AbbVie's board of directors authorized increases to its existing stock repurchase program of $4.0 billion in April 2016 in anticipation of executing an ASR in connection with the Stemcentrx acquisition and of $5.0 billion in March 2015 in anticipation of executing an ASR in connection with the Pharmacyclics acquisition. The following table shows details about AbbVie’s ASR transactions:
(shares in millions, repurchase amounts in billions)   
Execution datePurchase amount Initial delivery of shares Final delivery of sharesRelated acquisition
05/26/15$5.0 68.1 5.0Pharmacyclics
06/01/163.8 54.4 5.4Stemcentrx
On February 16, 2017,2023, AbbVie's board of directors authorized a $5.0 billion increase to AbbVie'sthe existing stock repurchase program.authorization. AbbVie repurchased 10 million shares for $1.6 billion in 2023, 8 million shares for $1.1 billion in 2022 and 6 million shares for $670 million in 2021. AbbVie's remaining sharestock repurchase authorization was $4.0$4.8 billion as of December 31, 2017.
On February 15, 2018, AbbVie's board of directors authorized a new $10.0 billion stock repurchase program, which superseded AbbVie's previous stock repurchase program. The new stock repurchase program permits purchases of AbbVie shares from time to time in open-market or private transactions, including accelerated share repurchases, at management’s discretion. The program has no time limit and can be discontinued at any time.

2023.
85
2017Image3.gif|2023 Form 10-K|    83




In addition to the ASRs, AbbVie repurchased on the open market approximately 13 million shares for $1.0 billion in 2017, 34 million shares for $2.1 billion in 2016 and 46 million shares for $2.8 billion in 2015.
Accumulated Other Comprehensive Loss
The following table summarizes the changes in each component of AOCI,accumulated other comprehensive loss, net of tax, for 2017, 20162023, 2022 and 2015:2021:
(in millions) (brackets denote losses)Foreign currency translation adjustmentsNet investment hedging activitiesPension
 and post-employment benefits		Cash flow hedging activitiesTotal
Balance as of December 31, 2020$583 $(790)$(3,067)$157 $(3,117)
Other comprehensive income (loss) before reclassifications(1,153)720 298 76 (59)
Net losses (gains) reclassified from accumulated other comprehensive loss— (21)223 75 277 
Net current-period other comprehensive income (loss)(1,153)699 521 151 218 
Balance as of December 31, 2021(570)(91)(2,546)308 (2,899)
Other comprehensive income (loss) before reclassifications(943)629 915 91 692 
Net losses (gains) reclassified from accumulated other comprehensive loss— (74)173 (91)8 
Net current-period other comprehensive income (loss)(943)555 1,088 — 700 
Balance as of December 31, 2022(1,513)464 (1,458)308 (2,199)
Other comprehensive income (loss) before reclassifications407 (311)(23)(10)63 
Net gains reclassified from accumulated other comprehensive loss— (88)(7)(74)(169)
Net current-period other comprehensive income (loss)407 (399)(30)(84)(106)
Balance as of December 31, 2023$(1,106)$65 $(1,488)$224 $(2,305)
(in millions) (brackets denote losses)
Foreign
 currency
 translation
adjustments
 
Net investment hedging
 activities
 
Pension
 and post-
employment
 benefits
 Marketable security activities 
Cash flow hedging
 activities
 Total
Balance as of December 31, 2014$(603) $—
 $(1,608) $3
 $177
 $(2,031)
Other comprehensive income (loss) before
 reclassifications
(667) —
 147
 48
 122
 (350)
Net losses (gains) reclassified from accumulated other comprehensive loss—
 —
 83
 (4) (259) (180)
Net current-period other comprehensive
 income (loss)
(667) —
 230
 44
 (137) (530)
Balance as of December 31, 2015(1,270) —
 (1,378) 47
 40
 (2,561)
Other comprehensive income (loss) before
 reclassifications
(165) 140
 (194) 7
 160
 (52)
Net losses (gains) reclassified from accumulated other comprehensive loss—
 —
 59
 (8) (24) 27
Net current-period other comprehensive
 income (loss)
(165) 140
 (135) (1) 136
 (25)
Balance as of December 31, 2016(1,435) 140
 (1,513) 46
 176
 (2,586)
Other comprehensive income (loss) before
 reclassifications
680
 (343) (480) 29
 (230) (344)
Net losses (gains) reclassified from
 accumulated other comprehensive loss
316
 —
 74
 (75) (112) 203
Net current-period other comprehensive
 income (loss)
996
 (343) (406) (46) (342) (141)
Balance as of December 31, 2017$(439) $(203) $(1,919) $—
 $(166) $(2,727)

In 2017, AbbVie reclassified $316 million of historical currency translation losses from AOCI related to the liquidation of certain foreign entities following the enactment of U.S. tax reform. These losses were included in net foreign exchange loss in the consolidated statement of earnings and had no related income tax impacts. Other comprehensive loss in 2017 alsoincome (loss) for 2023 included foreign currency translation adjustments totaling a gaingains of $680$407 million which was principally due to the impact of the strengthening of the Euro on the translation of the company’s Euro-denominated assets and the offsetting impact of net investment hedging activities totaling losses of $399 million. Other comprehensive income for 2022 included pension and post-employment benefit plan gains of $1.1 billion primarily due to actuarial gains driven by higher discount rates partially offset by losses on plan assets. Other comprehensive loss in 2016income (loss) for 2022 also included foreign currency translation adjustments totaling a losslosses of $165$943 million which was principally due to the impact of the weakening of the Euro on the translation of the company’scompany's Euro-denominated assets.assets and the offsetting impact of net investment hedging activities totaling gains of $555 million. Other comprehensive loss in 2015income (loss) for 2021 included foreign currency translation adjustments totaling a losslosses of $667 million, which was$1.2 billion principally driven bydue to the impact of the weakening of the Euro on the translation of the company's Euro-denominated assets.assets and the offsetting impact of net investment hedging activities totaling gains of $699 million.


84    |20172023 Form 10-K

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The table below presents the impact on AbbVie's consolidated statements of earnings for significant amounts reclassified out of each component of accumulated other comprehensive loss:
years ended December 31 (in millions) (brackets denote gains)202320222021
Net investment hedging activities
Gains on derivative amount excluded from effectiveness testing(a)
$(112)$(94)$(26)
Tax expense24 20 5 
Total reclassifications, net of tax$(88)$(74)$(21)
Pension and post-employment benefits
Amortization of actuarial losses (gains) and other(b)
$(7)$221 $283 
Tax expense (benefit)— (48)(60)
Total reclassifications, net of tax$(7)$173 $223 
Cash flow hedging activities
Losses (gains) on foreign currency forward exchange contracts(c)
$(77)$(82)$87 
Gains on treasury rate lock agreements(a)
(24)(23)(24)
Losses on interest rate swap contracts(a)
— 1 24 
Losses on cross-currency swap contracts(d)
6 — — 
Tax expense (benefit)21 13 (12)
Total reclassifications, net of tax$(74)$(91)$75 
(a)Amounts are included in interest expense, net (see Note 11).
years ended December 31 (in millions) (brackets denote gains)2017 2016 2015
Pension and post-employment benefits     
Amortization of actuarial losses and other(a)
$107
 $85
 $129
Tax benefit(33) (26) (46)
Total reclassifications, net of tax$74
 $59
 $83
      
Cash flow hedging activities     
Losses (gains) on designated cash flow hedges(b)
$(118) $(20) $(265)
Tax expense (benefit)6
 (4) 6
Total reclassifications, net of tax$(112) $(24) $(259)
(b)Amounts are included in the computation of net periodic benefit cost (see Note 12).
(a)
Amounts are included in the computation of net periodic benefit cost (see Note 11).
(c)Amounts are included in cost of products sold (see Note 11).
(d)Amounts are included in net foreign exchange loss (see Note 11).
(b)
Amounts are included in cost of products sold (see Note 10).
Other
In addition to common stock, AbbVie's authorized capital includes 200 million shares of preferred stock, par value $0.01. As of December 31, 2017,2023, no shares of preferred stock were issued or outstanding.
Note 13 Income Taxes
87
Image3.gif|2023 Form 10-K
Note 14 Income Taxes
Earnings Before Income Tax Expense
years ended December 31 (in millions)202320222021
Domestic$(3,475)$(4,608)$(1,644)
Foreign9,725 18,085 14,633 
Total earnings before income tax expense$6,250 $13,477 $12,989 
years ended December 31 (in millions)2017
2016
2015
Domestic$(2,678) $(1,651) $(1,038)
Foreign10,405
 9,535
 7,683
Total earnings before income tax expense$7,727
 $7,884
 $6,645
Income Tax Expense
years ended December 31 (in millions)202320222021
Current
Domestic$3,272 $2,647 $1,987 
Foreign994 916 351 
Total current taxes$4,266 $3,563 $2,338 
Deferred
Domestic$(2,324)$(1,512)$(839)
Foreign(565)(419)(59)
Total deferred taxes$(2,889)$(1,931)$(898)
Total income tax expense$1,377 $1,632 $1,440 
years ended December 31 (in millions)2017 2016 2015
Current     
Domestic$6,204
 $2,229
 $1,036
Foreign376
 498
 313
Total current taxes$6,580
 $2,727
 $1,349
Deferred     
Domestic$(4,898) $(792) $141
Foreign736
 (4) 11
Total deferred taxes$(4,162) $(796) $152
Total income tax expense$2,418
 $1,931
 $1,501
Impacts Related to U.S. Tax Reform
The Tax Cuts and Jobs Act (the “Act”) was signed into law in December 2017, resulting in significant changes to the U.S. corporate tax system. The Act reduces the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on a mandatory deemed repatriation of earnings of certain foreign subsidiaries that were previously untaxed and creates new taxes on certain foreign sourced earnings. These changes are effective beginning in 2018.

2017 Form 10-K  |    85




Prior to the enactment of the Act, the company did not provide deferred income taxes on undistributed earnings of foreign subsidiaries that were indefinitely reinvested for continued use in foreign operations. Due to the provision of the Act that requires a one-time deemed repatriation of earnings of foreign subsidiaries, the company no longer considers those earnings to be indefinitely reinvested. The transition tax expense on the one-time mandatory repatriation of previously untaxed earnings of foreign subsidiaries was $4.5 billion, generally payable in eight annual installments.
Additionally, the company remeasured certain deferred tax assets and liabilities based on tax rates at which they are expected to reverse in the future. The net tax benefit of U.S. tax reform from the remeasurement of deferred taxes related to the Act and foreign tax law changes was $3.6 billion.
Given the complexity of the Act and anticipated guidance from the U.S. Treasury about implementing the Act, the company’s analysis and accounting for the tax effects of the Act is preliminary. As a direct result of the Act, the company recorded $4.5 billion of transition tax expense, as well as $4.1 billion of net tax benefit for deferred tax remeasurement. Both of these amounts are provisional estimates, as the company has not fully completed its analysis and calculation of foreign earnings subject to the transition tax or its analysis of certain other aspects of the Act that could result in adjustments to the remeasurement of deferred tax balances. Upon completion of the analysis in 2018, these estimates may be adjusted through income tax expense in the consolidated statement of earnings.
Effective Tax Rate Reconciliation
years ended December 312017
2016
2015
Statutory tax rate35.0 % 35.0 % 35.0 %
Effect of foreign operations(12.2) (10.3) (9.4)
U.S. tax credits(4.0) (4.4) (4.5)
Impacts related to U.S. tax reform12.0
 —
 —
Tax law change related to foreign currency—
 2.4
 —
All other, net0.5
 1.8
 1.5
Effective tax rate31.3 % 24.5 % 22.6 %
years ended December 31202320222021
Statutory tax rate21.0 %21.0 %21.0 %
Effect of foreign operations8.0 (4.4)(5.4)
U.S. tax credits(3.1)(2.8)(2.8)
Non-deductible expenses1.5 0.6 0.3 
Tax law changes(3.8)(2.4)(2.0)
Tax audits and settlements(1.1)0.9 (0.4)
All other, net(0.5)(0.8)0.4 
Effective tax rate22.0 %12.1 %11.1 %
The effective income tax rate fluctuates year to year due to the allocation of the company's taxable earnings among jurisdictions, as well as certain discrete factors and events in each year, including changes in tax law acquisitions and collaborations.business development activities. The effective income tax rates in 2017, 20162023, 2022 and 20152021 differed from the statutory tax rate principally due to changes in enacted tax rates and laws, the benefit fromimpact of foreign operations which reflects the impact ofwith lower income tax rates in locations outside the United States, the U.S. global minimum tax, changes in fair value of contingent consideration, tax credits and incentives in the United States, Puerto Rico and other foreign tax jurisdictions, and business development activities and the cost of repatriation decisions. The effective tax rates for these periods also reflected the benefit from U.S. tax credits principally related to research and development credits, the orphan drug tax credit and Puerto Rico excise tax credits. The Puerto Rico excise tax credits relate to legislation enacted by Puerto Rico that assesses an excise tax on certain products manufactured in Puerto Rico. The tax is levied on gross inventory purchases from entities in Puerto Rico and is included in cost of products sold in the consolidated statements of earnings. The majority of the tax is creditable for U.S. income tax purposes.
activities. The effective income tax rate in 2017 included2023 was higher than prior periods due to increased changes in fair value of contingent consideration, intangible asset impairments and the impacts related to U.S. tax reform. In addition, in 2017, the company recognized a net tax benefit of $91 million related to the resolution of various tax positions pertaining to prior years.
The effective income tax rate in 2016 included additional expense of $187 million related to the recognition of the transition from the Puerto Rico excise tax effect of regulations issued byto an income tax.
In 2022, Puerto Rico enacted Act 52-2022 (the Puerto Rico Act) allowing for a transition from a Puerto Rico excise tax levied on gross inventory purchases to an income-based tax beginning in 2023. The company completed the Internal Revenue Service on December 7, 2016 that changed the determinationtransition requirements of the U.S. taxabilityPuerto Rico Act in 2022, resulting in the remeasurement of foreign currency gains and losses related to certain foreign operations.
The effective income tax rate in 2015 included a tax benefit of $103 million from a reduction of state valuation allowances.

86    |2017 Form 10-K



Deferred Tax Assets and Liabilities
as of December 31 (in millions)2017 2016
Deferred tax assets   
Compensation and employee benefits$556
 $718
Accruals and reserves315
 425
Chargebacks and rebates305
 473
Deferred revenue219
 391
Net operating losses and other credit carryforwards208
 151
Other429
 289
Total deferred tax assets2,032
 2,447
Valuation allowances(108) (76)
Total net deferred tax assets1,924
 2,371
Deferred tax liabilities   
Excess of book basis over tax basis of intangible assets(3,762) (5,487)
Excess of book basis over tax basis in investments(181) (3,367)
Other(203) (182)
Total deferred tax liabilities(4,146) (9,036)
Net deferred tax liabilities$(2,222) $(6,665)

The decreases in deferred tax assets and liabilities were primarily duebased on income tax rates at which they are expected to reverse in the future. The net tax benefit recognized in 2022 from the remeasurement of deferred taxes related to the enactment ofPuerto Rico Act was $323 million.
The Tax Cuts and Jobs Act (the Act) was signed into law in December 2017, resulting in significant changes to the U.S. tax reform that reduced the U.S. federal corporate tax rate from 35% to 21% and createdsystem, including a territorialone-time transition tax system, which will generally allowon a mandatory deemed repatriation of futureearnings of certain foreign sourced earnings without incurring additional U.S. taxes.subsidiaries that were previously untaxed. The Act also created a U.S. global minimum tax on certain foreign sourced earnings. The taxability of the foreign sourced earnings and the applicable tax rates are dependent on future events. While the company is still evaluating itscompany’s accounting policy for the minimum tax on foreign sourced earnings the provisional estimates ofis to report the tax effects of the Act were reported on the basis that the minimum tax will be recognized in tax expense in the year it is incurred as a period expense.
As
2023 Form 10-K | abbvieimage3.gif
88
Deferred Tax Assets and Liabilities
as of December 31 (in millions)20232022
Deferred tax assets
Compensation and employee benefits$519 $497 
Accruals and reserves1,113 1,023 
Chargebacks and rebates1,431 991 
Advance payments298 547 
Net operating losses and other carryforwards14,316 10,391 
Other2,259 1,710 
Total deferred tax assets19,936 15,159 
Valuation allowances(13,478)(9,627)
Total net deferred tax assets6,458 5,532 
Deferred tax liabilities
Excess of book basis over tax basis of intangible assets(1,535)(3,590)
Excess of book basis over tax basis in investments(374)(340)
Other(746)(772)
Total deferred tax liabilities(2,655)(4,702)
Net deferred tax assets$3,803 $830 
The increase in net deferred tax assets is primarily related to capitalization of December 31, 2017, gross stateR&D expense and increases in accruals and reserves, offset by a decrease in advance payments. The decrease in deferred tax liabilities is primarily related to amortization and impairments of intangible assets.
In 2023, Bermuda enacted the Corporate Income Tax Act (“Bermuda Tax Act”), which implements a 15% corporate income tax effective beginning in 2025. The enactment of the Bermuda Tax Act resulted in the remeasurement of certain deferred tax assets and liabilities based on income tax rates at which they are expected to reverse in the future. The remeasurement related primarily to net operating losses were $1.2and reflected an increase of $3.6 billion to deferred tax assets and an offsetting increase to valuation allowances, resulting in no net impact to deferred tax credit carryforwards were $228 million. The state tax carryforwards expire between 2018 and 2038. As of December 31, 2017, foreign net operating loss carryforwards were $209 million. Foreign net operating loss carryforwards of $155 million expire between 2018 and 2027 andassets as such losses are not expected to be realized in the remaining do not have an expiration period.foreseeable future.
The company had valuation allowances of $108 million$13.5 billion as of December 31, 20172023 and $76 million$9.6 billion as of December 31, 2016.2022. These were principally related to foreign and state net operating losses and other credit carryforwards that are not expected to be realized.
Current income taxes receivable were $2.1 billion asAs of December 31, 20172023, the company had U.S. federal, state and $347foreign credit carryforwards of $372 million as well as U.S. federal, state and foreign net operating loss carryforwards of December 31, 2016 and were included$33.6 billion, which will expire at various times through 2043. The company also had foreign loss carryforwards of $31.3 billion that have no expiration.
Unremitted foreign earnings subject to the Act’s transition tax are not considered indefinitely reinvested. Post-2017 earnings subject to the U.S. minimum tax on foreign sourced earnings or eligible for the 100 percent foreign dividends received deduction are also not considered indefinitely reinvested earnings. However, the company generally considers instances of outside basis differences in prepaid expenses and other on the consolidated balance sheets.foreign subsidiaries that would incur additional U.S. tax upon reversal (e.g., capital gain distributions) to be permanent in duration. The unrecognized tax liability is not practicable to determine.
89
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Unrecognized Tax Benefits
years ended December 31 (in millions)2017 2016 2015
Beginning balance$1,168
 $954
 $421
Increase due to current year tax positions1,768
 118
 187
Increase due to prior year tax positions16
 111
 369
Decrease due to prior year tax positions(2) (7) (15)
Settlements(233) —
 —
Lapse of statutes of limitations(16) (8) (8)
Ending balance$2,701
 $1,168
 $954


2017 Form 10-K  |    87




AbbVie and Abbott entered into a tax sharing agreement, effective on the date of separation, which provides that Abbott is liable for and has indemnified AbbVie against all income tax liabilities for periods prior to the separation. AbbVie will be responsible for unrecognized tax benefits and related interest and penalties for periods after separation or in instances where an existing entity was transferred to AbbVie upon separation.
years ended December 31 (in millions)202320222021
Beginning balance$5,670 $5,489 $5,264 
Increase due to current year tax positions129 88 208 
Increase due to prior year tax positions109 243 137 
Decrease due to prior year tax positions(21)(33)(62)
Settlements(86)(7)(24)
Lapse of statutes of limitations(39)(110)(34)
Ending balance$5,762 $5,670 $5,489 
If recognized, the net amount of potential tax benefits that would impact the company's effective tax rate is $2.6$5.6 billion in 20172023 and $1.1$5.5 billion in 2016. Of the unrecognized tax benefits recorded in the table above as of December 31, 2017, AbbVie would be indemnified for approximately $85 million.2022. The “Increases"Increase due to current year tax positions” in the table above includes amounts related to federal, statepositions" and international tax items, including a provisional estimate of the remeasurement of unrecognized tax benefits related to earnings of foreign subsidiaries following the enactment of U.S. tax reform in 2017. The "Increase due to prior year tax positions" in the table above includesinclude amounts relatingrelated to federal, state and international items as well as prior positions acquired through business development activities during the year. Uncertain tax positions are generally included as a long-term liability on the consolidated balance sheets.items.
AbbVie recognizes interest and penalties related to income tax matters in income tax expense in the consolidated statements of earnings. AbbVie recognized gross income tax expense of $24$430 million in 2017, $352023, $339 million in 20162022 and $13$161 million in 2015,2021, for interest and penalties related to income tax matters. AbbVie had an accrual for the payment of gross interest and penalties of $120$1.6 billion at December 31, 2023, $1.1 billion at December 31, 2022 and $803 million at December 31, 2017, $112 million at December 31, 2016 and $83 million at December 31, 2015.2021.
The company is routinely audited by the tax authorities in significant jurisdictions and a number of audits are currently underway. It is reasonably possible during the next twelve12 months that uncertain tax positions may be settled, which could result in a decrease in the gross amount of unrecognized tax benefits. Due to the potential for resolution of federal, state and foreign examinations and the expiration of various statutes of limitation, the company's gross unrecognized tax benefits balance may change within the next twelve12 months up to $31$476 million. All significant federal, state, local and international matters have been concluded for years through 2008.2009. The company believes adequate provision has been made for all income tax uncertainties.
Note 1415 Legal Proceedings and Contingencies

AbbVie is subject to contingencies, such as various claims, legal proceedings and investigations regarding product liability, intellectual property, commercial, securities and other matters that arise in the normal course of business. The most significant matters are described below. Loss contingency provisions are recorded for probable losses at management’s best estimate of a loss, or when a best estimate cannot be made, a minimum loss contingency amount within a probable range is recorded. The recorded accrual balanceFor litigation matters discussed below for litigation was approximately $445 million aswhich a loss is probable or reasonably possible, the company is unable to estimate the possible loss or range of December 31, 2017 and approximately $225 million at December 31, 2016.loss, if any, beyond the amounts accrued. Initiation of new legal proceedings or a change in the status of existing proceedings may result in a change in the estimated loss accrued by AbbVie. While it is not feasible to predict the outcome of all proceedings and exposures with certainty, management believes that their ultimate disposition should not have a material adverse effect on AbbVie’s consolidated financial position, results of operations or cash flows.


Subject to certain exceptions specified in the separation agreement by and between Abbott Laboratories (Abbott) and AbbVie, AbbVie assumed the liability for, and control of, all pending and threatened legal matters related to its business, including liabilities for any claims or legal proceedings related to products that had been part of its business, but were discontinued prior to the distribution, as well as assumed or retained liabilities, and will indemnify Abbott for any liability arising out of or resulting from such assumed legal matters.

Several pending lawsuits filed against Unimed Pharmaceuticals, Inc., Solvay Pharmaceuticals, Inc. (a company Abbott acquired in February 2010 and now known as AbbVie Products LLC) and others are consolidated for pre-trial purposes in the United States District Court for the Northern District of Georgia under the Multi-District Litigation (MDL) Rules as In re: AndroGel Antitrust Litigation MDL No. 2084. These cases, brought by private plaintiffs and the Federal Trade Commission (FTC), generally allege Solvay's patent litigation involving AndroGel was sham litigation and the 2006 patent litigation settlement agreements and related agreements with three generic companies violate federal antitrust laws. Plaintiffs generally seek monetary damages and/or injunctive relief and attorneys' fees. These cases include: (a) four individual plaintiff lawsuits; (b) three purported class actions; and (c) Federal Trade Commission v. Actavis, Inc. et al. Following the district court's dismissal of all plaintiffs' claims, appellate proceedings led to the reinstatement of the claims regarding the patent litigation settlements, which are proceeding in the district court.


88    |2017 Form 10-K



Lawsuits are pending against AbbVie and others generally alleging that the 2005 patent litigation settlement involving Niaspan entered into between Kos Pharmaceuticals, Inc. (a company acquired by Abbott in 2006 and presently a subsidiary of AbbVie) and a generic company violatesviolated federal and state antitrust laws and state unfair and deceptive trade practices and unjust enrichment laws. Plaintiffs generally seek monetary damages and/or injunctive relief and attorneys' fees. The lawsuits pending in federal court consist of foursix individual plaintiff lawsuits and two consolidated purporteda certified class actions: one broughtaction by three namedNiaspan direct purchasers of Niaspan and the other brought by ten named end-payer purchasers of Niaspan.purchasers. The cases are consolidated for pre-trial proceedingspending in the United States District Court for the Eastern District of Pennsylvania for coordinated or consolidated pre-trial proceedings under the MDL Rules as In re: Niaspan Antitrust Litigation, MDL No. 2460. In October 2016, the Orange County, California District Attorney’s Office filed a lawsuit on behalf of the State of California filed a lawsuit regarding the Niaspan patent
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90
litigation settlement in Orange County Superior Court, asserting a claim under the unfair competition provision of the California Business and Professions Code seeking injunctive relief, restitution, civil penalties and attorneys’ fees.


In September 2014, the FTCAugust 2019, direct purchasers of AndroGel filed suita lawsuit, King Drug Co. of Florence, Inc., et al. v. AbbVie Inc., et al., against AbbVie and others in the United States District Court for the Eastern District of Pennsylvania, against AbbVie and others, alleging that the2006 patent litigation settlements and related agreements by Solvay Pharmaceuticals, Inc. (a company Abbott acquired in February 2010 and now known as AbbVie Products LLC) with three generic companies violated federal antitrust law, and also alleging that 2011 patent litigation by Abbott with two generic companies regarding AndroGel was sham litigation and the settlements of those litigations violated federal antitrust law. Plaintiffs generally seek monetary damages and/or injunctive relief and attorneys’ fees. In November 2022, the State of Oregon filed a lawsuit in the Multnomah County, Oregon Circuit Court making similar allegations regarding the 2011 patent litigation settlement with one of thosethe generic companies violatescompanies.

Lawsuits were filed against Forest Laboratories, LLC and others generally alleging that 2012 and 2013 patent litigation settlements involving Bystolic with six generic manufacturers violated federal and state antitrust laws and state unfair and deceptive trade practices and unjust enrichment laws. The FTC's complaint seeksPlaintiffs generally seek monetary damages and/or injunctive relief and injunctive relief.attorneys’ fees. The lawsuits, purported class actions filed on behalf of direct and indirect purchasers of Bystolic, were consolidated as In May 2015, the court dismissed the FTC's claim regarding the patent litigation settlement.

In March 2015, the State of Louisiana filed a lawsuit, State of Louisiana v. Fournier Industrie et Sante, et al., against AbbVie, Abbott and affiliated Abbott entities in Louisiana state court. Plaintiff alleges that patent applications and patent litigation filed and other alleged conduct from the early 2000's and before related to the drug TriCor violated Louisiana State antitrust and unfair trade practices laws. The lawsuit seeks monetary damages and attorneys' fees.

In November 2014, a putative class action lawsuit, Medical Mutual of Ohio v. AbbVie Inc., et al., was filed against several manufacturers of testosterone replacement therapies (TRTs), including AbbVie,re: Bystolic Antitrust Litigation in the United States District Court for the NorthernSouthern District of Illinois on behalf of all insurance companies, health benefit providers,New York. In February 2023, the court granted Forest Laboratories’ motion to dismiss the cases, dismissing them with prejudice. Plaintiffs are appealing the court’s motion to dismiss ruling.
Government Proceedings
Lawsuits are pending against Allergan and several other third party payers who paid for TRTs, including AndroGel. The claims asserted include violationsmanufacturers generally alleging that they improperly promoted and sold prescription opioid products. Approximately 590 lawsuits are pending against Allergan in federal and state courts. Most of the federal RICO Act and state consumer fraud and deceptive trade practices laws. The complaint seeks monetary damages and injunctive relief.

Product liability cases are pending in which plaintiffs generally allege that AbbVie and other manufacturers of TRTs did not adequately warn about risks of certain injuries, primarily heart attacks, strokes and blood clots. Approximately 4,300 claimscourt lawsuits are consolidated for pre-trial purposes in the United States District Court for the Northern District of IllinoisOhio under the MDL Rulesrules as In re: Testosterone Replacement Therapy Products LiabilityNational Prescription Opiate Litigation, MDL No. 2545.2804. Approximately 210 claims140 of the lawsuits are pending in various state courts. PlaintiffsThe plaintiffs in these lawsuits, which include states, counties, cities, other municipal entities, Native American tribes, union trust funds and other third-party payors, private hospitals and personal injury claimants, generally seek compensatory and punitive damages. Of these approximately 590 lawsuits, approximately 175 of them are brought by states, counties, cities, and other municipal entities, approximately 140 of which are in the process of being dismissed pursuant to the previously announced settlement for which AbbVie recorded a charge of $2.1 billion to selling, general and administrative expense in the consolidated statement of earnings in the second quarter of 2022.

In July 2017,March 2023, AbbVie Inc. filed a jurypetition in the United States Tax Court, AbbVie Inc. and Subsidiaries v. Commissioner of Internal Revenue. The petition disputes the Internal Revenue Service determination concerning a $572 million income tax benefit recorded in 2014 related to a payment made to a third party for the termination of a proposed business combination.
Shareholder and Securities Litigation
In October 2018, a federal securities lawsuit, Holwill v. AbbVie Inc., et al., was filed in the United States District Court for the Northern District of Illinois reached a verdictagainst AbbVie, its chief executive officer and former chief financial officer, alleging that reasons stated for Humira sales growth in the first case to be tried. The jury found for AbbVie on the plaintiff's strict liabilityfinancial filings between 2013 and negligence claims2018 were misleading because they omitted alleged misconduct in connection with Humira patient and for the plaintiff on the plaintiff's fraud claim. The jury awarded no compensatory damages, but did award plaintiffs $150 million in punitive damages.reimbursement support services and other services and items of value that allegedly induced Humira prescriptions. In December 2017,September 2021, the court vacated the jury’s verdictgranted plaintiffs' motion to certify a class.

Lawsuits were filed against Allergan and punitive damage award on the fraud claimcertain of its former officers alleging they made misrepresentations and ordered a new trial on that claim. In a second case, a jury in the United States District Court for the Northern District of Illinois reached a verdict for AbbVie in August 2017 on all claims,omissions regarding Allergan's textured breast implants. The lawsuits, which is the subject of post-trial proceedings. In another case, a jury in the United States District Court for the Northern District of Illinois reached a verdict for AbbVie in October 2017 on strict liability but for the plaintiff on remaining claims and awarded $140,000 in compensatory damages and $140 million in punitive damages, which is the subject of post-trial proceedings. In a separate case, a jury in the United States District Court for the Northern District of Illinois reached a verdict for AbbVie in January 2018 on all claims.

Product liability cases are pending in which plaintiffs generally allege that AbbVie did not adequately warn about risk of certain injuries, primarily various birth defects, arising from use of Depakote. Over ninety percent of the approximately 635 claims are pendingwere filed by Allergan shareholders, have been consolidated in the United States District Court for the Southern District of Illinois, and the rest are pending in various other federal and state courts. PlaintiffsNew York as In re: Allergan plc Securities Litigation. The plaintiffs generally seek compensatory damages and punitive damages.attorneys’ fees. In September 2019, the court partially granted Allergan's motion to dismiss. In September 2021, the court granted plaintiffs' motion to certify a class. In December 2022, the court granted Allergan's motion for summary judgment on the remaining claims, dismissing them with prejudice. Plaintiffs are appealing the court's motion to dismiss and summary judgment rulings.


In November 2014, five individuals filed a putative class action lawsuit, Rubinstein, et al. vMay and July 2022, two shareholder derivative lawsuits, Treppel Family Trust v. Gonzalez et al., on behalf of purchasers and sellers of certain Shire plc (Shire) securities between June 20 and October 14, 2014, against AbbVie and its chief executive officerKatcher v. Gonzalez, et al., were filed in the United States District Court for the Northern District of Illinois, alleging that certain AbbVie directors and officers breached fiduciary and other legal duties in making or allowing alleged misstatements regarding the defendants made and/or are responsiblepotential effect that safety information about another company’s product would have on the Food and Drug Administration’s approval and labeling for material misstatements in violation of federal securities laws in connection with AbbVie's proposed transaction with Shire.AbbVie’s Rinvoq.

91
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Product Liability and General Litigation
In June 2016,April 2023, a putative class action lawsuit, Elliott Associates, L.P., et al.Camargo v. AbbVie Inc., was filed by five investment funds against AbbVie in the Cook County,United States District Court for the Northern District of Illinois Circuit Courton behalf of Humira patients who paid for Humira based on its list price or who, after losing insurance coverage, discontinued Humira because they could not pay based on its list price, alleging that AbbVie made misrepresentationsHumira’s list price is excessive in violation of multiple states’ unfair and omissions in connection with its proposed transaction with Shire. Similar lawsuits were filed between Julydeceptive trade practices statutes. The plaintiff generally seeks monetary damages, injunctive relief, and September 2017 against AbbVie and in someattorneys’ fees.

2017 Form 10-K  |    89




instances its chief executive officer in the same court by twelve additional investment funds. Plaintiffs seek compensatory and punitive damages.


In May 2017,2018, a shareholder derivativequi tam lawsuit, EllisU.S. ex rel. Silbersher v. Gonzalez,Allergan Inc., et al., was filed in Delaware Chancery Court, alleging that AbbVie's directors breached their fiduciary duties in connection with statements made regarding the Shire transaction. The lawsuit seeks unspecified compensatory damages for AbbVie, among other relief.

Beginning in May 2016, the Patent Trial & Appeal Board of the U.S. Patent & Trademark Office (PTO) instituted five inter partes review proceedings brought by Coherus Biosciences and Boehringer Ingelheim related to three AbbVie patents covering methods of treatment of rheumatoid arthritis using adalimumab. In these proceedings, the PTO reviewed the validity of the patents and issued decisions of invalidity in May, June and July of 2017. AbbVie’s appeal of the decisions is pending in the Court of Appeals for the Federal Circuit.

In March 2017, AbbVie filed a lawsuit, AbbVie Inc. v. Novartis Vaccines and Diagnostics, Inc. and Grifols Worldwide Operations Ltd., in the United States District Court for the Northern District of California against Novartis Vaccinesseveral Allergan entities and Grifols Worldwide seeking a declaratory judgmentothers, alleging that eleven HCV-related patents licensedtheir conduct before the U.S. Patent Office resulted in false claims for payment being made to AbbViefederal and state healthcare payors for Namenda XR and Namzaric. The plaintiff-relator sought damages and attorneys' fees under the federal False Claims Act and state law analogues. The federal government and state governments declined to intervene in 2002 are invalid.the lawsuit. In March 2023, the court granted Allergan’s motion to dismiss, dismissing plaintiff-relator’s federal law claims with prejudice and state law claims without prejudice. The plaintiff-relator is appealing the court’s motion to dismiss ruling.

Intellectual Property Litigation
AbbVie Inc. is seeking to enforce certain patent rights related to adalimumab (a drug AbbVie sells under the trademark HUMIRA®). In a case filed in United States District Court for the District of Delaware in August 2017, AbbVie alleges that Boehringer Ingelheim International GmbH’s, Boehringer Ingelheim Pharmaceutical, Inc.’s, and Boehringer Ingelheim Fremont, Inc.’s proposed biosimilar adalimumab product infringes certain AbbVie patents. AbbVie seeks declaratory and injunctive relief.

Pharmacyclics LLC, a wholly owned subsidiary of AbbVie, is seeking to enforce its patent rights relating to ibrutinib capsulesvenetoclax (a drug Pharmacyclics sellssold under the trademark IMBRUVICA®)Venclexta). In a caseLitigation was filed in the United States District Court for the District of Delaware on February 1, 2018, Pharmacyclics alleges that Fresenius Kabi USA, LLC, Fresenius Kabi USA,in July 2020 against Dr. Reddy’s Laboratories, Ltd. and Dr. Reddy’s Laboratories, Inc.; and Alembic Pharmaceuticals Ltd., Alembic Pharmaceuticals, Inc., and Fresenius Kabi Oncology Limited’sAlembic Global Holdings SA. AbbVie alleges defendants’ proposed generic ibrutinib product infringes Pharmacyclics’venetoclax products infringe certain patents and Pharmacyclics seeks declaratory and injunctive relief. Janssen Biotech,Genentech, Inc., which is in a global collaboration with PharmacyclicsAbbVie concerning the development and marketing of IMBRUVICA,Venclexta, is the co-plaintiff in this suit.

AbbVie Inc. is seeking to enforce patent rights relating to upadacitinib (a drug sold under the trademark Rinvoq). Litigation was filed in the United States District Court for the District of Delaware in November 2023 against Hetero USA, Inc., Hetero Labs Limited, Hetero Labs Limited Unit-V, Aurobindo Pharma USA, Inc., Aurobindo Pharma Ltd., Sandoz, Inc. Sandoz Private Limited, Sandoz GMBH, Intas Pharmaceuticals Ltd., Accord Healthcare, Inc., and Sun Pharmaceutical Industries, Ltd. AbbVie alleges defendants’ proposed generic upadacitinib products infringe certain patents and seeks declaratory and injunctive relief.
Note 1516 Segment and Geographic Area Information
AbbVie operates as a single global business segment dedicated to the research and development, manufacturing, commercialization and sale of innovative medicines and therapies. This operating structure enables the Chief Executive Officer, as chief operating decision maker (CODM), to allocate resources and assess business performance on a global basis in oneorder to achieve established long-term strategic goals. Consistent with this structure, a global research and development and supply chain organization is responsible for the discovery, manufacturing and supply of products. Commercial efforts that coordinate the marketing, sales and distribution of these products are organized by geographic region or therapeutic area. All of these activities are supported by a global corporate administrative staff. The determination of a single business segment—pharmaceutical products. segment is consistent with the consolidated financial information regularly reviewed by the CODM for purposes of assessing performance, allocating resources and planning and forecasting future periods.

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92
Substantially all of AbbVie's pharmaceutical product net revenues in the United States are to three wholesalers. Outside the United States, products are sold primarily to health care providers or through distributors, depending on the market served. The following tables detail AbbVie's worldwide net revenues:
years ended December 31 (in millions)2017 2016 2015
HUMIRA$18,427
 $16,078
 $14,012
IMBRUVICA2,573
 1,832
 754
HCV1,274
 1,522
 1,639
Lupron829
 821
 826
Creon831
 730
 632
Synagis738
 730
 740
Synthroid781
 763
 755
AndroGel577
 675
 694
Kaletra423
 549
 700
Sevoflurane410
 428
 474
Duodopa355
 293
 231
All other998
 1,217
 1,402
Total net revenues$28,216
 $25,638
 $22,859


years ended December 31 (in millions)202320222021
Immunology
HumiraUnited States$12,160 $18,619 $17,330 
International2,244 2,618 3,364 
Total$14,404 $21,237 $20,694 
SkyriziUnited States$6,753 $4,484 $2,486 
International1,010 681 453 
Total$7,763 $5,165 $2,939 
RinvoqUnited States$2,824 $1,794 $1,271 
International1,145 728 380 
Total$3,969 $2,522 $1,651 
Oncology
ImbruvicaUnited States$2,665 $3,426 $4,321 
Collaboration revenues931 1,142 1,087 
Total$3,596 $4,568 $5,408 
VenclextaUnited States$1,087 $1,009 $934 
International1,201 1,000 886 
Total$2,288 $2,009 $1,820 
EpkinlyCollaboration Revenues$28 $— $— 
International3 — — 
Total$31 $— $— 
Aesthetics
Botox CosmeticUnited States$1,670 $1,654 $1,424 
International1,012 961 808 
Total$2,682 $2,615 $2,232 
Juvederm CollectionUnited States$519 $548 $658 
International859 880 877 
Total$1,378 $1,428 $1,535 
Other AestheticsUnited States$1,060 $1,122 $1,268 
International174 168 198 
Total$1,234 $1,290 $1,466 
Neuroscience
Botox TherapeuticUnited States$2,476 $2,255 $2,012 
International515 464 439 
Total$2,991 $2,719 $2,451 
VraylarUnited States$2,755 $2,037 $1,728 
International4 1 — 
Total$2,759 $2,038 $1,728 
DuodopaUnited States$97 $95 $102 
International371 363 409 
Total$468 $458 $511 
UbrelvyUnited States$803 $680 $552 
International12 — — 
Total$815 $680 $552 
QuliptaUnited States$405 $158 $— 
International3 — — 
Total$408 $158 $— 
9093
Image3.gif|20172023 Form 10-K

years ended December 31 (in millions)202320222021
Other NeuroscienceUnited States$254 $456 $667 
International22 19 18 
Total$276 $475 $685 
Eye Care
OzurdexUnited States$143 $139 $130 
International329 289 288 
Total$472 $428 $418 
Lumigan/GanfortUnited States$173 $242 $273 
International259 272 306 
Total$432 $514 $579 
Alphagan/CombiganUnited States$121 $202 $373 
International151 144 156 
Total$272 $346 $529 
RestasisUnited States$382 $621 $1,234 
International54 45 56 
Total$436 $666 $1,290 
Other Eye CareUnited States$433 $399 $393 
International370 348 358 
Total$803 $747 $751 
Other Key Products
MavyretUnited States$659 $755 $754 
International771 786 956 
Total$1,430 $1,541 $1,710 
CreonUnited States$1,268 $1,278 $1,191 
Linzess/ConstellaUnited States$1,073 $1,003 $1,006 
International35 32 32 
Total$1,108 $1,035 $1,038 
All other$3,035 $4,137 $5,019 
Total net revenues$54,318 $58,054 $56,197 

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94


Net revenues to external customers by geographic area, based on product shipment destination, were as follows:
years ended December 31 (in millions)2017 2016 2015years ended December 31 (in millions)202320222021
United States$18,251
 $15,947
 $13,561
Germany1,157
 1,104
 1,082
United Kingdom807
 776
 688
Canada
Japan764
 770
 599
China
France730
 713
 597
Canada659
 624
 551
Spain521
 589
 618
Italy475
 523
 452
Australia
Brazil410
 355
 376
The Netherlands362
 352
 334
United Kingdom
All other countries4,080
 3,885
 4,001
Total net revenues$28,216
 $25,638
 $22,859
Long-lived assets, primarily net property and equipment, by geographic area were as follows:

as of December 31 (in millions)20232022
United States and Puerto Rico$3,139 $3,243 
Europe1,433 1,369 
All other417 323 
Total long-lived assets$4,989 $4,935 
as of December 31 (in millions)2017 2016
United States and Puerto Rico$1,862
 $1,822
Europe621
 504
All other320

278
Total long-lived assets$2,803
 $2,604


Note 17 Fourth Quarter Financial Results (unaudited)
2017 Form 10-K  |    91




Note 16 Quarterly Financial Data (unaudited)
quarter ended December 31 (in millions except per share data)2023
(in millions except per share data)2017 2016 
First Quarter    
Net revenues$6,538
 $5,958
 
Gross margin4,922
 4,589
 
Net earnings(a)
1,711
 1,354
 
Basic earnings per share$1.07
 $0.83
 
Diluted earnings per share$1.06
 $0.83
 
Cash dividends declared per common share$0.64
 $0.57
 

Second Quarter
    
Net revenues$6,944
 $6,452
 
Gross margin5,416
 5,047
 
Net earnings(b)
1,915
 1,610
 
Basic earnings per share$1.20
 $0.99
 
Diluted earnings per share$1.19
 $0.98
 
Cash dividends declared per common share$0.64
 $0.57
 

Third Quarter
    
Net revenues$6,995
 $6,432
 
Gross margin5,379
 4,928
 
Net earnings(c)
1,631
 1,598
 
Basic earnings per share$1.02
 $0.97
 
Diluted earnings per share$1.01
 $0.97
 
Cash dividends declared per common share$0.64
 $0.57
 

Fourth Quarter
    
Net revenues$7,739
 $6,796
 
Gross margin5,459
 5,241
 
Net earnings(d)
52
 1,391
 
Basic earnings per share$0.03
 $0.86
 
Diluted earnings per share$0.03
 $0.85
 
Cash dividends declared per common share$0.71
 $0.64
 

(a)
First quarter results in 2017 included after-tax costs of $84 million related to the change in fair value of contingent consideration liabilities. First quarter results in 2016 included a net foreign exchange loss of $298 million related to the devaluation of AbbVie’s net monetary assets denominated in the Venezuelan bolivar.

(b)
Second quarter results in 2017 included an after-tax charge of $62 million to increase litigation reserves and after-tax costs of $61 million related to the change in fair value of contingent consideration liabilities. Second quarter results in 2016 included after-tax costs totaling $122 million related to the acquisition of Stemcentrx and BI compounds as well as the amortization of the acquisition date fair value step-up for inventory related to the acquisition of Pharmacyclics.

(c)
Third quarter results in 2017 included after-tax costs of $401 million related to the change in fair value of contingent consideration liabilities. Third quarter results in 2016 included after-tax costs of $104 million related to the change in fair value of contingent consideration liabilities.

(d)
Net revenues
Fourth quarter results in 2017 were impacted by net charges related$
14,301 
Gross margin8,597 
Net earnings attributable to the December 2017 enactment of the Tax Cuts and Jobs Act, including an after-tax charge of $4.5 billion relatedAbbVie Inc.822 
Basic earnings per share attributable to the one-time mandatory repatriation of previously untaxedAbbVie Inc.$0.46 
Diluted earnings of foreign subsidiaries, partially offset by after-tax benefits of per share attributable to AbbVie Inc.$3.3 billion due to0.46 
Cash dividends declared per common share$1.55 

9295
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remeasurement of net deferred tax liabilities and other related impacts. Additional after-tax costs that impacted fourth quarter results in 2017 included $244 million for an intangible asset impairment charge, $221 million for a charge to increase litigation reserves, $205 million as a result of entering into a global strategic collaboration with Alector, Inc. and $79 million related to the change in fair value of contingent consideration liabilities. These costs were partially offset by an after-tax benefit of $91 million due to a tax audit settlement. Fourth quarter results in 2016 included after-tax costs totaling $187 million associated with a tax law change for regulations issued in the fourth quarter of 2016 that revised the treatment of foreign currency translation gains and losses for certain operations as well as after-tax costs totaling $85 million related to the change in fair value of contingent consideration liabilities.

2017 Form 10-K  |    93




Report Ofof Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of AbbVie Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of AbbVie Inc. and subsidiaries (the Company) as of December 31, 20172023 and 2016, and2022, the related consolidated statements of earnings, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2017,2023, and the related notes (collectively referred to as the “financial“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company at December 31, 20172023 and 2016,2022, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2017,2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2017,2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 16, 201820, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures tothat respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financialstatements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
2023 Form 10-K | abbvieimage3.gif
96
Sales rebate accruals for Medicaid, Medicare and managed care programs
Description of the Matter
As discussed in Note 2 to the consolidated financial statements under the caption “Revenue Recognition,” the Company established provisions for sales rebates in the same period the related product is sold. At December 31, 2023, the Company had $13,627 million in sales rebate accruals, a large portion of which were for rebates provided to pharmacy benefit managers, state government Medicaid programs, insurance companies that administer Medicare drug plans and private entities for Medicaid, Medicare and managed care programs. In order to establish these sales rebate accruals, the Company estimated its rebates based upon the identification of the products subject to a rebate, the applicable price and rebate terms and the estimated lag time between the sale and payment of the rebate.
Auditing the Medicaid, Medicare and managed care sales rebate accruals was complex and required significant auditor judgment because the accruals consider multiple subjective and complex estimates and assumptions. These estimates and assumptions included the estimated inventory in the distribution channel, which impacts the lag time between the sale to the customer and payment of the rebate and the final payer related to product sales, which impacts the applicable price and rebate terms. In deriving these estimates and assumptions, the Company used both internal and external sources of information to estimate product in the distribution channels, payer mix, prescription volumes and historical experience. Management supplemented its historical data analysis with qualitative adjustments based upon changes in rebate trends, rebate programs and contract terms, legislative changes, or other significant events which indicate a change in the reserve is appropriate.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s sales rebate accruals for Medicaid, Medicare and managed care programs. This included testing controls over management’s review of the significant assumptions and other inputs used in the estimation of Medicaid, Medicare and managed care rebates, among others, including the significant assumptions discussed above. The testing was inclusive of management’s controls to evaluate the accuracy of its reserve judgments to actual rebates paid, rebate validation and processing, and controls to ensure that the data used to evaluate and support the significant assumptions was complete, accurate and, where applicable, verified to external data sources.
To test the sales rebate accruals for Medicaid, Medicare and managed care programs, our audit procedures included, among others, understanding and evaluating the significant assumptions and underlying data used in management’s calculations. Our testing of significant assumptions included corroboration to external data sources. We evaluated the reasonableness of assumptions considering industry and economic trends, product profiles, and other regulatory factors. We assessed the historical accuracy of management’s estimates by comparing actual activity to previous estimates and performed analytical procedures, based on internal and external data sources, to evaluate the completeness of the reserves. For Medicaid, we involved a specialist with an understanding of statutory reimbursement requirements to assess the consistency of the Company’s calculation methodologies with applicable government regulations and policy.
97
Image3.gif|2023 Form 10-K
Valuation of contingent consideration
Description of the Matter
As discussed in Note 2 to the consolidated financial statements under the caption “Business Combinations” and in Note 11 under the caption “Fair Value Measures,” the Company recognized contingent consideration liabilities at the estimated fair value on the acquisition date in connection with applying the acquisition method of accounting for business combinations. Subsequent changes to the fair value of the contingent consideration liabilities were recorded within the consolidated statement of earnings in the period of change. At December 31, 2023, the Company had $19,890 million in contingent consideration liabilities, which represented a ‘Level 3’ fair value measurement in the fair value hierarchy due to the significant unobservable inputs used in determining the fair value and the use of management judgment about the assumptions market participants would use in pricing the liabilities.
Auditing the valuation of contingent consideration liabilities was complex and required significant auditor judgment due to the use of a Monte Carlo simulation model and the high degree of subjectivity in evaluating certain assumptions required to estimate the fair value of contingent royalty payments. In particular, the fair value measurement was sensitive to the significant assumptions underlying the estimated amount of future sales of the acquired products. Management utilized its expertise within the industry, including commercial dynamics, trends and utilization, as well as knowledge of clinical development and regulatory approval processes to determine certain of these assumptions.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s contingent consideration liabilities process including, among others, management’s process to establish the significant assumptions and measure the liability. This included testing controls over management’s review of the significant assumptions and other inputs used in the determination of fair value. The testing was inclusive of key management review controls to monitor and evaluate clinical development of the acquired products and estimated future sales, and controls to ensure that the data used to evaluate and support the significant assumptions was complete, accurate and, where applicable, verified to external data sources.
To test the estimated fair value of contingent consideration liabilities, our audit procedures included, among others, inspecting the terms of the executed agreement, assessing the Monte Carlo simulation model used and testing the key contractual inputs and significant assumptions discussed above. We evaluated the assumptions and judgments considering observable industry and economic trends and standards, external data sources and regulatory factors. Estimated amounts of future sales were evaluated for reasonableness in relation to internal and external analyses, clinical development progress and timelines, probability of success benchmarks, and regulatory notices. Our procedures included evaluating the data sources used by management in determining its assumptions and, where necessary, included an evaluation of available information that either corroborated or contradicted management’s conclusions. We involved a valuation specialist to assess the Company’s Monte Carlo simulation model and to perform corroborative fair value calculations.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2013.
Chicago, Illinois
February 16, 201820, 2024



94    |20172023 Form 10-K

| abbvieimage3.gif
98


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures; Internal Control Over Financial Reporting
        Evaluation of disclosure controls and procedures.    The Chief Executive Officer, Richard A. Gonzalez, and the Chief Financial Officer, William J. Chase,Scott T. Reents, evaluated the effectiveness of AbbVie's disclosure controls and procedures as of the end of the period covered by this report, and concluded that AbbVie's disclosure controls and procedures were effective to ensure that information AbbVie is required to disclose in the reports that it files or submits with the Securities and Exchange Commission under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms, and to ensure that information required to be disclosed by AbbVie in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to AbbVie's management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
        Changes in internal control over financial reporting.   There were no changes in AbbVie's internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that have materially affected, or are reasonably likely to materially affect, AbbVie's internal control over financial reporting during the quarter ended December 31, 2017.2023.
        Inherent limitations on effectiveness of controls.    AbbVie's management, including its Chief Executive Officer and its Chief Financial Officer, do not expect that AbbVie's disclosure controls or internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.
The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
        Management's annual report on internal control over financial reporting.    Management of AbbVie is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. AbbVie's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States. However, all internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and reporting.
Management assessed the effectiveness of AbbVie's internal control over financial reporting as of December 31, 2017.2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 framework). Based on that assessment, management concluded that AbbVie maintained effective internal control over financial reporting as of December 31, 2017,2023, based on the COSO criteria.
The effectiveness of AbbVie's internal control over financial reporting as of December 31, 20172023 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their attestation report below, which expresses an unqualified opinion on the effectiveness of AbbVie's internal control over financial reporting as of December 31, 2017.2023.

2017 Form 10-K  |    95





Report of independent registered public accounting firm. The report of AbbVie's independent registered public accounting firm related to its assessment of the effectiveness of internal control over financial reporting is included below.



9699
Image3.gif|20172023 Form 10-K



Report Ofof Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of AbbVie Inc.
Opinion on Internal Control overOver Financial Reporting
We have audited AbbVie Inc. and subsidiaries' internal control over financial reporting as of December 31, 2017,2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, AbbVie Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of AbbVie Inc. and subsidiariesthe Company as of December 31, 20172023 and 2016, and2022, the related consolidated statements of earnings, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2017,2023, and the related notes of the Company and our report dated February 16, 201820, 2024 expressed an unqualified opinion thereon.
Basis offor Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Annual Reportannual report on Internal Controlinternal control over Financial Reporting.financial reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations onof Internal Control Over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Chicago, Illinois
February 16, 2018


2017 Form 10-K  |    97




ITEM 9B. OTHER INFORMATION
None.


20, 2024
2023 Form 10-K | abbvieimage3.gif
100
ITEM 9B. OTHER INFORMATION
During the three months ended December 31, 2023, no director or officer of the company adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K, except as provided below.
Name & TitleAction TakenDate Adopted
Type of Trading Arrangement (1)
Aggregate Number of Shares to be Sold Pursuant to Trading Arrangement (2)
Duration of Trading Arrangement(3)
Perry C. Siatis
Executive Vice President,
General Counsel and
Secretary		Adoption11/01/2023Rule 10b5-1 Trading ArrangementUp to 31,549 Shares to be Sold08/30/2024
Timothy J. Richmond
Executive Vice President,
Chief Human Resources
Officer		Adoption11/13/2023Rule 10b5-1 Trading ArrangementUp to 122,957 Shares to be Sold12/31/2024
1.    Except as indicated by footnote, each trading arrangement marked as a "Rule 10b5-1 Trading Arrangement" is intended to satisfy the affirmative defense of Rule 10b5-1(c), as amended.
2.    The number of shares to be sold under each trading arrangement represents the maximum actual number of shares issuable under the applicable performance stock awards. The actual number of shares to be sold under each trading arrangement will depend on the achievement of applicable performance conditions under the performance stock awards and the number of shares withheld to satisfy tax obligations upon the vesting of the awards.
3.    Except as indicated by footnote, each trading arrangement permitted or permits transactions through and including the earlier to occur of (a) the completion of all sales or (b) the date listed in the table. Each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” only permitted or only permits transactions upon expiration of the applicable mandatory cooling-off period under the Rule.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not Applicable.
98
101
Image3.gif|20172023 Form 10-K



PART III


ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Incorporated herein by reference are "Information Concerning Director Nominees," "The Board of Directors and its Committees—Committees of the Board of Directors," "Section 16(a) Beneficial Ownership Reporting Compliance,"Communicating with the Board of Directors," and "Procedure"Deadlines for Recommendation and NominationNotice of Directors and TransactionStockholder Actions to be Considered at the 2024 Annual Meeting of Business at Annual Meeting"Stockholders" to be included in the 20182024 AbbVie Inc. Proxy Statement. The 20182024 Definitive Proxy Statement will be filed on or about March 19, 2018.18, 2024. Also incorporated herein by reference is the text found in this Form 10-K under the caption, "Executive Officers of the Registrant."Information about Our Executive Officers."
AbbVie's code of business conduct requires all its business activities to be conducted in compliance with all applicable laws, regulations and ethical principles and values. All directors, officers and employees of AbbVie are requiredexpected to read, understand and abide by the requirements of the code of business conduct applicable to them. AbbVie's code of business conduct is available in the corporate governance section of AbbVie's investor relations website at www.abbvieinvestor.com.
Any waiver of the code of business conduct for directors or executive officers may be made only by AbbVie's audit committee. AbbVie will disclose any amendment to, or waiver from, a provision of the code of conduct for the principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on its website within four business days following the date of the amendment or waiver. In addition, AbbVie will disclose any waiver from the code of business conduct for the other executive officers and for directors on the website.
AbbVie has a chief ethics and compliance officer who reports to the chief executive officerExecutive Vice President, General Counsel and Secretary and to the public policy committee. The chief ethics and compliance officer is responsible for overseeing, administering and monitoring AbbVie's compliance program.

ITEM 11. EXECUTIVE COMPENSATION
The material to be included in the 20182024 AbbVie Inc. Proxy Statement under the headings "Director Compensation," "Executive Compensation," and "Compensation Committee Report" is incorporated herein by reference. The 20182024 Definitive Proxy Statement will be filed on or about March 19, 2018.

18, 2024.
20172023 Form 10-K|abbvieimage3.gif99

102



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
(a)    Equity Compensation Plan Information.
The following table presents information as of December 31, 20172023 about AbbVie's equity compensation plans under which AbbVie common stock has been authorized for issuance:
Plan Category(a)
 Number of
 securities to be
 issued upon
 exercise of
 outstanding
 options,
 warrants and
 rights (1)		(b)
 Weighted-
 average exercise price of
 outstanding options,
 warrants and
 rights (2)		(c)
 Number of securities remaining available for
 future issuance under equity compensation plans (excluding securities
reflected in
 column (a)) (3)
Equity compensation plans approved by security holders18,219,985 $102.80 62,004,889 
Equity compensation plans not approved by security holders— — — 
Total18,219,985 $102.80 62,004,889 
(1)Includes 12,197 shares issuable under AbbVie's Incentive Stock Program pursuant to awards granted by Abbott and adjusted into AbbVie awards in connection with AbbVie's separation from Abbott.
(2)The weighted-average exercise price does not include outstanding restricted stock units, restricted stock awards and performance shares that have no exercise price.
(3)Excludes shares issuable upon the exercise of stock options and pursuant to other rights granted under the Stemcentrx 2011 Equity Incentive Plan, which was assumed by AbbVie upon the consummation of its acquisition of Stemcentrx, Inc. As of December 31, 2023, 41,212 options remained outstanding under this plan. The options have a weighted-average exercise price of $18.02. No further awards will be granted under this plan.
(b)Information Concerning Security Ownership.    Incorporated herein by reference is the material under the heading "Securities Ownership—Securities Ownership of Executive Officers and Directors" in the 2024 AbbVie Inc. Proxy Statement. The 2024 Definitive Proxy Statement will be filed on or about March 18, 2024.
Plan Category
(a)
 Number of
 securities to be
 issued upon
 exercise of
 outstanding
 options,
 warrants and
 rights (1)
 
(b)
 Weighted-
 average exercise
 price of
 outstanding
 options,
 warrants and
 rights (2)
 
(c)
 Number of
 securities
 remaining
 available for
 future issuance
 under equity
 compensation
 plans (excluding
 securities
 reflected in
 column (a)) (3)
Equity compensation plans approved by security holders18,770,467
 $41.69
 73,405,945
Equity compensation plans not approved by security holders—
 —
 —
Total18,770,467
 $41.69
 73,405,945
(1)Includes 3,350,775 shares issuable under AbbVie's Incentive Stock Program pursuant to awards granted by Abbott and adjusted into AbbVie awards in connection with AbbVie's separation from Abbott.
(2)The weighted-average exercise price does not include outstanding restricted stock units, restricted stock awards and performance shares that have no exercise price.
(3)Excludes shares issuable upon the exercise of stock options and pursuant to other rights granted under the Stemcentrx 2011 Equity Incentive Plan, which was assumed by AbbVie upon the consummation of its acquisition of Stemcentrx, Inc. As of December 31, 2017, 562,497 options remained outstanding under this plan. The options have a weighted-average exercise price of $13.62. No further awards will be granted under this plan.
(b)
Information Concerning Security Ownership.    Incorporated herein by reference is the material under the heading "Securities Ownership—Securities Ownership of Executive Officers and Directors" in the 2018 AbbVie Inc. Proxy Statement. The 2018 Definitive Proxy Statement will be filed on or about March 19, 2018.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The material to be included in the 20182024 AbbVie Inc. Proxy Statement under the headings "The Board of Directors and its Committees," "Corporate Governance Materials," and "Procedures for Approval of Related Person Transactions" is incorporated herein by reference. The 20182024 Definitive Proxy Statement will be filed on or about March 19, 2018.18, 2024.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The material to be included in the 20182024 AbbVie Inc. Proxy Statement under the headings "Audit Fees and Non-Audit Fees" and "Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of the Independent Registered Public Accounting Firm" is incorporated herein by reference. The 20182024 Definitive Proxy Statement will be filed on or about March 19, 2018.

18, 2024.
100103
Image3.gif|20172023 Form 10-K



PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)Documents filed as part of this Form 10-K.
(1)Financial Statements:    See Item 8, "Financial Statements and Supplementary Data" for a list of financial statements.
(2)Financial Statement Schedules:    All schedules omitted are inapplicable or the information required is shown in the consolidated financial statements or notes thereto.
(3)Exhibits Required by Item 601 of Regulation S-K:    The information called for by this paragraph is set forth in Item 15(b) below.

(b)    Exhibits:

(a)Documents filed as part of this Form 10-K.
(1)
Financial Statements:    See Item 8, "Financial Statements and Supplementary Data," on page 47 hereof, for a list of financial statements.
(2)
Financial Statement Schedules:    All schedules omitted are inapplicable or the information required is shown in the consolidated financial statements or notes thereto.
(3)
Exhibits Required by Item 601 of Regulation S-K:    The information called for by this paragraph is set forth in Item 15(b) below.

(b)Exhibits:

Exhibit
Number
Exhibit Description
2.1

2.2

*Amendment No. 1, dated as of May 28, 2016, to the Agreement and Plan of Merger, dated as of April 25, 2016, by and among Stemcentrx, Inc., AbbVie Inc., Sirius Sonoma Corporation, AbbVie Stemcentrx LLC (formerly Sirius Sonoma LLC) and, solely for the purposes set forth therein, Fertile Valley LLC (incorporated by reference to Exhibit 2.2 of AbbVie’scompany’s Current Report on Form 8-K filed on June 1, 2016)25, 2019).
2.2
2.3

2.4
2.43.1

3.1

*Amended and Restated Certificate of Incorporation of AbbVie Inc. (incorporated by reference to Exhibit 3.1 of the company's Current Report on Form 8-K filed on January 2, 2013).
3.2

4.1

4.2
4.24.3

4.34.4

4.44.5

4.54.6

4.64.7

2023 Form 10-K | abbvieimage3.gif
104
Exhibit
Number
Exhibit Description
4.8
4.9
4.10
4.11
4.12

2017 Form 10-K  |    101




Exhibit
Number4.13
Exhibit Description

*SupportAgency Agreement, by anddated September 26, 2019, among AbbVie Inc., Oxford Amherst CorporationU.S. Bank National Association, as trustee, transfer agent and Robert W. Duggan datedregistrar, and Elavon Financial Services DAC, U.K. Branch, as of March 4, 2015paying agent (incorporated by reference to Exhibit 4.14.3 of the company'scompany’s Current Report on Form 8-K filed on March 6, 2015)September 26, 2019).
4.14
4.15
4.16
10.1

10.2

10.3

10.4

*AbbVie Deferred Compensation Plan, as amended and restated (incorporated by reference to Exhibit 10.5 of the company's Annual Report on Form 10-K filed on February 17, 2017)for the fiscal year ended December 31, 2016).**
10.510.4

10.6

*AbbVie Supplemental Pension Plan (incorporated by reference to Exhibit 10.7 of the company's Annual Report on Form 10-K filed on February 17, 2017).**
10.7

*AbbVie Supplemental Savings Plan, as amended and restated (incorporated by reference to Exhibit 10.8 of the company's Annual Report on Form 10-K filed on February 19, 2016). **
10.8

*Form of AbbVie Inc. Non-Employee Director Non-Qualified Stock Option Agreement (incorporated by reference to Exhibit 10.310.2 of the company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2013)September 30, 2022).**
10.910.5

10.10

*Form of AbbVie Inc. Performance Restricted Stock Agreement (Annual) (incorporated by reference to Exhibit 10.5 of the company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2013).**
10.11

*Form of AbbVie Inc. Performance Restricted Stock Agreement (Interim) (incorporated by reference to Exhibit 10.6 of the company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2013).**
10.12

*Form of AbbVie Inc. Non-Qualified Stock Option Agreement (incorporated by reference to Exhibit 10.7 of the company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2013).**
10.13

*Form of AbbVie Inc. Non-Employee Director Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.1 of the company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016).**
10.1410.6

10.1510.7

10.16

*Form of AbbVie Inc. Retention Restricted Stock Unit Agreement - Ratable Vesting (incorporated by reference to Exhibit 10.4 of the company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016).**
10.17

*Form of AbbVie Inc. Retention Restricted Stock Agreement - Cliff Vesting (incorporated by reference to Exhibit 10.5 of the company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016).**
10.18

*Form of AbbVie Inc. Retention Restricted Stock Agreement - Ratable Vesting (incorporated by reference to Exhibit 10.6 of the company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016).**
10.19

*Form of AbbVie Inc. Performance Share Award Agreement (incorporated by reference to Exhibit 10.7 of the company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016).**
10.20

*Form of AbbVie Inc. Performance-Vested Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.8 of the company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016).**
10.21

*Form of AbbVie Inc. Non-Employee Director Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.1 of the company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017).**

102    |2017 Form 10-K

10.8


Exhibit
Number
Exhibit Description
10.22

*Form of AbbVie Inc. Non-Qualified Stock Option Agreement (incorporated by reference to Exhibit 10.2 of the company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017).**
10.2310.9

10.24105

Image3.gif|2023 Form 10-K
Exhibit
Number
Exhibit Description
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19

10.2510.20

10.26

AbbVie Non-Employee Directors' Fee Plan, as amended and restated.**
10.27

*Stemcentrx 2011 Equity Incentive Plan (incorporated by reference to Exhibit 4.3 of the Company’s Registration Statement on Form S-8 filed on June 16, 2016).**
10.28

*Pharmacyclics, Inc. 2014 Equity Incentive Award Plan (incorporated by reference to Exhibit 4.1 of the company's Registration Statement on Form S-8 filed on May 27, 2015).**
10.29

*Revolving Credit Agreement dated as of August 18, 2014, among AbbVie Inc., AbbVie Private Limited, AbbVie Holdings Private Limited, JPMorgan Chase Bank, N.A. and the lenders and other parties party thereto (incorporated by reference to Exhibit 10.2 of the company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021).**
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
2023 Form 10-K | abbvieimage3.gif
106
Exhibit
Number
Exhibit Description
10.32
10.33
10.34
10.35
10.36
10.37
10.38
10.39
10.40
10.3021

10.31

*Three-Year Term Loan Agreement, dated as of September 25, 2015, among AbbVie, Bank of America, N.A. and the lenders and other parties party thereto (incorporated by reference to Exhibit 10.1 of the company's Current Report on Form 8-K filed on September 29, 2015).
10.32

*Underwriting Agreement, dated as of May 5, 2015, by and among AbbVie Inc. and Morgan Stanley & Co. LLC, Barclays Capital Inc., Deutsche Bank Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the several other underwriters named therein (incorporated by reference to Exhibit 1.1 of the company's Current Report on Form 8-K filed on May 7, 2015).
10.33

*Underwriting Agreement, dated as of May 9, 2016, by and among AbbVie Inc., and Barclays Capital Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the several underwriters named in Schedule II thereto (incorporated by reference to Exhibit 1.1 of AbbVie’s Current Report on Form 8-K filed on May 12, 2016).
10.34

*Underwriting Agreement, dated as of November 14, 2016, by and among AbbVie Inc., and Barclays Bank PLC, Deutsche Bank AG, London Branch, J.P. Morgan Securities plc, Merrill Lynch International and Morgan Stanley & Co. International plc, as representatives of the several other underwriters named therein (incorporated by reference to Exhibit 1.1 of the company's Current Report on Form 8-K filed on November 17, 2016).
12.1

Ratio of Earnings to Fixed Charges
12.2

Computation of Ratio of Earnings to Fixed Charges
21

Subsidiaries of AbbVie Inc.
23

31.1

31.2

32.1

32.2

101
97

101The following financial statements and notes from the AbbVie Inc. Annual Report on Form 10-K for the year ended December 31, 20172023 filed on February 16, 2018,20, 2024, formatted in XBRL:Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Earnings; (ii) Consolidated Statements of Comprehensive Income; (iii) Consolidated Balance Sheets; (iv) Consolidated Statements of Equity; (v) Consolidated Statements of Cash Flows; and (vi) the Notes to Consolidated Financial Statements.
104
Cover Page Interactive Data File (the cover page from the AbbVie Inc. Annual Report on Form 10-K formatted as Inline XBRL and contained in Exhibit 101).
The AbbVie Inc. 20182023 Definitive Proxy Statement will be filed with the Securities and Exchange Commission under separate cover on or about March 19, 2018.18, 2024.



*    Incorporated herein by reference. Commission file number 001-35565.
2017 Form 10-K  |    103

**    Denotes management contract or compensatory plan or arrangement required to be filed as an exhibit hereto.




*Incorporated herein by reference. Commission file number 001-35565.
**Denotes management contract or compensatory plan or arrangement required to be filed as an exhibit hereto.

Exhibits 32.1 and 32.2, above, are furnished herewith and should not be deemed to be "filed" under the Securities Exchange Act of 1934. AbbVie will furnish copies of any of the above exhibits to a stockholder upon written request to the Secretary, AbbVie Inc., 1 North Waukegan Road, North Chicago, Illinois 60064.


107
Image3.gif|2023 Form 10-K
ITEM 16. FORM 10-K SUMMARY
None.
104    |20172023 Form 10-K

| abbvieimage3.gif


ITEM 16. FORM 10-K SUMMARY
108
None.

2017 Form 10-K  |    105




SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, AbbVie Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AbbVie Inc.
By:
AbbVie Inc.
By:/s/ RICHARD A. GONZALEZ
Name:Richard A. Gonzalez
Title:
Chairman of the Board and

Chief Executive Officer
Date:February 16, 201820, 2024


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of AbbVie Inc. on February 16, 201820, 2024 in the capacities indicated below.

/s/ RICHARD A. GONZALEZ/s/ WILLIAM J. CHASESCOTT T. REENTS
Richard A. Gonzalez

Chairman of the Board and

Chief Executive Officer

(Principal Executive Officer)
William J. Chase
Scott T. Reents
Executive Vice President,
Chief Financial Officer

(Principal Financial Officer)

/s/ ROBERT A. MICHAELKEVIN K. BUCKBEE
Robert A. MichaelKevin K. Buckbee
Senior Vice President, Controller
(Principal Accounting Officer)
/s/ ROBERT J. ALPERN, M.D./s/ ROXANNE S. AUSTIN
Robert J. Alpern, M.D.

Director of AbbVie Inc.
Roxanne S. Austin
Director of AbbVie Inc.
/s/ WILLIAM H.L. BURNSIDE/s/ JENNIFER L. DAVIS
William H.L. Burnside
Director of AbbVie Inc.
Jennifer L. Davis
Director of AbbVie Inc.
/s/ WILLIAM H.L. BURNSIDETHOMAS C. FREYMAN/s/ BRETT J. HART
William H.L. Burnside
Thomas C. Freyman
Director of AbbVie Inc.
Brett J. Hart
Director of AbbVie Inc.
/s/ MELODY B. MEYER/s/ SUSAN E. QUAGGIN, M.D.
Melody B. Meyer
Director of AbbVie Inc.
Susan E. Quaggin, M.D.
Director of AbbVie Inc.
/s/ EDWARD M. LIDDY/s/ MELODY B. MEYER
Edward M. Liddy
Director of AbbVie Inc.
Melody B. Meyer
Director of AbbVie Inc.
/s/ EDWARD J. RAPP/s/ REBECCA B. ROBERTS
Edward J. Rapp
Director of AbbVie Inc.		Rebecca B. Roberts
Director of AbbVie Inc.
/s/ GLENN F. TILTON
Edward J. Rapp
Director of AbbVie Inc.
Glenn F. Tilton
Director of AbbVie Inc.
/s/ FREDERICK H. WADDELL
Frederick H. Waddell
Glenn F. Tilton
Director of AbbVie Inc.
Frederick H. Waddell
Director of AbbVie Inc.





106109
Image3.gif|20172023 Form 10-K